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                                                                     EXHIBIT 4.4

                              AMENDED AND RESTATED
                               SECURITY AGREEMENT


         THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "Security
Agreement") is entered into as October 2, 1997 among IPC, INC., a Delaware
corporation (the "Borrower"), IVEX PACKAGING CORPORATION, a Delaware
corporation ("Holdings"), each of the Domestic Subsidiaries of the Borrower
(the Borrower's Domestic Subsidiaries, together with Holdings, individually a
"Guarantor" and collectively the "Guarantors"), BANKERS TRUST COMPANY, in its
capacity as documentation agent (in such capacity, the "Documentation Agent")
and NATIONSBANK, N.A., in its capacity as collateral agent (in such capacity,
the "Collateral Agent") for the lenders from time to time party to the Credit
Agreement described below (the "Lenders").


                                    RECITALS

         WHEREAS, the Borrower, the Guarantors, the lenders party thereto and
NationsBank, N.A., as agent entered into that certain Amended and Restated
Credit Agreement dated as of March 24, 1997 which provided a $205 million
credit facility to the Borrower (the "Prior Credit Agreement").  The credit
facility provided pursuant to the Prior Credit Agreement replaced and
refinanced the credit facilities provided to the Borrower by NationsBank, N.A.,
as agent and certain other lenders pursuant to a credit agreement dated as of
December 7, 1995.

         WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide and the Lenders have agreed to provide a new amended and restated
senior secured credit facility to replace and refinance the credit facility
provided pursuant to the Prior Credit Agreement.  Specifically, the Borrower
and the Guarantors have requested that, among other things, the new amended and
restated senior secured credit facility (i) provide up to $475 million of
indebtedness to the Borrower and (ii) extend the final maturity of the credit
facilities provided under the Prior Credit Agreement.

         WHEREAS, the Prior Credit Agreement has been amended and restated
pursuant to that certain Amended and Restated Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Borrower, the Guarantors, the Lenders,
the Documentation Agent and the Collateral Agent, in its capacity as
administrative agent.

         WHEREAS, the Lenders have required that the Borrower and the
Guarantors (the Guarantors together with the Borrower, individually an
"Obligor", and collectively the "Obligors") secure or resecure, as applicable,
their respective obligations under the Credit Agreement and the other Credit
Documents in accordance with the terms of this Security Agreement.


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         NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

         1.      Definitions.

                 (a)      Unless otherwise defined herein, capitalized terms
         used herein shall have the meanings ascribed to such terms in the
         Credit Agreement.  All terms used in this Security Agreement that are
         defined in the Uniform Commercial Code in effect in the State of New
         York (the "UCC") and which are not otherwise defined herein shall have
         the meanings set forth therein.  For purposes of this Security
         Agreement, the term "Lender" shall include any Affiliate of any Lender
         which has entered into a Hedging Agreement with the Borrower.

                 (b)      In addition, the following terms shall have the
         following meanings:

                          "Copyright Licenses":  any written agreement, naming
                 any Obligor as licensor, granting any right under any
                 Copyright including, without limitation, any thereof referred
                 to in Schedule 6.19 to the Credit Agreement.

                          "Copyrights":  (a) all copyrights in all works
                 subject to copyright protection pursuant to Title 17 of the
                 United States Code or applicable copyright legislation in any
                 other country, now existing or hereafter created or acquired,
                 all registrations and recordings thereof, and all applications
                 in connection therewith, whether in the United States
                 Copyright Office or in any similar office or agency of the
                 United States, any State thereof or any other country or any
                 political subdivision thereof, or otherwise, including,
                 without limitation, any thereof referred to in Schedule 6.19
                 to the Credit Agreement, (b) all renewals thereof including,
                 without limitation, any thereof referred to in Schedule 6.19
                 to the Credit Agreement and (c) all actions for infringement
                 concerning the foregoing.

                          "Excluded Equipment":  all de-inking equipment (not
                 to exceed a maximum aggregate value of $6,000,000) purchased
                 from Milnor Corporation for use at the Detroit, Michigan
                 facility of IPMC, Inc.

                          "Material Intellectual Property":  means all
                 Copyrights, Copyright Licenses, Patents, Patent Licenses,
                 Trademarks and Trademark Licenses in which the failure by a
                 Credit Party to maintain such Copyright, Copyright License,
                 Patent, Patent License, Trademark and Trademark License would
                 have a Material Adverse Effect.

                          "Patent License":  all agreements, whether written or
                 oral, providing for the grant by or to an Obligor of any right
                 to manufacture, use or sell any invention covered by a Patent,
                 including, without limitation, any thereof referred to in
                 Schedule 6.19 to the Credit Agreement.


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                          "Patents":  (a) all letters patent of the United
                 States or any other country, and all reissues and extensions
                 thereof, including, without limitation, any thereof referred
                 to in Schedule 6.19 to the Credit Agreement, (b) all
                 applications for letters patent of the United States or any
                 other country and all divisions, continuations and
                 continuations-in-part thereof, including, without limitation,
                 any thereof referred to in Schedule 6.19 to the Credit
                 Agreement and (c) all actions for infringement concerning the
                 foregoing, including the right to sue for and to recover and
                 retain all damages and profits arising from past
                 infringements.

                          "Trademark License":  means any agreement, written or
                 oral, providing for the grant by or to an Obligor of any right
                 to use any Trademark, including, without limitation, any
                 thereof referred to in Schedule 6.19 to the Credit Agreement.

                          "Trademarks":  (a) all trademarks, trade names,
                 corporate names, company names, business names, fictitious
                 business names, trade styles, service marks, logos and other
                 source or business identifiers, and the goodwill associated
                 therewith, now existing or hereafter adopted or acquired, all
                 registrations and recordings thereof, and all applications in
                 connection therewith, whether in the United States Patent and
                 Trademark Office or in any similar office or agency of the
                 United States, any State thereof or any other country or any
                 political subdivision thereof, or otherwise, including,
                 without limitation, any thereof referred to in Schedule 6.19
                 to the Credit Agreement, (b) all renewals thereof including,
                 without limitation, any thereof referred to in Schedule 6.19
                 to the Credit Agreement and (c) all actions for infringement
                 concerning the foregoing, including the right to sue for and
                 to recover and retain all damages and profits arising from
                 past infringements.

         2.      Grant of Security Interest in the Collateral.  To secure the
prompt payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations (as defined in Section 3
hereof), each Obligor hereby grants to the Collateral Agent, for the benefit of
the Lenders, a continuing security interest in (and, as applicable,
acknowledges and reaffirms any prior security interest granted to the
Collateral Agent, for the benefit of the Lenders), and a right to set off
against, any and all right, title and interest of such Obligor in and to the
following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the "Collateral"):

                 (a)      All equipment, including, without limitation, all
         vehicles, rolling stock, machinery, tools, furniture, furnishings,
         office equipment and trade fixtures, but excluding any computer
         equipment in which ABB Credit has a first priority security interest
         as of the date hereof; provided, however that no security interest
         shall exist in the Excluded Equipment until such time as the Michigan
         Department of Natural Resources shall have released its security
         interest in the same;

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                 (b)      All accounts and receivables and all goods
         represented by or securing accounts and receivables, including,
         without limitation, all rents and tenant payments, if any; provided,
         that such security interest will be released as necessary and
         appropriate if, and to the extent that, a Receivables Transaction
         occurs;

                 (c)      All inventory, including, without limitation, all raw
         materials, all work in process and all goods held by an Obligor for
         sale or lease;

                 (d)      All contract rights, including, without limitation,
         all rights under management agreements, tax sharing agreements and
         lease agreements and all rights to payment of money, tax refunds and
         insurance proceeds, but excluding any contract (other than those
         contracts with respect to any Leasehold Mortgaged Property) identified
         on Schedule 5(e) hereto;

                 (e)      All other general intangibles;

                 (f)      All instruments, documents, chattel paper,
         securities, policies and certificates of insurance, deposits, cash or
         other goods;

                 (g)      All books, records, ledger cards, files,
         correspondence, computer software, tapes, disks and related data
         processing software (owned by an Obligor or in which an Obligor has an
         interest) that at any time evidence or contain information relating to
         any Collateral or are otherwise necessary or helpful in the collection
         thereof or realization thereupon;

                 (h)      All Copyrights, Copyright Licenses, Patents, Patent
         Licenses, Trademarks and Trademark Licenses;

                 (i)      All other personal property of any kind or type
         whatsoever owned by an Obligor;

                 (j)      All accessions and additions to, and substitutions
         and replacements of, any and all of the foregoing, whether now
         existing or hereafter arising; and

                 (k)      All proceeds and products of the foregoing and all
         insurance relating to the foregoing collateral and all proceeds
         thereof (including, without limitation, insurance proceeds payable on
         account of business interruption), whether now existing or hereafter
         arising.

         Notwithstanding anything in this Security Agreement to the contrary,
with respect to each item of Collateral constituting an agreement, license,
permit or other instrument of any Obligor, such item shall be subject to the
security interest created hereby only to the extent that the granting of such
security interest does not, under the terms of such agreement, license, permit
or other instrument, or as provided by law, cause any default under or
termination of such agreement, license, permit or other instrument or the loss
of any material right of such Obligor


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thereunder; provided, however, that in no event shall the foregoing be
construed to exclude from the security interest created by this Security
Agreement, proceeds or products of any such agreement, license, permit or other
instrument of such Obligor or any accounts receivable or the right to payments
due or become due such Obligor under any such agreement or other instrument.

         The Obligors and the Collateral Agent, on behalf of the Lenders,
hereby acknowledge and agree that (i) the Collateral shall exclude the Newton
Property until such time as any Obligor shall obtain a fee interest in the
Newton Property and (ii) the security interest created hereby in the Collateral
is not to be construed as an assignment of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks or Trademark Licenses.

         3.      Security for Obligations.  The security interest created
hereby in the Collateral constitutes continuing collateral security for all of
the following, whether now existing or hereafter incurred (the "Secured
Obligations"):

                 (a)      In the case of the Borrower, the prompt performance
         and observance by the Borrower of all obligations of the Borrower
         under the Credit Agreement, the Notes, this Security Agreement and the
         other Credit Documents to which the Borrower is a party;

                 (b)      In the case of the Guarantors, the prompt performance
         and observance by such Guarantor of all obligations of such Guarantor
         under the Credit Agreement, this Security Agreement and the other
         Credit Documents to which such Guarantor is a party, including,
         without limitation, its guaranty obligations arising under Section 4
         of the Credit Agreement; and

                 (c)      Subject to Section 25 hereof, all other indebtedness,
         liabilities and obligations of any kind or nature owing from any
         Obligor to any Lender or the Collateral Agent in connection with (i)
         this Security Agreement or any other Credit Document, whether now
         existing or hereafter arising, due or to become due, direct or
         indirect, absolute or contingent, and howsoever evidenced, held or
         acquired, together with any and all modifications, extensions,
         renewals and/or substitutions of any of the foregoing, (ii) collecting
         and enforcing the Credit Party Obligations and (iii) liabilities
         arising under Hedging Agreements entered into pursuant to the Credit
         Agreement.

         4.      Provisions Relating to Accounts Receivable.

                 (a)      Anything herein to the contrary notwithstanding, each
         of the Obligors shall remain liable under each of the accounts
         receivable to observe and perform all the conditions and obligations
         to be observed and performed by it thereunder, all in accordance with
         the terms of any agreement giving rise to each such account
         receivable.  Neither the Collateral Agent nor any Lender shall have
         any obligation or liability under any account receivable (or any
         agreement giving rise thereto) by reason of or arising out of this
         Security Agreement or the receipt by the Collateral Agent or any
         Lender of any payment relating to

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         such account receivable pursuant hereto, nor shall the Collateral
         Agent or any Lender be obligated in any manner to perform any of the
         obligations of an Obligor under or pursuant to any account receivable
         (or any agreement giving rise thereto), to make any payment, to make
         any inquiry as to the nature or the sufficiency of any payment
         received by it or as to the sufficiency of any performance by any
         party under any account receivable (or any agreement giving rise
         thereto), to present or file any claim, to take any action to enforce
         any performance or to collect the payment of any amounts which may
         have been assigned to it or to which it may be entitled at any time or
         times; provided, however, that the Collateral Agent agrees to execute
         all documents reasonably necessary to enable the Obligors to collect
         upon any accounts receivable.

                 (b)      Once during each calendar year or at any time after
         the occurrence and during the continuation of an Event of Default, the
         Collateral Agent shall have the right, but not the obligation, to make
         test verifications of the accounts receivable in any manner and
         through any medium that it reasonably considers advisable, and the
         Obligors shall furnish all such assistance and information as the
         Collateral Agent may require in connection with such test
         verifications.  At any time and from time to time, upon the Collateral
         Agent's request, the Obligors shall cause independent public
         accountants or others satisfactory to the Collateral Agent to furnish
         (once each calendar year at the expense of the Obligors and at all
         other times at the expense of the Lenders) to the Collateral Agent
         reports showing reconciliations, aging and test verifications of, and
         trial balances for, the accounts receivable.  After the occurrence and
         during the continuance of an Event of Default, the Collateral Agent in
         its own name or in the name of others may communicate with account
         debtors on the accounts receivable to verify with them to the
         Collateral Agent's satisfaction the existence, amount and terms of any
         accounts receivable.

         5.      Representations and Warranties. Each Obligor hereby represents
and warrants to the Collateral Agent, for the benefit of the Lenders:

                 (a)      Chief Executive Office; Books & Records.  As of the
         Closing Date, each Obligor's chief executive office and chief place of
         business is (and for the prior four months have been) located at the
         locations set forth on Schedule 6.22(c) to the Credit Agreement, and
         each Obligor keeps its books and records at such locations.

                 (b)      Location of Collateral.  As of the Closing Date, the
         location of all tangible property included in the Collateral owned by
         each Obligor is as shown on Schedule 6.22(b) to the Credit Agreement;
         provided, however that the Obligors, in the aggregate, may have up to
         $10,000,000 (determined on the basis of Obligors' costs) of inventory
         held by customers pursuant to consignment arrangements or held in
         third party warehouses.

                 (c)      Ownership.  Each Obligor is the legal and beneficial
         owner of its Collateral and has the right to pledge, sell, assign or
         transfer the same (excluding any Collateral which is non-assignable by
         its terms).  As of the Closing Date, each Obligor's legal name is as
         shown in this Security Agreement and no Obligor has in the past four


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<PAGE>   7
         months changed its name, been party to a merger, consolidation or
         other change in structure or used any tradename except as set forth in
         Schedule 5(c) attached hereto.

                 (d)      Security Interest/Priority.  This Security Agreement
         creates a valid security interest in favor of the Collateral Agent,
         for the benefit of the Lenders, in the Collateral (excluding any
         Collateral which is non-assignable by its terms) of such Obligor and,
         when properly perfected by filing, recordation or registration, shall
         constitute a valid perfected security interest in such Collateral, to
         the extent such security can be perfected by filing under the UCC or
         other applicable personal property security legislation, free and
         clear of all Liens except for Permitted Liens.

                 (e)      Contracts; Agreements.  Except as provided in
         Schedule 5(e) attached hereto, as of the Closing Date, the Obligors
         have no material contracts or agreements which are non-assignable by
         their terms or which prevent the granting of a security interest
         therein.

                 (f)      Receivables.  (i) Each receivable of the Obligors and
         the papers and documents relating thereto are genuine and in all
         material respects what they purport to be, (ii) in the case of each
         receivable which is an account receivable, each receivable arises out
         of (A) a bona fide sale of goods sold and delivered by such Obligor
         (or is in the process of being delivered) or (B) services theretofore
         actually rendered by such Obligor to, the account debtor named
         therein, (iii) no receivable (excluding inter-company receivables) of
         an Obligor is evidenced by any instrument or chattel paper valued in
         excess of $100,000, unless such instrument or chattel paper has been
         theretofore endorsed over and delivered to the Collateral Agent except
         as otherwise provided in Section 6(c) below and (iv) no surety bond
         was required or given in connection with any receivables of an Obligor
         or the contracts or purchase orders out of which they arose.

                 (g)      Inventory.  As of the Closing Date, except as
         permitted under Section 5(b) hereof, no inventory is held by an
         Obligor pursuant to consignment, sale or return, sale on approval or
         similar arrangement.

                 (h)      Copyrights, Patents and Trademarks.

                          (i)     Schedule 6.19 to the Credit Agreement
                 includes all Material Intellectual Property which is the
                 subject of a registration or application and all material
                 Trademark Licenses, Copyright Licenses and Patent Licenses
                 owned by the Obligors in their own names as of the date
                 hereof.

                          (ii)    Except as set forth in Schedule 6.19 to the
                 Credit Agreement, to the best of each Obligor's knowledge,
                 each Copyright, Copyright License, Patent, Patent License,
                 Trademark and Trademark License of such Obligor included in
                 the Material Intellectual Property is valid, subsisting,
                 unexpired, enforceable and has not been abandoned.


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                          (iii)    Except as set forth in Schedule 6.19 to the
                 Credit Agreement, none of the Copyrights, Patents or
                 Trademarks included in the Material Intellectual Property
                 owned by the Obligor is the subject of any licensing or
                 franchise agreement.

                          (iv)    No holding, decision or judgment has been
                 rendered by any Governmental Authority which would be
                 reasonably likely to limit, cancel or question the validity of
                 any Material Intellectual Property.

                          (v)     No action or proceeding is pending seeking to
                 limit, cancel or question the validity of any Material
                 Intellectual Property, which, if adversely determined, would
                 be reasonably likely to have a Material Adverse Effect.

                          (vi)    All applications pertaining to the Material
                 Intellectual Property of each Obligor have been duly and
                 properly filed, and all registrations or letters pertaining to
                 such Material Intellectual Property have been duly and
                 properly filed and issued.

                          (vii)   Except as permitted under the Credit
                 Agreement, no Obligor has made any assignment or agreement in
                 conflict with the security interest in the Material
                 Intellectual Property of each Obligor hereunder.

         6.      Covenants.  Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding (other than any obligations with respect
to the indemnities set forth in the Credit Documents which shall survive the
termination of the Credit Documents) and until all of the Commitments shall
have been terminated, such Obligor shall:

                 (a)      Other Liens.  Defend the Collateral against the
         claims and demands of all other parties claiming an interest therein,
         keep the Collateral free from all Liens, except for Permitted Liens
         and Liens arising pursuant to consignment arrangements permitted under
         Sections 5(b) and 5(g) hereto, and not sell, exchange, transfer,
         assign, lease or otherwise dispose of the Collateral or any interest
         therein, except as permitted under the Credit Agreement.

                 (b)      Preservation of Collateral.  Keep the Collateral in
         good order, condition and repair in all material respects and not use
         the Collateral in violation of the provisions of this Security
         Agreement or any other agreement relating to the Collateral or any
         policy insuring the Collateral or any applicable statute, law, bylaw,
         rule, regulation or ordinance, except as permitted under the Credit
         Agreement.

                 (c)      Instruments/Chattel Paper.  Deliver to the Collateral
         Agent all instruments and chattel paper valued in excess of $100,000
         which represents or relates to the Collateral other than (i)
         instruments evidencing debt obligations from one Credit Party to
         another Credit Party and (ii) instruments evidencing debt obligations
         from employees of a


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<PAGE>   9
         Credit Party to a Credit Party if such debt was incurred as a result
         of tax obligations attributed from the owning of stock options.

                 (d)      Change in Location/Change of Name.  Not, without
         providing 30 days prior written notice to the Collateral Agent and
         without filing such further financing statements or amendments to any
         previously filed financing statements as the Collateral Agent may
         require; provided that the Collateral Agent shall promptly provide
         information to the Obligors regarding financing statements and
         amendments to be required after receipt of such notice, (i) change the
         location of its chief executive office and chief place of business (as
         well as its books and records) from the locations set forth on
         Schedule 6.22(c) to the Credit Agreement, (ii) change the location of
         its Collateral from the locations set forth for such Obligor on
         Schedule 6.22(b) of the Credit Agreement, except as otherwise
         permitted by Section 5(b) hereof or as set forth in the Credit
         Agreement, or (iii) change its name, be party to a merger,
         consolidation or other change in structure or use any tradename other
         than as set forth on Schedule 5(c) attached hereto.

                 (e)      Inspection.  Upon reasonable notice, and during
         reasonable hours, at all times allow the Collateral Agent or its
         representatives to visit and inspect the Collateral as set forth in
         Section 7.12 of the Credit Agreement.

                 (f)      Inventory.  Not change the location of the Collateral
         from that set forth on Schedule 6.22(b) of the Credit Agreement
         (unless proper notice is given as required by Section 6(d) above) or
         subject any inventory to consignment arrangements; provided that
         inventory, up to an aggregate amount of $10,000,000, may be held by
         customers pursuant to consignment arrangements or held in third party
         warehouses.

                 (g)      Contracts; Agreements.  Not enter into any material
         contracts or agreements which are non-assignable to the Collateral
         Agent or the Lenders by their terms or which prevent the granting of a
         security interest to the Collateral Agent or the Lenders.

                 (h)      Perfection of Security Interest.  Execute and deliver
         to the Collateral Agent such agreements, assignments or instruments
         (including affidavits, notices, reaffirmations and amendments and
         restatements of existing documents, as the Collateral Agent may
         reasonably request) and do all such other things as the Collateral
         Agent may reasonably deem necessary or appropriate (i) to assure to
         the Collateral Agent its security interests hereunder, including, but
         not limited to, (A) such financing statements (including renewal
         statements) or amendments thereof or supplements thereto or other
         instruments as the Collateral Agent may from time to time reasonably
         request in order to perfect and maintain the security interests
         granted hereunder in accordance with the UCC, (B) with regard to
         Copyrights that would constitute Material Intellectual Property, a
         Notice of Grant of Security Interest in such Copyrights for filing
         with the United States Copyright Office a form satisfactory to the
         Collateral Agent (C) with regard to Patents that would constitute
         Material Intellectual Property, a Notice of Grant of Security Interest
         in such Patents for filing with the United States Patent and Trademark
         Office in a form


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<PAGE>   10
         satisfactory to the Collateral Agent, and (D) with regard to
         Trademarks that would constitute Material Intellectual Property, a
         Notice of Grant of Security Interest in such Trademarks for filing
         with the United States Patent and Trademark Office in a form
         satisfactory to the Collateral Agent (ii) to consummate the
         transactions contemplated hereby and (iii) to otherwise protect and
         assure the Collateral Agent of its rights and interests hereunder.  To
         that end, each Obligor agrees that the Collateral Agent may file one
         or more financing statements disclosing the Collateral Agent's
         security interest in any or all of the Collateral of such Obligor
         without, to the extent permitted by law, such Obligor's signature
         thereon; provided that the Collateral Agent will provide a notice to
         the appropriate Obligor of any of the foregoing within 10 days of the
         execution, delivery and filing, if any, thereof and will promptly
         thereafter provide copies of any of the foregoing executed and
         delivered by the Collateral Agent, including, if received by the
         Collateral Agent, acknowledgment copies of any financing statements as
         filed. Furthermore, each Obligor hereby irrevocably makes, constitutes
         and appoints the Collateral Agent, its nominee or any other person
         whom the Collateral Agent may designate, as such Obligor's attorney in
         fact with full power and for the limited purpose to sign in the name
         of such Obligor any such financing statements, or amendments and
         supplements to financing statements, renewal financing statements,
         notices or any similar documents which in the Collateral Agent's
         reasonable discretion would be necessary or appropriate in order to
         perfect and maintain perfection of the security interests granted
         hereunder. The power of attorney granted hereunder is coupled with an
         interest and is and shall remain irrevocable so long as the Credit
         Agreement is in effect (other than any obligations with respect to the
         indemnities and the representations and warranties set forth in the
         Credit Documents which shall survive the termination of the Credit
         Documents) or any amounts payable thereunder, under any other Credit
         Document or Hedging Agreement, or under any Letter of Credit shall
         remain outstanding, and until all of the Commitments thereunder shall
         have terminated. Each Obligor hereby agrees that a carbon,
         photographic or other reproduction of this Security Agreement or any
         such financing statement is sufficient for filing as a financing
         statement by the Collateral Agent without notice thereof to such
         Obligor wherever the Collateral Agent may in its sole discretion
         desire to file the same.  In the event for any reason the law of any
         jurisdiction other than New York becomes or is applicable to the
         Collateral of any Obligor or any part thereof, or to any of the
         Secured Obligations, such Obligor agrees to execute and deliver all
         such instruments and to do all such other things as the Collateral
         Agent in its sole discretion reasonably deems necessary or appropriate
         to preserve, protect and enforce the security interests of the
         Collateral Agent under the law of such other jurisdiction (and, if an
         Obligor shall fail to do so promptly upon the request of the
         Collateral Agent, then the Collateral Agent may execute any and all
         such requested documents on behalf of such Obligor pursuant to the
         power of attorney granted hereinabove).  If any Collateral is in the
         possession or control of an Obligor's agents and the Collateral Agent
         so requests, such Obligor agrees to notify such agents in writing of
         the Collateral Agent's security interest therein and, upon occurrence
         and continuance of an Event of Default, upon the Collateral Agent's
         request, instruct them to hold all such Collateral for the Lenders'
         account and subject to the Collateral Agent's instructions.


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<PAGE>   11
Each Obligor agrees to mark its books and records to reflect the security
interest of the Collateral Agent in the Collateral.

         (i)     Treatment of Receivables.  Not grant or extend the time for
payment of any receivable, or compromise or settle any receivable for less than
the full amount thereof, or release any person or property, in whole or in
part, from payment thereof, or allow any credit or discount thereon, other than
as normal and customary in the ordinary course of an Obligor's business
(including the acceptance of certain notes by the Borrower in its sales of
polystyrene sheets and films).

         (j)     Covenants Relating to Copyrights.

                          (i)     Except as otherwise permitted by the Credit
                 Agreement, employ any Copyright that would constitute Material
                 Intellectual Property with such notice of copyright as may be
                 required by law to secure copyright protection.

                          (ii)    Except as otherwise permitted by the Credit
                 Agreement, not do any act or knowingly omit to do any act
                 whereby any Copyright that would constitute Material
                 Intellectual Property may become invalidated and (A) not do
                 any act, or knowingly omit to do any act, whereby any such
                 Copyright may become injected into the public domain; (B)
                 notify the Collateral Agent immediately if it knows, or has
                 reason to know, that any such Copyright may become injected
                 into the public domain or of any adverse determination or
                 development (including, without limitation, the institution
                 of, or any such determination or development in, any court or
                 tribunal in the United States or any other country), other
                 than a non-final determination of any such court, regarding an
                 Obligor's ownership of any such Copyright or its validity; (C)
                 take all necessary steps as it shall deem appropriate under
                 the circumstances to maintain and pursue each application (and
                 to use its reasonable efforts to obtain the relevant
                 registration) and to maintain each registration of each such
                 Copyright owned by an Obligor including, without limitation,
                 filing of applications for renewal where necessary; and (D)
                 promptly notify the Collateral Agent of any material
                 infringement of any such Copyright of an Obligor of which it
                 becomes aware and take such actions as it shall reasonably
                 deem appropriate under the circumstances to protect such
                 Copyright, including, where appropriate, the bringing of suit
                 for infringement, seeking injunctive relief and seeking to
                 recover any and all damages for such infringement.

                          (iii)   Except as otherwise permitted by the Credit
                 Agreement, not make any assignment or agreement in conflict
                 with the security interest in any Copyright that would
                 constitute Material Intellectual Property of each Obligor
                 hereunder.



                                    -11-

<PAGE>   12
         (k)     Covenants Relating to Patents and Trademarks.

                          (i)     (A) Except as otherwise permitted by the
                 Credit Agreement, continue to use each Trademark that would
                 constitute Material Intellectual Property in such a manner as
                 to maintain such Trademark in full force free from any claim
                 of abandonment for non-use, (B) use its best efforts to
                 control the quality of products and services offered under
                 such Trademark by licensees of the Trademark, (C) employ such
                 Trademark with the appropriate notice of registration or
                 notice of trademark, as applicable, sufficient to protect such
                 Trademark, (D) not adopt or use any mark which is confusingly
                 similar or a colorable imitation of such Trademark unless the
                 Collateral Agent, for the ratable benefit of the Lenders,
                 shall obtain a perfected security interest in such mark
                 pursuant to this Security Agreement, and (E) except as
                 otherwise permitted by the Credit Agreement, not (and not
                 permit any licensee or sublicensee thereof to) do any act or
                 knowingly omit to do any act whereby any such Trademark may
                 become invalidated.

                          (ii)    Except as otherwise permitted by the Credit
                 Agreement, not do any act, or knowingly omit to do any act,
                 whereby any Patent that would constitute Material Intellectual
                 Property may become abandoned or dedicated.

                          (iii)   Notify the Collateral Agent and the Lenders
                 immediately if it knows, or has reason to know, that any
                 application or registration relating to any Patent or
                 Trademark that would constitute Material Intellectual Property
                 may become abandoned or dedicated, or of any adverse
                 determination or development (including, without limitation,
                 the institution of, or any such determination or development
                 in, any proceeding in the United States Patent and Trademark
                 Office or any court or tribunal in any country), other than
                 non-final determinations of any such office or court,
                 regarding an Obligor's ownership of any such Patent or
                 Trademark or its right to register the same or to keep and
                 maintain the same.

                          (iv)    Take all reasonable and necessary steps, as
                 it shall deem appropriate under the circumstances, including,
                 without limitation, in any proceeding before the United States
                 Patent and Trademark Office, or any similar office or agency
                 in any other country or any political subdivision thereof, to
                 maintain and pursue each application (and use its best efforts
                 to obtain the relevant registration) and to maintain each
                 registration of the Patents and Trademarks that would
                 constitute Material Intellectual Property, including, without
                 limitation, filing of applications for renewal, affidavits of
                 use and affidavits of incontestability.

                          (v)     Promptly notify the Collateral Agent and the
                 Lenders after it learns that any Patent or Trademark that
                 would constitute Material Intellectual Property included in
                 the Collateral is infringed, misappropriated or diluted by a
                 third party, and take such actions as it shall reasonably deem
                 appropriate under the circumstances to protect such Patent or
                 Trademark, including, where appropriate, the bringing of suit
                 for infringement, misappropriation or dilution, seeking


                                    -12-

<PAGE>   13
                 injunctive relief where appropriate and seeking to recover any
                 and all damages for such infringement, misappropriation or
                 dilution.

                          (vi)    Except as otherwise permitted by the Credit
                 Agreement, not make any assignment or agreement in conflict
                 with the security interest in the Patents or Trademarks that
                 would constitute Material Intellectual Property of each
                 Obligor hereunder.

                 (l)      New Patents, Copyrights and Trademarks.  Whenever an
         Obligor, either by itself or through an agent, employee, licensee or
         designee, shall file an application for the registration of any
         Copyright, Patent or Trademark that would constitute Material
         Intellectual Property with the United States Patent and Trademark
         Office or any similar office or agency in any other country or any
         political subdivision thereof, an Obligor shall report such filing to
         the Collateral Agent and the Lenders within five Business Days after
         the last day of the fiscal quarter in which such filing occurs.  Upon
         request of the Collateral Agent, an Obligor shall promptly provide the
         Collateral Agent with (i) a listing of all such applications (together
         with a listing of the issuance of registrations or letters on present
         applications), which new applications and issued registrations or
         letters shall be subject to the terms and conditions hereunder, and
         (ii) (A) with respect to new registrations of Copyrights that would
         constitute Material Intellectual Property, a duly executed amendment
         or modification to the Notice of Security Interest in such Copyrights,
         (B) with respect to new Patents that would constitute Material
         Intellectual Property, a duly executed amendment or modification to
         the Notice of Security Interest in such Patents, (C) with respect to
         new applications or registrations of Trademarks that would constitute
         Material Intellectual Property, a duly executed amendment or
         modification to the Notice of Security Interest in such Trademarks or
         (D) such other duly executed documents as the Collateral Agent may
         request in a form acceptable to counsel for the Collateral Agent and
         suitable for recording to evidence the security interest in the
         Copyright, Patent or Trademark that would constitute Material
         Intellectual Property which is the subject of such new application or
         registration to the Collateral Agent as provided in Section 2 hereof,
         and subject to all the terms hereof; provided, however, that unless an
         Event of Default shall have occurred and be continuing, no special
         documents need be provided with respect to recording a security
         interest or assignment in Copyrights, Patents or Trademarks filed or
         registered in jurisdictions outside the United States.

                 (m)      Insurance.  Insure, repair and replace the Collateral
         of such Obligor as set forth in the Credit Agreement.  All insurance
         proceeds received in connection with the Collateral shall be subject
         to the security interest of the Collateral Agent hereunder.

         7.      Advances by Lenders.  On failure of any Obligor to perform any
of the covenants and agreements contained herein, the Collateral Agent may, at
its sole option and in its sole discretion, perform the same and in so doing
may expend such sums as the Collateral Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of
a Lien or

                                    -13-

<PAGE>   14
potential Lien, expenditures made in defending against any adverse claim and
all other expenditures which the Collateral Agent or the Lenders may make for
the protection of the security hereof or which may be compelled to make by
operation of law.  All such sums and amounts so expended shall be repayable by
the Obligors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are expended at the default rate
provided in Section 3.1(b) of the Credit Agreement for Revolving Loans that are
Base Rate Loans.  No such performance of any covenant or agreement by the
Collateral Agent or the Lenders on behalf of any Obligor, and no such advance
or expenditure therefor, shall relieve the Obligors of any default under the
terms of this Security Agreement, the other Credit Documents or any Hedging
Agreement.  The Lenders may make any payment hereby authorized in accordance
with any bill, statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP in effect from time to time.

         8.      Events of Default.

         The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an
"Event of Default").

         9.      Remedies.

                 (a)      General Remedies.  Upon the occurrence of an Event of
         Default and during continuation thereof, the Lenders shall have, in
         addition to the rights and remedies provided herein, in the Credit
         Documents, in the Hedging Agreements or by law (including, but not
         limited to, the rights and remedies set forth in the Uniform
         Commercial Code of the jurisdiction applicable to the affected
         Collateral), the rights and remedies of a secured party under the UCC
         to the extent permitted by law and further, the Collateral Agent may,
         with or without judicial process or the aid and assistance of others,
         (i) enter on any premises on which any of the Collateral may be
         located and, without resistance or interference by the Obligors, take
         possession of the Collateral, (ii)  dispose of any Collateral on any
         such premises, (iii) require the Obligors to assemble and make
         available to the Collateral Agent at the expense of the Obligors any
         Collateral at any place and time designated by the Collateral Agent
         which is reasonably convenient to both parties, (iv) remove any
         Collateral from any such premises for the purpose of effecting sale or
         other disposition thereof, and/or (v) without demand and without
         advertisement, notice, hearing or process of law, all of which each of
         the Obligors hereby waives to the fullest extent permitted by law, at
         any place and time or times, sell and deliver any or all Collateral
         held by or for it at public or private sale, by one or more contracts,
         in one or more parcels, for cash, upon credit or otherwise, at such
         prices and upon such terms as the Collateral Agent deems advisable, in
         its sole discretion (subject to any and all mandatory legal
         requirements).  In addition to all other sums due the Collateral Agent
         and the

                                    -14-

<PAGE>   15
         Lenders with respect to the Secured Obligations, the Obligors shall
         pay the Collateral Agent and each of the Lenders all reasonable
         documented costs and expenses incurred by the Collateral Agent or any
         such Lender, including, but not limited to, reasonable attorneys' fees
         and court costs, in obtaining or liquidating the Collateral, in
         enforcing payment of the Secured Obligations, or in the prosecution or
         defense of any action or proceeding by or against the Collateral Agent
         or the Lenders or the Obligors concerning any matter arising out of or
         connected with this Security Agreement, any Collateral or the Secured
         Obligations, including, without limitation, any of the foregoing
         arising in, arising under or related to a case under the Bankruptcy
         Code.  To the extent the rights of notice cannot be legally waived
         hereunder, each Obligor agrees that any requirement of reasonable
         notice shall be met if such notice is personally served on or mailed,
         postage prepaid, to the Borrower in accordance with the notice
         provisions of Section 11.1 of the Credit Agreement at least 10 days
         before the time of sale or other event giving rise to the requirement
         of such notice.  The Collateral Agent and the Lenders shall not be
         obligated to make any sale or other disposition of the Collateral
         regardless of notice having been given.  To the extent permitted by
         law, any Lender may be a purchaser at any such sale.  To the extent
         permitted by applicable law, each of the Obligors hereby waives all of
         its rights of redemption with respect to any such sale.  Subject to
         the provisions of applicable law, the Collateral Agent and the Lenders
         may postpone or cause the postponement of the sale of all or any
         portion of the Collateral by announcement at the time and place of
         such sale, and such sale may, without further notice, to the extent
         permitted by law, be made at the time and place to which the sale was
         postponed, or the Collateral Agent and the Lenders may further
         postpone such sale by announcement made at such time and place.

                 (b)      Remedies relating to Receivables.  Upon the
         occurrence of an Event of Default and during the continuation thereof,
         whether or not the Collateral Agent has exercised any or all of its
         rights and remedies hereunder, each Obligor will promptly upon written
         request of the Collateral Agent instruct all account debtors to remit
         all payments in respect of the receivables to a mailing location
         selected by the Collateral Agent.  In addition, upon the occurrence
         and during the continuance of an Event of Default, the Collateral
         Agent or its designee may notify any Obligor's customers and account
         debtors that the receivables of such Obligor have been assigned to the
         Collateral Agent or of the Collateral Agent's security interest
         therein, and may (either in its own name or in the name of an Obligor
         or both) demand, collect (including without limitation by way of a
         lockbox arrangement), receive, take receipt for, sell, sue for,
         compound, settle, compromise and give acquittance for any and all
         amounts due or to become due on receivables, and, in the Collateral
         Agent's discretion, file any claim or take any other action or
         proceeding to protect and realize upon the security interest of the
         Lenders in the receivables.  Each Obligor acknowledges and agrees that
         the proceeds of its receivables remitted to or on behalf of the
         Collateral Agent in accordance with the provisions hereof shall be
         solely for the Collateral Agent's own convenience and that such
         Obligor shall not have any right, title or interest in such accounts
         or in any such other amounts except as expressly provided herein.  The
         Collateral Agent and the Lenders shall have no liability or
         responsibility to any Obligor for acceptance of a check, draft or
         other order for payment of money bearing the legend "payment in full"
         or words of similar import or any

                                    -15-

<PAGE>   16
         other restrictive legend or endorsement or be responsible for
         determining the correctness of any remittance.  Each Obligor hereby
         agrees to indemnify the Collateral Agent and the Lenders from and
         against all liabilities, damages, losses, actions, claims, judgments,
         costs, expenses, charges and reasonable attorneys' fees suffered or
         incurred by the Collateral Agent or the Lenders (each, an "Indemnified
         Party") as a result of actions taken by the Collateral Agent in
         accordance with the foregoing except as relating to or arising out of
         the gross negligence or willful misconduct of an Indemnified Party or
         its officers, employees or agents.  In the case of any investigation,
         litigation or other proceeding, the foregoing indemnity shall be
         effective whether or not such investigation, litigation or proceeding
         is brought by an Obligor, its directors, shareholders or creditors or
         an Indemnified Party or any other Person.  The foregoing indemnity
         shall survive the repayment of the Secured Obligations and the
         termination of the Commitments.

                 (c)      Access.  In addition to the rights and remedies
         hereunder, upon the occurrence of an Event of Default and during the
         continuance thereof, the Collateral Agent shall have the right to
         enter and remain upon the various premises of the Obligors without
         cost or charge to the Collateral Agent, and use the same, together
         with materials, supplies, books and records of the Obligors for the
         purpose of collecting and liquidating the Collateral, or for preparing
         for sale and conducting the sale of the Collateral, whether by
         foreclosure, auction or otherwise.  In addition, upon the occurrence
         of an Event of Default and during the continuance thereof, the
         Collateral Agent may remove Collateral, or any part thereof, from such
         premises and/or any records with respect thereto, in order to
         effectively collect or liquidate such Collateral.

                 (d)      Nonexclusive Nature of Remedies.  Failure by the
         Collateral Agent or the Lenders to exercise any right, remedy or
         option under this Security Agreement, any other Credit Document or any
         Hedging Agreement or as provided by law, or any delay by the
         Collateral Agent or the Lenders in exercising the same, shall not
         operate as a waiver of any such right, remedy or option.  No waiver
         hereunder shall be effective unless it is in writing, signed by the
         party against whom such waiver is sought to be enforced and then only
         to the extent specifically stated, which in the case of the Collateral
         Agent or the Lenders shall only be granted as provided herein.  To the
         extent permitted by law, neither the Collateral Agent, the Lenders,
         nor any party acting as attorney for the Collateral Agent or the
         Lenders, shall be liable hereunder for any acts or omissions or for
         any error of judgment or mistake of fact or law other than their gross
         negligence or willful misconduct.  The rights and remedies of the
         Collateral Agent and the Lenders under this Security Agreement shall
         be cumulative and not exclusive of any other right or remedy which the
         Collateral Agent or the Lenders may have.


                                    -16-

<PAGE>   17
                 (e)      Retention of Collateral.  The Collateral Agent may,
         after complying with Section 9-505(2) of the UCC or otherwise
         complying with the requirements of applicable law of the relevant
         jurisdiction, to the extent the Collateral Agent is in possession of
         any of the Collateral, retain the Collateral in satisfaction of the
         Secured Obligations.  Unless and until the Collateral Agent shall have
         provided such notices, however, the Collateral Agent shall not be
         deemed to have retained any Collateral in satisfaction of any Secured
         Obligations for any reason.

                 (f)      Deficiency.  In the event that the proceeds of any
         sale, collection or realization are insufficient to pay all amounts to
         which the Collateral Agent or the Lenders are legally entitled, the
         Obligors shall be jointly and severally liable for the deficiency,
         together with interest thereon at the default rate specified in
         Section 3.1(b) of the Credit Agreement for Revolving Loans that are
         Base Rate Loans, together with the costs of collection and the
         reasonable fees of any attorneys employed by the Collateral Agent to
         collect such deficiency.  Any surplus remaining after the full payment
         and satisfaction of the Secured Obligations shall be returned to the
         Obligors or to whomsoever a court of competent jurisdiction shall
         determine to be entitled thereto.

         10.     Rights of the Collateral Agent.

                 (a)      Power of Attorney.  In addition to other powers of
         attorney contained herein, each Obligor hereby designates and appoints
         the Collateral Agent, on behalf of the Lenders, and each of its
         designees or agents, as attorney-in-fact of such Obligor, irrevocably
         and with power of substitution, with authority to take any or all of
         the following actions upon the occurrence and during the continuance
         of an Event of Default:

                          (i)      to demand, collect, settle, compromise,
                 adjust and give discharges and releases concerning the
                 Collateral, all as the Collateral Agent may reasonably
                 determine;

                          (ii)     to commence and prosecute any actions at any
                 court for the purposes of collecting any Collateral and
                 enforcing any other right in respect thereof;

                          (iii)    to defend, settle or compromise any action
                 brought and, in connection therewith, give such discharge or
                 release as the Collateral Agent may deem reasonably
                 appropriate;

                          (iv)     receive, open and dispose of mail addressed
                 to an Obligor and endorse checks, notes, drafts, acceptances,
                 money orders, bills of lading, warehouse receipts or other
                 instruments or documents evidencing payment, shipment or
                 storage of the goods giving rise to the Collateral of such
                 Obligor on behalf of and in the name of such Obligor, or
                 securing, or relating to such Collateral;


                                    -17-

<PAGE>   18
                          (v)      sell, assign, transfer, make any agreement
                 in respect of, or otherwise deal with or exercise rights in
                 respect of, any Collateral or the goods or services which have
                 given rise thereto, as fully and completely as though the
                 Collateral Agent were the absolute owner thereof for all
                 purposes;

                          (vi)     adjust and settle claims under any insurance
                 policy relating thereto;

                          (vii)    execute and deliver all assignments,
                 conveyances, statements, financing statements, renewal
                 financing statements, security agreements, affidavits, notices
                 and other agreements, instruments and documents that the
                 Collateral Agent may reasonably determine necessary in order
                 to perfect and maintain the security interests and liens
                 granted in this Security Agreement and in order to fully
                 consummate all of the transactions contemplated therein;

                          (viii) institute any foreclosure proceedings that the
                 Collateral Agent may deem appropriate; and

                          (ix)    do and perform all such other acts and things
                 as the Collateral Agent may reasonably deem to be necessary,
                 proper or convenient in connection with the Collateral.

         This power of attorney is a power coupled with an interest and shall
         be irrevocable (i) for so long as any of the Secured Obligations
         remain outstanding, and (ii) until all of the Commitments shall have
         been terminated.  The Collateral Agent shall be under no duty to
         exercise or withhold the exercise of any of the rights, powers,
         privileges and options expressly or implicitly granted to the
         Collateral Agent in this Security Agreement, and shall not be liable
         for any failure to do so or any delay in doing so.  The Collateral
         Agent shall not be liable for any act or omission or for any error of
         judgment or any mistake of fact or law in its individual capacity or
         its capacity as attorney-in-fact except acts or omissions resulting
         from its gross negligence or willful misconduct.  This power of
         attorney is conferred on the Collateral Agent solely to protect,
         preserve and realize upon its security interest in the Collateral.

                 (b)      Assignment by the Collateral Agent.  The Collateral
         Agent may in accordance with the terms of the Credit Agreement be
         replaced and the successor Collateral Agent shall be entitled to all
         of the rights and remedies of the Collateral Agent under this Security
         Agreement in relation thereto.

                 (c)      The Collateral Agent's Duty of Care.  Other than the
         exercise of reasonable care to assure the safe custody of the
         Collateral while being held by the Collateral Agent hereunder, the
         Collateral Agent shall have no duty or liability to preserve rights
         pertaining thereto, it being understood and agreed that the Obligors
         shall be responsible for preservation of all rights in the Collateral,
         and the Collateral Agent shall be relieved of all responsibility for
         the Collateral upon surrendering it or tendering the surrender of it
         to the Obligors.  The Collateral Agent shall be deemed to have


                                     -18-

<PAGE>   19
         exercised reasonable care in the custody and preservation of the
         Collateral in its possession if the Collateral is accorded treatment
         substantially equal to that which the Collateral Agent accords its own
         property, which shall be no less than the treatment employed by a
         reasonable and prudent agent in the industry, it being understood that
         the Collateral Agent shall not have responsibility for taking any
         necessary steps to preserve rights against any parties with respect to
         any of the Collateral.

         11.     Application of Proceeds.  Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Collateral
Agent or any of the Lenders in cash or its equivalent, will be applied in
reduction of the Secured Obligations in the order set forth in Section 9.3 of
the Credit Agreement, and each Obligor irrevocably waives the right to direct
the application of such payments and proceeds and acknowledges and agrees that
the Collateral Agent shall have the continuing and exclusive right to apply and
reapply any and all such payments and proceeds in the Collateral Agent's sole
discretion, notwithstanding any entry to the contrary upon any of its books and
records.

         12.     Costs of Counsel.  At all times hereafter, the Obligors agree
to promptly pay upon demand any and all reasonable documented costs and
expenses of the Collateral Agent or the Lenders, (i) as required under Section
11.5 of the Credit Agreement and (ii) as necessary to protect the Collateral or
to exercise any rights or remedies under this Security Agreement with respect
to any Collateral.  All of the foregoing costs and expenses shall constitute
Secured Obligations hereunder.

         13.     Continuing Agreement.

                 (a)      This Security Agreement shall be a continuing
         agreement in every respect and shall remain in full force and effect
         so long as the Secured Obligations are outstanding, any amounts
         payable thereunder or under any other Credit Document shall remain
         outstanding, and until all of the Commitments thereunder shall have
         terminated (other than any obligations with respect to the indemnities
         set forth in the Credit Documents which shall survive the termination
         of the Credit Documents).  Upon such payment and termination, this
         Security Agreement shall be automatically terminated and, the
         Collateral Agent and the Lenders shall, upon the request and at the
         expense of the Obligors, forthwith release all of its liens and
         security interests hereunder and shall execute and deliver all UCC
         termination statements and/or other documents reasonably requested by
         the Obligors evidencing such termination.  Notwithstanding the
         foregoing all releases and indemnities provided hereunder shall
         survive termination of this Security Agreement.

                 (b)      This Security Agreement shall continue to be
         effective or be automatically reinstated, as the case may be, if at
         any time payment, in whole or in part, of any of the Secured
         Obligations is rescinded or must otherwise be restored or returned by
         the Collateral Agent or any Lender as a preference, fraudulent
         conveyance or otherwise under any bankruptcy, insolvency or similar
         law, all as though such payment had not been


                                     -19-

<PAGE>   20
         made; provided that in the event payment of all or any part of the
         Secured Obligations is rescinded or must be restored or returned, all
         reasonable costs and expenses (including without limitation any
         reasonable legal fees and disbursements) incurred by the Collateral
         Agent or any Lender in defending and enforcing such reinstatement
         shall be deemed to be included as a part of the Secured Obligations.

         14.     Amendments; Waivers; Modifications.  This Security Agreement
and the provisions hereof may not be amended, waived, modified, changed,
discharged or terminated except as set forth in Section 11.6 of the Credit
Agreement.

         15.     Successors in Interest.  This Security Agreement shall create
a continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent and the Lenders hereunder, to the benefit
of the Collateral Agent and the Lenders and their successors and permitted
assigns; provided, however, that none of the Obligors may assign its rights or
delegate its duties hereunder without the prior written consent of each Lender
or the Required Lenders, as required by the Credit Agreement.  To the fullest
extent permitted by law, each Obligor hereby releases the Collateral Agent and
each Lender, and its successors and assigns, from any liability for any act or
omission relating to this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct of the
Collateral Agent, or such Lender, or its officers, employees or agents.

         16.     Notices.  All notices required or permitted to be given under
this Security Agreement shall be in conformance with Section 11.1 of the Credit
Agreement.

         17.     Counterparts.  This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument.  It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.

         18.     Headings.  The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning
or construction of any provision of this Security Agreement.


                                     -20-

<PAGE>   21
         19.     Governing Law; Submission to Jurisdiction; Venue.

                 (a)      THIS SECURITY AGREEMENT AND THE RIGHTS AND
         OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
         CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
         NEW YORK.  Any legal action or proceeding with respect to this
         Security Agreement may be brought in the courts of the State of North
         Carolina, or of the United States for the Western District of North
         Carolina, and, by execution and delivery of this Security Agreement,
         each Obligor hereby irrevocably accepts for itself and in respect of
         its property, generally and unconditionally, the jurisdiction of such
         courts.  Each Obligor further irrevocably consents to the service of
         process out of any of the aforementioned courts in any such action or
         proceeding by the mailing of copies thereof by registered or certified
         mail, postage prepaid, to it at the address for notices pursuant to
         Section 11.1 of the Credit Agreement, such service to become effective
         30 days after such mailing. Nothing herein shall affect the right of
         the Collateral Agent to serve process in any other manner permitted by
         law or to commence legal proceedings or to otherwise proceed against
         any Obligor in any other jurisdiction.

                 (b)      Each Obligor hereby irrevocably waives any objection
         which it may now or hereafter have to the laying of venue of any of
         the aforesaid actions or proceedings arising out of or in connection
         with this Security Agreement brought in the courts referred to in
         subsection (a) hereof and hereby further irrevocably waives and agrees
         not to plead or claim in any such court that any such action or
         proceeding brought in any such court has been brought in an
         inconvenient forum.

         20.     WAIVER OF JURY TRIAL.  TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

         21.     Severability.  If any provision of this Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

         22.     Entirety.  This Security Agreement, the other Credit Documents
and the Hedging Agreements represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and understandings, oral or
written, if any, including any commitment letters or correspondence relating to
the Credit Documents and the Hedging Agreements or the transactions
contemplated herein and therein.

         23.     Survival.  All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and

                                     -21-

<PAGE>   22
the Hedging Agreements, the delivery of the Notes and the making of the Loans
and the issuance of the Letters of Credit under the Credit Agreement.

         24.     Other Security.  To the extent that any of the Secured
Obligations are now or hereafter secured by property other than the Collateral
(including, without limitation, real property and securities owned by an
Obligor), or by a guarantee, endorsement or property of any other Person, then
to the extent the Collateral Agent and the Lenders shall have the right to
proceed against such other property, guarantee or endorsement upon the
occurrence and continuance of any Event of Default to the extent the applicable
security agreement, guarantee or endorsement or other applicable document so
provides, and the Collateral Agent and the Lenders have the right, in their
sole discretion, to determine which rights, security, liens, security interests
or remedies the Collateral Agent and the Lenders shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without in any
way modifying or affecting any of them or any of the Collateral Agent's and the
Lenders' rights or the Secured Obligations under this Security Agreement, under
any other Credit Document or under any Hedging Agreement.

         25.     Joint and Several Obligations of Obligors.

                 (a)      Subject to clause (c), each of the Obligors is
         accepting joint and several liability hereunder in consideration of
         the financial accommodation to be provided by the Lenders under the
         Credit Agreement, for the mutual benefit, directly and indirectly, of
         each of the Obligors and in consideration of the undertakings of each
         of the Obligors to accept joint and several liability for the
         obligations of each of them.

                 (b)      Subject to clause (c), each of the Obligors jointly
         and severally hereby irrevocably and unconditionally accepts, not
         merely as a surety but also as a co-debtor, joint and several
         liability with the other Obligors with respect to the payment and
         performance of all of the Secured Obligations arising under this
         Security Agreement and the other Credit Documents, it being the
         intention of the parties hereto that all the Obligations shall be the
         joint and several obligations of each of the Obligors without
         preferences or distinction among them.

                 (c)      Notwithstanding any provision to the contrary
         contained herein or in any other of the Credit Documents,

                          (i)     to the extent the obligations of a Guarantor
                 shall be adjudicated to be invalid or unenforceable for any
                 reason (including, without limitation, because of any
                 applicable state or federal law relating to fraudulent
                 conveyances or transfers) then the obligations of each
                 Guarantor hereunder shall be limited to the maximum amount
                 that is permissible under applicable law (whether federal or
                 state and including, without limitation, the Bankruptcy Code),
                 and

                          (ii)    the obligations of Holdings hereunder and
                 under the Credit Documents, in the aggregate, shall be limited
                 to an amount equal to $146,298,000,


                                     -22-

<PAGE>   23
                 unless at least ninety percent (90%) of the Holdings
                 Debentures have been repurchased, in which case no such
                 limitation shall apply.

         26.     Rights of Required Lenders.  All rights of the Collateral
Agent hereunder, if not exercised by the Collateral Agent, must be exercised by
the Collateral Agent if directed by the Required Lenders.



                                     -23-

<PAGE>   24
         Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.

                                           
BORROWER:                         IPC, INC.
--------                          Delaware corporation

                                  By:                                        
                                     ----------------------------------------
                                  Name:                                      
                                       --------------------------------------
                                  Title:                                     
                                        -------------------------------------





                             [signatures continue]






<PAGE>   25

GUARANTORS:               IVEX PACKAGING CORPORATION,
----------                a Delaware corporation     
                                                        

                          By:                                                 
                             ----------------------------------------         
                          Name:                                               
                               --------------------------------------         
                          Title:                                              
                                -------------------------------------         
                                                                              
                          IVEX PAPER MILL CORPORATION,                        
                          a Delaware corporation                              
                                                                              
                          IPMC HOLDING CORPORATION,                           
                          a Delaware corporation                              
                                                                              
                          IPMC, INC.,                                         
                          a Delaware corporation                              
                                                                              
                          VALLEY EXPRESS LINES, INC.,                         
                          a Delaware corporation                              
                                                                              
                          KAMA OF ILLINOIS CORPORATION,                       
                          a Delaware corporation                              
                                                                              
                          PACKAGING PRODUCTS, INC.,                           
                          a Delaware corporation                              
                                                                              
                          CFI INDUSTRIES, INC.,                               
                          a Delaware corporation                              
                                                                              
                          PLASTOFILM INDUSTRIES, INC.,                        
                          a Delaware corporation                              
                                                                              
                          CFI RECYCLING, INC.,                                
                          a Delaware corporation                              
                                                                              
                          TRIO PRODUCTS, INC.,                                
                          a Delaware corporation                              
                                                                              
                          By:                                                 
                             ----------------------------------------         
                          Name:                                               
                               --------------------------------------         
                          Title:                            of each of        
                                ----------------------------                  
                                   the above named Guarantors                 






<PAGE>   26
           Accepted and agreed to as of the date first above written.


                                  NATIONSBANK, N.A., as Collateral Agent

                                  By:                                        
                                     ----------------------------------------
                                  Name:                                      
                                       --------------------------------------
                                  Title:                                     
                                        -------------------------------------