[LOGO] Merrill Lynch                                          SECURITY AGREEMENT
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SECURITY  AGREEMENT  ("Agreement")  dated as of June  19,  2001,  between  BUNDY
AMERICAN CORPORATION, a corporation organized and existing under the laws of the
State of Maryland  having its principal  office at 11460  Cronridge  Drive Suite
118, Owings Mills, MD 21117  ("Grantor"),  and MERRILL LYNCH BUSINESS  FINANCIAL
SERVICES INC., a corporation  organized and existing under the laws of the State
of Delaware having its principal office at 222 North LaSalle Street, Chicago, IL
60601 ("MLBFS").

In order to induce MLBFS to extend or continue to extend credit to  RENT-A-WRECK
OF AMERICA,  INC. D/B/A  "RENT-A-WRECK"  AND "PRICELESS"  ("Customer") under the
Loan Agreement (as defined below) or otherwise,  and for other good and valuable
consideration,  the receipt  and  sufficiency  of which is hereby  acknowledged,
Grantor hereby agrees with MLBFS as follows

1. DEFINITIONS

(a) Specific  Terms.  In addition to terms defined  elsewhere in this Agreement,
when used herein the following terms shall have the following meanings

(i) "Account  Debtor" shall mean any party who is or may become  obligated  with
respect to an Account or Chattel Paper.

(ii)  "Bankruptcy  Event" shall mean any of the following (A) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt or
receivership  law or  statute  shall be  filed or  consented  to by  Grantor  or
Customer,  or (B) any such proceeding shall be filed against Grantor or Customer
and shall not be dismissed or withdrawn within sixty (60) days after filing;  or
(C)  Grantor or  Customer  shall make a general  assignment  for the  benefit of
creditors,  or (D) Grantor or Customer  shall  generally fail to pay or admit in
writing  its  inability  to pay its debts as they  become due; or (E) Grantor or
Customer shall be adjudicated a bankrupt or insolvent

(iii) "Business Day" shall mean any day other than a Saturday,  Sunday,  federal
holiday a other day on which the New York Stock Exchange is regularly closed.

(iv)  "Collateral"  shall mean all Accounts,  Chattel  Paper,  Contract  Rights,
Inventory,   Equipment,   Fixtures,   General  Intangibles,   Deposit  Accounts,
Documents,  Instruments,  Financial  Assets and Investment  Property of Grantor,
howsoever  arising,  whether  now owned or  existing  or  hereafter  acquired or
arising, and wherever located,  together with all parts thereof (including spare
parts), all accessories and accessions thereto, all books and records (including
computer  records)  directly related thereto,  all proceeds thereof  (including,
without  limitation,  proceeds in the form of Accounts and insurance  proceeds),
and the additional collateral described in Section 7(b) hereof

(v) "Default" shall mean an "Event of Default",  as defined in Section 6 hereof,
or any event which with the giving of notice,  passage of time,  or both,  would
constitute such an Event of Default.

(vi)  "Loan  Agreements"  shall  mean (a) that  certain  WCMA LOAN AND  SECURITY
AGREEMENT N0.  749-07V74  between MLBFS and Customer,  and (b) that certain WCMA
REDUCING  REVOLVER LOAN AND SECURITY  AGREEMENT N0. 7WD-07018  between MLBFS and
Customer,  together with all  agreements,  instruments  and  documents  executed
pursuant  thereto,  as any or all of the same  may from  time to time be or have
been amended, restated, extended or supplemented.

(vii)  "Location of Tangible  Collateral"  shall mean the address of Grantor set
forth at the  beginning of this  Agreement,  together  with any other address or
addresses  set forth on any  exhibit  hereto  as being a  Location  of  Tangible
Collateral.

(viii)  "Obligations"  shall  mean  all  liabilities,   indebtedness  and  other
obligations  of  Customer  or Grantor to MLBFS,  howsoever  created,  arising or
evidenced,  whether  now  existing  or  hereafter  arising,  whether  direct  or
indirect,  absolute or contingent, due or to become due, primary or secondary or
joint or several,  and, without  limiting the foregoing,  shall include interest
accruing  after the filing of any  petition in  bankruptcy,  and all present and
future  liabilities,  indebtedness  and  obligations  of Customer under the Loan
Agreement  and the  agreements,  instruments  and  documents  executed  pursuant
thereto, and of Grantor under this Agreement.

(ix)  "Permitted  Liens" shall mean with respect to the Collateral (A) liens for
current taxes not delinquent, other non-consensual liens arising in the ordinary
course of business  for sums not due,  and, if MLBFS'  rights to and interest in
the Collateral are not materially and adversely affected thereby, any such liens
for  taxes or other  non-consensual  liens  arising  in the  ordinary  course of
business being contested in good faith by appropriate proceedings,  (B) liens in
favor of MLBFS, and (C) any other liens expressly permitted in writing by MLBFS

(b) Other Terms.  Except as  otherwise  defined  herein,  all terms used in this
Agreement which are defined in the Uniform  Commercial Code of Illinois  ("UCC")
shall have the meanings set forth in the UCC.

2. COLLATERAL

(a) Pledge of Collateral.  To secure payment and performance of the Obligations,
Grantor hereby pledges, assigns, transfers and sets over to MLBFS, and grants to
MLBFS a first  lien and  security  interest  in and upon all of the  Collateral,
subject only to Permitted Liens.
<PAGE>
(b) Liens.  Except upon the prior  written  consent of MLBFS,  Grantor shall not
create or permit to exist any lien,  encumbrance  or security  interest  upon or
with  respect  to any  Collateral  now owned or  hereafter  acquired  other than
Permitted Liens.

(c)  Performance of  Obligations.  Grantor shall perform all of its  obligations
owing on account of or with respect to the Collateral,  it being understood that
nothing  herein,  and no action or inaction by MLBFS,  under this  Agreement  or
otherwise,  shall be  deemed an  assumption  by MLBFS of any of  Grantor's  said
obligations.

(d) Notice of Certain Events.  Grantor shall give MLBFS immediate  notice of any
attachment,  lien, judicial process, encumbrance or claim affecting or involving
$25,000.00 or more of the Collateral.

(e)  Indemnification.  Grantor shall  indemnify,  defend and save MLBFS harmless
from and against any and all claims, losses, costs, expenses (including, without
limitation,  reasonable  attorneys'  fees and expenses),  demands,  liabilities,
penalties,  fines and forfeitures of any nature whatsoever which may be asserted
against or incurred by MLBFS  arising out of or in any manner  occasioned by (i)
the ownership,  use, operation,  condition or maintenance of any Collateral,  or
(ii) any  failure  by  Grantor  to  perform  any of its  obligations  hereunder,
excluding,  however,  from said indemnity any such claims,  losses, etc. arising
out of the  willful  wrongful  act or active  gross  negligence  of MLBFS.  This
indemnity  shall survive the  expiration or  termination of this Agreement as to
all matters arising or accruing prior to such expiration or termination.

(f)  Insurance.  Grantor  shall  insure all of the tangible  Collateral  with an
insurer or insurers  reasonably  acceptable to MLBFS, under a policy or policies
of physical damage insurance  reasonably  acceptable to MLBFS providing that (i)
losses  will be  payable to MLBFS as its  interests  may  appear  pursuant  to a
Lender's Loss Payable endorsement,  and (ii) MLBFS will receive not less than 10
days  prior  written  notice of any  cancellation,  and  containing  such  other
provisions  as may be reasonably  required by MLBFS Grantor shall  maintain such
other  insurance as may be required by law or otherwise  reasonably  required by
MLBFS.  Grantor  shall  furnish  MLBFS with a copy or  certificate  of each such
policy or policies and, prior to any expiration or cancellation, each renewal or
replacement thereof.

(g) Event of Loss.  Grantor shall at its expense  promptly repair all repairable
damage to any tangible Collateral.  In the event that any tangible Collateral is
damaged  beyond repair,  lost,  totally  destroyed or confiscated  (an "Event of
Loss") and such Collateral had a value prior to such Event of Loss of $25,000.00
or more,  then,  on or  before  the  first to  occur  of (i) 90 days  after  the
occurrence  of such Event of Loss,  or (ii) 10  Business  Days after the date on
which either Grantor or MLBFS shall receive any proceeds of insurance on account
of such  Event  of  Loss,  or any  underwriter  of  insurance  on such  tangible
Collateral  shall advise either Grantor or MLBFS that it disclaims  liability in
respect of such Event of Loss, Grantor shall, at Grantors option, either replace
the Collateral subject to such Event of Loss with comparable  Collateral free of
all liens other than  Permitted  Liens (in which event Grantor shall be entitled
to utilize the  proceeds of  insurance on account of such Event of Loss for such
purpose, and may retain any excess proceeds of such insurance),  or pay to MLBFS
on account of the  Obligations any amount equal to the actual cash value of such
Collateral as determined by either the applicable  insurance  company's  payment
(plus any applicable deductible) or, in absence of insurance company payment, as
reasonably determined by MLBFS. Notwithstanding the foregoing, if at the time of
occurrence of such Event of Loss or any time thereafter  prior to replacement or
payment, as aforesaid, an Event of Default shall have occurred and be continuing
hereunder, then MLBFS may at its sole option, exercisable at any time while such
Event of Default shall be  continuing,  require  Grantor to either  replace such
Collateral or make a payment on account of the Obligations, as aforesaid.

(h) Sales and  Collections.  So long as no Event of Default  shall have occurred
and be continuing,  Grantor may in the ordinary  course of its business (i) sell
any  Inventory  normally  held by  Grantor  for sale,  (ii) use or  consume  any
materials  and supplies  normally  held by Grantor for use or  consumption,  and
(iii) collect all of its Accounts Grantor shall take such action with respect to
protection of its Inventory and the other  Collateral  and the collection of its
Accounts as MLBFS may from time to time reasonably request.

(i) Account  Schedules.  Upon the  request of MLBFS,  made now or at any time or
times  hereafter,  Grantor  shall  deliver to MLBFS,  in  addition  to the other
information required hereunder, a schedule identifying, for each Account and all
Chattel  Paper  subject to MLBFS'  security  interests  hereunder,  each Account
Debtor by name and address and amount,  invoice number and date of each invoice.
Grantor shall furnish to MLBFS such additional  information  with respect to the
Collateral,  and  amounts  received  by  Grantor  as  proceeds  of  any  of  the
Collateral, as MLBFS may from time to time reasonably request.

(j)  Location.  Except for  movements  in the  ordinary  course of its  business
Grantor  shall give MLBFS 30 days'  prior  written  notice of the  placing at or
movement of any tangible  Collateral  to any  location  other than a Location of
Tangible  Collateral.  In no event shall  Grantor  cause or permit any  tangible
Collateral  to be removed  from the United  States  without  the  express  prior
written consent of MLBFS.

(k) Alterations and Maintenance. Except upon the prior written consent of MLBFS,
Grantor  shall not make or  permit  any  material  alterations  to any  tangible
Collateral which might  materially  reduce or impair its market value or utility
Grantor shall at all times keep the tangible  Collateral  in good  condition and
repair and shall pay a cause to be paid all obligations  arising from the repair
and maintenance of such  Collateral,  as well as all obligations with respect to
each  Location of Tangible  Collateral,  except for any such  obligations  being
contested by Grantor in good faith by appropriate proceedings.

3. REPRESENTATIONS AND WARRANTIES

Grantor represents and warrants to MLBFS that

(a)  Organization.  Grantor is a corporation duly organized and validly existing
in good standing under the laws of the State of Maryland, and is qualified to do
business  and in good  standing  in each  other  state  where the  nature of its
business or the properly owned by it make such qualification necessary

(b) Execution, Delivery and Performance. The execution, delivery and performance
by Grantor of this Agreement have been duly authorized by all requisite  action,
do not and will  not  violate  a  conflict  with  any law or other  governmental
requirement, or any of the agreements, instruments or documents

                                       -2-
<PAGE>
which formed or governed Grantor,  and do not and will not breach or violate any
of the  provisions  of, and will not result in a default by Grantor  under,  any
other agreement,  instrument or document to which it is a party or by which it a
its properties are bound.

(c) Notice or Consent.  Except as may have been given or obtained,  no notice to
or consent or  approval of any  governmental  body or  authority  or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection  with the  execution,  delivery or  performance by Grantor of this
Agreement.

(d) Valid and Binding. This Agreement is the legal, valid and binding obligation
of  Grantor,  enforceable  against it in  accordance  with its terms,  except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally or by general principles of equity.

(e) Financial  Statements.  Except as expressly set forth in Grantor's financial
statements,  all financial  statements  of Grantor  furnished to MLBFS have been
prepared  in  conformity   with  generally   accepted   accounting   principles,
consistently  applied,  are true and correct,  and fairly  present the financial
condition  of it as at such  dates and the  results  of its  operations  for the
periods  then ended;  and since the most recent date  covered by such  financial
statements,  there has been no  material  adverse  change in any such  financial
condition or operation.

(f) Litigation, etc. No litigation, arbitration,  administrative or governmental
proceedings are pending or threatened against Grantor, which would, if adversely
determined, materially and adversely affect the financial condition or continued
operations of Grantor, or the liens and security interests of MLBFS hereunder.

(g) Taxes.  All  federal,  state and local tax returns,  reports and  statements
required  to  be  filed  by  Grantor  have  been  filed  with  the   appropriate
governmental  agencies and all taxes due and payable by Grantor have been timely
paid  (except  to the  extent  that  any  such  failure  to file or pay will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder or the financial condition or continued operations of Grantor).

(h) Collateral.  Grantor has good and marketable  title to the Collateral,  and,
except for any  Permitted  Liens.  (i) none of the  Collateral is subject to any
lien,  encumbrance or security interest,  and (u) upon the filing of all Uniform
Commercial  Code  financing  statements  executed by Grantor with respect to the
Collateral  or a copy  of this  Agreement  in the  appropriate  jurisdictions(s)
and/or the completion of any other action  required by applicable law to perfect
is lien and security interests,  MLBFS will have valid and perfected first liens
and security interests upon all of the Collateral.

Each of the foregoing representations and warranties has been and will be relied
upon as an  inducement  to MLBFS to advance funds or extend a continue to extend
credit to  Customer,  and is  continuing  and shall be deemed  remade by Grantor
concurrently with each such advance or extension of credit by MLBFS to Customer.

4. FINANCIAL AND OTHER INFORMATION

Grantor  covenants and agrees that Grantor will furnish or cause to be furnished
to MLBFS during the term of this Agreement such financial and other  information
as may be required by the Loan  Agreement or any other  document  evidencing the
Obligations  or as MLBFS may from time to time  reasonably  request  relating to
Grantor or the Collateral.

5. OTHER COVENANTS

Grantor further agrees during the term of this Agreement that

(a)  Financial  Records;  Inspection.  Grantor  will (i)  maintain  complete and
accurate books and records at its principal place of business,  and maintain all
of its financial  records in a manner  consistent with the financial  statements
heretofore  furnished  to  MLBFS,  or  prepared  on such  other  basis as may be
approved  in  writing by MLBFS,  and (ii)  permit  MLBFS or its duly  authorized
representatives,  upon reasonable notice and at reasonable times, to inspect its
properties (both real and personal), operations, books and records.

(b)  Taxes.  Grantor  will  pay  when  due  all  taxes,  assessments  and  other
governmental  charges,  howsoever  designated,  and all  other  liabilities  and
obligations,  except  to the  extent  that  any  such  failure  to pay  will not
materially and adversely affect either the liens and security interests of MLBFS
hereunder, or the financial condition or continued operations of Grantor.

(c)  Compliance  With Laws and  Agreements.  Grantor  will not  violate any law,
regulation or other governmental requirement, any judgment or order of any court
or governmental agency or authority, or any agreement, instrument or document to
which  it is a party  or by  which  it is  bound,  if any  such  violation  will
materially and adversely affect either the liens and security interests of MLBFS
hereunder, or the financial condition or continued operations of Grantor.

(d)  Notification  By Grantor.  Grantor shall provide MLBFS with prompt  written
notification  of (i) any Default,  (ii) any  materially  adverse,  change in the
business, financial condition a operations of Customer or Grantor, and (iii) any
information  which  indicates  that any  financial  statements  a of Customer or
Grantor fail in any material  respect to present fairly the financial  condition
and results of  operations  purported to be presented in such  statements.  Each
notification  by Grantor  pursuant hereto shall specify the event or information
causing such  notification,  and, to the extent  applicable,  shall  specify the
steps being taken to rectify or remedy such event or information.

(e)  Notice of  Change.  Grantor  shall  give  MLBFS not less than 30 days prior
written  notice  of any  change in the name  (including  any  fictious  name) or
principal place of business of Grantor

(f) Continuity.  Except upon the prior written  consent of MLBFS,  which consent
will not be unreasonably withheld (i) Grantor shall not be a party lo any merger
or consolidation with, or purchase or otherwise acquire all or substantially all
of the assets of, or any material stock, partnership, joint venture or other

                                       -3-
<PAGE>
equity interest in, any person or entity,  or sell,  transfer a lease all or any
substantial part of its assets,  if any such action would result in either (A) a
material change in the principal  business,  ownership or control of Grantor, or
(B) a material  adverse  change in the  financial  condition  or  operations  of
Grantor,  (ii) Grantor  shall  preserve its  existence  and good standing in the
jurisdiction(s)  of establishment and operation;  (iii) Grantor shall not engage
in any material business substantially  different from its business in effect as
of the date of application by Customer for credit from MLBFS, or cease operating
any such  material  business,  (iv) Grantor  shall not cause or permit any other
person or entity to assume or succeed to any material  business or operations of
Grantor,  and (iv) Grantor shall not cause or permit any material  change in its
controlling ownership.

6. EVENTS OF DEFAULT

The  occurrence  of any of the  following  events shall  constitute an "Event of
Default" under this Agreement

(a) Event of Default Under any Loan  Agreement.  An Event of Default shall occur
under the terms of the Loan Agreement.

(b) Failure to Perform.  Grantor shall default in the  performance or observance
of any covenant or agreement on its part to be performed or observed  under this
Agreement (not  constituting  an Event of Default under any other clause of this
Section),  and such default shall continue unremedied for 10 Business Days after
written notice thereof shall have been given by MLBFS to Grantor.

(c) Breach of Warranty. Any representation or warranty made by Grantor contained
in this Agreement shall at any time prove to have been incorrect in any material
respect when made.

(d)  Default  Under  Other  Agreement.  A default or Event of Default by Grantor
shall occur under the term of any other  agreement,  instrument or document with
or intended  for the benefit of MLBFS,  Merrill  Lynch,  Pierce,  Fenner & Smith
Incorporated  ("MLPF&S")  or any of their  affiliates,  and any required  notice
shall have been given and required passage of time shall have elapsed.

(e)  Seizure  or Abuse of  Collateral.  The  Collateral,  or any  material  part
thereof,  shall  be or  become  subject  to any  levy,  attachment,  seizure  or
confiscation which is not released within 10 Business Days.

(f) Bankruptcy Event. Any Bankruptcy Event shall occur.

(g)  Material  Impairment.  Any event shall occur which shall  reasonably  cause
MLBFS to in good faith  believe that the prospect of payment or  performance  by
Grantor  has  been  materially  impaired.  The  existence  of  such  a  material
impairment shall be determined in a manner consistent with the intent of Section
1-208 of the UCC.

(h) Acceleration of Debt to Other Creditors. Any event shall occur which results
in the  acceleration of the maturity of any  indebtedness of $100,000.00 or more
of Grantor to another creditor under any indenture,  agreement,  undertaking, or
otherwise.

7. REMEDIES

(a) Remedies Upon Default. Upon the occurrence and during the continuance of any
Event of Default,  MLBFS may at its sole option do any one or more or all of the
following,  at such time and in such  order as MLBFS may in its sole  discretion
choose.

(i)  Acceleration.  MLBFS may declare all  Obligations  to be forthwith  due and
payable,  whereupon  ail such  amounts  shall be  immediately  due and  payable,
without presentment,  demand for payment,  protest and notice of protest, notice
of dishonor,  notice of  acceleration,  notice of intent to  accelerate or other
notice or  formality  of any kind,  all of which are  hereby  expressly  waived;
provided,  however,  that  upon  the  occurrence  of any  Bankruptcy  Event  all
Obligations shall automatically became due and payable without any action on the
part of MLBFS.

(ii)  Exercise  Rights of Secured  Party.  MLBFS may  exercise any or all of the
remedies of a secured party under applicable law, including, but not limited to,
the UCC, and any or all of its other rights and remedies under this Agreement.

(iii)  Possession.  MLBFS may  require  Grantor to make the  Collateral  and the
records pertaining to the Collateral available to MLBFS at a place designated by
MLBFS which is reasonably  convenient to Grantor,  or may take possession of the
Collateral and the records  pertaining to the Collateral  without the use of any
judicial process and without any prior notice to Grantor.

(iv) Sale. MLBFS may sell any or all of the Collateral at public or private sale
upon such terms arid conditions as MLBFS may reasonably  deem proper,  and MLBFS
may purchase any Collateral at any such public sale, and the net proceeds of any
such public or private sale and all other amounts actually collected or received
by MLBFS pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection,  collection and
sale of the Collateral, will be applied to the payment of the Obligations,  with
any remaining  proceeds paid to Grantor or whoever else may be entitled thereto,
and with Customer and each guarantor of Customer's obligations remaining jointly
and severally liable for any amount remaining unpaid after such application.

(v) Delivery of Cash,  Checks,  Etc. MLBFS may require Grantor to forthwith upon
receipt,  transmit and deliver to MLBFS in the form received,  all cash, checks,
drafts and other instruments for the payment of money (property endorsed,  where
required, so that such items may be collected by MLBFS) which may be received by
Grantor at any time in full or partial  payment of any  Collateral,  and require
that  Grantor not  commingle  any such items which may be so received by Grantor
with any other of its funds or property but instead hold them separate and apart
and in trust for MLBFS until delivery is made to MLBFS.

                                      -5-
<PAGE>
(vi)  Notification of Account Debtors.  MLBFS may notify any Account Debtor that
its Account or Chattel  Paper has been assigned to MLBFS and direct such Account
Debtor to make payment directly to MLBFS of all amounts due or becoming due with
respect to such  Account or Chattel  Paper,  and MLBFS may  enforce  payment and
collect, by legal proceedings or otherwise, such Account or Chattel Paper.

(vii)  Control of  Collateral.  MLBFS may  otherwise  take control in any lawful
manner of any cash or non-cash items of payment or proceeds of Collateral and of
any rejected,  returned, stopped to transit or repossessed goods included in the
Collateral and endorse Grantor name on any item of payment on or proceeds of the
Collateral,   and,  in  connection  therewith,   MLBFS  may  notify  the  postal
authorities  to change the address for delivery of mail  addressed to Grantor to
such address as MLBFS may designate.

(b) Set-Off.  MLBFS shall have the further right upon the  occurrence and during
the continuance of an Event of Default to set-off,  appropriate and apply toward
payment of any of the  Obligations,  in such order of  application  as MLBFS may
from time to time and at any time elect, any cash, credits, deposits,  accounts,
financial  assets,  investment  property,  securities  and any other property of
Grantor  which is in  transit  to or in the  possession,  custody  or control of
MLBFS,  MLPF&S or any agent,  bailee,  or affiliate of MLBFS or MLPF&S.  Grantor
hereby collaterally  assigns and grants to MLBFS a security interest in all such
property as additional Collateral.

(c) Power of Attorney.  Effective upon the occurrence and during the continuance
of an  Event  of  Default,  Grantor  hereby  irrevocably  appoints  MLBFS as its
attorney-in-fact, with full power of substitution, in its place and stead and in
its name or in the name of MLBFS, to from time to time in MLBFS' sole discretion
take any action and to execute any instrument  which MLBFS may deem necessary or
advisable to  accomplish  the  purposes of this  Agreement,  including,  but not
limited  to, to  receive,  endorse  and  collect  all  checks,  drafts and other
instruments  for the  payment of money made  payable to Grantor  included in the
Collateral.

(d)  Remedies are  Severable  and  Cumulative.  All rights and remedies of MLBFS
herein are  severable  and  cumulative  and in addition to all other  rights and
remedies  available at law or in equity,  and any one or more of such rights and
remedies may be exercised  simultaneously  or successively.  Any notice required
under this  Agreement or under  applicable  law shall be deemed  reasonably  and
properly  given to Grantor if given at the  address and by any of the methods of
giving notice set forth in this Agreement at least 5 Business Days before taking
any action specified in such notice.

(e) Notices.  To the fullest extent  permitted by applicable law, Grantor hereby
irrevocably  waives and releases MLBFS of and from any and all  liabilities  and
penalties for failure of MLBFS to comply with any statutory or other requirement
imposed upon MLBFS relating to notices of safe,  holding of sale or reporting of
any sale, and Grantor waives all rights of redemption or reinstatement  from any
such sale.  MLBFS  shall have the right to postpone or adjourn any sale or other
disposition  of  Collateral  at any  time  without  giving  notice  of any  such
postponed or adjourned  date In the event MLBFS seeks to take  possession of any
or all of the Collateral by court process, Grantor further irrevocably waives to
the  fullest  extent  permitted  by law any  bonds and any  surety  or  security
relating thereto required by any statute, court rule or otherwise as an incident
to such  possession,  and any demand for possession prior to the commencement of
any suit or action.

8. MISCELLANEOUS

(a)  Non-Waiver.  No  failure  or delay on the part of MLBFS in  exercising  any
right,  power or remedy  pursuant to this  Agreement  shall  operate as a waiver
thereof,  and no single or partial  exercise of any such right,  power or remedy
shall preclude any other or further exercise there, or the exercise of any other
right,  power or remedy.  Neither any waiver of any provision of this Agreement,
nor any consent to any departure by Grantor therefrom, shall be effective unless
the same shall be in writing and signed by MLBFS. Any waiver of any provision of
this  Agreement  and any consent to any  departure  by Grantor from the terms of
this  Agreement  shall be effective  only in the  specific  instance and for the
specific purpose for which given. Except as otherwise expressly provided herein,
no notice to or demand on Grantor shall in any case entitle Grantor to any other
or further notice or demand in similar or other circumstances.

(b) Communications.  All notices and other communications  required or permitted
hereunder shall be in writing, and shall be either delivered personally,  mailed
by postage  prepaid  certified mail or sent by express  overnight  courier or by
facsimile.  Such notices and  communications  shall be deemed to be given on the
date  of  personal  delivery,  facsimile  transmission  or  actual  delivery  of
certified  mail,  or one  Business  Day after  delivery to an express  overnight
courier.  Unless otherwise specified in a notice sent or delivered in accordance
with the terms  hereof,  notices and other  communications  in writing  shall be
given to the  parties  hereto  at their  respective  addresses  set forth at the
beginning of this Agreement, and, in the case of facsimile transmission,  to the
parties at their respective regular facsimile telephone number.

(c) Costs,  Expenses and Taxes. Grantor shall pay or reimburse MLBFS upon demand
for (i) all Uniform Commercial Code filing and search fees and expenses incurred
by MLBFS in connection  with the  verification,  perfection or  preservation  of
MLBFS' rights  hereunder or in the Collateral,  (i) any and all stamp,  transfer
and other taxes and fees payable a determined to be payable in  connection  with
the  execution,  delivery  and/or  recording  of this  Agreement,  and (iii) all
reasonable  fees and  out-of-pocket  expenses  (including,  but not  limited to,
reasonable fees and expenses of outside counsel) incurred by MLBFS in connection
with the  enforcement  of this  Agreement  or the  protection  of MLBFS'  rights
hereunder,  excluding,  however,  salaries and expenses of MLBFS' employees. The
obligations  of Grantor under this  paragraph  shall  survive the  expiration or
termination of this Agreement and the discharge of the other Obligations.

(d) Right to Perform  Obligations.  If Grantor shall fail to do any act or thing
which it has  covenanted  to do under this  Agreement or any  representation  or
warranty on the part of Grantor  contained in this Agreement  shall be breached,
MLBFS may, in its sole discretion,  after 5 Business Days written notice is sent
to Grantor (or such lesser notice,  including no notice,  as is reasonable under
the  circumstances),  do the  same or  cause  it to be done or  remedy  any such
breach,  and may  expend  its funds  for such  purpose.  Any and all  reasonable
amounts so expended by MLBFS shall be repayable to MLBFS by Grantor upon demand,
with interest at the highest  "Interest Rate" under the Loan Agreement under the
Loan  Agreement,  or the highest  interest rate  permitted by law,  whichever is
less,  during the period  from and  including  the date funds are so expended by
MLBFS to the date of repayment, and any such amounts due

                                       -5-
<PAGE>
and owing MLBFS shall be additional  Obligations.  The payment or performance by
MLBFS of any of Grantor's  obligations  hereunder  shall not relieve  Grantor of
said  obligations or of the  consequences of having failed to pay or perform the
same, and shall not waive or be deemed a cure of any Default.

(e) Further Assurances. Grantor agrees to do such further acts and things and to
execute  and  deliver  to MLBFS  such  additional  agreements,  instruments  and
documents as MLBFS may  reasonably  require or deem  advisable to effectuate the
purposes  of this  Agreement,  or to  establish,  perfect  and  maintain  MLBFS'
security interests and liens upon the Collateral, including, but not limited to,
(i) executing financing  statements or amendments thereto when and as reasonably
requested  by  MLBFS,  and  (ii) if in the  reasonable  judgment  of MLBFS it is
required by local law, causing the owners and/or mortgagees of the real property
on which any  Collateral  may be located to execute and deliver to MLBFS waivers
or subordinations reasonably satisfactory to MLBFS with respect to any rights in
such Collateral.

(f)  Binding  Effect.  This  Agreement  shall be binding  upon  Grantor  and its
successors  and  assigns,  and  shall  inure to the  benefit  of  MLBFS  and its
successors and assigns.

(g) Headings.  Captions and section and paragraph headings in this Agreement are
inserted   only  as  a  matter  of   convenience,   and  shall  not  affect  the
interpretation hereof.

(h) Governing Law. This Agreement  shall be governed in all respects by the laws
of the State of Illinois.

(i)  Severability  of  Provisions.  Whenever  possible,  each  provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law.  Any  provision  of  this  Agreement  which  is  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability  without invalidating
the  remaining  provisions  of this  Agreement  or  affecting  the  validity  or
enforceability of such provision in any other jurisdiction.

(j) Term. This Agreement shall become  effective upon acceptance by MLBFS,  and,
subject to the terms  hereof,  shall  continue in effect so long  thereafter  as
either MLBFS shall be committed to advance funds or extend credit to Customer or
there shall be any Obligations outstanding.

(k)  Counterparts.  This  Agreement may be executed in one or more  counterparts
which, when taken together, constitute one and the same agreement.

(l)  Jurisdiction;  Waiver.  GRANTOR  ACKNOWLEDGES  THAT THIS AGREEMENT IS BEING
ACCEPTED BY MLBFS IN PARTIAL  CONSIDERATION OF MLBFS'.  RIGHT AND OPTION, IN ITS
SOLE DISCRETION, TO ENFORCE THIS AGREEMENT IN EITHER THE STATE OF ILLINOIS OR IN
ANY OTHER  JURISDICTION  WHERE GRANTOR OR ANY COLLATERAL FOR THE OBLIGATIONS MAY
BE LOCATED.  GRANTOR  IRREVOCABLY SUBMITS ITSELF TO JURISDICTION IN THE STATE OF
ILLINOIS AND VENUE IN ANY STATE OR FEDERAL  COURT IN THE COUNTY OF COOK FOR SUCH
PURPOSES, AND GRANTOR WAIVES ANY AND ALL RIGHTS TO CONTEST SAID JURISDICTION AND
VENUE AND THE  CONVENIENCE  OF ANY SUCH FORUM,  AND ANY AND ALL RIGHTS TO REMOVE
SUCH ACTION FROM STATE TO FEDERAL  COURT.  GRANTOR  FURTHER WAIVES ANY RIGHTS TO
COMMENCE ANY ACTION  AGAINST MLBFS IN ANY  JURISDICTION  EXCEPT IN THE COUNTY OF
COOK AND STATE OF ILLINOIS.  MLBFS AND GRANTOR HEREBY EACH  EXPRESSLY  WAIVE ANY
AND ALL  RIGHTS TO A TRIAL BY JURY IN ANY  ACTION,  PROCEEDING  OR  COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES  AGAINST  THE OTHER  PARTY WITH  RESPECT TO ANY
MATTER  RELATING  TO,  ARISING  OUT OF OR IN ANY WAY  CONNECTED  WITH  THE  LOAN
AGREEMENT,  THIS AGREEMENT AND/OR ANY OF THE TRANSACTIONS  WHICH ARE THE SUBJECT
MATTER OF THE LOAN AGREEMENT OR THIS AGREEMENT.  GRANTOR FURTHER WANES THE RIGHT
TO BRING ANY NON-COMPULSORY COUNTERCLAIMS.

(m) Integration. THIS WRITTEN AGREEMENT CONSTITUTES THE ENTIRE UNDERSTANDING AND
REPRESENTS THE FULL AND FINAL AGREEMENT  BETWEEN THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF,  AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR WRITTEN
AGREEMENTS  OR PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. NO AMENDMENT OR
MODIFICATION OF THIS AGREEMENT SHALL BE EFFECTIVE  UNLESS IN A WRITING SIGNED BY
BOTH MLBFS AND GRANTOR.

IN WITNESS  WHEREOF,  this  Agreement  has been  executed as of the day and year
first above written

BUNDY AMERICAN CORPORATION

BY      /s/ Ken Blum, Jr.                         /s/ Mitra Ghahramanlou
  ------------------------------------------------------------------------------
          Signature (1)                                 Signature (2)

        Ken Blum, Jr.                            Mitra Ghahramanlou
  ------------------------------------------------------------------------------
          Printed Name                                  Printed Name

        President                                       CEO
  ------------------------------------------------------------------------------
          Title                                         Title

                                      -6-
<PAGE>
Accepted at Chicago, Illinois
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES INC.

By: /s/

                                      -7-
<PAGE>
                                    EXHIBIT A

ATTACHED TO AND HEREBY MADE A PART OF SECURITY  AGREEMENT N0. 7WD-07018  BETWEEN
MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC. AND BUNDY AMERICAN CORPORATION

Locations of Tangible Collateral: