Document:

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                                                                    EXHIBIT 10.4

                                PLEDGE AGREEMENT

         THIS PLEDGE AGREEMENT (this "Agreement"), dated as of June 29, 2004, is
made by VISKASE COMPANIES, INC.., a Delaware corporation ("Pledgor"), and WELLS
FARGO FOOTHILL, INC., a California corporation (together with its successors and
assigns, the "Pledgee").

                                    RECITALS:

      A. The Pledgor is an equity holder of the Persons identified as Issuers
listed on Annex A attached hereto.

      B. Pledgor is a party with the Pledgee, to that certain Loan and Security
Agreement of even date herewith (as the same may be amended, supplemented or
modified from time to time, the "Loan Agreement"), pursuant to which the Pledgor
has requested that the Pledgee make certain loans to the Pledgor; capitalized
terms used but not defined herein shall have the meanings ascribed thereto in
the Loan Agreement.

      C. It is a condition precedent to the making of the loans under and
pursuant to the Loan Agreement that the Pledgor execute and deliver this
Agreement and shall have made the pledge contemplated hereunder in favor of the
Pledgee for the benefit of the Pledgee and the Bank Product Providers.

      NOW, THEREFORE, in consideration of the premises hereinabove, and to
induce the Pledgee to make the loans identified hereinabove pursuant to the Loan
Agreement and in consideration of the benefits accruing to the Pledgor, and for
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the Pledgor hereby covenants and agrees with the
Pledgee for the benefit of the Pledgee and the Bank Product Providers as
follows:

      1. SECURITY FOR OBLIGATIONS. This Agreement is for the benefit of the
Pledgee and the Bank Product Providers to secure the prompt and complete payment
and performance when due of any and all of the Obligations.

      2. DEFINITION OF ISSUERS; DESIGNATED NUMBER; EQUITY INTERESTS; PLEDGED
INTERESTS; PLEDGED COLLATERAL. As used herein, (A) the term "Issuers" shall mean
each of the Persons identified as an Issuer on Annex A attached hereto (or any
addendum or supplement thereto), and any successors thereto, whether by merger
or otherwise; (B) the term "Designated Number" shall mean, with respect to any
Issuer, the largest whole number of Equity Interests of such Issuer representing
not greater than sixty- five percent (65%) of all of the fully diluted issued
and outstanding Equity Interests of such Issuer (whether or not owned by the
Pledgor); (C) the term "Equity Interests" shall mean shares, units, options,
warrants, interests, participations, securities, investment property or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company, or equivalent entity, whether voting or nonvoting,
including general partner partnership interests, limited

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partner partnership interests, common stock, preferred stock or any other equity
security; (D) the term "Pledged Interest" means, with respect to each Issuer,
the Designated Number of Equity Interests identified as Pledged Interests of
such Issuer on Annex A attached hereto (or any addendum or supplement thereto);
and (E) the term "Pledged Collateral" means the "Pledged Interests" and the
"Future Rights" as defined in and acquired pursuant to Section 3.2 below,
collectively. Annex A may be supplemented from time to time pursuant to Section
3.2 below. The Pledgor represents and warrants to the Pledgee for the benefit of
the Pledgee and the Bank Product Providers that on the date hereof (a) Annex A
attached hereto correctly identifies the Pledged Interests and the Pledged
Collateral owned by the Pledgor with respect to Issuers; and (b) the Pledgor is
the holder of record and sole beneficial and legal owner of such Pledged
Interests and Pledged Collateral.

      3. PLEDGE OF PLEDGED COLLATERAL AND OTHER COLLATERAL.

      3.1 Pledge. To secure the Obligations and for the purposes set forth in
Section 1 hereof, Pledgor hereby pledges and collaterally assigns, and grants a
security interest in and lien on, in favor of Pledgee for the benefit of the
Pledgee and the Bank Product Providers, all of Pledgor's right, title and
interest in, to, and under (A) the Pledged Collateral, (B) any additional
Pledged Collateral acquired pursuant to Section 3.2 below (whether by purchase,
dividend, merger, consolidation, sale of assets, split, spin-off, or any other
dividend or distribution of any kind or otherwise), (C) all distributions,
dividends, cash, certificates, liquidation rights and interests, options,
rights, warrants, instruments or other property from time to time received,
receivable or otherwise distributed in respect of or in exchange or substitution
for any and all of the Pledged Collateral (excluding any of the foregoing items
in the preceding clause with respect to an Issuer to the extent and only to the
extent that their inclusion would cause the number of Equity Interests pledged
under this Agreement to exceed, with respect to such Issuer, the Designated
Number after giving effect to such issuances), (D) the Pledgor's right to vote
the Pledged Collateral, and (E) all proceeds, products, replacements and
substitutions for any of the foregoing, in each case whether now owned or
hereafter acquired by the Pledgor (collectively, the "Collateral"). If the
Pledged Collateral is evidenced by certificates, then the Pledgor shall
concurrently herewith deposit with the Collateral Agent (as defined below), for
the benefit of the Pledgee and the Collateral Agent, in accordance with the
terms of that certain Intercreditor Agreement dated as of the date hereof (the
"Intercreditor Agreement") by and among the Pledgor, the Pledgee and LaSalle
Bank National Association (the "Collateral Agent"), the Pledged Collateral owned
by the Pledgor on the date hereof and the certificates representing the Pledged
Collateral accompanied by "stock powers" or an Assignment Separate From
Certificate duly executed in blank by the Pledgor. Whether or not the Pledged
Collateral is evidenced by certificates, the Pledgor hereby permits the Pledgee
to file a Code Financing Statement naming the Pledgor as debtor and the Pledgee
as secured party with respect to the Collateral with the Delaware Secretary of
State, in form and substance satisfactory to the Pledgee in its sole and
absolute determination, and without the requirement of the Pledgor's signature.
Notwithstanding anything to the contrary contained in this Agreement, the
Pledgee shall not as a result of this Agreement be responsible or liable for any
obligations or liabilities of the Pledgor in the Pledgor's capacity as a
shareholder, if any, and the Pledgee shall not be deemed to have assumed any of
such obligations or liabilities.

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      3.2 Subsequently Acquired Pledged Collateral. If at any time or from time
to time after the date hereof during the term of this Agreement, the Pledgor
shall acquire any additional Pledged Interests, including any further stock, or
equity in each Issuer (whether by purchase, dividend, merger, consolidation,
sale of assets, split, spin-off, or any other dividend or distribution of any
kind or otherwise) (collectively, the "Future Rights") (provided, however, that
Future Rights under the preceding clause shall exclude any Future Rights to the
extent and only to the extent that their inclusion would cause the number of
Equity Interests pledged hereunder to exceed the Designated Number after giving
effect to the issuance of such Future Rights and any related issuances). If the
Intercreditor Agreement is in effect at such time, then the Pledgor will
forthwith pledge and, if applicable, deposit such additional Pledged Collateral
with the Collateral Agent, for the benefit of the Pledgee and the Collateral
Agent in accordance with the terms of the Intercreditor Agreement and deliver to
the Collateral Agent, for the benefit of the Pledgee and the Collateral Agent in
accordance with the terms of the Intercreditor Agreement, certificates or
instruments therefor, endorsed in blank by the Pledgor or accompanied by "stock
powers" or an Assignment Separate From Certificate duly executed in blank by the
Pledgor, and will promptly thereafter deliver to the Collateral Agent, for the
benefit of the Pledgee and the Collateral Agent in accordance with the terms of
the Intercreditor Agreement, a certificate (which shall be deemed to supplement
Annex A attached hereto) executed by the Pledgor describing such Pledged
Collateral and the other Pledged Collateral pledged to the Pledgee, and
certifying that the same have been duly pledged with the Pledgee hereunder. If
the Intercreditor Agreement is not in effect at such time, then the Pledgor will
make such deposits directly to the Pledgee. Whether or not such additional
Pledged Collateral is evidenced by certificates, the Pledgor shall permit the
Pledgee to file a Code Financing Statement naming the Pledgor as debtor and the
Pledgee as secured party with respect to the additional Collateral with the
Delaware Secretary of State, in form and substance satisfactory to the Pledgee
in its sole and absolute determination, and without the requirement of the
Pledgor's signature.

      3.3 Uncertificated Pledged Collateral. In addition to anything contained
in Sections 3.1 and 3.2 hereof, if any Pledged Collateral (whether now owned or
hereafter acquired) is not certificated or becomes an uncertificated security,
the Pledgor shall promptly notify the Pledgee thereof and shall promptly take
all actions required to perfect the security interest and pledge in favor of the
Pledgee under applicable law (including, in any event, any action required or
appropriate under this Agreement or the Code). The Pledgor further agrees to
take such actions as the Pledgee deems necessary or desirable to effectuate the
foregoing and to permit the Pledgee to exercise any of its rights and remedies
hereunder.

      4. VOTING, ETC. Until the occurrence and continuance of an Event of
Default (as defined in the Loan Agreement), the Pledgor shall be entitled to
vote any and all of the Pledged Collateral; provided; however, that no vote
shall be cast or any action taken by Pledgor which would violate or be
materially inconsistent with any of the terms of this Agreement, the Loan
Agreement, any other Loan Document, or which would have the effect of materially
impairing the position or interests of the Pledgee or which would authorize or
effect actions prohibited under the terms of the Loan Agreement or any Loan
Document. All such rights of the Pledgor to vote shall cease upon the occurrence
and during the continuance of an Event of Default, if the Pledgee so directs and
provides notice to the Pledgor to do so; provided, however, that upon the cure
or waiver of such Event of Default, all rights of the Pledgee to vote any and
all of the Pledged Collateral shall cease.

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      5. PAYMENTS AND OTHER DISTRIBUTIONS. Until the occurrence and continuance
of an Event of Default and subject in all cases to the Intercreditor Agreement,
all cash, dividends or distributions payable in respect of the Pledged
Collateral (to the extent such payments shall be permitted pursuant to the terms
and provisions of the Loan Agreement) shall be paid to the Pledgor; provided,
however, upon the occurrence and during the continuance of an Event of Default,
all cash dividends or distributions payable in respect of the Pledged Collateral
shall be paid to the Pledgee as security for the Obligations if the Pledgee so
directs and provides notice to the Pledgor to that effect; provided, further
that upon the cure or waiver of such Event of Default, all cash dividends or
distributions payable in respect of the Pledged Collateral shall be paid to the
Pledgor. The Pledgee shall be entitled to receive directly, and to retain as
part of the Collateral:

      (a) all other or additional securities or investment property, or rights
to subscribe for or purchase any of the foregoing, or property (other than cash)
paid or distributed by way of dividend in respect of the Pledged Collateral
(excluding any of the foregoing items in the preceding clause with respect to an
Issuer to the extent and only to the extent that their inclusion would cause the
number of Equity Interests pledged hereunder to exceed the Designated Number
after giving effect to such issuances); and

      (b) all other or additional securities, investment property or property
(including cash) paid or distributed in respect of the Pledged Collateral by way
of split, spin-off, split-up, reclassification, combination of shares or similar
rearrangement (excluding any of the foregoing items in the preceding clause with
respect to an Issuer to the extent and only to the extent that their inclusion
would cause the number of Equity Interests pledged hereunder to exceed the
Designated Number after giving effect to such issuances).

      Subject to the Intercreditor Agreement, if at any time the Pledgor shall
obtain or possess any of the foregoing Collateral described in this Section, the
Pledgor shall be deemed to hold such Collateral in trust for the Pledgee for the
benefit of the Pledgee and the Bank Product Providers, and the Pledgor shall
promptly surrender and deliver such Collateral to the Pledgee.

      6. REMEDIES IN CASE OF AN EVENT OF DEFAULT. Subject to the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, the Pledgee shall be entitled to exercise all of the rights, powers and
remedies (whether vested in it by this Agreement, the Loan Agreement, any other
Loan Documents, and/or in equity or by law, and including, without limitation,
all rights and remedies of a secured party of a debtor in default under the
Code) for the protection and enforcement of its rights in respect of the Pledged
Collateral, and to the fullest extent permitted by applicable law, the Pledgee
shall be entitled, without limitation, to exercise the following rights, which
the Pledgor hereby agrees to be commercially reasonable:

      (a) to receive all amounts payable to the Pledgor in respect of the
Pledged Collateral in accordance with Section 5 hereof;

      (b) to transfer all or any part of the Pledged Collateral into the
Pledgee's name or the name of its nominee or nominees for the benefit of the
Pledgee and the Bank Product Providers;

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      (c) to vote all or any part of the Pledged Collateral and otherwise act
with respect thereto as though it were the outright owner thereof in accordance
with Section 4 hereof;

      (d) at any time or from time to time to sell, assign and deliver, or grant
options to purchase, all or any part of the Pledged Collateral in one or more
parcels, or any interest therein, at any public or private sale at any exchange,
broker's board or at any of the Pledgee's offices or elsewhere, without demand
of performance, advertisement or notice of intention to sell or of time or place
of sale or adjournment thereof or to redeem (all of which, except as may be
required by mandatory provisions of applicable law, are hereby expressly and
irrevocably waived by the Pledgor) for cash, on credit or for other property,
for immediate or future delivery without any assumption of credit risk, and for
such price or prices and on such terms as the Pledgee in its commercially
reasonable judgment may determine. The Pledgor agrees that to the extent that
notice of sale shall be required by law that at least ten (10) calendar days'
notice to the Pledgor of the time (which shall be during normal business hours)
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Pledgee shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Pledgee may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and any such sale
may, without further notice, be made at the time and place to which it was so
adjourned. The Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the Pledged
Collateral, whether before or after sale hereunder, and all rights, if any of
marshalling the Pledged Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the Pledgee
may bid for and purchase all or any part of the Pledged Collateral so sold free
from any such right or equity of redemption. Neither the Pledgee nor any of the
Bank Product Providers shall be liable for failure to collect or realize upon
any or all of the Pledged Collateral or for any delay in so doing nor shall the
Pledgee nor any of the Bank Product Providers be under any obligation to take
any action whatsoever with regard thereto;

      (e) to settle, adjust, compromise and arrange all accounts, controversies,
questions, claims and demands whatsoever in relation to all or any part of the
Pledged Collateral;

      (f) in respect of the Pledged Collateral, to execute all such contracts,
agreements, deeds, documents and instruments, to bring, defend and abandon all
such actions, suits and proceedings, and to take all actions in relation to all
or any part of the Pledged Collateral as the Pledgee in its reasonable
discretion may determine;

      (g) to appoint managers, sub-agents, officers and servants for any of the
purposes mentioned in the foregoing provisions of this Section and to dismiss
the same, all as the Pledgee in its reasonable discretion may determine; and

      (h) generally, to take all such other action as the Pledgee in its
reasonable discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this Section and
which the Pledgee may or can do lawfully and to use the name of the Pledgor for
the purposes aforesaid and in any proceedings arising therefrom.

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      7. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of the Pledgee
(for the benefit of the Pledgee and the Bank Product Providers) provided for in
this Agreement, the Loan Agreement, any Loan Document (as defined in the Loan
Agreement) or any other security agreement, mortgage, guaranty or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee (for the benefit of the
Pledgee and the Bank Product Providers) of any one or more of the rights, powers
or remedies provided for in this Agreement, the Loan Agreement, or any other
Loan Document or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the Pledgee
of all such other rights, powers or remedies, and no failure or delay on the
part of the Pledgee to exercise any such right, power or remedy shall operate as
a waiver thereof.

      8. APPLICATION OF PROCEEDS. Subject to any mandatory requirements of
applicable law and the terms of the Loan Agreement and the Intercreditor
Agreement, all moneys collected by the Pledgee (for the benefit of the Pledgee
and the Bank Product Providers) upon sale or other disposition of the
Collateral, together with all other moneys received by the Pledgee hereunder,
shall be applied as follows:

      (a) To the payment of any and all Lender Expenses;

      (b) Next, to the payment of the Obligations in accordance with the Loan
Agreement; and

      (c) Any surplus then remaining shall be paid to the Pledgor.

      9. INDEMNITY. Without duplication of any amounts payable under any other
similar indemnity provision set forth in the Loan Agreement or any other Loan
Documents, the Pledgor shall: (i) pay all out-of-pocket costs and expenses of
the Pledgee incurred in connection with the administration of and in connection
with the preservation of rights under, and enforcement of, and any renegotiation
or restructuring of this Agreement and any amendment, waiver or consent relating
thereto (including, without limitation, the reasonable fees and disbursements of
counsel for the Pledgee); (ii) pay and hold the Pledgee and the Bank Product
Providers harmless from and against any and all present and future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to this Agreement and
save the Pledgee and the Bank Product Providers harmless from and against any
and all liabilities with respect to or resulting from any delay or omission to
pay any such taxes, charges or levies; and (iii) indemnify the Pledgee and each
of the Bank Product Providers, and each of their respective officers, directors,
shareholders, employees, representatives and agents from and hold each of them
harmless against any and all costs, losses, liabilities, claims, obligations,
suits, penalties, judgments, damages or expenses incurred by or asserted against
any of them (whether or not any of them is designated a party thereto) arising
out of or by reason of this Agreement or any transaction contemplated hereby
(including, without limitation, any investigation, litigation or other
proceeding related to this Agreement), including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding. Notwithstanding anything in
this Agreement

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to the contrary, the Pledgor shall not be responsible to the Pledgee or any Bank
Product Provider for any costs, losses, damages, liabilities or expenses which
result from the gross negligence or willful misconduct on the part of such
Pledgee or any Bank Product Provider. The Pledgor's obligations under this
Section shall survive any termination of this Agreement.

      10. FURTHER ASSURANCES. Pledgor agrees that, at any time and from time to
time, the Pledgor will join with the Pledgee in executing and, at the Pledgor's
own expense, will file and refile under the Code such financing statements,
continuation statements and other documents in such offices as the Pledgee may
deem necessary or appropriate and wherever required or permitted by law in order
to perfect and preserve the Pledgee's security interest in the Collateral, and
hereby authorizes the Pledgee to file financing statements and amendments
thereto relative to all or any part of the Collateral without the signature of
the Pledgor, and agrees to do such further acts and things and to promptly
execute and deliver to the Pledgee such additional conveyances, assignments,
agreements and instruments as the Pledgee may require or deem advisable to carry
into effect the purpose of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.

      11. REASONABLE CARE BY PLEDGEE. The Pledgee shall be deemed by the Pledgor
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Pledgee accords its own similar property.

      12. TRANSFER BY THE PLEDGOR. Except as otherwise permitted under the Loan
Agreement, if at all, the Pledgor shall not sell, transfer or otherwise dispose
of, grant any option with respect to, or pledge or otherwise encumber any of the
Collateral or any interest therein.

      13. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor hereby
represents and warrants to the Pledgee for the benefit of the Pledgee and the
Bank Product Providers, which representations and warranties shall survive the
execution and delivery of this Agreement, as follows:

      13.1 Validity, Perfection and Priority. The pledge and security interests
in the Pledged Collateral granted to the Pledgee constitute valid and continuing
security interests in the Pledged Collateral. Subject to the Intercreditor
Agreement and the liens in favor of the Collateral Agent, the security interests
in the Collateral granted to the Pledgee for the benefit of the Pledgee and the
Bank Product Providers hereunder constitute valid and perfected security
interests therein superior and prior to the rights or claims of any other person
or entity therein.

      13.2 No Liens; Other Financing Statements.

      (a) The Pledgor is the legal and beneficial owner of, and has good and
marketable title to, the Pledged Collateral.

      (b) Except for any filing made by the Collateral Agent, no financing
statement or other evidence of lien covering or purporting to cover any of the
Pledged Collateral is on file in any public office.

      13.3 Pledged Collateral.

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      (a) The Pledged Collateral described in Annex A attached hereto is, and
all other Pledged Collateral in which the Pledgor shall hereafter grant a lien
or security interest pursuant to Section 2 hereof will be, duly authorized,
validly issued, and fully paid, and, except for the pledge provided in Section
3.1 hereof in favor of Pledgee and in favor of the Collateral Agent, none of
such Pledged Collateral is or will be subject to any legal or contractual
restriction. The Pledged Collateral is, as of the date hereof, and shall be at
all times hereafter during the term of this Agreement, freely transferable
without restriction or limitation (except as limited by the terms of this
Agreement).

      (b) The Pledged Collateral described in Annex A hereto constitutes all of
the issued and outstanding securities and investment property legally and
beneficially owned by the Pledgor on the date hereof in or relating to each of
the Issuers. The Pledgor is the sole shareholder of each of the Issuers.

      13.4 Power and Authority. The Pledgor has the power and authority to
pledge and collaterally assign all of the Pledged Collateral pursuant to this
Agreement.

      13.5 Intentionally omitted.

      13.6 Litigation. There are no actions, suits or proceedings pending or, to
the Pledgor's best knowledge, threatened against or involving Pledgor before any
court with respect to any of the transactions contemplated by this Agreement or
the ability of the Pledgor to perform any of the obligations of the Pledgor
hereunder.

      13.7 State of Organization. The Pledgor's state of organization is
Delaware.

      13.8 Continued Existence. Upon any transfer of the Pledged Collateral to
any Person as permitted upon the occurrence and during the continuance of an
Event of Default in accordance with Section 6 hereof, each of the Issuers shall
continue in existence.

      14. COVENANTS OF THE PLEDGOR. Pledgor covenants and agrees with the
Pledgee that on and after the date hereof and until all of the Obligations shall
have been paid and performed in full (other than contingent indemnification
obligations) and this Agreement terminates in accordance with its terms:

      14.1 Collateral. (a) The Pledgor will use its commercially reasonable
efforts to defend the Pledgee's right, title and security interest in and to the
Collateral against the claims and demands of all Persons whomsoever; (b) the
Pledgor will have good and marketable title to and right to pledge any other
property at any time hereafter constituting Collateral and will likewise use its
commercially reasonable efforts to defend the right thereto and security
interest therein of the Pledgee; and (c) Pledgor will not without the advance
written consent of the Pledgee, with respect to any Pledged Collateral, enter
into any shareholder type agreements, voting agreements, voting trusts, trust
deeds, irrevocable proxies or any other similar agreements or instruments, which
would be inconsistent with the terms of this Agreement or materially and
adversely affect the Pledgee's interest in any of the Pledged Collateral.

      14.2 Right of Inspection. To the extent permitted in the Loan Agreement,
the Pledgee and its representatives shall have access to all the books,
correspondence and records of the

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Pledgor relating to the Collateral, if any, and the Pledgee and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof.

      14.3 Compliance with Laws. The Pledgor will comply with all requirements
of law applicable to the Pledged Collateral or any part thereof, except where
the failure to comply could not reasonably be expected to result in a Material
Adverse Change.

      14.4 Intentionally omitted.

      14.5 No Impairment. The Pledgor will not take or permit to be taken any
action which could materially impair the Pledgee's rights in the Pledged
Collateral. The Pledgor will not create, incur or permit to exist, will use its
commercially reasonable efforts to defend the Pledged Collateral against and
will take such other action as is necessary to remove, any lien or claim on or
to the Pledged Collateral, other than the liens created hereby and liens in
favor of the Collateral Agent in accordance with the Intercreditor Agreement,
and will use its commercially reasonable efforts to defend the right, title and
interest of the Pledgee in and to any of the Pledged Collateral against the
claims and demands of all Persons whomsoever.

      14.6 Performance by Pledgee of Pledgor's Obligations. If the Pledgor fails
to perform or comply with any of the agreements contained herein, the Pledgee
may, upon the occurrence and during the continuance of an Event of Default,
without notice to or consent by the Pledgor, perform or comply or cause
performance or compliance therewith; provided, however, the Pledgee shall not be
under any obligation to taken any such action.

      14.7 Further Identification of Pledged Collateral. The Pledgor will
furnish to the Pledgee from time to time such reports in connection with the
Pledged Collateral as the Pledgee may reasonably request from time to time.

      14.8 Continuous Perfection. The Pledgor will not change the Pledgor's
name, in any manner which might make any financing or continuation statement
filed hereunder seriously misleading within the meaning of any applicable
provision of Article 9 of the Code) unless the Pledgor shall have given the
Pledgee at least fifteen (15) days prior written notice thereof and shall have
taken all action necessary or reasonably requested by the Pledgee to amend such
financing statement or continuation statement so that it is not seriously
misleading. The Pledgor will not change the Pledgor's state of organization
unless the Pledgor shall have given the Pledgee at least fifteen (15) days prior
written notice thereof and shall have taken such action as is necessary to cause
the security interest of the Pledgee in the Pledged Collateral to continue to be
perfected.

      14.9 Stay or Extension Laws. The Pledgor will not at any time claim, take,
insist upon or invoke the benefit or advantage of or from any law now or
hereafter in force providing for the valuation or appraisement of the Pledged
Collateral prior to any sale or sales thereof to be made pursuant to the
provisions hereof or pursuant to the decree, judgment, or order of any court of
competent jurisdiction; nor, after such sale or sales, claim or exercise any
right under any statute now or hereafter made or enacted by any state to redeem
the property so sold or any part thereof, and the Pledgor hereby expressly
waives (to the extent not prohibited by applicable law), on behalf of the
Pledgor and each and every person or entity claiming by, through and under the

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Pledgor, all benefit and advantage of any such law or laws, and covenants that
the Pledgor will not invoke or utilize any such law or laws or otherwise hinder,
delay or impede the execution of any power, right or remedy herein or hereby
granted and delegated to the Pledgee, but will authorize, allow and permit the
execution of every such power, right or remedy as though no such law or laws had
been made or enacted.

      14.10 The Issuers' Records. The Pledgor shall cause each of the Issuers to
make a notation on its respective records indicating the interest granted hereby
in favor of the Pledgee.

      15. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor
under this Agreement shall be absolute and unconditional in accordance with its
terms and shall remain in full force and effect (except as otherwise provided
herein under Section 19) without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any change in the
time, place or manner of payment of, or in any other term of, all or any of the
Obligations, any waiver, indulgence, renewal, extension, amendment or
modification of or addition, consent or supplement to or deletion from or any
other action or inaction under or in respect of this Agreement, the Loan
Agreement or any other Loan Document (as defined in the Loan Agreement), or any
of the other documents, instruments or agreements relating to the Obligations or
any other instrument or agreement referred to therein or any assignment or
transfer of any thereof; (b) any lack of validity or enforceability of the Loan
Agreement, or any other Loan Document (as defined in the Loan Agreement), or any
other documents, instruments or agreement referred to therein or any assignment
or transfer of any thereof; (c) any furnishing of any additional security or
collateral to the Pledgee, for the benefit of the Pledgee and/or the Bank
Product Providers; or its assignees or any acceptance thereof or any release of
any security by the Pledgee or its assignees; (d) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; (e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any other Person, as applicable, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or knowledge
of any of the foregoing; (f) any exchange, release or nonperfection of any other
collateral, or any release, or amendment or waiver of or consent to departure
from any guaranty or security, for all or any of the Obligations; or (g) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, the Pledgor.

      16. NOTICES, ETC. Except as otherwise expressly provided herein, any
notice required or desired to be served, given or delivered hereunder shall be
in the form and manner, and shall be addressed to the parties set forth in the
Loan Agreement.

      17. POWER OF ATTORNEY. Pledgor hereby absolutely and irrevocably
constitutes and appoints the Pledgee for the benefit of the Pledgee and the Bank
Product Providers as Pledgor's true and lawful agent and attorney-in-fact with
full power of substitution, in the name of Pledgor upon the occurrence and
during the continuance of an Event of Default: (a) to execute and do all such
assurances, acts and things which the Pledgor ought to do but has failed to do
under the covenants and provisions contained in this Agreement; (b) to take any
and all

                                     - 10 -
<PAGE>

such action as the Pledgee or any of its sub-agents, nominees or attorneys may,
in its or their commercially reasonable discretion, reasonably determine as
necessary or advisable for the purpose of maintaining preserving or protecting
the security constituted by this Agreement or any of the rights, remedies,
powers or privileges of the Pledgee under this Agreement; and (c) generally, in
the name of the Pledgor, exercise all or any of the powers, authorities, and
discretions conferred on or reserved to the Pledgee by or pursuant to this
Agreement, and (without prejudice to the generality of any of the foregoing) to
deliver or otherwise perfect any deed, assurance, agreement, instrument or act
as the Pledgee may deem proper in or for the purpose of exercising any of such
powers, authorities or discretions. The Pledgor hereby ratifies and confirms,
and hereby agrees to ratify and confirm, whatever lawful acts the Pledgee or any
of the Pledgee's sub-agents or attorneys shall do or purport to do in the
exercise of the power of attorney granted to the Pledgee pursuant to this
Section, which power of attorney, being coupled with an interest and given for
security, is irrevocable; provided, however, that the Pledgor neither ratifies
nor confirms any acts of the Pledgee or any of the Pledgee's sub-agents or
attorneys do in the exercise of this power of attorney if such acts constitute
the gross negligence or willful misconduct of such Person.

      18. MISCELLANEOUS. The Pledgor agrees with the Pledgee that each of the
obligations and liabilities of the Pledgor to the Pledgee under this Agreement
may be enforced against the Pledgor without the necessity of joining any other
Person (as defined in the Loan Agreement) as a party. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall be
binding upon the heirs and legal beneficiaries, and permitted successors and
assigns, of the Pledgor, as applicable, and shall inure to the benefit of and be
enforceable by the Pledgee and its successors and assigns. Unless otherwise
defined herein, terms defined in the Code are used herein as therein defined.
The headings and titles in this Agreement are for convenience of reference only
and shall not limit or define the meaning hereof. This Agreement may be executed
in any number of counterparts, each of which shall be an original, but all of
which shall constitute one instrument. If any provision of this Agreement shall
prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto. The Pledgor shall have no rights of subrogation as to any
of the Pledged Collateral until full and complete performance and payment of the
Obligations (other than contingent indemnification obligations). A signature
hereto distributed by facsimile or electronic mail shall be deemed to be as
legally binding as a signed original.

      19. TERMINATION; RECOVERY CLAIM. This Agreement shall terminate after the
Obligations are paid in full (other than contingent indemnification obligations)
and the Loan Agreement is terminated in accordance with its terms. Upon the
termination of this Agreement, or as otherwise provided in the Loan Agreement,
the Pledgee, at the request of the Pledgor and at the cost and expense of the
Pledgor, will promptly execute and deliver to the Pledgor the proper instruments
acknowledging the termination of this Agreement and the security interest and
lien on the Pledged Collateral created hereby and will duly assign, transfer and
deliver to the Pledgor or to whomsoever shall be lawfully entitled to receive
the same (without recourse and without any representation or warranty of any
kind) such of the Pledged Collateral as may be in the possession of the Pledgee
and has not theretofore been sold or otherwise applied or released pursuant to
this Agreement. Should a claim ("Recovery Claim") be made upon the Pledgee or
any or all of the Bank Product Providers at any time for recovery of any amount
received by the Pledgee

                                     - 11 -
<PAGE>

or any or all of the Bank Product Providers in payment of the Obligations
(whether received from Pledgor or otherwise) and should the Pledgee or any or
all of the Bank Product Providers repay all or part of said amount by reason of
(a) any judgment, decree or order of any court or administrative body having
jurisdiction over the Pledgee or any or all of the Bank Product Providers or any
of their respective property; or (b) any settlement or compromise of any such
Recovery Claim effected by the Pledgee or any or all of the Bank Product
Providers with the claimant (including, without limitation, Pledgor), this
Agreement and the security interests granted to the Pledgee for the benefit of
the Pledgee and the Bank Product Providers hereunder shall continue in effect
with respect to the amount so repaid to the same extent as if such amount had
never originally been received by the Pledgee or any or all of the Bank Product
Providers, notwithstanding any prior termination of this Agreement, the return
of this Agreement to the Pledgor, or the cancellation of any note or other
instrument evidencing the Obligations.

      20. AMENDMENTS; MARSHALLING, ETC. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Pledgor and the Pledgee. The Pledgee shall be
under no obligation to marshal any assets or collateral in favor of the Pledgor
or any other person or entity or against or in payment of any or all of the
Obligations. All indemnities set forth herein shall survive the execution and
delivery of this Agreement and the making and repayment of the Obligations. The
Bank Product Providers are the intended third party beneficiaries of this
Agreement.

      21. REVIEW OF AGREEMENT BY PLEDGOR. The Pledgor acknowledges that Pledgor
has thoroughly read and reviewed the terms and provisions of this Agreement, and
that such terms and provisions are clearly understood by the Pledgor, and has
been fully and unconditionally consented to by the Pledgor with the full benefit
and advice of counsel chosen by the Pledgor, and that the Pledgor has freely and
voluntarily signed this Agreement without duress.

      22. WAIVER OF CLAIMS. Except as otherwise provided in this Agreement or
prohibited by law, PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE PLEDGEE'S
TAKING POSSESSION OR SALE OR THE PLEDGEE'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH PLEDGOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE,
and Pledgor hereby further waives (and releases any cause of action and claim
against the Pledgee as a result of), to the fullest extent permitted by law: (a)
all damages occasioned by such taking of possession, collection or sale except
any damages which are the direct result of the Pledgee's gross negligence or
willful misconduct; (b) all other requirements as to the time, place and terms
of sale or other requirements with respect to the enforcement of the Pledgee's
rights hereunder; (c) demand of performance or other demand, notice of intent to
demand or accelerate, notice of acceleration, presentment, protest,
advertisement or notice of any kind to or upon the Pledgor or any other person
or entity; and (d) all rights of redemption, appraisement, valuation, diligence,
stay, extension or moratorium now

                                     - 12 -
<PAGE>

or hereafter in force under any applicable law in order to delay the enforcement
of this Agreement.

      23. INTENTIONALLY OMITTED.

      24. GOVERNING LAW; SUBMISSION TO JURISDICTION.

      (a) THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF
ILLINOIS AND THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION
AND ENFORCEMENT, AND THE RIGHTS AND OBLIGATIONS OF PARTIES HEREUNDER, SHALL BE
DETERMINED UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAW OR CHOICE OF LAW
PRINCIPLES.

      (b) THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH OR RELATED TO THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY
IN THE STATE AND FEDERAL COURTS LOCATED IN COOK COUNTY, STATE OF ILLINOIS. THE
PLEDGOR WAIVES ANY RIGHT PLEDGOR MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO SUCH VENUE AND HEREBY CONSENTS TO ANY COURT ORDERED
RELIEF. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF THE PLEDGEE
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF THE PLEDGEE TO BRING ANY ACTION OR PROCEEDING AGAINST THE PLEDGOR OR
PLEDGOR'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

      25. WAIVER OF TRIAL BY JURY. THE PLEDGOR AND THE PLEDGEE EACH KNOWINGLY,
VOLUNTARILY, IRREVOCABLY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO TRIAL BY JURY
OF ALL DISPUTES BETWEEN THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO OR ARISE OUT OF THIS AGREEMENT OR TO THE SUBJECT MATTER OF THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PLEDGOR AND THE
PLEDGEE EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO
A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. THE PLEDGOR AND THE PLEDGEE FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

                                     - 13 -
<PAGE>

      26. Intercreditor Agreement. (a) The Liens granted hereunder in favor of
the Pledgee for the benefit of itself and the Bank Product Providers 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. (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.

                                     - 14 -
<PAGE>

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

                                            VISKASE COMPANIES, INC.

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

                                            WELLS FARGO FOOTHILL, INC.

                                            By: /s/ Brent E. Shay
                                            Its: Vice President

ACKNOWLEDGED AND AGREED:

      Each of the undersigned hereby (i) acknowledges the pledge of the Pledged
Collateral described above pursuant to the terms of this Pledge Agreement and
agrees to register such pledge in its books and records, and (ii) agrees, upon
receipt of notice from Pledgee of the occurrence and continuance of an Event of
Default, to comply with the written instructions originated by Pledgee, without
further consent of the registered holder of the Pledged Collateral, including,
without limitation, instructions to pay and remit to Pledgee all distributions
and other amounts payable to the Pledgor (upon redemption, termination and
dissolution of each of the undersigned or otherwise), and to transfer to, and
register the Pledged Collateral in the name of, Pledgee or its nominee, and
(iii) agrees to promptly honor its payment obligations contained in this Pledge
Agreement.

VISKASE BRASIL EMBALAGENS LTDA.

By: /s/ Julio Valdevis da Silva
Its:

VISKASE EUROPE LIMITED

By: /s/ Gordon S. Donovan
Its:  Director

VISKASE CANADA INC.

By: /s/ Gordon S. Donovan
Its: Vice President<PAGE>

                                                                    EXHIBIT 10.5

                             INTERCREDITOR AGREEMENT

      THIS INTERCREDITOR AGREEMENT dated as of June 29, 2004 (this "Agreement")
is made by and among WELLS FARGO FOOTHILL, INC., a California corporation
(together with it successors and assigns, the "Lender") under and pursuant to
the Loan Agreement (as hereinafter defined), LASALLE BANK NATIONAL ASSOCIATION
("LaSalle"), solely in its capacity as Collateral Agent (together with its
successors and assigns, Collateral Agent") under the Noteholder Documents (as
hereinafter defined), VISKASE COMPANIES, INC., a Delaware corporation (the
"Borrower") and those subsidiaries of the Borrower hereafter party hereto (the
"Subsidiaries", and together with the Borrower, each, individually, a "Credit
Party", and collectively, the "Credit Parties").

                                    RECITALS

      A. The Borrower 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 Borrower 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 Borrower 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 Borrower, at an exercise price of $0.01 per share, subject to
adjustment.

      B. Certain Subsidiaries of the Borrower are required under the Indenture
to become a party to the Indenture and deliver a Guarantee (as defined in the
Indenture) to guarantee the payment of the Notes and the other Obligations of
the Borrower thereunder and the other Indenture Documents (as defined in the
Indenture) to which the Borrower is a party.

      C. The Borrower is a party to one or more Collateral Agreements (as
defined in the Indenture) to secure its Obligations under the Indenture, the
Notes and the other Indenture Documents to which they are a party pursuant to
the terms thereof and such Subsidiaries are required to become a party to one or
more Collateral Agreements to secure their Obligations under the Indenture, such
Guarantee and the other Indenture Documents (such documents, together with all
other security agreements, pledge agreements, collateral access agreements,
control agreements, intellectual property security agreements, mortgages and
leasehold mortgages (as amended, restated, supplemented or otherwise modified,
the "Indenture Security Documents", and together with the Indenture, the Notes
and the Guarantees, the "Noteholder Documents")) to which they are a party
pursuant to the terms thereof.

      D. The Borrower and the Lender have entered into a Loan and Security
Agreement dated as of the date hereof (as amended, restated, supplemented or
otherwise

<PAGE>

modified from time to time, the "Loan Agreement"); and the Borrower and the
Lender have entered into those certain pledge agreements, cash management
agreements, control agreements, intellectual property security agreements,
collateral access agreements, intercompany subordination agreements, leasehold
mortgages and mortgages (as amended, restated, supplemented or otherwise
modified from time to time, the "Security Documents", and together with the Loan
Agreement, the "Loan Documents") pursuant to which the Lender has agreed, upon
the terms and conditions stated therein, to make revolving loans and advances to
and to issue letters of credit for the account of the Borrower up to the
principal amount of Twenty Million Dollars ($20,000,000), together with the
fees, interest, expenses and other obligations due under the Loan Agreement. The
repayment of the Obligations (as that term is defined in the Loan Agreement) is
secured by security interests in and liens on the Collateral (as defined below)
pursuant to the Loan Documents.

      E. The Lender and the Collateral Agent, for and on behalf of itself, the
Trustee and the Noteholders (as defined below) desire to enter into this
Agreement concerning the respective rights of the Lender and the Collateral
Agent with respect to the priority of their respective security interests in and
liens on the Collateral.

      NOW, THEREFORE, the parties hereto, in consideration of the foregoing, and
for other good and valuable consideration, the receipt, adequacy and sufficiency
of which are hereby acknowledged, hereby agree (intending to be legally bound
hereby) as follows:

                                    ARTICLE I

                                   DEFINITIONS

      Section 1.01 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:

            "Accounts" means "accounts" (as defined in the Commercial Code) now
or hereafter owned by the Credit Parties.

            "Advances" means the principal amount outstanding from time to time
of all revolving loans made under any Loan Agreement.

            "Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Capital Stock, by contract, or
otherwise; provided, however, that (a) any Person which owns directly or
indirectly 10% or more of the Capital Stock having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such

                                        2
<PAGE>

Person, and (c) each partnership or joint venture in which a Person is a
partner or joint venturer shall be deemed an Affiliate of such Person.

            "Agreement" has the meaning given in the Preamble.

            "Asset Sale" has the meaning given in the Indenture.

            "Bankruptcy Code" means title 11 of the United States Code, as in
effect from time to time.

            "Borrower" has the meaning given in the Preamble.

            "Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

            "Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited), and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of property of, the issuing
Person.

            "Cash Collateral" means any Collateral consisting of cash or cash
equivalents, any security entitlement (as defined in the Commercial Code) and
any financial assets (as defined in the Commercial Code).

            "Collateral" means all of each Credit Party's right, title and
interest in, to, and under all real and personal property and assets of the
Credit Parties that is subject to a Lien in favor of (i) the Lender pursuant to
the Loan Documents or (ii) the Collateral Agent pursuant to the Indenture
Security Documents.

            "Collateral Agent" has the meaning given in the Preamble.

            "Collateral Agent First Priority Collateral" means the Liens in
favor of the Collateral Agent on Collateral consisting of the (i) Real Property,
(ii) Fixtures, (iii) Equipment and (iv) Proceeds of the foregoing.

            "Collateral Agent Standstill Notice" means a written notice from or
on behalf of the Collateral Agent to the Lender stating that an Indenture Event
of Default has occurred and is continuing and stating that such written notice
is a "Collateral Agent Standstill Notice".

            "Collateral Agent Standstill Period" has the meaning set forth in
Section 2.04(a).

            "Commercial Code" means the Uniform Commercial Code, as in effect in
the State of Illinois from time to time.

                                       3
<PAGE>

            "Control Collateral" means any Collateral consisting of a
certificated security (as defined in the Commercial Code), investment property
(as defined in the Commercial Code), a deposit account (as defined in the
Commercial Code) and any other Collateral as to which a Lien may be perfected
through possession or control by the secured party.

            "Credit Parties" has the meaning given in the Preamble.

            "Discharge of the Indenture Secured Obligations" means payment in
full in cash of the Indenture Secured Obligations (other than Indenture Secured
Obligations consisting of contingent indemnification obligations under the
Noteholder Documents) in compliance with the terms of the Indenture.

            "Discharge of the Loan Agreement Secured Obligations" means payment
in full in cash of the Loan Agreement Secured Obligations (other than Loan
Agreement Secured Obligations consisting of contingent indemnification
obligations under the Loan Documents) up to (but not in excess of) the Maximum
Lender Priority Debt Amount including, with respect to amounts available to be
drawn under outstanding letters of credit issued thereunder (or indemnities
issued pursuant thereto in respect of outstanding letters of credit), delivery
of cash collateral in an amount not exceeding 105% of the undrawn aggregate
amount of all such outstanding letters of credit or backstop letters of credit
in respect thereof in compliance with the terms of the Loan Agreement, in each
case, after or concurrently with termination of all commitments to extend credit
thereunder.

            "Equipment" means "equipment" (as defined in the Commercial Code)
now or hereafter owned by the Credit Parties.

            "Fixtures" means "fixtures" (as defined in the Commercial Code) now
or hereafter owned by the Credit Parties.

            "GAAP" means generally accepted accounting principles as in effect
from time to time.

            "Governmental Authority" means any nation, sovereign or government,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any central bank.

            "Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by any Credit Party that provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging any Credit Party's exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.

                                       4
<PAGE>

            "Indebtedness" means, without duplication, (a) all obligations for
borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations in respect
of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations as a lessee under Capital Leases, (d)
all obligations or liabilities of others secured by a Lien on any asset of a
Person or its subsidiaries, irrespective of whether such obligation or liability
is assumed, (e) all obligations to pay the deferred purchase price of assets
(other than trade payables incurred in the ordinary course of business and
repayable in accordance with customary trade practices), (f) all obligations
owing under Hedge Agreements, and (g) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (f) above.

            "Indenture" has the meaning given in the Recitals.

            "Indenture Event of Default" means an "event of default" under the
Indenture.

            "Indenture Secured Obligations" means all Obligations and other
liabilities (contingent or otherwise) arising under or with respect to the
Noteholder Documents or any of them, including any and all amounts payable under
or in respect of the Noteholder Documents, as amended, restated, modified,
renewed, refunded, replaced, or refinanced in whole or in part from time to
time, in accordance with this Agreement including principal, premium, interest
accrued or accruing (or which would absent the commencement of an Insolvency or
Liquidation Proceeding accrue), fees, attorneys' fees, costs, charges, expenses,
indemnities, guarantees, and all other amounts payable thereunder or in respect
thereof (including, in each case, all amounts accruing on or after the
commencement of any Insolvency or Liquidation Proceeding relating to any Credit
Party or any other Person irrespective of whether a claim for all or any portion
of such amounts is allowable or allowed in any Insolvency or Liquidation
Proceeding).

            "Indenture Security Documents" has the meaning given in the
Preamble.

            "Insolvency or Liquidation Proceeding" means (a) any voluntary or
involuntary case or proceeding under the Bankruptcy Code with respect to any
Credit Party, (b) any other voluntary or involuntary insolvency, reorganization
or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding with respect to any Credit
Party or with respect to any of their respective assets, (c) any liquidation,
dissolution, reorganization or winding up of any Credit Party whether voluntary
or involuntary and whether or not involving insolvency or bankruptcy or (d) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of any Credit Party.

            "Inventory" means "inventory" (as defined in the Commercial Code)
now or hereafter owned by the Credit Parties.

                                       5
<PAGE>

            "Lender" has the meaning given in the Preamble.

            "Lender First Priority Collateral" means the Liens in favor of the
Lender on Collateral consisting of the (i) Accounts, (ii) Inventory, (iii)
lockboxes, (iv) deposit accounts into which payments therefor are deposited and
(v) Proceeds of the foregoing.

            "Lender Standstill Notice" means a written notice from or on behalf
of the Lender to the Collateral Agent stating that a Loan Agreement of Default
has occurred and is continuing and stating that such written notice is a "Lender
Standstill Notice".

            "Lender Standstill Period" has the meaning set forth in Section
2.04(b).

            "Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, irrespective of
whether (a) such interest is based on the common law, statute, or contract, (b)
such interest is recorded or perfected, and (c) such interest is contingent upon
the occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term "Lien" includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement or other preferential arrangement whatsoever,
including, without limitation, any right of setoff, any conditional sale or
trust receipt, or from a lease or any financing lease having substantially the
same economic effect as any of the foregoing, consignment, or bailment for
security purposes and also includes reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.

            "Lien Priority" means with respect to any Lien of the Lender or the
Collateral Agent in the Collateral, the order of priority of such Lien as
specified in this Agreement.

            "Loan Agreement" has the meaning given in the Recitals.

            "Loan Agreement Event of Default" means an "event of default" under
the Loan Agreement.

            "Loan Agreement Secured Obligations" means all Obligations and all
liabilities (contingent or otherwise) under the terms of the Loan Agreement and
the other Loan Documents, including any and all amounts payable under the Loan
Documents, as amended, restated, modified, renewed, refunded, replaced, or
refinanced in whole or in part from time to time in accordance with this
Agreement, including principal, premium, interest accrued or accruing (or which
would absent the commencement of an Insolvency or Liquidation Proceeding
accrue), fees, attorneys' fees, costs, charges, expenses, reimbursement
obligations, any obligation to post cash collateral in respect of letters of
credit, indemnities, guarantees, and all other amounts payable thereunder
(including, in each case, all amounts accruing on or after the commencement of
any Insolvency or Liquidation Proceeding relating to any Credit Party or any
other Person irrespective of

                                       6
<PAGE>

whether a claim for all or any portion of such amounts is allowable or allowed
in any Insolvency or Liquidation Proceeding).

            "Loan Documents" has the meaning given in the Recitals.

            "Maximum Lender Priority Debt Amount" means, as of any date of
determination, (a) (i) the undrawn amount of all letters of credit plus
unreimbursed drawings in respect thereof that are Loan Agreement Secured
Obligations as of such date, plus (ii) the principal amount of Advances or
revolving loans under the Loan Agreement, provided that all amounts described in
clauses (i) and (ii) shall not at any time exceed the Maximum RCF Debt Amount
(as defined in the Indenture; provided that solely for purposes of this
definition, the amount of $20,000,000 set forth in clauses (1)(x) and 2(x)(a)
thereof shall be deemed to be $23,000,000), plus (b) any premium, interest,
fees, attorneys' fees, costs, charges, expenses, indemnities, and all other
amounts payable under the Loan Agreement or other Loan Documents or in respect
of the Loan Agreement Secured Obligations (including, without duplication, all
guaranties in respect thereof); and including, for each amount specified in
clauses (a) and (b) all amounts accruing on or after the commencement of any
Insolvency or Liquidation Proceeding relating to any Credit Party or any other
Person irrespective of whether a claim for all or any portion of such amount is
allowable or allowed in any Insolvency or Liquidation Proceeding.

            "Net Book Value" means the "net book value" of any assets of the
Credit Parties as shown on the most recent audited financial statement of the
Credit Parties.

            "Net Cash Proceeds" has the meaning given in the Indenture.

            "Noteholders" means each of the holders of the Notes, together with
all successors, assigns and transferees.

            "Noteholder Documents" has the meaning given in the Recitals.

            "Notes" has the meaning given in the Recitals.

            "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

            "Pari Passu Collateral" means the Liens in favor of each of the
Collateral Agent and the Lender on the Collateral other than the (i) Collateral
Agent First Priority Collateral and (ii) the Lender First Priority Collateral.

            "Person" means any natural person, corporation, limited liability
company, limited partnership, general partnership, limited liability
partnership, joint venture, trust, land trust, business trust, or other
organization, irrespective of whether such organization is a legal entity, and
shall include a government and any agency or political subdivision thereof.

                                       7
<PAGE>

            "Proceeds" means (i) all "proceeds" as defined in the Commercial
Code with respect to the Collateral, and (ii) whatever is recoverable or
recovered when Collateral is sold, exchanged, collected, or disposed of, whether
voluntarily or involuntarily.

            "ratable" means ratable; provided, that such term as used with
respect to the allocation of cash, cash equivalents or other assets towards the
payment of the Loan Agreement Secured Obligations consisting of principal,
unreimbursed letter of credit reimbursement obligations or obligations to cash
collateralize the undrawn amount of any letter of credit shall be determined
based on the aggregate amount of such Loan Agreement Secured Obligations up to
(but not in excess of) the Maximum Lender Priority Debt Amount. The term
"ratably" shall have the correlative meaning.

            "Real Property" means any estates or interests in real property of
the Credit Parties and the improvements thereto.

            "Recovery" has the meaning set forth in Section 5.03.

            "Remedies Proceeds" means Proceeds that arise from or in connection
with any remedial action taken by the Lender or the Collateral Agent with
respect to enforcing their respective rights on Collateral.

            "Security Documents" has the meaning given in the Recitals.

            "Subsidiaries" has the meaning given in the Preamble.

            "Trustee" has the meaning given in the Recitals.

      Section 1.02 Rules of 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 term "including" is 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.
Article, section, subsection and clause 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 any Person shall be construed to include such Person's
successors and assigns.

                                   ARTICLE II

                                  LIEN PRIORITY

                                       8
<PAGE>

      Section 2.01 Acknowledgment. The Collateral Agent, for and on behalf of
itself, the Trustee and the Noteholders, acknowledges and agrees that,
concurrently herewith, the Lender has been granted Liens upon all of the
Collateral in which the Collateral Agent has been granted Liens and the
Collateral Agent hereby consents thereto. The Lender acknowledges and agrees
that the Collateral Agent, for the benefit of itself, the Trustee, and the
Noteholders, has been granted Liens upon all of the Collateral in which the
Lender has been granted Liens and the Lender hereby consents thereto.

      Section 2.02 Agreement to Subordinate. Notwithstanding the date, time,
method, manner or order of grant, attachment, or perfection of any Liens granted
to the Collateral Agent, the Trustee, or the Noteholders in respect of all or
any portion of the Collateral or of any Liens granted to the Lender in respect
of all or any portion of the Collateral, or the order or time of filing or
recordation of any document or instrument for perfecting the Liens in favor of
the Lender or the Collateral Agent (or the Trustee or any Noteholder) in any
Collateral or any provision of the Commercial Code, any other applicable law,
the Loan Documents, the Noteholder Documents or any other circumstance
whatsoever, each of the Lender, and the Collateral Agent, on behalf of itself,
the Trustee and the Noteholders, hereby agrees that:

            (a) any Lien now or hereafter held by or on behalf of the Collateral
Agent, the Trustee, or any Noteholder in and to the Lender First Priority
Collateral that secures all or any portion of the Indenture Secured Obligations,
shall in all respects be junior and subordinate to all Liens granted to the
Lender in the Lender First Priority Collateral to secure all or any portion of
the Loan Agreement Secured Obligations up to (but not in excess of) the Maximum
Lender Priority Debt Amount;

            (b) any Lien now or hereafter held by or on behalf of the Collateral
Agent, the Trustee, or any Noteholder in and to the Collateral Agent First
Priority Collateral that secures all or any portion of the Indenture Secured
Obligations, shall in all respects be senior and prior to all Liens granted to
the Lender in the Collateral Agent First Priority Collateral to secure all or
any portion of the Loan Agreement Secured Obligations;

            (c) any Lien now or hereafter held by or on behalf of the Lender in
and to the Lender First Priority Collateral that secures all or any portion of
the Loan Agreement Secured Obligations up to (but not in excess of) the Maximum
Lender Priority Debt Amount, shall in all respects be senior and prior to all
Liens granted to the Collateral Agent (or the Trustee or any Noteholder) in the
Lender First Priority Collateral to secure all or any portion of the Indenture
Secured Obligations;

            (d) any Lien now or hereafter held by or on behalf of the Lender in
and to the Collateral Agent First Priority Collateral that secures all or any
portion of the Loan Agreement Secured Obligations, shall in all respects be
junior and subordinate to all Liens granted to the Collateral Agent (or the
Trustee or any Noteholder) in the Collateral Agent First Priority Collateral to
secure all or any portion of the Indenture Secured Obligations; and

                                       9
<PAGE>

            (e) any Lien now or hereafter held by or on behalf of the Lender in
and to the Pari Passu Collateral that secures all or any portion of the Loan
Agreement Secured Obligations up to (but not in excess of) the Maximum Lender
Priority Debt Amount, shall in all respects rank equal to all Liens granted to
the Collateral Agent (or the Trustee or any Noteholder) in the Pari Passu
Collateral to secure all or any portion of the Indenture Secured Obligations.

            The subordination of Liens in the Lender First Priority Collateral
by the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders,
in favor of the Lender, and the subordination of Liens in the Collateral Agent
First Priority Collateral by the Lender in favor of the Collateral Agent, on
behalf of itself, the Trustee, and the Noteholders, herein shall not be deemed
to subordinate the Collateral Agent's Liens or the Lender's Liens, respectively,
to the Liens of any other Person.

      Section 2.03 Mutual Waiver of Right to Contest Liens.

            (a) Prior to the Discharge of the Loan Agreement Secured
Obligations, the Collateral Agent agrees, on behalf of itself, the Trustee and
the Noteholders, that it and they shall not (and hereby waives, on behalf of
itself, the Trustee and the Noteholders, any right to) take any action to
contest or challenge (or assist or support any other Person in contesting or
challenging), directly or indirectly, whether or not in any proceeding
(including in any Insolvency or Liquidation Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Lender in respect of the
Collateral. The Collateral Agent, for itself, the Trustee, and on behalf of the
Noteholders, agrees that none of the Collateral Agent, the Trustee, or the
Noteholders will take any action that would hinder any exercise of remedies
undertaken by the Lender under the Loan Documents in respect of the Collateral,
including any public or private sale, lease, exchange, transfer, or other
disposition of the Collateral, whether by foreclosure or otherwise (other than
as expressly permitted under this Agreement). The Collateral Agent, for itself,
the Trustee, and on behalf of the Noteholders, hereby waives any and all rights
it, the Trustee, or the Noteholders may have as a lien creditor or otherwise to
contest, protest, object to, or interfere with the manner in which the Lender
seeks to enforce the Liens in any portion of the Collateral (other than as
expressly permitted under this Agreement), and the parties hereto agree that the
terms of this Agreement shall govern with respect to the Collateral, even if any
portion of the Liens securing the Loan Agreement Secured Obligations are
avoided, disallowed, set aside, or otherwise invalidated in any judicial
proceeding or otherwise.

            (b) Prior to the Discharge of the Indenture Secured Obligations, the
Lender agrees that it will not (and hereby waives any right to) take any action
to contest or challenge (or assist or support any other Person in contesting or
challenging), directly or indirectly, whether or not in any proceeding
(including in any Insolvency or Liquidation Proceeding), the validity, priority,
enforceability, or perfection of the Liens of the Collateral Agent in respect of
the Collateral. The Lender agrees that it will not take any action that would
hinder any exercise of remedies undertaken by the Collateral Agent, the Trustee
or the Noteholders in respect of the Collateral, including any public or private
sale, lease, exchange, transfer, or other disposition of the Collateral, whether
by

                                       10
<PAGE>

foreclosure or otherwise (other than as expressly permitted under this
Agreement). The Lender hereby waives any and all rights it may have as a lien
creditor or otherwise to contest, protest, object to, or interfere with the
manner in which the Collateral Agent seeks to enforce the Liens in any portion
of the Collateral (other than as expressly permitted under this Agreement) and
the parties hereto agree that the terms of this Agreement shall govern with
respect to the Collateral, even if any portion of the Liens securing the
Indenture Secured Obligations are avoided, disallowed, set aside, or otherwise
invalidated in any judicial proceeding or otherwise.

      Section 2.04 Standstill Provisions.

            (a) Collateral Agent Standstill. If the Lender shall send a Lender
Standstill Notice to the Collateral Agent at any time after the occurrence and
during the continuation of a Loan Agreement Event of Default, the Collateral
Agent, on behalf of itself, the Trustee, and the Noteholders, agrees that from
and after the date of its receipt of any Lender Standstill Notice, none of the
Collateral Agent, the Trustee, or any Noteholder will exercise any of its rights
or remedies in respect of the collection on, set off against, marshalling of, or
foreclosure on, the Lender First Priority Collateral, the Pari Passu Collateral
or the Collateral Agent First Priority Collateral under the Noteholder
Documents, applicable law or otherwise as a secured creditor other than as
expressly permitted under this Agreement and will not take or receive any Lender
First Priority Collateral, Pari Passu Collateral or Collateral Agent First
Priority Collateral in connection with the exercise of any such right or remedy
(including recoupment or set-off), whether under the Noteholder Documents,
applicable law, in an Insolvency or Liquidation Proceeding or otherwise unless
and until (a) the Lender has expressly waived or acknowledged the cure of the
applicable Loan Agreement Event of Default in writing or the Discharge of the
Loan Agreement Secured Obligations shall have occurred, or (b) 90 days shall
have elapsed from the date of the receipt of such Lender Standstill Notice,
except with respect to any Lender First Priority Collateral. From and after the
earliest to occur of (i) the Collateral Agent's receipt of such waiver or cure
notice, (ii) the date on which the Discharge of the Loan Agreement Secured
Obligations shall have occurred, or (iii) the elapsing of such 90 day period,
any of the Collateral Agent, the Trustee, or any Noteholder may commence to
exercise any of its rights and remedies as a secured creditor with respect to
the Pari Passu Collateral or the Collateral Agent First Priority Collateral (and
following the Discharge of the Loan Agreement Secured Obligations, the Lender
First Priority Collateral) under the Noteholder Documents, applicable law or
otherwise (subject to the provisions of this Agreement). The time period during
which the Collateral Agent is not permitted to exercise rights or remedies under
this section is referred to herein as the "Collateral Agent Standstill Period".
In addition to the foregoing, during the Lender Standstill Period or the
Collateral Agent Standstill Period, the Collateral Agent agrees to provide the
Lender or any Person appointed by the Lender (including, without limitation, the
Credit Parties and any of its employees and Affiliates) with access to the
Collateral Agent First Priority Collateral during the Lender Standstill Period
or the Collateral Agent Standstill Period in order to permit the Lender or any
Person appointed by the Lender to use the Inventory during the Lender Standstill
Period or the Collateral Agent Standstill Period and to ultimately turn the
Inventory into Accounts, which Inventory and Accounts shall continue to remain
Lender First Priority

                                       11
<PAGE>

Collateral; provided, that (A) the Lender or such Person appointed by the Lender
shall provide to the Collateral Agent a waiver of liability from and
indemnification for any personal injury incurred in connection with any access
by the Lender, such Person, any of their respective agents or designees or any
of their respective employees (excluding any such liability from and
indemnification for any personal injury resulting from the gross negligence or
willful misconduct of the Collateral Agent), in form and substance reasonably
satisfactory to the Collateral Agent and (B) such access shall in no event
exceed 90 days in the aggregate. Subject to the immediately preceding sentence,
the Lender agrees that neither the Collateral Agent Standstill Period nor the
Lender Standstill Period shall in any way affect or limit the Collateral Agent's
right to foreclose or otherwise exercise any of its rights on or with respect to
the Collateral Agent First Priority Collateral.

            (b) Lender Standstill. If the Collateral Agent shall send a
Collateral Agent Standstill Notice to the Lender at any time after the
occurrence and during the continuation of an Indenture Event of Default, the
Lender agrees that from and after the date of its receipt of any Collateral
Agent Standstill Notice, the Lender will not exercise any of its rights or
remedies in respect of the collection on, set off against, marshalling of, or
foreclosure on, the Collateral Agent First Priority Collateral or the Pari Passu
Collateral under the Loan Documents, applicable law or otherwise as a secured
creditor other than as expressly permitted under this Agreement and will not
take or receive any Collateral Agent First Priority Collateral or Pari Passu
Collateral in connection with the exercise of any such right or remedy
(including recoupment or set-off), whether under the Loan Documents, applicable
law, in an Insolvency or Liquidation Proceeding or otherwise unless and until
(a) the Collateral Agent has expressly waived or acknowledged the cure of the
applicable Indenture Event of Default in writing or the Discharge of the
Indenture Secured Obligations shall have occurred, or (b) 90 days shall have
elapsed from the date of the Lender's receipt of such Collateral Agent
Standstill Notice, except with respect to any Collateral Agent First Priority
Collateral. From and after the earliest to occur of (i) the Lender's receipt of
such waiver or cure notice, (ii) the date on which the Discharge of the
Indenture Secured Obligations shall have occurred, or (iii) the elapsing of such
90 day period, the Lender may commence to exercise any of its rights and
remedies as a secured creditor with respect to the Pari Passu Collateral (and
following the Discharge of the Indenture Secured Obligations, the Collateral
Agent First Priority Collateral) under the Loan Documents, applicable law or
otherwise (subject to the provisions of this Agreement). The time period during
which the Lender is not permitted to exercise rights or remedies under this
section is referred to herein as the "Lender Standstill Period". The Collateral
Agent agrees that neither the Collateral Agent Standstill Period nor the Lender
Standstill Period shall in any way affect or limit the Lender's right to
foreclose or otherwise exercise any of its rights on or with respect to the
Lender First Priority Collateral.

            (c) Subject to Sections 3.01 and 3.02, notwithstanding anything to
the contrary in Section 2.04(a) or (b), neither such Section shall be construed
to prevent any action taken by the Collateral Agent or the Lender, as the case
may be, to prepare for or commence marketing activities for any applicable
Collateral so long as such preparation

                                       12
<PAGE>

does not interfere in any material respect with the exercise of rights or
remedies by the other party under such Section.

      Section 2.05 Exercise of Rights. So long as this Agreement has not been
terminated pursuant to the provisions hereof, and regardless of whether or not
the Lender Secured Obligations or the Indenture Secured Obligations,
respectively, have been accelerated or any Insolvency Proceeding or similar
event or proceeding has been commenced by or against any Credit Party:

            (a) Except as otherwise provided in this Agreement, until Discharge
of the Loan Agreement Secured Obligations, neither the Collateral Agent, the
Trustee or the Noteholders shall exercise any rights or remedies in respect of
the Lender First Priority Collateral or the Liens of the Collateral Agent with
respect thereto, whether under the Noteholder Documents, applicable law or
otherwise, including without limitation (A) rights of recoupment or set-off in
respect of any deposit or securities account of any Credit Party maintained with
the Collateral Agent or the Trustee or any of their respective Affiliates, or
(B) any action to institute any judicial or nonjudicial or similar action or
proceeding in respect of the Liens of the Collateral Agent or to seek relief
from the automatic stay pursuant to Section 362 of the Bankruptcy Code with
respect to such Collateral, and Collateral Agent, Trustee and Noteholders shall
have no right whatsoever to direct Lender to exercise or seek to exercise or
refrain from exercising any rights or remedies in respect of the Lender First
Priority Collateral;

            (b) Except as otherwise provided in this Agreement, until Discharge
of the Indenture Secured Obligations, the Lender shall not exercise any rights
or remedies in respect of the Collateral Agent First Priority Collateral or the
Liens of the Lender with respect thereto, whether under the Loan Documents,
applicable law or otherwise, including without limitation (A) rights of
recoupment or set-off in respect of any deposit or securities account of any
Credit Party maintained with the Lender or its Affiliates, or (B) any action to
institute any judicial or nonjudicial or similar action or proceeding in respect
of the Liens of the Lender or to seek relief from the automatic stay pursuant to
Section 362 of the Bankruptcy Code with respect to such Collateral, and Lender
shall have no right whatsoever to direct the Collateral Agent to exercise or
seek to exercise or refrain from exercising any rights or remedies in respect of
the Collateral Agent First Priority Collateral;

            (c) Subject to the terms of the Loan Documents and this Agreement,
the Lender shall have the right to exercise rights and remedies in respect of
(A) the Lender First Priority Collateral and the Pari Passu Collateral, and (B)
on and after Discharge of the Indenture Secured Obligations, the Collateral
Agent First Priority Collateral, in each case under the Loan Documents,
applicable law or otherwise. In exercising such rights and remedies with respect
to such Collateral, the Lender may enforce the provisions of the Loan Documents
and exercise remedies thereunder and under applicable law (or refrain from
enforcing any such rights and exercising any such remedies), all in such order
and in such manner as it may determine in the exercise of its discretion. Such
exercise and enforcement shall include, without limitation, the rights of the
Lender to sell or otherwise dispose of such Collateral (such sale to be free and
clear

                                       13
<PAGE>

of the Collateral Agent's Liens and the Collateral Agent agrees to execute any
and all Lien releases requested by the Lender in connection therewith), to incur
reasonable expenses in connection with such exercise and enforcement, and to
exercise all the rights and remedies of a secured lender under the Commercial
Code and of a secured creditor under bankruptcy or similar laws of any
applicable jurisdiction;

            (d) Subject to the terms of the Noteholder Documents and this
Agreement, the Collateral Agent shall have the right to exercise rights and
remedies in respect of (A) the Collateral Agent First Priority Collateral and
the Pari Passu Collateral, and (B) on and after Discharge of the Loan Agreement
Secured Obligations, the Lender First Priority Collateral, in each case under
the Noteholder Documents, applicable law or otherwise. In exercising such rights
and remedies with respect to such Collateral, the Collateral Agent may enforce
the provisions of the Noteholder Documents and exercise remedies thereunder and
under applicable law (or refrain from enforcing any such rights and exercising
any such remedies), all in such order and in such manner as it may determine in
the exercise of its discretion. Such exercise and enforcement shall include,
without limitation, the rights of the Collateral Agent to sell or otherwise
dispose of such Collateral (such sale to be free and clear of the Lender's Liens
and the Lender agrees to execute any and all Lien releases requested by the
Collateral Agent in connection therewith), to incur reasonable expenses in
connection with such exercise and enforcement, and to exercise all the rights
and remedies of a secured lender under the Commercial Code and of a secured
creditor under bankruptcy or similar laws of any applicable jurisdiction;

            (e) Until Discharge of the Loan Agreement Secured Obligations, any
money, property, securities, or other direct or indirect distributions of any
nature whatsoever received by the Collateral Agent, the Trustee or any
Noteholder (A) resulting from the sale, disposition, or other realization upon
or other exercise of remedies in respect of all or any part of the Lender First
Priority Collateral, (B) consisting of Net Cash Proceeds from any Asset Sale
with respect to all or any part of the Lender First Priority Collateral, (C)
consisting of Net Cash Proceeds in excess of their ratable portion of Net Cash
Proceeds from any Asset Sale with respect to all or any part of the Pari Passu
Collateral or (D) resulting from the sale, disposition, or other realization
upon or other exercise of remedies in respect of all or any part of the
Collateral Agent First Priority Collateral or Pari Passu Collateral which
remains after Discharge of the Indenture Secured Obligations, in each case
regardless of whether such money, property, securities, or other distributions
are received directly or indirectly during the pendency of or in connection with
any Insolvency or Liquidation Proceeding or otherwise, shall be delivered to
Lender in the form received, duly endorsed, if required, and applied by the
Lender as provided in the Loan Documents. Until so delivered, such payment or
distribution to the extent received by the Collateral Agent shall be held in
trust by such party as the property of the Lender, segregated from other funds
and property held by such party; and

            (f) Until Discharge of the Indenture Secured Obligations, any money,
property, securities, or other direct or indirect distributions of any nature
whatsoever received by the Lender (A) resulting from the sale, disposition, or
other realization upon

                                       14
<PAGE>

or other exercise of remedies in respect of all or any part of the Collateral
Agent First Priority Collateral, (B) consisting of Net Cash Proceeds in excess
of its ratable portion of Net Cash Proceeds from any Asset Sale with respect to
all or any part of the Pari Passu Collateral or (C) resulting from the sale,
disposition, or other realization upon or other exercise of remedies in respect
of all or any part of the Lender First Priority Collateral or the Pari Passu
Collateral which remains after Discharge of the Loan Agreement Secured
Obligations, in each case regardless of whether such money, property,
securities, or other distributions are received directly or indirectly during
the pendency of or in connection with any Insolvency Proceeding or otherwise,
shall be delivered to Collateral Agent in the form received, duly endorsed, if
required, and applied by Collateral Agent as provided in the Noteholder
Documents. Until so delivered, such payment or distribution to the extent
received by the Lender shall be held in trust by such party as the property of
the Collateral Agent, segregated from other funds and property held by such
party.

            (g) Until Discharge of the Indenture Secured Obligations and the
Discharge of the Loan Agreement Secured Obligations, any money, property,
securities, or other direct or indirect distributions of any nature whatsoever
received by the Lender or the Collateral Agent (A) resulting from the sale,
disposition, or other realization upon or other exercise of remedies in respect
of all or any part of the Pari Passu Collateral or (B) consisting of Net Cash
Proceeds from any Asset Sale with respect to all or any part of the Pari Passu
Collateral, in each case regardless of whether such money, property, securities,
or other distributions are received directly or indirectly during the pendency
of or in connection with any Insolvency Proceeding or otherwise, shall be
distributed in accordance with Sections 4.02(f) and (g), respectively. Until
such distribution to the extent received by the Lender or the Collateral Agent,
the amount distributable under either such Section, as the case may be, to the
other party shall be held in trust by such party as the property of such other
party segregated from other funds and property held by such party.

      Section 2.06 No Other Restrictions. Except as expressly set forth in this
Agreement, each of the Collateral Agent, the Trustee, the Noteholders and the
Lender shall have any and all rights and remedies it may have as a creditor
under applicable law, including the rights to exercise all rights and remedies
in foreclosure or otherwise with respect to any of the Collateral; provided,
however, that (i) any such exercise by the Collateral Agent, the Trustee or the
Noteholders and any collection or sale of all or any portion of the Collateral
by the Collateral Agent, the Trustee or the Noteholders, shall be subject to the
Liens of the Lender on the Collateral to the extent provided in this Agreement
and (ii) any such exercise by the Lender and any collection or sale of all or
any portion of the Collateral by the Lender, shall be subject to the Liens of
the Collateral Agent on the Collateral to the extent provided in this Agreement.
In exercising rights and remedies with respect to the Lender First Priority
Collateral and the Pari Passu Collateral, the Lender may enforce the provisions
of the Loan Documents and exercise remedies thereunder, all in such order and in
such manner as it may determine in the exercise of its sole discretion. Such
exercise and enforcement shall include the sale, lease, license, or other
disposition of all or any portion of the Lender First Priority Collateral or
Pari Passu Collateral by private or public sale or any other means permissible
under applicable law (it being understood that any such action shall in all
respects comply with the terms of

                                       15
<PAGE>

this Agreement and applicable law). In exercising rights and remedies with
respect to the Collateral Agent First Priority Collateral or Pari Passu
Collateral, the Collateral Agent may enforce the provisions of the Noteholder
Documents and exercise remedies thereunder, all in such order and in such manner
as it may determine in the exercise of its sole discretion. Such exercise and
enforcement shall include the sale, lease, license, or other disposition of all
or any portion of the Collateral Agent First Priority Collateral or Pari Passu
Collateral by private or public sale or any other means permissible under
applicable law (it being understood that any such action shall in all respects
comply with the terms of this Agreement and applicable law).

            (a) No Waiver of Rights. Subject to Sections 3.01 and 3.02,
respectively, the Collateral Agent, the Trustee and the Noteholders on the one
hand, and the Lender on the other hand, may exercise, and nothing herein shall
constitute a waiver of, any right they may have at law or equity to receive
notice of, or to commence or join with any creditor in commencing any Insolvency
or Liquidation Proceeding or to join or participate in, any action or proceeding
or other activity described in Sections 3.01 and 3.02, respectively; provided,
however, that exercise of any such right by the Collateral Agent, the Trustee
and the Noteholders on the one hand, and the Lender on the other hand, shall be
subject to all of the terms and conditions of this Agreement.

            (b) Rights as an Unsecured Creditor. Each of the Collateral Agent,
the Trustee and the Noteholders (i) may make such demands or file such claims in
respect of the Indenture Secured Obligations as may be necessary to prevent the
waiver or bar of such claims under applicable statutes of limitations or other
statutes, court orders or rules of procedure, (ii) may in any Insolvency or
Liquidation Proceeding file a proof of claim or statement of interest with
respect to the Indenture Secured Obligations, (iii) may accelerate the Indenture
Secured Obligations pursuant to the terms and conditions of the Noteholder
Documents and this Agreement, and (iv) shall have all rights and remedies it may
have as an unsecured creditor at law or in equity against any Credit Party;
provided, however, that (1) none of the Collateral Agent, the Trustee or the
Noteholders shall take any actions restricted by this Agreement in respect of
the Collateral until the Discharge of the Loan Agreement Secured Obligations
shall have occurred, and (2) any exercise by the Collateral Agent, the Trustee
or the Noteholders of their rights and remedies and any Remedies Proceeds as
result of such actions shall to the extent provided herein be subject to the
Liens of the Lender and to the provisions of this Agreement. Notwithstanding
anything to the contrary in this Agreement or any control agreement or any
bailee agreement, so long as the Discharge of the Loan Agreement Secured
Obligations has not occurred Collateral Agent agrees on behalf of itself, the
Trustee and the Noteholders, that during any Collateral Agent Standstill Period
it will not issue any instructions to any bank or securities intermediary
regarding the disposition of funds in any deposit account (as defined in the
Commercial Code) or the disposition of financial assets in any securities
account (as defined in the Commercial Code) or the disposition of any Capital
Stock held by any bailee without the prior written consent of the Lender. The
Lender (i) may make such demands or file such claims in respect of the Loan
Agreement Secured Obligations as may be necessary to prevent the waiver or bar
of such claims under applicable statutes of limitations or other statutes, court
orders or rules of procedure, (ii) may in any Insolvency or Liquidation
Proceeding file a proof of claim or statement of interest with

                                       16
<PAGE>

respect to the Loan Agreement Secured Obligations, (iii) may accelerate the Loan
Agreement Secured Obligations pursuant to the terms and conditions of the Loan
Documents and this Agreement, and (iv) shall have all rights and remedies it may
have as an unsecured creditor at law or in equity against any Credit Party;
provided, however, that (1) the Lender shall not take any actions restricted by
this Agreement in respect of the Collateral until the Discharge of the Indenture
Secured Obligations shall have occurred, and (2) any exercise by the Lender of
its rights and remedies and any Remedies Proceeds as result of such actions
shall to the extent provided herein be subject to the Liens of the Collateral
Agent and to the provisions of this Agreement. Notwithstanding anything to the
contrary in this Agreement or any control agreement or any bailee agreement, so
long as the Discharge of the Indenture Secured Obligations has not occurred the
Lender agrees that during any Lender Standstill Period it will not issue any
instructions to any bank or securities intermediary regarding the disposition of
funds in any deposit account (as defined in the Commercial Code) or the
disposition of financial assets in any securities account (as defined in the
Commercial Code) or the disposition of any Capital Stock held by any bailee
without the prior written consent of the Collateral Agent.

                                   ARTICLE III

                             ACTIONS OF THE PARTIES

      Section 3.01 Limitation on Certain Actions by the Collateral Agent.
Notwithstanding any other provision hereof,

            (a) during any Collateral Agent Standstill Period, the Collateral
Agent will not (i) commence receivership or foreclosure proceedings against any
Credit Party in respect of any Collateral Agent First Priority Collateral or
Pari Passu Collateral or (ii) sell, collect, transfer or dispose of any
Collateral Agent First Priority Collateral or Pari Passu Collateral; or

            (b) prior to the date that the Discharge of the Loan Agreement
Secured Obligations occurs, the Collateral Agent will not (i) commence
receivership or foreclosure proceedings against any Credit Party in respect of
any Lender First Priority Collateral or (ii) sell, collect, transfer or dispose
of any Lender First Priority Collateral or (iii) notify third party account
debtors to make payment in respect of Lender First Priority Collateral directly
to it or any other Persons acting on its behalf.

      Section 3.02 Limitation on Certain Actions by the Lender. Notwithstanding
any other provision hereof,

            (a) during any Lender Standstill Period, the Lender will not (i)
commence receivership or foreclosure proceedings against any Credit Party in
respect of any Pari Passu Collateral or (ii) sell, collect, transfer or dispose
of any Pari Passu Collateral; or

            (b) prior to the date that the Discharge of the Indenture Secured
Obligations occurs, the Lender will not (i) commence receivership or foreclosure

                                       17
<PAGE>

proceedings against any Credit Party in respect of any Collateral Agent First
Priority Collateral or (ii) sell, collect, transfer or dispose of any Collateral
Agent First Priority Collateral.

      Section 3.03 Control and Cash Collateral. Each of the Lender and the
Collateral Agent, for and on behalf of itself, the Trustee, and each Noteholder,
as applicable, agree to hold all Cash Collateral that is part of the Collateral
in its respective possession, custody, or control (or in the possession,
custody, or control of bailees for either, as applicable) as agent for the other
solely for the purpose of perfecting the security interest granted to each in
such Cash Collateral subject to the terms and conditions of this Section 3.03.
The Collateral Agent, for and on behalf of itself, the Trustee, and each
Noteholder, as applicable, agrees to hold all Control Collateral that is part of
the Collateral Agent First Priority Collateral in its respective possession,
custody, or control (or in the possession, custody, or control of bailees for
either, as applicable) as agent for the Lender solely for the purpose of
perfecting the security interest granted to the Lender in such Control
Collateral subject to the terms and conditions of this Section 3.03. The Lender
agrees to hold all Control Collateral that is part of the Lender First Priority
Collateral in its possession, custody, or control (or in the possession,
custody, or control of bailees for either, as applicable) as agent for the
Collateral Agent, for and on behalf of itself, the Trustee, and each Noteholder
solely for the purpose of perfecting the security interest granted to the
Collateral Agent in such Control Collateral subject to the terms and conditions
of this Section 3.03. None of the Collateral Agent, the Trustee, or the
Noteholders, as applicable, shall have any obligation whatsoever to the Lender,
and the Lender shall not have any obligation whatsoever to the Collateral Agent,
the Trustee or the Noteholders, to assure that any Control Collateral is genuine
or owned by any Credit Party or any other Person or to preserve rights or
benefits of any Person. The duties or responsibilities of the Lender and the
Collateral Agent under this Section 3.03 are and shall be limited solely to
holding or maintaining control of the Control Collateral and the Cash Collateral
for the other for purposes of perfecting the Lien held by the Collateral Agent
or the Lender, as applicable. The Lender is not and shall not be deemed to be a
fiduciary of any kind for the Collateral Agent, the Trustee, the Noteholders or
any other Person. The Collateral Agent is not and shall not be deemed to be a
fiduciary of any kind for the Lender or any other Person.

                                   ARTICLE IV

                       NOTICES AND APPLICATION OF PROCEEDS

      Section 4.01 Notices of Exercise. Concurrently with any exercise by the
Collateral Agent of any of its rights and remedies under the Noteholder
Documents following the occurrence of any Indenture Event of Default, the
Collateral Agent shall give notice of such exercise to the Lender and shall
exercise all rights or remedies under the Noteholder Documents consistent with
the terms of this Agreement. Concurrently with any exercise by the Lender of any
of its rights and remedies under the Loan Documents following the occurrence of
any Loan Agreement Event of Default, the Lender shall give notice of such
exercise to the Collateral Agent and shall only exercise such rights or remedies
in a manner consistent with the terms of this Agreement.

                                       18
<PAGE>

      Section 4.02 Application of Proceeds.

            (a) Revolving Nature of Loan Agreement Secured Obligations. As long
as the Lender is not exercising any of its remedies as a secured creditor under
the Loan Documents, the Lender may apply any and all of the Proceeds and Cash
Collateral in accordance with the provisions of the Loan Documents, subject to
the provisions of this Agreement, including, without limitation the application
of any Net Cash Proceeds from any Asset Sale of any Collateral in accordance
with the terms of the Indenture and the Loan Agreement as described in Section
4.02(g) hereof. The Collateral Agent, for and on behalf of itself, the Trustee,
and the Noteholders, expressly acknowledges and agrees that (a) any such
application of the Proceeds or Cash Collateral shall not be considered to be the
exercise of remedies under this Agreement; and (b) all Proceeds or Cash
Collateral received by the Lender in connection therewith may be applied,
reversed, reapplied, credited or reborrowed, in whole or in part, as Loan
Agreement Secured Obligations without reducing the Maximum Lender Priority Debt
Amount.

            (b) Turnover of Cash and Control Collateral After Payment. Upon the
Discharge of the Loan Agreement Secured Obligations, the Lender shall deliver to
the Collateral Agent or execute such documents as Collateral Agent may
reasonably request to cause the Collateral Agent to have control over any Cash
Collateral or Control Collateral still in Lender's possession, custody or
control in the same form as received, with any necessary endorsements or as a
court of competent jurisdiction may otherwise direct, to be applied by the
Collateral Agent to the Indenture Secured Obligations. Upon the Discharge of the
Indenture Secured Obligations, the Collateral Agent shall deliver to the Lender
or execute such documents as the Lender may reasonably request to cause the
Lender to have control over any Cash Collateral or Control Collateral still in
Collateral Agent's possession, custody or control in the same form as received,
with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct, to be applied by the Lender to the Loan Agreement Secured
Obligations.

            (c) Termination of Security Interest.

                  (i) Upon the Discharge of the Loan Agreement Secured
            Obligations and the cancellation or termination of the commitments
            included in the Loan Agreement Secured Obligations, the security
            interest granted under the Loan Documents shall terminate. Upon any
            such termination, the Lender shall, at Borrower's request and
            Borrower's sole expense, execute and deliver such documents
            reasonably requested to release such Liens or necessary to evidence
            such termination in form and substance satisfactory to Lender,
            without recourse against, or representation or warranty of any kind
            made by, Lender.

                  (ii) Upon the Discharge of the Indenture Secured Obligations,
            the security interest granted under the Noteholder Documents shall
            terminate. Upon any such termination, the Collateral Agent shall, at
            Borrower's request and Borrower's sole expense, execute and deliver
            such documents reasonably requested to release such Liens or
            necessary to

                                       19
<PAGE>

            evidence such termination in form and substance satisfactory to
            Collateral Agent, without recourse against, or representation or
            warranty of any kind made by, Collateral Agent.

            (d) Application of Lender First Priority Collateral Proceeds. The
Lender and the Collateral Agent hereby agree that all Lender First Priority
Collateral and all Remedies Proceeds in respect thereof received by either of
them upon the exercise of any of their secured creditor rights or remedies under
any of the Loan Documents or Noteholder Documents (as applicable), applicable
law, or otherwise shall be applied,

            first, ratably to the payment in full in cash of costs and expenses
of (i) the Lender and (ii) the Collateral Agent in connection with such
exercise,

            second, to the payment of the Loan Agreement Secured Obligations in
full in cash up to (but not in excess of) the Maximum Lender Priority Debt
Amount,

            third, ratably to the payment in full in cash of amounts owed to the
Trustee and the Collateral Agent under the Noteholder Documents,

            fourth, to the payment of all other Indenture Secured Obligations,

            fifth, solely in the event of Discharge of Indenture Secured
Obligations, to the payment of any Loan Agreement Secured Obligations in full in
cash in excess of the Maximum Lender Priority Debt Amount, and

            sixth, solely in the event of Discharge of Loan Agreement Secured
Obligations have been paid in full in cash, any remaining Remedies Proceeds
shall be payable to the Credit Parties.

            (e) Application of Collateral Agent First Priority Collateral
Proceeds. The Lender and the Collateral Agent hereby agree that all Collateral
Agent First Priority Collateral and all Remedies Proceeds in respect thereof
received by either of them upon the exercise of any of their secured creditor
rights or remedies under any of the Loan Documents or Noteholder Documents (as
applicable), applicable law, or otherwise shall be applied,

            first, ratably to the payment in full in cash of costs and expenses
of (i) the Collateral Agent and (ii) the Lender in connection with such
exercise,

            second, ratably to the payment in full in cash of amounts owed to
the Trustee and the Collateral Agent under the Noteholder Documents,

            third, to the payment of all other Indenture Secured Obligations,

            fourth, to the payment of the Loan Agreement Secured Obligations in
full in cash, and

                                       20
<PAGE>

            fifth, solely in the event of Discharge of Loan Agreement Secured
Obligations have been paid in full in cash, any remaining Remedies Proceeds
shall be payable to the Credit Parties.

            (f) Application of Pari Passu Collateral Proceeds. The Lender and
the Collateral Agent hereby agree that all Pari Passu Collateral and all
Remedies Proceeds in respect thereof received by either of them upon the
exercise of any of their secured creditor rights or remedies under any of the
Loan Documents or Noteholder Documents (as applicable), applicable law, or
otherwise shall be applied,

            first, ratably to the payment in full in cash of costs and expenses
of (i) the Collateral Agent and (ii) the Lender in connection with such
exercise,

            second, ratably to the payment in full in cash of amounts owed to
the (i) Trustee and the Collateral Agent under the Noteholder Documents and (ii)
the Lender under the Loan Documents in respect of administration and audit fees,
indemnifications and reimbursements (other than reimbursement obligations in
respect of unreimbursed letter of credit reimbursement obligations),

            third, ratably to the payment in full in cash of (i) Indenture
Secured Obligations and (ii) Loan Agreement Secured Obligations up to (but not
in excess of) the Maximum Lender Priority Debt Amount,

            fourth, solely in the event of Discharge of Indenture Secured
Obligations, to the payment of any Loan Agreement Secured Obligations in full in
cash in excess of the Maximum Lender Priority Debt Amount, and

            fifth, solely in the event of Discharge of Loan Agreement Secured
Obligations, any remaining Remedies Proceeds shall be payable to the Credit
Parties.

            (g) Application of Net Cash Proceeds. The Lender and the Collateral
Agent hereby agree that all Net Cash Proceeds from any Asset Sale relating to
any (i) Lender First Priority Collateral, in an amount equal to the greater of
(A) such Net Cash Proceeds and (B) the Net Book Value of such Lender First
Priority Collateral, shall be applied to the Loan Agreement Secured Obligations,
(ii) Collateral Agent First Priority Collateral shall be applied to consummation
of any Net Proceeds Offer as required under Section 4.10 of the Indenture and
(iii) Pari Passu Collateral shall be applied in the order specified in Section
4.02(f) (provided that clause "third" thereof shall only be applicable to the
Indenture Secured Obligations to the extent required to be applied to
consummation of any Net Proceeds Offer as required under Section 4.10 of the
Indenture).

            (h) In exercising remedies, whether as a secured creditor or
otherwise, the Lender shall have no obligation or liability to the Collateral
Agent, the Trustee, or to any Noteholder and none of the Collateral Agent, the
Trustee or any Noteholder shall have any obligation or liability to the Lender
regarding the adequacy of any Remedies Proceeds or for any action or omission
save and except solely an action or omission that breaches the express
obligations undertaken by each party under the terms of this

                                       21
<PAGE>

Agreement. Notwithstanding any provision to the contrary contained herein,
including, without limitation, this Section 4.02, this Section 4.02 shall not
confer any right of the Borrower or any Credit Party to dispose of any assets in
contravention with, or relieve the Borrower or any Credit Party of any
obligation to comply with, any provision of (i) the Loan Agreement, including
Section 7.4 of the Loan Agreement or (ii) the Indenture, including Section 4.10
of the Indenture.

      Section 4.03 Specific Performance. Each of the Lender and the Collateral
Agent is hereby authorized to demand specific performance of this Agreement,
whether or not any Subsidiary or any Credit Party shall have complied with any
of the provisions of any of the Loan Documents or the Noteholder Documents, at
any time when the other shall have failed to comply with any of the provisions
of this Agreement applicable to it. Each of the Lender and the Collateral Agent
hereby irrevocably waives any defense based on the adequacy of a remedy at law,
which might be asserted as a bar to such remedy of specific performance.

                                    ARTICLE V

                   INTERCREDITOR ACKNOWLEDGEMENTS AND WAIVERS

      Section 5.01 Notice of Acceptance and Other Waivers. (a) All Loan
Agreement Secured Obligations at any time made or incurred by any Credit Party
shall be deemed to have been made or incurred in reliance upon this Agreement,
and the Collateral Agent, on behalf of itself, the Trustee, and the Noteholders,
hereby waives (i) notice of acceptance, or proof of reliance, by the Lender of
this Agreement, and (ii) notice of the existence, renewal, extension, accrual,
creation, or non-payment of all or any part of the Loan Agreement Secured
Obligations. Neither the Lender nor any of its Affiliates, directors, officers,
employees, attorneys or agents shall be liable for failure to demand, collect,
or realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral or to take
any other action whatsoever with regard to the Collateral or any part thereof,
except as specifically provided in this Agreement. If the Lender honors (or
fails to honor) a request by any Credit Party for an extension of credit
pursuant to the Loan Agreement or any of the Loan Documents, whether the Lender
has knowledge that the honoring of (or failure to honor) any such request would
constitute a default under the terms of the Indenture or any Noteholder Document
or an act, condition, or event that, with the giving of notice or the passage of
time, or both, would constitute such a default, or if the Lender otherwise
should exercise any of its contractual rights or remedies under the Loan
Documents (subject to the express terms and conditions hereof), the Lender shall
not have any liability whatsoever to the Collateral Agent, the Trustee or any
Noteholder as a result of such action, omission, or exercise (so long as any
such exercise does not breach the express terms and provisions of this
Agreement). The Collateral Agent on behalf of itself and the Noteholders,
acknowledges and agrees that the Lender has made no express or implied
representations or warranty, including without limitation, with respect to the
execution, validity, legality, completeness, collectability or enforceability of
any Loan Documents. The Lender will be entitled to manage and supervise its
loans and extensions of credit under the Loan Agreement and other Loan Documents
as the Lender

                                       22
<PAGE>

may, in its sole discretion, deem appropriate, and the Lender may manage its
loans and extensions of credit without regard to any rights or interests that
the Collateral Agent, the Trustee, or any of the Noteholders have in the
Collateral or otherwise except as otherwise expressly set forth in this
Agreement. The Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, agrees that the Lender shall not incur any liability as a result of
a sale, lease, license, or other disposition of the Collateral, or any part
thereof, pursuant to the Loan Documents conducted in accordance with mandatory
provisions of applicable law. The Lender shall not have any duty to the
Collateral Agent, the Trustee or any Noteholder to act or refrain from acting in
any manner which allows or results in the occurrence or continuance of an event
of default or default under any agreement with any Credit Party regardless of
any knowledge thereof which Lender may have or be charged.

            (b) All Indenture Secured Obligations at any time made or incurred
by any Credit Party shall be deemed to have been made or incurred in reliance
upon this Agreement, and the Lender hereby waives (i) notice of acceptance, or
proof of reliance, by the Collateral Agent, the Trustee or any Noteholder of
this Agreement, and (ii) notice of the existence, renewal, extension, accrual,
creation, or non-payment of all or any part of the Indenture Secured
Obligations. None of the Collateral Agent, the Trustee, any Noteholder or any of
their respective Affiliates, directors, officers, employees, attorneys or agents
shall be liable for failure to demand, collect, or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral or to take any other action whatsoever
with regard to the Collateral or any part thereof, except as specifically
provided in this Agreement. If the Collateral Agent, the Trustee or any
Noteholder honors (or fails to honor) a request by any Credit Party for an
extension of credit pursuant to the Indenture or any of the Indenture Security
Documents, whether the Collateral Agent, the Trustee or any Noteholder has
knowledge that the honoring of (or failure to honor) any such request would
constitute a default under the terms of the Loan Agreement or any Loan Document
or an act, condition, or event that, with the giving of notice or the passage of
time, or both, would constitute such a default, or if the Collateral Agent, the
Trustee or any Noteholder otherwise should exercise any of their contractual
rights or remedies under the Indenture Security Documents (subject to the
express terms and conditions hereof), none of the Collateral Agent, the Trustee
or any Noteholder shall have any liability whatsoever to the Lender as a result
of such action, omission, or exercise (so long as any such exercise does not
breach the express terms and provisions of this Agreement). The Lender
acknowledges and agrees that the Collateral Agent, the Trustee and the
Noteholders have made no express or implied representations or warranty,
including, without limitation, with respect to the execution, validity,
legality, completeness, collectibility or enforceability of any of the
Noteholder Documents. The Noteholders will be entitled to manage and supervise
their respective extensions of credit to any Credit Party under the Indenture
and the other Noteholder Documents as the Noteholders may, in their sole
discretion, deem appropriate, and the Noteholders may manage their extensions of
credit without regard to any rights or interests that the Lender has in the
Collateral or otherwise, except as otherwise expressly set forth in this
Agreement. The Lender agrees that the Collateral Agent, the Trustee and the
Noteholders shall not incur any liability as a result of a sale, lease, license,
or other disposition of the Collateral, or

                                       23
<PAGE>

any part thereof, pursuant to the Noteholder Documents conducted in accordance
with mandatory provisions of applicable law. None of the Collateral Agent, the
Trustee or any Noteholder shall have any duty to the Lender to act or refrain
from acting in any manner which allows or results in the occurrence or
continuance of an event of default or default under any agreement with any
Credit Party regardless of any knowledge thereof which Collateral Agent or any
Noteholder may have or be charged.

      Section 5.02 Modifications to Loan Documents and Noteholder Documents.

            (a) The Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, hereby agrees that, without affecting the obligations of the
Collateral Agent, the Trustee and the Noteholders hereunder, the Lender may, at
any time and from time to time, in its sole discretion without the consent of or
notice to the Collateral Agent, the Trustee or any Noteholder (except to the
extent such notice or consent is required pursuant to the express provisions of
this Agreement), and without incurring any liability to the Collateral Agent,
the Trustee or any Noteholder or impairing or releasing the subordination
provided for herein, amend, restate, supplement, replace, refinance, extend,
consolidate, restructure, or otherwise modify any of the Loan Documents in any
manner whatsoever, including, to

                  (i) change the manner, place, time, or terms of payment of, or
            renew or alter, all or any of the Loan Agreement Secured Obligations
            or otherwise amend, restate, supplement, or otherwise modify in any
            manner, or grant any waiver or release with respect to, all or any
            part of the Loan Agreement Secured Obligations or any of the Loan
            Documents,

                  (ii) retain or obtain a Lien on any property of any Person to
            secure any of the Loan Agreement Secured Obligations, and in that
            connection to enter into any additional Loan Documents; provided,
            however, that the Collateral Agent for its benefit, the Trustee and
            the Noteholders retains or obtains a Lien on such property of such
            Person to secure any of the Indenture Secured Obligations,

                  (iii) amend, or grant any waiver, compromise or release with
            respect to, or consent to any departure from, any guaranty or other
            obligations of any Person obligated in any manner under or in
            respect of the Loan Agreement Secured Obligations,

                  (iv) release its Lien on any Collateral or other property,

                  (v) exercise or refrain from exercising any rights against any
            Credit Party or any other Person in accordance with the terms of
            this Agreement and any applicable law,

                  (vi) retain or obtain the primary or secondary obligation of
            any other Person with respect to any of the Loan Agreement Secured
            Obligations, and

                                       24
<PAGE>

                  (vii) otherwise manage and supervise the Loan Agreement
            Secured Obligations as the Lender shall deem appropriate.

            (b) The Lender hereby agrees that, the Collateral Agent, on behalf
of itself, the Trustee, and the Noteholders may, at any time and from time to
time, in its sole discretion without the consent of or notice to the Lender
(except to the extent such notice or consent is required pursuant to the express
provisions of this Agreement), and without incurring any liability to the Lender
amend, restate, supplement, replace, refinance, extend, consolidate,
restructure, or otherwise modify the Noteholder Documents in any manner
whatsoever; provided, however, that in no event shall the Collateral Agent, the
Trustee, or any Noteholder (i) obtain a Lien on any assets of any Credit Party
not subject to a Lien in favor of the Lender unless (A) the Lender also obtains
a Lien on such assets or (B) the Lender declines in a writing to the Collateral
Agent to obtain a Lien on such assets or (ii) increase the aggregate principal
amount of the Notes to an amount in excess of Ninety Million Dollars
($90,000,000).

            (c) The Lender also agrees that Collateral Agent and the Noteholders
shall have no liability (other than pursuant to the terms hereof and mandatory
applicable Requirements of Law) to the Lender and, subject to the terms hereof
and applicable law, the Lender hereby waives any claim against the Collateral
Agent, the Trustee or any Noteholder, arising out of any and all actions which
the Collateral Agent, the Trustee or Noteholders may take or permit or omit to
take with respect to: (i) the Noteholders Documents, (ii) the collection of the
Indenture Secured Obligations, (iii) the foreclosure upon, or sale, liquidation
or other disposition of, the Collateral pursuant to this Agreement, or (iv) the
release of any Lien in respect of any Collateral except for (x) claims for gross
negligence or willful misconduct or (y) claims for breach of this Agreement. The
Lender agrees that the Collateral Agent, the Noteholders, and the Trustee have
no duty to them in respect of the maintenance or preservation of the Collateral,
the Indenture Secured Obligations or otherwise other than as expressly set forth
herein.

            (d) The Collateral Agent, on behalf of itself, the Trustee and the
Noteholders, also agrees that the Lender shall have no liability (other than
pursuant to the terms hereof and mandatory applicable law) to the Collateral
Agent, the Trustee or any Noteholder, and, subject to the terms hereof and
applicable law, the Collateral Agent, on behalf of itself, the Trustee and the
Noteholders, hereby waives any claim against the Lender, arising out of any and
all actions which the Lender may take or permit or omit to take with respect to:
(i) the Loan Documents, (ii) the collection of the Loan Agreement Secured
Obligations, (iii) the foreclosure upon, or sale, liquidation or other
disposition of, the Collateral pursuant to this Agreement, or (iv) the release
of any Lien in respect of any Collateral except for (x) claims for gross
negligence or willful misconduct or (ii) claims for breach of this Agreement.
The Collateral Agent, on behalf of itself, the Trustee and the Noteholders,
agrees that the Lender has no duty to them in respect of the maintenance or
preservation of the Collateral, the Loan Agreement Secured Obligations or
otherwise other than as expressly set forth herein.

                                       25
<PAGE>

      Section 5.03 Reinstatement and Continuation of Agreement. If the Lender on
one hand, or the Collateral Agent, the Trustee or any Noteholder, on the other
hand, is required in any Insolvency or Liquidation Proceeding or otherwise to
turn over or otherwise pay to the estate of any Credit Party or any other Person
any amount (a "Recovery"), then the Loan Agreement Secured Obligations and the
Indenture Secured Obligations, as the case may be, shall be reinstated to the
extent of such Recovery. If this Agreement shall have been terminated prior to
such Recovery, this Agreement shall be reinstated in full force and effect, and
such prior termination shall not diminish, release, discharge, impair, or
otherwise affect the obligations of the parties hereto from such date of
reinstatement. All rights, interests, agreements, and obligations of the Lender,
the Lenders, the Collateral Agent, the Trustee, and the Noteholders under this
Agreement shall remain in full force and effect and shall continue irrespective
of the commencement of, or any discharge, confirmation, conversion, or dismissal
of, any Insolvency or Liquidation Proceeding by or against any Credit Party or
any other circumstance which otherwise might constitute a defense available to,
or a discharge of, any Credit Party in respect of the Loan Documents. No
priority or right of the Lender, the Collateral Agent, the Trustee or any
Noteholder shall at any time be prejudiced or impaired in any way by any act or
failure to act on the part of any Credit Party or by the noncompliance by any
Person with the terms, provisions, or covenants of any Loan Document or
Noteholder Document, as applicable, regardless of any knowledge thereof which
the Lender, the Collateral Agent, the Trustee or any Noteholder may have.

      Section 5.04 Receipt of Payments. The Collateral Agent, the Trustee, or
any Noteholder shall be permitted to receive payments on the Notes so long as
(a) such payments by any Credit Party are made in accordance with the terms of
the Noteholder Documents and (b) such receipt of payments by the Collateral
Agent, the Trustee or the Noteholders does not otherwise contravene this
Agreement. The Lender shall be permitted to receive payments under the Loan
Agreement and the Loan Documents so long as (a) such payments by any Credit
Party are made in accordance with the terms of the Loan Agreement and the Loan
Documents and (b) such receipt of payments by the Lender does not otherwise
contravene this Agreement.

                                   ARTICLE VI

                             INSOLVENCY PROCEEDINGS

      Section 6.01 Enforceability. The provisions of this Agreement are intended
to be and shall be enforceable under Section 510 of the Bankruptcy Code. The
Lender and the Collateral Agent, on behalf of itself, the Trustee, and the
Noteholders, each agrees that all distributions that the Lender, the Collateral
Agent, the Trustee, or any Noteholder receives in any Insolvency or Liquidation
Proceeding on account of the Collateral shall be held in trust by such Person
and turned over to the Lender for application in accordance with this Agreement.
To the extent that any amounts received by the Lender, the Collateral Agent, the
Trustee, or any Noteholder are paid over in connection with this provision, the
obligations owed by the Credit Parties to such Person will be deemed to be
reinstated to the extent of the amounts so paid over.

                                       26
<PAGE>

      Section 6.02 Asset Sales. The Collateral Agent agrees, on behalf of
itself, the Trustee, and the Noteholders, that it will not oppose any sale
consented to by Lender of Lender First Priority Collateral or Pari Passu
Collateral pursuant to Section 365(f) of Title 11 of the United States Code (or
any similar provision in any other applicable Bankruptcy Law) so long as the
proceeds of such sale are applied in accordance with this Agreement. The Lender
agrees that it will not oppose any sale consented to by the Collateral Agent,
the Trustee or the Noteholders of Collateral Agent First Priority Collateral or
Pari Passu Collateral pursuant to Section 365(f) of Title 11 of the United
States Code (or any similar provision in any other applicable Bankruptcy Law) so
long as the proceeds of such sale are applied in accordance with this Agreement.

                                   ARTICLE VII

                                  MISCELLANEOUS

      Section 7.01 Rights of Subrogation. The Collateral Agent agrees that no
payment or distribution to the Lender pursuant to the provisions of this
Agreement shall entitle the Collateral Agent, the Trustee, or any Noteholder to
exercise any rights of subrogation in respect thereof until the Discharge of the
Loan Agreement Secured Obligations shall have occurred. Following the Discharge
of the Loan Agreement Secured Obligations, the Lender agrees to execute such
documents, agreements, and instruments as the Collateral Agent, the Trustee or
any Noteholder may reasonably request to evidence the transfer by subrogation to
any such Person of an interest in the Loan Agreement Secured Obligations
resulting from payments or distributions to the Lender by such Person, so long
as all costs and expenses (including all reasonable legal fees and
disbursements) incurred in connection therewith by the Lender are paid by such
Person upon request for payment thereof. The Lender agrees that no payment or
distribution to the Collateral Agent pursuant to the provisions of this
Agreement shall entitle the Lender to exercise any rights of subrogation in
respect thereof until the Discharge of the Indenture Secured Obligations shall
have occurred. Following the Discharge of the Indenture Secured Obligations, the
Collateral Agent agrees to execute such documents, agreements, and instruments
as the Lender may reasonably request to evidence the transfer by subrogation to
any such Person of an interest in the Indenture Secured Obligations resulting
from payments or distributions to the Collateral Agent by such Person, so long
as all costs and expenses (including all reasonable legal fees and
disbursements) incurred in connection therewith by the Collateral Agent are paid
by such Person upon request for payment thereof.

      Section 7.02 Further Assurances. The parties hereto will, at the sole
expense of the Credit Parties and at any time and from time to time, promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that either party may reasonably
request, in order to protect any right or interest granted or purported to be
granted hereby or to enable the Lender or the Collateral Agent to exercise and
enforce its rights and remedies hereunder.

      Section 7.03 Representations. The Lender represents and warrants to the
Collateral Agent that it has the requisite power and authority under the Loan
Agreement

                                       27
<PAGE>

to enter into, execute, deliver, and carry out the terms of this Agreement. The
Collateral Agent represents and warrants to the Lender that it has the requisite
power and authority under the Indenture to enter into, execute, deliver, and
carry out the terms of this Agreement on behalf of itself, the Trustee, and the
Noteholders.

      Section 7.04 Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any party hereto shall be effective
unless it is in a written agreement executed by the Collateral Agent and the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

      Section 7.05 Addresses for Notices. All demands, notices and other
communications provided for hereunder shall be in writing and, if to the
Collateral Agent, mailed or sent by telecopy or delivered to it, addressed to it
as follows:

            LaSalle Bank National Association
            135 S. LaSalle, Suite 1960
            Chicago, IL 60603
            Attn: Victoria Douyon, CCTS
            First Vice President

and if to the Lender, mailed, sent by telecopy or delivered to it, addressed to
it as follows:

            Wells Fargo Foothill, Inc.
            One Boston Place
            18th Floor
            Boston, Massachusetts  02108
            Attention: Business Finance Manager

            Facsimile: (617) 523-1697

            With a copy to:

            Duane Morris LLP
            227 West Monroe Street
            Suite 3400
            Chicago, Illinois 60606
            Attention: Kenneth A. Latimer, Esq.

            Facsimile: (312) 499-6701

and if to Credit Party, sent by telecopy or delivered to it, addressed to it as
follows:

            Viskase Companies, Inc.
            625 Willowbrook Center
            Willowbrook, Illinois 60527
            Attention: Chief Financial Officer

            Facsimile (630) 455-2155

                                       28
<PAGE>

            with a copy to:

            Jenner & Block LLP
            One IBM Plaza
            Chicago, Illinois 60611
            Attention: Elizabeth Davidson, Esq.

            Facsimile (312) 840-8743

or as to any party at such other address as shall be designated by such party in
a written notice to the other parties complying as to delivery with the terms of
this Section 7.05. All such demands, notices and other communications shall be
effective, when mailed, two business days after deposit in the mails, postage
prepaid, when sent by telecopy, when receipt is acknowledged by the receiving
telecopy equipment (or at the opening of the next business day if receipt is
after normal business hours), or when delivered, as the case may be, addressed
as aforesaid.

      Section 7.06 No Waiver, Remedies. No failure on the part of any party
hereto to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

      Section 7.07 Continuing Agreement, Transfer of Secured Obligations. This
Agreement is a continuing agreement and shall (i) remain in full force and
effect until the earlier of (A) Discharge of the Loan Agreement Secured
Obligations shall have occurred and (B) the Discharge of the Indenture Secured
Obligations shall have occurred, (ii) be binding upon the parties and their
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the parties and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), the Lender, the
Collateral Agent, the Trustee, or any Noteholder may assign or otherwise
transfer all or any portion of the Loan Agreement Secured Obligations or the
Indenture Secured Obligations, as applicable, to any other Person in the manner
contemplated in the Loan Documents and the Noteholder Documents, and such other
Person shall thereupon become vested with all the rights and obligations in
respect thereof granted to the Lender, the Collateral Agent, the Trustee, or any
Noteholder, as the case may be, herein or otherwise. Notwithstanding anything to
the contrary in this Section, the initial Lender shall be the only party that
may deliver a Lender Standstill Notice and the only party to whom a Collateral
Agent Standstill Notice needs to be delivered unless (A) it shall have assigned
all of its rights and obligations hereunder and in respect of all of the Loan
Agreement Secured Obligations (and if then outstanding, the related commitments)
or (B) an agent shall have been appointed by the Lender under the Loan
Agreement, in which case such assignee or agent, as the case may be, shall then
constitute the Lender for such purposes as well. The Lender shall send the
Collateral Agent contemporaneous written notice of any such event contemplated
in the immediately preceding sentence.

      Section 7.08 Governing Law: Entire Agreement. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Illinois
except as

                                       29
<PAGE>

otherwise preempted by applicable federal law. This Agreement constitutes the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes any prior agreements, written or oral, with
respect thereto.

      Section 7.09 Counterparts. This Agreement maybe executed in any number of
counterparts, and it is not necessary that the signatures of all Parties be
contained on any one counterpart hereof, each counterpart will be deemed to be
an original, and all together shall constitute one and the same document. A
signed facsimile copy of this Agreement shall constitute an original for all
purposes.

      Section 7.10 No Third Party Beneficiary. This Agreement is solely for the
benefit of the parties hereto (and their permitted assignees). No other Person
(including any Credit Party or any Subsidiary or Affiliate of any Credit Party)
shall be deemed to be a third party beneficiary of this Agreement.

      Section 7.11 Headings. The headings of the articles and sections of this
Agreement are inserted for purposes of convenience only and shall not be
construed to affect the meaning or construction of any of the provisions hereof.

      Section 7.12 Severability. If any of the provisions in this Agreement
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and shall not invalidate the Lien Priority or any
other priority set forth in this Agreement.

      Section 7.13 Collateral Agent Status. Nothing in this Agreement shall be
construed to operate as a waiver by the Collateral Agent, with respect to any
Credit Party or any of its Subsidiaries, the Trustee, or any Noteholder, of the
benefit of any exculpatory rights, privileges, immunities, indemnities, or
reliance rights contained in any Noteholder Document, all of which rights,
privileges, immunities and indemnities, the parties hereto agree are
incorporated by reference herein. For all purposes of this Agreement, the
Collateral Agent may (a) rely in good faith, as to matters of fact, on any
representation of fact believed by the Collateral Agent to be true (without any
duty of investigation) and that is contained in a written certificate of any
authorized representative of any Credit Party or of the Lender, and (b) assume
in good faith (without any duty of investigation), and rely upon, the
genuineness, due authority, validity, and accuracy of any certificate,
instrument, notice, or other document believed by it in good faith to be genuine
and presented by the proper person.

      Section 7.14 Lender Status. Nothing in this Agreement shall be construed
to operate as a waiver by the Lender, with respect to any Credit Party or any
subsidiary of any Credit Party, the Lender of the benefit of any exculpatory
rights, privileges, immunities, indemnities, or reliance rights contained in any
Loan Document, all of which rights, privileges, immunities and indemnities, the
parties hereto agree are incorporated by reference herein. For all purposes of
this Agreement, the Lender may (a) rely in good faith, as to matters of fact, on
any representation of fact believed by the Lender to be true (without any duty
of investigation) and that is contained in a written certificate of any
authorized representative of any Credit Party or of the Collateral Agent, and
(b) assume

                                       30
<PAGE>

in good faith (without any duty of investigation), and rely upon, the
genuineness, due authority, validity, and accuracy of any certificate,
instrument, notice, or other document believed by it in good faith to be genuine
and presented by the proper Person.

      Section 7.15 Acknowledgment. Each Credit Party hereby acknowledges that it
has received a copy of this Agreement and consents thereto, and agrees to
recognize all rights granted thereby to the Lender and the Collateral Agent and
will not do any act or perform any obligation which is not in accordance with
the agreements set forth in this Agreement. Each Credit Party further
acknowledges and agrees that it is not an intended beneficiary or third party
beneficiary under this Agreement.

      Section 7.16 VENUE; JURY TRIAL WAIVER.

            (a) THE PARTIES HERETO AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF ILLINOIS; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE LENDER'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE THE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PARTY HERETO WAIVES, TO THE
EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.16.

            (b) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY HERETO REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
AND IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

      Section 7.17 Conflicts. The Lender and Collateral Agent agree that as
between themselves in the event of any actual, irreconcilable conflict between
the terms and provisions of the Loan Documents and the Noteholder Documents, the
terms and provisions of this Agreement shall control.

      Section 7.18 Intercreditor Agreement. This Agreement is the Intercreditor
Agreement referred to in the Indenture and the Loan Agreement. If this Agreement
or all or any portion of either party's rights or obligations hereunder are
assigned or otherwise transferred to any other Person or if the Loan Agreement
is otherwise refinanced or

                                       31
<PAGE>

replaced with another Person, such other Person shall execute and deliver an
agreement containing terms substantially identical to those contained in this
Agreement.

                           [Signature page to follow.]

                                       32
<PAGE>

      IN WITNESS WHEREOF, the Lender, the Collateral Agent and each Credit Party
has caused this Agreement to be duly executed and delivered as of the date first
above written.

LENDER:                                          WELLS FARGO FOOTHILL, INC.,
                                                 a California corporation

                                                 By: /s/ Brent E. Shay
                                                     ---------------------------
                                                     Name: Brent E. Shay
                                                     Title: Vice President

COLLATERAL AGENT:                                LASALLE BANK NATIONAL
                                                 ASSOCIATION, in its capacity as
                                                 Collateral Agent

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

BORROWER:                                        VISKASE COMPANIES, INC.,
                                                 a Delaware corporation

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

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