SECURITY AGREEMENT


     THIS  AGREEMENT  dated as of this 28th day of March,  1997,  is between CAG
Technologie  Management  Consultants  Greifswald GMBH, a corporation  formed and
legally existing under the laws of the Federal  Republic of Germany,  having its
principal  offices  at  Koitenhager  Landstrabe  17491  Greifswald  (hereinafter
"Grantor") 

                                      and

     IDM  ENVIRONMENTAL  CORP., a New Jersey  corporation,  having its principal
office  located  at  396  Whitehead  Avenue,   South  River,  New  Jersey  08882
(hereinafter "Secured Party").

     WHEREAS,  as of the date  hereof  Secured  Party  sold to  Grantor  certain
equipment  (the  "Equipment")  as  specifically  described in the sale agreement
between Grantor and Secured Party (the "Sale Agreement");

     WHEREAS,  Secured Party paid for the Equipment with a $600,000 cash payment
at closing and  delivery of a U.S.  $5,400,000.00  promissory  note (the "Note")
made by Grantor in favor of Secured Party dated as of the date hereof;

     WHEREAS,  one of the terms of the Note  requires  that the Grantor grant to
Secured  Party a security  interest in the Equipment in order to secure its debt
evidenced by the Note; and

     WHEREAS, the purpose of this Security Agreement is to comply with the terms
of the Note and to grant to Secured Party a security interest in the Equipment.

     NOW THEREFORE, the Grantor and the Secured Party agree as follows:

     SECTION 1.  OBLIGATIONS.  The Grantor has entered into this  Agreement with
Secured  Party to comply  with the terms of the Note and to  provide  collateral
security.

     SECTION  2.  COLLATERAL.  To secure  the  payment  and  performance  of all
obligations  of  Grantor  set  forth  in this  Agreement,  the Note and the Sale
Agreement whether  presently  existing or hereafter  arising,  together with all
renewals,  extensions and modifications  thereof, the Grantor pledges and grants
to  Secured  Party a first  security  interest  in the  Equipment  set  forth on
Schedule 1 attached hereto and made a part hereof.


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     2.2 LOCATION OF COLLATERAL.

     The Equipment is located at The Electrical  Federal Commission of Mexico in
Durango,  Mexico and at The Electrical  Federal  Commission of Mexico in Merida,
Mexico.

     SECTION 3.  REPRESENTATIONS  AND WARRANTIES Grantor represents and warrants
to Secured Party that:

     3.1 Grantor is duly  incorporated,  validly  existing and in good  standing
under the laws of the Federal Republic of Germany.

     3.2 The execution,  delivery,  and performance by Grantor of this Agreement
has been duly authorized by all necessary  corporate action and such action does
not cause  Grantor  to be in default  under any law,  rule,  regulation,  order,
judgment, injunction, decree, determination,  award, indenture, agreement, lease
or instrument.

     3.3 There is no pending or threatened  action against or affecting  Grantor
which may  materially  adversely  affect the  ability of Grantor to perform  its
obligation under this Agreement.

     3.4 Grantor has filed all tax returns required to be filed and has paid all
taxes,  assessments and governmental  charges and levies including  interest and
penalties.

     SECTION 4. GRANTOR'S AGREEMENTS.

     4.1 Grantor  will not sell,  exchange,  lease or  otherwise  dispose of the
Equipment  except in the  ordinary  course of  business,  nor permit any lien or
security  interest  therein,  or a financing  statement to be filed  against the
Equipment other than that of Secured Party.

     4.2 Grantor will  maintain the  Equipment in good  condition and repair and
preserve  it  against  loss,  damage  or  depreciation  in value  other  than by
reasonable wear.

     4.3 Grantor will  maintain  liability  and risk  insurance  coverage on the
Equipment  against fire,  theft and other  casualty with  financially  solid and
reputable  insurance  companies or associations in such amounts  satisfactory to
Secured  Party,  with loss to be payable to Secured  Party and  Grantor as their
respective  interest may appear.  In the event of loss or damage,  Grantor shall
notify  Secured  Party in  writing  and  promptly  file  proof of loss  with the
appropriate insurer. Any proceeds of such insurance received by Grantor shall be
held in trust by Grantor for Secured Party and shall be paid to Secured Party.

     4.4 Grantor  will pay,  when due, all taxes,  license fees and  assessments
relating to the Equipment or its use. 2


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     4.5 Grantor  authorizes Secured Party, if Grantor fails so to do, to do all
things  required of Grantor by Sections  4.2,  4.3 and 4.4 and charge all of its
expenses to Grantor.

     4.6 Grantor will not remove the Equipment  from the  specified  location(s)
without the prior written consent of Secured Party and will permit Secured Party
to inspect the Equipment and Grantor's books and records with respect thereto at
any reasonable time.

     4.7 Grantor  represents  that it has not  violated  and will not violate as
long as any obligation is outstanding under this Agreement,  any local, state or
federal  environmental  law, rule or  regulation.  Grantor shall notify  Secured
Party in the event of any notification, claim, communication,  judgment or other
involving the violation of Grantor of any environmental law, rule or regulation.

     SECTION 5. DEFAULT.  The following  occurrences  shall constitute a default
and Secured Party may declare all amounts payable under this Agreement, the Note
and the Sale Agreement  executed by the Grantor evidencing debt to Secured Party
in connection therewith to be immediately due and payable,  without presentment,
demand,  protest or notice of any kind, all of which are hereby expressly waived
by the Grantor:

     (i) Failure by Grantor to pay the principal or interest on the Note.

     (ii) Any  representation or warranty made or deemed made by Grantor in this
Agreement, the Note and Sale Agreement shall prove to have been incorrect in any
material respect on or as of the date made or deemed made.

     (iii) The Grantor  shall fail to perform or observe  any term,  covenant or
agreement contained herein or in the Note or Sale Agreement.

     (iv) Grantor shall make a general  assignment for the benefit of creditors,
or file a  petition  in  bankruptcy,  or  become  the  subject  of a  bankruptcy
proceeding,  or shall have a receiver or trustee  appointed for it or any of its
properties.

     (v) If  Grantor  becomes  insolvent  or  ceases to do  business  as a going
concern.

     5.1 Each of the occurrences described in Sections (i) through (v) above are
hereinafter referred to as an "Event of Default".


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     SECTION 6.  REMEDY ON  DEFAULT.  At any time after an Event of Default  and
during the continuation thereof,  Secured Party may declare all outstanding sums
due  under  the  Note and  proceed  with or  without  judicial  process  to take
possession of all or any part of the  Equipment.  Secured  Party may  thereafter
sell, assign, lease, transfer and deliver all, or any part of the Equipment at a
private sale or public auction for cash, upon credit or otherwise at such prices
and upon such terms as Secured Party may deem  advisable and any  requirement of
reasonable notice to Grantor shall be met if notice is mailed,  postage prepaid,
to Grantor at the address set forth in the  caption of this  Agreement  at least
ten (10) days prior to the sale or other  disposition  and Secured  Party may be
the  purchaser  at any  public  sale  of the  Equipment  free  of any  right  of
redemption, which right Grantor hereby waives.

     SECTION 7. MISCELLANEOUS PROVISIONS

     7.1 All the terms  herein,  and the  rights,  duties  and  remedies  of the
parties shall be governed by the law of the State of New Jersey, U.S.A.

     7.2 All of the benefit hereof shall inure to Secured Party,  its successors
and  assigns,  and the  obligations  shall  be  binding  upon the  Grantor,  its
successors and assigns.

     7.3  Secured  Party  shall not be deemed to have  waived  any of its rights
under this or any other  agreement or  instrument  signed by Grantor  unless the
waiver is in writing signed by Secured Party.  No delay in exercising its rights
shall be a waiver nor shall a waiver on one occasion operate as a waiver of such
right on a future occasion.


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     7.4 Each demand,  notice or other communication shall be served or given by
regular mail,  courier or facsimile  transmission  addressed to the party at its
address set forth  herein or as changed by written  notice to the other party or
by personal service upon the party or its proper officer.

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.


                                CAG TECHNOLOGIE MANAGEMENT
                                CONSULTANTS GREISFWALD GMBH


                                By:  /s/ Alexander Lentes
                                   ---------------------------------------------
                                     Alexander Lentes, President


                                IDM ENVIRONMENTAL CORP.


                                By:  /s/ Joel Freedman
                                   ---------------------------------------------
                                     Joel Freedman, President


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