Document:

Exhibit 4(k)

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                               SECURITY AGREEMENT

                             Made as of May 15, 2003

                                     Between

                            OREGON DISTRIBUTION LTD.,

                                   as Grantor

                                       And

                      GENERAL ELECTRIC CAPITAL CANADA INC.

                     as Canadian Agent for Canadian Lenders

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                                TABLE OF CONTENTS

                                                                          PAGE

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

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

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

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

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

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

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

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                                TABLE OF CONTENTS
                                  (continued)

                                                                          PAGE

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

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

SCHEDULE 4.1(4) - FINANCING STATEMENTS

SCHEDULE 4.1(5) - INSTRUMENTS AND CHATTEL PAPER

SCHEDULE 4.1(6) - LOCATIONS

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

EXHIBIT A - POWER OF ATTORNEY

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                               SECURITY AGREEMENT

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

            OREGON DISTRIBUTION LTD., an Ontario corporation
            ("Grantor"),

                  and

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

RECITALS

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

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

FOR VALUE RECEIVED, the parties agree as follows:

SECTION 1.  INTERPRETATION

1.1   TERMS DEFINED IN PPSA

      The terms "Chattel Paper", "Document of Title", "Goods", "Instrument",
"Intangible", "Security", "Proceeds", "inventory", "Accession", "Money",
"Account", "financing statement" and "financing change statement" whenever used
herein shall be interpreted in accordance with their respective meanings in the
Personal Property Security Act (Ontario), as amended from time

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                                      -2-

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

1.2   OTHER DEFINED TERMS

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

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

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

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

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

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

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

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

1.3   TERMS DEFINED IN CREDIT AGREEMENT

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

SECTION 2.  GRANT OF SECURITY

2.1   GRANT OF SECURITY

      As continuing collateral security for the due payment and performance by
Grantor of all of the Obligations, Grantor hereby grants, assigns, conveys,
mortgages, pledges, hypothecates and transfers to Canadian Agent, for its
benefit and for the benefit of Canadian Lenders, and

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grants to Canadian Agent, for its benefit and for the benefit of Canadian
Lenders, a security interest (collectively, the "SECURITY INTEREST") in, all of
its right, title and interest in, to and under all of Grantor's present and
after acquired personal property and other assets, including, without
limitation, in all Goods (including all parts, accessories, attachments, special
tools, additions and accessions thereto), Chattel Paper, Documents of Title
(whether negotiable or not), Instruments, Money and Securities now owned or
hereafter owned or acquired by or on behalf of Grantor (including such as may be
returned to or repossessed by Grantor) and in all Proceeds and renewals thereof,
accretions thereto and substitutions therefor and, further including, without
limitation, all of the following now owned or hereafter owned or acquired by or
on behalf of Grantor:

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

(2)   all Chattel Paper and Documents of Title;

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

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

(5)   all Intangibles;

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

(7)   all Intellectual Property;

(8)   all present and future Instruments;

(9)   all Money and Securities; and

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

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

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2.2   EXCEPTION RESPECTING TRADEMARKS

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

2.3   EXCEPTION TO LAST DAY

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

2.4   LIABILITY FOR DEFICIENCY

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

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

3.1   CONTINUED LIABILITY OF GRANTOR UNDER LICENSES, ETC.

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

3.2   NOTICE TO ACCOUNT DEBTORS

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

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                                      -5-

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

3.3   VERIFICATION OF ACCOUNTS

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

SECTION 4.  REPRESENTATIONS AND WARRANTIES OF GRANTOR

4.1   REPRESENTATIONS AND WARRANTIES

      Grantor represents and warrants that:

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

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

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

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

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

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

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

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

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

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                                      -7-

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

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

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

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

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                                      -8-

SECTION 5.  COVENANTS OF THE GRANTOR

5.1   COVENANTS

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

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

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

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

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

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

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

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

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

<PAGE>

                                      -10-

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

(9)   INTELLECTUAL PROPERTY COLLATERAL.

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

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

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

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

<PAGE>

                                      -11-

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

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

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

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

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

SECTION 6.  REMEDIES

6.1   APPOINTMENT OF RECEIVER

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

<PAGE>

                                      -12-

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

6.2   EXERCISE OF RIGHTS BY CANADIAN AGENT

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

6.3   TAKING POSSESSION OF COLLATERAL

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

6.4   RIGHTS AND REMEDIES UNDER PPSA

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

<PAGE>

                                      -13-

6.5   CO-OPERATION OF GRANTOR WITH RESPECT TO TAKING POSSESSION

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

6.6   COSTS

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

6.7   NOTICE OF SALE

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

6.8   GRANT OF LICENCE TO USE INTELLECTUAL PROPERTY COLLATERAL

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

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

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

<PAGE>

                                      -14-

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

6.10  WAIVER BY GRANTOR

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

6.11  ACKNOWLEDGEMENT BY GRANTOR

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

<PAGE>

                                      -15-

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

SECTION 7.  MISCELLANEOUS

7.1   EXTENSIONS, ETC.

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

7.2   NO WAIVER

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

7.3   WAIVER OF PROTEST

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

7.4   ASSIGNMENT AND ENUREMENT

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

<PAGE>

                                      -16-

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

7.5   AMENDMENT

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

7.6   NOTICES

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

7.7   REMEDIES CUMULATIVE

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

7.8   HEADINGS

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

7.9   REINSTATEMENT

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

<PAGE>

                                      -17-

7.10  NUMBER AND GENDER

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

7.11  LIMITATION BY LAW; SEVERABILITY

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

7.12  ATTACHMENT

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

7.13  AMALGAMATION

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

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

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

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

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

<PAGE>

                                      -18-

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

7.15  TERMINATION OF THIS AGREEMENT

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

7.16  FURTHER ASSURANCES

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

7.17  GOVERNING LAW

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

7.18  COUNTERPARTS

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

<PAGE>

                                      -19-

7.19  NO STRICT CONSTRUCTION

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

7.20  ADVICE OF COUNSEL

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

7.21  BENEFIT OF CANADIAN AGENT AND CANADIAN LENDERS

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

SECTION 8.  COPY OF AGREEMENT

8.1   COPY

      Grantor hereby acknowledges receipt of a copy of this Agreement.

8.2   WAIVER

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

                           [INTENTIONALLY LEFT BLANK]

<PAGE>

                                      -20-

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

                                                OREGON DISTRIBUTION LTD.

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

                                                GENERAL ELECTRIC CAPITAL
                                                CANADA INC., AS CANADIAN AGENT

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

<PAGE>

                          EXHIBIT A - POWER OF ATTORNEY

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

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

<PAGE>

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

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

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

                                        OREGON DISTRIBUTION LTD.

                                        By: ____________________________________
                                            Name:  Calvin E. Jenness
                                            Title: TreasurerExhibit 4(l)

                     -------------------------------------

                            BLOUNT HOLDINGS GUARANTEE

                             Made as of May 15, 2003

                                     Between

                              BLOUNT HOLDINGS LTD.,

                                  as Guarantor

                                       and

                      GENERAL ELECTRIC CAPITAL CANADA INC.,

                                as Canadian Agent

                     -------------------------------------

<PAGE>

                                TABLE OF CONTENTS

                                                                           PAGE

SECTION 1 -    INTERPRETATION................................................1
      1.1   Definitions......................................................1
      1.2   Other Defined Terms..............................................2
      1.3   References.......................................................2
      1.4   Rules of Interpretation..........................................2

SECTION 2 -    GUARANTEE.....................................................2

SECTION 3 -    PAYMENT.......................................................2
      3.1   Payment on Demand................................................2
      3.2   No Set-Off.......................................................3
      3.3   Taxes............................................................3
      3.4   Tax Gross-up.....................................................3

SECTION 4 -    OBLIGATIONS ABSOLUTE..........................................3

SECTION 5 -    INDEMNITY.....................................................3

SECTION 6 -    OBLIGATIONS CONTINUING........................................4
      6.1   No Reduction.....................................................4
      6.2   Effect of Rescission.............................................4

SECTION 7 -    OBLIGATIONS NOT AFFECTED......................................4
      7.1   Obligations Not Affected.........................................4
      7.2   Waiver...........................................................5
      7.3   No Obligation to Take Action Against Credit Parties..............6
      7.4   Dealing With Borrower and Others.................................6
      7.5   Acknowledgement..................................................6
      7.6   Accounts Stated..................................................7
      7.7   Postponement.....................................................7
      7.8   Funds Transfer...................................................7

SECTION 8 -    REPRESENTATIONS AND WARRANTIES OF GUARANTOR...................7
      8.1   Representations and Warranties...................................7

SECTION 9 -    GENERAL.......................................................8
      9.1   Notices..........................................................8
      9.2   Successor Canadian Agent.........................................9
      9.3   Applicable Law..................................................10
      9.4   Jurisdiction....................................................10
      9.5   Costs and Expenses..............................................10
      9.6   No Waiver; Cumulative Remedies..................................10
      9.7   Waiver of Rights of Subrogation, Reimbursement, Etc.............11
      9.8   Guarantee in Addition to Other Obligations......................11

<PAGE>

                                TABLE OF CONTENTS
                                  (CONTINUED)

                                                                           PAGE

      9.9   Entire Agreement................................................11
      9.10  Severability....................................................12
      9.11  Successors and Assignees........................................12
      9.12  Counterparts....................................................12

                                     - ii -

<PAGE>
-#-

                         BLOUNT HOLDINGS LTD. GUARANTEE

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

                    BLOUNT HOLDINGS LTD., a Canada corporation ("GUARANTOR"),

                                       and

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

RECITALS

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

B. Guarantor is a Credit Party under the Credit Agreement.

C. In connection with making the Canadian Loans, as provided for in the Credit
Agreement, and as a condition precedent thereto, the Canadian Agent and the
Canadian Lenders require that Guarantor shall have executed and delivered a
guarantee of the Canadian Obligations (as defined in the Credit Agreement) of
Canadian Borrower and the other Canadian Credit Parties (other than Guarantor).

     NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Canadian Lenders to provide the Canadian
Loans and other financial accommodations under the Credit Agreement, it is
agreed as follows:

SECTION 1 - INTERPRETATION

1.1  DEFINITIONS.

In this Guarantee:

(1) GUARANTEE means this Guarantee, as amended, restated, supplemented and
otherwise modified from time to time.

(2) GUARANTEED OBLIGATIONS has the meaning given to it in Section 2 of this
Guarantee.

<PAGE>

                                      -2-

(3) GUARANTEED PARTIES has the meaning given to it in Section 2 of this
Guarantee.

(4) TAX and TAXES each has the meaning given to it in Section 3.2(2) of this
Guarantee.

1.2  OTHER DEFINED TERMS.

Capitalized terms used herein and not otherwise defined have the meanings given
to them in the Credit Agreement.

1.3  REFERENCES.

Unless something in the subject matter or context is inconsistent therewith, all
references to Sections are to sections and subsections of this Guarantee. The
words "hereto", "herein", "hereof", "hereunder" and similar expressions refer to
this Guarantee and not to any particular Section, paragraph or other portion
hereof.

1.4  RULES OF INTERPRETATION.

In this Guarantee, unless otherwise specifically provided, the singular includes
the plural and vice versa and "in writing" or "written" includes printing,
typewriting or any electronic means of communication capable of being visibly
reproduced at the point of reception, including telecopier.

SECTION 2 - GUARANTEE

Guarantor hereby irrevocably and unconditionally guarantees to Canadian Agent
and each of the Canadian Lenders and their respective successors, transferees
and assigns (collectively, the "GUARANTEED PARTIES") the punctual and complete
payment when due (whether at stated maturity, by acceleration or otherwise) and
performance of all the Canadian Obligations of Canadian Borrower or any other
Canadian Credit Party (other than Guarantor) which are or may become at any time
and from time to time owing or payable, or to be performed to, or for the
benefit of, the Guaranteed Parties, or any of them, or which remain owing or
unpaid to, or to be performed for the benefit of, the Guaranteed Parties, or any
of them (the "GUARANTEED OBLIGATIONS"). Guarantor agrees that this Guarantee is
a guarantee of payment and performance and not of collection.

SECTION 3 - PAYMENT

3.1  PAYMENT ON DEMAND.

Guarantor agrees to make immediate payment to the Guaranteed Parties, or any of
them, of all Guaranteed Obligations owing or payable at that time to the
Guaranteed Parties, or any of them, upon demand for payment therefor by Canadian
Agent to Guarantor. Any payment made under this Guarantee shall be applied in
reduction of the Guaranteed Obligations, as contemplated by the Credit
Agreement.

<PAGE>

                                      -3-

3.2   NO SET-OFF.

Each payment to be made by Guarantor hereunder in respect of the Guaranteed
Obligations shall be payable in the currency or currencies in which such
Guaranteed Obligations are denominated, and shall be made:

(1) without set-off or counterclaim; and

(2) free and clear of and without deduction or withholding for or on account of
any present and future taxes, levies, imposts, stamp taxes, duties, charges to
tax, fees, deductions, withholdings and any conditions or restrictions resulting
in charges to tax and all penalties, interest and other payments on or in
respect thereof ("TAX" or "TAXES") unless Guarantor is compelled by law to make
payment subject to such Taxes.

3.3  TAXES.

All Taxes (other than those imposed on or measured by the net income or capital
of Canadian Agent or a Lender by the jurisdiction under the laws of which
Canadian Agent or such Lender is organized or is resident or carries on business
through a permanent establishment located therein or a political subdivision
thereof) in respect of this Guarantee or any amounts payable or paid under this
Guarantee shall be paid by Guarantor when due and, in any event, prior to the
date on which penalties attach thereto. Guarantor will indemnify each of the
Guaranteed Parties against and in respect of all such Taxes.

3.4  TAX GROSS-UP.

Without limiting the generality of the foregoing, if any Taxes (other than those
imposed on or measured by the net income or capital of Canadian Agent or a
Lender by the jurisdiction under the laws of which Canadian Agent or such Lender
is organized or is resident or carries on business through a permanent
establishment located therein or a political subdivision thereof) or amounts in
respect thereof must be deducted or withheld from any amounts payable or paid by
Guarantor hereunder, Guarantor shall pay such additional amounts as may be
necessary to ensure that each of the Guaranteed Parties receives a net amount
equal to the full amount which it would have received had payment (including of
any additional amounts payable under this Section 3.4) not been made subject to
such Taxes. Within thirty (30) days of each payment by Guarantor hereunder of
Taxes or in respect of Taxes, Guarantor shall deliver to Canadian Agent
satisfactory evidence (including originals, or certified copies, of all relevant
receipts) that such Taxes have been duly remitted to the appropriate authority
or authorities.

SECTION 4 - OBLIGATIONS ABSOLUTE

The   obligations  of  Guarantor   hereunder  are  and  shall  be  absolute  and
unconditional.

SECTION 5 - INDEMNITY

As an original and independent obligation under this Guarantee, Guarantor shall:

(1) indemnify each of the Guaranteed Parties, and keep each of the Guaranteed
Parties indemnified, against all costs, losses, expenses and liabilities of
whatever kind resulting from the failure by any Canadian Credit Party (other
than Guarantor) to make due and punctual payment

<PAGE>

                                      -4-

of any of the Guaranteed Obligations or resulting from any of the Guaranteed
Obligations being or becoming void, voidable, unenforceable or ineffective
against any Canadian Credit Party (other than Guarantor) (including, but without
limitation, all legal and other costs, charges and expenses incurred by the
Guaranteed Parties, or any of them, in connection with preserving or enforcing,
or attempting to preserve or enforce, its rights under this Guarantee); and

(2) pay on demand the amount of such costs, losses, expenses and liabilities
whether or not any of the Guaranteed Parties has attempted to enforce any rights
against any other Credit Party or any other Person or otherwise.

SECTION 6 - OBLIGATIONS CONTINUING

6.1  NO REDUCTION.

The obligations of Guarantor hereunder shall be continuing and shall remain in
full force and effect so long as any of the Canadian Obligations remain
outstanding and until all the Guaranteed Obligations have been paid, satisfied
and performed in full. The obligations of Guarantor hereunder shall not be
satisfied, reduced, affected or discharged by any intermediate payment,
settlement or satisfaction of the whole or any part of the principal, interest,
fees and other monies or amounts which may at any time be or become owing or
payable under or by virtue of or otherwise in connection with the Guaranteed
Obligations or the Loan Documents.

6.2  EFFECT OF RESCISSION.

The obligations of Guarantor hereunder shall continue to be effective or shall
be reinstated, as the case may be, if at any time any payment which would
otherwise have reduced the obligations of Guarantor hereunder (whether such
payment shall have been by or on behalf of Canadian Borrower, any other Credit
Party or by or on behalf of Guarantor) is rescinded or reclaimed from any of the
Guaranteed Parties upon the insolvency, bankruptcy, liquidation or
reorganization of Guarantor, any other Credit Party or otherwise, or any part of
such payment is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by Canadian Agent or any Canadian Lender
as a "voidable preference", "fraudulent conveyance", or otherwise, all as though
such payment had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.

SECTION 7 - OBLIGATIONS NOT AFFECTED

7.1  OBLIGATIONS NOT AFFECTED.

The obligations of Guarantor hereunder shall not be affected or impaired by any
act, omission, matter or thing whatsoever, occurring before, upon or after any
demand for payment hereunder (and whether or not known to Guarantor or any of
the Guaranteed Parties) which, but for this provision, might constitute a whole
or partial defence to a claim against Guarantor hereunder or might operate to
release or otherwise exonerate Guarantor from any of its obligations hereunder
or otherwise affect such obligations, whether occasioned by default of any of
the Guaranteed Parties or otherwise, including, without limitation:

<PAGE>

                                      -5-

(1) any limitation of status or power, disability, incapacity or other
circumstance relating to Canadian Borrower, any other Credit Party or any other
Person, including any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding-up or other proceeding involving
or affecting Guarantor, any other Credit Party or any other Person;

(2) any irregularity, defect, unenforceability or invalidity in respect of any
indebtedness or other obligation of any Credit Party or any other Person under
the Loan Documents or any other document or instrument;

(3) any failure of any Credit Party or any other Person, whether or not without
fault on their part, to perform or comply with any of the provisions of the Loan
Documents or to give notice thereof to Guarantor;

(4) the taking or enforcing or exercising or the refusal or neglect to take or
enforce or exercise any right or remedy against any Credit Party or any other
Person or their respective assets, or the release or discharge of any such right
or remedies;

(5) the granting of time, renewals, extensions, compromises, concessions,
waivers, releases, discharges and other indulgences to any Credit Party or any
other Person;

(6) any amendment, variation, modification, supplement or replacement of the
Loan Documents or any other document or instrument;

(7) any change in the ownership, control, name, objects, businesses, assets,
capital structure or constitution of Guarantor, any other Credit Party or any
other Person;

(8) any merger, amalgamation or consolidation of Guarantor or any other Credit
Party with any Person or Persons;

(9) the occurrence of any change in the laws, rules, regulations or ordinances
of any jurisdiction or by any present or future action of any governmental body
or court amending, varying, reducing or otherwise affecting, or purporting to
amend, vary, reduce or otherwise affect, any of the Guaranteed Obligations or
the obligations of Guarantor under this Guarantee;

(10) the existence of any claim, set-off or other rights which Guarantor may
have at any time against any other Credit Party, the Guaranteed Parties or any
other Person, or which any Credit Party may have at any time against the
Guaranteed Parties, whether in connection with the Loan Documents or otherwise;
and

(11) any other circumstance (other than by complete, irrevocable payment) that
might otherwise constitute a legal or equitable discharge or defence of any
Credit Party under the Loan Documents, or of Guarantor in respect of its
guarantee hereunder.

7.2  WAIVER.

Without in any way limiting the provisions of Section 7.1 of this Guarantee,
Guarantor hereby waives notice of acceptance hereof, notice of any liability of
Guarantor hereunder, notice or proof of reliance by the Guaranteed Parties upon
the obligations of Guarantor hereunder, and diligence, presentment, demand for
payment on any other Credit Party, protest, notice of

<PAGE>

                                      -6-

dishonour or non-payment of any of the Guaranteed Obligations, or other notice
or formalities to such Credit Party, of any kind whatsoever.

7.3  NO OBLIGATION TO TAKE ACTION AGAINST CREDIT PARTIES.

Neither Canadian Agent nor any of the other Guaranteed Parties shall have any
obligation to enforce any rights or remedies or to take any other steps against
Canadian Borrower, any other Credit Party or any other Person or any property of
Canadian Borrower, any other Credit Party or any other Person before Canadian
Agent is entitled to demand payment and performance by Guarantor of its
liabilities and obligations under this Guarantee, and Guarantor hereby waives
all benefit of discussion. The obligations of Guarantor hereunder are
independent of the Guaranteed Obligations and a separate action or actions may
be brought and prosecuted against Guarantor to enforce this Guarantee,
irrespective of whether any action is brought against Canadian Borrower or any
other Credit Party or whether Canadian Borrower or any other Credit Party is
joined in any such action or actions.

7.4  DEALING WITH BORROWER AND OTHERS.

The Guaranteed Parties, without releasing, discharging, limiting or otherwise
affecting in whole or in part Guarantor's obligations and liabilities hereunder
and without the consent of or notice to Guarantor, may:

(1) grant time, renewals, extensions, compromises, concessions, waivers,
releases, discharges and other indulgences to any other Credit Party or any
other Person;

(2) amend, vary, modify, supplement or replace any Loan Document or any other
related document or instrument;

(3) take or abstain from taking securities or collateral from any other Credit
Party, or from perfecting securities or collateral of any other Credit Party;

(4) release, discharge, compromise, realize, enforce or otherwise deal with or
do any act or thing in respect of (with or without consideration) any and all
collateral, mortgages or other security given by any other Credit Party or any
third party with respect to the obligations or matters contemplated by the
Credit Agreement;

(5) accept compromises or arrangements from any other Credit Party;

(6) apply all money at any time received from any other Credit Party, or from
securities upon such part of the Guaranteed Obligations as they may see fit or
change any such application in whole or in part from time to time as they may
see fit; and

(7) otherwise deal with, or waive or modify their right to deal with, any other
Credit Party, and all other Persons and securities as they may see fit.

7.5  ACKNOWLEDGEMENT.

Guarantor hereby acknowledges communication of the terms of the Loan Documents
and of all the provisions therein contained and consents to and approves the
same.

<PAGE>

                                      -7-

7.6  ACCOUNTS STATED.

Guarantor shall be bound by any account settled between any Canadian Credit
Party and the Guaranteed Parties, and if no such account has been so settled
immediately before demand for payment under this Guarantee, any account stated
by Canadian Agent shall be accepted by Guarantor as prima facie evidence in the
absence of manifest error of the amount which at the date of the account so
stated is due by a Canadian Credit Party to the Guaranteed Parties or remains
unpaid by Canadian Credit Party to the Guaranteed Parties.

7.7  POSTPONEMENT.

Until the Termination Date, all indebtedness and liabilities, present and
future, of Canadian Borrower or any other Credit Party to Guarantor are hereby
postponed to the liabilities to the Guaranteed Parties and all money received by
Guarantor in respect of the indebtedness and liabilities of Canadian Borrower or
any other Credit Party to Guarantor shall be received in trust for the
Guaranteed Parties and forthwith upon receipt shall be paid over to Canadian
Agent on behalf of the Guaranteed Parties, the whole without in any way limiting
or lessening the liability of Guarantor under the guarantee contained in this
Guarantee; and this postponement is independent of such guarantee and shall
remain in full effect notwithstanding that the liability of Guarantor under such
guarantee may be extinct; provided, that nothing in this Section 7.7 shall
restrict in any way any payments in respect of the indebtedness and liabilities
of Canadian Borrower or any other Credit Party to Guarantor which are expressly
permitted by the Credit Agreement.

7.8  FUNDS TRANSFER.

If Guarantor shall engage in any transaction as a result of which Canadian
Borrower is required to make a mandatory prepayment with respect to the
Guaranteed Obligations under the terms of the Credit Agreement (including any
issuance or sale of Guarantor's equity interests or any sale of its assets),
Guarantor shall distribute to Canadian Borrower an amount equal to the mandatory
prepayment required under the terms of the Credit Agreement to the extent
attributable to such transaction.

SECTION 8 - REPRESENTATIONS AND WARRANTIES OF GUARANTOR

8.1  REPRESENTATIONS AND WARRANTIES.

Guarantor represents and warrants to Canadian Agent on behalf of the Guaranteed
Parties as follows and acknowledges and confirms that the Guaranteed Parties are
relying upon such representations and warranties:

(1) Guarantor is a corporation duly incorporated and validly existing under the
laws of Canada and has all requisite power and authority to execute, deliver and
perform this Guarantee;

(2) Guarantor is duly qualified to do business and is in good standing under the
laws of each jurisdiction where its ownership or lease of property or the
conduct of its business requires such qualification, except where the failure to
be so qualified would not result in exposure to losses,

<PAGE>

                                      -8-

damages or liabilities which could, in the aggregate, reasonably be expected to
result in a Material Adverse Effect;

(3) Guarantor has the requisite power and authority and the legal right to own
and operate its properties, to lease the property it operates under lease, and
to conduct its business as now, heretofore and proposed to be conducted and has
the requisite power and authority and the legal right to pledge, mortgage,
hypothecate or otherwise encumber the Collateral;

(4) subject to specific representations set forth in the Credit Agreement
regarding Environmental Laws, Guarantor has all material licenses, permits,
consents or approvals from or by, and has made all material filings with, and
has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;

(5) Guarantor is in compliance with its constating documents and bylaws or
partnership or operating agreement, as applicable;

(6) subject to specific representations set forth in the Credit Agreement
regarding Environmental Laws, Tax and other laws, Guarantor is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;

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

SECTION 9 - GENERAL

9.1  NOTICES.

Whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or served
upon any of the parties by any other party, or whenever any of the parties
desires to give or serve upon another any such communication with respect to
this Guarantee, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be addressed to
the party to be notified as follows:

<PAGE>

                                      -9-

      (a)   If to Canadian Agent, at:

            c/o General Electrical Capital Corporation
            1100 Abernathy Road, Suite 900
            Atlanta, Georgia 30328
            Attention: Blount, Inc. Account Manager
            Telecopy Number: (678) 320-8902
            Telephone Number: (678) 320-8900

            with a copy to:

            Paul, Hastings, Janofsky & Walker LLP
            600 Peachtree Street, N.E.
            Suite 2400
            Atlanta, Georgia 30308
            Attention: Jesse H. Austin, III Esq.
            Telecopy Number: (404) 815-2424
            Telephone Number: (404) 815-2208

      (b)   If to any Lender, at the address of such Lender specified in the
            Credit Agreement

      (c)   If to Guarantor, at the following address:

            505 Edinburgh Road North,
            Guelph, Ontario  N1H 6L4
            Attention: General Manager
            Telecopy Number:  (519) 822-1450
            Telephone Number:  (519) 822-6870

            with copies to:

            Blount Holdings Ltd.
            c/o Blount, Inc.
            4909 S.E. International Way
            Portland, Oregon 97222
            Attention:  Calvin E. Jenness and Richard H. Irving III
            Telecopy Number: (503) 653-461
            Telephone Number: (503) 653-4573

            and to:

            Blake, Cassels & Graydon LLP
            P.O. Box 25, Suite 2800
            Commerce Court West
            199 Bay Street

<PAGE>

                                      -10-

            Toronto, Ontario  M5L 1A9
            Attention: Nathan Cheifetz
            Telecopy Number: (416) 863-2653
            Telephone Number: (416) 863-2969

or such other address as may be substituted by notice given as herein provided.

9.1   SUCCESSOR CANADIAN AGENT.

In the event that Canadian Agent for the time being under the Credit Agreement
shall resign and a successor agent thereafter shall be appointed in accordance
with Section 9.7 of the Credit Agreement, then upon such successor agent
agreeing in writing to be bound by the provisions of this Guarantee as Canadian
Agent hereunder, all references herein to Canadian Agent in this Guarantee shall
be deemed to be references to such successor agent as and from such date and
such successor agent shall receive and become vested with all the rights,
powers, privileges and duties of the retiring or removed Canadian Agent and the
retiring or removed Canadian Agent shall be discharged from its further duties
and obligations as Canadian Agent under this Guarantee.

9.2   APPLICABLE LAW.

This Guarantee shall be conclusively deemed to be a contract made under, and
shall for all purposes be governed by, and construed and interpreted in
accordance with, the laws of the Province of Ontario and the federal laws of
Canada applicable therein in effect from time to time without prejudice to or
limitation of any other rights or remedies available under the laws of any
jurisdiction where property or assets of Guarantor may be found.

9.3   JURISDICTION.

(1) Guarantor irrevocably agrees that any suits, actions or proceedings arising
out of or in connection with this Guarantee (collectively "PROCEEDINGS") may be
brought in any court in the Province of Ontario and submits and attorns to the
non-exclusive jurisdiction of each such court.

(2) Guarantor irrevocably waives any objections which it may have now or
hereafter to the laying of the venue of any Proceedings in any court referred to
in paragraph (1) and any claim that any such Proceedings have been brought in an
inconvenient forum and further irrevocably agrees that a judgment in any
Proceedings brought in any such court shall be conclusive and binding upon
Guarantor and may be enforced in any courts to the jurisdiction of which such
parties may be subject by Proceedings upon such judgment.

(3) Nothing contained in this Section 9.4 shall limit the right of Canadian
Agent or any other Guaranteed Party to take Proceedings against Guarantor in any
other court of competent jurisdiction nor shall the taking of Proceedings in one
or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.

(4) Guarantor hereby irrevocably consents generally to the fullest extent
permitted by law in respect of any Proceedings to the giving of any relief and
the issue of any process in connection with such Proceedings including, without
limitation, the making, enforcement or execution

<PAGE>

                                      -11-

against any property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such Proceedings.

(5) Guarantor hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Guarantee or any other Loan
Document, the transactions contemplated hereby or thereby or the actions of any
Guaranteed Party in the negotiation, administration, performance or enforcement
hereof or thereof.

9.5  COSTS AND EXPENSES.

Guarantor shall pay on demand by Canadian Agent any and all reasonable costs,
fees and expenses (including, without limitation, reasonable legal fees and
expenses) incurred by Canadian Agent in enforcing any of its rights under this
Guarantee.

9.6  NO WAIVER; CUMULATIVE REMEDIES.

No failure to exercise and no delay in exercising, on the part of any Guaranteed
Party, any right, remedy, power or privilege hereunder or under the Loan
Documents, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder or under the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein and under the Loan Documents are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

9.7  WAIVER OF RIGHTS OF SUBROGATION, REIMBURSEMENT, ETC.

Guarantor hereby irrevocably waives any claim or other rights that it may now or
hereafter acquire against any other Credit Party, that arise from the existence,
payment, performance or enforcement of the Guaranteed Obligations under this
Guarantee, the Credit Agreement or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Guaranteed Party against any other Credit Party, or any collateral, whether or
not such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from any
other Credit Party, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right; provided, however, that such waiver shall terminate on the
Termination Date; provided, that Canadian Agent shall be entitled to hold any
Potential Preference Payment (as hereafter defined) in trust for the benefit of
the Guaranteed Parties and shall forthwith pay such amount to the Guaranteed
Parties, to be credited and applied following the expiry of the potential
preference period, to the Guaranteed Obligations, whether matured or unmatured,
in accordance with the terms of the Credit Agreement. The term "POTENTIAL
PREFERENCE PAYMENT" shall mean any payment or other transfer received for the
benefit of the Guaranteed Parties for or on account of the Guaranteed
Obligations which could be avoided by a trustee in bankruptcy for any other
Credit Party, or by or for the benefit of other creditors of any other Credit
Party as a "preference" or a "preferential transfer" or for any other reason
under any applicable bankruptcy, insolvency or similar law now or hereafter in
effect in any bankruptcy, insolvency or similar proceeding with respect to any
other Credit Party. Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by

<PAGE>

                                      -12-

the Credit Agreement and that the waiver set forth in this Section 9.7 is
knowingly made in contemplation of such benefits.

9.8  GUARANTEE IN ADDITION TO OTHER OBLIGATIONS.

The obligations of Guarantor under this Guarantee are in addition to and not in
substitution for any other obligations to Canadian Agent or to any of the other
Guaranteed Parties in relation to the Loan Documents and any guarantees,
indemnities or security at any time held by or for the benefit of any of them.
To secure payment of the obligations of the Guarantor under this Guarantee,
concurrently with the execution of this Guarantee, the Guarantor has entered
into Collateral Documents pursuant to which the Guarantor has granted to the
Canadian Agent, for the benefit of itself and Canadian Lenders, security in all
of its Collateral identified therein.

9.9  ENTIRE AGREEMENT.

This Guarantee, including all documents contemplated hereby, constitutes the
entire agreement between the parties with respect to the subject matter and
supersedes all prior negotiations, undertakings, representations and
understandings.

9.10 SEVERABILITY.

Any provision of this Guarantee which is prohibited or unenforceable in any
jurisdiction shall not invalidate the remaining provisions and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

9.11 SUCCESSORS AND ASSIGNEES.

This Guarantee shall be binding upon and enure to the benefit of Guarantor and
Canadian Agent and the other Guaranteed Parties and their respective successors
and permitted assignees, except that Guarantor may not assign any of its
obligations hereunder.

9.12 COUNTERPARTS.

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

                           [INTENTIONALLY LEFT BLANK]

<PAGE>

                                      -13-

      IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be duly
executed and delivered by its proper and duly authorized officers as of the day
and year first above written.

                                        BLOUNT HOLDINGS LTD.

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

                                        GENERAL ELECTRIC CAPITAL CANADA INC.,
                                        AS CANADIAN AGENT

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

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