Document:

<PAGE>

                                                                   EXHIBIT 10.16

                               SECURITY AGREEMENT

            THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 29,
2004, is made by VISKASE COMPANIES, INC., a Delaware corporation (the
"Company"), and each of its Domestic Restricted Subsidiaries hereafter party
hereto (such Subsidiaries, together with Company, each, a "Debtor" and,
collectively, the "Debtors"), in favor of LASALLE BANK NATIONAL ASSOCIATION
("LaSalle"), as collateral agent (together with its successor(s) thereto in such
capacity, "Collateral Agent") for the Trustee and Holders, in light of the
following:

      WHEREAS, the Company and LaSalle, as Collateral Agent and as trustee (in
such capacity, the "Trustee"), have entered into an Indenture, dated as of June
29, 2004 (as amended, restated, supplemented or otherwise modified from time to
time, the "Indenture"), pursuant to which the Company has issued 90,000 Units
(and, together with any additional units that may be issued from time to time
thereunder or exchanged therefor or for such additional units, the "Units"),
each of which consists of an 11-1/2% Senior Secured Note due 2011 in a principal
amount of $1,000 (and, together with any additional notes that may be issued by
the Company from time to time thereunder or exchanged therefor or for such
additional notes, the "Notes") and a warrant to purchase 8.947 shares of common
stock of the Company, at an exercise price of $0.01 per share, subject to
adjustment;

      WHEREAS, each Domestic Restricted Subsidiary of the Company that is not an
Immaterial Subsidiary is required under the Indenture to (a) become a party to
the Indenture and deliver a Guarantee to guarantee the payment of the Notes and
the other Obligations of the Company thereunder and the other Indenture
Documents to which the Company is a party and (b) become a party hereto as a
Debtor and secure its Obligations under the Indenture, such Guarantee and the
other Indenture Documents to which it is a party pursuant to the terms hereof;

      WHEREAS, the Company and Wells Fargo Foothill, Inc. have entered into that
certain Loan and Security Agreement dated as of June 29, 2004 (as amended,
restated, supplemented, replaced or otherwise modified from time to time, the
"Credit Agreement");

      WHEREAS, the Collateral Agent, Administrative Agent and the Company have
entered into that certain Intercreditor and Lien Subordination Agreement, dated
as of June 29, 2004 (as amended, restated, supplemented, replaced or otherwise
modified from time to time, the "Intercreditor Agreement"), which agreement,
among other things, sets forth, as between the Collateral Agent and the
Administrative Agent, the relative priority of their respective Liens in the
Collateral and their rights with respect thereto;

      WHEREAS, the Company desires to secure its Obligations under the Notes,
the Indenture and each other Indenture Document to which it becomes a party and
each other Debtor that becomes a party hereto desires to secure its Guarantee,
the Indenture and each other Indenture Document to which it becomes a party by
granting to Collateral Agent, for the benefit of itself, the Trustee and the
Holders, security interests in the Collateral as set forth herein; and

      WHEREAS, to induce the Initial Purchaser to purchase the Units and the
underlying Notes, each Holder to hold the Units and the underlying Notes to be
held by it and LaSalle to act

<PAGE>

in its capacities as Trustee and Collateral Agent, each Debtor desires to
pledge, grant, transfer, and assign to Collateral Agent, for the benefit of
itself, the Holders and the Trustee, a security interest in the Collateral to
secure the Obligations, as provided herein.

      NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and each intending
to be bound hereby, Collateral Agent and each Debtor agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

      1.1 DEFINITIONS. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Indenture. As
used in this Agreement, the following terms shall have the following
definitions:

            "Account" means an account (as that term is defined in the Code).

            "Account Debtor" means any Person who is obligated on an Account,
chattel paper, or a General Intangible.

            "Additional Documents" has the meaning set forth in Section 2.4(c).

            "Agreement" has the meaning set forth in the preamble hereto.

            "Books" means, with respect to each Debtor, all of such Debtor's now
owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of such Debtor's Records relating to its business operations or
financial condition, and all of its goods or General Intangibles related to such
information).

            "Code" means the Uniform Commercial Code, as in effect from time to
time in the State of New York; provided, however, that in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection,
priority, or remedies with respect to the Collateral Agent's Lien on any
Collateral is governed by the Uniform Commercial Code as enacted and in effect
in a jurisdiction other than the State of New York, the term "Code" shall mean
the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.

            "Collateral" means, with respect to each Debtor, all of such
Debtor's now owned or hereafter acquired right, title, and interest in and to
each of the following:

            (a) all of its Accounts,

            (b) all of its Books,

            (c) all of its commercial tort claims described on Schedule 3.6(d)
(and any supplement thereto pursuant to Section 2.4(b)),

                                       2
<PAGE>

            (d) all of its Deposit Accounts,

            (e) all of its Equipment,

            (f) all of its General Intangibles,

            (g) all of its Inventory,

            (h) all of its Investment Property (including all of its securities
and Securities Accounts),

            (i) all of its Negotiable Collateral,

            (j) all of its Supporting Obligations,

            (k) money or other assets of such Debtor that now or hereafter come
into the possession, custody, or control of the Collateral Agent, and

            (l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Supporting
Obligations, money, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof. Notwithstanding
the foregoing, the term Collateral shall in no event include (a) more than
sixty-five percent (65%) of the issued and outstanding Voting Stock of any
first-tier Foreign Subsidiary of such Debtor, (b) the Excluded Capital Stock of
any Issuer, (c) any rights under any Account, contract, license or other
agreement or any General Intangible, in each case, to the extent that the grant
of a security interest under any Collateral Agreement (i) would invalidate the
underlying rights of such Debtor in such General Intangible, (ii) is prohibited
by such Account, contract, license, agreement, intellectual property or General
Intangible without the consent of any other party thereto, (iii) would give any
other party to such Account, contract, license, agreement or General Intangible
the right to terminate its obligations thereunder, or (iv) is not permitted
without consent, unless in each case, all necessary consents to such grant of a
security interest have been obtained from the other parties thereto; provided,
however, that nothing herein shall be intended to limit the affect of 9-406 of
the Code or otherwise limit or restrict the conveyance by such Debtor of any
rights under any such Account, contracts, licenses, agreements or General
Intangibles to the extent which would not be violative of the restrictive terms
thereof or (d) Equipment subject to a Permitted Lien of the type described in
clauses (6), (7), (13), (14) and (18) of the definition thereof, in each case,
with respect to which such Debtor is prohibited from granting a security
interest under the terms of the Indebtedness incurred to finance the purchase of
such Equipment.

            "Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in any Debtor's Books, Equipment, or Inventory,
substantially in the form of Exhibit B hereto, or to the extent a

                                       3
<PAGE>

Collateral Access Agreement is required to be obtained pursuant to the last
sentence of Section 4.20 of the Indenture.

            "Collateral Agent" has the meaning set forth in the preamble to this
Agreement.

            "Collateral Agent-Related Person" means the Collateral Agent,
together with its Affiliates, officers, directors, employees, attorneys, and
agents.

            "Collateral Agent's Liens" means the Liens granted by a Debtor to
Collateral Agent under this Agreement or the other Indenture Documents to which
such Debtor is a party.

            "Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).

            "Commercial Tort Claim Assignment" has the meaning set forth in
Section 4.4(b).

            "Company" has the meaning set forth in the preamble to this
Agreement.

            "Control Agreement" means, with respect to the applicable Debtor, a
control agreement, in form and substance reasonably satisfactory to the
Administrative Agent (if the Intercreditor Agreement has not been terminated at
the time of the execution of such control agreement) and the Collateral Agent,
executed and delivered by (a) such Debtor, (b) (i) the Administrative Agent for
the benefit of (A) the Lenders and (B) the Collateral Agent for the benefit of
itself, the Trustee and the Holders or (ii) if the Credit Agreement has not been
terminated, the Collateral Agent, and (c) the applicable (i) securities
intermediary (with respect to a Securities Account of such Debtor) or (ii) bank
(with respect to a Deposit Account of such Debtor).

            "Credit Agreement" has the meaning set forth in the recitals to this
Agreement.

            "Debtor" and "Debtors" have the meanings set forth in the preamble
to this Agreement.

            "Defeasance" means, with respect to any obligation, the defeasance
thereof pursuant to a Legal Defeasance or Covenant Defeasance as described under
Section 8.01 of the Indenture.

            "Deposit Account" means any deposit account (as that term is defined
in the Code).

            "Disposition" shall have the meaning ascribed to the term Asset Sale
in the Indenture, and the words "Dispose" and "Disposal" shall be interpreted
similarly.

            "Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm

                                       4
<PAGE>

products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.

            "Excluded Capital Stock" means, with respect to any Issuer that is a
Subsidiary of the Company, that portion of such Issuer's Capital Stock that
would otherwise constitute Collateral to the extent the greater of the par
value, book value as carried by the Debtor that is the holder thereof or the
market value of any such Capital Stock is equal to or greater than 20% of the
aggregate principal amount of the Notes then outstanding.

            "General Intangibles" means general intangibles (as that term is
defined in the Code), including limited liability and limited partnership
interests, payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.

            "Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.

            "Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, board, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.

            "Indemnified Liabilities" has the meaning set forth in Section 8.3.

            "Indemnified Person" has the meaning set forth in Section 8.3.

            "Indenture" has the meaning set forth in the recitals to this
Agreement.

            "Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.

            "Intellectual Property Security Agreement" means an intellectual
property security agreement executed and delivered by the applicable Debtor and
the Collateral Agent, substantially in the form of Exhibit A hereto.

            "Intercreditor Agreement" has the meaning set forth in the recitals
to this Agreement.

                                       5
<PAGE>

            "Inventory" means inventory (as that term is defined in the Code).

            "Investment Property" means investment property (as that term is
defined in the Code).

            "IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.

            "LaSalle" has the meaning set forth in the preamble to this
Agreement.

            "Negotiable Collateral" means letters of credit, letter of credit
rights, instruments, promissory notes, drafts, documents, and chattel paper
(including electronic chattel paper and tangible chattel paper).

            "Notes" has the meaning set forth in the recitals to this Agreement.

            "Obligations" means all debts, principal, interest (including any
interest that, but for the commencement of an Insolvency Proceeding, would have
accrued), premiums, liabilities (including all amounts owed by any Debtor
pursuant hereto), obligations (including indemnification obligations), fees
(including the fees provided for in the Fee Letter), charges, costs, reasonable
expenses (including any expenses that, but for the commencement of an Insolvency
Proceeding, would have accrued), guaranties, covenants, and duties of any kind
and description owing by any Debtor to the Collateral Agent or any other Secured
Party pursuant to or evidenced by the Indenture Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all reasonable expenses that any
Debtor is required to pay or reimburse by the Indenture Documents, by law, or
otherwise. Any reference in this Agreement to the Obligations shall include all
extensions, modifications, renewals or alterations thereof, both prior and
subsequent to any Insolvency Proceeding.

            "Permitted Dispositions" means Dispositions consummated in
accordance with the terms of Section 4.10 of the Indenture.

            "Permitted Protest" means the right of any Debtor to protest any
Lien (other than any Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a) a reserve with respect to such
obligation is established on the Books of such Debtor in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by such Debtor in good faith, and (c) while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Collateral Agent's Liens.

            "Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.

            "Securities Account" means a securities account (as that term is
defined in the Code).

                                       6
<PAGE>

            "Supporting Obligation" means a letter-of-credit right or secondary
obligation that supports the payment or performance of an Account, chattel
paper, document, General Intangible, instrument, or Investment Property.

            "Trustee" has the meaning set forth in the recitals to this
Agreement.

            "United States" means the United States of America.

            "Units" has the meaning set forth in the recitals to this Agreement.

            "Voidable Transfer" has the meaning set forth in Section 12.7.

      1.2 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 shall govern.

      1.3 CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the terms "includes" and "including" are not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section, subsection, clause, schedule, and exhibit references herein are to this
Agreement unless otherwise specified. Any reference in this Agreement to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to the satisfaction or repayment in full
of the Obligations shall mean the repayment in full in cash of all Obligations
other than contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein shall be satisfied by the transmission
of a Record and any Record transmitted shall constitute a representation and
warranty as to the accuracy and completeness of the information contained
therein.

      1.4 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

2. CREATION OF SECURITY INTEREST.

      2.1 GRANT OF SECURITY INTEREST. Each Debtor hereby grants to the
Collateral Agent, for the benefit of itself and the other Secured Parties, a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Collateral of such Debtor
in order to secure prompt repayment of any and all of the Obligations in
accordance with the terms and conditions of the Indenture Documents and in order
to secure prompt

                                       7
<PAGE>

performance by such Debtor of each of its covenants and duties under the
Indenture Documents. The Collateral Agent's Liens in and to the Collateral of
such Debtor shall attach to all Collateral of such Debtor without any further
action on the part of the Collateral Agent or such Debtor. Anything contained in
this Agreement or any other Indenture Document to the contrary notwithstanding,
except for Permitted Dispositions, no Debtor has any authority, express or
implied, to Dispose of any item or portion of the Collateral.

      2.2 NEGOTIABLE COLLATERAL. In the event that any Collateral of any Debtor,
including proceeds, is evidenced by or consists of Negotiable Collateral, and to
the extent that the perfection or priority of the Collateral Agent's security
interest is dependent on or enhanced by possession, such Debtor, shall endorse
and deliver physical possession of such Negotiable Collateral with an individual
value in excess of $50,000 to the Collateral Agent to be administered in
accordance with the terms of the Intercreditor Agreement.

      2.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, the Collateral Agent or the Collateral Agent's designee may
(a) notify Account Debtors of such Debtor that such Debtor's Accounts, chattel
paper, or General Intangibles have been assigned to the Collateral Agent or that
the Collateral Agent has a security interest therein, or (b) collect such
Debtor's Accounts, chattel paper, or General Intangibles directly and the
collection costs and expenses arising in connection therewith shall be for the
account of such Debtor. Each Debtor agrees that it will hold in trust for the
Collateral Agent, as the Collateral Agent's trustee, any of its Collections that
it receives and immediately will deliver such Collections at any time that an
Event of Default is outstanding to the Collateral Agent in their original form
as received by such Debtor (together with any necessary endorsements).

      2.4 FILING OF FINANCING STATEMENTS; COMMERCIAL TORT CLAIMS; DELIVERY OF
ADDITIONAL DOCUMENTATION REQUIRED.

            (a) Each Debtor shall and hereby authorizes the Collateral Agent to
file any financing statement necessary or desirable to effectuate the
transactions contemplated by the Indenture Documents, and any continuation
statement or amendment with respect thereto, in any appropriate filing office;
provided, however, that no such authorization shall obligate the Collateral
Agent to make any such filing.

            (b) If any Debtor acquires any commercial tort claims after the date
hereof for a claim of at least $50,000, such Debtor shall promptly (but in any
event within 5 Business Days after such acquisition) (i) deliver to the
Collateral Agent a written description of such commercial tort claim, (ii)
execute and deliver a supplement to this Agreement, pursuant to which such
Debtor shall grant a perfected security interest in all of its right, title and
interest in and to such commercial tort claim to the Collateral Agent, as
security for the Obligations (a "Commercial Tort Claim Assignment") and (iii)
not in limitation but in furtherance of clause (c) below, file a financing
statement or amendment to a previously filed and effective financial statement
describing such commercial tort claim with sufficient particularity to the
extent necessary to perfect the Collateral Agent's Lien therein.

                                       8
<PAGE>

            (c) Each Debtor shall prepare, execute and deliver to, and if
applicable, file, any and all financing statements, original financing
statements in lieu of continuation statements, amendments to financing
statements, fixture filings, security agreements, pledges, assignments,
Commercial Tort Claim Assignments, endorsements of certificates of title, and
all other documents (collectively, the "Additional Documents") as may be
necessary (and to the extent the Collateral Agent is a party thereto, in form
and substance reasonably satisfactory to the Collateral Agent) to create,
perfect, and continue the perfection of or to improve the priority the
Collateral Agent's Liens in the Collateral of such Debtor (whether now owned or
hereafter arising or acquired or tangible or intangible), or to fully consummate
all of the transactions contemplated hereby and under the other Indenture
Documents. Not in limitation but in furtherance of the foregoing, the Company
shall comply with its obligations in the immediately preceding sentence as such
obligations relate to the preparation and filing by it of a Code financing
statement, together with any applicable filing fees, within 10 days of the date
hereof in the applicable filing office, and following the filing thereof shall
provide the Collateral Agent with evidence of the same. To the maximum extent
permitted by applicable law, such Debtor authorizes the Collateral Agent to
execute any such Additional Documents in such Debtor's name and authorizes the
Collateral Agent to file such executed Additional Documents in any appropriate
filing office; provided, however, that no such authorization shall obligate the
Collateral Agent to take any such action. In addition, no less frequently than
annually, each Debtor shall (i) provide the Collateral Agent with a report of
all new material patents, patent applications, trademarks, trademark
applications, copyrights or copyright applications acquired or generated by such
Debtor during the prior period and (ii) cause to be prepared, executed, and
delivered to the Collateral Agent supplemental schedules to the applicable
Collateral Agreements to identify such patents, copyrights, and trademarks as
being subject to the security interests created thereunder; provided, however,
that no Debtor shall register or apply to register with (A) the United States
Copyright Office any unregistered copyrights (whether in existence on the Issue
Date or thereafter acquired, arising, or developed) unless within 30 days of any
such registration or application for registration, such Debtor executes and
delivers to the Collateral Agent and files with the United States Copyright
Office an Intellectual Property Security Agreement, supplemental schedules to
any existing Intellectual Property Security Agreement, or such other
documentation as may be necessary in order to perfect and continue the
perfection of or protect the Collateral Agent's Liens on such copyrights
following such registration or (B) the United States Patent and Trademark Office
any unregistered patents or trademarks (whether in existence on the Issue Date
or thereafter acquired, arising, or developed) unless within 30 days of any such
registration or application for registration, the applicable Person executes and
delivers to the Collateral Agent and files with the United States Patent and
Trademark Office an Intellectual Property Security Agreement, supplemental
schedules to any existing Intellectual Property Security Agreement, or such
other documentation as may be necessary in order to perfect and continue the
perfection of or protect the Collateral Agent's Liens on such patents or
trademarks following such registration. The Company shall submit the
Intellectual Property and Security Agreement executed by it as of the date
hereof for filing with the United States Copyright Office and the United States
Patent and Trademark Office, as applicable, together with all necessary filing,
registration or similar fees, within 30 days of the date hereof, and following
such submission thereof shall provide the Collateral Agent with evidence of the
same.

                                       9
<PAGE>

      2.5 POWER OF ATTORNEY. Each Debtor hereby irrevocably makes, constitutes,
and appoints the Collateral Agent (and any of the Collateral Agent's officers,
employees, or agents designated by the Collateral Agent) as such Debtor's true
and lawful attorney, with power to (a) if such Debtor refuses to, or fails
timely to execute and deliver any of the documents described in Section 2.4,
sign the name of such Debtor on any of the documents described in Section 2.4,
(b) at any time that an Event of Default has occurred and is continuing, sign
such Debtor's name on any invoice or bill of lading relating to the Collateral
of such Debtor, drafts against Account Debtors, or notices to Account Debtors,
(c) send requests for verification of such Debtor's Accounts at any time when an
Event of Default has occurred and is continuing, (d) endorse such Debtor's name
on any of its payment items (including all of its Collections) that may come
into the Collateral Agent's possession, (e) at any time that an Event of Default
has occurred and is continuing, make, settle, and adjust all claims under such
Debtor's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting such Debtor's Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that the Collateral
Agent determines to be reasonable, and the Collateral Agent may cause to be
executed and delivered any documents and releases that the Collateral Agent
determines to be necessary. The appointment of the Collateral Agent as such
Debtor's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations (other
than contingent indemnification obligations) have been paid and performed in
full or the Defeasance thereof shall have been consummated.

      2.6 RIGHT TO INSPECT. The Collateral Agent (through any of its officers,
employees, or agents) shall have the right (but not the obligation) no more
frequently than annually (unless an Event of Default is outstanding) to inspect
the Books and make copies or abstracts thereof and to check, test, and appraise
the Collateral, or any portion thereof, in order to verify each Debtor's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral at such reasonable times and intervals as the
Collateral Agent may designate, and so long as no Default or Event of Default
has occurred and is continuing, with reasonable prior notice.

      2.7 CONTROL AGREEMENTS. Each Debtor agrees that it will take all
commercially reasonable steps in order for the Collateral Agent or the
Administrative Agent as contemplated by the Intercreditor Agreement to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to all of its Securities Accounts, Deposit Accounts,
electronic chattel paper, Investment Property, and letter-of-credit rights
(other than Deposit Accounts and Securities Accounts having an average closing
balance in excess of (i) $50,000, individually, or (ii) $500,000, in the
aggregate, in each case, for any five consecutive Business Day period). Upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may notify any bank or securities intermediary subject to a Control
Agreement to liquidate the applicable Deposit Account or Securities Account or
any related Investment Property maintained or held thereby and remit the
proceeds thereof to the Collateral Agent.

                                       10
<PAGE>

3. REPRESENTATIONS AND WARRANTIES.

            In order to induce the Collateral Agent to enter into this
Agreement, each Debtor makes the following representations and warranties to the
Collateral Agent which shall be true, correct, and complete, in all material
respects, as of the date such Debtor became a party hereto, and such
representations and warranties shall survive the execution and delivery of this
Agreement:

      3.1 AS TO EQUITY INTERESTS OF SUBSIDIARIES. The Collateral comprised of
Capital Stock of any Issuer that is (a) a Subsidiary of such Debtor and (b) a
general partnership, limited partnership or limited liability company (i) are
not dealt in or traded on securities exchanges or in securities markets, (ii) do
not have terms expressly providing that they are securities governed by Article
8 of the Code as in effect in the jurisdiction in which such Issuer was formed,
and (iii) are not investment company securities, and are not, therefore,
"securities" governed by Article 8 of the Code.

      3.2 NO ENCUMBRANCES. Such Debtor has good and marketable title to, or a
valid leasehold interest in, its personal property assets and such personal
property assets of such Debtor is free and clear of Liens except for Permitted
Liens.

      3.3 EQUIPMENT. All of the Equipment of such Debtor is used or held for use
in its business and, except for Equipment that is substantially worn, damaged or
obsolete, is fit for such purposes.

      3.4 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory of such Debtor is
located at the locations identified on Schedule 3.4 (as such Schedule may be
updated pursuant to Section 4.3).

      3.5 INVENTORY RECORDS. Such Debtor keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.

      3.6 STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

            (a) The jurisdiction of organization of such Debtor is set forth on
Schedule 3.6(a).

            (b) The chief executive office of such Debtor is located at the
address indicated on Schedule 3.6(b) (as such Schedule may be updated pursuant
to Section 4.3).

            (c) Such Debtor's organizational identification numbers, if any, are
identified on Schedule 3.6(c).

            (d) As of the date such Debtor became a party hereto, such Debtor
did not hold any commercial tort claims, except as set forth on Schedule 3.6(d).

                                       11
<PAGE>

      3.7 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a) Such Debtor is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a material adverse effect on (A) the properties, business,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of the Company and its Subsidiaries, taken as a whole, (B) the ability of such
Debtor to perform its obligations in all material respects under any Indenture
Document or (C) the consummation of any of the transactions contemplated under
any of the Indenture Documents (each, a "Material Adverse Effect").

            (b) Set forth on Schedule 3.7(b), is a complete and accurate list of
such Debtor's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of Capital Stock
authorized for each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by such Debtor. All of the outstanding Capital Stock of each such
Subsidiary that is a corporation has been, validly issued and is fully paid and
non-assessable.

            (c) Except as set forth on Schedule 3.7(b), there are no
subscriptions, options, warrants, or calls relating to any shares of such
Debtor's Subsidiaries' Capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. None of the
Debtor's Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of such Debtor's
Subsidiaries' Capital Stock or any security convertible into or exchangeable for
any such Capital Stock.

      3.8 DUE AUTHORIZATION; NO CONFLICT.

            (a) The execution, delivery, and performance by such Debtor of this
Agreement and the Indenture Agreements to which it is a party have been duly
authorized by all necessary action on the part of such Debtor.

            (b) The execution, delivery, and performance by such Debtor of this
Agreement and the other Indenture Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or regulation
applicable to such Debtor, the Governing Documents of such Debtor, or any order,
judgment, or decree of any court or other Governmental Authority binding on such
Debtor, except where such violation could not reasonably be expected to have a
Material Adverse Effect, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
contractual obligation of such Debtor, except such conflict or breach which
could not reasonably be expected to have a Material Adverse Effect, (iii) result
in or require the creation or imposition of any Lien of any nature whatsoever
upon any properties or assets of such Debtor, other than Permitted Liens, or
(iv) require any approval of the holders of such Debtor's Capital Stock or any
approval or consent of any Person under any contractual obligation of such
Debtor, other than (x) consents or approvals that have been obtained and that
are still in force and effect and (y) those consents and approvals the failure
to obtain could not reasonably be expected to have a Material Adverse Effect.

                                       12
<PAGE>

            (c) Other than the filing of financing statements and the
recordation of the Mortgages, the execution, delivery, and performance by such
Debtor of this Agreement and the other Indenture Documents to which such Debtor
is a party do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority, other than (x) consents or approvals that have been obtained and that
are still in force and effect and (y) those consents and approvals the failure
to obtain could not reasonably be expected to have a Material Adverse Effect.

            (d) This Agreement and the other Indenture Documents to which such
Debtor is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by such Debtor will be the legally valid and binding
obligations of such Debtor, enforceable against such Debtor in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.

            (e) The Collateral Agent's Liens on the Collateral of such Debtor
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens (including the second priority Lien on the Equipment,
improvements to real property and fixtures, and first priority Lien on the
Accounts and Inventory, in each case, of such Debtor in favor of the
Administrative Agent).

      3.9 INTELLECTUAL PROPERTY. To such Debtor's knowledge, such Debtor owns,
or holds licenses in, all trademarks, trade names, copyrights, patents and
licenses that are necessary to the conduct of its business as currently
conducted, and attached hereto as Schedule 3.9 (as updated from time to time) is
a true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which such Debtor or one of its Subsidiaries is the owner or
is an exclusive licensee.

      3.10 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 3.10
(as such schedule may be amended from time to time by such Debtor and, to the
extent required by Section 2.7 consented to by the Collateral Agent as evidenced
by the execution and delivery by such Debtor, the applicable securities
intermediary or bank and the Collateral Agent of a Control Agreement) is a
listing of all of such Debtor's Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (a) the name and
address of such Person, and (b) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.

4. AFFIRMATIVE COVENANTS.

            Each Debtor covenants and agrees that, until payment in full of the
Obligations (other than contingent indemnification obligations) or the
Defeasance thereof, such Debtor shall do all of the following:

      4.1 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its properties
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all material leases to which it is a party as
lessee, so as to prevent any loss or forfeiture thereof or thereunder.

                                       13
<PAGE>

      4.2 INSURANCE.

            (a) At such Debtor's expense, maintain insurance respecting its
assets wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks and in such amounts as ordinarily are insured
against by other Persons engaged in the same or similar businesses. Such Debtor
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. Such Debtor shall deliver copies of all such policies
or certificates of insurance evidencing the same to the Collateral Agent with an
endorsement naming the Collateral Agent as loss payee (under a satisfactory
lender's loss payable endorsement) or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to the Collateral Agent in
the event of cancellation of any such policy for any reason whatsoever.

            (b) Such Debtor shall give the Collateral Agent prompt notice of any
loss in an amount in excess of $500,000 covered by such insurance. If an Event
of Default shall have occurred and is outstanding, the Collateral Agent shall
have the exclusive right to adjust any losses claimed under any such insurance
policies, without any liability to such Debtor whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be deposited into a Deposit Account of such Debtor with respect to which a
Control Agreement is in effect unless directed by the Collateral Agent to be
paid over to the Collateral Agent at any time an Event of Default is
outstanding, in which case, such payment shall be paid over to the Collateral
Agent.

            (c) Such Debtor will not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 4.2, unless the Collateral Agent is included thereon as an
additional insured or loss payee under a lender's loss payable endorsement. Such
Debtor promptly shall notify the Collateral Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies or
certificates of insurance evidencing the same shall be promptly provided to the
Collateral Agent.

      4.3 LOCATION OF INVENTORY AND EQUIPMENT. Keep such Debtor's Inventory and
Equipment only at the locations identified on Schedule 3.4 and its chief
executive offices only at the locations identified on Schedule 3.6(b); provided,
however, that such Debtor may amend Schedule 3.4 and Schedule 3.6(b) so long as
such amendment occurs by prompt written notice to the Collateral Agent, so long
as such new location is within the continental United States or Canada, and so
long as, at the time of such written notification, such Debtor provides to the
Collateral Agent a Collateral Access Agreement to the extent required under
Section 4.20 of the Indenture.

                                       14
<PAGE>

5. NEGATIVE COVENANTS.

            Each Debtor covenants and agrees that, until the Obligations are
paid and performed in full (other than contingent indemnification obligations)
or the Defeasance thereof shall have been consummated, such Debtor will not do
any of the following:

      5.1 DISPOSAL OF ASSETS. Other than Permitted Dispositions, Dispose of any
of such Debtor's assets.

      5.2 CHANGE NAME. Change such Debtor's name, organizational identification
number, state of organization or organizational identity unless such Debtor
shall within ten Business Days of any such change provide written notice to the
Collateral Agent of such change and file any financing statements or amendments
thereto necessary to continue the perfection and priority of the Collateral
Agent's Liens.

      5.3 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Maintain, on or after the
date that is 30 days following the Issue Date, any Deposit Account or Securities
Account having an average closing balance in excess of (i) $50,000,
individually, or (ii) $500,000, in the aggregate, in each case, for any five
consecutive Business Day period unless such Debtor and the applicable securities
intermediary or bank shall have entered into a Control Agreement governing such
Deposit Account or Securities Account, as the case may be, in order to perfect
or improve the priority the Collateral Agent's Liens therein.

6. COLLATERAL AGENT'S RIGHTS AND REMEDIES.

      6.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, the Collateral Agent (at its election (or at the
direction of the Holders holding a majority in aggregate principal amount of the
Notes but without notice of its election (or such direction) and without demand)
may do any one or more of the following, all of which are authorized by each
Debtor:

            (a) Proceed directly and at once, without notice, against such
Debtor to collect and recover the full amount or any portion of the Obligations,
without first proceeding against any other Debtor, or against any security or
collateral for the Obligations;

            (b) Settle or adjust disputes and claims directly with such Debtor's
Account Debtors for amounts and upon terms which the Collateral Agent considers
advisable;

            (c) Cause such Debtor to hold all of its returned Inventory in trust
for the Collateral Agent and segregate all such Inventory from all other assets
of such Debtor or in such Debtor's possession;

            (d) Without notice to or demand upon such Debtor, make such payments
and do such acts as the Collateral Agent considers necessary or reasonable to
protect its security interests in the Collateral. Such Debtor agrees to assemble
the Collateral if the Collateral Agent so requires, and to make the Collateral
available to the Collateral Agent at a place that the Collateral Agent may
designate which is reasonably convenient to both parties. Such Debtor

                                       15
<PAGE>

authorizes the Collateral Agent to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that conflicts with the
priority of the Collateral Agent's Liens in and to the Collateral and to pay all
expenses incurred in connection therewith, which expenses shall be for the
account of such Debtor. With respect to any of such Debtor's owned or leased
premises, such Debtor hereby grants the Collateral Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Collateral Agent's rights or remedies provided herein, at
law, in equity, or otherwise;

            (e) Without notice to such Debtor (such notice being expressly
waived), and without constituting an acceptance of any collateral in full or
partial satisfaction of an obligation (within the meaning of the Code), set off
and apply to the Obligations any and all (i) balances and deposits of such
Debtor held by the Collateral Agent, or (ii) Indebtedness at any time owing to
or for the credit or the account of such Debtor held by the Collateral Agent;

            (f) Hold, as cash collateral, any and all balances and deposits of
such Debtor held by the Collateral Agent to secure the full and final repayment
of all of the Obligations (other than contingent indemnification obligations);

            (g) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral of such Debtor. Such Debtor hereby grants to the Collateral Agent a
license or other right to use, without charge, such Debtor's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral of such Debtor, in completing production of, advertising for sale,
and selling any Collateral of such Debtor and such Debtor's rights under all
licenses and all franchise agreements shall inure to the Collateral Agent's
benefit;

            (h) Sell all or any part of the Collateral of such Debtor at either
a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
such Debtor's premises) as is commercially reasonable. It is not necessary that
such Collateral of such Debtor be present at any such sale;

            (i) Except in those circumstances where no notice is required under
the Code, the Collateral Agent shall give notice of the disposition of the
Collateral of such Debtor as follows:

                  (i) The Collateral Agent shall give such Debtor a notice in
            writing of the time and place of public sale, or, if the sale is a
            private sale or some other disposition other than a public sale is
            to be made of the Collateral of such Debtor, the time on or after
            which the private sale or other disposition is to be made; and

                  (ii) The notice shall be personally delivered or mailed,
            postage prepaid, to such Debtor as provided in Section 9, at least
            10 days before the earliest time of disposition set forth in the
            notice; no notice needs to be given prior to the disposition of any
            portion of the Collateral of such Debtor that is

                                       16
<PAGE>

            perishable or threatens to decline speedily in value or that is of a
            type customarily sold on a recognized market;

            (j) The Collateral Agent or any other Secured Party may credit bid
and purchase at any public sale;

            (k) The Collateral Agent may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral of such Debtor
or to operate same and, to the maximum extent permitted by applicable law, may
seek the appointment of such a receiver without the requirement of prior notice
or a hearing;

            (l) The Collateral Agent shall have all other rights and remedies
available at law or in equity or pursuant to any other Indenture Document; and

            (m) Be entitled to any deficiency that exists after disposition of
the Collateral as provided above by immediate payment from each Debtor. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Collateral Agent to the applicable Debtor.

      6.2 REMEDIES CUMULATIVE. The rights and remedies of the Collateral Agent
under this Agreement, the other Indenture Documents, and all other agreements
shall be cumulative. The Collateral Agent shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Collateral Agent of one right or remedy shall be
deemed an election, and no waiver by the Collateral Agent of any Event of
Default shall be deemed a continuing waiver. No delay by the Collateral Agent
shall constitute a waiver, election, or acquiescence by it.

7. TAXES AND EXPENSES.

            If any Debtor fails to pay any monies (whether taxes, assessments,
rents, insurance premiums, or, in the case of leased properties or assets, rents
or other amounts payable under such leases) due to third Persons, or fails to
make any deposits or furnish any required proof of payment or deposit, in each
case, to the extent required under the terms of this Agreement, then, the
Collateral Agent, in its sole discretion and without prior notice to such
Debtor, may (but shall not be obligated to) do any or all of the following: (a)
make payment of the same or any part thereof or (b) in the case of the failure
to comply with Section 4.2 hereof, if an Event of Default shall occur and be
continuing, obtain and maintain insurance policies of the type described in
Section 4.2 and take any action with respect to such policies as the Collateral
Agent deems prudent. Any such amounts paid by the Collateral Agent shall
constitute Obligations owing to the Collateral Agent and any such payments shall
not constitute an agreement by the Collateral Agent to make similar payments or
deposits in the future or a waiver by the Collateral Agent of any Event of
Default under this Agreement. The Collateral Agent need not inquire as to, or
contest the validity of, any such expense, tax, or Lien and the receipt of the
usual official notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.

                                       17
<PAGE>

8. WAIVERS; INDEMNIFICATION.

      8.1 DEMAND; PROTEST. Each Debtor waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Collateral Agent on which such Debtor may in any way be liable.

      8.2 COLLATERAL AGENT'S LIABILITY FOR COLLATERAL OF EACH DEBTOR. Each
Debtor hereby agrees that: (a) so long as the Collateral Agent complies with its
obligations, if any, under the Code, the Collateral Agent shall not in any way
or manner be liable or responsible for: (i) the safekeeping of the Collateral of
such Debtor, (ii) any loss or damage thereto occurring or arising in any manner
or fashion from any cause, (iii) any diminution in the value thereof, or (iv)
any act or default of any carrier, warehouseman, bailee, forwarding agency, or
other Person, and (b) all risk of loss, damage, or destruction of the Collateral
of such Debtor shall be borne by such Debtor.

      8.3 INDEMNIFICATION. Each Debtor shall, jointly and severally, pay,
indemnify, defend, and hold the Collateral Agent-Related Persons (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Indenture Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement or any other Indenture
Document, or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, such Debtor shall have no obligation
to any Indemnified Person under this Section 8.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment in full of the Obligations or the Defeasance thereof. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which such Debtor was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by such Debtor
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

                                       18
<PAGE>

9. NOTICES.

            All notices and other communications hereunder to Collateral Agent
shall be in writing and shall be mailed, sent or delivered in accordance with
the Indenture and all notices and other communications hereunder to any Debtor
shall be in writing and shall be mailed, sent or delivered in care of Company in
accordance with the Indenture.

10. CHOICE OF LAW; JURY TRIAL WAIVER.

            (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

            (b) EACH DEBTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.

11. AMENDMENTS; WAIVERS.

            11.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement, and no consent with respect to any departure by any Debtor
herefrom, shall be effective unless the same shall be in writing and signed by
the Collateral Agent and such Debtor and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. Notwithstanding the foregoing, the parties hereto agree that in the
event that Rule 3-16 of Regulation S-X under the Securities Act is amended,
modified or interpreted by the SEC to require (or is replaced with another rule
or regulation, or any other law, rule or regulation is adopted, which would
require) the filing with the SEC of separate financial statements of any Issuer
whose Capital Stock constitute Collateral, the term "Excluded Capital Stock"
shall be deemed amended (without further action or consent by any Debtor,
Collateral Agent, the Trustee or any Holder) to the extent, and only to the
extent, necessary to avoid the requirement of filing with the SEC of such
separate audited financial statements of such Issuer, and for the avoidance of
doubt, Collateral shall not include any Excluded Capital Stock as amended.

            11.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Collateral
Agent to exercise any right, remedy, or option under this Agreement or any other
Indenture Document, or delay by the Collateral Agent in exercising the same,
will operate as a waiver thereof. No waiver by the Collateral Agent will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Collateral Agent on any occasion shall affect or
diminish

                                       19
<PAGE>

the Collateral Agent's rights thereafter to require strict performance by each
Debtor of any provision of this Agreement. The Collateral Agent's rights under
this Agreement and the other Indenture Documents will be cumulative and not
exclusive of any other right or remedy that the Collateral Agent may have.

12. GENERAL PROVISIONS.

      12.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by each Debtor and the Collateral Agent.

      12.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that no party may assign this Agreement or any rights or duties hereunder other
than pursuant to the terms of the Indenture.

      12.3 SECTION HEADINGS. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

      12.4 INTERPRETATION; GOVERNMENT REGULATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against the Collateral Agent,
any other Secured Party or any Debtor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto.

      12.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

      12.6 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.

      12.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Debtor or the transfer by any Debtor to the
Collateral Agent of any property of such Debtor should for any reason
subsequently be declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the Bankruptcy Code
relating to fraudulent conveyances, preferences, or other voidable or
recoverable payments of money or transfers of property (collectively, a
"Voidable Transfer"), and if the Collateral Agent is required to repay or
restore, in whole or in part, any such Voidable Transfer, or elects to do so

                                       20
<PAGE>

upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Collateral Agent is required or elects
to repay or restore, and as to all reasonable costs, expenses, and attorneys
fees of the Collateral Agent related thereto, the liability of such Debtor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

      12.8 INTEGRATION. This Agreement, together with the other Indenture
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

      12.9 DEBTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding:

            (a) Debtors will remain liable under the contracts and agreements
      included in the Collateral to the extent set forth therein, and will
      perform all of their duties and obligations under such contracts and
      agreements to the same extent as if this Agreement had not been executed;

            (b) the exercise by Collateral Agent of any of its rights hereunder
      will not release any Debtor from any of its duties or obligations under
      any such contracts or agreements included in the Collateral; and

            (a) none of Collateral Agent, the Trustee or any Holder will have
any obligation or liability under any contracts or agreements included in the
Collateral by reason of this Agreement, nor will any such Person be obligated to
perform any of the obligations or duties of any Debtor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.

      12.10 COLLATERAL COMPRISED OF EQUITY INTERESTS OF SUBSIDIARIES. The
provisions of the Pledge Agreement, as they relate to Collateral comprised of
Equity Interests of Issuers that are Subsidiaries of any Debtor and the Excluded
Capital Stock related thereto are incorporated by reference herein, mutatis
mutandis.

      12.11 CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Collateral and shall: (i) remain in full
force and effect until the payment in full of all Obligations (other than
contingent indemnification obligations) or the Defeasance thereof except as
otherwise provided in the Indenture; (ii) be binding upon each Debtor and its
successors and assigns, except as otherwise provided in the Indenture; and (iii)
inure to the benefit of Collateral Agent and its successors, transferees, and
assigns. Upon the payment in full of all Obligations (other than contingent
indemnification obligations) or the Defeasance thereof, the security interests
granted herein shall automatically terminate and all rights to the Collateral
shall revert to the applicable Debtor and all restrictions imposed on the
exercise by such Debtor of any of its rights with respect to any Excluded
Capital Stock held by it shall be terminated. Upon any termination of any
security interest referred to in this Section 12.11, Collateral Agent will, at
Debtors' expense, execute and deliver to each Debtor such documents without
recourse, representation or warranty as such Debtor shall reasonably request to
evidence such termination.

                                       21
<PAGE>

      12.12 SECURITY INTEREST ABSOLUTE. To the maximum extent permitted by law,
all rights of Collateral Agent, all security interests hereunder, and all
obligations of each Debtor hereunder, shall be absolute and unconditional
irrespective of:

            (a) any lack of validity or enforceability of any of the Obligations
or any other agreement or instrument relating thereto, including any of the
Indenture Documents;

            (b) any change in the time, manner, or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any of the Indenture Documents,
or any other agreement or instrument relating thereto;

            (c) any exchange, release, or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guaranty for all or any of the Obligations; or

            (d) any other circumstances that might otherwise constitute a
defense available to, or a discharge of, any Debtor.

To the maximum extent permitted by law, each Debtor hereby waives any right to
require Collateral Agent to: (A) proceed against or exhaust any security held
from such Debtor; or (B) pursue any other remedy in Collateral Agent's power
whatsoever.

      12.13 POSTPONEMENT OF SUBROGATION. Each Debtor hereby agrees that it will
not exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
prior payment in full of all Obligations (other than contingent indemnification
obligations) or the Defeasance thereof. Subject to the terms of the
Intercreditor Agreement, any amount paid to any Debtor on account of any payment
made hereunder prior to the payment in full of all Obligations (other than
contingent indemnification obligations) or the Defeasance thereof shall be held
in trust for the benefit of Collateral Agent, the Holders and the Trustee and
shall immediately be paid to Collateral Agent, to be distributed to the Trustee
for application against the Obligations, whether matured or unmatured, in
accordance with the terms of the Indenture. In furtherance of the foregoing, for
so long as any Obligations (other than contingent indemnification obligations)
remain outstanding or the Defeasance thereof shall not have been consummated,
each Debtor shall refrain from taking any action or commencing any proceeding
against Company or any other Debtor (or any of their respective successors or
assigns, whether in connection with a Insolvency Proceeding or otherwise) to
recover any amounts in respect of payments made under this Agreement to
Collateral Agent, the Trustee or any Holder.

      12.14 INTERCREDITOR AGREEMENT.

            (a) The Liens granted hereunder in favor of Collateral Agent for the
benefit of itself, the Trustee and the Holders in respect of the Collateral and
the exercise of any right related thereto thereby shall be subject, in each
case, to the terms of the Intercreditor Agreement.

                                       22
<PAGE>

            (b) In the event of any direct conflict between the express terms
and provisions of this Agreement and of the Intercreditor Agreement, the terms
and provisions of the Intercreditor Agreement shall control.

            (c) Notwithstanding anything to the contrary herein, any provision
hereof that requires any Debtor to (i) deliver any Collateral to Collateral
Agent or (ii) provide that the Collateral Agent have control over such
Collateral may be satisfied by (A) the delivery of such Collateral by such
Debtor to the Administrative Agent for the benefit of the Lenders and Collateral
Agent for the benefit of itself, the Trustee and the Holders pursuant to Section
3.03 of the Intercreditor Agreement and (B) providing that the Administrative
Agent be provided with control with respect to such Collateral of such Debtor
for the benefit of the Lenders and Collateral Agent for the benefit of itself,
the Trustee and the Holders pursuant to Section 3.03 of the Intercreditor
Agreement.

                          [Signature pages to follow.]

                                       23
<PAGE>

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

                                              VISKASE COMPANIES, INC.,
                                                  a Delaware corporation

                                              By: /s/ Gordon S. Donovan
                                                  ------------------------------
                                                  Title:

                                              LASALLE BANK NATIONAL ASSOCIATION,
                                                  as Collateral Agent

                                              By: /s/
                                                  ------------------------------
                                                  Title: First Vice President

                                       24<PAGE>

                                                                   EXHIBIT 10.17

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

      THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement"), dated as
of June 29, 2004, is made by VISKASE COMPANIES, INC., a Delaware corporation
(the "Grantor"), in favor of LASALLE BANK NATIONAL ASSOCIATION ("LaSalle"), as
collateral agent (together with its successor(s) thereto in such capacity,
"Grantee") for the Trustee and Holders, in light of the following:

                              W I T N E S S E T H:

      WHEREAS, the Grantor and LaSalle, as collateral agent and as trustee (in
such capacity, the "Trustee"), have entered into an Indenture, dated as of June
29, 2004 (as amended, restated, supplemented or otherwise modified from time to
time, the "Indenture"), pursuant to which the Grantor has issued 90,000 Units
(and, together with any additional units that may be issued from time to time
thereunder or exchanged therefor or for such additional units, the "Units"),
each of which consists of an 11-1/2% Senior Secured Note due 2011 in a principal
amount of $1,000 (and, together with any additional notes that may be issued by
the Grantor from time to time thereunder or exchanged therefor or for such
additional notes, the "Notes") and a warrant to purchase 8.947 shares of common
stock of the Grantor, at an exercise price of $0.01 per share, subject to
adjustment;

      WHEREAS, the Grantor and the Grantee have entered into that certain
Security Agreement, dated as of June 29, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the "Security Agreement"),
pursuant to which the Grantor has granted security interests in certain of its
assets (including its Intellectual Property) as more fully described therein;

      WHEREAS, the Grantor and Wells Fargo Foothill, Inc. have entered into that
certain Loan and Security Agreement dated as of June 29, 2004 (as amended,
restated, supplemented, replaced or otherwise modified from time to time, the
"Credit Agreement");

      WHEREAS, the Grantee, the Administrative Agent and the Grantor have
entered into that certain Intercreditor and Lien Subordination Agreement, dated
as of June 29, 2004 (as amended, restated, supplemented, replaced or otherwise
modified from time to time, the "Intercreditor Agreement"), which agreement,
among other things, sets forth, as between the Grantee and the Administrative
Agent, the relative priority of their respective Liens in the Collateral
(including the Intellectual Property) and their rights with respect thereto;

      WHEREAS, the Grantor desires to secure its Obligations under the Notes,
the Indenture and each other Indenture Document to which it becomes a party by
granting to Grantee, for the benefit of itself, the Trustee and the Holders,
security interests in the Intellectual Property as set forth herein; and

      WHEREAS, to induce the Initial Purchaser to purchase the Units and the
underlying Notes, each Holder to hold the Units and the underlying Notes to be
held by it and LaSalle to act in its capacities as trustee and collateral agent,
the Grantor desires to pledge, grant, transfer, and assign to Grantee, for the
benefit of itself, the Holders and the Trustee, a security interest in the
Intellectual Property to secure the Obligations, as provided herein.

<PAGE>

      NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor (intending to be legally bound hereby) agrees as
follows:

            1. Incorporation of Security Agreement. The Security Agreement and
the terms and provisions thereof are hereby incorporated herein in their
entirety by this reference thereto. All terms capitalized but not otherwise
defined herein shall have the same meanings herein as in the Security Agreement.

            2. Security Interest in Intellectual Property. To secure prompt
payment of any and all of the Obligations in accordance with the terms and
conditions of the Security Agreement and in order to secure prompt performance
by Grantor of each of its covenants and duties under the Indenture Documents,
Grantor hereby grants to Grantee, for the benefit of the Grantee and the other
Secured Parties, a continuing security interest in, all of Grantor's right,
title and interest in and to all of the following now owned and existing and
hereafter arising, created or acquired property and products and proceeds
thereof (collectively, the "Intellectual Property"):

      (i) patents and patent applications, including, without limitation, rights
in the inventions and improvements described and claimed therein, and those
patents listed on Exhibit A attached hereto and hereby made a part hereof, and
(a) all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (b) all income, royalties, damages, proceeds and
payments now and hereafter due or payable under or with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world (all of the foregoing patents and applications, together with the items
described in clauses (a)-(d) of this subsection 2(i), are sometimes hereinafter
referred to individually as a "Patent" and, collectively, as the "Patents"); and

      (ii) trademarks, trademark registrations, trademark applications, trade
names and tradestyles, brand names, service marks, service mark registrations
and service mark applications, including, without limitation, the trademarks,
trade names, brand names, service marks and applications and registrations
thereof listed on Exhibit B attached hereto and hereby made a part hereof, and
(a) all renewals or extensions thereof, (b) all income, royalties, proceeds,
damages and payments now and hereafter due or payable with respect thereto,
including, without limitation, damages and payments for past or future
infringements thereof, (c) the right to sue for past, present and future
infringements thereof, and (d) all rights corresponding thereto throughout the
world (all of the foregoing trademarks, trade names and tradestyles, brand
names, service marks and applications and registrations thereof, together with
the items described in clauses (a)-(d) of this subsection 2(ii), are sometimes
hereinafter referred to individually as a "Trademark" and, collectively, as the
"Trademarks"); and

      (iii) rights under or interests in any patent, trademark, or copyright
license agreements with any other Person (to the extent a security interest may
be granted in such rights without violating the terms of any such license
agreement; with respect to any of the Intellectual Property or any other patent,
trademark, service mark or any application or registration thereof or any other
trade name or tradestyle between Grantor and any other Person, whether Grantor
is a

                                     - 2 -
<PAGE>

licensor or licensee under any such license agreement, including, without
limitation, the licenses listed on Exhibit C attached hereto and hereby made a
part hereof (all of the foregoing license agreements and Grantor's rights
thereunder are referred to collectively as the "Licenses"); and

      (iv) the goodwill of Grantor's business connected with and symbolized by
the Trademarks; and

      (v) copyrights, copyright registrations and copyright applications, used
in the United States and elsewhere, including, without limitation, the copyright
registrations and copyright applications listed on Exhibit D attached hereto and
made a part hereof, and (a) renewals or extensions thereof, (b) all income,
royalties, proceeds, damages and payments now and hereafter due and/or payable
with respect thereto, including, without limitation, damages and payments for
past or future infringements thereof, (c) the right to sue for past, present and
future infringements thereof, and (d) all rights corresponding thereto
throughout the world (all of the foregoing copyrights, copyright registrations
and copyright applications, together with the items described in clauses
(a)-(d), are sometimes hereinafter individually and/or collectively referred to
as the "Copyrights"); and

      (vi) all trade secrets, formulas, processes, devices, know-how, or
compilations of information (including technical information and non-technical
information such as customer lists and marketing plans), collectively referred
to as trade secrets, which are not available to others and which are maintained
as confidential by Grantor, and the right to prevent misappropriation and
unauthorized disclosures thereof and all rights corresponding thereto throughout
the world (all of the foregoing trade secrets and associated rights are
sometimes hereinafter individually and/or collectively referred to as the "Trade
Secrets").

            3. Representations and Warranties. Grantor hereby represents and
warrants to Grantee for the benefit of the Grantee and the other Secured
Parties, which representations and warranties shall survive the execution and
delivery of this Agreement, that:

      (i) None of the issued patents, patent applications, registered
trademarks, trademark applications, registered copyrights or copyright
applications (collectively, the "REGISTERED INTELLECTUAL PROPERTY") has been
adjudged invalid or unenforceable nor has any such Registered Intellectual
Property been cancelled, in whole or in part, and each such Intellectual
Property is presently subsisting;

      (ii) To the knowledge of the Grantor, none of the Intellectual Property
infringes upon the rights or property of any other Person or is currently being
challenged in any way

      (iii) There are no pending or, to the knowledge of the Grantor, threatened
claims, litigation, proceedings or other investigations regarding any of the
Intellectual Property;

      (iv) Each of the Intellectual Property material to the Grantor's business
is valid and enforceable, and the Grantor has adopted adequate precautions to
protect its Trade Secrets from unauthorized or accidental disclosure;

      (v) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Registered Intellectual Property, free
and clear of any liens, security

                                     - 3 -
<PAGE>

interests, mortgages, charges and encumbrances, including, without limitation,
licenses, consent-to-use agreements, shop rights and covenants by Grantor not to
sue third Persons (except for Permitted Liens);

      (vi) Grantor has adopted, used and is currently using all of the
Trademarks, and, to the knowledge of Grantor, Grantor's use thereof does not
infringe the intellectual property rights of any person or entity;

      (vii) Grantor has no written notice or knowledge of any suits or actions
commenced or threatened with reference to or in connection with any of the
Intellectual Property;

      (viii) Grantor has the unqualified right to execute and deliver this
Agreement and perform its terms, this Agreement has been executed and delivered
by a duly authorized officer of Grantor, and this Agreement is a legally
enforceable obligation of Grantor;

      (ix) No trademark opposition or cancellation proceedings have been filed
in the prior three years with the United States Patent and Trademark Office
against any of the Trademarks; and

      (x) The Licenses, complete copies of which have been provided to Grantor,
are valid and binding agreements, enforceable in accordance with their terms
(subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency and similar laws from time to time in effect). Each
of the material Licenses is in full force and effect and has not been amended or
abrogated and, to the knowledge of the Grantor, there is no default under any of
the Licenses.

            4. Restrictions on Future Agreements. Except as otherwise permitted
pursuant to the Indenture, Grantor agrees that until all Obligations shall have
been satisfied and paid in full (other than contingent indemnification
obligations) or the Defeasance thereof shall have been consummated, Grantor
shall not, without the prior written consent of Grantee, Dispose, grant a Lien
on, encumber or assign any or all of, or grant any license or sublicense under
(other than as commercially reasonable in Grantor's good faith business
judgment), the Intellectual Property, or enter into any other agreement with
respect to the Intellectual Property, and Grantor further agrees that it shall
not knowingly take any action or knowingly permit any action to be taken by
others subject to its control, including, without limitation, licensees or
sublicensees, or knowingly fail to take any action, which would materially
adversely affect the validity or enforcement of the rights Grantee subject to
this Agreement, other than in the ordinary course of business.

            5. New Intellectual Property. Grantor hereby represents and warrants
to Grantee for the benefit of the Grantee and the other Secured Parties that the
Intellectual Property listed on Exhibits A, B and C, respectively, constitute
all of the Registered Intellectual Property now owned by Grantor. Grantor hereby
represents and warrants to Grantee for the benefit of Grantee and the other
Secured Parties that the Intellectual Property listed on Exhibit C constitute
all of the material Licenses now owned by Grantor. If, before all Obligations
(other than contingent indemnification obligations) shall have been satisfied in
full or the Defeasance thereof shall have been consummated, Grantor shall (i)
become aware of any existing Registered

                                     - 4 -
<PAGE>

Intellectual Property of which Grantor has not previously informed Grantee, (ii)
obtain rights to any Registered Intellectual Property, or (iii) become entitled
to the benefit of any material Intellectual Property which benefit is not in
existence on the date hereof, the provisions of this Agreement above shall
automatically apply thereto and Grantor shall give to Grantee prompt written
notice thereof. Grantor hereby authorizes Grantee to modify this Agreement by
amending Exhibits A, B, C, and D, as applicable, to include any such
Intellectual Property, and Grantee may file or refile this Agreement with the
United States Patent and Trademark Office and United States Copyright Office.
Grantor agrees to execute and deliver any and all documents and instruments
necessary or advisable to record or preserve Grantee's interest in all
Intellectual Property added to Exhibits A, B, C, and D pursuant to this Section.

            6. Royalties; Terms; Rights Upon Default. The term of this Agreement
shall extend until the earlier of (i) the expiration of all of the respective
material Intellectual Property collaterally assigned hereunder, (ii) the payment
in full of all Obligations (other than contingent indemnification obligations)
and (iii) the Defeasance of all Obligations (other than contingent
indemnification obligations) shall have been consummated. Grantor agrees that
upon the occurrence and during the continuance of an Event of Default, the use
by Grantee for the benefit of the Grantee and the other Secured Parties of all
Intellectual Property shall be worldwide and as extensive as the rights of
Grantor to use such Intellectual Property, and without any liability for
royalties or other related charges from Grantee or the other Secured Parties to
Grantor, solely for the purpose of completing production of, advertising for
sale and selling any Intellectual Property.

            7. Grantee's Right to Inspect; Trademark Quality Control. To the
extent permitted by the Security Agreement, Grantee shall have the right, from
time to time with prior notice (unless an Event of Default has occurred and is
continuing, in which case prior notice shall not be required) and, during normal
business hours and prior to payment in full of all Obligations (other than
contingent indemnification obligations) or the Defeasance thereof, to inspect
Grantor's premises and to examine Grantor's books, records and operations,
including, without limitation, Grantor's quality control processes. Grantor
agrees (i) to maintain the quality of any and all products in connection with
which the material Trademarks are used, consistent with the quality of said
products (as determined by Grantor in its commercially reasonable business
judgment) and (ii) to provide Grantee, upon Grantee's reasonable request from
time to time, with a certificate of an officer of Grantor certifying Grantor's
compliance with the foregoing.

            8. Release of Security Interest. Upon the payment and performance in
full in cash of the Obligations (other than contingent indemnification
obligations) or the Defeasance thereof, this Agreement shall terminate, and
Grantee shall execute and deliver such documents and instruments and take such
further action reasonably requested by Grantor, at Grantor's expense, as shall
be necessary to evidence termination of the security interest granted by Grantor
to Grantee for the benefit of the Grantee and the other Secured Parties
hereunder.

            9. Expenses. All costs and expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by Grantor.
All fees, costs and expenses, of whatever kind or nature, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by Grantee (for the
benefit of the Grantee and the other Secured

                                     - 5 -
<PAGE>

Parties) in connection with the filing or recording of any documents (including
all taxes in connection therewith) in public offices, the payment or discharge
of any taxes, counsel fees, maintenance fees, encumbrances or otherwise in
protecting, maintaining or preserving the Intellectual Property, or in defending
or prosecuting any actions or proceedings arising out of or related to the
Intellectual Property, shall be borne by and paid by Grantor on demand by
Grantee on behalf of the Grantee and the other Secured Parties and until so paid
shall bear interest at the "default rate of interest" set forth in the
Indenture.

            10. Duties of Grantor. Grantor shall have the duty to the extent
commercially reasonable and in Grantor's good faith business judgment,
desirable: (i) to file and prosecute diligently any patent, trademark or service
mark applications pending as of the date hereof or hereafter until all
Obligations (other than contingent indemnification obligations) shall have been
paid in full or the Defeasance thereof shall have been consummated, (ii) except
as otherwise provided in the Indenture or any other Indenture Document, to
preserve and maintain all rights in the material Intellectual Property
(including, but not limited to, with respect to Trademarks, the filing of
affidavits of use and, incontestability, where applicable, under Sections 8 and
15 of the Lanham Act (15 U.S.C. Section 1058, 1065) and renewals and, to the
extent commercially reasonable, initiating opposition or cancellation
proceedings or litigation against users of the same or confusingly similar marks
who seriously threaten the validity or rights of Grantor in its material
Trademarks), and (iii) to ensure that the Registered Intellectual Property is
and remains enforceable. The Grantee shall be reimbursed for all such costs and
expenses which constitute to the extent required under the Security Agreement or
the Indenture. Grantor shall not knowingly or unreasonably abandon any right to
file a material patent, trademark or service mark application, or abandon any
pending patent application, or any other material Intellectual Property, unless
Grantor, in the exercise of its commercially reasonable business judgment
determines that such abandonment will not materially and adverse effect its
business.

            11. Grantee's Right to Sue. Upon the occurrence and during the
continuance of an Event of Default, Grantee for the benefit of the Grantee and
the other Secured Parties shall have the right, but shall in no way be
obligated, to bring suit in its own name to enforce the Intellectual Property,
only after Grantee has tendered notice to Grantor of Grantee's desire to
initiate such suit and Grantor has declined in writing to itself pursue such
suit, and, if Grantee shall commence any such suit, Grantor shall, at the
request of Grantee, do any and all lawful acts and execute any and all proper
documents and instruments reasonably required by Grantee for the benefit of the
Grantee and the other Secured Parties in aid of such enforcement.

            12. No Waivers; Cumulative Remedies. No course of dealing between
Grantor and Grantee, nor any failure to exercise, nor any delay in exercising,
on the part of Grantee, any right, power or privilege hereunder or under the
Indenture or any other Indenture Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.

            13. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid and unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof,

                                     - 6 -
<PAGE>

in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.

            14. Modification. This Agreement cannot be altered, amended or
modified in any way, except as specifically provided in Section 5 hereof or by a
writing signed by the Grantor and the Grantee.

            15. Cumulative Remedies; Power of Attorney; Effect on Indenture
Documents. All of Grantee's rights and remedies with respect to the Intellectual
Property (for the benefit of the Grantee and the other Secured Parties), whether
established hereby or by the Indenture or any other Indenture Document, or by
any other agreements or by law shall be cumulative and may be exercised
singularly or concurrently. Grantor hereby authorizes Grantee for the benefit of
the Grantee and the other Secured Parties upon the occurrence and during the
continuance of an Event of Default, to make, constitute and appoint any officer
or agent of Grantee as Grantee may select, in its sole discretion, as Grantor's
true and lawful attorney-in-fact, with power to, for the benefit of the Grantee
and the other Secured Parties, (i) endorse Grantor's name on all applications,
documents, papers and instruments necessary or desirable for Grantee in the use
of the Intellectual Property, or (ii) take any other actions with respect to the
Intellectual Property as Grantee deems in its commercially reasonable judgment
to be in the best interest of Grantee, or (iii) grant or issue any exclusive or
non-exclusive license under the Intellectual Property to any person or entity,
or (iv) assign, pledge, sell, convey or otherwise transfer title in or dispose
of any of the Intellectual Property to any person or entity. Grantor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney being coupled with an interest shall be
irrevocable until all Obligations shall have been paid in full (other than
contingent indemnification obligations) or the Defeasance thereof shall have
been consummated. Grantor acknowledges and agrees that this Agreement is not
intended to limit or restrict in any way the rights and remedies of Grantee
under the Indenture or any other Indenture Document but rather is intended to
facilitate the exercise of such rights and remedies. Grantee shall have, in
addition to all other rights and remedies given it by the terms of this
Agreement, the Indenture and the other Indenture Documents, all rights and
remedies allowed by law, in equity, and the rights and remedies of a secured
party under the Uniform Commercial Code as enacted in the State of New York.

            16. Grantor Remain Liable. Anything herein to the contrary
notwithstanding:

            (a) the Grantor will remain liable under the contracts and
      agreements included in the Intellectual Property to the extent set forth
      therein, and will perform all of its duties and obligations under such
      contracts and agreements to the same extent as if this Agreement had not
      been executed;

            (b) the exercise by the Grantee of any of its rights hereunder will
      not release the Grantor from any of its duties or obligations under any
      such contracts or agreements included in the Intellectual Property; and

            (c) no Secured Party will have any obligation or liability under any
      contracts or agreements included in the Intellectual Property by reason of
      this Agreement, nor will any such Person be obligated to perform any of
      the obligations or duties of the Grantor

                                     - 7 -
<PAGE>

      thereunder or to take any action to collect or enforce any claim for
      payment assigned hereunder.

            17. Binding Effect; Benefits. This Agreement shall be binding upon
Grantor and its respective successors and assigns, and shall inure to the
benefit of Grantee, its successors, nominees and assigns; provided, however,
that neither party may assign this Agreement or any rights or duties hereunder
other than pursuant to the terms of the Indenture.

            18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

            19. Headings; Counterparts. Paragraph headings used herein are for
convenience only and shall not modify the provisions which they precede. This
Agreement may be signed in one or more counterparts, but all of such
counterparts shall constitute and be deemed to be one and the same instrument.
Any fax signature shall be deemed to be as legally enforceable and effective as
a signed original.

            20. Further Assurances. Grantor agrees to execute and deliver such
further agreements, instruments and documents, and to perform such further acts,
as Grantee shall reasonably request from time to time in order to carry out the
purpose of this Agreement and agreements set forth herein. Grantor acknowledges
that a copy of this Agreement will be filed by the Grantee with the United
States Patent and Trademark Office and, if applicable, the United States
Copyright Office, at the sole cost and expense of Grantor.

            21. Survival of Representations. All representations and warranties
of Grantor contained in this Agreement shall survive the execution and delivery
of this Agreement.

            22. Foreign Patents, Copyrights and Trademarks. Upon the occurrence
and during the continuance of an Event of Default, at the request of Grantee and
at the sole cost and expense (including, without limitation, reasonable
attorneys' fees) of Grantor, Grantor shall take all actions and execute and
deliver any and all instruments, agreements, assignments, certificates and/or
documents, reasonably required by Grantee to collaterally assign any and all of
Grantor's foreign patent, copyright and trademark registrations and applications
now owned or hereafter acquired to and in favor of Grantee. Upon the execution
and delivery of any such collateral assignments or documents, the terms
"Patents", "Copyrights", and "Trademarks" as used herein shall automatically be
deemed amended to include such foreign patent, copyright and trademark
registrations and applications without any action required by any person or
entity.

            23. JURY TRIAL WAIVER. THE GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR IN

                                     - 8 -
<PAGE>

CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

            24. Interpretation; Government Regulation. Neither this Agreement
nor any uncertainty or ambiguity herein shall be construed against the Grantee,
any other Secured Party or the Grantor, whether under any rule of construction
or otherwise. On the contrary, this Agreement has been reviewed by all parties
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto.

            25. Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by the Grantor or the transfer by the Grantor to the
Grantee of any property of the Grantor should for any reason subsequently be
declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Grantee or any other Secured Party is required to repay or restore, in whole
or in part, any such Voidable Transfer, or elects to do so upon the reasonable
advice of its counsel, then, as to any such Voidable Transfer, or the amount
thereof that the Grantee or such other Secured Party is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Grantee or such other Secured Party related thereto, the liability of the
Grantor automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.

            26. Intercreditor Agreement.

            (a) The Liens granted hereunder in favor of Grantee for the benefit
of itself, the Trustee and the Holders in respect of the Intellectual Property
and the exercise of any right related thereto thereby shall be subject, in each
case, to the terms of the Intercreditor Agreement.

            (b) In the event of any direct conflict between the express terms
and provisions of this Agreement and of the Intercreditor Agreement, the terms
and provisions of the Intercreditor Agreement shall control.

                            [Signature Page Follows]

                                     - 9 -
<PAGE>

      IN WITNESS WHEREOF, Grantor has duly executed this Intellectual Property
Security Agreement in favor of Grantee, as of the date first written above.

                                                GRANTOR:
                                                VISKASE COMPANIES, INC.

                                                By:   /s/ Gordon S. Donovan
                                                Name: Gordon S. Donovan
                                                Its:  Vice President

Agreed and Accepted as of this
29th, day of June, 2004

GRANTEE:
LASALLE BANK NATIONAL ASSOCIATION,
  as Collateral Agent

By: /s/ Victoria Y. Douyon
Name: Victoria Y. Douyon
Its: First Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]