<PAGE>
 
                             Amended and Restated
                              Security Agreement
                      (Accounts, Inventory and Equipment)
                                        

CoreStates


     THIS AGREEMENT is made this 30th day of May, 1997, between CoreStates Bank,
N.A.*, a national banking association (the "Bank"), and The JPM Company, a
Pennsylvania corporation (the "Debtor").

1.  DEFINITIONS.  As used herein and in any separate agreement between the Bank
and the Debtor in connection with this Agreement:

    (a)  "Account" means any right to payment for goods sold or leased or for
services rendered which is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance including all rights to payment
under a charter or other contract involving the use or hire of a vessel and all
rights incident to such charter or contract.

    (b)  "Qualified Account" means any Account meeting all the following
specifications: (i) it is lawfully owned by the Debtor and subject to no lien,
security interest or prior assignment, and the Debtor has the right of
assignment thereof and the power to grant a security interest therein; (ii) it
is a valid and enforceable Account, representing the undisputed indebtedness of
an Account Debtor to the Debtor; (iii) it is not subject to any defense, set-
off, counter-claim, credit, allowance or adjustment; (iv) no substantial part of
any goods, the sale of which has given rise to the Account, has been returned,
rejected, lost or damaged; (v) if it arises from the sale of goods by the
Debtor, such sale was an absolute sale and not on consignment or on approval or
on a sale or return basis nor subject to any other repurchase or return
agreement, and such goods have been shipped to the Account Debtor; (vi) if it
arises from the performance of services, such services have actually been
performed; (vii) it arose in the ordinary course of the Debtor's business;
(viii) no notice of the bankruptcy, receivership, reorganization, insolvency, or
financial embarrassment of the Account Debtor has been received; (ix) the
Account Debtor is not a subsidiary or affiliate of the Debtor, does not control
the Debtor, and is not under the control of or under common control with the
Debtor; and (x) the Account meets such other specifications and requirements
which may from time to time be established by the Bank., including the
definition  of a "qualified accounts receivable" in Section 3 of the Credit
Agreement.

    (c)  "Account Debtor" means the Person who is obligated on an Account or
General Intangible.


--------------------
*CoreStates Bank, N.A. also conducts business as Philadelphia National Bank, as 
CoreStates First Pennsylvania Bank and as CoreStates Hamilton Bank.
<PAGE>
 
     (d)  "Chattel Paper" means a writing or writings which evidence both a
monetary obligation and a security interest in or a lease of specific goods.

     (e)  "Collateral" means (i) all of the Debtor's Inventory now owned or
hereafter acquired; (ii) all of the Debtor's Documents of Title now owned or
hereafter acquired; (iii) all of the Debtor's Accounts now existing or hereafter
arising; (iv) all of the Debtor's Farm Products now existing or hereafter
arising; (v) all of the Debtor's General Intangibles, Chattel Paper and
Instruments now existing or hereafter acquired or arising; (vi) all guarantees
of the Debtor's existing and future Accounts and General Intangibles and all
other security held by the Debtor for the payment or satisfaction thereof; (vii)
the goods or the services, the sale or lease or performance of which gave rise
to any Account or General Intangible of the Debtor, including any returned
goods; (viii) all of the Debtor's Equipment now owned or hereafter acquired;
(ix) any balance or share belonging to the Debtor of any deposit, agency or
other account with any bank and any other amounts which may be owing from time
to time by any bank to the Debtor; (x) all property of any nature whatsoever of
the Debtor now or hereafter in the possession of or assigned or hypothecated to
the Bank for any purpose; and (xi) all Proceeds of all of the foregoing,
including all Proceeds of other Proceeds.

     (f)  "Credit Agreement"  means that Commitment Letter between Debtor and
the Bank dated May 28, 1997, as may be  supplemented, amended, modified,
substituted or restated from time to time.

     (g)  "Debtor" means the Person who executes this Agreement as such. The
Debtor may be either a borrower from the Bank or a guarantor of the indebtedness
of another to the Bank, and in either case is the Person obligated to pay the
Liabilities secured hereby.

     (h)  "Document of Title" means a bill of lading, dock warrant, dock
receipt, warehouse receipt or order for the delivery of goods, and also any
other document which in the regular course of business or financing is treated
as adequately evidencing that the Person in possession of it is entitled to
receive, hold and dispose of the document and the goods it covers.

     (i)  "Farm Products" means crops or livestock or supplies used or produced
in farming operations or products of crops or livestock in their unmanufactured
states (such as ginned cotton, woolclip, maple syrup, milk and eggs), if they
are in the possession of a Debtor engaged in raising, fattening, grazing or
other farming operations.

     (j)  "Equipment" means tangible personal property held by the Debtor for
use primarily in business and includes equipment, machinery, furniture,
fixtures, dies, tools, and all accessories and parts now or hereafter affixed
thereto.

     (k)  "General Intangibles" means all personal property of every kind and
description of Debtor other than goods, Accounts, Chattel Paper, Documents of
Title, Instruments and money, and includes without limitation choses in action,
books, records, customer lists, tax, insurance and other kinds of refunds,
patents, trademarks, copyrights, trade names, plans, licenses and other rights
in personal property.

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<PAGE>
 
     (l)  "Instrument" means a negotiable instrument or a security or any other
writing which evidences a right to the payment of money and is not itself a
security agreement or lease and is of a type which is, in ordinary course of
business, transferred by delivery with any necessary indorsement or assignment.

     (m)  "Inventory" means tangible personal property held by the Debtor for
sale or lease or to be furnished under contracts of service, tangible personal
property which the Debtor has so leased or furnished, and raw materials, work in
process and materials used, produced or consumed in Debtor's business, and shall
include tangible personal property returned to the Debtor by the purchaser
following a sale thereof by the Debtor and tangible personal property
represented by Documents of Title. All equipment, accessories and parts at any
time attached or added to items of Inventory or used in connection therewith
shall be deemed to be part of the Inventory.

     (n)  "Liabilities" means all existing and hereafter incurred or arising
indebtedness, obligations and liabilities of the Debtor to the Bank, whether
absolute or contingent, direct or indirect and out of whatever transactions
arising, and includes without limitation, the indebtedness under the Line of
Credit and the Note  (as these terms are defined in the Credit Agreement) and
all other matured and unmatured indebtedness, obligations and liabilities of the
Debtor under or in connection with existing and future loans and advances
evidenced by promissory notes or otherwise, letters of credit, acceptances, all
other extensions of credit, repurchase agreements, security agreements,
mortgages, overdrafts, foreign exchange contracts and all other contracts for
payment or performance, indemnities, and all indebtedness, obligations and
liabilities under any guaranty or surety agreement, or as co-maker or co-obligor
with any person for any of the foregoing, including without limitation all
interest, expenses, costs (including collection costs) and fees (including
reasonable attorney's fees and prepayment fees) incurred, arising or accruing
(whether prior or subsequent to the filing of any bankruptcy petition by or
against any Debtor) under or in connection with any of the foregoing, and
further including all such indebtedness, obligations and liabilities of the
Debtor (i) to others which the Bank may have obtained by assignment,
participation, subrogation, merger or otherwise, and (ii) to subsidiaries of the
Bank.

     (o)  "Person" means an individual, a corporation, a government or
governmental subdivision or agency or instrumentality, a business trust, an
estate, a trust, a partnership, a cooperative, an association, two or more
Persons having a joint or common interest, or any other legal or commercial
entity.

     (p)  "Proceeds" means whatever is received when Collateral is sold,
exchanged, collected or otherwise disposed of, including, without limitation,
insurance proceeds.

2.   SECURITY INTEREST IN COLLATERAL.  As Security for the payment of the
Liabilities the Debtor hereby assigns to the Bank and grants to the Bank a lien
upon and security interest in the Collateral. Without the written consent of the
Bank, the Debtor will not create, incur, assume or suffer to exist any other
liens or security interests in the Collateral.  Bank

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<PAGE>
 
expressly consents to those loans and security interests in the Collateral held
by other banks as set forth in the Credit Agreement.

3.  COLLECTION OF ACCOUNTS UPON DEFAULT.  Upon the occurrence and during the
continuation of a default hereunder and to the extent the Bank has not exercised
it rights to collect the Accounts directly from the Account Debtors,  the Debtor
shall deliver to the Bank within one day of the receipt thereof by the Debtor
all Proceeds in the form of cash, checks, drafts, notes and other remittances
received in payment of or on account of any of the Debtor's Accounts. Such
Proceeds shall be deposited in a special non-interest bearing bank account (the
"Cash Collateral Account") maintained with the Bank over which the Bank alone
shall have power of withdrawal. All Proceeds other than cash shall be deposited
in precisely the form in which received, except for the addition thereto of the
endorsement of the Debtor when necessary to permit collection of the items,
which endorsement the Debtor agrees to make. The Debtor will not commingle any
such Proceeds with any of the Debtor's other funds or property but will hold
them separate and apart from any other funds or property and upon an express
trust for the Bank until deposit thereof is made in the Cash Collateral Account.
At the Bank's discretion, the Bank will apply all or any part of the collected
Proceeds of Accounts on deposit in the Cash Collateral Account to the payment in
full or in part of such of the Liabilities and in such order as the Bank may
elect. In addition, the Bank shall have the right at any time, acting if it so
chooses in the Debtor's name, to collect the Debtor's Accounts itself, to sell,
assign, compromise discharge or extend the time for payment of any Account, to
institute legal action for the collection of any Account, and to do all acts and
things necessary or incidental thereto. The Debtor hereby ratifies all that the
Bank shall do by virtue hereof. The Bank may at any time, without notice to the
Debtor, notify any Account Debtor that the Account payable by such Account
Debtor has been assigned to the Bank and is to be paid directly to the Bank. At
the Bank's request the Debtor shall so notify Account Debtors and shall indicate
on all billings to Account Debtors that payments thereon are to be made to the
Bank. Without the written consent of the Bank, the Debtor shall not compromise,
discharge, extend the time for payment of or otherwise grant any indulgence or
allowance with respect to any Account.

4.  PROCESSING AND SALES OF INVENTORY.  So long as the Debtor is not in default
hereunder, the Debtor shall have the right, in the regular course of its
business, to process and sell its Inventory.

5.  OTHER AGREEMENTS OF DEBTOR.

    (a)  The Debtor shall keep complete and accurate books and records and make
all necessary entries therein to reflect the quantities, costs, values and
location of its Inventory and Equipment, and the transactions and facts giving
rise to its Accounts and General Intangibles and all payments, credits and
adjustments applicable thereto. The Debtor shall keep the Bank fully and
accurately informed as to the location of all such books and records pertaining
to the Collateral and shall permit the Bank's agents to have access to all such
books and records and any other records pertaining to the Debtor's business
which the Bank may request for the purpose of examining, auditing and copying
the same.  The Bank shall have the right to communicate with Account Debtors and
Debtor's accountant to the extent reasonably necessary to verify 

                                       4
<PAGE>
 
account balances and any information provided by the Debtor. The Bank's right to
audit, inspect, copy and access the Debtor's books and records pertaining to the
Collateral shall be enforceable at law by appropriate remedies at law or in
equity, and the Debtor consents to the entry of judicial orders or injunctions
enforcing such right without any notice to the Debtor or any opportunity to be
heard.

     (b)  In the event that any lien, assessment or tax liability against the
Debtor shall arise, whether or not entitled to priority over the security
interest of the Bank created hereby, the Debtor shall give prompt notice thereof
in writing to the Bank. The Bank shall have the right (but shall be under no
obligation) to pay any tax or other liability of the Debtor reasonably deemed by
the Bank to affect its interest. The Debtor shall repay to the Bank any sums
which the Bank shall have so paid, together with interest thereon at the rate
payable by the Debtor, at the time of payment by the Bank, with respect to the
Liabilities (or the highest such rate, if there be more than one), but in no
event less than six percent (6%) per annum and the Debtor's liability to the
Bank for such repayment with interest shall be included in the Liabilities. In
addition, the Bank shall be subrogated to the extent of the payment made by it
to all rights of the recipient of such payment against the assets of the Debtor.
The Debtor shall furnish to the Bank at such times as the Bank may require proof
reasonably satisfactory to the Bank of the making of payments or deposits
required by applicable law with respect to amounts withheld by the Debtor from
wages and salaries of employees and amounts contributed by the Debtor on account
of federal and other income or wage taxes and amounts due under the Federal
Insurance Contributions Act. With respect to its operations in the United States
of America, the Debtor represents, warrants and agrees that, in respect to all
employee pension or other benefit plans maintained by the Debtor or any of its
subsidiaries, the Debtor is in full compliance, and will continue to comply
fully, with the Employee Retirement Income Security Act of 1974, as amended and
all rules and regulations adopted thereunder or pursuant thereto. With respect
to its operations in the United States of America, the Debtor continuously
represents and warrants to the Bank that all Collateral consisting of goods has
been and will continue to be produced in compliance with the requirements of the
Fair Labor Standards Act, including Sections 206 and 207 thereof, and will
immediately notify Bank if Debtor has any reason to believe otherwise.

     (c)  If any of the Debtor's Accounts or General Intangibles arises out of a
contract with the United States or any department, agency or instrumentality
thereof and is in excess of $100,000, the Debtor will immediately notify the
Bank thereof in writing and execute any instruments and take any steps required
by the Bank in order that the security interest of the Bank hereunder in the
Debtor's General Intangibles under such contract and in all Accounts arising
thereunder and in the Proceeds thereof shall be perfected under the provisions
of the Federal Assignment of Claims Act.

     (d)  If, upon the occurrence of a default hereunder, any of the Debtor's
Accounts is or becomes evidenced by a promissory note, a trade acceptance or any
other instrument for the payment of money, the Debtor will promptly deliver such
instrument to the Bank appropriately endorsed to the Bank's order. Regardless of
the form of such endorsement, the Debtor hereby waives presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto.

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<PAGE>
 
     (e)  The Debtor will keep its Inventory and Equipment insured against such
casualties and in such amounts as the Bank shall reasonably require. All
insurance policies shall be written for the benefit of the Debtor as the
insured, and shall name the Bank as loss payee, and certificates evidencing such
insurance, in form and substance acceptable to the Bank, shall be delivered to
and held by the Bank. All such policies of insurance shall provide for at least
ten days' advance notice in writing to the Bank of any cancellation thereof, and
shall insure Bank notwithstanding the act or neglect to act of Debtor. If the
Debtor fails to pay the premiums on any such insurance, the Bank shall have the
right (but shall be under no obligation) to pay such premiums for the Debtor's
account. The Debtor shall repay to the Bank any sums which the Bank shall have
so paid, together with interest thereon at the rate payable by the Debtor, at
the time of payment by the Bank, with respect to the Liabilities (or the highest
such rate, if there be more than one), but in no event less than six percent
(6%) per annum, and the Debtor's liability to the Bank for such repayment with
interest shall be included in the Liabilities. The Debtor's rights to receive
payment of any return or unearned premiums and the proceeds of any such
insurance are included in the Accounts and General Intangibles which are hereby
subjected to a security interest.

     (f)  The Debtor will maintain the Equipment in good condition and repair,
and will pay the cost of repairs to or maintenance of the same and will not
permit anything to be done that may impair the value of the Equipment.

     (g)  Upon the occurrence, and during the continuance of a default
hereunder, the Bank shall have the right to take possession of any Inventory and
the Debtor hereby assigns to the Bank its right of stoppage in transit with
respect to any Inventory. All costs of transportation, packing, storage and
insurance of any Inventory which the Bank may take into its possession shall be
promptly repaid to the Bank by the Debtor, together with interest thereon at the
rate payable by the Debtor, at the time of payment by the Bank, with respect to
the Liabilities (or the highest such rate, if there be more than one), but in no
event less than six percent (6% ) per annum, and the Debtor's liability to the
Bank for such repayment with interest shall be included in the Liabilities. If
any of the Debtor's Inventory is or becomes represented by a Document of Title,
the Bank may require that such Document of Title be in such form as to permit
the Bank or anyone to whom the Bank may negotiate the same to obtain delivery of
the Inventory represented thereby, and that it be delivered into the possession
of the Bank.

     (h)  At such intervals as the Bank may reasonably require, the Debtor shall
submit to the Bank a schedule reflecting in form and detail satisfactory to the
Bank the quantities, cost and value of its Inventory and Equipment, and the
amounts of all its outstanding Accounts and the amount of the Accounts which are
Qualified Accounts and the value of all its General Intangibles. The Bank may
also require the Debtor to submit to the Bank copies of the invoices pertaining
to all or any of its Accounts and evidence of shipment of the Inventory the sale
or leasing of which have given rise to such Accounts.

     (i)  The Debtor shall promptly notify the Bank of any event causing
deterioration, loss or depreciation in value of any substantial portion of the
Debtor's Inventory or Equipment and the 

                                       6
<PAGE>
 
amount of such loss or depreciation. The Debtor shall permit the Bank's agents
to have access to its Inventory and Equipment from time to time, as requested by
the Bank, for purposes of examination, inspection, and appraisal thereof and
verification of the Debtor's records pertaining thereto. Upon the occurrence and
during the continuation of a default hereunder, the Debtor shall assemble the
Inventory and Equipment and make them available to the Bank at such place as may
be designated by the Bank which is reasonably convenient to both parties. At the
request of the Bank, the Debtor shall lease warehousing space in the Debtor's
own premises to the Bank for the purpose of taking any Inventory into the
custody of the Bank without removal thereof from such premises and will erect
such structures and post such signs as the Bank may require in order to place
such Inventory under the exclusive control of the Bank.

     (j)  The Debtor will promptly notify the Bank (i) of any material adverse
change in the Debtor's financial condition or in the financial condition of any
Account Debtor owing money to the Bank in excess of $150,000 or in the
collectibility of any of its Accounts in excess of $150,000, (ii) of all claims,
rejections, returns and adjustments which may result in a reduction of the
liability of any Account Debtor on an Account in excess of $150,000, and (iii)
of any Qualified Account which shall cease for any reason to meet the
specifications fixed hereby for Qualified Accounts and which is in excess of
$150,000.

     (k)  The Debtor warrants that the Debtor's chief executive office and all
of its offices where it keeps its records concerning the Collateral, all
locations at which it keeps its Inventory and Equipment and all locations at
which it maintains a place of business are listed in Section 18 hereof. Debtor
further warrants that Debtor has no plans for the removal of the Collateral to
any location not set forth in Section 18. The Debtor shall promptly notify the
Bank in writing of any change in the Debtor's name, chief executive office or
the location of the Debtor's records, of any change in the location of the
Collateral, of any change in the location of any place of business and of the
establishment of any new place of business. If any of the Collateral or any of
the Debtor's records concerning the Collateral are at any time to be located on
premises leased by the Debtor or on premises owned by the Debtor, subject to a
mortgage or other lien (other than mortgages and liens permitted under the
Credit Agreement), the Debtor shall obtain and deliver to the Bank, prior to the
delivery of any Collateral or records concerning the Collateral to said
premises, an agreement in form satisfactory to the Bank, waiving the landlord's
or mortgagee's or lienholder's rights to enforce any claim against the Debtor
for moneys due under the lease, mortgage or other lien by levy of distraint or
other similar proceedings against the Collateral or the Debtor's records
concerning the Collateral and assuring the Bank's ability to have access to the
Collateral and the Debtor's records concerning the Collateral in order to
exercise its rights hereunder to take possession thereof.

     (l)  The Debtor shall pay to the Bank on demand, with interest at the rate
payable by the Debtor, at the time of payment by the Bank, with respect to the
Liabilities (or the highest such rate, if there be more than one), but in no
event less than six percent (6%) per annum, any and all expenses (including
reasonable attorney's fees and legal expenses, filing fees, searches, and
termination costs), which may have been incurred by the Bank (i) to enforce
payment of any Account or to enforce any General Intangibles or to enforce any
of the Liabilities, whether as against an Account Debtor, the Debtor or any
guarantor or surety of any Account Debtor or of 

                                       7
<PAGE>
 
the Debtor; or (ii) in the enforcement, prosecution or defense of any action
growing out of or connected with the subject matter of this Agreement, the
Liabilities, the Collateral or any of the Bank's rights therein or thereto; or
(iii) in connection with the custody, preservation, use, operation, preparation
for sale or sale of any Collateral; or (iv) in connection with preparation and
completion of this Agreement and any and all related agreements and consummation
of the financing arrangements described herein and any modification or extension
hereof; or (v) with respect to the enforcement, protection or preservation from
time to time of the Bank's rights under this Agreement or with respect to the
Collateral. The Debtor's liability to the Bank for such repayment with interest
shall be included in the Liabilities and is secured by the Collateral.

     (m)  The Debtor shall provide the Bank with all financial statements or
other financial documents as the Bank may from time to time require. The Debtor
further covenants and agrees to execute from time to time any and all agreements
and documents (including financing statements) which the Bank may request in
order to perfect its lien on the Collateral and otherwise carry out the
provisions of this Agreement. The Debtor further authorizes the Bank to file a
carbon, photographic or other reproduction of this Agreement or a financing
statement previously filed under this Agreement as a financing statement in any
jurisdiction. If certificates of title are issued or outstanding with respect to
any of the Collateral, the Debtor will cause the security interest of the Bank
to be properly noted thereon and will promptly deliver such certificates to the
Bank.

     (n)  Except in the ordinary course of business and as limited immediately
hereafter, the Debtor shall not sell or otherwise dispose of its Inventory or
Equipment without the prior written consent of the Bank.  If the Debtor seeks to
sell or otherwise dispose of Equipment having a then current fair market value
of $50,000 or more (as mutually determined in good faith between the Bank and
the Debtor), and the Debtor does not replace that Equipment with Equipment that
(i) has a then current market value of equal or greater value and (ii) is
subject to no lien, encumbrance or security interest (including title retained
as security) other than in favor of the Bank, then the Debtor must obtain the
prior written consent of the Bank.

6.   ENVIRONMENTAL MATTERS.

     (a)  As used in this Agreement, the following terms shall have the
following meanings: (i) "Environmental Laws" means any and all applicable
federal, state and local environmental laws, rules and regulations whether now
existing or hereafter enacted together with all amendments, modifications and
supplements thereof; and (ii) "Hazardous Materials" means any contaminants,
hazardous substances, regulated substances, or hazardous wastes which may be the
subject of liability pursuant to any Environmental Law.

     (b)  The Debtor represents and warrants that, except as otherwise expressly
set forth in Section 11(a) of the Credit Agreement, no property owned or leased
by the Debtor or any subsidiary of the Debtor is in violation of any
Environmental Laws, no Hazardous Materials are present on said property and
neither the Debtor nor any subsidiary of the Debtor has been identified in any
litigation, administrative proceedings or investigation as a responsible party
for any liability under any Environmental Laws.

                                       8
<PAGE>
 
     (c) Except as otherwise expressly permitted in Section 11(a) of the Credit
Agreement, the Debtor shall not use, generate, treat, store, dispose of or
otherwise introduce, or permit any subsidiary to use, generate, treat, store,
dispose of or otherwise introduce, any Hazardous Materials into or on any
property owned or leased by the Debtor, and will not, and will not permit any
subsidiary to, cause, suffer, allow or permit anyone else to do so, except in an
environmentally safe manner through methods which have been approved by and meet
all of the standards of the federal Environmental Protection Agency and any
other federal, state or local agency with authority to enforce Environmental
Laws. The Debtor hereby agrees to indemnify, reimburse, defend and hold harmless
the Bank and its directors, officers, agents and employees ("Indemnified
Parties") for, from and against all demands, liabilities, damages, costs,
claims, suits, actions, legal or administrative proceedings, interest, losses,
expenses and reasonable attorney's fees (including any such fees and expenses
incurred in enforcing this indemnity) asserted against, imposed on or incurred
by any of the Indemnified Parties, directly or indirectly pursuant to or in
connection with the application of any Environmental Law, to acts or omissions
occurring at any time on or in connection with any property owned or leased by
the Debtor or any subsidiary of the Debtor or any business conducted thereon.

7.   DEFAULT.  With respect to Liabilities owing under the Credit Agreement, the
occurrence of an Automatic Termination Event shall represent a default
hereunder.  With respect to all other Liabilities, the Debtor shall be in
default hereunder upon the occurrence of any of the following events:

     (a)  The nonpayment when due of any amount payable on any of the
Liabilities by the Debtor or by any other person liable, either absolutely or
contingently, for payment, including endorsers, guarantors and sureties (each
such person is referred to as a "Obligor");

     (b)  If the Debtor or any Obligor has failed to observe or perform any
existing or future agreement of any nature whatsoever with the Bank (other than
those described in clause (a) above);

     (c)  If any representation, warranty, certificate, financial statement or
other information made or given by the Debtor or any Obligor to the Bank is
materially incorrect or misleading;

     (d)  If the Debtor or any Obligor shall become insolvent or make an
assignment for the benefit of creditors or if any petition shall be filed by or
against the Debtor or any Obligor under any bankruptcy or insolvency law which,
in the case of an involuntary petition only, is not dismissed within sixty (60)
days of filing;

     (e)  The entry of any judgment against the Debtor or any Obligor in excess
of $200,000 which remains unsatisfied for 15 days (unless and to the extent the
effect of the judgment is stayed by appeal, reconsideration or similar judicial
reasons) or the issuance of any attachment, tax lien, levy or garnishment
against any property of material value in which the Debtor or any Obligor has an
interest;

                                       9
<PAGE>
 
     (f)  If any attachment, levy, garnishment or similar legal process with
respect to liabilities  in excess of $200,000 is served upon the Bank as a
result of any claim against the Debtor or any Obligor or against any property of
the Debtor or any Obligor;

     (g)  The dissolution, merger, consolidation or change in control (as
control is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of
any Debtor which is a corporation or partnership, or the sale or transfer of any
substantial portion of any Debtor's assets, or if any agreement for such
dissolution, merger, or consolidation, change in control, sale or transfer is
entered into without the written consent of Bank;

     (h)  The death of any Debtor or Obligor who is a natural person;

     (i)  If the Bank determines reasonably and in good faith that an event has
occurred or a condition exists which has had, or is likely to have, a material
adverse effect on financial condition or creditworthiness of the Debtor or any
Obligor,

     (j)  If the Debtor or any Obligor shall fail to remit promptly when due to
the appropriate government agency or authorized depository, any amount collected
or withheld from any employee of the Debtor for payroll taxes, Social Security
payments or similar payroll deductions;

     (k)  If any Obligor shall attempt to terminate or disclaim such Obligor's
liability for the Liabilities;

     (l)  If the Bank shall reasonably and in good faith determine and notify
the Debtor that any collateral is insufficient as to quality or quantity;

     (m)  If the Debtor shall fail to pay when due any material indebtedness for
borrowed money other than to the Bank; or

     (n)  If the Debtor shall be notified of the failure of the Debtor or any
Obligor to provide such financial and other information promptly when reasonably
requested by the Bank and Debtor shall not have cured the failure within three
(3) business days from notice by Bank.

8.   ACCELERATION AND ENFORCEMENT RIGHTS.  Whenever the Debtor shall be in
default as aforesaid, in addition to and not in limitation of, any demand rights
of the Bank with respect to any Liabilities, (i) the Bank may declare the entire
unpaid amount of such of the Liabilities as are not then due and payable to
become immediately due and payable without notice to or demand on any Obligor;
and (ii) the Bank may at its option exercise from time to time any or all rights
and remedies available to it under the Uniform Commercial Code or otherwise
available to it, including the right to collect, receipt for, settle,
compromise, adjust, sue for, foreclose or otherwise realize upon any of the
Collateral and to dispose of any of the Collateral at public or private sale(s)
or other proceedings, with or without advertisement, and the Debtor agrees that
the Bank or its nominee may become the purchaser at any such sale(s). Bank shall
have the unconditional right to retain and obtain the full benefit of all
Collateral until all Liabilities of the Debtor to the Bank are paid and
satisfied in full. If any notification of intended

                                       10
<PAGE>
 
disposition of the Collateral is required by law, such notice shall be deemed
reasonable if mailed at least 7 days before such disposition addressed to the
Debtor at its Address shown herein. If any of the Liabilities secured hereby is
payable on demand, Bank's right to require payment shall not be restricted or
impaired by the absence, non-occurrence or waiver of an Event of Default, and it
is understood that if such Liabilities are payable on demand, the Bank may
require payment at any time.

9.  APPLICATION OF COLLATERAL.  The Proceeds of any Collateral received by the
Bank at any time before or after default, whether from sale of Collateral or
otherwise, may be applied to the payment in full or in part of such of the
Liabilities and in such order as the Bank may elect. The Debtor, to the extent
that it has any right, title or interest in any of the Collateral, authorizes
Bank to proceed against the Collateral in any order that Bank may determine and
waives and releases any right to require the Bank to collect any of the
Liabilities from any source other than from the Collateral under any theory of
marshaling of assets, or otherwise, and specifically authorizes the Bank to
proceed against any of the Collateral in which the Debtor has a right, title or
interest with respect to any of the Liabilities in any manner that the Bank may
determine.

10.  POWER OF ATTORNEY.  Upon the occurrence and during the continuation of a
default hereunder, the Debtor does hereby appoint any officer or agent of the
Bank as the Debtor's true and lawful attorney-in-fact, with power to endorse the
name of the Debtor upon any notes, checks, drafts, money orders, or other
instruments of payment or Collateral that may come into possession of Bank; to
sign and endorse the name of the Debtor upon any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against Account
Debtors, assignments, verifications and notices in connection with Accounts, and
any instruments or documents relating thereto or to the Debtor's rights therein;
and to give written notice to such office and officials of the United States
Postal Service to effect such change or changes of address so that all mail
addressed to the Debtor may be delivered directly to Bank (Bank will return all
mail not related to the Liabilities or the Collateral within a reasonable period
of time following receipt); granting unto Debtor's said attorney full power to
do any and all things necessary to be done with respect to the above
transactions as fully and effectually as Debtor might or could do, and hereby
ratifying all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable for the term of this
Agreement and all transactions hereunder.

11.  TERM.  The term of this Agreement shall commence with the date hereof and
end on the date when, after receipt of written notice of the termination of this
Agreement from either party to the other, which notice may be given by either
party at any time, there shall be no Liabilities outstanding.

12.  SUCCESSORS AND ASSIGNS.  All provisions herein shall inure to, and become
binding upon, the heirs, executors, administrators, successors, representatives,
receivers, trustees and assigns of the parties, provided, however, that this
Agreement shall not be assignable by the Debtor without the prior written
approval of the Bank.

                                       11
<PAGE>
 
13.  CONFESSION OF JUDGMENT.  Upon the occurrence of a default hereunder, the
Debtor hereby irrevocably authorizes and empowers any attorney of any court of
record to appear for and confess judgment against the Debtor for the unpaid
amount of the Liabilities as evidenced by an affidavit signed by an officer of
the Bank setting forth the amount then due, plus 15% thereof, but no less than
$5,000, as an attorney's commission, with costs of suit, release of errors, and
without right of appeal. If a copy hereof, verified by an affidavit, shall have
been filed in said proceeding, it shall not be necessary to file the original as
a warrant of attorney. The Debtor waives the right to any stay of execution and
the benefit of all exemption laws now or hereafter in effect. No single exercise
of the foregoing warrant and power to confess judgment shall be deemed to
exhaust the power, whether or not any such exercise shall be held by any court
to be invalid, voidable, or void, but the power shall continue undiminished and
may be exercised from time to time as often as the Bank shall elect, until all
Liabilities have been paid in full

14.  THE DEBTOR'S AUTHORITY AND CAPACITY, ETC.  The Debtor represents and
warrants that the Bank is obtaining and shall maintain at all times a first lien
on all of the Collateral, except for such prior liens as may be expressly
permitted under the Credit Agreement. If the Debtor is a corporation, the Debtor
further represents and warrants that it is duly organized, validly in existence
and in good standing in its state of incorporation and any other state where the
nature or extent of its business requires qualification, that the execution and
performance by the Debtor of this Agreement and any related agreements is
authorized by the Debtor's Board of Directors and does not violate the Articles
of Incorporation or By-Laws of the Debtor or any other Agreement or contract by
which the Debtor is bound. The Debtor represents and warrants that this
Agreement is the legal, valid and binding obligation of the Debtor enforceable
against the Debtor in accordance with its terms.

15.  CONSENT TO JURISDICTION AND VENUE. IN ANY LEGAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE RELATIONSHIP ESTABLISHED HEREUNDER, EACH UNDERSIGNED PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED IN ANY COUNTY IN THE COMMONWEALTH OF PENNSYLVANIA WHERE THE BANK
MAINTAINS AN OFFICE AND AGREES NOT TO RAISE ANY OBJECTION TO SUCH JURISDICTION
OR TO THE LAYING OR MAINTAINING OF THE VENUE OF ANY SUCH PROCEEDING IN SUCH
COUNTY. EACH UNDERSIGNED PARTY AGREES THAT SERVICE OF PROCESS IN ANY SUCH
PROCEEDING MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF, BY REGISTERED
MAIL, POSTAGE PREPAID, TO EACH UNDERSIGNED PARTY.

16.  WAIVER OF JURY TRIAL. EACH UNDERSIGNED PARTY HEREBY WAIVES, AND THE BANK BY
ITS ACCEPTANCE HEREOF THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE 

                                       12
<PAGE>
 
RELATIONSHIP ESTABLISHED HEREUNDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE BANK TO ENTER INTO, ACCEPT OR RELY UPON THIS AGREEMENT.

17.  MISCELLANEOUS.  The construction and interpretation of this Agreement and
all agreements shall be governed by the laws of the Commonwealth of
Pennsylvania. No modification hereof shall be binding or enforceable unless in
writing and signed by the party against whom enforcement is sought. If any
provision of this Agreement is determined to be unenforceable or invalid, such
determination shall not affect or impair the remaining provisions of this
Agreement. No rights are intended to be created hereunder for the benefit of any
third party beneficiary hereof. The individual signatory(ies) on behalf of the
Debtor represents that he (they) is (are) authorized to execute this Agreement
on behalf of the Debtor. This Agreement supplements the Debtor's obligations
under any promissory notes or separate agreements with the Bank,

18.  LOCATIONS OF DEBTOR.  The Debtor represents and warrants that the following
addresses (together with any additional addresses which may be shown on any
attached schedule) correctly set forth all of the locations where the Debtor
maintains a place of business, its records or the Collateral.

Chief Executive Office:  Route 15, Kelly Township, Union County, Lewisburg, PA
17837

<TABLE>
<CAPTION>
 
Other Locations:
<S>                          <C>                     <C>
 
1.  The JPM Company          2.  The JPM Company     3.  Electronica Pantera
    Industrial Park              Route 321               S.A. de C.V.
    North 15th Street            Winnsboro, SC 29180     Montemorelos No. 121
    East Buffalo Township                                Fracc. Loma Bonita
    Union County                                         Zapopan, Jalisco
    Lewisburg, PA  17837                                 Mexico, 45060
</TABLE>

19.  NAME OF DEBTOR.  The Debtor represents and warrants that the name of the
Debtor shown on this Agreement is the correct, full legal name of the Debtor,
that the Debtor has not at any time changed its name, identity or corporate
structure, and that the Debtor is not conducting business under an assumed name
or trade name except as set forth below.   In the state of South Carolina, the
Debtor operates under the fictitious name "The JPM Company of South Carolina."

20.  AMENDMENT AND RESTATEMENT.  This Agreement amends and restates in its
entirety that Security Agreement dated April 19, 1996 (the "Original Agreement")
previously executed and delivered by Debtor to Commonwealth Bank, a division of
Meridian ("Meridian") predecessor-in-interest to Bank with respect to the
Liabilities and the Collateral.  Debtor hereby acknowledges and consents to the
transfer of Meridian's rights and interests in the Liabilities and Collateral to
the Bank effected by the merger of Meridian into Bank.  All lien priorities
effected

                                       13
<PAGE>
 
pursuant to the Original Agreement shall continue, uninterrupted and in full
force and effect in favor of Bank.

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
under seal and intending to be legally bound on the day and year first above
written.


                             CoreStates Bank. N.A.



                             By  /s/ David M. Diffenderffer
                                ---------------------------



                             THE JPM COMPANY



                             By:  /s/ William D. Baker
                                 ---------------------
                                     (Signature)



                               William D. Baker
                               ----------------
                               (Print Name and Title)

                               Vice President, CFO and Treasurer

                                       14