S-4/A

As filed with the Securities and Exchange Commission on December 22, 2004

No. 333-120002

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Viskase Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	3089	95-2677354
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

625 Willowbrook Centre Parkway

Willowbrook, Illinois 60527

(630) 789-4900

(Address, including zip code, and telephone number, including area code, of

registrant’s principal executive offices)

Gordon S. Donovan

Vice President and Chief Financial Officer

Viskase Companies, Inc.

625 Willowbrook Centre Parkway

Willowbrook, Illinois 60527

(630) 789-4900

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:

Thomas A. Monson

Jenner & Block LLP

One IBM Plaza

Chicago, Illinois 60611

(312) 222-9350

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

    If this Form is filed to registered additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

    If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

    The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY DRAFT DATED DECEMBER 22, 2004, SUBJECT TO COMPLETION

OFFER TO EXCHANGE

$90,000,000 11 1/2% Senior Secured Notes due 2011

Which Have Been Registered Under the Securities Act of 1933

for

Any and All Outstanding

$90,000,000 11 1/2% Senior Secured Notes Due 2011,

of

Viskase Companies, Inc.

PRINCIPAL TERMS OF THE EXCHANGE OFFER AND THE EXCHANGE NOTES

•  We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (which together constitute the “Exchange Offer”), all outstanding 11 1/2% senior secured notes due 2011 (the “Outstanding Notes”) that are validly tendered and not withdrawn for an equal principal amount of new 11 1/2% senior secured notes due 2011 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”).

•  You may withdraw tenders of Outstanding Notes at any time prior to the expiration of the Exchange Offer.

•  The Exchange Offer will expire 5:00 p.m., New York City time, on                l          , 2004, unless extended.

•  The terms of the Exchange Notes are substantially identical to the Outstanding Notes, except that the Exchange Notes are registered under the Securities Act and the transfer restrictions and registration rights applicable to the Outstanding Notes do not apply to the Exchange Notes.

•  The Exchange Notes will represent the same debt as the Outstanding Notes, and we will issue the Exchange Notes under the same indenture.

•  The terms of the Exchange Offer and the Exchange Notes are summarized below and more fully described in this prospectus.

•  There is no existing market for the Outstanding Notes or the Exchange Notes. We do not intend to list the Exchange Notes on any securities exchange or seek approval for quotation through any automated trading system.

You should carefully consider the “Risk Factors” beginning on page 11 of this prospectus

before participating in the Exchange Offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or

disapproved of these securities or passed upon the adequacy or the accuracy of this prospectus.

Any representation to the contrary is a criminal offense.

The date of this prospectus is l , 2004.

TABLE OF CONTENTS

Additional Information	i
Prospectus Summary	1
Risk Factors	11
The Exchange Offer	26
Capitalization	35
Selected Consolidated Historical Financial Data	36
Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Business	56
Management	64
Security Ownership of Certain Beneficial Owners and Management	71
Certain Relationships and Related Transactions	73
Use of Proceeds	74
Description of Certain Indebtedness	75
Description of the Notes	77
United States Federal Income Tax Considerations	130
Plan of Distribution	133
Legal Matters	133
Experts	133
Forward-Looking Statements	134
Index to Consolidated Financial Statements	F-1
Indenture
Opinion of Jenner & Block LLP
Loan and Security Agreement
Intellectual Property Security Agreement
Pledge Agreement (Domestic)
Pledge Agreement (Foreign)
First Supplemental Indenure, dated as of June 29, 2004
Management Incentive Plan
Severance Plan
Restructuring Agreement
Security Agreement
Intellectual Property Security Agreement
Pledge Agreement
List of Subsidiaries of the Company
Consent of PricewaterhouseCoopers, LLP
Consent of Grant Thornton, LLP
Form of Letter of Transmittal

ADDITIONAL INFORMATION

      We have filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 under the Securities Act with respect to the Exchange Notes. This prospectus, which is a part of the registration statement, omits certain information included in the registration statement and in its exhibits. For further information relating to us and the Exchange Notes, we refer you to the registration statement and its exhibits, from which this prospectus incorporates important business and financial information about the Company that is not included in or delivered herewith. You may read and copy the registration statement, including its exhibits, at the SEC’s Public Reading Room located at 450 Fifth Street, N.W., Washington D.C. 20549. You may obtain information on the operation of the Public Reading Room by calling the SEC at 1-800-SEC-0300. The SEC also maintains a Web site (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants like us who file electronically with the SEC. You can obtain a copy of any of our filings, without charge, by contacting us at the following address:

Corporate Secretary

Viskase Companies, Inc.

625 Willowbrook Centre Parkway

Willowbrook, Illinois 60527

(630) 789-4900

      To ensure timely delivery, please make your request as soon as practicable and, in any event, no later than five business days prior to the expiration of the Exchange Offer.

      We are not currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following effectiveness of the registration statement of which this prospectus is a part, we will file annual, quarterly and current reports and other information with the SEC in accordance with the Exchange Act. You may read and copy any document we file with the SEC at the SEC’s address set forth above.

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PROSPECTUS SUMMARY

      This summary highlights certain information that we believe is especially important concerning our business and this Exchange Offer. It does not contain all of the information that may be important to you and to your investment decision. You should carefully read the entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding to participate in the Exchange Offer. In this prospectus, unless indicated otherwise, “Viskase” or the “Company” refers to Viskase Companies, Inc., the issuer of the notes, and “we,” “us,” and “our” refer to Viskase and its subsidiaries.

Our Company

      We are a leading worldwide producer of non-edible cellulosic, fibrous and plastic casings used to prepare and package processed meat products. We provide value-added support services relating to these products to our customers, which include some of the world’s largest global consumer products companies. In 1925, one of our predecessors invented the basic process for producing casings from regenerated cellulose for commercial production, and we and/or our predecessors have been in the processed meat flexible packaging business for over 79 years. We believe we are one of the two largest worldwide producers of non-edible cellulosic casings for small-diameter processed meats, such as hot dogs. In addition, we believe we are one of the leading producers of non-edible fibrous casings for large-diameter sausages, salami, hams and other processed meat products. We also produce plastic casings for a wide range of processed meat and poultry applications. Our high-quality product offering and superior customer service have resulted in strong and longstanding relationships with our blue-chip customer base that includes Kraft, Smithfield Foods and ConAgra. The average length of our relationships with our top 15 customers is greater than ten years. We operate seven manufacturing facilities and eight distribution centers in North America, Europe and Latin America, and, as a result, we are able to sell our products in most countries throughout the world.

      The Company is a Delaware corporation. Our principal executive offices are located at 625 Willowbrook Centre Parkway, Willowbrook, Illinois 60527, and our telephone number is (630) 789-4900. Our website is www.viskase.com. Our website and the information included therein are not part of this prospectus.

The Industry

      The flexible packaging market in the United States is comprised of paper, plastic film or foil products and laminations of these materials. According to industry sources, domestic demand for flexible packaging was 6.0 billion pounds in 2003, and has grown from 5.5 billion pounds in 1998, reflecting a compound annual growth rate of 1.9%. Industry analysts expect the flexible packaging market as a whole to continue to expand at a steady rate due to technological advances and manufacturers’ needs for higher performance packaging. According to industry sources, domestic demand for flexible packaging is expected to reach 6.8 billion pounds by 2008, which would reflect a compound annual growth rate of 2.4% from 2003. Furthermore, domestic demand for flexible packaging for meat, poultry and seafood, the subsection of the flexible packaging market in which we operate, has been growing. Industry sources report that domestic demand for flexible packaging used for meat, poultry and seafood increased to 540 million pounds in 2003 from 515 million pounds in 1998, reflecting a compound annual growth rate of 1.0%. Domestic demand for flexible packaging for meat, poultry and seafood is expected to reach 594 million pounds by 2008, which would reflect a compound annual growth rate of 1.9% from 2003. We believe that we will continue to benefit from these stable United States industry fundamentals in both the general and the meat, poultry and seafood flexible packaging markets. We also believe that growth in demand for flexible meat, poultry and seafood packaging will occur in international markets. We expect modest growth in developed countries and, due to increasing wealth and availability of quality nutrition, more expansive growth in developing countries.

      We participate in the small-diameter cellulosic, fibrous and plastic casings segments of the general flexible packaging market. Casings are used in the production of processed meat and poultry products, such as hot dogs, sausages, salami, ham and bologna. In the manufacturing of these products, a meat preparation is stuffed into a casing and then cooked, smoked or dried. The casing utilized determines the size, consistency

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of shape, and overall appearance and quality of the final product. Small-diameter cellulosic, fibrous and plastic casings also permit high-speed stuffing and processing of products on commercially available, automated equipment, which provides a meat processor with consistent product quality, high production output rates and lower manufacturing costs.

SUMMARY OF THE EXCHANGE OFFER

      The summary below describes the principal terms of the Exchange Offer. The description below is subject to important limitations and exceptions. Please read the section entitled “The Exchange Offer” in this prospectus, which contains a more detailed description of the Exchange Offer.

The Exchange Offer	On June 29, 2004, we completed the private offering of $90,000,000 aggregate principal amount of 11 1/2% Senior Secured Notes due 2011, which we refer to as the “Outstanding Notes.” The Outstanding Notes were issued under an indenture (the “Indenture”), between the Company and LaSalle Bank, National Association, as Trustee (the “Trustee”). As part of the offering of the Outstanding Notes, we entered into a registration rights agreement in respect of the Outstanding Notes in which we agreed, among other things, to deliver this prospectus to you and to complete the Exchange Offer for the Outstanding Notes.
	We are offering to exchange $90,000,000 aggregate principal amount of our new 11 1/2% Senior Secured Notes due 2011 which we refer to as the “Exchange Notes,” for all Outstanding Notes. Throughout this prospectus, we refer to the Exchange Notes and the Outstanding Notes, collectively, as the “Notes.” The Exchange Notes have been registered under the Securities Act and will be issued under the same Indenture as the Outstanding Notes.
	We intend to satisfy our obligations to complete the Exchange Offer under the registration rights agreement through the issuance of the Exchange Notes. The Exchange Notes have terms substantially identical to the terms of the Outstanding Notes, except that the Exchange Notes have been registered under the Securities Act and are not entitled to registration rights under the registration rights agreement. In order to be exchanged, an Outstanding Note must be properly tendered and accepted. All Outstanding Notes that are validly tendered and not withdrawn will be exchanged. As of the date of this prospectus, there are $90,000,000 aggregate principal amount of the Outstanding Notes outstanding. We will issue Exchange Notes promptly after the expiration of the Exchange Offer. You may tender your Outstanding Notes for exchange in whole or in part in integral multiples of $1,000 principal amount.
	See “The Exchange Offer.”
Resales	Based on interpretations by the staff of the SEC, as detailed in a series of no-action letters issued to third parties, we believe that the Exchange Notes issued in the Exchange Offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act as long as:
	• you are acquiring the Exchange Notes in the ordinary course of your business;

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	• you are not participating, do not intend to participate and have no arrangement or understanding   with any person to participate, in a distribution of the Exchange Notes; and
	• you are not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of ours.
	If you are an affiliate of ours, are engaged in or intend to engage in or have any arrangement or understanding with any person to participate in the distribution of the Exchange Notes:
	• you cannot rely on the applicable interpretations of the staff of the SEC; and
	• you must comply with the registration and prospectus delivery requirements of the Securities   Act in connection with any resale transaction.
	Each broker or dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making or other trading activities must acknowledge that it will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any offer to resell or other transfer of the Exchange Notes issued in the Exchange Offer, including the delivery of a prospectus that contains information with respect to any selling holder required by the Securities Act in connection with any resale of the Exchange Notes.
	Furthermore, any broker-dealer that acquired any of its Outstanding Notes directly from us:
	• may not rely on the applicable interpretation of the staff of the SEC’s position contained in   Exxon Capital Holdings Corp., SEC no-action letter (May 13, 1988), Morgan, Stanley & Co.   Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2,   1993); and
	• must also be named as a selling noteholder in connection with the registration and prospectus   delivery requirements of the Securities Act relating to any resale transaction.
	See “Plan of Distribution.”
Expiration Date; Withdrawal of Tenders	The Exchange Offer will expire at 5:00 p.m., New York City time, on        l       , 2004, or such later date and time to which we extend the expiration date. A tender of Outstanding Notes pursuant to the Exchange Offer may be withdrawn at any time before 5:00 p.m., New York City time on the expiration date. Any Outstanding Notes not accepted for exchange for any reason will be returned promptly after the expiration or termination of the Exchange Offer without expense to the tendering holder.
Conditions to the Exchange Offer	The Exchange Offer is subject to customary conditions, some of which we may waive in our discretion. Holders of Outstanding Notes will have specified rights against us under the registration rights agreement executed as part of the private offering of the Outstanding Notes should we fail to complete the Exchange Offer.
	See “The Exchange Offer — Conditions to the Exchange Offer.”

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Procedures for Tendering Outstanding Notes	If you wish to accept the Exchange Offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal, in accordance with the instructions contained in this prospectus and the letter of transmittal. You must also mail or otherwise deliver the letter of transmittal, or a facsimile of the letter of transmittal, together with the Outstanding Notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. If you hold Outstanding Notes through The Depository Trust Company (“DTC”), and wish to participate in the Exchange Offer, you must comply with the Automated Tender Offer Program (“ATOP”), by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal you represent to us that, among other things:
	• any Exchange Notes that you receive will be acquired in the ordinary course of your business;
	• you are not participating, do not intend to participate and have no arrangement or understanding   with any person or entity to participate in a distribution of the Exchange Notes;
	• if you are a broker-dealer that will receive Exchange Notes for your own account in exchange   for Outstanding Notes that were acquired as a result of market-making activities, you will deliver   a prospectus, as required by law, in connection with any resale of such Exchange Notes; and
	• you are not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of ours.
	Please do not send your letter of transmittal or your Outstanding Notes to us. Those documents should only be sent to the exchange agent. Questions regarding how to tender and requests for information should be directed to the exchange agent. See “The Exchange Offer — Exchange Agent.”
Special Procedures for Beneficial Owners	If you are a beneficial owner of Outstanding Notes that are not registered in your name and you wish to tender such Outstanding Notes in the Exchange Offer, you should contact the registered holder promptly and instruct such registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, before completing and executing the letter of transmittal and delivering your Outstanding Notes, either make appropriate arrangements to register ownership of the Outstanding Notes in your name or obtain a properly completed bond power from the registered holder.
Guaranteed Delivery Procedures	If you wish to tender your Outstanding Notes and your Outstanding Notes are not immediately available, or you cannot deliver your Outstanding Notes, the letter of transmittal or any other documents required by the letter of transmittal, or you cannot comply with the applicable procedures under ATOP prior to the expiration date, you must tender your Outstanding Notes according

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	to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.”
Effect on Holders of Outstanding Notes	As a result of the making and consummation of the Exchange Offer, we will fulfill a covenant contained in the registration rights agreement and, accordingly, there will be no increase in the interest rate on the Outstanding Notes under the circumstances described in the registration rights agreement. If you are a holder of Outstanding Notes and you do not tender your Outstanding Notes in the Exchange Offer, you will continue to be entitled to all the rights and subject to all the limitations applicable to the Outstanding Notes in the Indenture, except as noted above.
	To the extent that Outstanding Notes are tendered and accepted in the Exchange Offer, any trading market for Outstanding Notes could be adversely affected.
Interest on the Exchange Notes and the Outstanding Notes	The Exchange Notes will bear interest from the most recent interest payment date to which interest has been paid on the applicable series of notes or, if no interest has been paid, from the issue date of the applicable series of Outstanding Notes. Interest on the Outstanding Notes accepted for exchange will cease to accrue upon the issuance of the Exchange Notes.
Consequences of Failure To Exchange	All Outstanding Notes not tendered in the Exchange Offer will continue to be subject to the restrictions on transfer provided for in the Outstanding Notes and in the Indenture. In general, the Outstanding Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the Exchange Offer, we do not currently intend to register the Outstanding Notes under the Securities Act.
U.S. Federal Income Tax Considerations	The exchange of Outstanding Notes for Exchange Notes in the Exchange Offer will not result in any income, gain or loss to the holders who participate in the Exchange Offer or to us for U.S. federal income tax purposes. See “United States Federal Income Tax Considerations.”
Use of Proceeds	We will not receive any cash proceeds from the issuance of Exchange Notes pursuant to the Exchange Offer.
Exchange Agent	LaSalle Bank N.A. is the exchange agent for the Exchange Offer. The address and telephone number of the exchange agent are set forth in the section captioned “The Exchange Offer — Exchange Agent.”

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Summary Description of the Notes

      The summary below describes the principal terms of the Exchange Notes. The terms of the Exchange Notes are substantially identical to the terms of the Outstanding Notes, except that the Exchange Notes are registered under the Securities Act and the registration rights and transfer restrictions applicable to the Outstanding Notes are not applicable to the Exchange Notes. The Exchange Notes will evidence the same debt as the Outstanding Notes and will be governed by the same Indenture. Please read the section entitled “description of the Notes” in this prospectus, which contains a more detailed description of the terms and conditions of the Notes.

Issuer	Viskase Companies, Inc.
Total Amount of Exchange Notes Offered	$90,000,000 aggregate principal amount of 11 1/2% Senior Secured Notes due 2011.
Maturity	June 15, 2011.
Interest Rate	We will pay interest on the Exchange Notes at an annual rate of 11 1/2%.
Interest Payment Dates	Semi-annually in cash, in arrears, on June 15 and December 15, beginning on December 15, 2004.
Guarantees	The Exchange Notes will be guaranteed by all of our future domestic restricted subsidiaries that are not immaterial subsidiaries, however, the Exchange Notes are not currently guaranteed by any of our subsidiaries.
Ranking	The Exchange Notes are senior secured obligations and will rank equally with all of our existing and future senior debt and senior to all of our existing and future subordinated debt. Any guarantees by any of our future domestic restricted subsidiaries will be senior secured obligations and will rank equally with all of the existing and future senior debt of such domestic restricted subsidiaries that guarantee the Exchange Notes and senior to all of their existing and future subordinated debt. The Exchange Notes and any related guarantees will effectively be subordinated to certain secured indebtedness permitted to be incurred under the Indenture, in each case to the extent of the assets securing such indebtedness and so long as the liens on such assets under such indebtedness are senior to the liens securing the Exchange Notes and any such guarantees. The Exchange Notes and any guarantees will also be effectively junior to any liabilities (including trade payables) of our unrestricted subsidiaries, foreign restricted subsidiaries and immaterial subsidiaries. As of September 30, 2004, we had $15,675,000 of indebtedness ranking subordinate to the Notes and $450,000 of indebtedness secured by assets not securing the Notes and therefore ranking effectively senior to the Notes. As of September 30, 2004, the maximum additional amount of indebtedness that we could incur under our existing credit arrangements was $22,500,000.
Security Interest	The Exchange Notes and any related guarantees by any of our future domestic restricted subsidiaries will be secured by substantially all of our and those domestic restricted subsidiaries’ current and future tangible and intangible assets, including all or a portion of the stock of our and their subsidiaries (except that no more than

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65% of the voting stock of any foreign subsidiary will constitute collateral securing the Exchange Notes).

	The Indenture permits us to incur other senior secured indebtedness and to grant liens on our assets under certain circumstances.
	See “Description of the Notes — Collateral.”
Optional Redemption	At any time prior to June 15, 2008, the Company may redeem, at its option, some or all of the Exchange Notes at a make-whole redemption price, plus accrued and unpaid interest on the Exchange Notes to the date of redemption, as more fully described under “Description of the Notes — Redemption — Optional Make-Whole Redemption Prior to June 15, 2008.”
	On or after June 15, 2008, we may redeem, at our option, some or all of the Exchange Notes at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the date of redemption:

For the Periods	Percentage
On or after June 15, 2008		105	3/4%
On or after June 15, 2009		102	7/8%
On or after June 15, 2010		100	%

	Prior to June 15, 2007, we may redeem, at our option, up to 35% of the aggregate principal amount of the Exchange Notes with the net proceeds of any equity offering at 111 1/2% of their principal amount, plus accrued and unpaid interest to the date of redemption, provided that at least 65% of the aggregate principal amount of the Exchange Notes remain outstanding.
	See “Description of the Notes — Redemption.”
Excess Cash Flow Offer	Within 90 days after the end of each fiscal year (beginning with the fiscal year ending 2006) for which our “excess cash flow” (as defined in “Description of the Notes — Certain Definitions”) was greater than or equal to $2.0 million, we may be required to offer to repurchase (subject to certain exceptions) a portion of the Notes at 101% of principal amount, plus accrued and unpaid interest to the date of purchase, with 50% of the excess cash flow from such fiscal year.
	See “Description of the Notes — Excess Cash Flow Offer.”
Change of Control Offer	If we undergo a change of control, the holders of the Exchange Notes will have the right to put their Exchange Notes to us at 101% of their principal amount, plus accrued and unpaid interest to the date of purchase. If the holders of the Exchange Notes exercise such right, we may not have funds available to pay the purchase price, and we may be unable to obtain the necessary third party financing to meet our purchase obligations pursuant to a change of control offer.
	See “Description of the Notes — Repurchase upon Change of Control.”
Asset Sale Proceeds	If we engage in asset sales, we must either invest the net cash proceeds from such sales in our business within a certain period of time (subject to certain exceptions), prepay indebtedness under our revolving credit facility (unless the assets that are the subject of such sales are comprised of real property, fixtures or improvements thereon or equipment) or make an offer to purchase at 100% of

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	principal amount, plus accrued and unpaid interest to the date of purchase, a principal amount of the Exchange Notes equal to any excess net cash proceeds.
	See “Description of the Notes — Certain Covenants — Limitation on Asset Sales.”
Certain Indenture Provisions	The Indenture contains covenants that, among other things, limit our ability to:
	• incur additional indebtedness or issue disqualified capital stock;
	• pay dividends, redeem subordinated debt or make other restricted payments;
	• make certain investments or acquisitions;
	• issue stock of subsidiaries;
	• grant or permit certain liens on our assets;
	• enter into certain transactions with affiliates;
	• merge, consolidate or transfer substantially all of our assets;
	• incur dividend or other payment restrictions affecting certain of our subsidiaries;
	• transfer, sell or acquire assets, including capital stock of our subsidiaries; and
	• change the business we conduct.
	These covenants are subject to a number of important limitations and exceptions.
	In addition, the Indenture contains a financial covenant requiring us to maintain a minimum amount of “Consolidated EBITDA” (as defined in “Description of the Notes — Definitions”) at the end of each fiscal quarter unless we maintain a certain level of liquidity.
	See “Description of the Notes — Certain Covenants.”
Trading	We do not intend to list the Exchange Notes on any securities exchange or seek approval for quotation of the Exchange Notes through any automated trading system. The initial purchaser of the Outstanding Notes currently makes a market in the Outstanding Notes and has informed us that, while it is not obligated to do so, it currently intends to make a market in the Exchange Notes to be issued. The initial purchaser, however, may cease its market-making activities at any time.

      For more information about the Exchange Notes, see “Description of the Notes.”

Risk Factors

      You should carefully consider all of the information set forth in this prospectus and, in particular, you should refer to the section captioned “Risk Factors” for an explanation of certain risks related to the Exchange Notes and participation in the Exchange Offer.

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SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA

      The following table sets forth our summary historical, unaudited interim and unaudited pro forma consolidated financial data for the periods ended and the dates indicated. We have derived the summary historical consolidated financial data for the years ended December 31, 2001, 2002 and 2003 from our audited consolidated financial statements and related notes for such years included elsewhere in this prospectus. We have derived the summary historical consolidated financial data as of September 30, 2004 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have derived the summary historical consolidated financial data for the period April 3, 2003 through December 31, 2003 from our audited consolidated financial statements and related notes for the year ended December 31, 2003. We have derived the summary historical consolidated financial data for the periods January 1 through April 2, 2003 and April 3, 2003 through September 30, 2003 from our unaudited interim consolidated financial statements and related notes for the periods January 1 through April 2, 2003 and April 3, 2003 through September 30, 2003 included elsewhere in this prospectus. In the opinion of our management, our unaudited interim consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our financial position, the results of our operations and cash flows. The results of operations for the nine-month period ended September 30, 2004 are not necessarily indicative of the operating results to be expected for a full fiscal year.

      Moreover, as a result of our emergence from Chapter 11 bankruptcy and the application of fresh-start accounting, our unaudited historical and pro forma consolidated financial data for the periods subsequent to April 2, 2003, following the effective date of our plan of reorganization in the bankruptcy proceedings, are referred to as the “Reorganized Company” and are not comparable to those for the periods prior to April 3, 2003, which are referred to as the “Predecessor Company.”

      The pro forma data for the nine-month period ended September 30, 2004 gives effect to the original offering of the Notes, the repayment of certain capital lease obligations and the purchase of $55.5 million of our 8% Senior Notes at a purchase price of 90% of the aggregate principal amount thereof, together with accrued and unpaid interest to the purchase date therefor, as if they occurred on October 1, 2003, while the pro forma balance sheet data give effect to these transactions as if they occurred as of September 30, 2004. The summary historical and unaudited interim consolidated financial data set forth below are not necessarily indicative of the results of future operations and should be read in conjunction with the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and related notes included elsewhere in this prospectus.

	Predecessor Company									Reorganized Company
	Year Ended						January 1			April 3			April 3			Nine Months
	December 31,						Through			Through			Through			Ended
							April 2,			December 31,			September 30,			September 30,
	2001			2002			2003			2003			2003			2004
	(Dollars in thousands)
Income Statement Data:
Net sales	$	189,315		$	183,577		$	45,402		$	152,408		$	101,094		$	154,366
Gross margin		33,057			36,736			7,371			32,419			22,446			32,676
Selling, general and administrative expenses		40,027			38,526			8,890			24,664			16,645			22,779
Operating (loss) income		(13,736	)		2,342			(2,019	)		(40,813	)		4,100			8,421
Net (loss) income		(25,526	)		(19,330	)		151,873			(46,627	)		(465	)		(15,103	)
Other Financial Data:
Depreciation and amortization		23,125			22,959			5,338			10,067			6,722			8,819
Capital expenditures		5,882			3,824			527			3,764			1,349	(1)		3,898	(1)

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Pro Forma Data:
Total interest expense(2)(3)	$	13,503
Cash interest expense(4)		10,977
Domestic collateral(5)		83,302
Net debt(6)		67,470
Domestic collateral/ Net debt(7)		1.2	x

	As of September 30, 2004
	Actual			Pro Forma(8)
Balance Sheet Data:
Cash and cash equivalents(9)	$	33,249		$	33,249
Property, plant and equipment, net		86,260			86,260
Total assets		203,545			203,545
Total debt		100,719			100,719
Total stockholders’ (deficit) equity		(55,826	)		(55,826	)

(1)	Capital expenditures total does not include $9,500 for reacquisition of leased assets.
(2)	Pro forma total interest expense includes $183 of amortization of deferred financing costs.
(3)	The effect of the Note issuance, repayment of the GECC lease and repurchase of the 8% Senior Notes on pro forma interest expense was $7,812, $(5,304) and $(2,148), respectively.
(4)	Pro forma cash interest expense is calculated as total interest expense less non-cash interest on 8% Senior Notes of $2,200, effective interest of $143 on the Notes and non-cash charges of $183 related to the amortization of deferred financing costs.
(5)	Domestic collateral is defined as the sum of domestic receivables, domestic inventories and domestic property, plant and equipment, net as of September 30, 2004. Domestic collateral does not include the value of the stock of foreign subsidiaries.
(6)	Net debt is defined as total debt less cash and cash equivalents as of September 30, 2004.
(7)	Calculated as the pro forma domestic collateral divided by the pro forma net debt at September 30, 2004.
(8)	Pro forma numbers assume $55.5 million of our 8% Senior Notes were repurchased by the Company concurrently with completion of the June 29, 2004 offering of the Outstanding Notes, at a price equal to 90% of the aggregate principal amount as of December 31, 2003.
(9)	Includes $2.7 million of restricted cash primarily securing letters of credit.

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RISK FACTORS

      In addition to the information contained elsewhere in this prospectus, the following risk factors should be carefully considered in evaluating the Exchange Offer and an investment in the Exchange Notes. If any of the following risks actually occur, our business, financial condition and operating results could be materially adversely affected, which, in turn, could adversely affect our ability to pay interest and principal on the Notes and could adversely affect the value of the Notes. The following risk factors, other than “If you do not exchange your Outstanding Notes, they may be difficult to resell,” generally apply both to the Outstanding Notes and to the Exchange Notes.

Risks Related to the Exchange Offer

If you do not exchange your Outstanding Notes, they may be difficult to resell.

      As Outstanding Notes are tendered and accepted in the Exchange Offer, the trading market for the remaining Outstanding Notes that are not tendered or are tendered but not accepted will be adversely affected. We anticipate that most holders of the Outstanding Notes will elect to exchange their Outstanding Notes for Exchange Notes as a result of the general absence of restrictions on the resale of Exchange Notes under the Securities Act. Therefore, we anticipate that the liquidity of the market for any Outstanding Notes remaining after the consummation of the Exchange Offer will be substantially limited.

      The restrictions on transfer of your Outstanding Notes arise because we issued the Outstanding Notes pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. In general, you may only offer or sell the Outstanding Notes if they are registered under the Securities Act and applicable state securities laws, or offered and sold pursuant to an exemption from these requirements. If you do not tender your Outstanding Notes, or if your Outstanding Notes are not accepted for exchange, you will generally have no further right to require us to register your Outstanding Notes after the Exchange Offer. Except in connection with this Exchange Offer, we do not presently intend to register the Outstanding Notes under the Securities Act.

      You should review the more detailed discussion in “The Exchange Offer — Procedures for Tendering” and “The Exchange Offer — Consequences of Exchanging or Failing to Exchange Outstanding Notes.”

You cannot be sure that an active trading market will develop for the Exchange Notes, and you may not be able to sell the Exchange Notes quickly or at attractive prices.

      The Exchange Notes will constitute a new issue of securities, with no established trading market. A market may not develop, and you may not be able to resell your Exchange Notes. We do not intend to apply for the Exchange Notes to be listed on any securities exchange or to arrange for quotation on any automated dealer quotation systems; however, we expect that the Exchange Notes will be eligible for trading by qualified institutional buyers (“QIBs”) in PORTAL. As a result, we cannot assure you as to the liquidity of any trading market for the Exchange Notes. You may not be able to sell any of your Exchange Notes at a particular time or at favorable prices and may be required to bear the financial risk of your investment in the Exchange Notes indefinitely. If a trading market were to develop, future trading prices of the Exchange Notes may be volatile and will depend on many factors, including:

•  our ability to complete the Exchange Offer; and

•  the market interest for the Exchange Notes and similar securities.

      Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Exchange Notes. The market for the Exchange Notes, if any, may be subject to similar disruptions that could adversely affect the value of the Exchange Notes.

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If you exchange your Outstanding Notes, you may not be able to resell the Exchange Notes you receive in the Exchange Offer without registering them and delivering a prospectus.

      Based solely on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that you may offer for resale, resell and otherwise transfer the Exchange Notes without compliance with the registration and prospectus delivery provisions of the Securities Act, so long as certain criteria are satisfied. These criteria include that you are not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of ours, that you acquired your Exchange Notes in the ordinary course of your business and that you are not engaging in and do not intend to engage in, and have no arrangement or understanding with any person to participate in, the distribution of your Exchange Notes. If any of these criteria is not satisfied, you will be subject to additional limitations, and you may not be able to resell Exchange Notes you receive in the Exchange Offer without registering those Exchange Notes or delivering a prospectus. Moreover, even if you do satisfy the foregoing criteria, we have not submitted a no-action letter to the SEC in connection with this Exchange Offer, and we cannot assure you that the SEC would make a similar determination with respect to this Exchange Offer. See “The Exchange Offer — Resales of the Exchange Notes.”

      In addition, holders that are broker-dealers may be deemed “underwriters” within the meaning of the Securities Act in connection with any resale of Exchange Notes acquired in the Exchange Offer. Holders that are broker-dealers must acknowledge that they acquired their Outstanding Notes in market-making activities or other trading activities and must deliver a prospectus when they resell the Exchange Notes they acquire in the Exchange Offer in order not to be deemed an underwriter.

Risks Related to the Notes

Our substantial level of indebtedness could adversely affect our results of operations, cash flows and ability to compete in our industry. This could, among other things, prevent us from fulfilling our obligations under the Exchange Notes.

      We have substantial indebtedness. In addition, subject to restrictions in the Indenture, we may incur additional indebtedness. This may make it more difficult for us to satisfy our obligations under the Notes. As of September 30, 2004, we had approximately $100.7 million ($106.1 million aggregate principal) of total debt, not including the availability of additional indebtedness, of up to $20.0 million, that we may borrow under our revolving credit facility. Of the total debt, $89.0 million ($90 million aggregate principal) relates to these Notes. We also have $11.2 million ($15.7 million aggregate principal) of our 8% Senior Notes outstanding, which are now unsecured and subordinated to our obligations under certain of our indebtedness, including the Notes and our revolving credit facility.

      Our high level of indebtedness has important implications, including the following:

•  if we fail to satisfy our obligations under the Notes or our other indebtedness, including our revolving credit facility and the 8% Senior Notes, or fail to comply with the restrictive covenants contained in the Indenture or our revolving credit facility, it may result in an event of default, all of our indebtedness could become immediately due and payable, and our lender under our revolving credit facility could foreclose on our assets securing such indebtedness following the occurrence and during the continuance of an event of default; and

•  it may require us to dedicate a substantial portion of our cash flow from our business operations to pay our indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, development projects, general operational requirements and other purposes.

      We expect to obtain the money to pay our expenses and to pay the amounts due under the Notes and our other debt primarily from our operations. Our ability to meet our expenses and make these payments thus depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the future and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the Notes, or to fund other liquidity

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needs. If we do not have enough money, we may be required to refinance all or part of our then existing debt (including the Notes), sell assets or borrow more money, which we may not be able to accomplish on terms acceptable to us, or at all. In addition, the terms of existing or future debt agreements, including the Indenture, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve any of these alternatives could materially adversely affect the value of the Notes and our ability to pay the amounts due under the notes.

Despite current indebtedness levels, we may still incur substantially more debt. This could decrease cash or other collateral available to pay the Notes.

      We may incur substantial additional indebtedness in the future. Although the Indenture and our revolving credit facility contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. For example, we have the ability to borrow up to $20.0 million under our revolving credit facility, which is secured by liens on all of our personal and real property assets, with certain exceptions. Under certain circumstances, we are permitted to incur in excess of $20.0 million under our revolving credit facility. The liens on collateral comprised of inventory, accounts receivable, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof that secure our revolving credit facility are contractually senior, pursuant to an intercreditor agreement, to the liens thereon that secure the Notes. See “Capitalization,” “Selected Consolidated Historical Financial Data,” “Description of Certain Indebtedness” and “Description of the Notes.”

We may not be able to generate the significant amount of cash needed to pay interest and principal amounts on our debt, including the Notes, which could result in our inability to fulfill our obligations under the Notes.

      Our earnings, excluding gains on the early extinguishment of debt, were insufficient to cover our fixed charges for the nine-month period ended September 30, 2004. If our cash flow and capital resources are insufficient to pay interest and principal under our revolving credit facility, the Notes, the 8% Senior Notes and our other debt, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or attempt to restructure our debt. If any of those alternative measures do not permit us to meet our scheduled debt service obligations, we could face substantial liquidity problems and the possibility of a default under our revolving credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

      Unless we were to obtain an appropriate waiver, an event of default would give our lender under our revolving credit facility the right to demand immediate repayment, a demand we might not be able to meet. The Notes will effectively be subordinated in right of payment to our indebtedness under the our revolving credit facility to the extent of our assets securing such indebtedness. We urge you to consider the information under “Capitalization,” “Prospectus Summary — Summary Consolidated Historical and Pro Forma Financial Data,” “Description of the Notes” and “Description of Certain Indebtedness” for more information.

A substantial portion of our business is conducted through foreign subsidiaries, and our failure to generate sufficient cash flow from these subsidiaries, or otherwise repatriate or receive cash from these subsidiaries, could result in our inability to repay our indebtedness, including the Notes.

      Our sales to customers located outside the United States are conducted primarily through subsidiaries organized under the laws of jurisdictions outside of the United States. For the nine-month period ended September 30, 2004, our foreign restricted subsidiaries contributed approximately 41% of our consolidated revenues. As of September 30, 2004, 45% of our consolidated assets, based on book value, were held by foreign subsidiaries. No more than 65% of the voting stock of our foreign subsidiaries will be pledged as security for the Notes, and neither will our foreign subsidiaries be guarantors of the Notes nor is it likely that any of the underlying assets of such foreign subsidiaries will ever be pledged as security for the Notes. Accordingly, our ability to meet our debt service obligations, including our obligations with respect to the Notes, with cash from foreign subsidiaries will depend upon the results of operations of these subsidiaries

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and may be subject to contractual or other restrictions and other business considerations. In addition, dividend and interest payments to us from our foreign subsidiaries may be subject to foreign withholding taxes, which would reduce the amount of funds we receive from such foreign subsidiaries. Dividends and other distributions from our foreign subsidiaries may also be subject to fluctuations in currency exchange rates and restrictions on repatriation, which could further reduce the amount of funds we receive from such foreign subsidiaries.

None of our foreign restricted subsidiaries, unrestricted subsidiaries or immaterial subsidiaries are guarantors with respect to the Notes, and therefore any claims you may have in respect of the Notes are effectively subordinated to the liabilities of those subsidiaries.

      None of our foreign restricted subsidiaries, unrestricted subsidiaries or immaterial subsidiaries will guarantee the Notes, and it is very unlikely that any assets of any of our foreign subsidiaries will constitute collateral for the Notes. If any of our foreign restricted subsidiaries, unrestricted subsidiaries or immaterial subsidiaries becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its indebtedness and its trade creditors generally will be entitled to payment on their claims from the assets of such subsidiary before any of those assets would be made available to us. Consequently, your claims in respect of the Notes would effectively be subordinated to all of the existing and future liabilities of our foreign restricted subsidiaries, unrestricted subsidiaries and immaterial subsidiaries. As of September 30, 2004, our foreign restricted subsidiaries and our immaterial subsidiaries that are domestic restricted subsidiaries have $0.5 million and $0.0 million, respectively, of indebtedness (other than intercompany loans) outstanding, and we will not have any material unrestricted subsidiaries. For the nine-month period ended September 30, 2004, our foreign restricted subsidiaries and those immaterial subsidiaries contributed approximately 45% and 0%, respectively, of our consolidated revenues. As of September 30, 2004, assets of our foreign restricted subsidiaries and of those immaterial subsidiaries had a book value of approximately $92.0 million and $0.3 million, respectively. In addition, because the liens on the collateral securing the Notes include pledges of a portion of the stock (or equivalent equity interest) of our foreign subsidiaries, the validity of those pledges under local law, if applicable, and the ability of the holders of the Notes to realize upon that collateral under local law, to the extent applicable, may be limited by such local law, which limitations may or may not affect such liens.

Our obligation to secure the Notes and any related guarantee with a lien on foreign assets is very limited, and because such a lien could result in adverse tax consequences to us at some point in time, it is very unlikely that the Notes or any guarantee will ever be secured by such a lien. As a result, your right to receive payments under the Exchange Notes from cash flow generated by foreign subsidiaries may be subordinated to other senior indebtedness of such subsidiaries.

      We have an obligation under the Indenture to use our reasonable best efforts to cause a lien to be granted on assets acquired by our foreign restricted subsidiaries to secure the Notes and any related guarantees, so long as we determine that obtaining such a lien could not possibly result in any adverse tax consequences to us. The failure to grant liens on assets held by foreign restricted subsidiaries means that the Notes will be effectively subordinated to the indebtedness of such subsidiaries. It is likely that in nearly all conceivable circumstances, we would determine that granting such a lien could result in adverse tax consequences to us at some point in time. Consequently, your right to receive payments under the Notes will effectively be subordinated to payments under our capital leases and our other senior secured indebtedness to the extent of the value of the assets securing such indebtedness and so long as the liens on such assets under such indebtedness are senior to the liens securing the Notes. The proceeds from the collateral securing the Notes may not be sufficient to pay all amounts owed under the Notes if an event of default occurs.

The ability of the trustee to foreclose on the collateral may be limited or delayed pursuant to bankruptcy laws. Your claims under the Notes may be subordinated or limited as a result.

      Federal bankruptcy law could impair the trustee’s ability to foreclose upon the collateral. This may result in the effective subordination of the Notes or otherwise limit your recovery. If we or a guarantor become a debtor in a case under the United States Bankruptcy Code, as amended (the “Bankruptcy Code”), the

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automatic stay, imposed by the Bankruptcy Code upon the commencement of a case, could prevent the trustee from foreclosing upon the collateral or, if a trustee has already taken control of the collateral, from disposing of it, without prior bankruptcy court approval. Furthermore, other provisions of the Bankruptcy Code permit a debtor to continue to retain and use the collateral (and the proceeds, products, rents or profits of such collateral) so long as the secured creditor is afforded “adequate protection” of its interest in the collateral. Although the precise meaning of the term “adequate protection” may vary according to circumstances, it is generally intended to protect a secured creditor against any diminution in the value of the creditor’s interest in its collateral. Accordingly, the bankruptcy court may find that a secured creditor is “adequately protected” if, for example, the debtor makes certain cash payments or grants the creditor liens on additional or replacement collateral as security for any diminution in the value of the collateral occurring for any reason during the pendency of the bankruptcy case. Because the courts have not precisely defined the term “adequate protection” and have broad discretionary powers, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the trustee could repossess or dispose of the collateral, or whether or to what extent holders of the Notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.”

      Moreover, potential liabilities to third parties may preclude the trustee from foreclosing on collateral. For example, secured creditors that foreclose on real property may be held liable under environmental laws for the costs of remediating or preventing release or threatened releases of hazardous substances at the real property. Consequently, the trustee may decline to foreclose on our real property or exercise other remedies available if it does not receive indemnification to its satisfaction from the holders of the Notes.

      For these and other reasons, if we, or our subsidiary guarantors, become debtors in cases under the Bankruptcy Code, there can be no certainty as to whether:

•  any payments under the Notes would be made;

•  the trustee could foreclose upon or sell the collateral; or

•  the trustee or you would be able to enforce your rights against the subsidiary guarantors under their guarantees.

      In addition, if any of our foreign restricted subsidiaries were to grant a security interest in any of its acquired assets to secure the Notes and any related guarantees, applicable foreign bankruptcy or insolvency laws and statutes may similarly prevent, limit and/or delay the exercise of any remedies by the trustee with respect to such assets.

      Finally, the trustee’s ability to foreclose on the collateral on your behalf may be subject to lack of perfection, the consent of third parties, prior liens, including the security interests that will be held by the lender under our revolving credit facility, and practical problems associated with the realization of the trustee’s security interest in the collateral.

In the event we were to become subject to liquidation or bankruptcy proceedings, the treatment of our pension and postretirement benefit liabilities in bankruptcy could adversely affect the recovery of the holders of the Notes.

      Our postretirement benefit and qualified and non-qualified pension plans for our North American employees have unfunded liabilities of $55.8 million and $47.1 million, respectively, as of September 30, 2004. Under the terms of these plans, we have the right to terminate, amend or change benefits at any time. The Company will terminate postretirement medical benefits as of December 31, 2004 for all active employees and retirees in the U.S. who are not covered by a collective bargaining agreement. It is estimated that said termination will result in a projected $35 million reduction in the unfunded postretirement liability. With respect to any continuing postretirement medical benefits and non-qualified pension plans, if we were unable to terminate our postretirement benefit and non-qualified pension plans in connection with a bankruptcy or liquidation proceeding, these benefits would be treated as administrative claims and would be payable during the pendency of the bankruptcy case until such plans were either modified or terminated. In

15

such event, these administrative claims would rank senior in priority to general unsecured claims (including any deficiency claim of the holders of the Notes) but would be subordinated to secured claims, including the Notes to the extent of the value of the collateral available to repay such indebtedness. Under certain circumstances prior to bankruptcy, the Pension Benefit Guaranty Corporation can seek to secure any unfunded qualified pension liability claims. If the Pension Benefit Guaranty Corporation does not perfect such liens prior to the commencement of a bankruptcy proceeding or the trustee in such proceeding voids such liens, then the claims of the Pension Benefit Guaranty Corporation would be treated as general unsecured claims. Additionally, if the qualified pension plan is terminated in any such proceeding, the unfunded qualified pension liability would be treated as a general unsecured claim and any claims of the holders of the Notes that remain unpaid following the application of proceeds of collateral securing such claims would rank pari passu in right of payment with all such pension liability claims.

The capital stock securing the Notes will automatically be released from the collateral to the extent the pledge of such collateral would require the filing with the SEC of separate financial statements for any of our subsidiaries, resulting in your loss of a security interest to the extent of the collateral released.

      The Indenture and the security documents related thereto provide that, to the extent that any rule is adopted, amended or interpreted that would require the filing with the SEC (or any other governmental agency) of separate financial statements for any of our subsidiaries due to the fact that such subsidiary’s capital stock secures the Notes, then such capital stock will automatically be deemed not to be part of the collateral securing the Notes to the extent necessary to not be subject to such requirement. In such event, the security documents may be amended, without the consent of any holder of Notes, to the extent necessary to release the liens on such capital stock. As a result, holders of the Notes could lose their security interest in such portion of the collateral if, and for so long as, any such rule is in effect. At this time, and at all times since the issuance of the Outstanding Notes, only one of our subsidiaries, Viskase Europe Limited, represents collateral exceeding 10% of the principal amount of the Notes. The release of capital stock of a subsidiary pursuant to this provision in certain circumstances could result in less than a majority of the capital stock of a subsidiary being pledged to secure the Notes, which could impair the ability of the trustee to sell a controlling interest in such subsidiary or to otherwise realize value on its security interest in such subsidiary’s stock or assets. Finally, the liens of the lenders under our revolving credit facility are not subject to any such restriction, and as a result, the Notes will effectively be subordinated in right of payment to our indebtedness under our revolving credit facility to the extent of the value of such capital stock so released.

Your right to exercise remedies with respect to certain collateral will be limited by an intercreditor agreement between the trustee and the lender under our revolving credit facility.

      A number of the trustee’s rights and remedies with respect to certain collateral to be shared with the administrative agent under our revolving credit facility are significantly limited under the intercreditor agreement between the trustee for the holders of the Notes and the administrative agent under our revolving credit facility. For instance, if the Notes become due and payable prior to the stated maturity or are not paid in full at the stated maturity at a time during which we have indebtedness outstanding under our revolving credit facility, the trustee will not have the right to foreclose upon any collateral comprised of inventory, accounts receivable, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof under certain conditions specified in such intercreditor agreement. Similarly, the administrative agent is subject to reciprocal restrictions relating to collateral securing the Notes and any related guarantees that consist of real property, fixtures and improvements thereon, equipment and proceeds thereof. In the case of all other collateral, the liens in favor of the trustee and the administrative agent will be pari passu, and the intercreditor agreement provides for the process under which the trustee or the administrative agent may exercise any remedy in respect thereof.

      In addition, the intercreditor agreement limits the trustee from commencing enforcement actions against the collateral consisting of our or any guarantor’s real property, fixtures and improvements thereon and equipment for a period of 90 days from the date that the trustee or the administrative agent receives written notice of an event of default under the revolving credit facility or the Indenture, respectively.

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The Indenture and our other indebtedness impose significant operating and financial restrictions, and a breach of any such restriction may result in a default and the possible acceleration of repayment obligations.

      The Indenture and the credit agreement governing our revolving credit facility impose significant operating and financial restrictions on us. These restrictions restrict our ability to take advantage of potential business opportunities as they arise and may adversely affect the conduct of our current business. More specifically, they restrict our ability to, among other things:

•  incur additional indebtedness or issue disqualified capital stock;

•  pay dividends, redeem subordinated debt or make other restricted payments;

•  make certain investments or acquisitions;

•  grant liens on our assets;

•  merge, consolidate or transfer substantially all of our assets; and

•  transfer, sell or acquire assets, including capital stock of our subsidiaries.

      The credit agreement governing our revolving credit facility also requires us to meet a number of financial ratios and tests. Compliance with these financial ratios and tests may adversely affect our ability to adequately finance our operations or capital needs in the future or to pursue attractive business opportunities that may arise in the future. Our ability to meet these ratios and tests and to comply with other provisions governing our indebtedness may be adversely affected by our operations and by changes in economic or business conditions or other events beyond our control. Our failure to comply with our debt-related obligations could result in an event of default under the Notes and our other indebtedness, resulting in accelerated repayment obligations and giving our secured creditors certain rights against our collateral.

The interests of our stockholders may not be aligned with yours, and their actions may conflict with your interests.

      To our knowledge, Carl C. Icahn is the beneficial owner of approximately 29.1% of our outstanding Common Stock. Two employees of companies affiliated with Mr. Icahn are members of our Board of Directors, which is comprised of five directors. When we emerged from bankruptcy, a third individual was designated as a member of our Board of Directors by a company affiliated with Mr. Icahn. As the beneficial owner of 29.1% of our Common Stock, Mr. Icahn has significant influence regarding the election of our Board of Directors and stockholder voting on decisions relating to fundamental corporate actions. It is possible that the interests of Mr. Icahn and our other stockholders, as such, could conflict in certain circumstances with your interest as a holder of the Notes.

If we have excess cash flow, we may not have sufficient funds to satisfy our purchase obligations with respect to an excess cash flow offer.

      If we have at least $2.0 million of excess cash flow in fiscal year 2006 or any fiscal year thereafter, the holders of the Notes will have the right, under certain circumstances, to require us to purchase their Notes at a price equal to 101% of the principal amount of the Notes, together with any accrued and unpaid interest to the date of purchase, with 50% of such excess cash flow, subject to certain conditions imposed under our revolving credit facility, including the requirement that there be no default or event of default then continuing under the terms of our revolving credit facility. See “Description of the Notes — Excess Cash Flow Offer.”

      If we are required to make an offer to purchase Notes with 50% of our excess cash flow for any such fiscal year, we may not have available funds sufficient to consummate such an offer or we may not be able to satisfy each of the conditions to the consummation of such a purchase. Our failure to consummate such an offer (except when prohibited under the revolving credit facility) in a timely manner will constitute a default under the Indenture and give the trustee and the holders of the Notes the rights described in “Description of the Notes — Events of Default.” If such a default arises, an event of default may arise under our revolving

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credit facility and permit the lender under our revolving credit facility to accelerate the indebtedness outstanding thereunder. If such indebtedness is not paid, the lender may enforce security interests in the collateral comprised of inventory, accounts receivable, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof that secures such indebtedness, thereby limiting our ability to raise cash to purchase the Notes and reducing the practical benefit to the holders of the Notes of the excess cash flow offer provisions of the Indenture.

Upon a change of control, we may not have sufficient funds to satisfy our purchase obligations with respect to a change of control offer.

      Upon the occurrence of a change of control, the holders of the Notes will have the right to require us to purchase their Notes at a price equal to 101% of the principal amount of the Notes, together with any accrued and unpaid interest to the date of purchase. See “Description of the Notes — Repurchase Upon Change of Control.” The lender under our revolving credit facility will have a similar right to be repaid or to terminate the facility upon a change of control. Any of our future debt agreements may contain a similar provision.

      If a change of control occurs, we may not have available funds sufficient to meet any of our repurchase obligations. Accordingly, we may be unable to pay the holders of the Notes the change of control purchase price for their Notes. Our failure to pay the change of control purchase price when due will constitute a default under the Indenture and give the trustee and the holders of the Notes the rights described in “Description of the Notes — Events of Default.” The same events constituting a change of control under the Indenture may also constitute an event of default under our revolving credit facility and permit the lender under our revolving credit facility to accelerate the indebtedness outstanding thereunder. If such indebtedness is not paid, the lender may enforce security interests in the collateral comprised of inventory, accounts receivable, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof that secures such indebtedness, thereby limiting our ability to raise cash to purchase the Notes and reducing the practical benefit to the holders of the Notes of the offer to purchase provisions of the Indenture. Acquisition of control of voting stock by affiliates of Carl C. Icahn will not constitute a change of control under the Indenture.

Bankruptcy and fraudulent transfer laws could limit your claims against any subsidiary guarantors.

      Each of our future domestic restricted subsidiaries that are not immaterial subsidiaries will guarantee the Notes. Although standards may vary depending upon the applicable law, generally under U.S. federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a court could, if a subsidiary guarantor became a debtor in bankruptcy, void or cancel all or a portion of any such guarantees of the Notes or subordinate any such guarantees to other obligations of our subsidiary guarantors. The court might do so if it found that, when the subsidiary guarantor entered into its guarantee or, in some states, when payments became due thereunder, it (a) received less than reasonably equivalent value or fair consideration for the guarantee and (b) either (i) was insolvent or was rendered insolvent, (ii) was left with inadequate capital to conduct its business, or (iii) believed or should have believed that it would incur debts beyond its ability to pay them. The court might also avoid a guarantee, without regard to the above factors, if it found that the subsidiary guarantor entered into its guarantee with actual intent to hinder, delay or defraud its creditors. A court would likely find that a subsidiary guarantor did not receive reasonably equivalent value or fair consideration for its guarantee unless it benefited directly or indirectly from the issuance of the Notes.

      If a subsidiary’s guarantee were to be voided by the bankruptcy court, you would have no claim against that subsidiary. If a subsidiary’s guarantee were held to be subordinated in favor of other creditors of that subsidiary, the other creditors would be entitled to be paid in full before you could be paid on the Notes. In addition, the court might direct you to repay any amounts already received from the subsidiary. If the court were to avoid or subordinate any subsidiary’s guarantee, there may not be funds available to pay the Notes from another subsidiary guarantor or from any other source.

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      Each guarantee will state that the liability of each subsidiary guarantor thereunder is limited to the maximum amount that the subsidiary guarantor can incur without risk that the guarantee will be subject to avoidance as a fraudulent conveyance. This limitation may not protect the guarantees from a fraudulent conveyance attack or, if it does, ensure that the guarantees will be in amounts sufficient, if necessary, to pay obligations under the Notes when due.

Risks Related to our Business

We have recently emerged from bankruptcy, have a history of losses and may not become profitable.

      We have recently emerged from bankruptcy and have a history of losses. We may not grow or achieve and maintain profitability in the near future, or at all. On November 13, 2002, we filed a prepackaged plan of reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. On April 3, 2003, we consummated our prepackaged plan of reorganization, as modified by the bankruptcy court, and emerged from bankruptcy. If we cannot achieve and maintain profitability, the value of an investment in the Notes may decline. Should we file for bankruptcy again in the future, the value of an investment in the Notes could decline even further.

Our results of operations and financial condition for the periods subsequent to our emergence from bankruptcy may vary significantly from any projections that were prepared in connection with our plan of reorganization and you may be unable to make meaningful comparisons to our historical financial statements for the period prior to our bankruptcy.

      In connection with our plan of reorganization, we were required to prepare projected financial information to demonstrate to the United States Bankruptcy Court the feasibility of our plan of reorganization and ability to continue operations upon our emergence from bankruptcy. Also in connection with our emergence from bankruptcy, we have applied the “fresh start” accounting method. This method requires us to revalue all our assets and liabilities based on our estimate of our enterprise value and the fair value of each of our assets and liabilities. These projections and enterprise valuation were prepared solely for the purpose of the bankruptcy and should not be relied upon for any other purpose. The determination of these values was subject to significant estimates, and the fair values recorded based on these estimates may not be fully realized in periods subsequent to our emergence from bankruptcy. The recorded amounts of our assets and liabilities and the results of our operations reflected in the financial statements for periods subsequent to our emergence from bankruptcy are not comparable to the financial statements for the period prior to the emergence from bankruptcy. You may not be able to make meaningful comparisons of certain information reflecting our results of operations and financial condition to the previous periods.

We face competitors that are better capitalized, and the continuous-flow nature of the casings manufacturing process forces competitors to compete based on volume, which could adversely affect our revenues and results.

      We face competition in the United States and internationally from competitors that may have substantially greater financial resources than we have. The cellulosic casings industry includes several competitors that are larger and better capitalized than we are. Currently, our primary competitors include Teepak LLC, Viscofan, S.A. and Kalle Nalo GmbH, although new competitors could enter the market or competing products could be introduced. Since 1995, there have been steady declines in the prices of cellulosic casing products; nevertheless, we believe prices have stabilized recently. Also, although we believe that the current output in our industry is in balance with global demand, the continuous-flow nature of the casings manufacturing process requires competitors in our industry to compete based on volume. Recently, some of our competitors have announced plans to expand extrusion capacity at their existing facilities, which we anticipate will increase global capacity by approximately 5%. Upon completion of these projects, the industry may return to a condition of overcapacity, likely leading the industry to compete more aggressively based on volume. We attempt to differentiate our products on the basis of product quality and performance, product development, service, sales and distribution, but competitors in our industry may use price as a competitive factor in an attempt to obtain greater volumes. If prices decline further, we may not be able to

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achieve profitability whereas certain of our competitors who are better capitalized may be positioned to absorb such price declines. Any of these factors could result in a material reduction of our revenue, gross profit margins and operating results.

We receive our raw materials from a limited number of suppliers, and problems with their supply could impair our ability to meet our customer’s product demands.

      Our principal raw materials, paper and pulp, constitute an important aspect and cost factor of our operations. We generally purchase our paper and pulp from a single source or a small number of suppliers. Any inability of our suppliers to timely deliver raw materials or any unanticipated adverse change in our suppliers could be disruptive and costly to us. Our inability to obtain raw materials from our suppliers would require us to seek alternative sources. These alternative sources may not be adequate for all of our raw material needs, nor may adequate raw material substitutes exist in a form that our processes could be modified to use. These risks could materially and adversely impact our sales volume, revenues, costs of goods sold and, ultimately, profit margins.

Our failure to efficiently respond to industry changes in casings technology could jeopardize our ability to retain our customers and maintain our market share.

      We and other participants in our industry have considered alternatives to cellulosic casings for many years. As resin technology improves, alternative casings may be developed that threaten the long-term sustainability and profitability of our cellulosic casings, our core product, and our fibrous casings. Our failure to anticipate, develop or efficiently and timely integrate new technologies that provide viable alternatives to cellulosic casings, including plastics and film alternatives, may cause us to lose customers and market share to competitors integrating such technologies, which, in turn, would negatively impact our revenues and operating results.

Sales of our products could be negatively affected by problems or concerns with the safety and quality of food products.

      We could be adversely affected if consumers in the food markets were to lose confidence in the safety and quality of meat products, particularly with respect to processed meat products for which casings are used, such as hot dogs and sausages. Outbreaks of, or even adverse publicity about the possibility of, diseases such as “mad cow disease” and “foot and mouth disease,” food-borne pathogens such as E. coli and listeria, and any other food safety problems or concerns relating to meat products, may discourage consumers from buying meat products. These risks could also result in additional governmental regulations, and/or cause production and delivery disruptions or product recalls. Each of these risks could adversely affect the demand for our products, and consequently, our revenues and liquidity.

Changing dietary trends and consumer preferences could weaken the demand for our products.

      Various medical studies detailing the health-related attributes of particular foods, including meat products, affect the purchase patterns, dietary trends and consumption preferences of consumers. These patterns, trends and preferences are routinely changing. For example, general dietary concerns about meat products, such as the cholesterol, calorie, sodium and fat content of such products, could result in reduced demand for such products, which would, in turn, cause a reduction in the demand for our products and a decrease in our sales volume and revenue.

Our facilities are capital intensive and we may not be able to obtain financing to fund necessary capital expenditures.

      Our business is capital intensive. We operate seven manufacturing facilities and eight distribution centers as part of our business. We are required to make substantial capital expenditures and substantial repair and maintenance expenditures to maintain, repair, upgrade and expand existing equipment and facilities to keep pace with competitive developments. In addition, we are required to invest in technological advances to

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maintain compliance with safety standards and environmental laws or regulations. For example, we have already expended $2.9 million, and expect to expend another $7.4 million over the next 12 months, on maximum achievable control technology (“MACT”) to meet certain air emissions standards related to carbon disulfide under the Clean Air Act Amendments of 1990. Historically, we have spent approximately $5.0 million each year on capital expenditures. We currently estimate that we will need to spend approximately $9.9 million for capital expenditures in 2004, $8.0 million in 2005 and approximately $6.5 million annually thereafter. At some point in the future, we may be required to obtain additional financing to fund capital expenditures. If we need to obtain additional funds, we may not be able to do so on terms favorable to us, or at all, which would ultimately negatively affect our production and operating results.

Business interruptions at any of our production facilities could increase our operating costs, decrease our sales or cause us to lose customers.

      The reliability of our production facilities is critical to the success of our business. In recent years, we have streamlined our productive capacity to be better aligned with our sales. At current operating levels, we have little or no excess production capacity for certain products. Additionally, our collective bargaining agreement covering union employees at our Loudon, Tennessee facility expires on September 30, 2005. When the current agreement expires, we do not know whether we will be able to negotiate a replacement agreement on similar or more favorable terms as the current agreement or at all or whether we will be able to do so without production interruptions or labor stoppages. If the operations of any of our manufacturing facilities were interrupted or significantly delayed for any reason, we may be unable to shift production to another facility without incurring a significant drop in production. Such a drop in production would negatively affect our sales and our relationships with our customers.

We are subject to significant minimum contribution requirements with respect to our pension plan, and we are subject to market exposure with respect to our defined benefit plan, both of which could adversely affect our cash flow.

      We maintain a pension plan for our domestic employees, through which monthly benefits are paid to our retired employees. We are subject to substantial minimum contribution requirements with respect to our pension plan. Although the amount fluctuates, our aggregate minimum funding contribution requirement from September 30, 2004 through 2008 is approximately $36.1 million. This amount could increase or decrease due to market factors, including expected returns on plan assets and the discount rate used to measure accounting liabilities, among other factors.

      Our unfunded pension plan liabilities with respect to our North American employees were projected to be $47.1 million as of September 30, 2004. The funds in our defined benefit plan are subject to market risks, including fluctuating discount rates, interest rates and asset returns. As of April 1, 2004 for all employees not covered by a collective bargaining agreement, we eliminated the unreduced early retirement benefit within our defined benefit plan and, in addition, we replaced the current defined benefit plan for all employees who were not defined benefit plan participants as of March 31, 2003 with a new defined contribution plan.

      Plan documents governing our pension plan reserve our right to terminate, amend or change the pension plan.

Underfunding with respect to our postretirement medical and life insurance benefits provided to our eligible North American retirees could adversely affect our cash position.

      We have historically provided postretirement medical and life insurance benefits to eligible North American retirees. The retirees contribute between 50% and 80% of the “premium costs” depending on their credited years of service with us. We fund the postretirement employee benefits (“PREB”) on a “pay-as-you-go” basis. The actuarially computed unfunded PREB liability with respect to our North American employees was approximately $55.8 million as of September 30, 2004. Plan documents governing our postretirement medical and life insurance benefits reserve our right to terminate, amend or change the plans under which such benefits are offered.

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      The Company will terminate postretirement medical benefits as of December 31, 2004 for all active employees and retirees in the U.S. who are not covered by a collective bargaining agreement. It is estimated that said termination will result in a projected $35 million reduction in the Company’s unfunded postretirement liability.

Our international operations expose us to political and economic risks in foreign countries, as well as to risks related to currency fluctuations, all of which could impair our ability to do business at the international level.

      We currently have manufacturing or sales and distribution centers in six foreign countries, including Brazil, Canada, France, Germany, Italy and Poland. Our international sales and operations may be subject to various political and economic risks including, but not limited to:

•  possible unfavorable exchange rate fluctuations or hyperinflation;

•  changes in a country’s or region’s political or economic conditions;

•  governmental regulations, including import and export controls; and

•  tariffs.

      Our sales to customers located outside the United States generally are subject to taxes on the repatriation of funds. In addition, international operations in certain parts of the world may be subject to international balance of payments difficulties that may raise the possibility of delay or loss in the collection of accounts receivable from sales to customers in those countries. Net sales to customers located outside the United States represented approximately 59% and 59% of total net sales in 2003 and the nine-month period ended September 30, 2004, respectively.

      Should any of these risks occur, it could impair our ability to export our products or conduct sales to customers located outside of the United States and result in a loss of sales and profits from our international operations.

Continued consolidation of our customers and increasing competition for those customers may put pressures on our operating margins.

      In recent years, the trend among our customers has been towards consolidation within the meat processing industry. These consolidations have enhanced the purchasing power of our customers who, not being contractually obligated to purchase our products, tend to exert increased pressure with respect to pricing terms, product quality and new products. As our customer base continues to consolidate, the already high level of competition for the business of fewer customers is expected to intensify. If we do not continue to enhance the value of our product offering in a way that provides greater benefit to our customers, our sales volume and revenues could decrease.

We may engage in strategic transactions, which could require significant attention and resources.

      In connection with our business strategies and goals of growth of our operations and market share, we may seek to acquire, merge with, enter into partnerships with or enter into other similar transactions with, other companies, including companies that complement our existing products, technologies or distribution, or lower our costs, and we regularly engage in discussions with other companies or their representatives with respect to such transactions. Nonetheless, we may be unable to identify and/or successfully acquire, merge with, partner with or enter into other similar transactions with suitable companies under terms advantageous to our business. If we do enter into such transactions, we may be unable to efficiently and effectively integrate our business and achieve the anticipated synergies. The integration of the businesses may also result in unforeseen difficulties that require a disproportionate amount of management’s attention and other resources, which, in turn, may negatively affect our profitability.

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Continued compliance with environmental regulations may result in significant costs, which could negatively affect our financial condition.

      Our operations are subject to extensive and increasingly stringent environmental, health and safety laws and regulations pertaining to the discharge of material into the environment, the handling and disposition of wastes and land reclamation and remediation of hazardous substance releases. We are also subject to differing environmental regulations and standards due to the fact we operate in many different countries. These laws and regulations are complex and subject to change at any time.

      Failure to comply with environmental laws and regulations can have serious consequences for us, including criminal as well as civil and administrative penalties and negative publicity. Liability under these laws and regulations involves inherent uncertainties. In addition, continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at ongoing operations, which will be charged against income from future operations. Present and future environmental laws and regulations applicable to our operations may require substantial capital expenditures and may have a material adverse effect on our business, financial condition and results of operations.

      We have incurred, and will continue to incur, significant capital and operating expenditures to comply with various environmental laws and regulations. For example, we have already expended $2.9 million, and expect to expend another $7.4 million over the next 12 months, on “maximum achievable control technology” to meet certain air emissions standards related to carbon disulfide under the Clean Air Act Amendments of 1990. Although we expect to implement the technology necessary to meet these emissions standards at our two U.S. extrusion facilities, our failure to do so, could result in substantial penalties, including civil fines of approximately $50,000 per facility per day or a shutdown of our U.S. extrusion operations. Additional environmental requirements imposed in the future could require currently unanticipated investigations, assessments or expenditures, and may require us to incur significant additional costs. As the nature of these potential future charges is unknown, management is not able to estimate the magnitude of any future costs, and we have not accrued any reserve for any potential future costs.

      Some of our facilities have been in operation for many years. During that time, we and previous owners of these facilities may have generated and disposed of wastes that are or may be considered hazardous or may have polluted the soil or groundwater at our facilities, including adjacent properties. Some environmental regulations impose liability on certain categories of persons who are deemed to be responsible for the release of “hazardous substances” or other pollutants into the environment, without regard to fault or to the legality of such person’s conduct. Under certain circumstances, a party may be required to bear more than its proportional share of cleanup costs at a contaminated site for which it has liability if payments sufficient to remediate the site cannot be obtained from other responsible parties.

      For example, our Canadian subsidiary, Viskase Canada Inc. (“Viskase Canada”), among others, has been identified, and is currently being investigated by the Ontario Ministry of the Environment (the “MOE”), as a potentially responsible party for polychlorinated biphenyl (“PCB”) contamination at its facility in Lindsay, Ontario, Canada. While Viskase Canada did not engage in the activities that deposited the PCB contamination at the Lindsay facility, it is possible that it could ultimately be held responsible for costs associated with the clean-up of the site.

      These costs could be substantial. Moreover, the MOE could seek to hold the Company liable for a portion of these costs, although we believe that risk is low. See “Business — Legal Matters.”

Our Canadian subsidiary is a subject of an investigation by Canadian provincial governmental authorities in connection with contamination at its Lindsay, Ontario facility, and we could be held responsible for costs associated with the clean-up of such facility.

      We are currently involved in both litigation and ongoing governmental proceedings arising out of environmental contamination at a facility owned by Viskase Canada in Lindsay, Ontario, Canada. Viskase Canada acquired the facility from Union Carbide Corporation and its affiliates, including Union Carbide

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Canada Limited (together, “Union Carbide”), as part of the purchase of Union Carbide’s cellulosic casings and plastic barrier films businesses by several of our former subsidiaries. Shortly after the acquisition, Viskase Canada commenced a lawsuit in Canada against Union Carbide seeking damages resulting from the discovery of ammonium sulphate contamination at the Lindsay facility and Union Carbide’s breach of contractual representations and warranties relating to the environmental condition of the facility. In the meantime, the MOE notified Viskase Canada that it had evidence suggesting that the Lindsay facility was also a source of PCB contamination. The Dow Chemical Company (the corporate successor to Union Carbide) and its relevant affiliates (collectively, “Dow”) have replaced or soon will replace Union Carbide as the defendant in the ongoing litigation, which is still pending and is expected to proceed to trial sometime during 2005. Dow has consented to an amendment to the lawsuit that adds a claim against Union Carbide relating to the PCB contamination, which amendment Viskase Canada intends to file with the court as soon as the claim can be adequately quantified.

      Viskase Canada was recently advised by the MOE that it expects to issue certain orders against the Company, Viskase Canada, Dow and others in the next few months requiring remediation under applicable Canadian provincial environmental laws and regulations. Canadian provincial environmental law provides for joint and several liability among responsible parties for remediation of contaminated sites. It further extends responsibility for environmental contamination, under certain circumstances, not only to parties who actively release substances into the environment, but also to those who at any time had “management or control” of the contaminated property. Consequently, the MOE has further indicated that it will seek to require such parties (including the Company and Viskase Canada) to post a bond preliminarily set in an aggregate amount of $20.0 million (Canadian) in connection with anticipated remediation of the site. The bond, if required, would impose joint and several obligations on the parties. We have vigorously opposed any such obligation on the grounds that neither Viskase Canada nor the Company engaged in any of the operations or conduct producing the contamination found at the Lindsay facility, and on the grounds that the Company, as a high-level parent company, has had no significant connection to the property or control of operations there. Nevertheless, Viskase Canada, and possibly the Company, may be deemed a responsible party with respect to remediation of PCB contamination at the Lindsay facility, or limited portions or aspects thereof. While no definitive clean-up cost estimates have been arrived at concerning the PCB contamination, remediation costs could be substantial. We have reserved $0.75 million for remediation of the Lindsay facility, and our present estimate of the cost of remediating the PCB contamination at the Lindsay facility is $2.0 million (Canadian).

We may be subject to significant tax assessments, which could affect our financial condition.

      In 1993, the Illinois Department of Revenue submitted a proof of claim against Envirodyne Industries, Inc. (our former corporate name) and its subsidiaries in the United States Bankruptcy Court, for liability with respect to our allegedly incorrect utilization of certain loss carry-forwards of certain of our subsidiaries. We believe the potential tax liability, interest and penalties totaled approximately $2.5 million as of September 30, 2004. Our liability could be materially greater than or less than our current estimates and could materially affect our financial condition. See “Business — Legal Matters” for more information.

      In August 2001, the Department of Revenue of the Province of Quebec, Canada, issued an assessment against Viskase Canada in the amount of $2.7 million (Canadian), plus additional interest and possible penalties to accrue after August 31, 2001. This assessment is based upon Viskase Canada’s failure to collect and remit sales tax during the period July 1, 1997 to May 31, 2001. During this period, Viskase Canada did not collect and remit sales tax in Quebec in reliance on the written advice of its outside accounting firm. We have provided for a reserve of $0.3 million for interest and penalties, if any, but have not provided for a reserve for the underlying sales tax. Although the ultimate liability for the Quebec sales tax lies with the customers of Viskase Canada during the relevant period, Viskase Canada could be required to pay the amount of the underlying sales tax prior to receiving reimbursement for such tax from its customers, and there is no guarantee that customers will fully reimburse Viskase Canada for such tax. See “Business — Legal Matters” for more information.

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Our intellectual property rights may be inadequate or violated, or we may be subject to claims of infringement.

      We rely on a combination of trademarks, patents, trade secret rights and other rights to protect our intellectual property. Our trademark or patent applications may not be approved and our trademarks or patents may be challenged by third parties. We cannot be certain that the steps we have taken will prevent the misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our rights as fully as the laws of the United States. From time to time, it has been necessary for us to enforce our intellectual property rights against infringements by third parties, and we expect to continue to do so in the ordinary course of our business. We also may be subjected to claims by others that we have violated their intellectual property rights. Even if we prevail, third party-initiated or Company-initiated claims may be time consuming and expensive to resolve, and may result in a diversion of our time and resources. The occurrence of any of these factors could diminish the value of our trademark, patent and intellectual property portfolio, increase competition within our industry and negatively impact our sales volume and revenues.

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THE EXCHANGE OFFER

Purpose of the Exchange Offer

      On June 29, 2004, the Company completed the private offering of 90,000 units (the “Units”) consisting of $90,000,000 aggregate principal amount of the Outstanding Notes and 90,000 common stock purchase warrants (the “Warrants”). The Company originally sold the Units to Jefferies & Company, Inc., the initial purchaser, under the terms of a purchase agreement dated June 29, 2004. The initial purchaser subsequently resold the Units to QIBs in reliance on Rule 144A and Regulation S under the Securities Act.

      In connection with the issuance and sale of the Outstanding Notes, the Company entered into a registration rights agreement with the initial purchaser of the Outstanding Notes in which the Company agreed:

•  to use its reasonable best efforts to file a registration statement within 120 days after the date of original issuance of the Outstanding Notes, with the SEC with respect to an offer to exchange the Outstanding Notes for other notes issued by the Company having terms identical in all material respects to the Outstanding Notes (except that such notes will not contain terms with respect to transfer restrictions or registration rights) that would be registered under the Securities Act;

•  to use its reasonable best efforts to cause the registration statement to be declared effective under the Securities Act within 210 days after the date of the original issuance of the Outstanding Notes;

•  to commence the Exchange Offer and use its best efforts to issue, within 45 days after the date on which the registration statement is declared effective, Exchange Notes in exchange for all Outstanding Notes tendered before the expiration date.

      The Exchange Offer is not being made to holders of Outstanding Notes in any jurisdiction in which the exchange would not comply with the securities or blue sky laws of such jurisdiction. A copy of the registration rights agreement is filed as an exhibit to the registration statement of which this prospectus is a part.

Terms of the Exchange Offer

      Upon the terms and conditions set forth in this prospectus and the accompanying letter of transmittal, the Company will accept for exchange all Outstanding Notes that are properly tendered on or before the expiration date and not withdrawn as permitted below. The Company will issue $1,000 principal amount of Exchange Notes for each $1,000 principal amount of Outstanding Notes accepted in the Exchange Offer. Holders may tender some or all of their Outstanding Notes in the Exchange Offer in integral multiples of $1,000. As used in this prospectus, the term “expiration date” means 5:00 p.m., New York City time, on        l       , 2004. However, if the Company, in its sole discretion, has extended the period of time for which the Exchange Offer is open, the term “expiration date” means the latest time and date to which the Company extends the Exchange Offer.

      The form and terms of the Exchange Notes will be substantially identical to the form and terms of the Outstanding Notes except the Exchange Notes will be registered under the Securities Act and will not bear legends restricting their transfer. The Exchange Notes will evidence the same debt as the Outstanding Notes. The Exchange Notes will be issued under and entitled to the benefits of the same Indenture that authorized the issuance of the Outstanding Notes. Consequently, both series will be treated as a single class of debt securities under the Indenture. For a description of the Indenture, see “Description of the Notes” below.

      The Exchange Offer is not conditioned upon any minimum aggregate principal amount of Outstanding Notes being tendered for exchange.

      As of the date of this prospectus, there are $90,000,000 aggregate principal amount of the Outstanding Notes outstanding. There will be no fixed record date for determining registered holders of Outstanding Notes entitled to participate in the Exchange Offer. This prospectus is first being sent on or about        l       , 2004 to all registered holders of Outstanding Notes. The Company’s obligation to accept Outstanding Notes for

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exchange in the Exchange Offer is subject to the conditions described below under “— Conditions to the Exchange Offer.” The Company reserves the right to extend the period of time during which the Exchange Offer is open. We would then delay acceptance for exchange of any Outstanding Notes by giving oral or written notice of an extension to the holders of Outstanding Notes as described below. During any extension period, all Outstanding Notes previously tendered will remain subject to the Exchange Offer and may be accepted for exchange by the Company. Any Outstanding Notes not accepted for exchange will be returned to the tendering holder promptly after the expiration or termination of the Exchange Offer.

      The Company intends to conduct the Exchange Offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC. Outstanding Notes that are not tendered for exchange in the Exchange Offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the Indenture and under the registration rights agreement.

      The Company reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Outstanding Notes not previously accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified below under “— Conditions to the Exchange Offer.” The Company will give oral or written notice of any extension, amendment, non-acceptance or termination to the holders of the Outstanding Notes as promptly as practicable. If the Company materially changes the terms of the Exchange Offer, it will resolicit tenders of the Outstanding Notes, file a post-effective amendment to the prospectus and provide notice to the noteholders. If the change is made less than five business days before the expiration of the Exchange Offer, the Company will extend the offer so that the noteholders have at least five business days to tender or withdraw. The Company will notify you of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City, time on the next business day after the expiration date.

      The tender of Outstanding Notes by a holder that is not withdrawn before the expiration date will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

Procedures for Tendering

      Only a holder of Outstanding Notes may tender such Outstanding Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must:

•  complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature on the letter of transmittal guaranteed, if the letter of transmittal so requires, and transmit such letter of transmittal to the exchange agent before the expiration date; or

•  comply with the ATOP procedures described below.

      In addition, either:

•  the exchange agent must receive such Outstanding Notes along with the letter of transmittal; or

•  the exchange agent must receive, before the expiration date, a timely confirmation of book-entry transfer of such Outstanding Notes into the exchange agent’s account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent’s message; or

•  the holder must comply with the guaranteed delivery procedures described below.

      To be properly tendered, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at the address set forth below under “— Exchange Agent” before the expiration date.

      The method of delivery of Outstanding Notes, the letter of transmittal and all other required documents to the exchange agent is at the holder’s election and risk. Rather than mail these items, we recommend that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to the exchange agent before the expiration date. Holders should not send the letter of transmittal or

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Outstanding Notes to us. Holders may request their respective brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for them.

      Any beneficial owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct it to tender on the owner’s behalf. If such beneficial owner wishes to tender on its own behalf, it must, before completing and executing the letter of transmittal and delivering its Outstanding Notes, either:

•  make appropriate arrangements to register ownership of the Outstanding Notes in such owner’s name; or

•  obtain a properly completed bond power from the registered holder of such Outstanding Notes.

      The transfer of registered ownership may take considerable time and may not be completed before the expiration date.

      Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act, unless the Outstanding Notes tendered pursuant thereto are tendered:

•  by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

•  for the account of an eligible guarantor institution.

      If the letter of transmittal is signed by a person other than the registered holder of any Outstanding Notes listed on the Outstanding Notes, such Outstanding Notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the Outstanding Notes and an eligible guarantor institution must guarantee the signature on the bond power.

      If the letter of transmittal or any Outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

      The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s ATOP to effect tenders. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the Exchange Offer electronically. They may do so by causing DTC to transfer the Outstanding Notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that:

•  DTC has received an express acknowledgment from a participant in ATOP that is tendering Outstanding Notes that are the subject of such book-entry confirmation;

•  such participant has received and agrees to be bound by the terms of the letter of transmittal, or, in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and

•  the agreement may be enforced against such participant.

      The Company will determine, in its sole discretion, all questions as to the validity, form, eligibility (including time of receipt) and acceptance of tendered Outstanding Notes and withdrawal of tendered Outstanding Notes. The Company’s determination will be final and binding on all holders of Notes. The Company reserves the absolute right to reject any Outstanding Notes not properly tendered or any

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Outstanding Notes the acceptance of which would, in the opinion of its counsel, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. If the Company exercises the right to waive any condition relating to the Exchange Offer, such waiver will apply to all holders of the Outstanding Notes. The Company’s interpretation of the terms and conditions of the Exchange Offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within such time as the Company shall determine. Although the Company intends to notify holders of defects or irregularities with respect to tenders of Outstanding Notes, neither it, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed made until such defects or irregularities have been cured or waived. Any Outstanding Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned promptly by the exchange agent without cost to the tendering holder, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

      In all cases, the Company will issue Exchange Notes for Outstanding Notes that have been accepted for exchange under the Exchange Offer only after the exchange agent timely receives:

•  such Outstanding Notes or a timely book-entry confirmation of such Outstanding Notes into the exchange agent’s account at DTC; and

•  a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

      By signing the letter of transmittal, each tendering holder of Outstanding Notes will represent to the Company that, among other things:

•  any Exchange Notes that the holder receives will be acquired in the ordinary course of its business;

•  the holder has no arrangement or understanding with any person or entity to participate in the distribution of the Exchange Notes;

•  if the holder is not a broker-dealer, that it is not engaged in and does not intend to engage in the distribution of the Exchange Notes;

•  if the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will deliver a prospectus, as required by law, in connection with any resale of such Exchange Notes (see “Plan of Distribution”); and

•  the holder is not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of ours.

Book-Entry Transfer

      The exchange agent will make a request to establish an account with respect to the Outstanding Notes at DTC for purposes of the Exchange Offer promptly after the date of this prospectus; and any financial institution participating in DTC’s system may make book-entry delivery of Outstanding Notes by causing DTC to transfer such Outstanding Notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. Holders of Outstanding Notes who are unable to deliver confirmation of the book-entry tender of their Outstanding Notes into the exchange agent’s account at DTC or all other documents required by the letter of transmittal to the exchange agent on or before the expiration date must tender their Outstanding Notes according to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

      Holders wishing to tender their Outstanding Notes but whose Outstanding Notes are not immediately available or who cannot deliver their Outstanding Notes, the letter of transmittal or any other required

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documents to the exchange agent or comply with the applicable procedures under ATOP prior to the expiration date may tender if:

•  the tender is made through an eligible guarantor institution;

•  before the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery (by facsimile transmission, mail or hand delivery) or a properly transmitted agent’s message and notice of guaranteed delivery:

•  setting forth the name and address of the holder, the registered number(s) of such Outstanding Notes and the principal amount of Outstanding Notes tendered;

•  stating that the tender is being made thereby;

•  guaranteeing that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or a facsimile of the letter of transmittal, together with the Outstanding Notes or a book-entry confirmation, and any other documents required by the letter of transmittal will be deposited by the eligible guarantor institution with the exchange agent; and

•  the exchange agent receives such properly completed and executed letter of transmittal, or a facsimile of the letter of transmittal, as well as all tendered Outstanding Notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three New York Stock Exchange trading days after the expiration date.

      Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Outstanding Notes according to the guaranteed delivery procedures set forth above.

Acceptance of Outstanding Notes for Exchange; Delivery of Exchange Notes

      Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Company will accept, promptly after the expiration date, all Outstanding Notes properly tendered. The Company will issue the Exchange Notes promptly after acceptance of the Outstanding Notes. See “— Conditions to the Exchange Offer” below. For purposes of the Exchange Offer, the Company will be deemed to have accepted properly tendered Outstanding Notes for exchange when, as and if it has given oral or written notice to the exchange agent, with prompt written confirmation of any oral notice.

      For each Outstanding Note accepted for exchange, the holder of such Outstanding Note will receive an Exchange Note of the same series as and having a principal amount equal to that of the surrendered Outstanding Note. The Exchange Notes will bear interest from the most recent date to which interest has been paid on the Outstanding Notes. Accordingly, registered holders of Exchange Notes on the relevant record date for the first interest payment date following the completion of the Exchange Offer will receive interest accruing from the most recent date to which interest has been paid on the Outstanding Notes. Outstanding Notes accepted for exchange will cease to accrue interest from and after the date of completion of the Exchange Offer. Holders of Outstanding Notes whose Outstanding Notes are accepted for exchange will not receive any payment for accrued interest on the Outstanding Notes otherwise payable on any interest payment date the record date for which occurs on or after completion of the Exchange Offer and will be deemed to have waived their rights to receive the accrued interest on the Outstanding Notes.

      In all cases, issuance of Exchange Notes for Outstanding Notes will be made only after the exchange agent timely receives Outstanding Notes or a timely book-entry confirmation of the Outstanding Notes into the exchange agent’s account at DTC and a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

Withdrawal Rights

      Except as otherwise provided in this prospectus, holders of Outstanding Notes may withdraw their tenders at any time prior to the expiration date.

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      For a withdrawal to be effective:

•  the exchange agent must receive a written notice, which may be by facsimile transmission, mail or hand delivery, of withdrawal at one of the addresses set forth below under “— Exchange Agent”; or

•  holders must comply with the appropriate procedures of DTC’s ATOP procedures.

      Any such notice of withdrawal must:

•  specify the name of the person who tendered the Outstanding Notes to be withdrawn;

•  identify the Outstanding Notes to be withdrawn (including the principal amount of such Outstanding Notes);

•  be signed by the holder in the same manner as the original signature on the letter of transmittal by which such Outstanding Notes were tendered, with any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the Outstanding Notes register the transfer of such notes into the name of the person withdrawing the tender and a properly completed irrevocable proxy authorizing such person to effect such withdrawal on behalf of such holder; and

•  where certificates for Outstanding Notes have been transmitted, specify the name in which such Outstanding Notes were registered, if different from that of the withdrawing holder.

      If certificates for Outstanding Notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit:

•  the serial numbers of the particular certificates to be withdrawn; and

•  a signed notice of withdrawal with signatures guaranteed by an eligible guarantor institution, unless such holder is an eligible guarantor institution.

      If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Outstanding Notes and otherwise comply with the procedures of such facility. The Company will determine all questions as to the validity, form and eligibility, including time of receipt, of such notices, and its determination shall be final and binding on all parties. The Company will deem any Outstanding Notes so withdrawn not to have been validly tendered for exchange for purposes of the Exchange Offer. No Exchange Notes will be issued with respect to such Outstanding Notes unless the Outstanding Notes so withdrawn are validly re-tendered. Any Outstanding Notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder, or, in the case of Outstanding Notes tendered by book-entry transfer into the exchange agent’s account at DTC according to the procedures described above, such Outstanding Notes will be credited to an account maintained with DTC for Outstanding Notes, as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be re-tendered by following one of the procedures described under “— Procedures for Tendering” above at any time on or before the expiration date.

Conditions to the Exchange Offer

      Notwithstanding any other provision of the Exchange Offer, the Company’s acceptance of Outstanding Notes for exchange, or issuance of Exchange Notes in exchange for, any Outstanding Notes, are subject to the following conditions:

•  that the Exchange Offer does not violate any applicable laws or any applicable policy or interpretation of the SEC;

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•  the valid tendering of Outstanding Notes in accordance with the terms of the Exchange Offer; and

•  in the event no Outstanding Notes are tendered, the Exchange Offer may expire, unless extended by the Company in its sole discretion, 20 business days after the date notice thereof is mailed to holders.

      These conditions to the Exchange Offer are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any of these conditions, or may be waived in whole or in part in its reasonable discretion. All conditions to the Exchange Offer (other than those dependent upon the receipt of necessary governmental approval) must be satisfied or waived at or before the expiration of the Exchange Offer, and the Company may only terminate or amend the Exchange Offer if any of the specified conditions are not satisfied before the expiration of the Exchange Offer. If the Company exercises the right to make any condition relating to the Exchange Offer, such waiver will apply to all holders of the Outstanding Notes. The Company will announce any such waiver in a manner reasonably calculated to inform the holders of Outstanding Notes of such waiver. The Exchange Offer will remain open for at least five business days following the Company’s waiver of any of the preceding conditions. The Company’s failure at any time to exercise any of the foregoing rights will not be deemed a waiver of any right.

Resales of the Exchange Notes

      Based on interpretations by the staff of the SEC, as set forth in no-action letters issued to third parties unrelated to us, we believe that holders of Outstanding Notes who exchange their Outstanding Notes for Exchange Notes in the Exchange Offer may offer for resale, resell or otherwise transfer such Exchange Notes without compliance with the registration and prospectus delivery provisions of the Securities Act. This would not apply, however, to any holder that is a broker-dealer that acquired Outstanding Notes as a result of market-making activities or other trading activities or directly from us for resale under an available exemption under the Securities Act. Also, resale would only be permitted for Exchange Notes that (1) are acquired in the ordinary course of a holder’s business, (2) where such holder has no arrangement or understanding with any person to participate in the distribution of such Exchange Notes and (3) where such holder is not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of the Company. The Company has not sought a no-action letter from the staff of the SEC with respect to the Exchange Offer, and there can be no assurance that the staff of the SEC would make a similar determination with respect to the Exchange Offer. Each broker or dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making or other trading activities must acknowledge that it will comply with the registration and prospectus delivery requirements of the Securities Act in connection with any offer to resell or other transfer of the Exchange Notes issued in the Exchange Offer, including the delivery of a prospectus that contains information with respect to any selling holder required by the Securities Act in connection with any resale of the Exchange Notes. See “Plan of Distribution.”

Exchange Agent

      The Company has appointed LaSalle Bank N.A. as the exchange agent for the Exchange Offer. You should direct questions and requests for assistance or requests for additional copies of this prospectus to the exchange agent addressed as follows:

LaSalle Bank N.A.

Corporate Trust Services

135 South LaSalle Street

Suite 1960

Chicago, Illinois 60603

Facsimile:

(312) 904-2236

For information, or to confirm transmission by facsimile, call:

(312) 904-5619

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      Any deliveries to an address or facsimile number other than as set forth above will not constitute a valid delivery.

Fees and Expenses

      The Company will bear the expenses of soliciting tenders. The solicitation is being made principally by mail; however, the Company may make additional solicitations by telegraph, telephone or in person by its officers and regular employees and those of its affiliates.

      The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to broker-dealers or others soliciting acceptances of the Exchange Offer. The Company will, however, pay the exchange agent reasonable and customary fees for services and reimburse it for its related reasonable out-of-pocket expenses.

      The Company will pay the cash expenses to be incurred in connection with the Exchange Offer, including SEC registration fees, fees and expenses of the exchange agent and trustee, accounting and legal fees, and printing and mailing costs. The Company estimates these expenses in the aggregate to be approximately $350,000.

Reimbursement of Nominee Forwarding Expenses

      Banks, brokerage firms, or other nominees holding the notes on your behalf will be reimbursed for reasonable expenses incurred in transmitting this document and all related materials with respect to this offer to their customers and account executives via First Class Mail and via Internet Email. Any such reimbursement will be made at levels consistent with those established by the New York Stock Exchange.

Transfer Taxes

      The Company will pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes under the Exchange Offer. The tendering holder, however, will be required to pay any transfer taxes (whether imposed on the registered holder or any other person) if:

•  certificates representing Outstanding Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of Outstanding Notes tendered;

•  tendered Outstanding Notes are registered in the name of any person other than the person signing the letter of transmittal; or

•  a transfer tax is imposed for any reason other than the exchange of Outstanding Notes under the Exchange Offer.

      If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

Consequences of Exchanging or Failing to Exchange Outstanding Notes

      Holders of Outstanding Notes who do not exchange their Outstanding Notes for Exchange Notes in the Exchange Offer will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Outstanding Notes and the restrictions on transfer of the Outstanding Notes as described in the legend on the Outstanding Notes as a consequence of the issuance of the Outstanding Notes under exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Outstanding Notes may not be offered or sold, unless registered under the Securities Act, except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Under existing interpretations of the Securities Act by the SEC’s staff contained in several no-action letters to third parties, and subject to the immediately following sentence, the Company believes that the Exchange Notes would generally be freely transferable by holders after the Exchange Offer without further registration under the Securities Act, subject to certain representations

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required to be made by each holder of Exchange Notes, as set forth below. However, any purchaser of Exchange Notes who is an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) of the Company, or who intends to participate in the Exchange Offer for the purpose of distributing the Exchange Notes:

•  will not be able to rely on the interpretation of the SEC’s staff;

•  will not be able to tender its Outstanding Notes in the Exchange Offer; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the notes unless such sale or transfer is made pursuant to an exemption from such requirements. See “Plan of Distribution.”

      The Company does not intend to seek its own interpretation regarding the Exchange Offer and there can be no assurance that the SEC’s staff would make a similar determination with respect to the Exchange Notes as it has in other interpretations to other parties, although the Company has no reason to believe otherwise.

Accounting Treatment

      The Company will record the Exchange Notes in its accounting records at the same carrying value as the Outstanding Notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange. Accordingly, the Company will not recognize any gain or loss for accounting purposes in connection with the Exchange Offer. Expenses of the Exchange Offer will be capitalized and amortized over the term of the Exchange Notes.

Other

      Participation in the Exchange Offer is voluntary, and you should carefully consider whether to exchange your Outstanding Notes for Exchange Notes. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

      The Company may in the future seek to acquire untendered Outstanding Notes in open market or privately negotiated transactions, through subsequent exchange offers, as required pursuant to the terms of the Indenture or otherwise. The Company has no present plans to acquire any Outstanding Notes that are not tendered in the Exchange Offer or to file a registration statement to permit resales of any Outstanding Notes not tendered in the Exchange Offer.

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CAPITALIZATION

      The following table sets forth our cash and cash equivalents, debt and total capitalization as of September 30, 2004. This table should be read in conjunction with “Use of Proceeds,” “Selected Consolidated Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

		As of September 30, 2004
		(Dollars in millions)
Cash and Cash Equivalents		$	33.2	(1)
Debt:
	Revolving Credit Facility		0.0	(2)
	11 1/2% Senior Secured Notes due 2011		90.0	(3)
	8% Senior Notes due 2008		15.7	(4)
Other Debt			0.5
Total Debt			106.2
Stockholder’s (Deficit)			(55.8	)
Total Capitalization		$	50.4

(1)	Includes $2.7 million of restricted cash primarily securing letters of credit.
(2)	We currently have a $20 million revolving credit facility in place with Wells Fargo Foothill.
(3)	Represents aggregate principal amount of 11 1/2% Senior Secured Notes as of September 30, 2004. The carrying value of the 11 1/2% Senior Secured Notes as of September 30, 2004 was $89.0 million.
(4)	Represents aggregate principal amount of the 8% Senior Notes as of September 30, 2004. The carrying value of the 8% Senior Notes as of September 30, 2004 was $11.2 million.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA

      The following table contains our selected consolidated financial data for the years ended December 31, 1999, 2000, 2001 and 2002, the periods from January 1, 2003 to April 2, 2003 and from April 3, 2003 to December 31, 2003 and the nine months ended September 30, 2004, which have been derived from audited consolidated financial statements for 1999, 2000, 2001, 2002 and 2003 and unaudited interim consolidated financial statements for the periods from January 1, 2003 to April 2, 2003, April 3, 2003 to September 30, 2003 and for the nine months ended September 30, 2004. The selected consolidated balance sheet data as of September 30, 2004 have been derived from our unaudited interim consolidated financial statements and, in our opinion, reflects all adjustments, consisting of normal accruals, necessary for a fair presentation of the data. Our unaudited interim consolidated results of operations for the nine months ended September 30, 2004 may not be indicative of the results that may be expected for 2004. You should read the information set forth below in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

      As a result of our emergence from Chapter 11 bankruptcy and the application of fresh-start accounting, our consolidated financial statements for the periods subsequent to April 2, 2003, following the effective date of our plan of reorganization in the bankruptcy proceedings, are referred to as the “Reorganized Company” and are not comparable to those for the periods prior to April 3, 2003, which are referred to as the “Predecessor Company.” A black line has been drawn in the data presented below to distinguish, for accounting purposes, the periods associated with the Reorganized Company and the Predecessor Company. Aside from the effects of fresh-start accounting and new accounting pronouncements adopted as of the effective date of the plan of reorganization, the Reorganized Company follows the same accounting policies as the Predecessor Company.

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		Predecessor Company															Reorganized Company
														January 1			April 3			April 3			Nine Months
		Year Ended December 31,												Through			Through			Through			Ended
														April 2,			December 31,			September 30,			September 30,
		1999			2000			2001			2002			2003			2003			2003			2004
		(Dollars in thousands, except for number of shares and per share amounts)
Statements of Operations Data:
Net sales		$	225,767		$	200,142		$	189,315		$	183,577		$	45,402		$	152,408		$	101,094		$	154,366
Cost of sales			166,079			157,560			156,258			146,841			38,031			119,989			78,648			121,690
Gross margin			59,688			42,582			33,057			36,736			7,371			32,419			22,446			32,676
Other expenses:
	Selling, general and administrative		41,854			39,374			40,027			38,526			8,890			24,664			16,645			22,779
	Amortization of intangibles		2,000			2,000			2,000			2,000			500			809			539			808
	Restructuring expense (income)		—			94,910			4,766			(6,132	)		—			954			1,162			668
	Asset writedown		—			—			—			—			—			46,805			—			—
Operating (loss) income			15,834			(93,702	)		(13,736	)		2,342			(2,019	)		(40,813	)		4,100			8,421
	Interest income		375			2,299			2,479			1,161			323			517			354			349
	Interest expense		44,403			45,406			25,520			22,222			1,204			10,362			6,821			9,747
	(Loss) gain on early extinguishment of debt		—			6,511			8,137			—			153,946			—			—			(13,083	)
	Other (income) expense, net		3,923			5,330			3,445			(1,493	)		(1,505	)		(3,844	)		(2,292	)		1,436
	Patent infringement settlement income		—			46,900			—			—			—			—			—			—
(Loss) income from continuing operations before taxes and reorganization expense			(32,117	)		(88,728	)		(32,085	)		(17,226	)		152,551			(46,814	)		(75	)		(15,496	)
	Reorganization expense		—			—			—			3,401			399			403			403			—
	Income tax (benefit) provision		(2,190	)		728			(3,370	)		(1,297	)		279			(590	)		(13	)		(393	)
	(Loss) income from continuing operations		(29,927	)		(89,456	)		(28,715	)		(19,330	)		151,873			(46,627	)		(465	)		(15,103	)
	Income (loss) from discontinued operations net of income taxes		(1,831	)		3,435			—			—			—			—			—			—
	Gain on sale of discontinued operations net of income tax provision of $0 in 2001 and $6,633 in 2000		—			68,185			3,189			—			—			—			—			—
Net (loss) income		$	(31,758	)	$	(17,836	)	$	(25,526	)	$	(19,330	)	$	151,873		$	(46,627	)	$	(465	)	$	(15,103	)
Net (loss) income from continuing operations per common share		$	(2.00	)	$	(5.91	)	$	(1.88	)	$	(1.26	)	$	9.91		$	(4.37	)	$	(0.04	)	$	(1.45	)
Net (loss) income per common share		$	(2.12	)	$	(1.18	)	$	(1.67	)	$	(1.26	)	$	9.91		$	(4.37	)	$	(0.04	)	$	(1.45	)
Cash dividends declared per common share			—			—			—			—			—			—			—			—

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	Predecessor Company															Reorganized Company
													January 1			April 3			April 3		Nine Months
	Year Ended December 31,												Through			Through			Through		Ended
													April 2,			December 31,			September 30,		September 30,
	1999			2000			2001			2002			2003			2003			2003		2004
	(Dollars in thousands, except for ratios)
Balance Sheet Data:
Total assets	$	493,818		$	322,364		$	234,028		$	218,681		$	200,301		$	212,093		$	250,250	$	203,545
Total long-term debt		404,151			73,183			194			85			34,235			69,850			67,563		100,368
Total debt		427,246			273,859			236,253			64,368			49,129			91,153			88,766		100,719
Stockholders’ (deficit) equity		(89,442	)		(107,397	)		(138,053	)		(175,146	)		(178,041	)		(41,100	)		1,750		(55,826	)
Other Data:
Capital expenditures		27,943			13,735			5,882			3,824			527			3,764			1,349		2,504	(2)
Depreciation and amortization		43,672			34,427			23,125			22,959			5,338			10,067			6,722		5,868
Ratio of earnings to fixed charges(1)		NM			NM			NM			NM			118.96			NM			NM		NM
Shortfall of earnings to fixed charges		35,323			89,171			32,375			17,307			—			46,912			16,328		17,498

(1)

Ratio of earnings to fixed charges includes gain (loss) from continuing operations before taxes and reorganization expense and gain on debt extinguishment, plus fixed charges, less capitalized interest net of amortization of capitalized interest, divided by fixed charges. Fixed charges include interest costs expensed and capitalized, including amortization of the discount associated with the 8% Senior Notes and estimated interest within rental expense. Where “NM” is indicated, the ratio is not meaningful since earnings (as defined herein) were negative.

(2)

Capital expenditures total does not include $9,500 for reacquisition of leased assets.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations

Company Overview

      We are a worldwide leader in the manufacture and sale of cellulosic, fibrous and plastic casings for the processed meat industry. We currently operate seven manufacturing facilities and eight distribution centers throughout North America, Europe and South America, and we derive approximately 60% of our total net sales from customers located outside the United States. We believe we are one of the two largest manufacturers of non-edible cellulosic casings for small-diameter processed meats and one of the three largest manufacturers of non-edible fibrous casings. Our management believes that the factors most critical to the success of our business are:

•  maintaining and building upon our reputation for providing a high level of customer and technical services;

•  maintaining and building upon our long-standing customer relationships, many of which have continued for decades;

•  developing additional sources of revenue through new products and services; and

•  continuing to streamline our cost structure.

      Our net sales are primarily driven by consumer demand for meat products, but are also driven by demand for casings by processed meat manufacturers and by the prices of our casings relative to the market. More specifically, demand for our casings is dependent on overall consumption of processed meats and the types of meat products purchased by consumers. Demand for meat products is driven by general economic conditions, population growth, changing consumer preferences and dietary trends, and expansion into developing world markets. Average selling prices are dependent on overall supply and demand for processed meat casings and on our product mix.

      Our industry is capital-intensive and is characterized by high fixed costs. The industry’s operating results have historically been sensitive to the global balance of capacity and demand. We believe that the industry’s current output is in balance with global demand and that the downward trend in casing prices during recent years has stabilized. Recently, some of our competitors announced plans to expand extrusion capacity at their existing facilities. The projected increase in global capacity from these expansion projects is approximately 5%.

      Our contribution margin varies with changes in selling price, input material costs, labor costs and manufacturing efficiencies. Subject to the limits of our capacity discussed below, our total contribution margin increases as demand for our casings increases. Our financial results benefit from increased volume because we do not have to increase our fixed cost structure in proportion to increases in demand. For certain products, we operate at near-capacity in our existing facilities. We continue to seek ways to increase our throughput at these facilities; however, should demand for those products increase substantially, we would not be able to meet such increased demand in the short-term. We regularly evaluate our capacity limitations and compare those limitations to projected market demand.

      We operate in a competitive environment. During the mid-1990’s, we experienced significant pricing pressure and volume loss as a consequence of the entrance of a foreign competitor into the U.S. market. The market for cellulosic casings experienced declines in selling price over the last ten years, which we believe only recently has stabilized. While the overall market volume has expanded during this period, the industry continued to experience pressure on pricing. Our financial performance moves in direct relation to our average selling price.

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      We have continued to reduce our fixed cost structure in response to market and economic conditions. Since 1998, we have reduced annual fixed costs by approximately $35 million by:

•  closing our Chicago, Illinois plant and selling the facility;

•  reconfiguring our Loudon, Tennessee and Beauvais, France plants;

•  closing our Thâon-les-Vosges, France extrusion operations;

•  discontinuing our Nucel® operations;

•  ceasing operations at our Lindsay, Ontario, Canada facility; and

•  reducing the number of employees at our headquarters and most of our facilities by approximately 30%.

      Despite these restructuring efforts, the significance of our debt load caused us to be unable to continue meeting our debt service obligations in 2002. As a result, we filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on November 13, 2002. The bankruptcy court confirmed our plan of reorganization and we emerged from bankruptcy on April 3, 2003. We adopted fresh-start accounting in accordance with SOP 90-7, and reflected the effects of the adoption in the consolidated financial statements in 2003.

      As a result of our adoption of fresh-start accounting, the results of operations for periods ended after April 2, 2003 are prepared on a different basis of accounting. Therefore, the results of operations prior to April 3, 2003 are not comparable to the periods after April 2, 2003.

Comparison of Results of Operations for the Three Months Ended September 30, 2003 and the Three Months Ended September 30, 2004

		Reorganized Company
		3 Months Ended			3 Months Ended			%
		September 30, 2004			September 30, 2003			Change
NET SALES		$	52,954		$	51,458			2.9	%
COSTS AND EXPENSES
	Cost of sales		42,048			39,774			5.7	%
	Selling, general and administrative		7,373			8,313			-11.3	%
	Amortization of intangibles		269			269			0.0	%
	Restructuring (income)		—			1,500			NM
OPERATING INCOME			3,264			1,602			103.7	%
	Interest income		131			145			-9.7	%
	Interest expense		3,409			3,496			-2.5	%
	Other expense (income), net		(1,860	)		(335	)		455.2	%
	Loss on early extinguishment of debt, net of income tax provisions of $0 in 2004		—			—			NM
	(LOSS) INCOME BEFORE REORGANIZATION EXPENSES AND INCOME TAXES		1,846			(1,414	)		NM
	Reorganization expense		—			17			NM
(LOSS) INCOME BEFORE INCOME TAXES			1,846			(1,431	)		NM
	Income tax (benefit) provision	$	(154	)	$	(136	)		13.2

40

		Reorganized Company
		3 Months Ended			3 Months Ended			%
		September 30, 2004			September 30, 2003			Change
NET INCOME (LOSS)		$	2,000		$	(1,295	)		NM
	Other comprehensive income (loss)		—
	Foreign currency translation adjustments		(659	)		(1,596	)		-58.7	%
COMPREHENSIVE INCOME (LOSS)		$	1,341		$	(2,891	)		NM

NM = Not meaningful when comparing positive to negative numbers or to zero.

Third Quarter 2004 Versus Third Quarter 2003

      Net Sales. Our net sales for the third quarter of 2004 were $53.0 million, which represents an increase of $1.5 million or 2.9% from the prior year period. Sales benefited from strong volume in the fibrous casing market in the U.S. Additionally, U.S. sales pricing in the small diameter cellulosic casings market was slightly favorable. Offsetting these benefits was pressure on selling prices in the worldwide market. Increased European sales dollars primarily reflect the strengthened Euro against the U.S. dollar, which benefited net sales by $1.4 million; increased volume of $0.7 million and decreased price and or mix of $1.2 million.

      Cost of Sales. The cost of sales increased 5.7% from the prior year; and increased as a percent of sales from 77.3% in third quarter 2003 to 79.4% in third quarter 2004. The increase in cost of sales as a percent of sales can be attributed to higher plant costs in our European facilities and 0.4% of additional depreciation related to the repurchase of the GECC leased equipment.

      Selling, General Administrative Expenses. We were able to reduce selling, general and administrative expenses from 16.2% of sales in third quarter 2003 to 13.9% of sales in third quarter 2004. This can be attributed to reductions in overall spending and internal cost savings measures implemented during the third and fourth quarters of 2003 and the first quarter of 2004, which reduced employee costs.

      Operating Income. The operating income for the third quarter of 2004 was $3.3 million, representing an improvement of $1.7 million from the prior year period. The improvement in the operating income resulted primarily from reduced selling, general and administrative expenses, the absence of restructuring expenses during 2004 offset by higher cost of goods due to higher European plant costs.

      Interest Expense. Interest expense, net of interest income, for the third quarter of 2004 and 2003 both totaled $3.3 million. The principal components of the third quarter 2004 interest expense were approximately $0.5 million on the 8% Senior Notes and $2.7 million on the Notes. The principal components of the third quarter 2003 interest expense were approximately $1.0 million on the GECC lease and $2.3 million on the 8% Senior Notes.

      Other Income. Other income of approximately $1.9 million and $0.3 million for the third quarter of 2004 and the prior year quarter, respectively, consists principally of foreign exchange losses and gains.

      Income Tax Benefit. In the third quarter of 2004, a tax benefit of $0.2 million was recognized on the income before income taxes of $1.8 million resulting from the tax benefit related to operations of foreign subsidiaries.

      The net income for the quarter ended September 30, 2004 was $2.0 million compared to net (loss) of $1.3 million for the comparable period of 2003.

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Comparison of Results of Operations for the Periods January 1 through April 2, 2003 and April 3 through September 30, 2003 and the Nine Months Ended September 30, 2004

								Predecessor
		Reorganized Company						Company
								January 1
		Nine Months						Through
		Ended			April 3 Through			April 2,			%
		September 30, 2004			September 30, 2003			2003			Change(1)
NET SALES		$	154,366		$	101,094		$	45,402			5.4	%
COSTS AND EXPENSES
Cost of sales			121,690			78,648			38,031			4.3	%
	Selling, general and administrative		22,779			16,645			8,890			-10.8	%
	Amortization of intangibles		808			539			500			-22.2	%
	Restructuring expense (income)		668			1,162			0			-42.5	%
OPERATING INCOME (LOSS)			8,421			4,100			(2,019	)		304.7	%
	Interest income		349			354			323			-48.4	%
	Interest expense		9,747			6,821			1,204			21.5	%
	Other expense (income), net		1,436			(2,292	)		(1,505	)		NM
	Loss (gain) on early extinguishment of debt, net of income tax provisions of $0 in 2004 and 2003		13,083			—			(153,946	)		NM
(LOSS) INCOME BEFORE REORGANIZATION EXPENSES AND INCOME TAXES			(15,496	)		(75	)		152,551			NM
	Reorganization expense		—			403			399			NM
(LOSS) INCOME BEFORE INCOME TAXES			(15,496	)		(478	)		152,152			NM
	Income tax (benefit) provision		(393	)		(13	)		279			NM
NET (LOSS) INCOME			(15,103	)		(465	)		151,873			NM
	Other comprehensive (loss)
	Foreign currency translation adjustments		(332	)		1,239			(845	)		NM
COMPREHENSIVE (LOSS) INCOME		$	(15,435	)	$	774		$	151,028			NM

NM = Not meaningful when comparing positive to negative numbers or to zero.

(1)  - % Change is computed as the percentage difference between the column entitled “Nine Months Ended September 30, 2004 and the sum of the columns entitled “Predecessor Company January 1 through April 2, 2003” plus “April 3 through September 30, 2003.”

First Nine Months 2004 Versus First Nine Months 2003

      Net Sales. Our net sales for the first nine months of 2004 were $154.4 million, which represents an increase of $7.9 million or 5.4% from the predecessor period January 1 through April 2, 2003 and reorganized period April 3, 2003 through September 30, 2003. Sales benefited from strong volumes in the small diameter cellulosic casings market in the U.S. domestic and export markets. Additionally, sales benefited from stronger volumes in the fibrous casing market in the U.S., which more than offset the pressure selling prices had on our U.S. sales. Increased European sales dollars primarily reflect the strengthened Euro against the U.S. dollar, which benefited net sales by $6.7 million; increased volume of $2.7 million and decreased price and or mix of $2.2 million.

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      Cost of Sales. The cost of sales increased 4.3% over the prior year due to the increased sales level for the same period, and increased as a percent of sales from 78.8% in first nine months of 2003 to 79.6% in first nine months 2004. The increase in cost of sales as a percent of sales can be attributed to higher plant costs in Europe and 0.3% of additional depreciation related to the repurchase of the GECC leased equipment.

      Selling, General Administrative Expenses. We were able to reduce selling, general and administrative expenses from 17.4% of sales in first nine months of 2003 to 14.8% in first nine months of 2004. This can be attributed to reductions in overall spending and internal reorganizations that occurred in July 2003 and March 2004, which reduced employee costs. Additionally, in the first quarter of 2004 there was an unusual income charge of $0.4 million consisting of a reversal of a legal liability recorded in fresh-start accounting that has been settled.

      Operating Income. The operating income for the first nine months of 2004 was $8.4 million, representing an improvement of $6.3 million from the prior year period. The improvement in the operating income resulted primarily from lower employee costs, reduced selling, general and administrative expenses and a $3.0 million decrease in depreciation during the first nine months of 2004 versus the same period of 2003. Operating income in 2004 includes a restructuring charge of $0.8 million, offset by a reversal of $.1 million for the 2003 restructuring, in keeping with the Company’s strategy to streamline its cost structure. Also included in the 2004 operating income is an unusual income charge of $0.4 million consisting of a reversal of a legal liability recorded in fresh-start accounting that has been settled.

      Interest Expense. Interest expense, net of interest income, for the first nine months of 2004 totaled $9.4 million, which represented an increase of $2.1 million from the $7.3 million for the comparable period of the prior year predecessor and reorganized periods. The principal components of the first nine months of 2004 interest expense were approximately $1.1 million on the GECC lease; $5.2 million on the 8% Senior Notes and $2.7 million on the Notes. The principal components of the first nine months of 2003 interest expense were approximately $3.1 million on the GECC lease and $4.3 million on the 8% Senior Notes issued upon the emergence from bankruptcy in April 2003.

      Other Expense (Income). Other expense of approximately $1.4 million for the first nine months of 2004 and other income of $3.8 million for the prior year predecessor and reorganized periods, respectively, consists principally of foreign exchange losses and gains, the loss on disposal of an asset in 2004, and the gain associated with the disposal of property held for sale in 2003.

      Debt Extinguishment. The loss on debt extinguishment for the first nine months of 2004 of $13.1 million consists of the losses from the early retirement of $55.5 million of the 8% Senior Notes and of the early termination of the General Electric Capital Corporation (“GECC”) capital lease. The 8% Senior Notes were purchased at a discount to the principal amount, however, the purchase price exceeded the carrying value of the 8% Senior Notes as established in fresh-start accounting. The gain on debt extinguishment for the period from January 1 through April 2, 2003 of $153.9 million consisted of the elimination of the old senior debt of $163.1 million, a gain on the elimination of the accrued interest on the debt of $25.1 million, a loss on the establishment at fair market value of the 8% Senior Notes of $33.2 million and a loss on the fair market value of the new equity at $1.0 million.

      Reorganization Expense. The 2003 reorganization expenses of $0.8 million consist principally of fees for legal, financial advisory and professional services incurred due to the Chapter 11 proceeding.

      Income Tax Benefit. In the first nine months of 2004, a tax benefit of $.2 million was recognized on the (loss) before income taxes of $(17.3) million, resulting from the tax benefit related to operations of foreign subsidiaries.

      Primarily as a result of factors discussed above, net (loss) for the nine months ended September 30, 2004 was $(15.1) million compared to net income of $151.8 million for the predecessor and reorganized periods of 2003.

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Comparison of Results of Operations for Fiscal Years Ended December 31, 2001, 2002 and 2003

      The following discussion compares the results of operations for the fiscal year ended December 31, 2001 to the results of operations for the fiscal year ended December 31, 2002, and compares the results of operations for the fiscal year ended December 31, 2002 to the results of operations for the fiscal year ended December 31, 2003. We have provided the table below in order to facilitate an understanding of this discussion. The table shows our results of operations for the 2001, 2002 and 2003 fiscal years. Results of operations for 2003 include the combined income statement activity of the Predecessor Company and the Reorganized Company, and are not intended to be a presentation in accordance with accounting principles generally accepted in the United States. The table (dollars in thousands) is as follows:

				%						%
				Change						Change
				over						over
	2001			2001			2002			2002			2003
NET SALES	$	189,315			(3.0	)%	$	183,577			7.8	%	$	197,810
COST AND EXPENSES
Cost of sales		156,258			(6.0	)%		146,841			7.6	%		158,020
Selling, general and administrative		40,027			(3.7	)%		38,526			(12.9	)%		33,554
Amortization of intangibles		2,000			0.0	%		2,000			(34.6	)%		1,309
Restructuring expense (income)		4,766			—			(6,132	)		NM			954
Asset writedown		—			NM			—			NM			46,805
OPERATING (LOSS) INCOME		(13,736	)		NM			2,342			NM			(42,832	)
Interest income		2,479			(53.2	)%		1,161			(27.6	)%		840
Interest expense		25,520			(12.9	)%		22,222			(48.0	)%		11,566
Gain on early extinguishment of debt		8,137			NM			—			NM			153,946
Other (income) expense, net		3,445			NM			(1,493	)		258.3	%		(5,349	)
Reorganization expense		—			NM			3,410			(76.4	)%		802
Income tax benefit		(3,370	)		(61.5	)%		(1,297	)		(76.0	)%		(311	)
Gain on sale of discontinued operations		3,189			NM			—			NM			—
NET INCOME (LOSS)	$	(25,526	)		24.3	%	$	(19,330	)		NM		$	105,246

2003 Versus 2002

      Net Sales. Our 2003 net sales were $197.8 million, which represented an increase of 14.2 million from 2002. The increase in sales reflected slightly higher volumes and the strengthening of the Euro against the U.S. dollar, which positively benefited net sales by approximately $13.8 million. This benefit was partially offset by the continuing effect of reduced selling prices in the worldwide casings industry.

      Cost of Sales. Our cost of sales increased proportionately with net sales in 2003 (from 80.0% of net sales in 2002 to 79.9% of net sales in 2003), with the benefit of various cost reduction programs and lower depreciation due to fresh-start accounting being offset, for the most part, by increases in the costs of labor and materials.

      Selling, General and Administration Expense. We were able to reduce our selling, general and administrative expenses in 2003 by $5.0 million compared to 2002, and from 21.0% to 17.0% of net sales in the same period. This reduction reflected decreases in depreciation of certain assets that reached the end of their depreciable lives, employee expenses and other costs associated with our headquarters facility.

      Operating Income (Loss). Our operating loss during 2003 was $42.8 million. This operating loss included net restructuring expense of $1.0 million and an asset write-down of $46.8 million. The asset write-down occurred during our annual impairment review in the fourth quarter of the year and resulted in a complete write-off of the goodwill created under fresh-start accounting after consummation of our bankruptcy

44

reorganization plan. The restructuring expense was the result of a year 2003 charge of $2.6 million to reduce employees and employee-related costs to offset the effects of the industry’s competitive environment. This expense was offset by a reversal of $1.2 million from our year 2002 restructuring accrual due to a revised estimate of employee costs, and by a reversal of $0.3 million from our year 2000 restructuring accrual due to the renegotiated Nucel® license fee.

      Debt Extinguishment. We recognized a gain on the early extinguishment of debt in the amount of $153.9 million in the period January 1 through April 2, 2003. We did not recognize income tax expense on that gain. Internal Revenue Code Section 108 prescribes that we will not recognize any taxable income for calendar year 2003 but that we must reduce tax attributes up to the extent of the cancellation of debt income (COD). In 2003, the tax benefit recognized of $0.3 million resulted from the benefit related to sales to customers outside the U.S.

      Interest Expense. Interest expense during 2003 totaled $11.6 million, which represented a decrease of $10.7 million from 2002. The decrease was due to the emergence from bankruptcy and the establishment of 8% Senior Notes with a fair market value of $33.3 million, which replaced $163.1 million of 10.25% Senior Notes. The principal components of the 2003 interest expense were approximately $4.2 million on the GECC lease and $6.6 million on the 8% Senior Notes issued upon emergence from bankruptcy in April 2003. The principal components of the 2002 interest expense were approximately $15.2 million on the 10.25% Senior Notes that were cancelled upon emergence bankruptcy in April 2003 and $6.0 million on the GECC lease. Cash interest paid was $4.4 million in 2003, which compared to $3.2 million in 2002. This increase was primarily associated with the timing of payments under the GECC capital lease.

      Other Income (Expense). Other income (expense) of approximately $5.3 million and $1.5 million in 2003 and 2002, respectively, consisted principally of foreign exchange gains.

      Reorganization Expense. The reorganization expenses in 2003 of $0.8 million consisted principally of fees for legal, financial advisory and professional services incurred due to the Chapter 11 proceeding, which compared to $3.4 million in 2002.

      Income Tax Benefit. Net domestic cash income taxes paid (refunded) in 2003 and 2002 were $0.0 and $(2.1) million, respectively. In 2002, we received a refund of a 2001 alternative minimum tax payment, resulting from passage of the 2002 Job Creation Act which retroactively changed the law under which we made the 2001 payment. Net foreign cash income taxes paid during the same periods were $3.0 million and $0.9 million respectively. The increase in 2003 compared to 2002 was due to improved profits reported for tax purposes in our foreign subsidiaries.

2002 Versus 2001

      Net Sales. Our 2002 net sales were $183.6 million, which represented a decrease of $5.7 million from 2001. The decline in sales reflected the continuing effect of reduced selling prices in the casings industry and slightly lower sales volumes, offset by the strengthening Euro against the U.S. dollar that positively benefited net sales by approximately $3.2 million.

      Cost of Sales. Cost of sales decreased from 82.5% of net sales in 2001 to 80.0% of net sales in 2002 primarily as a result of a reduction in raw materials costs, but also as a result of our continuing cost-reduction initiatives.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $1.5 million, but remained at 21.0% as a percentage of sales as a result of the 2002 restructuring, which reduced headcount throughout our organization.

      Operating Income (Loss). Our operating income during 2002 was $2.3 million. Operating income included net restructuring income of $6.1 million recognized in the second quarter of 2002. This restructuring income was the result of a reversal of $9.3 million of excess reserves that were originally recorded in 2000 due to the negotiation of reduced Nucel® technology third party license fees, offset by a year 2002 restructuring charge of $3.2 million. During the second quarter of 2002, we committed to a restructuring plan

45

to address the industry’s competitive environment. This loss compared favorably to Operating (Loss) from the comparable prior year period of $(13.7) million. The improvement in this amount, excluding the effects of $4.8 million of restructuring items, resulted primarily from operating efficiencies from previous cost saving measures and reduced raw material costs.

      Interest Expense. Interest expense during 2002 totaled $22.2 million, which represented a decrease of $3.3 million from 2001. The decrease was due primarily to the lower amount of interest expense related to the GECC lease payment for 2002 compared to 2001. Cash interest paid decreased from $11.7 million in 2001 to $3.2 million in 2002, primarily as a result of ceasing interest payments on the 10.25% Senior Notes due 2001.

      Other Income (Expense). Other income (expense) for 2002 increased by $4.9 million compared to 2001, and consisted primarily of foreign exchange gains.

      Reorganization Expense. The reorganization expenses of $3.4 million consisted principally of professional fees for services incurred due to our Chapter 11 proceeding.

      Income Tax Benefit. In 2002, the tax benefit of $1.3 million resulted from the benefit of a U.S. income tax refund resulting from the Job Creation Act enacted in March 2002, offset by the tax provision related to operations of foreign subsidiaries. Net domestic cash income taxes paid (refunded) in 2002 and 2001 were $(2.1) million and $2.2 million, respectively. The 2001 payment was due to alternative minimum tax rules which were superseded in 2002 with passage of the Job Creation Act and under which we received a 2002 refund. Net foreign cash income taxes paid during the same periods were $0.9 million and $2.5 million respectively. The decrease in 2002 compared to 2001 was due to lower profits reported for tax purposes in our foreign subsidiaries.

Effect of Changes in Exchange Rates

      In general, our financial results are affected by changes in foreign exchange rates. Subject to market conditions, we price most of our products in our foreign operations in local currencies, with the exception of the Brazilian export market and the U.S. export markets, which are priced in U.S. dollars. As a result, a decline in the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a favorable effect on our profitability, and an increase in the value of the U.S. dollar relative to the local currencies of profitable foreign subsidiaries can have a negative effect on our profitability. Exchange rate fluctuations improved the comprehensive loss by $3.7 million in both 2003 and 2002. Exchange rate fluctuations decreased comprehensive income by $0.3 million for the nine months ended September 30, 2004 and increased comprehensive income by $0.3 million for the comparable predecessor and reorganized periods of 2003.

Discontinued Operations

      During 2001, we recognized a net gain of $3.2 million, which was a residual amount left over from the sale of our plastic barrier and non-barrier shrink films business in 2000. The business sold included production facilities in the United States, United Kingdom, and Brazil. In conjunction with the sale of the films business, we shut down our oriented polypropylene films business located in Newton Aycliffe, England and our films operation in Canada. The costs of shutting down these operations are included in the business discontinuance.

Liquidity and Capital Resources

      Cash and cash equivalents increased by $7.4 million during the first nine months of 2004. Cash flows provided by operating activities were $14.3 million, provided by investing activities were $11.2 million, and used in financing activities were $17.9 million. Cash flows provided by operating activities were principally attributable to depreciation, amortization, the loss on debt extinguishment and the non-cash accrued interest on the debt offset by the net loss and increase in working capital usage. Cash flows provided by investing activities were principally attributable to the release of restricted cash, which was used to pay the GECC

46

capital lease obligation, capital expenditures, and the reacquisition of the leased assets. Cash flows used in financing activities principally consisted of the proceeds from the issuance of 11.5% Senior Secured Notes offset by the repurchase of $55.5 million of 8% Senior Notes at a discount, the payment of the renegotiated GECC lease and the incurrence of financing fees associated with the issuance of 11.5% Senior Secured Notes.

      Cash and cash equivalents increased by $13.3 million during the period from April 3 through December 31, 2003. Cash flows provided by operating activities were $16.6 million, used for reorganization items were $0.4 million, provided by investing activities were $0.7 million, and used in financing activities were $4.5 million. Cash flows provided by operating activities were principally attributable to the effect of depreciation and amortization, and a decrease in working capital usage. Cash flows used for reorganization items consist principally of fees for legal, financial advisory and professional services incurred due to our Chapter 11 proceeding. Cash flows provided by investing activities were principally attributable to a decrease in restrictions on cash and the proceeds on disposition of assets, offset by capital expenditures for property, plant and equipment. Cash flows used in financing activities principally consisted of the payment of the scheduled GECC capital lease obligation.

      On June 29, 2004, the Company issued $90 million of 11.5% Senior Secured Notes and 90,000 Warrants to purchase an aggregate of 805,230 shares of common stock of the Company. The proceeds of the 11.5% Senior Secured Notes and the 90,000 Warrants totaled $90 million. The 11.5% Senior Secured Notes have a maturity date of, and the Warrants expire on, June 15, 2011. The $90 million of proceeds were used for the (i) repurchase $55.5 million principal amount of the 8% Senior Notes at a price of 90% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon; (ii) early termination of the GECC capital lease and repurchase of the operating assets subject thereto for a purchase price of $33.0 million; and (iii) payment of fees and expenses associated with the refinancing and repurchase of existing debt. In addition, the Company entered into a $20.0 million revolving credit facility. The revolving credit facility is a five-year facility with a June 29, 2009 maturity date.

      The 11.5% Senior Secured Notes require that the Company maintain a minimum annual level of EBITDA calculated at the end of each fiscal quarter as follows:

Fiscal Quarter Ending	Amount
September 30, 2004 through September 30, 2006	$	16,000
December 31, 2006 through September 30, 2008	$	18,000
December 31, 2008 and thereafter	$	20,000

unless the sum of (i) unrestricted cash of the Company and its restricted subsidiaries as of such day and (ii) the aggregate amount of advances that the Company is actually able to borrow under the revolving credit facility on such day (after giving effect to any borrowings thereunder on such day) is at least $15 million. The minimum annual level of EBITDA covenant is not currently in effect as the Company’s unrestricted cash and the amount of available credit under the revolving credit facility exceeds $15 million.

      The 11.5% Senior Secured Notes limit our ability to (i) incur additional indebtedness; (ii) pay dividends, redeem subordinated debt, or make other restricted payments, (iii) make certain investments or acquisitions; (iv) issue stock of subsidiaries; (v) grant or permit to exist certain liens; (vi) enter into certain transactions with affiliates; (vii) merge, consolidate, or transfer substantially all of our assets; (viii) incur dividend or other payment restrictions affecting certain subsidiaries; (ix) transfer or sell assets, including capital stock of subsidiaries; and, (x) change the nature of our business.

      The revolving credit facility contains various covenants that restrict the Company’s ability to, among other things, incur indebtedness, enter into mergers or consolidation transactions, dispose of assets (other than in the ordinary course of business), acquire assets, make certain restricted payments, prepay any of the 8% Senior Notes at a purchase price in excess of 90% of the aggregate principal amount thereof (together with accrued and unpaid interest to the date of such prepayment), create liens on our assets, make investments, create guarantee obligations and enter into sale and leaseback transactions and transactions with affiliates, in each case subject to permitted exceptions. The revolving credit facility also requires that we

47

comply with various financial covenants, including meeting a minimum four-quarter EBITDA (calculated each calendar quarter) of $19,400 through September 30, 2006 and $21,000 thereafter and an annual limitation on capital expenditures of $9,700 in 2004, $5,500 in 2005 and $6,000 in 2006 and thereafter (with any unused amount being carried over to the immediately following fiscal year), as well as certain other covenants, if our usage of the revolving credit facility exceeds 30%. The minimum level of EBITDA and annual limitations on capital expenditures are not currently in effect because the Company has no borrowings outstanding, and as such, its usage is below the 30% threshold applicable to the covenant. The revolving credit facility also requires payment of a prepayment premium in the event that it is terminated prior to maturity. The prepayment premium, as a percentage of the $20.0 million facility amount, is 3% through June 29, 2005, 2% through June 29, 2006, and 1% through June 29, 2007.

      In April 2004, the Company renegotiated and amended its lease arrangement with GECC. Under terms of the amended lease, six payments of approximately $6.1 million were due semi-annually on February 28 and August 28 beginning in February 2005. The Company and GECC mutually agreed to a $9.5 million fair market sales value for the leased equipment, which amount was used to value the equipment in fresh-start accounting. The Company had the option to terminate the lease early upon payment of $33.0 million through February 28, 2005, thereafter the amount of the early termination payment would decrease upon payment of each semi-annual capital lease payment. The equipment would have transferred to the Company free and clear of all liens on the earlier of (i) the payment of the early termination amount, plus any accrued interest due and payable at 6% per annum or (ii) the payment of the final installment due August  28, 2007. On June 29, 2004, the Company exercised its $33.0 million early termination payment option, terminated the lease and acquired title to the leased equipment. The leased equipment was transferred to the Company free and clear of all liens.

      Capital expenditures (excluding the repurchase of the leased equipment under the GECC capital lease) for the nine months ended September 30, 2004 and 2003 totaled $3.9 million and $1.9 million, respectively. In June 2004, the Company repurchased the leased assets under the GECC capital lease for $9.5 million. Significant 2004 capital expenditures, other than the repurchase of the leased equipment, are related to the installation of environmental equipment to conform to MACT standards for casing manufacturers. Significant 2003 capital expenditures included costs associated with the Viskase Food Science Quality Institute (“FSQI”) plastic casing line. Capital expenditures for 2004, excluding the repurchase of the leased equipment from GECC, are expected to be approximately $9.9 million.

      Capital expenditures for the year ended December 31, 2003 and 2002 totaled $4.3 and $3.8 million, respectively. Significant 2003 expenditures included costs for Osceola and Loudon environmental control technology systems. Significant 2002 capital expenditures included costs associated with FSQI and numerous smaller projects throughout our manufacturing facilities worldwide. Significant 2001 capital expenditures for continuing operations included costs associated with the Visflex^TM and Vismax^TM plastic casing product line and with the corporate office relocation.

      During the first nine months of 2004, we spent approximately $2.0 million on research and development programs, including product and process development, and on new technology development. Our 2004 research and development and product introduction expenses are expected to be approximately $3.0 million. Among the projects included in the current research and development efforts are the development of SmokeMaster^TM casing, the anti-listeria NOJAX® AL^TM casing, and the application of certain patents and technology being licensed by Viskase to the manufacture of cellulosic casings.

      We paid $5.0 million and $1.0 million for our pension and postretirement contributions in the third quarter of 2004. We anticipate we will pay $0.2 million additional pension contributions and approximately $0.9 million of postretirement contributions during the remainder of the year.

Letter of Credit Facility

      Letters of credit in the amount of $1.9 million were outstanding under letter of credit facilities with commercial banks, and were cash collateralized at September 30, 2004.

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      We finance our working capital needs through a combination of internally generated cash from operations, cash on hand and our revolving credit facility.

Revolving Credit Facility

      On June 29, 2004, we terminated our existing revolving credit facility with Arnos Corp., an affiliate of Carl C. Icahn, and entered into a credit facility for up to $20.0 million with Wells Fargo Foothill. This revolving credit facility will be used for working capital and other general corporate purposes.

      Borrowings under the loan and security agreement governing this revolving credit facility (the “Credit Agreement”) are subject to a borrowing base formula based on percentages of eligible domestic receivables and eligible domestic inventory. Under the Credit Agreement, we are able to choose between two per annum interest rate options: (x) the lender’s prime rate and (y) (1) LIBOR plus (2) a margin of 2.25% (which margin will be subject to performance based increases up to 2.50% and decreases down to 2.00%); provided that LIBOR shall be at least equal to 1.00%. Letter of credit fees will be charged a per annum rate equal to the then applicable margin described in clause (y)(2) of the immediately preceding sentence less 50 basis points. The Credit Agreement also provides for an unused line fee of 0.375% per annum and a monthly servicing fee. The Credit Agreement has a term of five years from the date of the closing thereof.

      Indebtedness under the Credit Agreement is secured by liens on substantially all of our and our domestic subsidiaries’ assets, which liens (i) on inventory, account receivables, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof, are contractually senior to the liens securing the Notes and the related guarantees pursuant to an intercreditor agreement, (ii) on real property, fixtures and improvements thereon, equipment and proceeds thereof, are contractually subordinate to the liens securing the Notes and such guarantees pursuant to such intercreditor agreement, (iii) on all other assets, are contractually pari passu with the liens securing the Notes and such guarantees pursuant to such intercreditor agreement.

      The Credit Agreement also contains various covenants that restrict our and our subsidiaries’ ability to, among other things, incur indebtedness, enter into mergers or consolidation transactions, dispose of assets (other than in the ordinary course of business), acquire assets (with permitted exceptions), make certain restricted payments, prepay any of the 8% Senior Notes at a purchase price in excess of 90% of the aggregate principal amount thereof, together with accrued and unpaid interest to the date of such prepayment, create liens on our assets, make investments, create guarantee obligations and enter into sale and leaseback transactions and transactions with affiliates. The Credit Agreement also requires that we comply with various financial covenants, including meeting a minimum EBITDA requirement and limitations on capital expenditures as well as, in the event our usage of the Credit Agreement exceeds 30%, certain other financial covenants. The Credit Agreement provides for certain events of default, including default upon the nonpayment of principal, interest, fees or other amounts, a cross default with respect to other obligations of ours and our subsidiaries, failure to comply with certain covenants, conditions or provisions under the Credit Agreement, the existence of certain unstayed or undischarged judgments, the invalidity or unenforceability of the relevant security documents, the making of materially false or misleading representations or warranties, commencement of reorganization, bankruptcy, insolvency or similar proceedings and the occurrence of certain ERISA events. Upon the occurrence of an event of default under the Credit Agreement, the lender will be entitled to declare all obligations thereunder to be immediately due and payable. The Credit Agreement requires us to pay a prepayment premium in the event that it is prepaid prior to maturity.

8% Senior Notes

      The 8% Senior Notes are unsecured, bear interest at a rate of 8% per year, and will accrue interest from December 1, 2001, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in the form of 8% Senior Notes (paid-in-kind) for the first three years. Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of 8% Senior Notes (paid-in-kind). Thereafter, interest will be payable in cash. The 8% Senior Notes will mature on December 1, 2008 with a principal value of approximately $18.7 million, assuming interest in the first five years is paid-in-kind.

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      The 8% Senior Notes were valued at market under fresh-start accounting. The 8% Senior Notes were recorded on the books at April 3, 2003 at their discounted value of $33.2 million. The discount to face value is being amortized using the effective-interest rate methodology through maturity with an effective interest rate of 10.46%.

      On June 29, 2004, we purchased $55.5 million aggregate principal amount of the outstanding 8% Senior Notes. In connection therewith and in accordance with the indenture for the 8% Senior Notes, the holders thereof agreed to, among other things, release the liens on the collateral that had been securing the 8% Senior Notes and may eliminate substantially all of the restrictive covenants contained in such indentures governing the 8% Senior Notes. From time to time, we may offer to purchase at a substantial discount any or all of the remaining 8% Senior Notes through privately negotiated transactions, purchases in the public marketplace or otherwise. The following table summarizes the carrying value of the 8% Senior Notes at December 31 (in millions):

		2004			2005			2006			2007
8% Senior Notes Principal amount outstanding		$	16.0		$	17.3		$	18.7		$	18.7
	Discount		(4.2	)		(3.3	)		(2.3	)		(1.2	)
	Carrying value	$	11.8		$	14.0		$	16.4		$	17.5

      As a result of the purchase of 8% Senior Notes and the termination of the GECC lease on June 29, 2004, we have recorded a net loss of approximately $13.1 million during the second quarter of 2004, which reduced our operating income and net income (loss), and we expect interest expense to be $11.3 million on a pro forma annual basis for 2004.

Pension and Postretirement Benefits

      Our long-term pension and postretirement benefit liabilities totaled $101.7 million at December 31, 2003. Expected cash contributions for pension and postretirement benefit liabilities are expected to be (in millions):

	2004		2005		2006		2007		2008
Pension	$	6.0	$	3.8	$	13.1	$	8.7	$	7.7
Postretirement Benefit(1)		3.0		1.4		1.4		1.4		1.4
Total	$	9.0	$	5.0	$	14.5	$	10.1	$	9.1

(1)  Net of retiree contributions.

Other

      The fair value of our debt obligations (excluding capital lease obligations) is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to us for the debt of the same remaining maturities. At September 30, 2004, the carrying amount and estimated fair value of our debt obligations (excluding capital lease obligations) were $100.7 million and $103.8 million, respectively.

      As of September 30, 2004, aggregate maturities of debt for each of the next five years are (in millions):

	2004		2005		2006		2007		2008
11 1/2% Senior Secured Notes	$	—	$	—	$	—	$	—	$	—
8% Senior Notes		—		—		—		—		18.7
Other		—		—		—		—		—
Total	$		$		$		$		$	18.7

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Critical Accounting Policies

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying financial statements. In preparing these financial statements, management bases its estimates on historical experience and other assumptions that they believe are reasonable. We do not believe there is a great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and the use of assumptions as to uncertainties and, as a result, actual results could differ from these estimates. If actual amounts are ultimately different from previous estimates, the revisions are included in our results for the period in which the actual amounts become known. Historically, the aggregate differences, if any, between our estimates and actual amounts in any year have not had a significant impact on our consolidated financial statements. The Company is not aware of any trend, event or uncertainty that would materially affect the methodology or assumptions used within its critical accounting policies. The Company has not made any material changes to accounting estimates in the past three years, and at this time the Company does not intend to make any changes in the underlying assumptions to its accounting estimates.

Revenue Recognition

      Substantially all of the Company’s revenues are recognized at the time the products are shipped to the customer, under F.O.B. Shipping Point terms or under F.O.B. Port terms. Revenues are net of any discounts, rebates and allowances. The Company records all labor, raw materials, in-bound freight, plant receiving and purchasing, warehousing, handling and distribution costs as a component of cost of goods sold.

Allowance for Doubtful Accounts Receivable

      Accounts receivable have been reduced by an allowance for amounts that may become uncollectible in the future. This estimated allowance is primarily based upon our evaluation of the financial condition of each customer, each customer’s ability to pay and historical write-offs.

Allowance for Obsolete and Slow Moving Inventories

      Inventories are valued at the lower of cost or market. The inventories have been reduced by an allowance for slow moving and obsolete inventories. The estimated allowance is based upon management’s estimate of specifically identified items, the age of the inventory and historical write-offs of obsolete and excess inventories.

Deferred Income Taxes

      Deferred tax assets and liabilities are measured using enacted tax laws and tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. In addition, the amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be realized on a more likely than not basis.

Pension Plans and Other Postretirement Benefit Plans

      Our North American operations have a defined benefit retirement plan that covers substantially all salaried and full-time hourly employees who were hired prior to April 1, 2003 and a fixed defined contribution plan and a discretionary profit sharing plan that covers substantially all salaried and full-time hourly employees who were hired on or after April 1, 2003. Our operations in Germany have a defined benefit retirement plan that covers substantially all salaried and full-time hourly employees. Pension cost is computed using the projected unit credit method. The discount rate used approximates the average yield for

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high quality corporate bonds as of the valuation date. Our funding policy is consistent with funding requirements of the applicable federal and foreign laws and regulations.

      Our North American operations have postretirement health care and life insurance benefits. We accrue for the accumulated postretirement benefit obligation that represents the actuarial present value of the anticipated benefits. Measurement is based on assumptions regarding such items as the expected cost of providing future benefits and any cost sharing provisions. The Company will terminate postretirement medical benefits as of December 31, 2004 for all active employees and retirees in the U.S. who are not covered by a collective bargaining agreement. It is estimated that said termination will result in a $35 million reduction in the Company’s unfunded postretirement liability.

Fresh-Start Accounting

      As previously discussed, the accompanying consolidated financial statements reflect the use of fresh-start accounting as required by SOP 90-7. Under fresh-start accounting, our assets and liabilities were adjusted to fair values and a reorganization value for the entity was determined based upon the estimated fair value of the enterprise before considering values allocated to debt. The portion of the reorganization value that could not be attributed to specific tangible or identified intangible assets of the Reorganized Company totaled $44.4 million. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” this amount is reported as “Goodwill” in the consolidated financial statements. Fresh-start accounting results in the creation of a new reporting entity with no accumulated deficit as of April 3, 2003. Our reorganization value was based on the consideration of many factors and various valuation methods, including discounted cash flow analysis using projected financial information, selected publicly traded company market multiples of certain companies operating businesses viewed to be similar to us, and other applicable ratios and valuation techniques believed by us to be representative of our business and industry.

      The valuation was based upon a number of estimates and assumptions, which are inherently subject to significant uncertainties and contingencies beyond our control.

      Upon the adoption of fresh-start accounting, as of April 3, 2003, we recorded goodwill of $44.4 million, which equals the reorganization value in excess of amounts allocable to identifiable net assets recorded in accordance with SOP 90-7. In the fourth quarter of 2003, we performed our first annual goodwill impairment analysis under SFAS No. 142. Due to the fact the fair value of our single reporting unit, as estimated by our market capitalization, was significantly less than the net book value at December 31, 2003, we wrote off the entire $44.4 million goodwill balance in the fourth quarter of 2003.

Goodwill and Intangible Assets

      Goodwill and intangible assets that have an indefinite useful life are not amortized and are tested at least annually for impairment. Due to the prepackaged nature of our bankruptcy plan, goodwill was tested for impairment by comparing the fair value with its recorded amount. As a result of adopting SFAS No. 142, we used a discounted cash flow methodology for determining fair value. This methodology identified an impairment of goodwill and intangible assets in the amount of $49.4 million, which was written off in the fourth quarter of 2003. As part of fresh-start accounting, the Company recognized intangible assets that are being amortized. Non-compete agreements in the amount of $1.2 million are being amortized over two years. The intangible backlog in the amount of $2.4 million was written-off in its entirety during 2003.

Property, Plant and Equipment

      We carry property, plant and equipment at cost less accumulated depreciation. Property and equipment additions include acquisition of property and equipment and costs incurred for computer software purchased for internal use including related external direct costs of materials and services and payroll costs for employees directly associated with the project. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from 2 to 32 years. Upon retirement or other disposition, cost and

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related accumulated depreciation are removed from the accounts, and any gain or loss is included in results of operations.

Long-Lived Assets

      We continue to evaluate the recoverability of long-lived assets including property, plant and equipment, patents and other intangible assets. Impairments are recognized when the expected undiscounted future operating cash flows derived from long-lived assets are less than their carrying value. If impairment is identified, valuation techniques deemed appropriate under the particular circumstances will be used to determine the asset’s fair value. The loss will be measured based on the excess of carrying value over the determined fair value. The review for impairment is performed at least once a year or when circumstances warrant.

Other Matters

      We do not have off-balance sheet arrangements (sometimes referred to as “special purpose entities”), financing or other relations with unconsolidated entities or other persons. In the ordinary course of business, we lease certain casing manufacturing and finishing equipment, and certain real property, consisting of manufacturing and distribution facilities and office facilities. Substantially all such leases as of September 30, 2004 were operating leases, with the majority of those leases requiring the Company to pay maintenance, insurance and real estate taxes.

Liquidity

      The Company emerged from bankruptcy on April 3, 2003. For the period April 3 through December 31, 2003, the Company recorded a net loss of $46,627 and positive cash flow from operating activities before reorganization expense of $16,645. In connection with its emergence from bankruptcy, the Company restructured its debt and equity. In addition, the amounts due under capital leases were renegotiated with the lessor. As of December 31, 2003, the Company had positive working capital of approximately $52,201 and unrestricted cash of $23,160, with additional amounts available under its revolving credit facility. While the Company could decide to raise additional amounts through the issuance of new debt or equity, management believes that the existing resources available to it will be adequate to satisfy current and planned operations for at least the next twelve months.

Contractual Obligations Related to Debt, Leases and Related Risk Disclosure

      The following table reflects our future contractual cash obligations and commercial commitments as of December 31, 2003, determined on a pro forma basis (in millions):

			Payments Due by Pay Period
			Less than		Years		Years		More than
Contractual Obligations	Total		1 Year		2 & 3		4 & 5		5 Years
Long-term debt	$	90.0	$		$		$		$	90.0
Cash interest obligations		20.2		2.5		3.5		14.2
Other long-term debt		18.8						18.7		0.1
Pension		51.7		5.7		16.9		16.4		12.7
Postretirement benefits		54.3		3.0		6.0		6.0		39.3
Operating leases		10.9		2.1		3.8		3.1		1.9
Third-party license fees		0.2		0.2
Total	$	246.1	$	13.5	$	30.2	$	58.4	$	144.0

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      The following table reflects our future contractual cash obligations and commercial commitments as of September 30, 2004, determined on a pro forma basis (in millions):

			Payments Due by Pay Period
			Less than		Years		Years		More than
Contractual Obligations	Total		1 Year		2 & 3		4 & 5		5 Years
Long-term debt	$	90.0	$		$		$		$	90.0
Cash interest obligations		75.2		9.9		22.0		22.6		20.7
Other long-term debt		18.8						18.7		0.1
Pension		47.1		2.5		20.9		12.7		11.0
Postretirement benefits		20.8		2.2		2.6		2.6		13.4
Operating leases		10.9		2.1		3.8		3.1		1.9
Third-party license fees		0.2		0.2
Total	$	263.0	$	16.9	$	49.3	$	59.7	$	137.1

      Cash interest obligations changed between December 31, 2003 and September 30, 2004 as a result of the issuance of the Notes, which pay interest in cash, in comparison with the 8% Senior Notes, with respect to which a substantial portion of the interest is payable in kind. The decrease in postretirement benefits between December 31, 2003 and September 30, 2004 relates to the Company’s decision to discontinue certain postretirement benefits effective December 31, 2004.

Recent Accounting Pronouncements

      In January 2003, the Financial Accounting Standards Board (FASB) issued EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF 00-21 provides guidance on how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how arrangement consideration should be measured and allocated to the separate units of accounting in the arrangement. EITF 00-21 is effective for arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 did not have a material impact on our results of operations or financial position.

      In January 2003, the FASB issued FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51.” FIN 46 clarified the application of Accounting Research Bulletin Number 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Qualifying special purpose entities as defined by FASB Statement Number 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” are excluded from the scope of FIN 46. FIN 46 applied immediately to all variable interest entities created after January 31, 2003 and was originally effective for fiscal periods beginning after July 1, 2003 for existing variable interest entities. In October 2003, the FASB postponed the effective date of FIN 46 to December 31, 2003. We do not have any variable interest entities and, therefore, believe that the adoption of the provisions of FIN 46 will not have a material impact on our results of operations or financial position.

      In December 2003, a revised version of FIN 46 (Revised FIN 46) was issued by the FASB. The revisions clarify some requirements, ease some implementation problems, add new scope exceptions and add applicability judgments. Revised FIN 46 is required to be adopted by most public companies no later than March 31, 2004. We believe that the adoption of revised FIN 46 will not have a material impact on our results of operations or financial position.

      In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instrument and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 is

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effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on our results of operations or financial position.

      In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. In November 2003, the FASB issued FASB Staff Position Number 150-3, which deferred indefinitely the effective date of SFAS No. 150 as it relates to certain mandatory redeemable non-controlling interests. SFAS No. 150 was effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on our results of operations or financial position.

      In December 2003, the FASB issued SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits — an Amendment of FASB Statements No. 87, 88, and 106.” The statement was developed in response to concerns expressed by users of financial statements regarding more information about pension plan assets, obligations, benefit payments, contributions and net benefit cost. Disclosures about postretirement benefits other than pensions are required. All new provisions for domestic plans are effective for fiscal years ending after December 15, 2003. Foreign and nonpublic entities disclosures are required effective for fiscal years ending after June 15, 2004. We are considering the standard and its effect on our financial statements.

      On December 17, 2003, the staff of the SEC issued Staff Accounting Bulletin (SAB) 104, “Revenue Recognition,” which amends SAB 101, “Revenue Recognition in Financial Statements.” SAB 104’s primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superseded as a result of the issuance of EITF 00-21. Additionally, SAB 104 rescinds the SEC’s “Revenue Recognition in Financial Statements Frequently Asked Questions and Answers” (the FAQ) issued with SAB 101 (that had been codified in SEC Topic 13, “Revenue Recognition”). Selected portions of the FAQ have been incorporated into SAB 104. While the wording of SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104. The adoption of SAB 104 did not have a material impact on our results of operations or financial position.

      In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The statement is applicable for fiscal years beginning after May  15, 2002 and requires, among other things, that any gain or loss on extinguishment of debt that does not meet criteria in Opinion 30, as amended, no longer be classified as an extraordinary item. We adopted SFAS No. 145 in 2003 and accordingly reclassified extraordinary gains as a separate caption in accordance with this statement.

Quantitative and Qualitative Disclosure About Market Risk

      We are exposed to certain market risks related to foreign currency exchange rates. In order to manage the risk associated with this exposure to such fluctuations, we occasionally use derivative financial instruments. We do not enter into derivatives for trading purposes.

      We have prepared sensitivity analyses to determine the impact of a hypothetical 10% devaluation of the U.S. dollar relative to our European receivables, payables, sales and purchases denominated in U.S. dollars. Based on our sensitivity analyses at September 30, 2004, a 10% devaluation of the U.S. dollar would affect our consolidated financial position by $16 thousand.

      We purchase gas futures contracts to lock in set rates on gas purchases. We use this strategy to minimize our exposure to volatility in the price of natural gas. These products are not linked to specific assets and liabilities that appear on the balance sheet or to a forecasted transaction and, therefore, do not qualify for hedge accounting. As such, gains on the change in fair value of the futures contracts are not recorded in other income, whereas losses are recognized. There were no natural gas futures contracts outstanding at September 30, 2004.

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BUSINESS

Our Company

      We are a leading worldwide producer of non-edible cellulosic, fibrous and plastic casings used to prepare and package processed meat products. We provide value-added support services relating to these products to our customers, which include some of the world’s largest global consumer products companies. We are a Delaware corporation organized in 1970 and were known as Envirodyne Industries, Inc. until we changed our name in 1998. In 1925, one of our predecessors invented the basic process for producing casings from regenerated cellulose for commercial production, and we and/or our predecessors have been in the processed meat flexible packaging business for over 79 years. We believe we are one of the two largest worldwide producers of non-edible cellulosic casings for small-diameter processed meats, such as hot dogs. In addition, we believe we are one of the leading producers of non-edible fibrous casings for large-diameter sausages, salami, hams and other processed meat products. We also produce plastic casings for a wide range of processed meat and poultry applications. Our high-quality product offering and superior customer service have resulted in strong and longstanding relationships with our blue-chip customer base, which includes Kraft, Smithfield Foods and ConAgra. The average length of our relationships with our top 15 customers is greater than ten years. We operate seven manufacturing facilities and eight distribution centers in North America, Europe and South America and, as a result, we are able to sell our products in most countries throughout the world.

      Since 1998, we have sold certain of our operations in order to reduce indebtedness and increase our operational focus. As a result of these efforts, we sold our wholly-owned subsidiary, Sandusky Plastics, Inc. in June 1998, our wholly-owned subsidiary, Clear Shield National, Inc. in July 1998, and our plastic barrier and non-barrier shrink film business in August 2000. These divestitures have left the cellulosic, fibrous and plastic casings business as our primary operating activity.

      Upon emergence from bankruptcy in April 2003, our wholly-owned subsidiary, Viskase Corporation, merged with and into us. In addition, since emerging from bankruptcy, we have implemented a number of restructuring measures to reduce the fixed cost structure of our remaining business and to address competitive price pressures and increases in various production costs in our business. In September 2003, we dissolved two of our subsidiaries, Envirosonics, Inc. and Viskase Puerto Rico Corporation, and in October 2003, we dissolved another subsidiary, Viskase Australia Limited. In January 2004, we merged two of our subsidiaries, Viskase Holding Corporation and Viskase Sales Corporation, with and into us, and merged another subsidiary, Envirodyne Subsidiary, Inc., with and into one of our domestic subsidiaries.

Bankruptcy and Plan of Reorganization

      On November 13, 2002, we filed a prepackaged Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Bankruptcy Court”). The Chapter 11 filing was for Viskase Companies, Inc. alone and did not include any of our domestic or foreign subsidiaries. On December 20, 2002, the Bankruptcy Court confirmed our prepackaged plan of reorganization, as modified (the “Plan”), and we consummated the Plan and emerged from bankruptcy on April 3, 2003. Throughout the bankruptcy proceeding, our domestic and foreign operating subsidiaries continued to provide an uninterrupted supply of products and services to customers worldwide. Trade creditors and vendors were unaffected and were paid in the ordinary course of business, and the employees of our operating subsidiaries were paid all wages, salaries and benefits on a timely basis.

      Under the terms of the Plan, our 10.25% Senior Notes due 2001 (the “10.25% Senior Notes”) were converted into 8% Senior Notes and shares of our Common Stock on the basis of $367.96271 principal amount of 8% Senior Notes (i.e., $60 million) and 63.4122 shares of Common Stock for each $1,000 principal amount of the 10.25% Senior Notes. The previously outstanding shares of our common stock were canceled pursuant to the Plan and the holders thereof received warrants with a term of seven years (expiring April 2, 2010) to purchase shares of Common Stock equal to 2.7% of our Common Stock outstanding immediately after the consummation of the Plan on a fully-diluted basis at an exercise price of $10.00 per

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share. On a fully-diluted basis, holders of the 10.25% Senior Notes received approximately 91.5% of our Common Stock, and approximately 5.8%, or 660,000 shares, of our Common Stock was issued or reserved for issuance to our management and employees.

      Upon emerging from bankruptcy our Board of Directors was reconstituted into five members.

The Industry

      The flexible packaging market in the U.S. is comprised of paper, plastic film or foil products, and laminations of these materials. According to industry sources, domestic demand for flexible packaging was 6.0 billion pounds in 2003, and has grown from 5.5 billion pounds in 1998, reflecting a compound annual growth rate of 1.9%. Industry analysts expect the flexible packaging market as a whole to continue to expand at a steady rate due to technological advances and manufacturers’ needs for higher performance packaging. According to industry sources, domestic demand for flexible packaging is expected to reach 6.8 billion pounds by 2008, which would reflect a compound annual growth rate of 2.4% from 2003. Furthermore, domestic demand for flexible packaging for meat, poultry and seafood, the subsection of the flexible packaging market in which we operate, has been growing. Industry sources report that domestic demand for flexible packaging used for meat, poultry and seafood increased to 540 million pounds in 2003 from 515 million pounds in 1998, reflecting a compound annual growth rate of 1.0%. Domestic demand for flexible packaging for meat, poultry and seafood is expected to reach 594 million pounds by 2008, which would reflect a compound annual growth rate of 1.9% from 2003. We believe that we will continue to benefit from these stable U.S. industry fundamentals in both the general and the meat, poultry and seafood flexible packaging markets. We also believe that growth in demand for flexible meat, poultry and seafood packaging will occur in international markets. We expect modest growth in developed countries and, due to increasing wealth and availability of quality nutrition, more expansive growth in developing countries.

      We participate in the small-diameter cellulosic, fibrous and plastic casings segments of the general flexible packaging market. Casings are used in the production of processed meat and poultry products, such as hot dogs, sausages, salami, ham and bologna. In the manufacturing of these products, a meat preparation is stuffed into a casing and then cooked, smoked or dried. The casing utilized dictates the size, consistency of shape, and overall appearance and quality of the final meat product. Small-diameter cellulosic, fibrous and plastic casings also permit high-speed stuffing and processing of products on commercially available automated equipment, which provides a meat processor with consistent product quality, high production output rates and lower manufacturing costs.

      The processed meat casings market can be sub-divided as follows:

Edible Casings

      Natural (Gut) Casings. Natural casings, made from animal intestines, are the most commonly used edible casings, although their share of the worldwide market is believed to be decreasing due to their inconsistent quality and lack of compatibility with automated production equipment.

      Edible Collagen Casings. Edible collagen (derived from animal proteins) is used for fresh sausages, snack sticks and some small-diameter cooked sausages because its consistency in performance is generally improved over natural casings.

Non-Edible Casings

      Cellulosic Casings. Cellulosic casings are the highest volume non-edible casings and are used in the production of small-diameter processed meat products (less than 35 millimeters), such as hot dogs, frankfurters and other small-diameter cooked sausages. Cellulosic casings are typically peeled off of the meat product and discarded prior to final packaging. Cellulosic casings’ advantages in strength, uniformity and machinability on high speed, automatic stuffing equipment allow for higher productivity and lower manufacturing costs compared to processing with edible natural or collagen casings.

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      Fibrous Casings. Fibrous casings are paper-reinforced cellulosic casings used in large-diameter products (greater than 35 millimeters) because the fibrous material enhances casing strength and provides uniformity in product diameter. Applications include a wide variety of cooked, smoked and dried processed meats, including large sausages, salami, hams and deli meats.

      Non-Edible Collagen Casings. Non-edible collagen is used for large-diameter sausages such as chorizo and certain types of specialty dried salamis.

      Plastic Casings. Plastic casings are traditionally used in steam or water cooking applications, such as boiled ham, poultry rolls and other processed sausages where the plastic casing lends itself to higher cooking yields and can serve as a final package. Plastic casings are growing in market demand because they can provide a lower-cost alternative to fibrous casings when cook yields and re-packaging costs are taken into consideration.

      We compete in the cellulosic, fibrous and plastic casing segments of the non-edible casings market.

Products

      Our main product lines are as follows:

      NOJAX® casings — Small-diameter cellulosic casings designed for the production of hot dogs, wieners, frankfurters, viennas, cocktail sausages, coarse ground dinner sausages, dry mini-salamis and other small-diameter processed meats.

      Fibrous casings — Paper-reinforced cellulosic casings utilized in the manufacturing of a wide variety of cooked, smoked and dried processed meats, including large sausages, bologna, salami, ham, pepperoni and deli meats.

      Visflex^TM, Vismax^TM and Vislon® casings — Plastic (polyamide) casings, each designed with distinct performance characteristics targeted at a wide range of sausage, deli meat and other processed meat and poultry applications.

      We also manufacture other specialty cellulosic products, notably a family of large cellulosic casings with limited applications for mortadella and specialty sausages, as well as some non-food products targeted at dialysis membrane and specialized battery separator market applications. Furthermore, on a limited and geographic basis, we sometimes take on distributor product lines of certain allied products that serve as complimentary supply items to casings. Examples of such products include an elastic netting line that we distribute in North America and shrinkable barrier bags that we distribute in Italy.

International Operations

      We have four manufacturing and/or finishing facilities located outside the continental United States, in Beauvais, France; Thâon-les-Vosges, France; Guarulhos, Brazil, and Caronno, Italy.

      Net sales from customers located outside the United States represented approximately 59% of our total net sales during 2003. Our operations in France are responsible for distributing products, directly or through distributors, in Europe, Africa, the Middle East and parts of Asia. While overall consumption of processed meat products in North America and Western Europe has apparently stabilized, we believe there is a potential for market growth in Eastern Europe, Latin America, South America and Southeast Asia.

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      The following table shows our net sales, operating (loss) income, identifiable assets and U.S. export sales by geographic region during the last three fiscal years (in millions):

			YearPredecessor Company									Reorganized Company
			December 31,						January 1
									Through			April 3 Through			January 1 Through
			2001			2002			April 2, 2003			December 31, 2003			September 30, 2004
Net Sales
	United States		$	120.3		$	115.8		$	29.5		$	97.8		$	98.4
	Canada			8.2			6.8			—			—			—
	South America			7.9			7.4			1.6			5.9			5.8
	Europe			70.1			66.5			17.9			60.7			63.6
	Other and eliminations			(17.2	)		(12.9	)		(3.6	)		(12.0	)		(13.4	)
		Total	$	189.3		$	183.6		$	45.4		$	152.3		$	154.4
Operating (loss) income
	United States		$	(10.3	)	$	4.0		$	(1.4	)	$	(37.1	)	$	10.3
	Canada			(0.5	)		(0.5	)		(0.1	)		(0.4	)		(0.5	)
	South America			(0.6	)		(1.4	)		(0.2	)		(0.9	)		(0.7	)
	Europe			(2.3	)		0.2			(0.3	)		(2.4	)		(0.7	)
	Other and eliminations			—			—			—			—			—
		Total	$	(13.7	)	$	2.3		$	(2.0	)	$	(40.8	)	$	8.4
Identifiable Assets
	United States		$	138.2		$	131.4		$	115.0		$	115.7		$	111.6
	Canada			6.8			1.5			0.8			0.7			0.6
	South America			9.5			8.8			8.9			7.9			7.5
	Europe			79.5			77.0			75.6			87.8			83.8
	Other and eliminations			—			—			—			—			—
		Total	$	234.0		$	218.7		$	200.3		$	212.1		$	203.5

Manufacturing

      The production of regenerated cellulosic casings generally involves four principal steps: (i) production of a viscose slurry from wood pulp; (ii) regeneration of cellulosic fibers; (iii) extrusion of a continuous tube during the regeneration process; and (iv) “shirring” of the final product. Shirring is a finishing process that involves pleating and compressing the casing in tubular form for subsequent use in high-speed stuffing machines. The production of regenerated cellulosic casings involves a complex and continuous series of chemical and manufacturing processes, and we believe that our facilities and expertise in the manufacture of extruded cellulose are important factors in maintaining our product quality and operating efficiencies.

      Our product line includes NOJAX® cellulosic casings, which are used for small-diameter processed meat products such as hot dogs; fibrous casings, which are paper-reinforced cellulosic casings used in the production of large-diameter sausages, salami, hams and other processed meat products; and Visflex^TM and Vismax^TM plastic casings, which are used for a wide range of processed meat, poultry and cheese applications.

Sales and Distribution

      We have a broad base of customers, with no single customer accounting for more than 7.0% of our net sales. We are able to sell our products in most countries throughout the world. We have 40 people staffing our technical and sales teams who are responsible for sales and service to processed meat and poultry producers. Approximately 69 distributors market our products to customers in Europe, Africa, the Middle

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East, Asia, and Latin/ South America. Our products are marketed through our own subsidiaries in France, Germany, Italy, Poland and Brazil, and we maintain eight distribution centers located in the United States, Canada, Germany and Poland to provide warehousing and distribution of our products. See “— Facilities.”

      As of September 30, 2004, we had backlog orders of approximately $34.8 million. As of December 31, 2003 and 2002, we had backlog orders of approximately $36.6 million and $28.0 million, respectively. Orders on backlog typically are filled within 90 days.

Competition

      We are one of the world’s leading producers of cellulosic casings. While our industry generally competes based on volume and price, we seek to maintain our competitive advantage and differentiate ourselves from our competitors by manufacturing products that have higher quality and superior performance characteristics when compared to our competitors’ products; by responding quickly to customer product requirements; by providing technical support services to our customers for production and formulation requirements; and by producing niche products to satisfy individual customer needs.

      Our principal competitors in the cellulosic casing market are Teepak LLC, located in the United States with manufacturing facilities in the United States, Belgium, Mexico and the Czech Republic; Viscofan, S.A., located in Spain with manufacturing facilities in Germany, Brazil, the Czech Republic and the United States; Kalle Nalo GmbH, located in Germany; Case Tech, a wholly-owned subsidiary of Bayer AG, located in Germany; Oy Visko AB, located in Finland; and two Japanese manufacturers, Futamura Chemical, marketed by Meatlonn, and Toho. Our primary competitors include several corporations that are larger and better capitalized than we are and, thus, are less vulnerable to price reductions in the market. During the previous ten years, we have experienced reduced profits due to overcapacity in our industry and intense competition based on volume.

Research and Development

      We believe our continuing emphasis on research and development is central to our ability to maintain industry leadership. In particular, we have focused on the development of new products that increase our customers’ operating efficiencies, reduce their operating costs and expand their markets. Our research and development projects also include the development of new processes and products to improve our own manufacturing efficiencies. Our research scientists, engineers and technicians are engaged in continuous product and equipment development, and also provide direct technical and educational support to our customers.

      We believe we have achieved and maintained our position as a leading producer of cellulosic casings for packaging meats through significant expenditures on research and development. We expect to continue our research and development efforts. The commercialization of certain of our product and process applications, and related capital expenditures to achieve commercialization, may require substantial financial commitments in future periods. Research and development costs from continuing operations are expensed as incurred and totaled $3.6 million, $4.1 million and $4.8 million during 2003, 2002 and 2001, respectively.

Seasonality

      Historically, our domestic sales and profits have been seasonal in nature, increasing in the spring and summer months. Sales outside of the U.S. remain relatively stable throughout the year.

Raw Materials

      The raw materials we use include cellulose (derived from wood pulp), specialty fibrous paper and various other chemicals. We generally purchase our raw materials from a single source or a small number of suppliers with whom we maintain good relations. Certain primary and alternative sources of supply are located outside the U.S. We believe that adequate alternative sources of supply currently exist for all of our

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raw materials or that raw material substitutes are available, which we could utilize by modifying our manufacturing processes.

Facilities

      The following table lists each of our facilities, including location, use, approximate square footage and status:

Manufacturing Facilities

			Approximate		Owned or
Facility	Primary Use		Square Footage		Leased
Beauvais, France		Casings production and finishing		235,000		Leased
Caronno, Italy		Casings finishing		73,000		Owned
Guarulhos, Brazil		Casings finishing		25,000		Leased
Kentland, Indiana		Casings finishing		125,000		Owned
Loudon, Tennessee		Casings production		250,000		Owned
Osceola, Arkansas		Casings production and casings finishing		223,000		Owned
Thâon-les-Vosges, France		Casings finishing		239,000		Owned

Distribution Centers

Facility	Owned or Leased
Atlanta, Georgia		Leased
Buffalo, New York		Leased
Fresno, California		Leased
Remington, Indiana		Leased
Lindsay, Ontario, Canada		Owned
Saskatoon, Saskatchewan, Canada		Leased
Dormagen, Germany		Leased
Warsaw, Poland		Leased

Headquarters

Facility	Owned or Leased
Willowbrook, Illinois (Worldwide headquarters)		Leased
Pantin, France (European headquarters)		Leased

Employees

      We believe we maintain productive and amicable relationships with our approximately 1,360 employees worldwide. Approximately 480 of our 1,360 employees are union members. One of our domestic facilities, located in Loudon, Tennessee, is unionized. Our collective bargaining agreement covering union employees at the Loudon facility expires on September 30, 2005. Additionally, all of our European and Brazilian facilities have national agreements with annual renewals. Employees at our European facilities are involved in labor negotiations at both the local and national levels.

Trademarks and Patents

      We hold patents on many of our major technologies, including those used in our manufacturing processes and those embodied in products sold to our customers. We believe our ongoing market leadership is derived, in part, from our technology. We vigorously protect and defend our patents against infringement on an international basis. As part of our research and development program, we have developed and expect to continue to develop new proprietary technology and have licensed proprietary technology from third parties.

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We believe these activities will enable us to maintain our competitive position. However, we do not believe that any single patent or group of patents is material to us. We also own numerous trademarks and registered trade names that are used actively in marketing our products. We periodically license our process and product patents to competitors on a royalty basis.

Environmental Regulations

      In manufacturing our products, we employ certain hazardous chemicals and generate toxic and hazardous wastes. The use of these chemicals and the disposal of such wastes are subject to stringent regulation by several governmental entities, including the United States Environmental Protection Agency (the “EPA”) and similar state, local and foreign environmental control entities. We are subject to various environmental, health and safety laws, rules and regulations including those of the United States Occupational Safety and Health Administration and the EPA. These laws, rules and regulations are subject to amendment and to future changes in public policy or interpretation, which may affect our operations.

      Certain of our facilities are or may become potentially responsible parties with respect to on-site and off-site waste disposal facilities and remediation of environmental contamination. See “— Legal Matters” with respect to potential environmental liabilities at the Lindsay, Ontario facility of our Canadian subsidiary, Viskase Canada.

      Under the Clean Air Act Amendments of 1990, various industries, including casings manufacturers, will be required to meet MACT air emissions standards for certain chemicals. MACT standards applicable to all U.S. cellulosic casing manufacturers were promulgated June 11, 2002. We submitted extensive comments to the EPA during the public comment period. Compliance with these new rules is required by June 13, 2005, although the Company has obtained a one-year extension for both of its facilities. To date, we have over $2.9 million in capital expenditures, and we expect to spend over $7.4 million over the next 12 months, to become compliant with MACT rules at our two U.S. extrusion facilities. Although we expect to implement the technology necessary to meet these emissions standards at our two extrusion facilities, our failure to do so, or our failure to receive a compliance extension that we anticipate requesting from regulatory agencies, could result in substantial penalties, including civil fines of up to $50,000 per facility per day or a shutdown of our U.S. extrusion operations.

      Under the Resource Conservation and Recovery Act, regulations have been proposed that, in the future, may impose design and/or operating requirements on the use of surface impoundments for wastewater. Two of our plants use surface impoundments. We do not foresee these regulations being imposed for several years.

Legal Matters

Lindsay, Ontario Environmental Matters

      In 1988, our subsidiary, Viskase Canada, commenced a lawsuit against Union Carbide claiming that Union Carbide had breached several representations and warranties and deliberately and/or negligently failed to disclose the existence of ammonium sulphate contamination on the premises of a facility in Lindsay, Ontario, Canada that Viskase Canada purchased from Union Carbide in 1986.

      In November 2000, the MOE notified Viskase Canada that it had evidence to suggest that the Lindsay facility was a source of PCB contamination in surrounding areas. Viskase Canada has been working with the MOE in investigating the alleged PCB contamination and developing and implementing, if appropriate, a remedial plan for the Lindsay facility and the affected area. Viskase Canada and others have been advised by the MOE that the MOE has prepared certain Director’s Orders requiring remediation under applicable environmental laws and regulations against Viskase Canada, Dow and others, the timing of issuance of the any orders is subject to resolution of site investigations and if appropriate, developing an acceptable remedial plan. Dow, which has replaced or soon will replace Union Carbide as the defendant in the lawsuit against Union Carbide, has consented to an amendment to the lawsuit, which Viskase Canada will file with the court as soon as the claim can be adequately quantified, that alleges further that any PCB contamination at the Lindsay facility was generated from Union Carbide’s prior plastics extrusion business, which was not part of the business Viskase Canada purchased from Union Carbide. Viskase Canada is seeking an order to require Union Carbide to repurchase the Lindsay facility and award Viskase Canada damages in excess of

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$2.0 million (Canadian). We have reserved $0.75 million for the property remediation. The lawsuit is currently pending and is expected to proceed to trial in 2005.

Illinois Loss Carry-Forwards

      In 1993, the Illinois Department of Revenue (“IDR”) submitted a proof of claim against Envirodyne Industries, Inc. (our former corporate name) and its subsidiaries in the United States Bankruptcy Court for the Northern District of Illinois, for liability with respect to IDR’s denial of our allegedly incorrect utilization of certain loss carry-forwards of certain of our subsidiaries. In September 2001, the bankruptcy court denied IDR’s claim and determined that we were not responsible for 1998 and 1999 tax liabilities, interest and penalties. IDR appealed the bankruptcy court’s decision to the United States District Court, Northern District of Illinois, and in February 2002 the district court affirmed the bankruptcy court’s order. IDR appealed the district court’s order to the United States Court of Appeals for the Seventh Circuit. On January 6, 2004, the appeals court reversed the judgment of the district court and remanded the case for further proceedings. The matter is now before the bankruptcy court for further determination. As of September 30, 2004, the tax liabilities, interest and penalties totaled approximately $2.5 million. See “Risk Factors.”

Quebec Sales Taxes

      In August 2001, the Department of Revenue of the Province of Quebec, Canada issued an assessment against Viskase Canada in the amount of approximately $2.7 million (Canadian), plus additional interest and possible penalties to accrue from August 31, 2001. This assessment is based upon Viskase Canada’s failure to collect and remit sales tax during the period July 1, 1997 to May 31, 2001. During this period, Viskase Canada did not collect and remit sales tax in Quebec in reliance on the written advice of its outside accounting firm. Viskase Canada filed a Notice of Objection in November 2001 with a supplementary submission in October 2002. The Notice of Objection found in favor of the Department of Revenue. The Company has appealed the decision. We have provided for a reserve of $0.3 million for interest and penalties, if any, but have not provided for a reserve for the underlying sales tax. Although the ultimate liability for the Quebec sales tax lies with the customers of Viskase Canada during the relevant period, Viskase Canada could be required to pay the amount of the underlying sales tax prior to collecting such tax from its customers, and there is no guarantee that customers will fully reimburse Viskase Canada for such tax. Viskase Canada is negotiating with the Quebec Department of Ministry to avoid having to collect the sales tax from customers.

Employment Matters

      On December 23, 2003, our former vice president, secretary and general counsel, Kimberly K. Duttlinger, filed suit against us in the Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois, alleging that she terminated her employment for “good reason,” as defined in her employment agreement with us, and is therefore entitled to termination compensation of approximately $368,000. Ms. Duttlinger is alleging that, under her employment agreement, if she terminated her employment for “good reason,” she is entitled to receive two years’ of salary and certain bonus and other amounts. We strongly deny the allegations set forth in this complaint and intend to vigorously defend this claim. We filed a motion to dismiss the complaint in April 2004, which was dismissed without prejudice. We are currently engaged in pre-trial discovery.

Other Legal Matters

      In addition to the matters we have described above, we, and our subsidiaries, are involved in various other legal proceedings arising in the ordinary course of our business, none of which is expected to have a material adverse effect upon our results of operations, cash flows or financial condition.

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MANAGEMENT

      The following table sets forth certain information regarding the members of our board of directors and our executive officers and other senior officers.

Name	Age		Position
Robert L. Weisman		56	President and Chief Executive Officer
Gordon S. Donovan		51	Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
Stephen E. Foli		60	Vice President, Worldwide Operations
Maurice J. Ryan		52	Vice President, Sales, North America
John O. Cunningham		55	Vice President, Administration/ Human Resources, Compensation and Benefits
Jean-Luc Tillon		45	President, Viskase S.A.S.
Jeffrey B. Sherry		42	Vice President, Marketing
Paul J. Fitzsimmons		48	Vice President, Sales, Asia Pacific/ Latin America
Vincent J. Intrieri		48	Chairman of the Board, Director
Eugene I. Davis		49	Director
Thomas S. Hyland		61	Director
James L. Nelson		55	Director
Jon F. Weber		46	Director

      Robert L Weisman, 56, has been President and Chief Executive Officer since October 2004. From December 2002 to June 2004, he served as the Vice President, Innovation and Business Development for Sara Lee Corporation. Mr. Weisman also served as the Chief Executive Officer, Sara Lee Bakery from May 2001 to December 2002 and the Group President of Sara Lee’s Specialty Meat Companies from June 1996 through May 2001.

      Gordon S. Donovan, 51, has been our Vice President and Chief Financial Officer since January 1997. Mr. Donovan has also served as our Treasurer and Assistant Secretary since November 1989, and as a Vice President since May 1995. Mr. Donovan has been employed by us since 1987.

      Stephen E. Foli, 60, has been our Vice President, Worldwide Operations since August 2003. He also served as our Vice President, Logistics from January 1998 to August 2003 and our Vice President, West Region Sales from August 1995 to January 1998. Mr. Foli has been employed by us since 1967.

      Maurice J. Ryan, 52, has served as our Vice President, Sales, North America since September 2000. He also served as our Vice President, U.S. and Canada Sales beginning in 2000, our Vice President, West Region from 1997 to 2000, Vice President, Strategic Accounts from 1995 to 1997 and our Vice President, Sales from 1993 to 1995. Mr. Ryan has been employed by us since 1977.

      John O. Cunningham, 55, has served as our Vice President, Administration/ Human Resources, Compensation and Benefits since October, 2002. He also served as our Director, Human Resources/ Compensation and Benefits from September 1995 to September 2002. Mr. Cunningham has been employed by us since 1990.

      Jean-Luc Tillon, 45, has served as our President, Viskase S.A.S. since January 1999. He previously served as our Director of Finance, Europe from January 1999 to June 2003 and as our Director of Sales and Marketing, Europe from July 2003 to March 2004. Mr. Tillon has been employed by us since 1986 and currently also serves as a director of Viskase Spa, Viskase Gmbh and Viskase Polska.

      Jeffrey B. Sherry, 42, has served as our Vice President, Marketing since May 2003. Mr. Sherry also served as our Director, Sales, Western Region from June 2002 to May 2003 and as our Director, Worldwide Marketing from November 1997 to June 2002. Mr. Sherry has been employed by us since June 1984.

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      Paul J. Fitzsimmons, 48, has served as our Vice President, Sales, Asia Pacific/ Latin America since June 2003. Mr. Fitzsimmons also served as our Director, Sales, Asia Pacific/ Latin America from May 2000 to June 2003 and as our Director, Customer Service from January 1999 to May 2000. Mr. Fitzsimmons has been employed by us since March 1990.

      Vincent J. Intrieri, 48, has served as Chairman of the Board of Directors and as a director since April 2003. Since March 2003, he has been Managing Director of Icahn Associates Corp., an entity controlled by Carl C. Icahn, who may be deemed to be a beneficial owner of approximately 29.07% of our Common Stock. Mr. Intrieri served as a portfolio manager of High River Limited Partnership from 1998 to March 2003. From 1995 to 1998, he served as a portfolio manager for distressed investments with Elliot Associates L.P., a New York investment fund. Mr. Intrieri currently serves on the boards of XO Communications, Inc. and Trans Texas Gas Corporation, each of which are affiliated with Mr. Icahn.

      Eugene I. Davis, 49, has been a director since April 2003. Since 1999, Mr. Davis has been chairman and chief executive officer of Pirinate Consulting Group, L.L.C., a consulting firm that specializes in, among other things, crisis and turn-around management, mergers and acquisitions and strategic planning services. From January 2001 to December 2003, he was chairman, chief executive officer and president of RBX Industries, Inc., a manufacturer and distributor of rubber and plastic based foam products, and prior to that served as RBX Industries’ chief restructuring officer, and from 1998 to 1999, he served as chief operating officer of Total-Tel USA Communications, Inc. Mr. Davis has been the chief executive officer, chief operating officer or president of other companies including Murdock Communications Corporation and SmarTalk Teleservices, Inc. RBX Industries and SmarTalk Teleservices were debtors under the federal bankruptcy code for which Mr. Davis was retained to provide turnaround management services. Mr. Davis is currently a member of the CFN Liquidating Trust Committee for the former Contifinancial Corporation and its affiliates, and is a director of Metals USA, Inc., Metrocall Holdings, Inc., Flag Telecom Group Limited, Elder-Beerman Stores, Inc., Tipperary Corporation, Knology, Inc., TelCove, Inc., Exide Technologies and a number of private companies. In addition, he is a member of the Board of Advisors of PPM America Special Investment Funds.

      Thomas S. Hyland, 61, has been a director since April 2003. Mr. Hyland has been associated as a consultant for the past six years with the Service Corps of Retired Executives, a nonprofit association that provides counseling and educational programs for small businesses.

      James L. Nelson, 55, has served as a director since April 2003. From March 1998 until July 2004, Mr. Nelson has been Chairman and Chief Executive Officer of Orbit Aviation, Inc., a company engaged in the acquisition and completion of Boeing 737 Business Jets for private and corporate clients. From 1986 until the present, Mr. Nelson has been Chairman and Chief Executive Officer of Eaglescliff Corporation, a specialty investment banking, consulting and wealth management company. From August 1995 until July 1999, he was Chief Executive Officer and Co-Chairman of Orbitex Management, Inc. Mr. Nelson currently serves on the board of American Real Estate Partners LP, which is affiliated with Mr. Icahn.

      Jon F. Weber, 46, has been a Director since May 2003 and was President and Chief Executive Officer from May 2003 until October 2004. Since April 2003, he has been Head of Portfolio Company Operations and Chief Financial Officer at Icahn Associates Corp., an entity controlled by Carl C. Icahn, who may be deemed to be a beneficial owner of approximately 29.07% of our Common Stock. Since March 2003, he has served as Chief Executive Officer and a director of Philip Services Corporation, a metal recycling and, industrial services company affiliated with Mr. Icahn. He served as Chief Financial Officer of venture-backed companies QuantumShift Inc. and Alchemedia Ltd. from October 2001 to July 2002 and November 2000 to October 2001, respectively. From May 1998 to November 2000, Mr. Weber served as Managing Director — Investment Banking for JP Morgan Chase and its predecessor, Chase Manhattan Bank, in São Paulo, Brazil. Previously, Mr. Weber was an investment banker at Morgan Stanley and Salomon Brothers. Mr. Weber began his career as a corporate lawyer following his graduation from Harvard Law School. He also holds an MBA and Bachelor’s degree from Babson College. He currently serves as an Overseer (previously a trustee) of Babson College.

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Summary Compensation Table

      The following table sets forth information regarding compensation for the fiscal years 2003, 2002 and 2001 awarded to, earned by or paid to the individuals serving as our Chief Executive Officer in fiscal year 2003 and the other four most highly compensated executive officers at December 31, 2003. Mr. Gustafson resigned as our President and Chief Executive Officer effective as of May 30, 2003 and was replaced by Mr. Weber effective as of May 31, 2003. Effective October 4, 2004, Jon F. Weber resigned as President and Chief Executive Officer and Robert L. Weisman was appointed President and Chief Executive Officer. Mr. Weber will continue his duties as a member of the Company’s board of directors.

								Other Annual			Restricted		All Other
				Salary		Bonus		Compensation			Stock		Compensation
Name and Principal Position		Year		($)		($)		($)			Award(s) ($)(1)		($)
Robert L Weisman(2)			2003		—		—		—			—		—
	President and Chief Executive Officer
Jon F. Weber(3)			2003		94,318		—		—			—		—
	President and Chief Executive Officer
F. Edward Gustafson(4)			2003		222,917		—		—			—		2,104,303	(5)
	Chairman of the Board,		2002		535,000		267,500		67,004	(6)		—		16,050	(7)
	President and Chief Executive		2001		513,000		—		—			—		24,745	(8)
	Officer
Gordon S. Donovan			2003		193,020		22,084		12,131	(9)		456		8,524	(10)
	Vice President,		2002		186,060		74,126		10,989	(9)		—		6,496	(11)
	Chief Financial Officer,		2001		178,728		14,012		10,663	(9)		—		7,855	(12)
	Treasurer and Assistant Secretary
Stephen E. Foli			2003		159,264		64,789		7,195	(9)		100		6,700	(13)
	Vice President,		2002		153,504		53,189		5,054	(9)		—		6,512	(14)
	Worldwide Operations		2001		147,456		10,115		7,204	(9)		—		6,332	(15)
Maurice J. Ryan			2003		141,540		43,184		5,790	(9)		100		4,621	(16)
	Vice President,Sales		2002		136,140		47,173		5,147	(9)		—		4,446	(17)
	North America		2001		130,524		8,771		5,340	(9)		—		4,277	(18)
John O. Cunningham			2003		141,396		43,140		5,340	(9)		100		4,617	(19)
	Vice President,		2002		127,780		44,308		1,843	(9)		—		4,174	(20)
	Human Resources		2001		120,000		4,560		—			—		3,931	(21)

(1)	On April 3, 2003, Mr. Donovan was granted 45,605 restricted shares of our Common Stock and Messrs. Foli, Ryan and Cunningham each were granted 10,000 restricted shares of our Common Stock. The per share value as of the grant date was $0.01. These restricted shares are entitled to receive dividends should we authorize dividends on our Common Stock. These restricted shares vest according to the schedule described in “— Restricted Stock Plan.” As of December 31, 2003, the value of the vested restricted shares held by Mr. Donovan was $2,280 and the value of the vested restricted shares held by Messrs. Foli, Ryan and Cunningham was $500 each.
(2)	Mr. Weisman was appointed President and Chief Executive Officer effective as of October 4, 2004.
(3)	Mr. Weber was appointed President and Chief Executive Officer effective as of May 31, 2003. Effective October 4, 2004, Jon F. Weber resigned as President and Chief Executive Officer. Mr. Weber will continue his duties as a member of the Company’s board of directors.
(4)	Mr. Gustafson resigned as Chairman, President and Chief Executive Officer and director of the Company effective as of May 30, 2003.
(5)	Includes a $1,605,000 severance equal to three times his annual salary, a $267,500 payment equal to the bonus that would have been otherwise payable for achievement of a 50% bonus level for fiscal year 2003, and a $185,192 payout for accrued vacation, which were paid to Mr. Gustafson upon his resignation in accordance with his employment agreement. Also includes $6,688 contributed to the Viskase SAVE Plan (401(k)), $7,512 contributed to the Viskase Parallel Non-Qualified Savings Plan (the

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“Non-Qualified Plan”), $32,136 paid for deferred salary and Company contributions made under our Non-Qualified Plan and $275 paid for group life insurance.

(6)	Includes $30,000 for automobile allowance and $20,084 for reimbursement of legal services.
(7)	Includes $8,175 contributed to the Viskase SAVE Plan, $7,215 contributed to the Non-Qualified Plan and $660 paid for group life insurance.
(8)	Includes $7,815 contributed to the Viskase SAVE Plan, $15,780 contributed to the Non-Qualified Plan and $1,150 paid for group life insurance.
(9)	Represents tax gross-up payments for automobile allowances.

(10)	Includes $5,791 contributed to the Viskase SAVE Plan, $2,221 contributed to the Non-Qualified Plan and $512 paid for group life insurance.
(11)	Includes $5,582 contributed to the Viskase SAVE Plan, $420 contributed to the Non-Qualified Plan and $494 paid for group life insurance.
(12)	Includes $5,362 contributed to the Viskase SAVE Plan, $1,999 contributed to the Non-Qualified Plan and $494 paid for group life insurance.
(13)	Includes $4,778 contributed to the Viskase SAVE Plan, $1,500 contributed to the Viskase Corporation Non-Qualified Executive Benefit Trust, our non-qualified supplemental pension plan (the “Executive Benefit Trust”) and $422 paid for group life insurance.
(14)	Includes $4,605 contributed to the Viskase SAVE Plan, $1,500 contributed to the Executive Benefit Trust and $407 paid for group life insurance.
(15)	Includes $4,424 contributed to the Viskase SAVE Plan, $1,500 contributed to the Executive Benefit Trust and $408 paid for group life insurance.
(16)	Includes $4,246 contributed to the Viskase SAVE Plan and $375 paid for group life insurance.
(17)	Includes $4,084 contributed to the Viskase SAVE Plan and $362 paid for group life insurance.
(18)	Includes $3,916 contributed to the Viskase SAVE Plan and $362 paid for group life insurance.
(19)	Includes $4,242 contributed to the Viskase SAVE Plan and $375 paid for group life insurance.
(20)	Includes $3,836 contributed to the Viskase SAVE Plan and $338 paid for group life insurance.
(21)	Includes $3,600 contributed to the Viskase SAVE Plan and $331 paid for group life insurance.

Restricted Stock Plan

      There were initially 660,000 shares of Common Stock reserved for grant to our management and employees under the Viskase Companies, Inc. Restricted Stock Plan. On April 3, 2003, the Company granted 330,070 shares of restricted Common Stock (“Restricted Stock”) under the Restricted Stock Plan. Shares granted under the Restricted Stock Plan vested 12.5% on the grant date and vest 17.5%, 20%, 20% and 30% on the first, second, third and fourth anniversaries, respectively, of the grant date, subject to acceleration upon the occurrence of certain events. The Restricted Stock expense for the nine-month period ending December 31, 2003 for the Reorganized Company was $20,000.

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Pension Plan

      The following table sets forth estimated annual benefits payable upon retirement under the Retirement Program for Employees of Viskase Corporation (the “Retirement Program”) to employees of the U.S. operations of the Company in specified remuneration and years of service classifications.

	Annual Benefits for Years of Service Indicated(2)
Assumed Final Average Annual Salary(1)	15		20		25		30		35
$100,000	$	18,000	$	24,000	$	30,000	$	36,000	$	42,000
$150,000		27,000		36,000		45,000		54,000		63,000
$200,000		36,000		48,000		60,000		72,000		84,000
$250,000		45,000		60,000		75,000		90,000		105,000
$300,000		54,000		72,000		90,000		108,000		126,000
$350,000		63,000		84,000		105,000		126,000		147,000
$400,000		72,000		96,000		120,000		144,000		168,000
$450,000		81,000		108,000		135,000		162,000		189,000
$500,000		90,000		120,000		150,000		180,000		210,000
$550,000		99,000		132,000		165,000		198,000		231,000

(1)	Annual benefits payable under the Retirement Program are calculated based on the participant’s average base salary for the consecutive thirty-six (36) month period immediately prior to retirement.
(2)	The annual benefits payable are based on straight-life annuity basis at normal retirement age. The benefits reported in this table are not subject to any reduction for benefits paid by other sources, including Social Security. As of December 31, 2003, Messrs. Donovan, Foli, Ryan and Cunningham are credited with 16, 37, 27 and 14 years of service, respectively.

Compensation of Directors

      Each director who is not an officer of the Company received an annual retainer of $10,000 in 2003 and a fee of $1,000 for each meeting of the Board of Directors attended. Chairmen of committees of the Board of Directors receive an additional annual retainer of $1,500. Directors receive a fee of $1,000 ($500 in the case of committee meetings occurring immediately before or after meetings of the full Board of Directors) for each meeting of a committee of the Board of Directors attended. Directors who are officers of the Company do not receive compensation in their capacity as directors.

Compensation Committee Interlocks and Insider Participation

      We have no standing compensation committee. All compensation decisions are made by our full Board of Directors.

Employment Agreements and Change-in-Control Arrangements

      On October 4, 2004, we entered into an employment agreement with Robert L. Weisman. Pursuant to this agreement, Mr. Weisman agreed to serve as our President and Chief Executive Officer. The initial term of the agreement is three years, commencing on October 4, 2004 and ending on October 4, 2007. However, Mr. Weisman’s employment is at will, and it may be terminated by us for various reasons set forth in the agreement and by Mr. Weisman for any reason.

      Under the agreement, Mr. Weisman receives an annual base salary of at least $250,000. This salary may be increased annually based on reviews by the Board of Directors. Mr. Weisman is also eligible to participate in our: (i) Management Incentive Plan, a bonus program calculated as a percentage of his base salary depending on our performance and our appraisal of his personal performance; (ii) Non-Qualified Parallel Plan; and (iii) other employee and fringe benefit and/or profit sharing plans that we provide to other senior executive employees, including medical and health plans.

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      Under the Agreement, Mr. Weisman will receive stock options with respect to 500,000 shares of Common Stock, at an exercise price of $2.40 per share. Generally, options with respect to one-third of the shares will vest at every anniversary of the agreement. However, no stock options will vest after the employment is terminated, other than the stock options that would have vested upon the anniversary of the agreement immediately after the termination if the termination had not been taken place; provided, however, that Mr. Weisman has completed at least six months of employment with us before termination. If we experience a change of control such that Mr. Weisman ceases to serve as our principal executive officer, the stock options with respect to all 500,000 shares will vest. The stock options will expire on the fifth anniversary of their issuance.

      If Mr. Weisman’s employment is terminated by us for reasons other than disability or “Cause,” as defined in the agreement, we will: (1) continue to pay Mr. Weisman for six months at a per annum rate equivalent to his base salary; (2) provide Mr. Weisman and his spouse medical and health insurance coverage for six months or until Mr. Weisman receives such coverage from another employer, whichever is earlier; and (3) pay Mr. Weisman a pro rata portion of the bonus for which he is eligible.

      Pursuant to the agreement, Mr. Weisman is generally prohibited during the term of the agreement, and for a period of twelve months thereafter, from competing with us, soliciting any of our customers or inducing or attempting to persuade any of our employees to terminate his or her employment with us to enter into competitive employment.

      On November 29, 2001, we entered into an employment agreement with Gordon S. Donovan. Pursuant to the employment agreement, Mr. Donovan agreed to serve as our Vice President, Chief Financial Officer and Treasurer. The initial term of the employment agreement is approximately three years ending December 31, 2004; provided, however, that on January 1, 2003 and each subsequent anniversary thereof, the term of the employment agreement is automatically extended for a period of one year unless either we or Mr. Donovan give written notice to the other party at least 30 days prior to the anniversary date that the term shall not be so extended.

      Under the employment agreement, Mr. Donovan receives an annual base salary of at least $193,020. Mr. Donovan’s base salary will be increased by the President of the Company each year in a manner consistent with increases in base salary for our other senior officers. In addition, the employment agreement provides that Mr. Donovan is eligible to participate in our: (i) Management Incentive Plan, a bonus program calculated as a percentage of his base salary depending on our performance and our appraisal of his personal performance; (ii) Non-Qualified Parallel Plan; (iii) Executive Auto Allowance Program; and (iv) certain equity incentive compensation plans. Mr. Donovan is also entitled to participate in any employee benefit plans in effect for, and to receive other fringe benefits provided to, other executive officers.

      If Mr. Donovan’s employment is terminated by us for “cause,” as defined in the employment agreement, or by Mr. Donovan other than for “good reason” or “disability,” each as defined in the employment agreement, Mr. Donovan will be paid all “accrued compensation,” as defined in the employment agreement, through the date of termination of employment. If Mr. Donovan’s employment is terminated by us for any reason other than for cause, death or disability, or by Mr. Donovan for good reason: (i) Mr. Donovan will be paid all accrued compensation plus 200% of his base salary and the prorated amount of annual bonus that would have been payable to him with respect to the fiscal year in which his employment is terminated, provided that the performance targets have been actually achieved as of the date of termination (unless such termination of employment follows a “change in control,” as defined in the employment agreement, in which case Mr. Donovan will receive a bonus equal to 40% of his base salary regardless of our performance); (ii) Mr. Donovan will continue to receive life insurance, medical, dental and hospitalization benefits for a period of twenty-four (24) months following termination of employment; and (iii) all outstanding stock options and restricted shares will become immediately exercisable, vested and nonforfeitable.

      Pursuant to the employment agreement, Mr. Donovan is generally prohibited during the term of the employment agreement, and for a period of two (2) years thereafter, from competing with us, soliciting any of our customers or inducing or attempting to persuade any of our employees to terminate his or her employment with us in order to enter into competitive employment. For purposes of the employment

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agreement, the “Company” includes Viskase Companies, Inc. and any of its subsidiaries over which Mr. Donovan exercised, directly or indirectly, any supervisory, management, fiscal or operating control during the term of the employment agreement.

      We have provided notice to Mr. Donovan that the employment agreement will not be renewed at the end of the current term of the agreement, which ends December 31, 2005, although it is not our intention that the non-renewal of the employment agreement be deemed a termination of his employment.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

General

      The following table sets forth the beneficial ownership of our Common Stock as of September 30, 2004 of (i) each person or group of persons known to us to beneficially own more than 5% of the outstanding shares of Common Stock, (ii) each director of the Company, (iii) each executive officer of the Company listed in the Summary Compensation Table above and (iv) all executive officers and directors of the Company as a group. In June 2003, we terminated our registration under Section 12(g) of the Exchange Act and, therefore, we have not been subject to the reporting requirements of the Exchange Act since that time. All information below is taken from or based upon ownership filings previously made by such persons with the SEC or upon information provided to us by such persons, but because such persons have not been subject to the beneficial ownership reporting requirements of the Exchange Act, complete and accurate information with respect to current beneficial ownership provided may be unavailable. To our knowledge, each of the holders of Common Stock listed below has sole voting and investment power as to the shares of Common Stock owned, unless otherwise noted.

			Percentage of Total
	Number of Shares of		Common Stock
Name and Address of Beneficial Owner	Common Stock		(%)
Carl C. Icahn(1)		2,868,005		29.07	%
Barberry Corp.
High River Limited Partnership
Meadow Walk Limited Partnership
Merrill Lynch & Co., Inc.(2)		1,428,423		14.48	%
Debt Strategies Fund, Inc.
Northeast Investors Trust(3)		1,293,291		13.11	%
Robert L. Weisman(4)		0		*
Gordon S. Donovan(4)(5)		46,188		*
Stephen E. Foli(4)(6)		10,000		*
Maurice J. Ryan(4)(6)		10,000		*
John O. Cunningham(4)(6)		10,000		*
Vincent J. Intrieri(4)		0		*
Eugene I. Davis(4)		0		*
Thomas S. Hyland(4)		0		*
James L. Nelson(4)		0		*
Jon F. Weber(4)		0		*
All directors and named executive officers as a group (9 persons)		76,188		*

*  Represents less than 1%.

(1)  The ownership indicated is according to a Schedule 13D filed with the SEC on April 14, 2003, rounded down to reflect the actual number of shares issued by the disbursement agent. Mr. Icahn is the sole shareholder, director and executive officer of Barberry Corp. (“Barberry”), which is the general partner of each of High River Limited Partnership (“High River”) and Meadow Walk Limited Partnership (“Meadow Walk”). As such, Mr. Icahn is in a position, directly or indirectly, to determine the investment and voting decisions with respect to the Common Stock owned by Barberry, High River and Meadow Walk. The ownership indicated (rounded down to reflect the actual number of shares issued by the disbursing agent) includes 1,236,537 owned directly by Barberry, 1,331,656 owned directly by High River and 299,812 owned directly by Meadow Walk. The address for Mr. Icahn is c/o Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153 and the address for each of Barberry, High River and Meadow Walk is 100 South Bedford Road, Mount Kisco, New York 10549.

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(2)	The ownership indicated is according to a Schedule 13G filed with the SEC on January 27, 2004. The ownership indicated includes shares of Common Stock over which Merrill Lynch & Co., Inc. (“ML&Co.”) and Debt Strategies Fund, Inc. share voting and dispositive power, which shares are owned directly by asset management subsidiaries of ML&Co., including Fund Asset Management, L.P. ML&Co. and Debt Strategies Fund, Inc. disclaim beneficial ownership of the shares held by their subsidiaries. The address of ML&Co. is World Financial Center, North Tower, 250 Vesey Street, New York, New York 10381 and the address of Debt Strategies Fund, Inc. is 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
(3)	The ownership indicated is according to a Schedule 13G filed with the SEC on June 11, 2003. The address for Northeast Investors Trust is 50 Congress Street, Boston, Massachusetts 02109-4096.
(4)	The address for each of our officers and directors is c/o Viskase Companies, Inc., 625 Willowbrook Centre Parkway, Willowbrook, Illinois 60527.
(5)	Mr. Donovan was granted 45,605 shares of Restricted Stock pursuant to the Restricted Stock Plan, 13,682 shares of which are vested. Mr. Donovan also directly owns warrants to purchase 160 shares of Common Stock and beneficially owns through our 401(k) Plan, our Non-Qualified Plan, his IRA and his spouse’s IRA, warrants to purchase 324, 59, 20 and 20 shares of Common Stock, respectively. Mr. Donovan disclaims beneficial ownership of the warrants to purchase 20 shares of Common Stock held in his spouse’s IRA.
(6)	Messrs. Foli, Ryan and Cunningham were each granted 10,000 shares of Restricted Stock pursuant to the Restricted Stock Plan, 3,000 shares of which are vested.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      During the period from April 2003 to December 2003, Mr. Weber, our former President and Chief Executive Officer, received a salary of $170,000 and other benefits (including 401(k) contributions and medical and life insurance) of approximately $10,000 from a wholly-owned subsidiary of Icahn Associates Corp. as compensation for Mr. Weber’s services to us and to other companies affiliated with Icahn Associates Corp.

      During the nine months ended September 30, 2004, we purchased $66,000 in telecommunication services in the ordinary course of business from XO Communications, Inc., an affiliate of Carl C. Icahn, who may be deemed to be a beneficial owner of approximately 29.1% of our Common Stock. The Company believes that the purchase of the telecommunications services were on terms at least as favorable as those that the Company would expect to negotiate with an unaffiliated party.

      Arnos Corp., an affiliate of Mr. Icahn, was the lender under our former revolving credit facility. We paid Arnos Corp. origination fees, interest and unused commitment fees of $175,000 during the period from April 3, 2003 through December 31, 2003 and $144,000 during the period ended from January 1, 2004 through September 30, 2004. The Company believes that the terms of the former revolving credit facility were at least as favorable as those that the Company would have expected to negotiate with unaffiliated party.

      Gregory R. Page, the President and Chief Operating Officer of Cargill, Inc., resigned as one of our directors as of the date we emerged from bankruptcy in April 2003. During 2003, we had sales in the ordinary course of business of $613,162 to Cargill, Inc. and its affiliates, $199,598 of which occurred prior to Mr. Page’s resignation in April 2003.

      On June 29, 2004 we repurchased 805,270 shares of our Common Stock (representing approximately 7.34% of our issued and outstanding Common Stock on a fully-diluted basis as of June 17, 2004 held by Jefferies & Company, Inc., the initial purchaser of the Outstanding Notes, or its affiliates for total consideration of $298,000.

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USE OF PROCEEDS

      We will not receive any proceeds from the issuance of the Exchange Notes. In consideration for issuing the Exchange Notes as contemplated by this prospectus, we will receive in exchange a like principal amount of Outstanding Notes, the terms of which are substantially identical to the Exchange Notes. The Outstanding Notes surrendered in exchange for Exchange Notes will be retired and canceled and cannot be reissued. Accordingly, issuance of the Exchange Notes will not result in any increase in our indebtedness. We have agreed to bear the expenses of the Exchange Offer. No underwriter is being used in connection with the Exchange Offer.

      We received approximately $86.1 million in net proceeds from the sale of the Units, which included the Notes and the Warrants, after deducting the fees and expenses of the offering of the Units. Approximately $52.2 million of the net proceeds were used to repurchase $55.5 million of 8% Senior Notes (which bear interest at the rate of 8% per year and mature on December 1, 2008) at a price of 90% of the principal amount thereof, plus accrued and unpaid interest thereon, and approximately $33.0 million of the net proceeds were used for the early termination of the GECC capital lease and repurchase of the operating assets subject thereto. The remainder of the net proceeds are available for general corporate purposes.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

      The following summary of certain provisions of the instruments evidencing our material indebtedness does not purport to be complete, but it does discuss the provisions that are, in our view, material for investors in the Notes, and is subject to all of the provisions of the corresponding agreements, including the definitions of certain terms therein that are not otherwise defined in this prospectus.

Revolving Credit Facility

      On June 29, 2004, the Company and all of its domestic subsidiaries entered into a senior secured revolving credit facility for up to $20.0 million (which includes a letter of credit subfacility of up to $10.0 million) as borrowers thereunder. This revolving credit facility will be used for working capital and other general corporate purposes.

      Borrowings under the loan and security agreement governing the revolving credit facility (the “Credit Agreement”) will be subject to a borrowing base formula based on percentages of eligible domestic receivables and eligible domestic inventory. Under the Credit Agreement, we are able to choose between two per annum interest rate options: (x) the lender’s prime rate and (y) (1) LIBOR plus (2) a margin of 2.25% (which margin will be subject to performance based increases up to 2.50% and decreases down to 2.00%); provided that LIBOR shall be at least equal to 1.00%. Letter of credit fees are charged a per annum rate equal to the then applicable margin described in clause (y)(2) of the immediately preceding sentence less 50 basis points. The Credit Agreement also provides for an unused line fee of 0.375% per annum and a monthly servicing fee. The Credit Agreement has a term of five years.

      Indebtedness under the Credit Agreement is secured by liens on substantially all of our and our domestic subsidiaries’ assets, which liens (i) on inventory, account receivables, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof, are contractually senior to the liens securing the Notes and the related guarantees pursuant to an intercreditor agreement, (ii) on real property, fixtures and improvements thereon, equipment and proceeds thereof, are contractually subordinate to the liens securing the Notes and such guarantees pursuant to such intercreditor agreement, (iii) on all other assets, are contractually pari passu with the liens securing the Notes and such guarantees pursuant to such intercreditor agreement.

      The Credit Agreement contains various covenants that restrict our ability to, among other things, incur indebtedness, enter into mergers or consolidation transactions, dispose of assets (other than in the ordinary course of business), acquire assets (with permitted exceptions), make certain restricted payments, prepay any of the 8% Senior Notes at a purchase price in excess of 90% of the aggregate principal amount thereof, together with accrued and unpaid interest to the date of such prepayment, create liens on our assets, make investments, create guarantee obligations and enter into sale and leaseback transactions and transactions with affiliates. The Credit Agreement also requires that we comply with various financial covenants, including meeting a minimum EBITDA requirement and limitations on capital expenditures as well as, in the event our usage of the Credit Agreement exceeds 30%, certain other financial covenants. For a description of the revolving credit facility’s covenants, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Credit Agreement provides for certain events of default, including default upon the nonpayment of principal, interest, fees or other amounts, a cross default with respect to other obligations of ours, failure to comply with certain covenants, conditions or provisions under the Credit Agreement, the existence of certain unstayed or undischarged judgments, the invalidity or unenforceability of the relevant security documents, the making of materially false or misleading representations or warranties, commencement of reorganization, bankruptcy, insolvency or similar proceedings and the occurrence of certain ERISA events. Upon the occurrence of an event of default under the Credit Agreement, the lender will be entitled to declare all obligations thereunder to be immediately due and payable. The Credit Agreement requires us to pay a prepayment premium in the event that it is prepaid prior to maturity.

8% Senior Notes Due 2008

      The 8% Senior Notes accrue interest from December 1, 2001 at the rate of 8% per year, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest

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payable in the form of 8% Senior Notes (paid-in-kind) for the first three years. Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of 8% Senior Notes (paid-in-kind). Thereafter, interest will be payable in cash. The 8% Senior Notes mature on December 1, 2008 with a principal value of approximately $18.7 million, assuming interest in the first five years is paid in the form of 8% Senior Notes (paid-in-kind). The aggregate principal amount and carrying value of the 8% Senior Notes as of September 30, 2004 were $15.7 million and $11.2 million, respectively.

      On June 29, 2004, we purchased $55.5 million aggregate principal amount of the outstanding 8% Senior Notes. In connection therewith, the holders thereof agreed to, among other things, release the liens on the collateral securing the 8% Senior Notes and to eliminate substantially all of the restrictive covenants contained in the indenture governing the 8% Senior Notes. From time to time, we may offer to purchase at a substantial discount the remaining 8% Senior Notes through privately negotiated transactions, purchases in the public marketplace or otherwise.

Intercreditor Agreement

      On June 29, 2004, we entered into, along with our subsidiary guarantors, the lenders under our new revolving credit facility and the trustee under the Indenture, an intercreditor agreement (the “Intercreditor Agreement”), which sets forth the respective rights and obligations of the parties to the Intercreditor Agreement with respect to the collateral securing our revolving credit facility and the Notes. See “Description of the Notes — Collateral” and “Risk Factors — Risks Related to the Notes — Your right to exercise remedies with respect to certain collateral will be limited by an intercreditor agreement between the trustee and the lender under our revolving credit facility.”

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DESCRIPTION OF THE NOTES

      We issued the Outstanding Notes under the Indenture. Pursuant to the Registration Rights Agreement, we agreed for the benefit of the Holders, at our cost, to effect this Exchange Offer pursuant to which we will offer to the Holders the opportunity to exchange the Outstanding Notes for Exchange Notes, which will also be issued under the Indenture and will have terms substantially identical in all material respects to the Outstanding Notes (except that the Exchange Notes will not contain terms with respect to transfer restrictions or interest rate increases of the type described in the last sentence of this paragraph as more fully described in this prospectus), and in certain circumstances to register the Notes for resale under the Securities Act through a shelf registration statement. The failure to consummate an Exchange Offer or to register the Notes for resale under such shelf registration statement may result in our paying Additional Interest on the Notes.

      The Exchange Notes will be issued pursuant to the terms of the Indenture. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “TIA”).

      The Outstanding Notes are and the Exchange Notes will be senior secured obligations of the Company and will rank equally in right of payment with all other senior obligations of the Company and senior in right of payment with all Indebtedness that by its terms is subordinated to senior obligations of the Company (including, without limitation, the Notes). The Outstanding Notes are and the Exchange Notes will be secured by the assets of the Company as more fully described under “— Collateral” below. The Outstanding Notes and the Exchange Notes will be guaranteed, jointly and severally on a senior secured basis by the Guarantors, as set forth under “— Guarantees” below.

      The Trustee will initially act as paying agent and registrar for the Notes. You may present Notes for registration or transfer and exchange at the offices of the registrar, which initially will be the Trustee’s corporate office. No service charge will be made for any registration of transfer or exchange or redemption of Notes, but we may require payment in certain circumstances of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. We may change any paying agent and registrar without notice to Holders. We will pay principal (and premium, if any) on the Notes at the Trustee’s corporate office in New York, New York. At our option, we may pay interest and Additional Interest, if any, at the Trustee’s corporate trust office or by check mailed to the registered address of each Holder.

      We summarize below the material provisions of the Indenture, but this summary does not include all of the provisions of the Indenture. You can obtain a copy of the Indenture in the manner described under “Available Information.” You can find definitions of certain capitalized terms used in this description under “— Certain Definitions.”

Brief Description of the Notes and the Guarantees

The Notes

      The Outstanding Notes are and the Exchange Notes will be:

•  senior secured obligations of the Company that rank equally in right of payment with all other senior obligations of the Company and senior in right of payment to all Indebtedness that by its terms is subordinated to the Notes;

•  secured by security interests in substantially all of the assets of the Company, subject to Permitted Liens; and

•  unconditionally guaranteed, jointly and severally on a senior secured basis by all of the Company’s future Domestic Restricted Subsidiaries (other than Immaterial Subsidiaries), if any, as set forth under “— Guarantees” below.

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The Guarantees

      The Notes will be guaranteed by all of our future direct and indirect Domestic Restricted Subsidiaries (other than Immaterial Subsidiaries). Each Guarantee of a Guarantor will be:

•  senior secured obligations of such Guarantor that rank equally in right of payment with all other senior obligations of such Guarantor and senior in right of payment to all Indebtedness that by its terms is subordinated to the Guarantee of such Guarantor; and

•  secured by security interests in substantially all of the assets of such Guarantor, subject to Permitted Liens.

      Our two current Domestic Restricted Subsidiaries are Immaterial Subsidiaries and will not be Guarantors. When taken together, those two Subsidiaries had no revenues for the nine-month period ended September 30, 2004 and, as of September 30, 2004, a fair market value of less than $0.5 million. The Notes and the Guarantees will effectively be junior to any liabilities (including trade payables) of our Unrestricted Subsidiaries, Foreign Subsidiaries and Immaterial Subsidiaries.

      Pursuant to the terms of the Intercreditor Agreement, (i) the Lien of the Collateral Agent on the RCF Priority Collateral that secures the Notes and the Guarantees will be contractually subordinated only to a Lien securing the Credit Agreement, (ii) the Lien of the Administrative Agent on the Notes Priority Collateral that secures the Credit Agreement will be contractually subordinated only to a Lien securing the Notes and Guarantees and (iii) the Liens of the Collateral Agent that secure the Notes and the Guarantees and the Administrative Agent that secures the Credit Agreement, in each case, on the Shared Collateral will contractually be treated as ranking pari passu.

Principal, Maturity and Interest

      The Company will issue the Notes in fully registered form in denominations of $1,000 and integral multiples thereof. The Notes are unlimited in aggregate principal amount. The Company may issue additional Notes (“Additional Notes”) from time to time, subject to the limitations set forth under “Certain Covenants — Limitation on Incurrence of Additional Indebtedness.” The Notes and any Additional Notes will be substantially identical other than the issuance dates and the dates from which interest will accrue. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Notes,” references to the Notes include any Additional Notes actually issued. Any Outstanding Notes that remain outstanding after the completion of this Exchange Offer, together with the Exchange Notes issued in connection with this Exchange Offer, will be treated as a single class of securities under the Indenture. Any Additional Notes will be secured equally and ratably with the Notes. As a result, the issuance of Additional Notes will have the effect of diluting the security interest of the Collateral for the then outstanding Notes. Because, however, any Additional Notes may not be fungible with the Notes for federal income tax purposes, they may have a different CUSIP number or numbers, be represented by a different global note or notes and otherwise be treated as a separate class or classes of Notes for other purposes.

      The Notes will mature on June 15, 2011. Interest on the Notes will accrue at the rate of 11 1/2% per annum and will be due and payable semiannually in cash on each June 15 and December 15, commencing on December 15, 2004, to the Persons who are registered Holders at the close of business on each June 1 and December 1 immediately preceding the applicable interest payment date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Additional Interest may accrue on the Notes in certain circumstances pursuant to the Registration Rights Agreement.

Collateral

      Pursuant to the terms of the Collateral Agreements, the Notes and the Guarantees are secured by substantially all of the tangible and intangible assets of the Company and the Guarantors, including a pledge of the Capital Stock owned directly by the Company and the Guarantors. However, no such pledge will

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include more than 65% of the Voting Stock of any of our Foreign Subsidiaries directly owned by the Company or any Guarantor. Under certain limited circumstances, it is possible that assets acquired after the Issue Date by Foreign Restricted Subsidiaries of the Company may constitute Collateral. See “Risk Factors — Risks Related to the Notes — None of our foreign restricted subsidiaries, unrestricted subsidiaries or immaterial subsidiaries are guarantors with respect to the Notes, and therefore, any claims you may have in respect of the Notes are effectively subordinated to the liabilities of those subsidiaries” and “— Certain Covenants — Pledge of Future Foreign Assets.”

      The Collateral will not include any Capital Stock of any Subsidiary of the Company to the extent that the pledge of such Capital Stock results in the Company being required to file separate financial statements of such Subsidiary with the SEC, but only to the extent necessary to not be subject to such requirement. In addition, in the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary of the Company due to the fact that the Capital Stock of such Subsidiary secures the Notes, then the Capital Stock of such Subsidiary shall automatically be deemed not to be part of the Collateral but only to the extent necessary to not be subject to such requirement. In such event, the Collateral Agreements may be amended or modified, without the consent of any holder of Notes, to the extent necessary to release the security interests in favor of the Trustee on the shares of the Capital Stock of such Subsidiary that are so deemed to no longer constitute part of the Collateral. In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would permit) the Capital Stock of such Subsidiary to secure the Notes in excess of the amount then pledged, without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Capital Stock of such Subsidiary shall automatically be deemed to be a part of the Collateral but only to the extent necessary to not be subject to any such financial statement requirement. As a result, Holders could lose their security interest in such portion of such Collateral if, and for so long as, any such rule is in effect. In addition, such release of Capital Stock of a Subsidiary in certain circumstances could result in less than a majority of the Capital Stock of a Subsidiary being pledged to secure the Notes, which could impair the ability of the Collateral Agent to sell a controlling interest in such Subsidiary or to otherwise realize value on its Lien in such Subsidiary’s Capital Stock or assets.

      The Collateral securing the Notes and the Guarantees (other than any Foreign Collateral) also serves as collateral to secure the obligations under the Credit Agreement. The Company, the Guarantors and the Collateral Agent, on behalf of itself, the Trustee and the Holders, and the Administrative Agent, on behalf of the Lenders, entered into the Intercreditor Agreement. The Intercreditor Agreement provides, among other things, that (1) Liens on assets of the Company and the Guarantors that constitute RCF Priority Collateral and secure the Notes and Guarantees are contractually subordinated only to the Liens thereon in favor of the Administrative Agent, for the benefit of itself and the Lenders, and consequently, the Administrative Agent and the Lenders are entitled to receive the net proceeds from the foreclosure of any such assets prior to the Collateral Agent, the Trustee and the Holders, (2) Liens on assets of the Company and the Guarantors that constitute Notes Priority Collateral and secure the Credit Agreement are contractually subordinated to the security interests in favor of the Collateral Agent, for the benefit of itself, the Trustee and the Holders, and consequently, the Collateral Agent, the Trustee and the Holders will be entitled to receive the net proceeds from the foreclosure of any such assets prior to the Administrative Agent and the Lenders, (3) Liens on assets of the Company and the Guarantors that constitute Shared Collateral and secure the Notes and the Guarantees and the Credit Agreement are contractually treated as ranking pari passu, and consequently, the Collateral Agent, the Trustee and the Holders and the Administrative Agent and the Lenders are entitled to receive the net proceeds from the foreclosure of any such assets on a pro rata basis, (4) the Collateral Agent has control or possession of any Shared Collateral in which a security interest may be perfected by a creditor by control or possession thereof and (5) during any insolvency proceedings, the Administrative Agent and the Collateral Agent will coordinate their efforts to give effect to the relative priority of their security interests in the RCF Priority Collateral and the Notes Priority Collateral and the pari passu ranking of their security interests in the Shared Collateral. The Intercreditor Agreement also provides the procedure for enforcing the Liens on the

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RCF Priority Collateral, the Notes Priority Collateral and the Shared Collateral, including (a) the distribution of sale, insurance or other proceeds of the RCF Priority Collateral, the Notes Priority Collateral or the Shared Collateral, as the case may be, (b) permitting the Administrative Agent to enter into and use real property constituting Notes Priority Collateral to the extent necessary to realize on the RCF Priority Collateral and (c) the process under which the Collateral Agent or the Administrative Agent may exercise any remedy in respect of any Shared Collateral. See “Risk Factors — Risks Related to the Notes — Your right to exercise remedies with respect to certain collateral will be limited by an intercreditor agreement between the trustee and the lender under our revolving credit facility.”

      Upon the occurrence of an Event of Default, the proceeds from the sale of Collateral securing the Notes and the Guarantees may be insufficient to satisfy the Company’s and the Guarantors’ obligations under the Notes and the Guarantees, respectively. No appraisals of any of the Collateral have been prepared. Additionally, (x) the Administrative Agent, on behalf of itself and the Lenders, will, subject to the terms of the Intercreditor Agreement, have sole control over all decisions and actions with respect to enforcement of the security interests thereunder in respect of the RCF Priority Collateral, and will be entitled to have sole control over all decisions regarding whether and when to foreclose upon all such Collateral; (y) the Collateral Agent will, subject to comparable terms therein, have sole control over decisions and actions relating to the Notes Priority Collateral and (z) the Collateral Agent will be subject to the provisions set forth in the Intercreditor Agreement that relate to the enforcement of its security interests in the Shared Collateral and be required pursuant to the terms thereof to turn over a pro rata portion of the net proceeds of any such enforcement action to the Administrative Agent to be shared with the Administrative Agent and the Lenders. Moreover, the amount to be received upon any such foreclosure sale whether or not conducted by Collateral Agent would be dependent upon numerous factors, including the condition, age and useful life of the Collateral at the time of the sale, as well as the timing and manner of the sale. By its nature, all or some of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral, if saleable, can be sold in a short period of time.

      The Intercreditor Agreement also provides that in connection with the foreclosure of any Collateral of the Company or the Guarantors, such Collateral and proceeds realized by the Administrative Agent or the Collateral Agent from such Collateral will be applied:

      (a) to the extent constituting or realized from RCF Priority Collateral:

•  first, to the costs and expenses relating to the foreclosure giving rise to such proceeds;

•  second, to amounts owing to the Administrative Agent and the Lenders under the Credit Agreement in accordance with the terms of the Credit Agreement; provided, however, that such amounts in respect of principal due thereto shall not exceed the Maximum RCF Debt Amount;

•  third, ratably to amounts owing to the Trustee in its capacity as such in accordance with the terms of the Indenture and to amounts owing to the Collateral Agent in its capacity as such in accordance with the terms of the Indenture and the Collateral Agreements;

•  fourth, to amounts owing to the Holders in accordance with the terms of the Indenture; and

•  fifth, to the Company and/or other persons legally entitled thereto;

      (b) to the extent constituting or realized from Notes Priority Collateral:

•  first, to the costs and expenses relating to the foreclosure giving rise to such proceeds;

•  second, ratably (i) to amounts owing to the Trustee in its capacity as such in accordance with the terms of the Indenture and (ii) to amounts owing to the Collateral Agent in its capacity as such in accordance with the terms of the Indenture and the Collateral Agreements;

•  third, to amounts owing to the Holders in accordance with the terms of the Indenture;

•  fourth, to amounts owing to the Administrative Agent and the Lenders under the Credit Agreement in accordance with the terms of the Credit Agreement; and

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•  fifth, to the Company and/or other persons legally entitled thereto; and

      (c) to the extent constituting or realized from Shared Collateral:

•  first, to the costs and expenses relating to the foreclosure giving rise to such proceeds;

•  second, ratably (i) to amounts owing to the Trustee in its capacity as such in accordance with the terms of the Indenture, (ii) to amounts owing to the Collateral Agent in its capacity as such in accordance with the terms of the Indenture and the Collateral Agreements and (iii) to amounts owing to the Administrative Agent in its capacity as such in accordance with the terms of the Indenture;

•  third, ratably (i) to amounts owing to the Holders in accordance with the terms of the Indenture and (ii) to amounts owing to the Lenders under the Credit Agreement in accordance with the terms of the Credit Agreement (provided, however, that such amounts in respect of principal due thereto shall not exceed the Maximum RCF Debt Amount); and

•  fourth, to the Company and/or other persons legally entitled thereto.

      Subject to the terms of the Collateral Agreements, the Company, the Guarantors and any Foreign Grantors have the right to remain in possession and retain exclusive control of the Collateral securing the Notes, to freely operate the Collateral and to collect, invest and dispose of any income therefrom.

      On the Issue Date, the security interests granted by the Company and the Guarantors that secure the Notes and the Guarantees will be junior to Permitted Liens securing less than $1.0 million of other existing Indebtedness. Subject to the restrictions on incurring Indebtedness in the Indenture, the Company and its Restricted Subsidiaries also have the right to grant Liens securing Capital Lease Obligations and Purchase Money Obligations constituting Permitted Indebtedness and to acquire any such assets subject to such Liens, and the Foreign Restricted Subsidiaries have the right to grant liens on their assets in connection with Permitted Indebtedness.

      To the extent third parties hold Permitted Liens, such third parties may have rights and remedies with respect to the property subject to such Liens that, if exercised, could adversely affect the value of the Collateral. Given the intangible nature of certain of the Collateral, any such sale of such Collateral separately from the assets of the Company as a whole may not be feasible. The ability of the Company, any Guarantor or any Foreign Grantor to grant a security interest in certain Collateral may be limited by legal or other logistical considerations. The ability of the Holders to realize upon the Collateral may be subject to certain bankruptcy law limitations in the event of a bankruptcy. See “Certain Bankruptcy and Other Limitations.”

      The Company is permitted to form new Restricted Subsidiaries and to transfer all or a portion of the Collateral to one or more of its Restricted Subsidiaries that are Domestic Restricted Subsidiaries; provided, that each such new Domestic Restricted Subsidiary is required to execute a Guarantee in respect of the Company’s obligations under the Notes and the Indenture and a supplement to each of the Security Agreement and the Pledge Agreement granting to the Collateral Agent a security interest in all of the assets of such Domestic Restricted Subsidiary on the same basis and subject to the same limitations as currently existing on the Restricted Subsidiaries on the Issue Date as described in this section.

      So long as no Event of Default shall have occurred and be continuing, and subject to certain terms and conditions in the Indenture, the Collateral Agreements and the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral), each of the Company, the Guarantors and the Foreign Grantors, if any, are entitled to receive all cash dividends, interest and other payments made upon or with respect to the equity interests of any of its Subsidiaries and to exercise any voting, consensual rights and other rights pertaining to such equity interests pledged by it. Upon the occurrence and during the continuance of an Event of Default, subject to the terms of the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral), upon notice from the Collateral Agent, (a) all rights of the Company, such Guarantor or such Foreign Grantor, as the case may be, to exercise such voting, consensual rights, or other rights shall to the extent constituting Collateral cease and all such rights shall become vested in the Collateral Agent, which, to the extent permitted by law, shall have the sole right to exercise such voting, consensual rights or other rights, (b) all rights of the Company, such Guarantor or such Foreign Grantor, as the case may be, to receive

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cash dividends, interest and other payments made upon or with respect to the Collateral shall cease, and any such cash dividends, interest and other payments shall be paid to the Collateral Agent, and (c) the Collateral Agent may sell the Collateral or any part thereof in accordance with, and subject to the terms of, the Collateral Agreements. Subject to the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral), all funds distributed under the Collateral Agreements and received by the Collateral Agent for the ratable benefit of the Holders shall be turned over to the Trustee for distribution by the Trustee in accordance with the provisions of the Indenture.

      The collateral release provisions of the Indenture permit the release of Collateral without substitution of collateral having at least equal value under certain circumstances, including asset sales or dispositions, defeasances and releases of Guarantors, in each case, made in compliance with the Indenture.

Certain Bankruptcy and Other Limitations

      The right of the Collateral Agent to repossess and dispose or otherwise exercise remedies in respect of the Collateral upon the occurrence of an Event of Default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against the Company or any of its Domestic Restricted Subsidiaries prior to the Collateral Agent having repossessed and disposed of the Collateral or otherwise completed the exercise of its remedies with respect to the Collateral. Under the Bankruptcy Code, a secured creditor such as the Collateral Agent is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without bankruptcy court approval. Moreover, the Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments; provided that, under the Bankruptcy Code, the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the collateral securing the obligations owed to it and may include cash payments or the granting of additional security, if and at such times as the bankruptcy court in its discretion determines, for any diminution in the value of such collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the Notes or the Guarantees could be delayed following commencement of a bankruptcy case, whether or when the Collateral Agent could repossess or dispose of the Collateral or whether or to what extent Holders would be compensated for any delay in payment or loss of value of the Collateral through the requirement of “adequate protection.”

      In addition, if any Foreign Restricted Subsidiary of the Company were to grant a security interest in any assets acquired by it after the Issue Date to secure the Notes and the Guarantees, applicable foreign bankruptcy or insolvency laws and statutes may similarly prevent, limit and/or delay the exercise of any remedies by the Collateral Agent with respect to such assets.

      Moreover, the Collateral Agent may need to evaluate the impact of the potential liabilities before determining to foreclose on Collateral consisting of real property because a secured creditor that holds a lien on real property may be held liable under environmental laws for the costs of remediating or preventing release or threatened releases of hazardous substances at such real property. Consequently, the Collateral Agent may decline to foreclose on such Collateral or exercise remedies available if it does not receive indemnification to its satisfaction from the Holders.

      In addition, because a portion of the Collateral consists of pledges of a portion of the Capital Stock of certain of our Foreign Subsidiaries and could possibly include assets acquired by our Foreign Restricted Subsidiaries after the Issue Date, the validity of those pledges under applicable foreign law, and the ability of the Holders to realize upon that Collateral under applicable foreign law, to the extent applicable, may be limited by such law, which limitations may or may not affect such Liens.

      The Collateral Agent’s ability to foreclose on the Collateral may be subject to lack of perfection, the consent of third parties, prior liens and practical problems associated with the realization of the Collateral Agent’s Lien on the Collateral.

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Guarantees

      The full and prompt payment of the Company’s payment obligations under the Notes and the Indenture will be guaranteed, jointly and severally, by all future direct and indirect Domestic Restricted Subsidiaries, other than Immaterial Subsidiaries. Each Guarantor will fully and unconditionally guarantee on a senior secured basis (each, a “Guarantee” and, collectively, the “Guarantees”), jointly and severally, to each Holder and the Trustee, the full and prompt performance of the Company’s Obligations under the Indenture and the Notes, including the payment of principal of, interest on, premium, if any, on and Additional Interest, if any, on the Notes. The Guarantee of each Guarantor will rank senior in right of payment to all existing and future subordinated Indebtedness of such Guarantor and equally in right of payment with all other existing and future senior Indebtedness of such Guarantor. The obligations of each Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, will result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. The net worth of any Guarantor for such purpose shall include any claim of such Guarantor against the Company for reimbursement and any claim against any other Guarantor for contribution. Each Guarantor may consolidate with or merge into or sell its assets to the Company or another Guarantor without limitation. See “— Certain Covenants — Mergers, Consolidation and Sale of Assets” and “— Limitation on Asset Sales.”

      Notwithstanding the foregoing, a Guarantor will be released from its Guarantee (and the Liens on its assets in favor of the Trustee shall be released) without any action required on the part of the Trustee or any Holder:

      (1) if (a) all of the Capital Stock issued by such Guarantor or all or substantially all of the assets of such Guarantor is sold or otherwise disposed of (including by way of merger or consolidation) to a Person other than the Company or any of its Domestic Restricted Subsidiaries or (b) such Guarantor ceases to be a Restricted Subsidiary, and we otherwise comply, to the extent applicable, with the covenant described below under the caption “Certain Covenants — Limitation on Asset Sales”;

      (2) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with the covenant described below under the caption “Certain Covenants — Limitation on Restricted Payments”;

      (3) if the Company exercises its legal defeasance option or its covenant defeasance option as described below under the caption “Legal Defeasance and Covenant Defeasance”; or

      (4) upon satisfaction and discharge of the Indenture or payment in full in cash of the principal of and premium, if any, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations that are then due and payable.

      At the Company’s request and expense, the Trustee will execute and deliver an instrument evidencing such release. A Guarantor may also be released from its obligations under its Guarantee in connection with a permitted amendment of the Indenture. See “— Modification of the Indenture” below.

      As of the date of the Indenture, all of our Domestic Subsidiaries were Restricted Subsidiaries. However, under certain circumstances described below under the subheading “— Certain Covenants — Limitation on Restricted Payments,” the Company is permitted to designate certain of its Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to the restrictive covenants of the Indenture and will not guarantee the Notes. Also, as of the date of the Indenture, none of the Company’s Foreign Subsidiaries or Immaterial Subsidiaries guaranteed the Notes. In the event of a bankruptcy, liquidation or reorganization of any of these non-Guarantor Subsidiaries, the non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors and be subject to the applicable laws of their countries of residence before they will be able to distribute any of their assets to the Company. As of September 30, 2004, the non-Guarantor Subsidiaries represented approximately 45% of the Company’s consolidated assets and 41% of revenues for the nine-month period ended September 30, 2004.

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Redemption

      Optional Make-Whole Redemption Prior to June 15, 2008. At any time prior to June 15, 2008, the Company may redeem the Notes, at its option, in whole or in part, upon not less than 30 nor more than 60 days notice, at a redemption price equal to the greater of (1) 100% of the aggregate principal amount of the Notes being redeemed and (2) the sum of the present values of 105 3/4% of the aggregate principal amount of such Notes and scheduled payments of interest on such Notes to and including June 15, 2008, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, together with, in each case, accrued and unpaid interest and Additional Interest, if any, to the date of redemption.

      Optional Redemption on or After June 15, 2008. At any time on or after June 15, 2008, the Company may redeem the Notes, at its option, in whole or in part, upon not less than 30 nor more than 60 days notice, at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on June 15, of the year set forth below:

Year	Percentage
2008		105	3/4%
2009		102	7/8%
2010 and thereafter		100	%

      In addition, the Company must pay accrued and unpaid interest and Additional Interest, if any, on the Notes redeemed.

      Optional Redemption Upon Equity Offerings. At any time, or from time to time, on or prior to June 15, 2007, the Company may, at its option, use an amount not to exceed the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued under the Indenture at a redemption price of 111 1/2% of the aggregate principal amount thereof, plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of redemption; provided that:

      (1) at least 65% of the sum of (i) $90,000,000 (the initial aggregate principal amount of the Notes issued in the Offering) and (ii) the initial aggregate principal amount of Additional Notes issued under the Indenture after the Issue Date remain outstanding immediately after any such redemption; and

      (2) the Company makes such redemption not more than 120 days after the consummation of any such Equity Offering.

Selection and Notice of Redemption

      In the event that the Company chooses to redeem less than all of the Notes, selection of the Notes for redemption will be made by the Trustee either:

      (1) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed; or

      (2) if the Notes are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee may reasonably determine is fair and appropriate.

      If a partial redemption is made with the proceeds of an Equity Offering, the Trustee will select the Notes only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to DTC procedures), unless such method is otherwise prohibited. No Notes of a principal amount of $1,000 or less shall be redeemed in part and Notes of a principal amount in excess of $1,000 may be redeemed in part in integral multiples of $1,000 only.

      Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the redemption date to each Holder to be redeemed at its registered address. If Notes are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed. A new

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Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in the Global Note will be made).

      The Company will pay the redemption price for any Note together with accrued and unpaid interest and Additional Interest thereon, if any, through the date of redemption. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Company has deposited with the paying agent funds in satisfaction of the applicable redemption price pursuant to the Indenture.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

      The Company is not required to make any mandatory redemption or sinking fund payments with respect to the Notes. However, under certain circumstances, the Company may be required to offer to purchase the Notes as described below under the captions “— Excess Cash Flow Offer,” “— Repurchase upon Change of Control” and “— Certain Covenants — Limitation on Asset Sales.” The Company may at any time and from time to time purchase Notes in the open market or otherwise.

Excess Cash Flow Offer

      Within 90 days after the end of each fiscal year of the Company (beginning 90 days after the fiscal year of the Company ending in 2006) for which Excess Cash Flow was greater than or equal to $2,000,000, the Company must offer (the “Excess Cash Flow Offer”) to all Holders to purchase the maximum principal amount of Notes that may be purchased with 50% of Excess Cash Flow for such fiscal year at a purchase price in cash equal to 101% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest and Additional Interest, if any, to the date of such purchase (such amount, the “Excess Cash Flow Offer Amount,” and such date, the “Excess Cash Flow Offer Purchase Date”); provided, that the Excess Cash Flow Offer Amount shall be reduced by the aggregate principal amount of Notes purchased in open market purchases during the period ending one day prior to such Excess Cash Flow Offer Purchase Date and commencing on the later of (x) the day that is 365 days immediately preceding such Excess Cash Flow Offer Purchase Date and (y) the Excess Cash Flow Offer Purchase Date, if any, immediately preceding such Excess Cash Flow Offer Purchase Date. The Indenture requires that each Excess Cash Flow Offer remain open for a period of 20 business days and no longer, unless a longer period is required by law (the “Excess Cash Flow Offer Period”). Promptly after the termination of the Excess Cash Flow Offer Period, the Company will purchase and mail or deliver payment (up to the Excess Cash Flow Offer Amount) for the Notes or portions thereof tendered, pro rata (based on amounts tendered) or by such other method as may be required by law, or, if less than the Excess Cash Flow Offer Amount has been tendered, all Notes tendered pursuant to the Excess Cash Flow Offer. Upon receiving notice of the Excess Cash Flow Offer, Holders may elect to tender their Notes, in whole or in part, in integral multiples of $1,000 in exchange for cash. If any Excess Cash Flow remains after consummation of an Excess Cash Flow Offer, the Company may use such remaining Excess Cash Flow for any purpose not otherwise prohibited by the Indenture.

      Within the time period specified in the immediately preceding paragraph, the Company must send, by first class mail, postage prepaid, an offer to each Holder, with a copy to the Trustee, which offer will govern the terms of the Excess Cash Flow Offer. Such offer will state, among other things:

•  the purchase price;

•  the Excess Cash Flow Offer Period;

•  that the Company is making an Excess Cash Flow Offer;

•  that any Note not tendered will continue to accrue interest;

•  that unless the Company defaults on the payment of the purchase price, any Notes accepted for payment pursuant to the Excess Cash Flow Offer will cease to accrue interest after the Excess Cash Flow Offer Period; and

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•  certain procedures that a Holder of Notes must follow to accept the Excess Cash Flow Offer or to withdraw such acceptance.

      Holders electing to have a Note purchased pursuant to an Excess Cash Flow Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the paying agent at the address specified in the offer as a condition to receiving payment.

      Promptly after the termination of the Excess Cash Flow Offer Period, the Company will, to the extent lawful:

•  accept for payment all Notes or portions thereof properly tendered pursuant to the Excess Cash Flow Offer;

•  deposit with the paying agent an amount equal to the purchase price in respect of all Notes or portions thereof so tendered (including 101% of principal, and the accrued but unpaid interest and Additional Interest, if any, to the date of such purchase); and

•  deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount at maturity of Notes or portions thereof being purchased by the Company.

      Notwithstanding the foregoing, the repurchase of Notes by the Company pursuant to this “Excess Cash Flow Offer” provision shall not be required if the RCF Excess Cash Flow Offer Conditions would not be satisfied immediately after giving effect to the consummation of such repurchase.

      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to an Excess Cash Flow Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Excess Cash Flow Offer” provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached the Company’s obligations under the “Excess Cash Flow Offer” provisions of the Indenture by virtue thereof.

Repurchase upon Change of Control

      Upon the occurrence of a Change of Control, each Holder will have the right to require that the Company purchase all or a portion (in integral multiples of $1,000) of such Holder’s Notes using immediately available funds pursuant to the offer described below (the “Change of Control Offer”), at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase. Neither the Board of Directors of the Company nor the Trustee may waive the covenant to offer to purchase the Notes upon the occurrence of a Change of Control.

      Within 30 days following the date upon which the Change of Control occurred, the Company must send, by registered first-class mail, an offer to each Holder, with a copy to the Trustee, which offer shall govern the terms of the Change of Control Offer. Such offer shall state, among other things, the purchase date, which must be no earlier than 30 days nor later than 60 days from the date such notice is mailed, other than as may be required by law (the “Change of Control Payment Date”).

      Holders electing to have a Note purchased pursuant to a Change of Control Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the paying agent at the address specified in the notice prior to the close of business on the third business day prior to the Change of Control Payment Date. If only a portion of a Note is purchased pursuant to a Change of Control Offer, a new Note in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder thereof upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made). Notes (or portions thereof) purchased pursuant to a Change of Control Offer will be cancelled and cannot be reissued.

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      Notwithstanding the foregoing, if the Company believes that a Change of Control will occur in connection with a merger described under clause (10) of the second paragraph of the “Certain Covenants — Limitation on Restricted Payments” section, then the Company may, in lieu of the foregoing, consummate a Change of Control Offer pursuant to the foregoing terms; provided, however, that the Change of Control Payment Date shall instead be on the date on which such Change of Control is scheduled to occur and written notice of the Change of Control Offer is made at least 30 but not more than 60 days prior to the date that such Change of Control is scheduled to occur; provided further; however, that (i) the Company may, on at least ten business days’ written notice (which extension notice may only be given once), extend the Change of Control Payment Date to a date not in excess of 30 days following the original date on which such Change of Control is scheduled to occur; (ii) the Company may, on at least five business days’ written notice, rescind such Change of Control Offer and (iii) any Holder that properly tendered all or any portion of its Note(s) in connection with such Change of Control Offer may withdraw all or any portion of such Note(s) no later than one business day preceding the Change of Control Payment Date then in effect.

      The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

      If a Change of Control Offer is made, there can be no assurance that the Company will have available funds sufficient to pay the Change of Control purchase price for all the Notes that might be delivered by Holders seeking to accept the Change of Control Offer. In the event the Company is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Company expects that it would seek third-party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Company would be able to obtain such financing and the terms of the Credit Agreement and/or the Indenture may restrict the ability of the Company to obtain such financing.

      Restrictions in the Indenture described herein on the ability of the Company and its Restricted Subsidiaries to incur additional Indebtedness, to grant Liens on its property, to make Restricted Payments and to make Asset Sales may also make more difficult or discourage a takeover of the Company, whether favored or opposed by the management or the Board of Directors of the Company. Consummation of any such Asset Sales in certain circumstances may require redemption or repurchase of the Notes, and there can be no assurance that the Company or the acquiring party will have sufficient financial resources to effect such redemption or repurchase. Such restrictions and the restrictions on transactions with Affiliates may, in certain circumstances, make more difficult or discourage any leveraged buyout of the Company or any of its Subsidiaries by the management of the Company. While such restrictions cover a wide variety of arrangements that have traditionally been used to effect highly leveraged transactions, the Indenture may not afford the Holders protection in all circumstances from the adverse aspects of a highly leveraged transaction, reorganization, restructuring, merger, recapitalization or similar transaction.

      One of the events that constitutes a Change of Control under the Indenture is the disposition of “all or substantially all” of the Company’s assets under certain circumstances. This term has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, in the event Holders elect to require the Company to purchase the Notes and the Company elects to contest such election, there can be no assurance as to how a court interpreting New York law would interpret the phrase under such circumstances.

      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Change of Control” provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Change of Control” provisions of the Indenture by virtue thereof.

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Certain Covenants

      The Indenture contains, among others, the following covenants:

      Limitation on Incurrence of Additional Indebtedness. The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, acquire, become liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of (collectively, “incur”) any Indebtedness (other than Permitted Indebtedness); provided, however, that the Company or any of its Restricted Subsidiaries that is or, upon such incurrence, becomes a Guarantor may incur Indebtedness (including, without limitation, Acquired Indebtedness) if on the date of the incurrence of such Indebtedness and after giving effect to the incurrence thereof (1) no Default or Event of Default shall be outstanding and (2) the Consolidated Fixed Charge Coverage Ratio of the Company will be greater than 2.0 to 1.0.

      Limitation on Restricted Payments. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly:

      (1) declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company and dividends and distributions payable to the Company or another Restricted Subsidiary of the Company) on or in respect of shares of Capital Stock of the Company or its Restricted Subsidiaries to holders of such Capital Stock;

      (2) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or its Restricted Subsidiaries (other than any such Capital Stock held by the Company or any Restricted Subsidiary);

      (3) make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness of the Company or any Guarantor that is subordinate or junior in right of payment to the Notes or a Guarantee; or

      (4) make any Investment (other than Permitted Investments);

      (each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being referred to as a “Restricted Payment”), if at the time of such Restricted Payment or immediately after giving effect thereto:

      (i) a Default or an Event of Default shall have occurred and be continuing;

      (ii) the Company is not able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the covenant described under “— Limitation on Incurrence of Additional Indebtedness” above; or

      (iii) the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property at the time of the making thereof) shall exceed the sum of:

      (A) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income is a loss, minus 100% of such loss) of the Company earned during the period beginning on the first day of the first completed fiscal quarter after the Issue Date and ending on the last day of the Company’s most recent fiscal quarter ending prior to the date the Restricted Payment occurs for which financial statements are available (the “Reference Date”) (treating such period as a single accounting period); plus

      (B) 100% of the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) from the issuance and sale subsequent to the Issue Date and on or prior to the Reference Date of Qualified Capital Stock of the Company or options or warrants to acquire the same (excluding any net proceeds from an Equity Offering to the extent used to redeem Notes pursuant to the provisions described under “Redemption — Optional Redemption Upon Equity Offerings”); plus

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      (C) without duplication of any amounts included in clause (iii)(B) above, 100% of the aggregate net cash proceeds of any equity contribution received by the Company from a holder of the Company’s Capital Stock subsequent to the Issue Date and on or prior to the Reference Date (excluding any net proceeds from an Equity Offering to the extent used to redeem Notes pursuant to the provisions described under “Redemption — Optional Redemption Upon Equity Offerings”); plus

      (D) 100% of the aggregate net cash proceeds received from the issuance (other than to a Subsidiary of the Company) of Indebtedness or shares of Disqualified Capital Stock of the Company that have been converted into or exchanged for Qualified Capital Stock of the Company subsequent to the Issue Date and on or prior to the Reference Date; plus

      (E) the sum of (1) without duplication of any amounts included in Consolidated Net Income in clause (iii)(A) above, the aggregate amount paid in cash or Cash Equivalents to the Company or a Restricted Subsidiary of the Company on or with respect to Investments (other than Permitted Investments) made subsequent to the Issue Date whether through interest payments, principal payments, dividends or other distributions or payments, (2) the net cash proceeds received by the Company or any of its Restricted Subsidiaries from the disposition of all or any portion of such Investments (other than to the Company or a Subsidiary of the Company) and (3) upon redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the product of (x) the fair market value of such Subsidiary and (y) the percentage of the Capital Stock of such Unrestricted Subsidiary that is held by the Company or any of its Restricted Subsidiaries; provided, however, that the sum of clauses (1), (2) and (3) above shall not exceed the aggregate amount of all such Investments made subsequent to the Issue Date.

      In the case of clauses (iii)(B) and (C) above, any net cash proceeds from issuances and sales of Qualified Capital Stock of the Company financed directly or indirectly using funds borrowed from the Company or any Subsidiary of the Company, shall be excluded until and to the extent such borrowing is repaid.

      Notwithstanding the foregoing, the provisions set forth in the immediately preceding paragraph do not prohibit:

      (1) the payment of any dividend or other distribution or redemption within 60 days after the date of declaration of such dividend or call for redemption, as the case may be, if such dividend or redemption, as the case may be, would have been permitted on the date of declaration or call for redemption, as the case may be;

      (2) if no Event of Default shall have occurred and be continuing or would exist after giving effect thereto, the acquisition of any shares of Qualified Capital Stock of the Company, either (i) solely in exchange for other shares of Qualified Capital Stock of the Company or (ii) through the application of net proceeds of a sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company within 60 days after such sale;

      (3) the acquisition of any Indebtedness of the Company or the Guarantors that is subordinate or junior in right of payment to the Notes and Guarantees either (i) solely in exchange for shares of Qualified Capital Stock of the Company, or (ii) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, through the application of net proceeds of a sale for cash (other than to a Subsidiary of the Company) within 60 days after such sale of (a) shares of Qualified Capital Stock of the Company or (b) Refinancing Indebtedness;

      (4) an Investment either (i) solely in exchange for shares of Qualified Capital Stock of the Company or (ii) through the application of the net proceeds of a sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company within 60 days after such sale;

      (5) if no Default or Event of Default has occurred and is continuing or would exist after giving effect thereto, the repurchase or other acquisition of shares of Capital Stock of the Company from employees, former employees, directors or former directors of the Company (or permitted transferees of

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such employees, former employees, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such repurchases and other acquisitions in any calendar year shall not exceed the sum of (x) $1,000,000 and (y) the aggregate amount of Restricted Payments permitted (but not made) pursuant to this clause (5) in the immediately preceding calendar year;

      (6) repurchases of Capital Stock deemed to occur upon exercise of stock options, warrants or other similar rights if such Capital Stock represents a portion of the exercise price of such options, warrants or other similar rights;

      (7) payments or distributions to dissenting stockholders of Capital Stock of the Company pursuant to applicable law, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of the Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property and assets of the Company or any of its Restricted Subsidiaries;

      (8) the application of the proceeds from the issuance of the Notes on the Issue Date as described in the offering circular related to the original Offering of the Notes;

      (9) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, payments on, purchases, defeasances, redemptions and prepayments of, and decreases and other acquisitions and retirement for value of, any of the 8% Senior Notes so long as the aggregate amount of consideration for any such 8% Senior Notes purchased, defeased, redeemed, prepaid or otherwise acquired or retired does not exceed 90% of the outstanding principal amount thereof, plus accrued and unpaid interest thereon;

      (10) if no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, purchases, redemptions or other acquisitions or retirements for value of any Capital Stock of the Company concurrently with or after any merger of the Company with any other Person that is not a Subsidiary of the Company in accordance with the terms of the “— Merger, Consolidation and Sale of Assets” covenant below; provided, however, that (i) if the consideration paid or payable for such Capital Stock consists solely of Merger Proceeds (as defined below), or the aggregate consideration paid or payable for such Capital Stock so purchased, redeemed or otherwise acquired or retired for value shall not exceed the sum of (x) the aggregate Net Cash Proceeds received by such other Person from the issuance by such other Person of its Qualified Capital Stock and (y) the aggregate amount of capital contributions received by such other Person in cash (together with such Net Cash Proceeds, “Merger Proceeds”), in each case, concurrently with such merger; and (ii) if the consideration paid or payable for such Capital Stock does not consist solely of Merger Proceeds, immediately after giving effect thereto (including any other transactions related thereto), the Consolidated Leverage Ratio of the Company must be 0.5 times lower on a pro forma basis than the Consolidated Leverage Ratio of the Company immediately before the occurrence of such merger; provided further, however, that if a Change of Control shall have resulted in connection with such purchase, redemption or other acquisition or retirement for value or merger, no such purchase, redemption or other acquisition or retirement for value may be made until the Change of Control Offer related thereto shall have been consummated by the Company in accordance with the terms of “Repurchase upon Change of Control” above; and

      (11) if no Default shall have occurred and be continuing or would exist after giving effect thereto, other Restricted Payments not to exceed $5,000,000 in the aggregate since the Issue Date.

      In determining the aggregate amount of Restricted Payments made subsequent to the Issue Date in accordance with clause (iii) of the first paragraph of this “— Limitation on Restricted Payments” covenant amounts expended pursuant to clauses (1), (2)(ii), 3(ii)(a), (4)(ii), (5), (7) and (11) shall be included in such calculation.

      Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment complies with the Indenture and setting forth in

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reasonable detail the basis upon which the required calculations were computed, which calculations may be based upon the Company’s latest available internal quarterly financial statements.

      Limitation on Asset Sales. The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

      (1) the Company or the applicable Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed;

      (2) at least 70% of the consideration received by the Company or the Restricted Subsidiary, as the case may be, from such Asset Sale shall be in the form of cash or Cash Equivalents and is received at the time of such disposition; provided that the amount of any liabilities (as shown on the most recent applicable balance sheet) of the Company or such Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes) that are assumed by the transferee of any such assets shall be deemed to be cash for purposes of this provision to the extent that the documents governing such liabilities provide that there is no further recourse to the Company or any of its Subsidiaries with respect to such liabilities; and

      (3) the Company shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof either:

      (a) to the extent the assets and property sold pursuant to such Asset Sale constitute RCF Priority Collateral or Shared Collateral, to repay Indebtedness under the Credit Agreement;

      (b) (i) to make an investment in properties and assets that replace the properties and/or assets that were the subject of such Asset Sale or in long-term properties and/or assets that will be used in a Related Business (“Replacement Assets”) or (ii) to make expenditures for maintenance, repair or improvement of existing long-term properties or assets; or

      (c) a combination of prepayment and investment permitted by the foregoing clauses (3)(a) and (3)(b).

      On the 361st day after an Asset Sale or such earlier date, if any, as the Board of Directors of the Company or of such Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses (3)(a), 3(b) or 3(c) of the preceding paragraph (each, a “Net Proceeds Offer Trigger Date”), such aggregate amount of Net Cash Proceeds that have not been applied on or before such Net Proceeds Offer Trigger Date as permitted in clauses (3)(a), (3)(b) and (3)(c) of the preceding paragraph (each a “Net Proceeds Offer Amount”) shall be applied by the Company or such Restricted Subsidiary to make an offer to purchase (the “Net Proceeds Offer”) on a date (the “Net Proceeds Offer Payment Date”) not less than 30 nor more than 60 days following the applicable Net Proceeds Offer Trigger Date, from all Holders and all holders of other Applicable Indebtedness (other than Indebtedness under the Credit Agreement) containing provisions similar to those set forth in this “— Limitation on Asset Sales” covenant on a pro rata basis, the maximum principal amount of Notes and such other Applicable Indebtedness that may be purchased with the Net Proceeds Offer Amount at a price equal to 100% of the principal amount thereof (or if such Indebtedness was issued with original issue discount, 100% of the accreted value), plus accrued and unpaid interest and Additional Interest thereon, if any, to the date of purchase; provided, however, that (x) if at any time any non-cash consideration received by the Company or any Restricted Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder on the date of such conversion or disposition, as the case may be, and the Net Cash Proceeds thereof shall be applied in accordance with this covenant and (y) notwithstanding anything to the contrary in this covenant, if within 360 days of any Asset Sale, the Company or any Domestic Restricted Subsidiary enters into one or more definitive agreements for the acquisition and/or construction of a Replacement Asset consisting of a manufacturing or distribution facility having a Fair Market Value of at least $1,000,000, the Net Cash Proceeds of such Asset Sale shall not constitute a Net Proceeds Offer Amount to the extent such

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Net Cash Proceeds are applied in accordance with the terms of such definitive agreement for (aa) the acquisition of such manufacturing or distribution facility or the real property upon which such manufacturing or distribution facility is to be situated and/or (yy) the construction of such manufacturing or distribution facility.

      The Company may defer any Net Proceeds Offer until there is an aggregate unutilized Net Proceeds Offer Amount equal to or in excess of $5,000,000 resulting from one or more Asset Sales in which case the accumulation of such amount shall constitute a Net Proceeds Offer Trigger Date (at which time, the entire unutilized Net Proceeds Offer Amount, and not just the amount in excess of $5,000,000, shall be applied as required pursuant to the immediately preceding paragraph). Upon completion of each Net Proceeds Offer, the Net Proceeds Offer Amount will be reset at zero.

      In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Restricted Subsidiaries as an entirety to a Person in a transaction permitted under “— Merger, Consolidation and Sale of Assets,” which transaction does not constitute a Change of Control, the successor entity shall be deemed to have sold the properties and assets of the Company and its Restricted Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it constituted an Asset Sale. In addition, the Fair Market Value of such properties and assets of the Company or its Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for purposes of this covenant.

      Each notice of a Net Proceeds Offer shall be mailed first class, postage prepaid, to the record Holders as shown on the register of Holders within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee, and shall comply with the procedures set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may elect to tender their Notes in whole or in part in integral multiples of $1,000 in exchange for cash. To the extent Holders properly tender Notes in an amount exceeding the Net Proceeds Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis (based on amounts tendered). A Net Proceeds Offer shall remain open for a period of 20 business days or such longer period as may be required by law.

      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Asset Sale” provisions of the Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the “Asset Sale” provisions of the Indenture by virtue of such compliance.

      Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to:

      (1) pay dividends or make any other distributions on or in respect of its Capital Stock;

      (2) make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any other Restricted Subsidiary of the Company; or

      (3) transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of:

      (a) applicable law;

      (b) the Indenture, the Collateral Agreements and the Intercreditor Agreement;

      (c) customary non-assignment and non-transfer provisions of any lease or license of any Restricted Subsidiary of the Company to the extent such provisions restrict the transfer of the lease or license or the property leased or licensed thereunder;

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      (d) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

      (e) the Credit Agreement;

      (f) agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date;

      (g) restrictions on the transfer of assets subject to any Lien permitted under the Indenture;

      (h) restrictions imposed by any agreement to sell assets or Capital Stock permitted under the Indenture to any Person pending the closing of such sale;

      (i) provisions in joint venture agreements and other similar agreements (in each case relating solely to the respective joint venture or similar entity or the equity interests therein) entered into in the ordinary course of business;

      (j) restrictions contained in the terms of the Purchase Money Indebtedness or Capitalized Lease Obligations not incurred in violation of the Indenture; provided, that such restrictions relate only to the assets financed with such Indebtedness;

      (k) restrictions in other Indebtedness incurred in compliance with the covenant described under “— Limitation on Incurrence of Additional Indebtedness”; provided that such restrictions, taken as a whole, are, in the good faith judgment of the Company’s Board of Directors, no more materially restrictive with respect to such encumbrances and restrictions than those contained in the existing agreements referenced in clauses (b), (e) and (f) above;

      (l) restrictions on cash or other deposits imposed by customers under contracts or other arrangements entered into or agreed to in the ordinary course of business; or

      (m) an agreement governing Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement referred to in clause (b), (d), (e), (f), (j) or (k) above; provided, however, that the provisions relating to such encumbrance or restriction contained in any such Indebtedness are no less favorable to or more restrictive on the Company in any material respect as determined by the Board of Directors of the Company in their reasonable and good faith judgment than the provisions relating to such encumbrance or restriction contained in agreements referred to in such clause (b), (d), (e), (f), (j) or (k) above.

      Limitation on Issuances and Sales of Capital Stock of Subsidiaries. The Company will not permit or cause any of its Restricted Subsidiaries to issue or sell any Capital Stock (other than to the Company or to a Wholly-Owned Subsidiary of the Company) or permit any Person (other than the Company or a Wholly-Owned Subsidiary of the Company) to own or hold any Capital Stock of any Restricted Subsidiary of the Company or any Lien or security interest therein (other than as required by applicable law); provided, however, that this provision shall not prohibit (1) any issuance or sale if, immediately after giving effect thereto, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the “— Limitations on Restricted Payments” covenant if made on the date of such issuance or sale or (2) the sale of all of the Capital Stock of a Restricted Subsidiary in compliance with the provisions of the “— Limitations on Asset Sales” covenant.

      Limitation on Liens. The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit or suffer to exist any Liens (other than Permitted Liens) of any kind against or upon any property or assets of the Company or any of its Restricted Subsidiaries whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom.

      Merger, Consolidation and Sale of Assets. The Company will not, in a single transaction or series of related transactions, consolidate or merge with or into any Person, or sell, assign, transfer, lease, convey or

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otherwise dispose of (or cause or permit any Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise dispose of) all or substantially all of the Company’s assets (determined on a consolidated basis for the Company and the Company’s Restricted Subsidiaries) whether as an entirety or substantially as an entirety to any Person unless:

      (1) either:

      (a) the Company shall be the surviving or continuing corporation; or

      (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company and of the Company’s Restricted Subsidiaries substantially as an entirety (the “Surviving Entity”):

      (x) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia; and

      (y) shall expressly assume, (i) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, interest and Additional Interest, if any, on all of the Notes and the performance of every covenant of the Notes, the Indenture and the Registration Rights Agreement on the part of the Company to be performed or observed thereunder and (ii) by amendment, supplement or other instrument (in form and substance reasonably satisfactory to the Trustee and the Collateral Agent), executed and delivered to the Trustee, all obligations of the Company under the Collateral Agreements, and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity;

      (2) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including after giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction and any other transaction related thereto (including a merger described under clause (10) of the second paragraph of the “— Certain Covenants — Restricted Payments” section above)), the Company or such Surviving Entity, as the case may be, (a) shall have a Consolidated Net Worth at least equal to the lesser of (i) the Consolidated Net Worth of the Company immediately prior to such transaction or (ii) $25,000,000 and (b) shall be able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the “— Limitation on Incurrence of Additional Indebtedness” covenant;

      (3) immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(y) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred and be continuing; and

      (4) the Company or the Surviving Entity shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied.

      For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Company the Capital Stock of which constitutes all or substantially all of the properties and assets of the Company shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. With respect to the foregoing, although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under

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applicable law. Accordingly, the scope of the Company’s ability to sell assets without having sold “substantially all” of its assets within the meaning of the covenant may be uncertain.

      The Indenture provides that upon any consolidation, combination or merger or any transfer of all or substantially all of the assets of the Company in accordance with the foregoing, in which the Company is not the surviving or the continuing corporation, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture and the Notes with the same effect as if such surviving entity had been named as such. Upon such substitution, the Company and any Guarantors that remain Subsidiaries of the Company shall be released from their respective obligations under the Indenture and the Guarantees.

      Each Guarantor (other than any Guarantor whose Guarantee is to be released in accordance with the terms of the Guarantee and the Indenture in connection with any transaction complying with the provisions of this covenant and the “— Limitation on Asset Sales” covenant) will not, and the Company will not cause or permit any Guarantor to, consolidate with or merge with or into any Person, other than the Company or any other Guarantor unless:

      (1) the entity formed by or surviving any such consolidation or merger (if other than the Guarantor) or to which such sale, lease, conveyance or other disposition shall have been made is a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia;

      (2) such entity assumes (a) by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, all of the obligations of the Guarantor under the Guarantee and the performance of every covenant of the Guarantee, the Indenture and the Registration Rights Agreement and (b) by amendment, supplement or other instrument (in form and substance satisfactory to the Trustee and the Collateral Agent) executed and delivered to the Trustee and the Collateral Agent, all obligations of the Guarantor under the Collateral Agreements and in connection therewith shall cause such instruments to be filed and recorded in such jurisdictions and take such other actions as may be required by applicable law to perfect or continue the perfection of the Lien created under the Collateral Agreements on the Collateral owned by or transferred to the surviving entity;

      (3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

      (4) immediately after giving effect to such transaction and the use of any net proceeds therefrom on a pro forma basis, the Company could satisfy the provisions of clause (2) of the first paragraph of this covenant.

      Any merger or consolidation of (i) a Guarantor with and into the Company (with the Company being the surviving entity) or another Guarantor or (ii) a Guarantor or the Company with an Affiliate organized solely for the purpose of reincorporating such Guarantor or the Company in another jurisdiction in the United States or any state thereof or the District of Columbia need only comply with:

      (A) clause (4) of the first paragraph of this covenant; and

      (B) (x) in the case of a merger or consolidation involving the Company as described in clause (ii), clause 1(b)(y) of the first paragraph of this covenant and (y) in the case of a merger or consolidation involving the Guarantor as described in clause (ii) of the immediately preceding paragraph.

      Limitations on Transactions with Affiliates. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any of its Affiliates (each an “Affiliate Transaction”), other than

      (x) Affiliate Transactions permitted under paragraph (b) below, and

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      (y) Affiliate Transactions on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of the Company or such Restricted Subsidiary.

      Except with respect to paragraph (b) below, with respect to all Affiliate Transactions and except with respect to Affiliate Transactions involving aggregate payments or other property with a Fair Market Value of less than $500,000, the Company shall deliver an Officers’ Certificate to the Trustee certifying that such transactions are in compliance with clause (a)(y) of the preceding paragraph. All Affiliate Transactions (and each series of related Affiliate Transactions which are similar or part of a common plan) involving aggregate payments or other property with a Fair Market Value in excess of $5,000,000 shall be approved by a majority of the disinterested members of the Board of Directors of the Company, such approval to be evidenced by a Board Resolution stating that such Board of Directors has determined that such transaction complies with the foregoing provisions. If the Company or any Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a series of related Affiliate Transactions related to a common plan) that involves an aggregate Fair Market Value of more than $10,000,000, the Company or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of the financial terms of such transaction or series of related transactions to the Company or the relevant Restricted Subsidiary, as the case may be from an Independent Financial Advisor and file the same with the Trustee.

      (b) The restrictions set forth in the first paragraph of this covenant shall not apply to:

      (1) reasonable and customary (x) fees and compensation (including directors’ fees) paid to, (y) indemnity provided on behalf of and (z) employee benefit arrangements provided for the benefit of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary of the Company, in each case, entered into in the ordinary course of business and as determined in good faith by the Company’s Board of Directors;

      (2) transactions exclusively between or among the Company and any of its Restricted Subsidiaries or exclusively between or among such Restricted Subsidiaries, provided such transactions are not otherwise prohibited by the Indenture;

      (3) any agreement as in effect as of the Issue Date and any amendment thereto or replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date;

      (4) Restricted Payments permitted by the Indenture; and

      (5) any merger or other transaction with an Affiliate solely for the purpose of reincorporating the Company in another jurisdiction.

      Additional Subsidiary Guarantees. If (x) the Company or any of its Restricted Subsidiaries transfers or causes to be transferred, in one transaction or a series of related transactions, any property to any Person that is not a Guarantor but becomes a Domestic Restricted Subsidiary (other than an Immaterial Subsidiary) as a result of such transaction, (y) if the Company or any of its Restricted Subsidiaries shall organize, acquire or otherwise invest in another Person that is or becomes a Domestic Restricted Subsidiary (other than an Immaterial Subsidiary) that is not a Guarantor or (z) any Domestic Restricted Subsidiary that was an Immaterial Subsidiary is no longer an Immaterial Subsidiary, then the Company shall cause such Domestic Restricted Subsidiary that is not a Guarantor to:

      (1) execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee pursuant to which such Domestic Restricted Subsidiary shall unconditionally guarantee on a senior secured basis all of the Company’s obligations under the Notes and the Indenture on the terms set forth in the Indenture;

      (2) (a) execute and deliver to the Collateral Agent such amendments to the Collateral Agreements as the Collateral Agent deems necessary or advisable in order to grant to the Collateral Agent, for the benefit of the Holders and the Lenders, a perfected security interest in the Capital Stock of such new

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Domestic Restricted Subsidiary and any debt securities of such new Domestic Restricted Subsidiary, subject to the Permitted Liens, which are owned by the Company or such new Domestic Restricted Subsidiary and required to be pledged pursuant to the Pledge Agreement, (b) deliver to the Collateral Agent any certificates representing such Capital Stock and debt securities, together with (i) in the case of such Capital Stock, undated stock powers or instruments of transfer, as applicable, endorsed in blank, and (ii) in the case of such debt securities, endorsed in blank, in each case executed and delivered by an Officer of the Company or such Subsidiary, as the case may be;

      (3) take such actions necessary or as the Collateral Agent reasonably determines to be advisable to grant to the Collateral Agent for the benefit of the Holders a perfected security interest in the assets of such new Domestic Restricted Subsidiary, subject to Permitted Liens, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by any Collateral Agreement or by law or as may be reasonably requested by the Collateral Agent;

      (4) take such further action and execute and deliver such other documents specified in the Indenture or otherwise reasonably requested by the Trustee or the Collateral Agent to effectuate the foregoing; and

      (5) deliver to the Trustee an Opinion of Counsel that such supplemental indenture and any other documents required to be delivered have been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and constitutes legal, valid, binding and enforceable obligations of such Domestic Restricted Subsidiary and such other opinions regarding the perfection of such Liens in the assets of such Domestic Restricted Subsidiary as provided for in the Indenture.

      Thereafter, such Domestic Restricted Subsidiary shall be a Guarantor for all purposes of the Indenture.

      Impairment of Security Interest. Subject to the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral), neither the Company nor any of its Restricted Subsidiaries will take or omit to take any action which would adversely affect or impair in any material respect the Liens in favor of the Collateral Agent with respect to the Collateral. Neither the Company nor any of its Restricted Subsidiaries shall grant to any Person (other than the Collateral Agent), or permit any Person (other than the Collateral Agent), to retain any interest whatsoever in the Collateral other than Permitted Liens. Neither the Company nor any of its Restricted Subsidiaries will enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person, other than as permitted by the Indenture, the Notes, the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral) and the Collateral Agreements. The Company shall, and shall cause each such Restricted Subsidiary to, at their sole cost and expense, execute and deliver all such agreements and instruments as the Collateral Agent or the Trustee shall reasonably request to more fully or accurately describe the property intended to be Collateral or the obligations intended to be secured by the Collateral Agreements. The Company shall, and shall cause each such Restricted Subsidiary to, at their sole cost and expense, file any such notice filings or other agreements or instruments as may be reasonably necessary or desirable under applicable law to perfect the Liens created by the Collateral Agreements at such times and at such places as the Collateral Agent or the Trustee may reasonably request. Notwithstanding anything to the contrary in this covenant, the Company shall not be required to use more than its reasonable best efforts to cause a Lien to be granted on any assets acquired after the Issue Date by any of its Foreign Restricted Subsidiaries to secure the Notes and the Guarantees and in any event, the Company shall have no such obligation, and no such Lien shall be granted, if the Company determines, in the good faith exercise of its sole discretion, that such Lien could in any way result (in the year such Lien is obtained or would be deemed to be obtained, or in any other year) in an adverse tax consequence of any kind to the Company or any successor entity.

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      Minimum EBITDA. The Company will not permit, as of the last day of any of its fiscal quarters set forth in the table below, its Consolidated EBITDA for the four consecutive fiscal quarters ending on such day to be less than the amount set forth below opposite such fiscal quarter:

	Minimum
Fiscal Quarter Ending	EBITDA
September 30, 2004 through September 30, 2006	$	16,000,000
December 31, 2006 through September 30, 2008	$	18,000,000
December 31, 2008 and thereafter	$	20,000,000

unless the sum of (i) Unrestricted Cash of the Company and its Restricted Subsidiaries as of such day and (ii) the aggregate amount of advances that the Company is actually able to borrow under the Credit Agreement on such day (after giving effect to any borrowings thereunder on such day) is at least $15,000,000.

      Real Estate Mortgages and Filings. With respect to any fee interest in any real property (individually and collectively, the “Premises”) owned by the Company or a Domestic Restricted Subsidiary on the Issue Date or acquired by the Company or a Domestic Restricted Subsidiary after the Issue Date, with (i) a purchase price or (ii) as of the Issue Date, with a Fair Market Value, of greater than $1,000,000:

      (1) the Company shall deliver to the Collateral Agent, as mortgagee, fully-executed counterparts of Mortgages, each dated as of the Issue Date or the date of acquisition of such property, as the case may be, duly executed by the Company or the applicable Domestic Restricted Subsidiary, together with evidence of the completion (or satisfactory arrangements for the completion), of all recordings and filings of such Mortgage as may be necessary or, in the reasonable opinion of the Collateral Agent desirable, to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby;

      (2) the Collateral Agent shall have received mortgagee’s title insurance policies in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Collateral Agent, the Trustee and the Holders in an amount equal to 100% of the Fair Market Value of the Premises purported to be covered by such Mortgage and in form and substance and issued by insurers reasonably acceptable to the Collateral Agent, insuring that title to such property is marketable and that the interests created by the Mortgage constitute valid Liens thereon free and clear of all Liens, defects and encumbrances other than Permitted Liens, and such policies shall also include, to the extent available, a revolving credit endorsement and such other endorsements as the Collateral Agent shall reasonably request and shall have the standard exceptions thereto deleted (other than the survey exception to the extent required below in (3)) and be accompanied by evidence of the payment in full of all premiums thereon; and

      (3) the Company shall deliver to the Collateral Agent, with respect to each of the covered Premises, the most recent survey of such Premises and, solely to the extent that the title company insuring the Lien of the respective Mortgages shall deem such survey acceptable to remove the standard survey exception from the applicable title policy and/or to issue a survey endorsement with respect thereto, the Company shall have such survey exception deleted and such survey endorsement delivered to the Collateral Agent.

      Leasehold Mortgages and Filings. To the extent delivered to the Administrative Agent for the benefit of the Lenders under the Credit Agreement, the Company and each of its Domestic Restricted Subsidiaries (that is or is obligated under the Indenture to become a Guarantor) shall concurrently with such delivery deliver to the Collateral Agent, as mortgagee, Mortgages with respect to the Company’s leasehold interests in the premises (the “Leased Premises”) occupied by the Company or such Domestic Restricted Subsidiary pursuant to leases, together with landlord waivers, title insurance policies, survey, subordination agreements and other related documents to the extent delivered to the Administrative Agent and evidence of the completion (or satisfactory arrangements for the completion), of all recordings and filings of such Mortgages as may be necessary or, in the reasonable opinion of the Collateral Agent desirable, to create a valid, perfected Lien, subject to Permitted Liens, against the properties purported to be covered thereby.

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      Landlord, Bailee and Consignee Waivers. Each of the Company and each of its Domestic Restricted Subsidiaries (that is or is obligated under the Indenture to become a Guarantor) that is a lessee of, or becomes a lessee of, real property on or in which it will maintain, store, hold or locate all or any of its assets that constitute Priority Collateral or Shared Collateral and have an aggregate fair market value of at least $250,000 and with respect to which it has not obtained a Mortgage with respect to its leasehold interests in such real property pursuant to the “— Leasehold Mortgages and Filings” covenant, is, and will be, required to use commercially reasonable efforts (which shall not require the expenditure of cash under any relevant lease that was in effect on the Issue Date or if such Domestic Restricted Subsidiary was not a Domestic Restricted Subsidiary of the Company on the Issue Date, the date such Domestic Restricted Subsidiary became a Domestic Restricted Subsidiary of the Company) to deliver to the Collateral Agent a landlord waiver, substantially in the form of the exhibit form thereof to be attached to the Indenture, executed by the lessor of such real property; provided that in the case where such lease is a lease in existence on the Issue Date or the lessee thereof that is a Domestic Restricted Subsidiary of the Company (that is or is obligated under the Indenture to become a Guarantor) was not a Domestic Restricted Subsidiary of the Company on the Issue Date, the Company or such Domestic Restricted Subsidiary that is the lessee thereunder shall have 90 days from the Issue Date to satisfy such requirement and shall be relieved of such obligation with respect to any landlord waiver to the extent such lessor has refused to deliver such a waiver following such Person’s use of such commercially reasonable efforts. Each of the Company and each of its Domestic Restricted Subsidiaries (that is or is obligated under the Indenture to become a Guarantor) that provides any of its assets that constitute Priority Collateral or Shared Collateral and have an aggregate fair market value of at least $250,000 to a bailee or consignee agrees to be bound by the terms of the immediately preceding sentence, mutatis mutandis; provided, that (i) the terms “landlord,” “lessee” and “lease” shall be replaced, respectively, with the terms “bailee” or “consignee,” as applicable, “bailor” or “consignor,” as applicable, and the “applicable agreement” and (ii) the condition that the lessee maintain, store, hold or locate all or any of its assets that constitute Priority Collateral or Shared Collateral and have an aggregate fair market value of at least $250,000 shall instead be replaced with the condition that the fair market value of the assets subject to the applicable bailment or consignment have a fair market value of at least $250,000. In addition, each of the Company and each such Domestic Restricted Subsidiary shall, to the extent it delivers a landlord, bailee or consignee waiver to the Administrative Agent for the benefit of the Lenders under the Credit Agreement and has not already delineated such a waiver under this covenant, concurrently with such delivery, deliver a comparable waiver from the applicable landlord, bailee or consignee to the Collateral Agent.

      Pledge of Future Foreign Assets. The Company shall use its reasonable best efforts to cause a Lien to be granted pursuant to one or more Foreign Collateral Agreements (each of which shall be prepared by the Company and be in form and substance reasonably satisfactory to the Collateral Agent) on all tangible and intangible assets acquired after the Issue Date by its Foreign Restricted Subsidiaries to secure the Notes and the Guarantees (a “Foreign Asset Lien”) so long as such assets do not include more than 65% of the Voting Stock of any Foreign Subsidiary. Notwithstanding anything to the contrary, the Company shall have no obligation whatsoever to obtain such a Foreign Asset Lien, and no such Foreign Asset Lien shall be granted, if the Company determines, in the good faith exercise of its sole discretion, that such Foreign Asset Lien could in any way result (in the year such Lien is obtained or would be deemed to be obtained, or in any other year) in an adverse tax consequence of any kind to the Company or any successor entity.

      Conduct of Business. The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any businesses which are not Related Businesses.

      Reports to Holders. The Indenture requires that, whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company must furnish to the Trustee and to the Holders:

      (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that describes the financial condition and results of operations of the Company and its consolidated Subsidiaries (showing in reasonable detail, either on the face of the financial statements or in the footnotes thereto and in Management’s Discussion and Analysis of Financial Condition and Results of

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Operations, the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company, if any) and, with respect to the annual information only, a report thereon by the Company’s certified independent accountants; and

      (2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports, in each case within the time periods specified in the SEC’s rules and regulations; provided that following consummation of the Exchange Offer, such forms and reports may be so furnished no later than five business days following the end of such time periods.

      In addition, following the consummation of the Exchange Offer, whether or not required by the rules and regulations of the SEC, the Company will file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing). In addition, the Company has agreed that, prior to the consummation of the Exchange Offer, for so long as any Notes remain outstanding, it will furnish to the Holders upon their request, the information required to be delivered pursuant to Rule 144(A)(d)(4) under the Securities Act.

      Notwithstanding anything to the contrary in this covenant, solely with respect to any information delivery requirements relating to the quarter ended June 30, 2004 that would otherwise have been required to be delivered by August  16, 2004, the Company may, in lieu of complying with the requirements set forth in clause (1) of the first paragraph of this covenant on or prior to such date, (i) furnish to the Trustee and to the Holders, on or prior to August 16, 2004, an unaudited consolidated balance sheet as of June 30, 2004 and an unaudited consolidated statement of operations, an unaudited consolidated statement of cash flows and an unaudited consolidated statement of stockholders’ deficit/equity, in each case, for the three-month period ended June 30, 2004 and for the six-month period ended June 30, 2004, (ii) organize, on or prior to August 23, 2004 but not earlier than three business days after compliance with the immediately preceding clause (i), a telephonic conference call during normal business hours in which all holders of Notes, or the related Units and/or Warrants, may participate and with respect to which the Initial Purchaser has been provided reasonable advance notice, and (iii) comply, on or prior to August 31, 2004, with the requirements of clause (1) of the first paragraph of this covenant (without regard to the time periods applicable to such requirements specified in the SEC’s rules and regulations).

Possession, Use and Release of Collateral

      Unless an Event of Default shall have occurred and be continuing, the Company and the Restricted Subsidiaries shall have the right to remain in possession and retain exclusive control of the Collateral securing the Notes and the Guarantees (other than as set forth in the Collateral Agreements and the Intercreditor Agreement with respect to the Collateral (other than the Foreign Collateral)), to freely operate the Collateral and to collect, invest and dispose of any income therefrom.

      Release of Collateral. Upon compliance by the Company and the Restricted Subsidiaries with the conditions set forth below in respect of any release of items of Collateral, and upon delivery by the Company to the Collateral Agent of an Opinion of Counsel to the effect that such conditions have been met, the Collateral Agent will terminate and release its Lien on the applicable Released Interests (as hereinafter defined), and the Collateral Agent shall, at the sole cost and expense of the Company or such Restricted Subsidiary, execute and deliver to the Company or such Restricted Subsidiary such documents, without any representation, warranty or recourse of any kind whatsoever, as the Company or such Restricted Subsidiary shall reasonably request to evidence such termination.

      Asset Sale Release. The Company and the Restricted Subsidiaries have the right to obtain a release of items of Collateral (the “Released Interests”) subject to an Asset Sale permitted hereunder upon compliance with the condition that the Company deliver to the Collateral Agent an Officers’ Certificate of the Company stating that: (i) the release of such Released Interests would not be expected to interfere in any material respect with the Collateral Agent’s ability to realize the value of the remaining Collateral and will not impair in any material respect the maintenance and operation of the remaining Collateral, (ii) such Asset Sale covers only the Released Interests and complies with the terms and conditions of the Indenture with respect to Asset

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Sales; (iii) there is no Default or Event of Default in effect or continuing on the date thereof, the Valuation Date or the date of such Asset Sale; (iv) the release of the Collateral will not result in a Default or Event of Default under the Indenture; and (v) all conditions precedent in the Indenture relating to the release in question have been or will be complied with.

      If the Company or any Restricted Subsidiary engages in any direct or indirect sale, issuance, conveyance, transfer, lease, assignment or other transfer for value of any Collateral of the type described in clause (a), (c), (d) or (e) of the proviso to the definition of the term “Asset Sale,” the Liens of the Collateral Agent on such Collateral shall automatically terminate and be released without any action by the Collateral Agent, and the Collateral Agent shall, at the sole cost and expense of the Company or such Restricted Subsidiary, execute and deliver to the Company or such Restricted Subsidiary such documents, without any representation, warranty or recourse of any kind whatsoever, as the Company or such Restricted Subsidiary shall reasonably request to evidence such termination.

      Release of Inventory and Accounts Receivable Collateral. Notwithstanding any provision to the contrary in the Indenture, Collateral comprised of inventory and accounts receivable, or the proceeds of the foregoing shall be subject to release upon sales of such inventory, collection of the proceeds of such accounts receivable and the use of such proceeds, in each case, in the ordinary course of business pursuant to transactions not otherwise prohibited by the Indenture. If requested in writing by the Company, the Trustee shall instruct the Collateral Agent to execute and deliver such documents, instruments or statements and to take such other action as the Company may request to evidence or confirm that the Collateral falling under this “Release of Inventory and Accounts Receivable Collateral” provision has been released from the Liens of each of the Collateral Agreements. The Collateral Agent shall execute and deliver such documents, instruments and statements and shall take all such actions promptly upon receipt of such instructions from the Trustee.

      Release upon Satisfaction or Defeasance of all Outstanding Obligations. The security interests on, and pledges of, all Collateral will also be terminated and released upon (i) payment in full of the principal of, premium, if any, on, accrued and unpaid interest and Additional Interest, if any, on the Notes and all other Obligations under the Indenture, the Guarantees and the Collateral Agreements that are due and payable at or prior to the time such principal, premium, if any, accrued and unpaid interest and Additional Interest, if any, are paid, (ii) a satisfaction and discharge of the Indenture as described below under the caption “— Satisfaction and Discharge” and (iii) the later to occur of (A) a legal defeasance or covenant defeasance as described below under “— Legal Defeasance and Covenant Defeasance” and (B) the 91st day occurring subsequent to the making of the deposit required under clause (1) of the third paragraph of “— Legal Defeasance and Covenant Defeasance.”

Events of Default

      The following events are defined in the Indenture as “Events of Default”:

      (1) the failure to pay interest and Additional Interest, if any, on any Notes or any other amount (other than principal for the Notes) when the same becomes due and payable and the default continues for a period of 30 days;

      (2) the failure to pay the principal of or premium, if any, on any Notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase Notes tendered pursuant to an Excess Cash Flow Offer, a Change of Control Offer or a Net Proceeds Offer);

      (3) a default in the observance or performance of any other covenant or agreement contained in the Indenture (other than the payment of the principal of, or premium, if any, or interest and Additional Interest, if any, on any Note) or any Collateral Agreement which default continues for a period of 30 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes (except in the case of a default with respect to the “— Merger, Consolidation and Sale of

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Assets” covenant, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);

      (4) the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness of the Company or any Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 20 days from the date of acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated (in each case with respect to which the 20-day period described above has elapsed), aggregates $5,000,000 million or more at any time;

      (5) one or more judgments in an aggregate amount in excess of $10,000,000 shall have been rendered against the Company or any of its Restricted Subsidiaries (other than any judgment as to which a reputable and solvent third-party insurer has accepted full coverage) and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable;

      (6) certain events of bankruptcy affecting the Company or any of its Significant Subsidiaries, with customary grace periods with respect to involuntary bankruptcies;

      (7) any Collateral Agreement at any time for any reason shall cease to be in full force and effect in all material respects, or ceases to give the Collateral Agent the Liens, rights, powers and privileges purported to be created thereby, superior to and prior to the rights of all third Persons other than the holders of Permitted Liens and subject to no other Liens except as expressly permitted by the applicable Collateral Agreement;

      (8) any of the Company, the Guarantors or the Foreign Grantors, if any, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of any Collateral Agreement; or

      (9) any Guarantee of a Significant Subsidiary ceases to be in full force and effect or any Guarantee of a Significant Subsidiary is declared to be null and void and unenforceable or any Guarantee of a Significant Subsidiary is found to be invalid or any Guarantor denies its liability under its Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture).

      If an Event of Default (other than an Event of Default specified in clause (6) above with respect to the Company) shall occur and be continuing and has not been waived, the Trustee or the Holders of at least 25% in principal amount of outstanding Notes may declare the principal of and premium, if any, accrued interest and Additional Interest, if any, on all the Notes to be due and payable by notice in writing to the Company and the Trustee specifying the Event of Default and that it is a “notice of acceleration” (the “Acceleration Notice”), and the same shall become immediately due and payable.

      If an Event of Default specified in clause (6) above with respect to the Company occurs and is continuing, then all unpaid principal of, and premium, if any, and accrued and unpaid interest and Additional Interest, if any, on all of the outstanding Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

      The Indenture provides that, at any time after a declaration of acceleration with respect to the Notes as described in the preceding paragraphs, the Holders of a majority in principal amount of the Notes may rescind and cancel such declaration and its consequences:

      (1) if the rescission would not conflict with any judgment or decree;

      (2) if all existing Events of Default have been cured or waived except nonpayment of principal, premium, if any, interest or Additional Interest, if any, that has become due solely because of the acceleration;

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      (3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal and premium, if any, and Additional Interest, if any, which has become due otherwise than by such declaration of acceleration, has been paid;

      (4) if the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and its advances; and

      (5) in the event of the cure or waiver of an Event of Default of the type described in clause (7) of the description above of Events of Default, the Trustee shall have received an Officers’ Certificate and an Opinion of Counsel that such Event of Default has been cured or waived.

      No such rescission shall affect any subsequent Default or impair any right consequent thereto.

      The Holders of a majority in principal amount of the Notes may waive any existing Default or Event of Default under the Indenture, and its consequences, except a default in the payment of the principal of or premium, if any, interest or Additional Interest, if any, on any Notes.

      Subject to the provisions of the Intercreditor Agreement, holders may not enforce the Indenture or the Notes except as provided in the Indenture and under the TIA. Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of any of the Holders, unless such Holders have offered to the Trustee reasonable indemnity. Subject to the provisions of the Indenture, the Intercreditor Agreement and applicable law, the Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.

      No past, present or future director, officer, employee, incorporator, or stockholder of the Company or a Guarantor, as such, shall have any liability for any payment obligations of the Company or the Guarantors under the Notes, the Guarantees or the Indenture or for any claim based on, in respect of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

      Under the Indenture, the Company is required to provide an Officers’ Certificate to the Trustee promptly upon any Officer obtaining knowledge of any Default or Event of Default (provided that such Officers’ Certificate shall be provided at least annually whether or not such Officers know of any Default or Event of Default) that has occurred and, if applicable, describe such Default or Event of Default and the status thereof.

Legal Defeasance and Covenant Defeasance

      The Company may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors and any Foreign Guarantors discharged with respect to the outstanding Notes (“Legal Defeasance”). Such Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, except for:

      (1) the rights of Holders to receive payments in respect of the principal of, premium, if any, interest and Additional Interest, if any, on the Notes when such payments are due;

      (2) the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payments;

      (3) the rights, powers, trust, duties and immunities of the Trustee and the Company’s obligations in connection therewith; and

      (4) the Legal Defeasance provisions of the Indenture.

      In addition, the Company may, at its option and at any time, elect to have the obligations of the Company released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default or

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Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, reorganization and insolvency events) described under “Events of Default” will no longer constitute an Event of Default with respect to the Notes.

      In order to exercise either Legal Defeasance or Covenant Defeasance:

      (1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts and at such times as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, interest and Additional Interest, if any, on the Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be;

      (2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that:

      (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

      (b) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

      (3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

      (4) no Default or Event of Default shall have occurred and be continuing on the date of such deposit pursuant to clause (1) of this paragraph (except such Default or Event of Default resulting from the failure to comply with “Certain Covenants — Limitations on Incurrence of Additional Indebtedness” as a result of the borrowing of funds required to effect such deposit) or insofar as Defaults or Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of such deposit;

      (5) such Legal Defeasance or Covenant Defeasance shall not result in a breach of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

      (6) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over any other creditors of the Company or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company or others;

      (7) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and

      (8) the Company shall have delivered to the Trustee an Opinion of Counsel (subject to customary qualifications and exclusions) to the effect that the trust resulting from the deposit is not required to register as an investment company under the Investment Company Act of 1940.

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Satisfaction and Discharge

      The Indenture (and all Liens on Collateral securing the Notes and the Guarantees) will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when:

      (1) either:

      (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation; or

      (b) all Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, interest and Additional Interest, if any, on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

      (2) the Company has paid all other sums payable under the Indenture and the Collateral Agreements by the Company; and

      (3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

Modification of the Indenture

      From time to time, the Company, the Guarantors, any Foreign Grantors, the Trustee and, if such amendment, modification or supplement relates to any Collateral Agreement, the Collateral Agent, without the consent of the Holders, may amend, modify, waive or supplement the Indenture, the Notes, the Guarantees, the Registration Rights Agreement and the Collateral Agreements:

      (1) to cure any ambiguity, defect or inconsistency contained therein;

      (2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

      (3) to provide for the assumption of the Company’s or a Guarantor’s obligations to Holders in accordance with the covenant described under “Certain Covenants — Merger Consolidation and Sale of Assets”;

      (4) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights of any such Holder under the Indenture, the Notes, the Guarantees, the Registration Rights Agreement or the Collateral Agreements;

      (5) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA;

      (6) to allow any Subsidiary or any other Person to guarantee the Notes;

      (7) to release a Guarantor as permitted by the Indenture and the relevant Guarantee, or

      (8) if necessary, in connection with any addition or release of Collateral permitted under the terms of the Indenture or Collateral Agreements, so long as such amendment, modification, waiver or supplement does not, in the opinion of the Trustee and, if such amendment, modification, waiver or supplement relates to any Collateral Agreement, the Collateral Agent, adversely affect the rights of any

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of the Holders in any material respect. In formulating its opinion on such matters, each of the Trustee and, if such amendment, modification or supplement relates to any Collateral Agreement, the Collateral Agent, will be entitled to rely on such evidence as it deems appropriate, including, without limitation, solely on an Opinion of Counsel.

      Other amendments of, modifications to, waivers of and supplements to the Indenture, the Notes, the Guarantees, the Registration Rights Agreement and the Collateral Agreements may be made with the consent of the Holders of a majority in principal amount of the then outstanding Notes issued under the Indenture, except that

      (a) without the consent of each Holder affected thereby, no amendment may:

      (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver of any provision of the Indenture or the Notes;

      (2) reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, or Additional Interest on any Notes;

      (3) reduce the principal of or change or have the effect of changing the fixed maturity of any Notes, or change the date on which any Notes may be subject to redemption or reduce the redemption price therefore (other than any advance notice requirement with respect to any redemption of the Notes);

      (4) make any Notes payable in money other than that stated in the Notes;

      (5) make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of, premium, if any, interest and Additional Interest, if any, on such Note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of Notes to waive Defaults or Events of Default;

      (6) amend, change or modify in any material respect the obligation of the Company to make and consummate an Excess Cash Flow Offer with respect to any fiscal year of the Company following the ending thereof, make and consummate a Change of Control Offer after the occurrence of a Change of Control or make and consummate a Net Proceeds Offer with respect to any Asset Sale that has been consummated or, modify any of the provisions or definitions with respect thereto (other than any advance notice requirement with respect to any redemption of the Notes); or

      (7) subordinate the Notes or any Guarantee in right of payment to, or the Liens granted under the Collateral Agreements to any Lien on all or substantially all of any of (i) the Notes Priority Collateral, (ii) the Shared Collateral, (iii) except as otherwise provided in the Intercreditor Agreement with respect to Liens securing the Credit Agreement, the RCF Priority Collateral or (iv) any Foreign Collateral to secure, any other Indebtedness of the Company, any Guarantor or any Foreign Grantor; or

      (b) without the consent of Holders of 66 2/3% of the then outstanding Notes issued under the Indenture:

      (1) release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the terms of the Indenture; or

      (2) release all or substantially all of the Collateral otherwise than in accordance with the terms of the Indenture and the Collateral Agreements.

      The Indenture provides that notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which shall be excluded by the Indenture), (i) in determining whether the Holders of the required principal amount of Notes have concurred in any request, demand, authorization, notice, direction, amendment, supplement, waiver or consent, Notes owned of record or beneficially by the Company or any Subsidiary of the Company or any other obligor on the Notes shall be considered as though they are not outstanding (but the Notes owned of record or beneficially by any other Affiliates shall be deemed

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outstanding for all purposes under the Indenture) and (ii) in determining whether the Trustee shall be protected in relying on any such request, demand, authorization, notice, direction, amendment, supplement, waiver or consent, only Notes owned by the Company, its Subsidiaries or any other obligor on the Notes which the Trustee knows are so owned shall be considered as though they are not outstanding.

Governing Law

      The Indenture provides that it, the Notes and the Guarantees are governed by, and construed in accordance with, the laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.

The Trustee

      The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it by the Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

      The Indenture and the provisions of the TIA contain certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payments of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. Subject to the TIA, the Trustee will be permitted to engage in other transactions; provided that if the Trustee acquires any conflicting interest as described in the TIA, it must eliminate such conflict or resign.

Certain Definitions

      Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms, as well as any other terms used herein for which no definition is provided.

      “8% Senior Notes” means the Company’s 8% Senior Subordinated Secured Notes due 2008.

      “Acquired Indebtedness” means Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time it merges or consolidates with or into the Company or any of its Restricted Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such acquisition, merger or consolidation and which Indebtedness is without recourse to the Company or any of its Subsidiaries (other than in the event of such a merger, consolidation or acquisition of assets in which the Company or any of its Subsidiaries is the surviving entity or assumes such Indebtedness) or to any of their respective properties or assets other than the Person or the assets to which such Indebtedness related prior to the time such Person became a Restricted Subsidiary of the Company or the time of such acquisition, merger or consolidation.

      “Administrative Agent” means (i) the initial Lender under the Credit Agreement until such time as an agent is appointed to act on behalf of the Lenders thereunder and (ii) from and after the appointment of such agent, such agent.

      “Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that Beneficial Ownership of 10% or more of the Voting Stock of the Person shall be deemed to be control. The terms “controlling” and “controlled” have meanings correlative of the foregoing.

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      “Applicable Indebtedness” means:

      (1) in respect of any asset that is the subject of an Asset Sale at a time when such asset is included in the Collateral, Indebtedness that is pari passu with the Notes and secured at such time by Collateral; or

      (2) in respect of any other asset, Indebtedness that is pari passu with the Notes.

      “Asset Acquisition” means:

      (1) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or

      (2) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person (other than a Restricted Subsidiary of the Company) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.

      “Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer, lease (other than operating leases or non-exclusive licenses, in each case, entered into in the ordinary course of business), assignment or other transfer (other than a Lien in accordance with the Indenture) for value by (x) the Company or any of its Restricted Subsidiaries to any Person other than the Company or a Guarantor or (y) a Foreign Restricted Subsidiary to any Person other than the Company or a Wholly-Owned Subsidiary of the Company of:

      (1) any Capital Stock of any Restricted Subsidiary of the Company; or

      (2) any other property or assets of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business;

provided, however, that Asset Sales shall not include:

      (a) a transaction or series of related transactions for which the Company or its Restricted Subsidiaries receive aggregate consideration of less than $500,000;

      (b) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted under “Certain Covenants — Merger, Consolidation and Sale of Assets”;

      (c) any Restricted Payment permitted under “Certain Covenants — Limitation on Restricted Payments” including a Permitted Investment;

      (d) sales of inventory in the ordinary course of business;

      (e) the sale of Cash Equivalents; and

      (f) the sale or other disposition of used, worn out, obsolete or surplus equipment.

      “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, and codified as 11 U.S.C. §§ 101 et seq.

      “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” have meanings correlative to the foregoing.

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      “Board of Directors” means, as to any Person, the board of directors or similar governing body of such Person or any duly authorized committee thereof.

      “Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

      “Capital Stock” means:

      (1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

      (2) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; and

      (3) any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above.

      “Capitalized Lease Obligation” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP.

      “Cash Equivalents” means:

      (1) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof;

      (2) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Ratings Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”);

      (3) commercial paper maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s;

      (4) certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined net capital and surplus of not less than $250,000,000;

      (5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (1) above entered into with any bank meeting the qualifications specified in clause (4) above; and

      (6) investments in money market funds that invest substantially all their assets in securities of the types described in clauses (1) through (5) above.

      “Change of Control” means the occurrence of one or more of the following events:

      (1) any direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one transaction or a series of related transactions, of all or substantially all of the assets of the Company to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), other than a transaction in which the transferee is controlled by one or more Permitted Holders;

      (2) any Person or Group, other than Permitted Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have

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beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly whether by merger or consolidation, of a majority of the total outstanding Voting Stock of the Company as measured by voting power; provided that there shall be no Change of Control pursuant to this clause (2) if the Permitted Holders continue to have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company;

      (3) the adoption of a plan for the liquidation or dissolution of the Company; or

      (4) individuals who on the Issue Date constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved pursuant to a vote of a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; provided, that there shall be no Change of Control pursuant to this clause (4) if since the Issue Date the Permitted Holders continue to own, directly or indirectly, (a) at least 90% of the Voting Stock of the Company held by the Permitted Holders as of the Issue Date, (b) more Voting Stock than any other Person or Group (other than a Group consisting solely of Merrill Lynch and Co., Inc., Northeast Investors Trust and their respective Affiliates), (c) more Voting Stock than Merrill Lynch & Co., Inc. and its Affiliates and (d) more Voting Stock than Northeast Investors Trust and its Affiliates.

      Notwithstanding anything to the contrary in the immediately preceding sentence, none of the events described in clauses (1) through (4) thereof shall be deemed to constitute a “Change of Control” if (x) such event shall have occurred (aa) prior to the second anniversary of the Issue Date or (bb) subsequent to such second anniversary within 10 business days of the receipt by the relevant parties of any requisite governmental approval or consent relating to the transaction giving rise to such event and the only reason with respect to which such transaction could not have occurred prior to such second anniversary was the failure of such parties to have obtained such governmental approval or consent, and (y) immediately after giving effect thereto, (i) the Consolidated Leverage Ratio of the Company is 0.5 times lower on a pro forma basis than the Consolidated Leverage Ratio of the Company immediately before the occurrence of such event (i.e., the Consolidated Leverage Ratio of the Company immediately before the occurrence of such event minus 0.5) and (ii) no Default or Event of Default shall have occurred and be continuing.

      “Collateral” shall mean collateral as such term is defined in the Security Agreement, all property mortgaged under the Mortgages and any other property, whether now owned or hereafter acquired, upon which a Lien securing the Obligations is granted or purported to be granted under any Collateral Agreement.

      “Collateral Agent” means the collateral agent and any successor under the Indenture.

      “Collateral Agreements” means, collectively, the Security Agreement, the Pledge Agreement, the Control Agreements (as defined in the Security Agreement), the Intellectual Property Security Agreement (as defined in the Security Agreement), each Mortgage and each Foreign Collateral Agreement, in each case, as the same may be in force from time to time.

      “Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock.

      “Comparable Treasury Issue” means the United States Treasury security selected by a Reference Treasury Dealer appointed by the Company as having a maturity comparable to the remaining term of the Notes (as if the final maturity of the Notes was June 15, 2008) that would be utilized at the time of selection and in accordance with customary financial practice in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes (as if the final maturity of the notes was June 15, 2008).

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      “Comparable Treasury Price” means, with respect to any redemption date, (1) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities” or (2) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (B) if the Company obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

      “Consolidated EBITDA” means, with respect to any Person, for any period, the sum (without duplication) of:

      (1) Consolidated Net Income; and

      (2) to the extent Consolidated Net Income has been reduced thereby:

      (a) all income taxes of such Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP for such period;

      (b) Consolidated Interest Expense and interest expense attributable to amortization or write-offs of deferred financing costs; and

      (c) Consolidated Non-cash Charges less any non-cash items increasing Consolidated Net Income for such period all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP.

      “Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person, the ratio of Consolidated EBITDA of such Person during the four consecutive full fiscal quarters (the “Four Quarter Period”) most recently ending on or prior to the date of the transaction or event giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio for which financial statements are available (the “Transaction Date”) to Consolidated Fixed Charges of such Person for the Four Quarter Period.

      In addition to and without limitation of the foregoing, for purposes of this definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

      (1) (a) the incurrence or repayment of any Indebtedness (other than in respect of the Credit Agreement) of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (b)(i) if a Specified Transaction is occurring on, or has occurred prior to, the Transaction Date, the deemed incurrence of Indebtedness under the Credit Agreement on the first day of the Four Quarter Period and for such entire Four Quarter Period and the Transaction Date at a rate of interest equal to the maximum non-default rate of interest applicable to extensions of credit thereunder and in an aggregate principal amount equal to the Maximum RCF Debt Amount then in effect regardless of whether the Company could have obtained extensions of credit thereunder in an aggregate principal amount equal to the Maximum RCF Debt Amount then in effect and (ii) if a Specified Transaction is not occurring on, and has not occurred prior to, the Transaction Date, the deemed incurrence of Indebtedness under the Credit Agreement on the first day of the Four Quarter Period and for such entire Four Quarter Period and the Transaction Date at a rate of interest equal to the rate of interest applicable to extensions of credit thereunder and in an aggregate principal amount equal to the outstanding aggregate principal amount of extensions of credit thereunder, in each case, immediately after giving effect to such transaction or event; and

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      (2) any Asset Sale or other disposition or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Sale or other disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or Acquired Indebtedness and also including any Consolidated EBITDA associated with such Asset Sale or other disposition or Asset Acquisition and any expense or costs savings (calculated on a basis consistent with Regulation S-X under the Exchange Act) attributable to the assets that are the subject of the Asset Sale or other disposition or Asset Acquisition; provided that (x) such expense or cost savings were identified and quantified in an Officers’ Certificate delivered to the Trustee at the time of the consummation of such Asset Sale or other disposition or Asset Acquisition and such Officers’ Certificate states that such officers believe in good faith that actions will be commenced or initiated within 90 days of the consummation of such Asset Sale or other disposition or Asset Acquisition to effect such expense or cost savings and sets forth the specific steps to be taken within such 90 day period to accomplish such expense or cost savings, and (y) with respect to each Asset Sale or other disposition or Asset Acquisition completed prior to the 90th day preceding such date of determination, actions were commenced or initiated by the Company or any of its Restricted Subsidiaries within 90 days of such acquisition, merger or consolidation to effect the expense and cost savings identified in such Officers’ Certificate) occurred on the first day of the Four Quarter Period provided that the Consolidated EBITDA of any Person acquired shall be included only to the extent includible pursuant to the definition of “Consolidated Net Income.” If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness.

      Furthermore, in calculating “Consolidated Fixed Charges” for purposes of determining the denominator (but not the numerator) of this “Consolidated Fixed Charge Coverage Ratio”:

      (a) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date (including Indebtedness actually incurred on the Transaction Date) and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and

      (b) notwithstanding clause (1) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Interest Swap Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.

      “Consolidated Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

      (1) Consolidated Interest Expense; plus

      (2) the product of (x) the amount of all dividend payments on any Disqualified Capital Stock of such Person and any series of Preferred Stock of such Person (other than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during such period times (y) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal.

      “Consolidated Interest Expense” means, with respect to any Person for any period, the aggregate of the interest expense (excluding amortization or writeoff of deferred financing costs) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, as determined in accordance with GAAP, and including, without duplication, (a) all amortization or accretion of original issue discount; (b) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such

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Person and its Restricted Subsidiaries during such period; and (c) net cash costs under all Interest Swap Obligations (including amortization of fees).

      “Consolidated Leverage Ratio” means, with respect to any Person, as of any Transaction Date, the ratio of (x) Consolidated Total Debt of such Person as of the Transaction Date to (y) Consolidated EBITDA of such Person for the four consecutive full fiscal quarters (the “Four Quarter Period”) most recently ending on or prior to the Transaction Date for which financial statements are available (the “Transaction Date”).

      In addition to and without limitation of the foregoing, for purposes of this definition, “Consolidated Total Debt” and “Consolidated EBITDA” shall be calculated after giving effect on a pro forma basis for the period of such calculation and the Transaction Date, as applicable, to:

      (1) (a) the incurrence or repayment of any Indebtedness (other than in respect of the Credit Agreement) of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period and (b) (i) if a Specified Transaction is occurring on, or has occurred prior to, the Transaction Date, the deemed incurrence of Indebtedness under the Credit Agreement on the first day of the Four Quarter Period and for such entire Four Quarter Period and the Transaction Date at a rate of interest equal to the maximum non-default rate of interest applicable to extensions of credit thereunder and in an aggregate principal amount equal to the Maximum RCF Debt Amount then in effect regardless of whether the Company could have obtained extensions of credit thereunder in an aggregate principal amount equal to the Maximum RCF Debt Amount then in effect and (ii) if a Specified Transaction is not occurring on, and has not occurred prior to, the Transaction Date, the deemed incurrence of Indebtedness under the Credit Agreement on the first day of the Four Quarter Period and for such entire Four Quarter Period and the Transaction Date at a rate of interest equal to the rate of interest applicable to extensions of credit thereunder and in an aggregate principal amount equal to the outstanding aggregate principal amount of extensions of credit thereunder, in each case, immediately after giving effect to such transaction or event; and

      (2) any Asset Sale or other disposition or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of any such Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date), as if such Asset Sale or other disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or Acquired Indebtedness and also including any Consolidated EBITDA associated with such Asset Sale or other disposition or Asset Acquisition and any expense or costs savings (calculated on a basis consistent with Regulation S-X under the Exchange Act) attributable to the assets that are the subject of the Asset Sale or other disposition or Asset Acquisition; provided that (x) such expense or cost savings were identified and quantified in an Officers’ Certificate delivered to the Trustee at the time of the consummation of such Asset Sale or other disposition or Asset Acquisition and such Officers’ Certificate states that such officers believe in good faith that actions will be commenced or initiated within 90 days of the consummation of such Asset Sale or other disposition or Asset Acquisition to effect such expense or cost savings and sets forth the specific steps to be taken within such 90 day period to accomplish such expense or cost savings, and (y) with respect to each Asset Sale or other disposition or Asset Acquisition completed prior to the 90th day preceding such date of determination, actions were commenced or initiated by the Company or any of its Restricted Subsidiaries within 90 days of such acquisition, merger or consolidation to effect the expense and cost savings identified in such Officers’ Certificate) occurred on the first day of the Four Quarter Period provided that the Consolidated EBITDA of any Person acquired shall be included only to the extent includible pursuant to the definition of “Consolidated Net Income.” If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees

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Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness.

      “Consolidated Net Income” means, with respect to any Person, for any period, the aggregate net income (or loss) of such Person and its Restricted Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided, however, that there shall be excluded therefrom:

      (1) after-tax gains and losses from Asset Sales or abandonments or reserves relating thereto;

      (2) after-tax items classified as extraordinary or nonrecurring gains and losses;

      (3) the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is restricted by a contract, operation of law or otherwise;

      (4) the net income of any Person, other than the referent Person or a Restricted Subsidiary of the referent Person, except to the extent of cash dividends or distributions paid to the referent Person or to a Wholly-Owned Subsidiary of the referent Person by such Person;

      (5) any restoration to income of any material contingency reserve, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date;

      (6) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued);

      (7) all gains and losses realized on or because of the purchase or other acquisition by such Person or any of its Restricted Subsidiaries of any securities of such Person or any of its Restricted Subsidiaries;

      (8) the cumulative effect of a change in accounting principles;

      (9) non-cash charges resulting from the impairment of intangible assets; and

      (10) in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person’s assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets.

      “Consolidated Net Worth” of any Person means the consolidated stockholders’ equity of the Company, determined on a consolidated basis in accordance with GAAP, less (without duplication) amounts attributable to Disqualified Capital Stock of such Person.

      “Consolidated Non-cash Charges” means, with respect to any Person, for any period, the aggregate depreciation, amortization and other non-cash items and expenses of such Person and its Restricted Subsidiaries to the extent they reduce Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any such charge which requires an accrual of or a reserve for cash charges for any future period).

      “Consolidated Total Debt” means, with respect to any Person, as of any date, the consolidated Indebtedness of such Person and its Restricted Subsidiaries of the nature referred to in clauses (1), (2), (3), (4), (5) and (9) of the definition of the term “Indebtedness.”

      “Consolidated Working Capital” means, with respect to any Person, at any date, the excess of (a) the sum of all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries on such date, but excluding (i) the

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current portion of liabilities in respect of pension contributions and postretirement benefits of such Person and its Restricted Subsidiaries to the extent not included in clauses (D) and (E), respectively, of clause (ii) of the definition of the term “Excess Cash Flow” and (ii) any Funded Debt.

      “Credit Agreement” means the Loan and Security Agreement dated as of the Issue Date, among the Company and the lender or lenders party thereto (together with its or their successors and assigns, the “Lender” or “Lenders”) and the Administrative Agent, together with the related documents thereto (including, without limitation, any notes, guarantee agreements and security documents), in each case as such agreement and related documents may be amended, restated, supplemented or otherwise modified from time to time, in whole or in part, including any amendment, restatement, supplement or other modification extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder (provided that such increase in borrowings does not exceed the aggregate amount of Indebtedness permitted under clauses (2) and (16) of the definition of the term “Permitted Indebtedness”) or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders, but excluding any amendment, restatement, supplement or other modification that provides for terms more adverse to the Holders or less favorable or more onerous to the Company and its Restricted Subsidiaries.

      “Currency Agreement” means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement designed to protect the Company or any Restricted Subsidiary of the Company against fluctuations in currency values.

      “Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

      “Disqualified Capital Stock” means that portion of any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event (other than an event that would constitute a Change of Control), matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof (except in each case, upon the occurrence of a Change of Control) on or prior to the 91st day after the final maturity date of the Notes for cash or is convertible into or exchangeable for debt securities of the Company or its Subsidiaries at any time prior to such 91st day.

      “Domestic Restricted Subsidiary” means, with respect to any Person, a Domestic Subsidiary of such Person that is a Restricted Subsidiary of such Person.

      “Domestic Subsidiary” means, with respect to any Person, a Subsidiary of such Person that is not a Foreign Subsidiary of such Person.

      “Eligible Accounts Receivable” mean the accounts receivable (net of any reserves and allowances for doubtful accounts in accordance with GAAP) of the Company and the Guarantors that are not more than 90 days past their due date and that were entered into in the ordinary course of business on normal payment terms as shown on the most recent financial consolidated balance sheet of the Company and the Guarantors, all in accordance with GAAP.

      “Eligible Inventory” means inventory of the Company and the Guarantors consisting of finished goods held by the Company or any Guarantor for sale in the ordinary course of business.

      “Eligible Raw Inventory” means inventory of the Company and the Guarantors consisting of raw material to be consumed or used by the Company or any Guarantor in the production of goods to be held by the Company or any Guarantor for sale in the ordinary course of business.

      “Eligible WIP Inventory” means inventory of the Company and the Guarantors consisting of work-in-process relating to the production of goods to be held by the Company or any Guarantor for sale in the ordinary course of business.

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      “Equity Offering” means an underwritten public offering of Common Stock of the Company or any holding company of the Company pursuant to a registration statement filed with the SEC (other than on Form S-8) or any private placement of Common Stock of the Company or any holding company of the Company to any Person other than issuances upon exercise of options by employees of any holding company, the Company or any of the Restricted Subsidiaries.

      “Excess Cash Flow” means, with respect to any fiscal year of the Company, the excess of (i) the sum of (A) Consolidated EBITDA of the Company and its Restricted Subsidiaries for such fiscal year and (B) decreases in Consolidated Working Capital of the Company and its Restricted Subsidiaries for such fiscal year over (ii) the sum of (A) consolidated capital expenditures actually made in cash by the Company and its Restricted Subsidiaries during such fiscal year, (B) Consolidated Interest Expense of the Company and its Restricted Subsidiaries for such fiscal year but only to the extent such Consolidated Interest Expense was actually paid in cash during such fiscal year, (C) income taxes actually paid in cash by the Company and its Restricted Subsidiaries during such fiscal year, (D) pension contributions actually made in cash by the Company and its Restricted Subsidiaries during such fiscal year but only to the extent such contributions were not deducted in calculating such Consolidated EBITDA, (E) postretirement benefits actually paid in cash by the Company and its Restricted Subsidiaries during such fiscal year but only to the extent such payments were not deducted in calculating such Consolidated EBITDA and (F) increases in Consolidated Working Capital of the Company and its Restricted Subsidiaries for such fiscal year.

      “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute or statutes thereto.

      “Exchange Offer” means an Exchange Offer that may be made by the Company, pursuant to the Registration Rights Agreement, to exchange for any and all the Notes a like aggregate principal amount of Notes having substantially identical terms to the Notes registered under the Securities Act.

      “Fair Market Value” means, with respect to any asset or property, the price of which could be negotiated in an arm’s length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution of the Board of Directors of the Company delivered to the Trustee.

      “Foreign Collateral” means the tangible and intangible assets of any Foreign Restricted Subsidiary of the Company in which a Lien has been granted in favor of the Collateral Agent pursuant to a Foreign Collateral Agreement.

      “Foreign Collateral Agreement” means each agreement executed and delivered by any Foreign Restricted Subsidiary of the Company pursuant to which such Foreign Restricted Subsidiary has granted a Lien on any of its tangible or intangible assets in favor of the Collateral Agent.

      “Foreign Grantor” means each Foreign Restricted Subsidiary of the Company that has granted a Lien on any of its tangible or intangible assets in favor of the Collateral Agent pursuant to a Foreign Collateral Agreement.

      “Foreign Restricted Subsidiary” means any Restricted Subsidiary that is organized under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia.

      “Foreign Subsidiary” means, with respect to any Person, any Subsidiary of such Person that is organized under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia.

      “Funded Debt” means all Indebtedness for borrowed money of the Company and its Restricted Subsidiaries that matures more than one year from the date of its incurrence or matures within one year from such date and is renewable or extendable, at the option of the Company or one of its Restricted Subsidiaries, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders thereunder to extend credit during a period of more than one year from such date, including all amounts of Funded Debt required to be paid or prepaid within one year from the date of its creation and, in the case of the Company, Indebtedness in respect of the Notes.

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      “GAAP” means accounting principles generally accepted in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, which are in effect from time to time.

      “Guarantor” means each of the Company’s Domestic Restricted Subsidiaries that in the future executes a supplemental indenture in which such Domestic Restricted Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of the Indenture.

      “Holder” means the Person in whose name a Note is registered on the registrar’s books.

      “Immaterial Subsidiary” means any Restricted Subsidiary of the Company that has (1) assets with a Fair Market Value or book value (whichever is greater) less than $500,000 and (2) revenues not exceeding $1,000,000 during the last twelve months preceding the Issue Date and, thereafter, during the twelve months preceding the Company’s most recent fiscal quarter.

      “Indebtedness” means with respect to any Person, without duplication:

      (1) all Obligations of such Person for borrowed money;

      (2) all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

      (3) all Capitalized Lease Obligations of such Person, other than Capital Lease Obligations that are not or will not be included in the audited consolidated financial statements of such Person prepared in accordance with GAAP due to the immateriality, as determined in good faith by such Person, of such obligations;

      (4) all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and any deferred purchase price represented by earn outs consistent with the Company’s past practice);

      (5) all Obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, whether or not then due;

      (6) guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clauses (7) through (9) below;

      (7) all Obligations of any other Person of the type referred to in clauses (1) through (6) above and clauses (8) and (9) below which are secured by any Lien on any property or asset of such Person, the amount of any such Obligation being deemed to be the lesser of the Fair Market Value of the property or asset securing such Obligation or the amount of such Obligation;

      (8) all Interest Swap Obligations and all Obligations under Currency Agreements of such Person; and

      (9) all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any.

      For purposes hereof, (a) the “maximum fixed repurchase price” of any Disqualified Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the

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Fair Market Value of such Disqualified Capital Stock, such Fair Market Value shall be determined reasonably and in good faith by the Board of Directors of the issuer of such Disqualified Capital Stock and (b) the outstanding principal amount of any Indebtedness with original issue discount as of any date shall be the accreted value thereof.

      “Independent Financial Advisor” means a nationally-recognized accounting, appraisal or investment banking firm: (1) that does not, and whose directors, officers and employees or Affiliates do not, have a direct or indirect financial interest in the Company; and (2) that, in the judgment of the Board of Directors of the Company, is otherwise independent and qualified to perform the task for which it is to be engaged.

      “Initial Purchaser” means Jefferies & Company, Inc.

      “Intercreditor Agreement” means the Intercreditor Agreement among the Administrative Agent, the Trustee, the Collateral Agent, the Company and the Guarantors, dated as of the Issue Date, as the same may be amended, supplemented or modified from time to time.

      “Interest Swap Obligations” means the obligations of any Person pursuant to any arrangement with any other Person, whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such other Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements.

      “Investment” means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee, but excluding commission, travel and similar advances to officers and employees made in the ordinary course of business) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition for value by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. “Investment” shall exclude extensions of trade credit by the Company and its Restricted Subsidiaries on commercially reasonable terms in accordance with normal trade practices of the Company or such Restricted Subsidiary, as the case may be, that are recorded as accounts receivable on the balance sheet of the Company or such Restricted Subsidiary, as the case may be. For the purposes of the “— Limitation on Restricted Payments” covenant, (i) “Investment” shall include and be valued at the Fair Market Value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and (ii) the amount of any Investment shall be the original cost of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment, reduced by the payment of dividends or distributions in connection with such Investment or any other amounts received in respect of such Investment; provided that no such payment of dividends or distributions or receipt of any such other amounts shall reduce the amount of any Investment if such payment of dividends or distributions or receipt of any such amounts would be included in Consolidated Net Income. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of a Restricted Subsidiary (including any issuance of Capital Stock by a Restricted Subsidiary) such that, after giving effect to any such sale or disposition, such Restricted Subsidiary would cease to be a Subsidiary of the Company, the Company shall be deemed to have made an “Investment” on the date of any such sale or disposition equal to sum of the Fair Market Value of the Capital Stock of such former Restricted Subsidiary held by the Company or any Restricted Subsidiary immediately following such sale or other disposition.

      “Issue Date” means the date of original issuance of the Notes.

      “Lenders” has the meaning set forth in the definition of the term “Credit Agreement.”

      “Lien” means any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof and any agreement to give any security interest).

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      “Maximum RCF Debt Amount” means as of any date occurring (1) prior to the date that a Specified Transaction has occurred, the excess of (x) $20,000,000 over (y) the aggregate amount of repayments of Indebtedness under the Credit Agreement with the proceeds of Shared Collateral pursuant to clause (3)(a) of “Certain Covenants — Limitation on Asset Sales” and (2) on or subsequent to the date that a Specified Transaction has occurred, the excess of (x) the greater of (a) $20,000,000 and (b) the sum of (i) 90% of the aggregate amount of all Eligible Accounts Receivable, (ii) 70% of the value of all Eligible Inventory, in each case, on such date (iii) 70% of the value of all Eligible WIP Inventory and (iv) 70% of the value of all Eligible Raw Inventory and (y) the aggregate amount of repayments of Indebtedness under the Credit Agreement with the proceeds of Shared Collateral pursuant to clause (3)(a) of “Certain Covenants — Limitation on Asset Sales.”

      “Mortgages” means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises and/or the Leased Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents.

      “Net Cash Proceeds” means, with respect to any Asset Sale or Specified Issuance, the proceeds in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (other than the portion of any such deferred payment constituting interest) received by the Company or any of its Restricted Subsidiaries from such Asset Sale or such Specified Issuance, as the case may be, net of:

      (1) reasonable out-of-pocket expenses and fees relating to such Asset Sale or such Specified Issuance, as the case may be (including, without limitation, legal, accounting and investment banking fees and sales commissions);

      (2) all taxes and other costs and expenses actually paid or estimated by the Company (in good faith) to be payable in cash or accruing or to be accrued in connection with such Asset Sale or such Specified Issuance, as the case may be;

      (3) repayment of Indebtedness that is secured by the property or assets that are the subject of such Asset Sale and is required to be repaid in connection with such Asset Sale or such Specified Issuance, as the case may be; and

      (4) appropriate amounts to be provided by the Company or any Restricted Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale or such Specified Issuance, as the case may be.

      “Notes Priority Collateral” means all existing and after-acquired real property, fixtures and improvements thereon, equipment and proceeds thereof of the Company and the Guarantors.

      “Obligations” means all obligations for principal, premium, interest, Additional Interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

      “Offering” means the offering of the Notes hereunder.

      “Officer” means the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President or the Treasurer of the Company.

      “Officers’ Certificate” means a certificate signed by two Officers of the Company, at least one of whom shall be the principal financial officer of the Company, and delivered to the Trustee.

      “Opinion of Counsel” means a written opinion of counsel who shall be reasonably acceptable to the Trustee.

      “Permitted Holders” means Carl C. Icahn and his Affiliates.

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      “Permitted Indebtedness” means, without duplication, each of the following:

      (1) Indebtedness under the Notes issued in the Offering or in the Exchange Offer in an aggregate outstanding principal amount not to exceed $90,000,000 and the related Guarantees;

      (2) Indebtedness incurred pursuant to the Credit Agreement in an aggregate principal amount at any time outstanding not to exceed the Maximum RCF Debt Amount;

      (3) Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date (other than Indebtedness evidenced by the Notes or under the Credit Agreement);

      (4) Interest Swap Obligations of the Company or any Restricted Subsidiary of the Company covering Indebtedness of the Company or any of its Restricted Subsidiaries; provided, however, that such Interest Swap Obligations are entered into for the purpose of fixing or hedging interest rates with respect to any fixed or variable rate Indebtedness that is permitted by the Indenture to be outstanding to the extent that the notional amount of any such Interest Swap Obligation does not exceed the principal amount of Indebtedness to which such Interest Swap Obligation relates;

      (5) Indebtedness under Currency Agreements; provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Restricted Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

      (6) (a) Intercompany Indebtedness of the Company or a Guarantor for so long as such Indebtedness is held by the Company or a Guarantor; provided that (i) such Indebtedness shall be unsecured and contractually subordinated in all respects to the obligations of the Company under the Notes or such Guarantor under its Guarantee, as the case may be, and (ii) if as of any date any Person other than the Company or a Guarantor owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness and (b) intercompany Indebtedness of any Foreign Restricted Subsidiary for so long as such Indebtedness is held by (i) the Company or any Guarantor and is permitted to be made by the Company or such Guarantor in such Restricted Subsidiary pursuant to clause (1)(b)(i) of the definition of the term “Permitted Investment” or (ii) any other Foreign Restricted Subsidiary; provided that if as of any date any Person other than the Company or a Guarantor owns or holds any such Indebtedness or holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness under this clause (6) by the issuer of such Indebtedness;

      (7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days of incurrence;

      (8) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business;

      (9) Indebtedness represented by Capitalized Lease Obligations and Purchase Money Indebtedness of the Company and its Restricted Subsidiaries incurred in the ordinary course of business (including Refinancings thereof that do not result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing)) not to exceed $10,000,000 at any time outstanding;

      (10) Refinancing Indebtedness;

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      (11) Indebtedness represented by guarantees by the Company or a Restricted Subsidiary of Indebtedness incurred by the Company or a Restricted Subsidiary so long as the incurrence of such Indebtedness by the Company or any such Restricted Subsidiary is otherwise permitted by the terms of the Indenture;

      (12) Indebtedness arising from agreements of the Company or a Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and the Subsidiary in connection with such disposition;

      (13) Indebtedness of the Company or any of its Restricted Subsidiaries to the extent the net proceeds thereof are concurrently with the incurrence thereof used to redeem the Notes in full or deposited to defease or discharge the Notes, in each case, in accordance with the Indenture;

      (14) obligations of the Company or any of its Restricted Subsidiaries in respect of performance and surety bonds and completion guarantees incurred in the ordinary course of business;

      (15) Indebtedness of Foreign Restricted Subsidiaries of the Company in an aggregate outstanding principal amount not to exceed $2,000,000; and

      (16) additional Indebtedness of the Company and its Restricted Subsidiaries in an aggregate principal amount not to exceed $5,000,000 at any time outstanding (which amount may, but need not be, incurred in whole or in part under the Credit Agreement).

      For purposes of determining compliance with the “— Limitation on Incurrence of Additional Indebtedness” covenant, (a) the outstanding principal amount of any item of Indebtedness shall be counted only once and (b) in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (16) above or is entitled to be incurred pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with this covenant. Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Capital Stock in the form of additional shares of the same class of Disqualified Capital Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Capital Stock for purposes of the “— Limitations on Incurrence of Additional Indebtedness” covenant.

      “Permitted Investments” means:

      (1) (a) Investments by the Company or any Restricted Subsidiary of the Company in any Person that is or will become immediately after such Investment a Guarantor or that will merge or consolidate with or into the Company or a Guarantor, or that transfers or conveys all or substantially all of its assets to the Company or a Guarantor and (b) Investments in any Person that is or will become immediately after such Investment a Foreign Restricted Subsidiary by (i) the Company or any Guarantor so long as the aggregate amount of all such Investments are in the form of intercompany loans entered into in the ordinary course of business that rank equally in right of payment with all other senior obligations of such Person, are not subordinated in right of payment to any other Indebtedness of such Person and do not exceed $15,000,000 at any time outstanding and (ii) any other Foreign Restricted Subsidiary;

      (2) Investments in the Company by any Restricted Subsidiary of the Company; provided that any Indebtedness evidencing such Investment is unsecured and subordinated, pursuant to a written agreement, to the Company’s Obligations under the Notes and the Indenture;

      (3) Investments in cash and Cash Equivalents;

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      (4) Currency Agreements and Interest Swap Obligations entered into in the ordinary course of the Company’s or its Restricted Subsidiaries’ businesses and otherwise in compliance with the Indenture;

      (5) Investments in the Notes;

      (6) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers in exchange for claims against such trade creditors or customers;

      (7) Investments made by the Company or its Restricted Subsidiaries as a result of consideration received in connection with an Asset Sale made in compliance with the “— Limitation on Asset Sales” covenant;

      (8) Investments in existence on the Issue Date;

      (9) loans and advances, including advances for travel and moving expenses, to employees, officers and directors of the Company and its Restricted Subsidiaries in the ordinary course of business for bona fide business purposes not in excess of $1,000,000 at any time outstanding;

      (10) advances to suppliers and customers in the ordinary course of business; and

      (11) additional Investments not to exceed $2,000,000 at any time outstanding.

      “Permitted Liens” means the following types of Liens:

      (1) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

      (2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law or pursuant to customary reservations or retentions of title incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

      (3) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

      (4) any judgment Lien not giving rise to an Event of Default;

      (5) easements, rights-of-way, zoning restrictions, covenants, conditions, restrictions, minor imperfections in title and other charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

      (6) any interest or title of a lessor under any Capitalized Lease Obligation permitted pursuant to clause (9) of the definition of “Permitted Indebtedness”; provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation;

      (7) Liens securing Purchase Money Indebtedness permitted pursuant to clause (9) of the definition of “Permitted Indebtedness”;

      (8) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

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      (9) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof;

      (10) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off;

      (11) Liens securing Interest Swap Obligations which Interest Swap Obligations relate to Indebtedness that is otherwise permitted under the Indenture;

      (12) Liens securing Indebtedness under Currency Agreements that are permitted under the Indenture;

      (13) Liens securing Acquired Indebtedness incurred in accordance with the “— Limitation on Incurrence of Additional Indebtedness” covenant; provided that:

      (a) such Liens secured such Acquired Indebtedness at the time of and prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company and were not granted in connection with, or in anticipation of, the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company; and

      (b) such Liens do not extend to or cover any property or assets of the Company or of any of its Restricted Subsidiaries other than the property or assets that secured the Acquired Indebtedness prior to the time such Indebtedness became Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company and are no more favorable to the lienholders than those securing the Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Company or a Restricted Subsidiary of the Company;

      (14) Liens existing as of the Issue Date and securing Indebtedness permitted to be outstanding under clause (3) of the definition of the term “Permitted Indebtedness” to the extent and in the manner such Liens are in effect on the Issue Date;

      (15) Liens securing the Notes and all other monetary obligations under the Indenture and the Guarantees;

      (16) Liens securing Indebtedness under the Credit Agreement to the extent such Liens are subject to the provisions of the Intercreditor Agreement and such Indebtedness is permitted under clause (2) or (16) of the definition of the term “Permitted Indebtedness” and all other Obligations thereunder;

      (17) Liens securing Indebtedness of Foreign Restricted Subsidiaries to the extent such Indebtedness is permitted under clause (15) of the definition of the term “Permitted Indebtedness”; provided, however, that no asset of the Company or any Domestic Restricted Subsidiary shall be subject to any such Lien; and

      (18) Liens securing Refinancing Indebtedness which is incurred to Refinance any Indebtedness which has been secured by a Lien permitted under this paragraph and which has been incurred in accordance with the “— Limitation on Incurrence of Additional Indebtedness” provisions of the Indenture; provided, however, that such Liens: (i) are no less favorable to the Holders and are not more favorable to the lienholders with respect to such Liens than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries not securing the Indebtedness so Refinanced.

      “Person” means an individual, partnership, corporation, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

      “Pledge Agreement” means the Pledge Agreement, dated as of the Issue Date, made by the Company and the Guarantors that become parties thereto in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.

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      “Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation.

      “Purchase Money Indebtedness” means Indebtedness of the Company and its Restricted Subsidiaries incurred for the purpose of financing all or any part of the purchase price, or the cost of installation, construction or improvement, of property or equipment, provided, that (1) the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost, (2) such Indebtedness shall not be secured by a Lien on any property or assets of the Company or any Restricted Subsidiary of the Company other than such property or assets so acquired or constructed and improvements thereto with such financing and (3) such Indebtedness is incurred either concurrently or within 30 days of such acquisition, installation, construction or improvement.

      “Qualified Capital Stock” means any Capital Stock that is not Disqualified Capital Stock.

      “RCF Excess Cash Flow Offer Conditions” means, as of any date of determination, (i) both before and after giving effect to the payment to be made pursuant to an Excess Cash Flow Offer, no default or event of default shall have occurred and be continuing under the Credit Agreement, and (ii) (A) if the Company will not borrow under the Credit Agreement to make such payment, the Company shall have had the ability to draw at least $5,000,000 under the Credit Agreement for the thirty-day period ending on the date of such payment and believes that it will continue to have such ability for the thirty-day period commencing on such date, and (B) if the Company will borrow under the Credit Agreement to make all or any portion of such payment, the Company shall have had the ability to draw at least $10,000,000 under the Credit Agreement for the thirty-day period ending on the date of such payment and believes that it will continue to have such ability for the thirty-day period commencing on such date. Each condition set forth in the immediately preceding sentence shall only be applicable to the extent the Credit Agreement contains a covenant containing such condition that prohibits the Company from consummating any Excess Cash Flow Offer.

      “RCF Priority Collateral” means all existing and after-acquired inventory, accounts receivable, lockboxes, deposit accounts into which payments therefor are deposited and proceeds thereof of the Company and the Guarantors.

      “Reference Treasury Dealer” means any primary U.S. government securities dealer in the City of New York selected by the Company.

      “Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date.

      “Refinance” means, in respect of any security or Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue a security or Indebtedness in exchange or replacement for, such security or Indebtedness in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

      “Refinancing Indebtedness” means any Refinancing by the Company or any Restricted Subsidiary of the Company of Indebtedness incurred in accordance with the “— Limitation on Incurrence of Additional Indebtedness” covenant (other than pursuant to Permitted Indebtedness) or clauses (1), (3) or (10) of the definition of Permitted Indebtedness, in each case that does not:

      (1) have an aggregate principal amount (or, if such Indebtedness is issued with original issue discount, an aggregate offering price) greater than the sum of (x) the aggregate principal amount of the Indebtedness being Refinanced (or, if such Indebtedness being Refinanced is issued with original issue discount, the aggregate accreted value) as of the date of such proposed Refinancing, (y) the amount of accrued but unpaid interest thereon and any premium required to be paid thereon under the terms of the instrument governing such Indebtedness and (z) the amount of reasonable fees, expenses and defeasance costs relating to the Refinancing of such Indebtedness being Refinanced;

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      (2) create Indebtedness with: (a) a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or (b) a final maturity earlier than the final maturity of the Indebtedness being Refinanced;

      (3) if the obligor of the Indebtedness that is being Refinanced is the Company, change the obligor or add any additional obligors on such Refinancing Indebtedness;

      (4) affect the security, if any, for such Refinancing Indebtedness (except to the extent that less security is granted to holders of such Refinancing Indebtedness); or

      (5) afford the holders of such Refinancing Indebtedness covenants, defaults, rights or remedies more burdensome to the obligors than those contained in the Indebtedness being refinanced.

      If such Indebtedness being Refinanced is subordinate or junior by its terms to the Notes, then such Refinancing Indebtedness shall be subordinate by its terms to the Notes at least to the same extent and in the same manner as the Indebtedness being Refinanced.

      “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the Issue Date, between the Company, the Guarantors and the Initial Purchaser, as the same may be amended or modified from time to time in accordance with the terms thereof.

      “Related Businesses” means any business in which the Company or any Restricted Subsidiary of the Company was engaged on the Issue Date and any other businesses that in the good faith judgment of the Board of Directors of the Company are similar or reasonably related to the businesses in which the Company and its Restricted Subsidiaries are engaged on the Issue Date.

      “Restricted Subsidiary” of any Person means any Subsidiary of such Person which at the time of determination is not an Unrestricted Subsidiary. Unless the context otherwise requires, references to Restricted Subsidiaries shall be deemed to be references to Restricted Subsidiaries of the Company.

      “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

      “Security Agreement” means the Security Agreement, dated as of the Issue Date, made by the Company and the Guarantors in favor of the Collateral Agent, as amended or supplemented from time to time in accordance with its terms.

      “Shared Collateral” means all Collateral other than the Notes Priority Collateral, the RCF Priority Collateral and any Foreign Collateral.

      “Significant Subsidiary” with respect to any Person, means any Restricted Subsidiary of such Person that satisfies the criteria for a “significant subsidiary” set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.

      “Specified Issuance” means any issuance of Qualified Capital Stock described in clause (10) of the second paragraph of the “— Limitation on Restricted Payments” covenant.

      “Specified Transaction” means any transaction consummated after the Issue Date pursuant to which (1) the Company or any Restricted Subsidiary of the Company acquires (a) all of the Capital Stock of any Person engaged in a Related Business or (b) all or substantially all of the assets of any Person constituting a business or business line that is a Related Business, or (2) any Person engaged in a Related Business acquires all of the Capital Stock or all or substantially all of the assets of the Company in accordance with the “— Merger, Consolidation and Sale of Assets” covenant and pursuant thereto becomes the issuer of the Notes, in each such case, for aggregate consideration in excess of $1,000,000.

      “Subsidiary” with respect to any Person, means:

      (1) any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or

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      (2) any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person.

      “Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption period.

      “Unrestricted Cash” means, at any time, cash and Cash Equivalents of the Company and its Restricted Subsidiaries to the extent such cash and Cash Equivalents is (i)(a) not subject to any Lien (other than a Permitted Lien described in clause (15) or (16) of the definition thereof) or (b) on deposit in, or credited to, any escrow or similar account and (ii) included in “cash and cash equivalents” and not “restricted cash” on the consolidated balance sheet of the Company or any such Restricted Subsidiary.

      “Unrestricted Subsidiary” of any Person means:

      (1) any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below; and

      (2) any Subsidiary of an Unrestricted Subsidiary.

      The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated, provided that:

      (1) the Company certifies to the Trustee that such designation complies with the “— Limitation on Restricted Payments” covenant; and

      (2) each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.

      The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if:

      (1) immediately after giving effect to such designation, the Company is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the “— Limitation on Incurrence of Additional Indebtedness” covenant; and

      (2) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

      Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

      “Voting Stock” means, with respect to any Person, securities of any class or classes of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

      “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing (1) the then outstanding aggregate principal amount of such Indebtedness into (2) the sum of the total of the products obtained by multiplying:

      (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by

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      (b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

      “Wholly-Owned Subsidiary” of any Person means any Restricted Subsidiary of such Person of which all the outstanding Capital Stock (other than in the case of a Foreign Subsidiary, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to applicable law) are owned by such Person or any Wholly-Owned Subsidiary of such Person.

Exchange Offer; Registration Rights

      The Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Initial Purchaser on the original issue date of the Units (“Issue Date”) pursuant to which the Company agreed that, at its expense, for the benefit of the holders of the Notes, it will use its reasonable best efforts to:

•  on a date that is within 120 days after the Issue Date (the “Filing Date”), file a registration statement on an appropriate registration form (the “Exchange Offer Registration Statement”) with respect to a registered offer (the “Exchange Offer”) to exchange the Outstanding Notes for the Exchange Notes, guaranteed on a senior secured basis by the Guarantors, which Exchange Notes will have terms substantially identical in all material respects to the Notes (except that the Exchange Notes will not contain terms with respect to transfer restrictions); and

•  cause the Exchange Offer Registration Statement to be declared effective under the Securities Act within 210 days after the Issue Date.

      Upon the Exchange Offer Registration Statement being declared effective, the Company will offer the Exchange Notes (and the related Guarantees) in exchange for surrender of the Outstanding Notes (and the related Guarantees). The Company will keep the Exchange Offer open for not less than 20 business days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the holders. For each of the Outstanding Notes surrendered to the Company pursuant to the Exchange Offer, the holder who surrendered such Outstanding Note will receive an Exchange Note having a principal amount equal to that of the surrendered Outstanding Note. Interest on each Exchange Note will accrue:

      (A) from the later of:

•  the last interest payment date on which interest was paid on the Outstanding Note surrendered in exchange therefor; or

•  if the Note is surrendered for exchange on a date in a period that includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date; or

      (B) if no interest has been paid on such Note, from the Issue Date.

      Under existing interpretations of the SEC contained in several no-action letters to third parties, the Exchange Notes (and the related Guarantees) will be freely transferable by holders (other than our affiliates) after the Exchange Offer without further registration under the Securities Act; provided, however, that each holder that wishes to exchange its Outstanding Notes for Exchange Notes will be required to represent:

•  that any Exchange Notes to be received by it will be acquired in the ordinary course of its business;

•  that at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of Securities Act) of the Exchange Notes in violation of the Securities Act;

•  that it is not an “affiliate” (as defined in Rule 405 promulgated under the Securities Act) or ours;

•  if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of Exchange Notes; and

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•  if such holder is a broker-dealer (a “Participating Broker-Dealer”) that will receive Exchange Notes for its own account in exchange for Notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such Exchange Notes.

      The Company has agreed to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of Exchange Notes.

      If:

•  because of any change in law or in currently prevailing interpretations of the Staff of the SEC, the Company is not permitted to effect the Exchange Offer;

•  the Exchange Offer is not consummated within 45 days from the date the Exchange Offer Registration Statement was declared effective;

•  in certain circumstances, certain holders of unregistered Exchange Notes so request; or

•  in the case of any holder that participates in the Exchange Offer, such holder does not receive Exchange Notes on the date of the exchange that may be sold without restriction under state and federal securities laws,

then in each case, the Company will (x) promptly deliver to the holders and the Trustee written notice thereof and (y) at the Company’s sole expense, (a) as promptly as practicable, file a shelf registration statement covering resales of the Notes (the “Shelf Registration Statement”), and (b) use its reasonable best efforts to keep effective the Shelf Registration Statement until the earlier of two years after the Issue Date or such time as all of the applicable Notes have been sold thereunder.

      The Company will, in the event that a Shelf Registration Statement is filed, provide to each holder copies of the prospectus that is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement for the Notes has become effective and take certain other actions as are required to permit unrestricted resales of the Notes. A holder that sells Notes pursuant to the Shelf Registration Statement will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a holder (including certain indemnification rights and obligations).

      Notwithstanding anything to the contrary in the Registration Rights Agreement, upon notice to the holders of the Notes, the Company may postpone the filing of, or suspend the effectiveness of, any registration statement or amendment thereto, or suspend use of any prospectus and shall not be required to amend or supplement the registration statement, any related prospectus or any document incorporated therein by reference (other than an effective registration statement being used for an underwritten offering) in the event that, and for a period of time (a “Blackout Period”) not to exceed an aggregate of 60 days in any twelve-month period, the Company’s Board of Directors determines, in good faith, that (1) an event or circumstance occurs and is continuing as a result of which the registration statement, any related prospectus or any document incorporated therein by reference as then amended or supplemented or proposed to be filed would contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (2) (a) the disclosure of such event, occurrence or other item at such time could reasonably be expected to have a material adverse effect on our business, operations or prospects, or (b) permitting such sales would interfere with any material business transaction that has not been publicly disclosed and our Board of Directors also determines, in good faith, that any disclosure thereof would jeopardize the success of the transaction or that disclosure of the transaction is prohibited pursuant to the terms thereof.

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      If the Company fails to meet the targets listed above, then additional interest (the “Additional Interest”) shall become payable in respect of the Notes as follows:

      (1) if (A) neither the Exchange Offer Registration Statement nor the Shelf Registration Statement is filed with the SEC on or prior the 120th day after the Issue Date or (B) notwithstanding that the Company has consummated or will consummate an Exchange Offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not filed on or prior to the date required by the Registration Rights Agreement, then commencing on the day after either such required filing date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.25% per annum for the first 90 days immediately following each such filing date, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each subsequent 90-day period;

      (2) if (A) neither the Exchange Offer Registration Statement nor a Shelf Registration Statement is declared effective by the SEC on or prior to the 210th day after the Issue Date or (B) notwithstanding that the Company has consummated or will consummate an Exchange Offer, the Company is required to file a Shelf Registration Statement and such Shelf Registration Statement is not declared effective by the SEC on or prior to the later of (x) the 90th day following the date such Shelf Registration Statement was filed and (y) the 210th day after the Issue Date, then, commencing on the day after either such required effective date, Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.25% per annum for the first 90 days immediately following such date, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each subsequent 90-day period; or

      (3) if (A) the Company has not exchanged Exchange Notes for all Outstanding Notes validly tendered in accordance with the terms of the Exchange Offer on or prior to the date that is 45 days from the date the Exchange Offer Registration Statement was required to be declared effective or (B) if applicable, the Shelf Registration Statement has been declared effective and such Shelf Registration Statement ceases to be effective at any time prior to the second anniversary of the Issue Date (other than during any Blackout Period relating to such Shelf Registration Statement or after such time as all Notes have been disposed of thereunder), then Additional Interest shall accrue on the principal amount of the Notes at a rate of 0.25% per annum for the first 90 days commencing on (x) the 46th day after such effective date, in the case of (A) above, or (y) the day such Shelf Registration Statement ceases to be effective, in the case of (B) above, such Additional Interest rate increasing by an additional 0.25% per annum at the beginning of each subsequent 90-day period;

provided, however, that Additional Interest will not accrue under more than one of the foregoing clauses (1), (2) or (3) at any one time; provided further, however, that the amount of Additional Interest accruing will not exceed 1.0% per annum; provided further, however, that (a) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (1) above), (b) upon the effectiveness of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (2) above), or (c) upon the exchange of Exchange Notes for all Notes tendered (in the case of clause (3)(A) above), or upon the effectiveness of the Shelf Registration Statement that had ceased to remain effective (in the case of clause (3)(B) above), Additional Interest on the Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue.

      Any amounts of Additional Interest that have accrued pursuant to clause (1), (2) or (3) above will be payable in cash on the same original interest payment dates as the Notes.

      This summary of the provisions of the Registration Rights Agreement does not purport to be complete, but it does discuss the provisions that are, in our view, material for investors in the Notes, and is subject to all the provisions of the Registration Right Agreement, a copy of which is available from us upon request.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

      The following is a summary of the material United States federal income tax consequences relating to the Exchange Offer and the acquisition, ownership and disposition of the Outstanding Notes and the Exchange Notes. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations and judicial decisions and administrative interpretations thereunder, as of the date hereof, all of which are subject to change, possibly with retroactive effect, and are subject to different interpretations. The following summary is not binding on the IRS and there can be no assurance that the IRS will take a similar view with respect to the tax consequences described below. No ruling has been or will be requested by the Company from the IRS on any tax matters relating to the Outstanding Notes, the Exchange Notes or the Exchange Offer.

      This summary does not purport to address all of the possible federal income tax consequences or any state, local or foreign tax consequences of the Exchange Offer or the acquisition, ownership and disposition of the Outstanding Notes or the Exchange Notes. It is limited to investors who purchased the Outstanding Notes in the original offering at the offering price, and who will hold the Outstanding Notes or the Exchange Notes as capital assets. It does not address the federal income tax consequences that may be relevant to particular investors in light of their unique circumstances or to certain types of investors (such as dealers in securities, insurance companies, financial institutions, banks and tax-exempt entities) or to investors that will hold the Outstanding Notes or the Exchange Notes as a part of a straddle, hedge, constructive sale or synthetic security transaction for federal income tax purposes, all of whom may be subject to special treatment under federal income tax laws.

      Investors are expected to consult with their own tax advisors as to the particular tax consequences to them of the Exchange Offer and the acquisition, ownership and disposition of the Outstanding Notes and the Exchange Notes, including the effect and applicability of state, local or foreign tax laws or any tax treaty.

      For purposes of this summary, the term “U.S. holder” means:

      (1) an individual who is a citizen or resident of the U.S.;

      (2) an entity taxable as a corporation for U.S. federal income tax purposes, which is created or organized in or under the laws of the United States, any state therein or the District of Columbia;

      (3) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

      (4) a trust, if (a) a court within the U.S. is able to exercise primary supervision over such trust’s administration and one or more U.S. persons have the authority to control all substantial decisions of such trust, or (b) the trust has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

      If a partnership (including any entity treated as a partnership or other pass-through entity for United States federal income tax purposes) is a holder of an Outstanding Note or an Exchange Note, the United States federal income tax treatment of a partner in such a partnership will generally depend on the status of the partner and the activities of the partnership. Partners and partnerships should consult their own tax advisors as to the particular federal income tax consequences applicable to them of the partnership’s acquisition, ownership and disposition of the Outstanding Notes and the Exchange Notes.

      For purposes of this summary, the term “non-U.S. holder” means a holder that is not a U.S. holder.

U.S. Holders

      Exchange Offer. Because the Exchange Notes have terms that are substantially identical to the terms of the Outstanding Notes, the exchange of Outstanding Notes for Exchange Notes pursuant to the Exchange Offer will not be a taxable transaction for federal income tax purposes. As a result, (a) a U.S. holder will not recognize gain or loss as a result of the exchange of the Outstanding Notes for the Exchange Notes, and (b) a

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U.S. holder will have the same tax basis and holding period in the Exchange Notes received as in the Outstanding Notes surrendered in exchange therefor.

      Payments of Interest. Payments of interest to a U.S. holder on an Outstanding Note or an Exchange Note are includible in income as ordinary interest income in accordance with the U.S. holder’s usual method of accounting for federal income tax purposes.

      Disposition of Outstanding Notes or Exchange Notes. Upon the sale, exchange, redemption or other disposition of an Outstanding Note or an Exchange Note, except in the case of an exchange pursuant to the Exchange Offer (see “ — U.S. Holders — Exchange Offer” above), a U.S. holder generally will recognize gain or loss equal to the difference between (a) the amount of cash plus the fair market value of any property received by the U.S. holder upon such sale, exchange, redemption or other taxable disposition of the Outstanding Note or the Exchange Note (other than amounts attributable to accrued but unpaid interest which, if not previously included in the U.S. holder’s income, will be treated as interest paid on the notes and included in income) and (b) the U.S. holder’s adjusted tax basis in such debt instrument. Such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the Outstanding Notes or the Exchange Notes have been held for more than one year at the time of the sale or other disposition. The deductibility of capital losses is subject to certain limitations.

      Information Reporting and Backup Withholding. In general, information reporting requirements will apply to certain payments of principal and interest on the Outstanding Notes and the Exchange Notes and the proceeds of sale of the Outstanding Notes and the Exchange Notes unless the U.S. holder is an exempt recipient. A backup withholding tax (the rate of which currently is 28%) will apply to such payments if the U.S. holder fails to provide its taxpayer identification number or certification of exempt status, provides an incorrect taxpayer identification number, or has been notified by the IRS that it is subject to backup withholding.

      Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS, provided the required information is properly furnished to the IRS on a timely basis. U.S. holders should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining such exemption.

Non-U.S. Holders

      Exchange Offer. Because the Exchange Notes have terms that are substantially identical to the terms of the Outstanding Notes, the exchange of Outstanding Notes for Exchange Notes pursuant to the Exchange Offer will not be a taxable transaction for federal income tax purposes. See “— U.S. Holders — Exchange Offer.” As a result, there will be no federal income tax consequences to non-U.S. holders exchanging the Outstanding Notes for Exchange Notes pursuant to the Exchange Offer.

      Payments of Interest. Subject to the discussion below concerning information reporting and backup withholding, payments of interest to non-U.S. holders on an Outstanding Note or an Exchange Note will not be subject to federal income or withholding tax provided that the interest is not effectively connected with the conduct of a trade or business within the United States by the non-U.S. holder (or, if a tax treaty applies, such interest is not attributable to a permanent establishment in the United States), so long as the non-U.S. holder, among other things, (a) does not actually or constructively own 10% or more of the total combined voting power of all classes of Company stock entitled to vote, (b) is not, for federal income tax purposes, a controlled foreign corporation that is related to the Company through stock ownership, a foreign tax-exempt organization, or foreign private foundation for federal income tax purposes, and (c) certifies, on the IRS Form W-8BEN (or successor form) under penalty of perjury, that it is a non-U.S. holder and provides its name and address. If none of these three exceptions apply, the non-U.S. holder’s interest on such note would generally be subject to withholding tax at a flat rate of 30% or a lower applicable treaty rate.

      Non-U.S. partnerships and certain other non-U.S. entities that would otherwise be required to make the certification described in clause (c) of the prior paragraph generally will be required to provide an IRS

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Form W-8IMY (or successor form) and appropriate certification from each partner or member. Non-U.S. holders should consult their tax advisors regarding these and possible additional reporting requirements applicable to them in their particular circumstances.

      If a non-U.S. holder is engaged in a trade or business in the United States and interest on an Outstanding Note or an Exchange Note is effectively connected with the conduct of that trade or business (and, if a tax treaty applies, such interest is attributable to a permanent establishment in the United States), the non-U.S. holder will be subject to federal income tax on that interest on a net income basis (but will be exempt from withholding tax) in the same manner as if the holder was a United States person. In addition, a non-U.S. holder that is a corporation may be subject to branch profits tax equal to 30% (or a lower applicable treaty rate) of its earnings and profits for the taxable year, subject to certain adjustments.

      Payments of interest on an Outstanding Note or an Exchange Note may also be subject to tax under tax laws applicable to certain U.S. expatriates.

      Disposition of Outstanding Notes or Exchange Notes. A non-U.S. holder will generally not be subject to federal income tax on gain recognized on a sale, redemption, or other disposition of the Outstanding Notes or the Exchange Notes unless (a) the gain is effectively connected with the conduct of a trade or business within the United States by the non-U.S. holder (and, if a tax treaty applies, the gain is attributable to a permanent establishment in the United States), (b) in the case of a non-U.S. holder who is a nonresident alien individual, such holder is present in the United States for 183 or more days during the taxable year and certain other requirements are met, or (c) the non-U.S. holder is a nonresident alien individual who is subject to laws applicable to certain U.S. expatriates. In this case, any such gain will be subject to federal income tax on a net income basis in the same manner as if such holder were a United States person. If such holder is a corporation, such gain may also be subject to the branch profits tax described above in “— Non U.S. Holders — Payments of Interest.”

      Information Reporting and Backup Withholding. The Company will, when required, report to the IRS and to each non-U.S. holder the amount of any interest paid on the Outstanding Notes or the Exchange Notes in each calendar year, and the amount of tax withheld, if any, with respect to the payments. This information may also be made available to the tax authorities of a country in which the non-U.S. holder resides. Interest paid on the Outstanding Notes or the Exchange Notes generally will not be subject to backup withholding provided that the non-U.S. holder satisfies the certification requirements described above in “— Non U.S. Holders — Payments of Interest.”

      Information reporting and backup withholding also generally will not apply to a payment of the proceeds of a sale of the Outstanding Notes or the Exchange Notes effected outside the United States by a foreign office of a foreign broker. However, information reporting requirements will apply, and backup withholding may apply, to a payment of the proceeds of a sale of the Outstanding Notes or the Exchange Notes effected outside the United States by a foreign office of a U.S. broker or a foreign broker that has certain types of relationships to the United States, unless the broker has documentary evidence in its records that the holder is a non-U.S. holder and certain conditions are met, or the holder otherwise establishes an exemption. Payment by a U.S. office of a broker of the proceeds of a sale of the Outstanding Notes or the Exchange Notes will be subject to both backup withholding and information reporting unless the holder certifies its non-U.S. status under penalties of perjury or otherwise establishes an exemption.

      Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against that holder’s federal income tax liability provided the required information is properly furnished to the IRS.

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PLAN OF DISTRIBUTION

      Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired as a result of market-making activities or other trading activities. To the extent any such broker-dealer participates in the Exchange Offer, we have agreed that for a period of up to 180 days after the registration statement with respect to the Exchange Notes becomes effective, we will make this prospectus, as amended or supplemented, available to such broker-dealer for use in connection with any such resale, and will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents. In addition, until        l       , 2004, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus.

      We will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at prevailing market prices at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers or any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an underwriter within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter within the meaning of the Securities Act.

      For a period of 180 days after the registration statement with respect to the Exchange Notes becomes effective, or such shorter period as will terminate when all Outstanding Notes acquired by broker-dealers for their own accounts as a result of market-making activities or other trading activities have been exchanged for Exchange Notes and such Exchange Notes have been resold by such broker-dealers, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal.

LEGAL MATTERS

      The enforceability of the Exchange Notes will be passed upon for the Company by Jenner & Block LLP, Chicago, Illinois.

EXPERTS

      The financial statements as of December 31, 2002 and for each of the two years in the period ended December 31, 2002 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP (“PwC”), independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

      The financial statements as of December 31, 2003 and for the year ended December 31, 2003 included in this prospectus have been so included in reliance on the report of Grant Thornton LLP (“Grant Thornton”), independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

      On September 15, 2003, the Company dismissed PwC and engaged Grant Thornton as our independent registered public accounting firm. The decision to change such firms was recommended by our audit

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committee and unanimously ratified by our board of directors. The reports of PwC on our financial statements as of December 31, 2002 and for each of the two years in the period ended December 31, 2002 contained no adverse opinion or disclaimer of opinion and, except as noted in the next sentence, were not qualified or modified as to uncertainty, audit scope or accounting principle. PwC’s report on such financial statements included an explanatory paragraph that described substantial doubt about our ability to continue as a going concern. During the two years in the period ended December 31, 2002 and through September 15, 2003, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in its report on our financial statements for such years; nor were there any “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K. In addition, we did not consult with Grant Thornton with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements.

FORWARD-LOOKING STATEMENTS

      This prospectus includes “forward-looking statements.” Forward-looking statements are those that do not relate solely to historical fact. These statements relate to future events or our future financial performance and implicate known and unknown risks, uncertainties and other factors that may cause the actual results, performances or levels of activity of our business or our industry to be materially different from that expressed or implied by any such forward-looking statements. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. In some cases, you can identify forward-looking statements by use of words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” “will,” “would,” “could,” “predict,” “propose,” “potential,” “may” or words or phrases of similar meaning. Statements concerning our financial position, business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, plans, references to future success and other similar matters are forward-looking statements. Forward-looking statements may relate to, among other things:

•  our ability to meet liquidity requirements and to fund necessary capital expenditures;

•  the strength of demand for our products, prices for our products and changes in overall demand;

•  assessment of market and industry conditions and changes in the relative market shares of industry participants;

•  consumption patterns and consumer preferences;

•  the effects of competition;

•  our ability to realize operating improvements and anticipated cost savings, including with respect to the planned termination of certain postretirement medical and pension benefits;

•  pending or future legal proceedings and regulatory matters, including but not limited to proceedings, claims or problems related to environmental issues, or the impact of any adverse outcome of any currently pending or future litigation on the adequacy of our reserves;

•  general economic conditions and their effect on our business;

•  changes in the cost or availability of raw materials;

•  the cost of and compliance with environmental laws and other governmental regulations;

•  our results of operations for future periods;

•  our anticipated capital expenditures;

•  our ability to pay, and our intentions with respect to the payment of, dividends on shares of our capital stock;

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•  our ability to protect our intellectual property; and

•  our strategy for the future.

      These forward-looking statements are not guarantees of future performance. Forward-looking statements are based on management’s expectations that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause actual results to differ materially from trends, plans or expectations set forth in the forward-looking statements. These risks and uncertainties may include those discussed in “Risk Factors.” Other risks besides those listed in “Risk Factors” can adversely affect us, and new risk factors can emerge from time to time. It is not possible for us to predict all of these risks, nor can we assess the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in the forward-looking statements. Given these risks and uncertainties, we urge you to read this prospectus completely and with the understanding that actual future results may be materially different from what we plan or expect. We will not update these forward-looking statements even if our situation changes in the future.

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INDEX TO FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS OF

VISKASE COMPANIES, INC. AND SUBSIDIARIES

	Page
Report of Grant Thornton LLP, Independent Registered Public Accounting Firm		F-2
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm		F-3
Consolidated Balance Sheets as of December 31, 2002 and 2003		F-4
Consolidated Statements of Operations for the Years Ended December 31, 2001 and 2002, the Period January 1 through April 2, 2003, and the Period April 3 through December 31, 2003		F-5
Consolidated Statements of Stockholders’ Deficit as of December 31, 2001 and 2002, April 2, 2003 and December 31, 2003		F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001 and 2002, the Period January 1 through April 2, 2003 and the Period April 3 through December 31, 2003		F-7
Notes to Consolidated Financial Statements		F-8
Schedule II — Valuation and Qualifying Accounts		F-43
Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003 (unaudited)		F-44
Unaudited Consolidated Statements of Operations for the Three Months Ended September 30, 2004 and September 30, 2003 and for the Nine Months Ended September 30, 2004 and the Period January 1, 2003 through April 2, 2003 and April 3, 2003 through September 30, 2003		F-45
Unaudited Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2004 and the Period January 1, 2003 through April 2, 2003 and April 3, 2003 through September 30, 2003		F-46
Notes to Interim Consolidated Financial Statements — Unaudited		F-47

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Viskase Companies, Inc.

      We have audited the accompanying consolidated balance sheet of Viskase Companies, Inc. (a Delaware corporation) and Subsidiaries as of December 31, 2003, and the related consolidated statements of income, stockholders’ deficit and cash flows for the period from January 1, 2003 through April 2, 2003 and April 3, 2003 through December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Viskase Companies, Inc. and Subsidiaries as of and for the year ended December 31, 2002 and for each of the two years in the period then ended, were audited by other auditors, whose report thereon, dated March 14, 2003, included an explanatory paragraph that described the Company’s filing of its voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code, which raised substantial doubt about the Company’s ability to continue as a going concern and that the financial statements were prepared assuming the Company and its subsidiaries will continue as a going concern.

      We conducted our audit in accordance with the standards of the Public Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

      As discussed in Note 2 to the consolidated financial statements, the Company’s plan of reorganization under Chapter 11 of the United States Bankruptcy Code became effective on April 2, 2003. As a result of the adoption of “fresh-start” reporting in accordance with Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,” the consolidated financial statements as of and for the year ended December 31, 2003 and for the period from April 3, 2003 to December 31, 2003 are presented on a different basis than the periods before the emergence from bankruptcy, and are therefore not comparable.

      In our opinion, the 2003 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Viskase Companies, Inc. and Subsidiaries as of December 31, 2003, and the results of their operations and their cash flows for the period from January 1, 2003 through April 2, 2003 and April 3, 2003 through December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

Grant Thornton LLP

Chicago, Illinois

April 4, 2004

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Viskase Companies, Inc.

      In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of shareholders’ deficit and of cash flows present fairly, in all material respects, the financial position of Viskase Companies, Inc. and its subsidiaries (the “Company”) at December 31, 2002, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. In addition, the accompanying financial statement schedule for each of the two years in the period ended December 31, 2002 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      The accompanying consolidated financial statements have been prepared assuming that Viskase Companies, Inc. and its subsidiaries will continue as a going concern. As more fully described in Note 2 to the consolidated financial statements, on November 13, 2002, Viskase Companies, Inc. filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s intentions with respect to this matter are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

PricewaterhouseCoopers LLP

Chicago, Illinois

March 14, 2003

F-3

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			Predecessor Company			Reorganized Company
			Year Ended			Year Ended
			December 31, 2002			December 31, 2003
			(In thousands)
ASSETS
Current assets
	Cash and cash equivalents		$	27,700		$	23,160
	Restricted cash			28,347			26,245
	Receivables, net			25,563			29,065
	Inventories			30,587			31,738
	Other current assets			7,245			8,309
		Total current assets		119,442			118,517
Property, plant and equipment, including those under capital leases				246,434			99,839
	Less accumulated depreciation and amortization			154,088			17,109
		Property, plant and equipment, net		92,346			82,730
Deferred financing costs, net				39			222
Other assets				6,854			10,624
		Total assets	$	218,681		$	212,093
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
	Short-term debt including current portion of long-term debt and obligations under capital leases		$	64,283		$	21,303
	Accounts payable			11,649			14,893
	Accrued liabilities			27,918			28,276
	Current deferred income taxes			1,597			1,844
		Total current liabilities		105,447			66,316
Current liabilities subject to compromise				188,198			—
Long-term debt including obligations under capital leases				85			69,850
Accrued employee benefits				75,621			100,652
Noncurrent deferred income taxes				24,476			16,375
Commitments and contingencies				—			—
Stockholders’ deficit
	Preferred stock, $0.01 par value; none outstanding			—			—
	Common stock, $0.01 par value; issued and outstanding, 15,314,562 shares at December 31, 2002 and 10,670,053 shares at December 31, 2003			153			106
	Paid in capital			138,007			894
	Accumulated (deficit)			(291,904	)		—
	Accumulated (deficit) from April 3 through December 31, 2003			—			(46,627	)
	Accumulated other comprehensive income (loss)			(21,323	)		4,547
	Unearned restricted stock issued for future service			(79	)		(20	)
		Total stockholders’ (deficit)		(175,146	)		(41,100	)
		TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	218,681		$	212,093

The accompanying notes are an integral part of the consolidated financial statements.

F-4

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

				Predecessor Company									Reorganized
													Company
													April 3
				Year Ended December 31,						January 1			Through
										Through			December 31,
				2001			2002			April 2, 2003			2003
				(In thousands, except for number of shares and per share amounts)
Net sales				$	189,315		$	183,577		$	45,402		$	152,408
Costs and expenses
	Cost of sales				156,258			146,841			38,031			119,989
	Selling, general and administrative				40,027			38,526			8,890			24,664
	Amortization of intangibles				2,000			2,000			500			809
	Restructuring expense (income)				4,766			(6,132	)		—			954
	Asset write-down and charge for goodwill impairment				—			—			—			46,805
		Operating income (loss)			(13,736	)		2,342			(2,019	)		(40,813	)
Interest income					2,479			1,161			323			517
Interest expense					25,520			22,222			1,204			10,362
Other (income) expense, net					3,445			(1,493	)		(1,505	)		(3,844	)
Gain on early extinguishment of debt net of income tax provision of $0 in 2003 and 2001					(8,137	)		—			(153,946	)		—
		(Loss) income from continuing operations before reorganization expense and income taxes			(32,085	)		(17,226	)		152,551			(46,814	)
Reorganization expense					—			3,401			399			403
		(Loss) income from continuing operations before income taxes			(32,085	)		(20,627	)		152,152			(47,217	)
Income tax (benefit) provision					(3,370	)		(1,297	)		279			(590	)
		(Loss) income from continuing operations			(28,715	)		(19,330	)		151,873			(46,627	)
Discontinued operations Gain on sale from discontinued operations net of income tax provision of $0 in 2001					3,189			—			—			—
Net (loss) income					(25,526	)		(19,330	)		151,873			(46,627	)
Other comprehensive income (loss), net of tax (see Note 18)
	Foreign currency translation adjustments				(129	)		3,711			(845	)		4,547
	Minimum pension liability adjustments				(5,172	)		(21,573	)		—			—
		Other comprehensive income (loss) net of tax			(5,301	)		(17,862	)		(845	)		4,547
		Comprehensive (loss) income		$	(30,827	)	$	(37,192	)	$	151,028		$	(42,080	)
Weighted average common shares — basic and diluted					15,309,616			15,316,183			15,314,553			10,670,053
Per share amounts
	(Loss) earnings per share — basic and diluted
		Continuing operations		$	(1.88	)	$	(1.26	)	$	9.91		$	(4.37	)
		Discontinued operations			—			—			—			—
		Gain on sale from discontinued operations			0.21			—			—			—
			Net (loss) income	$	(1.67	)	$	(1.26	)	$	9.91		$	(4.37	)

The accompanying notes are an integral part of the consolidated financial statements.

F-5

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

											Accumulated Other
											Comprehensive
											(Loss) Income
																	Restricted
											Foreign			Minimum			Stock			Total
											Currency			Pension			Issued for			Stockholders’
		Common			Paid-In			Accumulated			Translation			Liability			Future			Equity
		Stock			Capital			(Deficit)			Adjustments			Adjustments			Service			(Deficit)
		(In thousands)
Predecessor Company
	Balance December 31, 2000	$	153		$	137,967		$	(247,048	)	$	1,840		$	—		$	(309	)	$	(107,397	)
	Net loss		—			—			(25,526	)		—			—			—			(25,526	)
	Issuance of common stock		—			47			—			—			—			124			171
	Other comprehensive (loss)		—			—			—			(129	)		(5,172	)		—			(5,301	)
	Balance December 31, 2001		153			138,014			(272,574	)		1,711			(5,172	)		(185	)		(138,053	)
	Net loss		—			—			(19,330	)		—			—			—			(19,330	)
	Issuance of common stock		—			(7	)		—			—			—			106			99
	Other comprehensive income (loss)		—			—			—			3,711			(21,573	)		—			(17,862	)
	Balance December 31, 2002		153			138,007			(291,904	)		5,422			(26,745	)		(79	)		(175,146	)
	Net income		—			—			151,873			—			—			—			151,873
	Issuance of common stock		—			(3	)		—			—			—			26			23
	Other comprehensive loss		—			—			—			(845	)		—			—			(845	)
	Balance April 2, 2003		153			138,004			(140,031	)		4,577			(26,745	)		(53	)		(24,095	)
	Reorganization adjustments		(153	)		(138,004	)		140,031			(4,577	)		26,745			53			24,095
Reorganized Company
	Distribution of equity in accordance with plan		106			894			—			—			—			(31	)		969
	Balance April 3, 2003		106			894			—			—			—			(31	)		969
	Net loss		—			—			(46,627	)		—			—			—			(46,627	)
	Issuance of common stock		—			—			—			—			—			11			11
	Other comprehensive income		—			—			—			4,547			—			—			4,547
	Balance December 31, 2003	$	106		$	894		$	(46,627	)	$	4,547		$	—		$	(20	)	$	(41,100	)

The accompanying notes are an integral part of the consolidated financial statements.

F-6

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

					Predecessor Company
														Reorganized
														Company
					Year Ended						January 1			April 3
					December 31,						Through			Through
											April 2,			December 31,
					2001			2002			2003			2003
					(In thousands)
Cash flows from operating activities
	Net (loss) income				$	(25,526	)	$	(19,330	)	$	151,873		$	(46,627	)
	Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
		Depreciation and amortization under capital leases				21,125			20,959			4,838			9,258
		Amortization of intangibles				2,000			2,000			500			809
		Amortization of deferred financing fees and discount				185			18			3			68
		Reorganization expense				—			3,401			399			403
		Decrease in deferred income taxes				(698	)		(718	)		(339	)		(1,052	)
		Foreign currency transaction (gain) loss				533			(920	)		311			(1,251	)
		Gain on disposition of assets				(2,807	)		(27	)		(330	)		(195	)
		Bad debt provision				425			558			113			448
		Net property, plant and equipment write-off				4,766			1,029			—			—
		Goodwill and intangibles write-off				—			—			—			46,805
		Gain on debt extinguishment				(8,137	)		—			(153,946	)		—
		Changes in operating assets and liabilities
			Receivables			803			2,746			(1,358	)		(179	)
			Inventories			9,596			507			(1,407	)		2,638
			Other current assets			6,361			2,860			(2,143	)		1,563
			Accounts payable and accrued liabilities			(30,111	)		4,432			(1,429	)		(119	)
			Other			4,155			749			(404	)		4,076
				Total adjustments		8,196			37,594			(155,192	)		63,272
				Net cash provided by (used in) operating activities before reorganization expense		(17,330	)		18,264			(3,319	)		16,645
Net cash used for reorganization items						—			(1,259	)		(386	)		(403	)
Cash flows from investing activities
	Capital expenditures					(5,882	)		(3,824	)		(527	)		(3,764	)
	Proceeds from disposition of assets					11,156			575			1,302			2,373
	Restricted cash					14,480			(1,789	)		(4	)		2,106
				Net cash provided by (used in) investing activities		19,754			(5,038	)		771			715
Cash flows from financing activities
	Deferred financing costs					(2,047	)		—			—			(253	)
	Repayment of revolving loan, long-term borrowings and capital lease obligations					(29,448	)		(8,882	)		(15,242	)		(4,265	)
				Net cash (used in) financing activities		(31,495	)		(8,882	)		(15,242	)		(4,518	)
Effect of currency exchange rate changes on cash						(739	)		(925	)		354			843
Net increase (decrease) in cash and equivalents						(29,810	)		2,160			(17,822	)		13,282
Cash and equivalents at beginning of period						55,350			25,540			27,700			9,878
Cash and equivalents at end of period					$	25,540		$	27,700		$	9,878		$	23,160
Supplemental cash flow information and non-cash investing and financing activities
	Interest paid less capitalized interest				$	11,716		$	3,150		$	3,311		$	1,107
	Income taxes paid (refunded)					4,690			(1,210	)		843			2,212

The accompanying notes are an integral part of the consolidated financial statements.

F-7

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Nature of Operations

      The Company is a producer of non-edible cellulosic and plastic casings used to prepare and package processed meat products, and to provide value-added support services relating to these products, for some of the largest global consumer products companies. The Company operates seven manufacturing facilities and eight distribution centers in North America, Europe and Latin America and, as a result, are able to sell our products in most countries throughout the world.

Principles of Consolidation

      The consolidated financial statements include the accounts of the Viskase Companies, Inc. and its wholly-owned subsidiaries (the “Company”). Intercompany accounts and transactions have been eliminated in consolidation.

Reclassification

      Reclassifications have been made to the prior years’ financial statements to conform to the 2003 presentation.

Use of Estimates in the Preparation of Financial Statements

      The preparation of financial statements includes the use of estimates and assumptions that affect a number of amounts included in the Company’s financial statements, including, among other things, pensions and other post-retirement benefits and related disclosures, inventories valued under the last-in-first-out method, reserves for excess and obsolete inventory, restructuring charges and income taxes. Management bases its estimates on historical experience and other assumptions that they believe are reasonable. If actual amounts are ultimately different from previous estimates, the revisions are included in the Company’s results for the period in which the actual amounts become known. Historically, the aggregate differences, if any, between the Company’s estimates and actual amounts in any year have not had a significant effect on the Company’s consolidated financial statements.

Cash Equivalents (Dollars in Thousands)

      For purposes of the statement of cash flows, the Company considers cash equivalents to consist of all highly liquid debt investments purchased with an initial maturity of approximately three months or less. Due to the short-term nature of these instruments, the carrying values approximate the fair market value. Cash equivalents and restricted cash include $44,172 and $52,193 of short-term investments at December 31, 2003 and December 31, 2002, respectively. The 2003 restricted cash is principally cash held as collateral for outstanding letters of credit with a commercial bank.

Inventories

      Domestic inventories are valued primarily at the lower of last-in, first-out (“LIFO”) cost or market. Remaining inventories, primarily foreign, are valued at the lower of first-in, first-out (“FIFO”) cost or market.

Property, Plant and Equipment

      The Company carries property, plant and equipment at cost less accumulated depreciation. Property and equipment additions include acquisition of property and equipment and costs incurred for computer software purchased for internal use including related external direct costs of materials and services and payroll costs for employees directly associated with the project. Upon retirement or other disposition, cost and related

F-8

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

accumulated depreciation are removed from the accounts, and any gain or loss is included in results of operations. Depreciation is computed on the straight-line method over the estimated useful lives of the assets ranging from (1) building and improvements — 10 to 32 years, (2) machinery and equipment — 4 to 12 years, (3) furniture and fixtures — 3 to 12 years and (4) auto and trucks — 2 to 5 years.

Deferred Financing Costs

      Deferred financing costs are amortized on a straight-line basis over the expected term of the related debt agreement. Amortization of deferred financing costs is classified as interest expense.

Patents

      Patents are amortized on the straight-line method over an estimated average useful life of 10 years.

Goodwill and Intangible Assets (Dollars in Thousands)

      Goodwill and intangible assets that have an indefinite useful life are not amortized and are tested at least annually for impairment. Due to the prepackaged nature of the Bankruptcy Plan, goodwill was tested for impairment by comparing the fair value with its recorded amount. As a result of adopting Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” the Company used a discounted cash flow methodology for determining fair value. This methodology identified an impairment and goodwill in the amount of $44,430 was written off in the fourth quarter of the current year. As part of Fresh-Start Accounting, the Company recognized intangible assets that are being amortized. Non-compete agreements in the amount of $1,236 are being amortized over two years. The intangible backlog in the amount of $2,375 was amortized in its entirety during 2003.

Long-Lived Assets (Dollars in Thousands)

      The Company continues to evaluate the recoverability of long-lived assets including property, plant and equipment, patents and other intangible assets. Impairments are recognized when the expected undiscounted future operating cash flows derived from long-lived assets are less than their carrying value. If impairment is identified, valuation techniques deemed appropriate under the particular circumstances will be used to determine the asset’s fair value. The loss will be measured based on the excess of carrying value over the determined fair value. The review for impairment is performed at least once a year or when circumstances warrant.

Accounts Payable (Dollars in Thousands)

      The Company’s cash management system provides for the daily replenishment of its bank accounts for check-clearing requirements. The outstanding check balances of $79 and $420 at December 31, 2003 and 2002, respectively, are not deducted from cash but are reflected in Accounts Payable in the consolidated balance sheets.

Pensions and Other Post-Retirement Benefits

      The North American operations of the Company and the Company’s operations in Germany have defined benefit retirement plans covering substantially all salaried and full time hourly employees. Pension cost is computed using the projected unit credit method. The discount rate used approximates the average yield for high-quality corporate bonds as of the valuation date. The Company’s funding policy is consistent with funding requirements of the applicable Federal and foreign laws and regulations.

      The North American operations of the Company have postretirement health care and life insurance benefits. The Company accrues for the accumulated postretirement benefit obligation that represents the

F-9

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

actuarial present value of the anticipated benefits. Measurement is based on assumptions regarding such items as the expected cost of providing future benefits and any cost sharing provisions.

Income Taxes

      Deferred tax assets and liabilities are measured using enacted tax laws and tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities due to a change in tax rates is recognized in income in the period that includes the enactment date. In addition, the amounts of any future tax benefits are reduced by a valuation allowance to the extent such benefits are not expected to be realized on a more likely than not basis.

Net Loss Per Share

      Net loss per share of common stock is based upon the weighted-average number of shares of common stock outstanding during the year.

Other Comprehensive Income

      Comprehensive income includes all other non-shareholder changes in equity. As of December 31, 2003, changes in other comprehensive income resulted from changes in foreign currency translation adjustments.

Revenue Recognition

      Substantially all of the Company’s revenues are recognized at the time products are shipped to customer under F.O.B. Shipping Point terms or under F.O.B. Port Terms. Revenues are net of any discounts, rebates and allowances. The Company records all labor, raw materials, in-bound freight, plant receiving and purchasing, warehousing, handling and distribution costs as a component of cost of goods sold.

Accounting Standards

      In January 2003, the Financial Accounting Standards Board (“FASB”) issued Emerging Issues Task Force (“EITF”) No. 00-21, “Revenue Arrangements With Multiple Deliverables.” EITF No. 00-21 provides guidance on how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how arrangement consideration should be measured and allocated to the separate units of accounting in the arrangement. EITF No. 00-21 is effective for arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF No. 00-21 did not have a material impact on the Company’s results of operations or financial position.

      In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities — an Interpretation of Art No. 51.” FIN 46 clarified the application of Accounting Research Bulletin Number 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Qualifying special-purpose entities as defined by FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” are excluded from the scope of FIN 46. FIN 46 applied immediately to all variable interest entities created after January 31, 2003, and was originally effective for fiscal periods beginning after July 1, 2003, for existing variable interest entities. In October 2003, the FASB postponed the effective date of FIN 46 to December 31, 2003. The Company does not have any variable interest entities and, therefore, believes that the adoption of the provisions of FIN 46 will not have a material impact on the Company’s results of operations or financial position.

F-10

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      In December 2003, a revised version of FIN 46 (“Revised FIN 46”) was issued by the FASB. The revisions clarify some requirements, ease some implementation problems, add new scope exceptions, and add applicability judgments. Revised FIN 46 is required to be adopted by most public companies no later than March 31, 2004. The Company believes that the adoption of Revised FIN 46 will not have a material impact on the Company’s results of operations or financial position.

      In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instrument and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company’s results of operations or financial position.

      In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments With Characteristics of Both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. In November 2003, the FASB issues FASB Staff Position Number 150-3, which deferred indefinitely the effective date of SFAS No. 150 as it relates to certain mandatory redeemable non-controlling interests. SFAS No. 150 was effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material impact on the Company’s results of operations or financial position.

      In December 2003, the FASB issued SFAS No. 132, “Employers’ Disclosures About Pensions and Other Postretirement Benefits — an Amendment of FASB Statements No. 87, 88, and 106.” The statement was developed in response to concerns expressed by users of financial statements regarding more information about pension plan assets, obligations, benefit payments, contributions and net benefit cost. Disclosures about post-retirement benefits other than pensions are required. All new provisions for domestic plans are effective for fiscal years ending after December 15, 2003. Foreign and non-public entities disclosures are required effective for fiscal years ending after June 15, 2004. The Company is considering the standard and its effect on the Company’s financial statements.

      On December 17, 2003, the Staff of Securities and Exchange Commission (“SEC” or the “Staff”) issued Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition,” which amends SAB 101, “Revenue Recognition in Financial Statements.” SAB 104’s primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superseded as a result of the issuance of EITF No. 00-21. Additionally, SAB 104 rescinds the SEC’s “Revenue Recognition in Financial Statements Frequently Asked Questions and Answers” (the “FAQ”) issued with SAB 101 (that had been codified in SEC Topic 13, “Revenue Recognition”). Selected portions of the FAQ have been incorporated into SAB 104. While the wording of SAB 104 has changed to reflect the issuance of EITF No. 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104. The adoption of SAB 104 did not have a material impact on the Company’s results of operations or financial position.

      In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The statement is applicable for fiscal years beginning after May  15, 2002 and requires, among other things, that any gain or loss on extinguishment of debt that does not meet criteria in Opinion 30, as amended, no longer be classified as an extraordinary item. The Company adopted SFAS No. 145 in 2003 and accordingly reclassified extraordinary gains as a separate caption in accordance with this statement.

F-11

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Reorganization Under Chapter 11 and Basis of Presentation (Dollars in Thousands, Except Number of Shares and Per Share and Per Bond Amounts)

      As a result of the Company’s emergence from Chapter 11 bankruptcy on April 3, 2003 and the application of Fresh-Start Accounting (see Note 3 Fresh-Start Accounting), consolidated financial statements for the Company for the periods subsequent to the effective date of the Company’s plan of reorganization in the bankruptcy proceedings are referred to as the “Reorganized Company” and are not comparable to those for the periods prior to this date, which are referred to as the “Predecessor Company.” The March 31, 2003 unaudited consolidated financial statements were used for the predecessor period ended April 2, 2003; subsequent to March 31, 2003 through the end of the period ending April 2, 2003, net income reflects a $153,946 gain representing the gain on debt extinguishment (see Note 3). A black line has been drawn in the audited consolidated financial statements to distinguish, for accounting purposes, the periods associated with the Reorganized Company and the Predecessor Company. Aside from the effects of fresh-start accounting and new accounting pronouncements adopted as of the effective date of the plan of reorganization, the Reorganized Company follows the same accounting policies as the Predecessor Company.

      On April 3, 2003, the Company consummated its prepackaged Chapter 11 bankruptcy plan, as modified (the “Plan”), which had previously been confirmed by order of the Bankruptcy Court. Under the Plan, holders of the Company’s 10.25% Notes due 2001 (“Old Senior Notes”) received just over 90% of the Company’s equity on a fully diluted basis. Suppliers and other trade creditors were not affected by the consummation of the Plan.

Summary of the Plan

      Under the terms of the Plan, the Company’s wholly-owned operating subsidiary, Viskase Corporation, was merged into the Company with the Company being the surviving corporation.

      The holders of the Company’s outstanding $163,060 of Old Senior Notes received a pro rata share of $60,000 face value of 8% Senior Subordinated Notes due December 1, 2008 (“8% Senior Notes”), and 10,340,000 shares of new common stock (“New Common Stock”) issued by the Company on a basis of $367.96271 principal amount of 8% Senior Notes and 63.4122 shares of New Common Stock for each one thousand dollar ($1,000) principal amount of Old Senior Notes.

      The 8% Senior Notes bear interest at a stated rate of 8% per year, and accrue interest from December 1, 2001, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in the form of 8% Senior Notes (paid-in-kind) for the first three years. The first interest payment date on the 8% Senior Notes was June 30, 2003 (paid-in-kind). Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of 8% Senior Notes (paid-in-kind). Thereafter, interest will be payable in cash. The 8% Senior Notes mature on December 1, 2008, with an accreted value of approximately $88,894, assuming interest in the first five years is paid in the form of 8% Senior Notes (paid-in-kind). The 8% Senior Notes are secured by substantially all of the Company’s personal Property other than assets subject to the Company’s capital lease obligations.

      Shares of common stock (“Old Common Stock”), including the stock issued to employees to celebrate the Company’s 75th anniversary, and options of the Company outstanding prior to the Company’s emergence from bankruptcy were canceled pursuant to the Plan. In addition, the Company’s stockholder rights plan was terminated pursuant to the Plan. Holders of the Old Common Stock received a pro rata share of 306,291 warrants (“2010 Warrants”) to purchase shares of New Common Stock. The 2010 Warrants have a seven year term expiring on April 2, 2010, and an exercise price of $10.00 per share.

      Under the restructuring, 660,000 shares of Restricted Stock were authorized for Company management and employees under a new Restricted Stock Plan. Any such shares that are issued are subject to a vesting schedule with acceleration upon the occurrence of certain events.

F-12

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company also entered into a three-year $20,000 working capital facility to provide the Company with additional financial flexibility. The working capital facility is senior to the 8% Senior Notes. The credit facility is a three-year facility. Interest under the credit facility is prime plus 200 basis points. The credit facility contains one financial covenant that requires a minimum level of earnings before depreciation, interest, amortization and taxes calculated on a rolling four-quarter basis.

      Following the approval of the Plan, the Company adopted Statement of Position (“SOP”) 90-7, “Fresh-Start” accounting, resulting in recording all assets and liabilities at fair value. As a result, the effects of the adjustments on reported amounts of individual assets and liabilities resulting from the adoption of fresh-start accounting and the effects of the forgiveness of debt are reflected in the Company’s historical statement of operations. Upon emergence from bankruptcy, the amounts and classifications reported in the consolidated historical financial statements materially changed.

      The conversion of $163,060 of Old Senior Notes to 8% Senior Notes and New Common Stock results in a $103,060 reduction of debt, which represents cancellation of debt income (“COD”) which is governed by Internal Revenue Code Section 108. Under Section 108, the Company will not recognize any taxable income for calendar year 2003 but must reduce tax attributes up to the extent of the COD income. This tax attribute reduction will be used to eliminate the Company’s Net Operating Loss carryforward and reduce the tax basis of assets that the Company had previously written off for book purposes.

      On November 13, 2002, Viskase Companies, Inc., a stand-alone-entity (“VCI”), filed a prepackaged Chapter 11 bankruptcy in the Bankruptcy Court. The Chapter 11 filing was for VCI only and did not include any domestic or foreign subsidiaries.

F-13

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Condensed financial information of VCI subsequent to November 13, 2002, the date on which VCI filed the prepackaged Chapter 11 bankruptcy, is presented below:

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION BALANCE SHEET

(Unaudited)

				December 31, 2002
				(Dollars in
				thousands)
ASSETS
Current assets
	Other current assets			$	169
			Total current assets		169
Property, plant and equipment, net					0
Deferred financing					39
Intercompany receivables					411,629
Investment in affiliate entities					(348,254	)
			Total assets	$	63,583
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities not subject to compromise
	Overdrafts payable			$	52
	Accounts payable				407
	Accrued liabilities				54
			Total current liabilities not subject to compromise		513
Current liabilities subject to compromise					188,198
	Deferred income taxes				50,018
			Total liabilities		238,729
		Stockholders’ deficit			(175,146	)
			Total Liabilities and Stockholders’ Deficit	$	63,583

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION STATEMENT OF OPERATIONS

(Unaudited)

			November 13, 2002
			Through
			December 31, 2002
			(Dollars in
			thousands)
Selling, general and administrative			$	49
Other (income) expense, net				30
Intercompany interest income, net				5,049
	Income from continuing operations before taxes and reorganization items			4,970
Reorganization expense				452
Income tax provision				—
		NET INCOME	$	4,518

F-14

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION CONDENSED STATEMENT OF CASH FLOWS

(Unaudited)

					November 13, 2002
					Through
					December 31, 2002
					(Dollars in
					thousands)
Cash flows from operating activities
	Net income				$	4,518
		Adjustments to reconcile net income to net cash
			Changes in operating assets and liabilities
				Other current assets		(169	)
				Accrued liabilities		461
				(Decrease) in deferred tax		(26	)
				Intercompany accounts		(4,855	)
				Other		19
			Net cash (used in) operating activities			(52	)
			Net decrease in cash and equivalents			(52	)
Cash and cash equivalents at petition date						—
		Cash and cash equivalents at end of period			$	(52	)

Liquidity

      As discussed above the Company emerged from bankruptcy on April 3, 2003. For the nine months ended December 31, 2003, the company recorded a net loss of $46,627 and positive cash flow from operating activities before reorganization expense of $16,645. In connection with its emergence from bankruptcy, the Company restructured its debt and equity. In addition the amounts due under capital leases were renegotiated with the lessor. As of December 31, 2003, the Company had positive working capital of approximately $52,201 and unrestricted cash of $23,160, with additional amounts available under its revolving credit facility. While the Company could decide to raise additional amounts through the issuance of new debt or equity, management believes that the existing resources available to it will be adequate to satisfy current and planned operations for at least the next twelve months.

3. Fresh-Start Accounting (Dollars in Thousands)

      As previously discussed, the accompanying consolidated financial statements reflect the use of fresh-start accounting as required by SOP 90-7 because the reorganized value of the Company’s assets immediately before emergence from bankruptcy was less than all post-petition liabilities, and the Predecessor Company’s stockholders received less than 50% of the Reorganized Company’s voting shares upon emergence from bankruptcy. The reorganization value of the Company was based upon the compilation of many factors and various valuation methods, including: (i) discounted cash flow analysis using five-year projected financial information applying discount rates between 16% and 18% and terminal cash flow multiples of 5.0X to 6.0X based upon review of selected publicly traded company market multiples of certain companies operating businesses viewed to be similar to that of the Company; and (ii) other applicable ratios and valuation techniques believed by the Company and its financial advisors to be representative of the Company’s business and industry. Under fresh-start accounting, the Company’s assets and liabilities were adjusted to fair values

F-15

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and a reorganization value for the entity was determined by the Company based upon the estimated fair value of the enterprise before considering values allocated to debt. The portion of the reorganization value, which could not be attributed to specific tangible or identified intangible assets of the Reorganized Company, totaled $44,430. In accordance with SFAS No. 142, this amount is reported as “Goodwill” in the consolidated financial statements. Fresh-start accounting results in the creation of a new reporting entity with no accumulated deficit as of April 3, 2003.

      The valuation was based upon a number of estimates and assumptions, which are inherently subject to significant uncertainties and contingencies beyond the control of the Company.

      Upon the adoption of fresh-start accounting, as of April 3, 2003, the Company recorded goodwill of $44,430, which equals the reorganization value in excess of amounts allocable to identifiable net assets recorded in accordance with SOP 90-7. In the fourth quarter of 2003, the Company performed its first annual goodwill impairment analysis under SFAS No. 142. Due to the fact the fair value of the Company’s single reporting unit, as estimated by the Company’s market capitalization, was significantly less than the net book value at December 31, 2003, goodwill was evaluated for impairment. As a result of the Company’s impairment test, the entire $44,430 goodwill balance was written off in the fourth quarter of 2003.

F-16

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

				Predecessor									Reorganized
				Company			Adjustments						Company
				March 31,									April 3,
				2003			Reorganization			Fresh-Start			2003
Assets
Current assets
	Cash and cash equivalents			$	9,878		$	—		$	—		$	9,878
	Restricted cash				28,351			—			—			28,351
	Receivables, net				26,715			—			—			26,715
	Inventories				32,235			—			(399	)(10)		31,836
	Other current assets				9,376			—			—			9,376
		Total current assets			106,555			—			(399	)		106,156
Property, plant and equipment, including those under capital leases					246,238			—			(160,696	)(11)		85,542
		Less accumulated depreciation and amortization			158,903			—			(158,903	)(11a)		—
	Property, plant and equipment, net				87,335			—			(1,793	)		85,542
Deferred financing costs, net					36			—			—			36
Other assets					6,375			—			6,371	(12)		12,746
Excess reorganization value/goodwill					—			30,495	(1)		13,935	(13)		44,430
		Total assets		$	200,301		$	30,495		$	18,114		$	248,910
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities not subject to compromise
	Short-term debt, including current portion of long-term debt and obligations under capital leases			$	14,894		$	—		$	—		$	14,894
	Accounts payable				12,387			—			—			12,387
	Accrued liabilities				25,284			40	(2)		3,150	(14)		28,474
	Current deferred income taxes				1,597			—			—			1,597
	Total current liabilities not subject to compromise				54,162			40			3,150			57,352
Current liabilities subject to compromise					188,198			(188,198	)(3)		—			—
Long-term debt including obligations under capital leases not subject to compromise					34,235			39,643	(4)		—			73,878
Accrued employee benefits					77,581			—			22,662	(15)		100,243
Non-current deferred income taxes					24,166			—			(7,698	)(16)		16,468
Commitments and contingencies
	Stockholders’ equity (deficit)
	Old Common Stock, $.01 par value; 15,314,562 shares issued and outstanding				153			(153	)(5)		—			—
	New Common Stock, $.01 par value; 10,670,053 shares issued and outstanding				—			106	(6)		—			106
	Paid-in capital				138,004			(137,110	)(7)		—			894
	Accumulated deficit				(293,977	)		293,977	(8)		—			—
	Accumulated other comprehensive (loss)				(22,168	)		22,168	(5)		—			—
	Unearned restricted stock issued for future service				(53	)		22	(9)		—			(31	)
	Total stockholders’ equity (deficit)				(178,041	)		179,010			—			969
			Total liabilities and stockholders’ equity (deficit)	$	200,301		$	30,495		$	18,114		$	248,910

F-17

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reorganization Adjustments

1.	Excess reorganization value consisted of the following:
	a.	Eliminate the accumulated other comprehensive loss	$	22,168
	b.	Eliminate the unearned restricted stock		53
	c.	Eliminate the accumulated deficit		140,031
	d.	Recognize the accreted interest for the period December 1, 2001 through March 31, 2003		6,400
	e.	Eliminate the par value of Old Common Stock		(153	)
	f.	Eliminate the paid-in capital for Old Common Stock		(138,004	)
			$	30,495
2.	To reclassify the pre-petition other current liabilities to accrued liabilities		$	40
3.	The adjustment to liabilities subject to compromise consisted of the following:
	a.	Pursuant to the Plan, the Old Senior Notes were exchanged for 8% Senior Notes	$	(163,060	)
	b.	Pursuant to the Plan, eliminate the accrued interest payable on the Old Senior Notes		(25,098	)
	c.	Reclassify the pre-petition other current liabilities		(40	)
			$	(188,198	)
4.	The adjustment to long-term debt consisted of the following:
	a.	Pursuant to the Plan, issuance of 8% Senior Notes at fair market value	$	33,243
	b.	Recognize the accreted paid-in-kind (PIK) and effective interest on the 8% Senior Notes for the period December 1, 2001 to March 31, 2003		6,400
			$	39,643
5.	Eliminate Old Common Stock of ($153) and the accumulated other comprehensive loss of $22,168
6.	Adjustments to New Common Stock consist of the following:
	a.	Pursuant to the Plan, represents the par value of equity at fair market value exchanged for Old Senior Notes	$	103
	b.	Pursuant to the Plan, represents the par value of shares issued to management for the new Restricted Stock Plan		3
			$	106
7.	The adjustment to paid-in capital consists of the following:
	a.	Eliminate the paid-in capital for Old Common Stock	$	(138,004	)
	b.	Recognize the paid-in capital on equity at fair market value exchanged for Old Senior Notes		866
	c.	Recognize the paid-in capital value of shares at fair market value issued to management from the new Restricted Stock Plan		28
			$	(137,110	)
8.	The adjustment to the accumulated deficit consists of the following:
	a.	Pursuant to the Plan, the issuance of 8% Senior Notes at fair market value	$	(33,243	)
	b.	Recognize the equity at fair market value exchanged for Old Senior Notes		(969	)
	c.	Pursuant to the Plan, the Old Senior Notes were exchanged for 8% Senior Notes		163,060

F-18

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	d.	Pursuant to the Plan, eliminate the accrued interest payable on the Old Senior Notes		25,098
	e.	Eliminate accumulated deficit		140,031
			$	293,977
9.	a. Recognize the fair market value of the new Restricted Stock Plan shares issued to management		$	(31	)
	b.	Eliminate the old unearned restricted stock		53
			$	22
10.	Represents adjustment to write down inventories to net realizable value		$	(399	)
11.	Adjustments to Property, plant and equipment consist of the following:
	a.	Eliminate accumulated depreciation	$	(158,903	)
	b.	Write up U.S. Property, plant and equipment to fair market value		8,323
	c.	Write up Chicago East Plant to fair market value		1,493
	d.	Write up Europe Property, plant and equipment to fair market value		2,747
	e.	Write off Property, plant and equipment for Brazil		(3,436	)
	f.	Write down GECC assets for fair market value		(10,920	)
			$	(160,696	)
12.	Adjustments to other assets consist of the following:
	a.	Adjustment to write up patents to fair market value	$	3,098
	b.	Fair market value of non-compete agreements		1,236
	c.	Fair market value of customer backlog		2,375
	d.	Write off intangible pension assets		(338	)
			$	6,371
13.	The adjustments to reorganization value in excess of amounts allocable to identifiable assets and liabilities:
	a.	Represents adjustment to write down inventories to net realizable value	$	399
	b.	Write up U.S. Property, plant and equipment to fair market value		(8,323	)
	c.	Adjustment to write up patents to fair market value		(3,098	)
	d.	Recognize a liability for the foreign and domestic projected benefit obligation (“PBO”) in excess of plan assets		22,662
	e.	Recognize a liability due to emergence		3,150
	f.	Write up Chicago East Plant to fair market value		(1,493	)
	g.	Write up Europe Property, plant and equipment to fair market value		(2,747	)
	h.	Write off Property, plant and equipment for Brazil		3,436
	i.	Fair market value of non-compete agreements		(1,236	)
	j.	Fair market value of customer backlog		(2,375	)
	k.	Write off intangible pension assets		338
	l.	Adjust the deferred tax liability to fair market value		(7,698	)
	m.	Write down GECC assets to fair market value		10,920
			$	13,935

F-19

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Recognize a liability for severance obligation due to former
14.	chief chang of re conti	executive officer and president that was triggered by e of control upon emergence from bankruptcy and recognition serves for legal services related to specific loss ngencies	$	3,150
15.	To recognize a liability for the foreign and domestic PBO in excess of plan assets		$	22,662
16.	To adjust the deferred tax liability to fair market value		$	(7,698	)

4. Receivables (Dollars in Thousands)

      Receivables consisted primarily of trade accounts receivable and were net of allowances for doubtful accounts of $438 and $1,334 at December 31, 2003 and 2002, respectively.

		Balance at		Provision										Balance
		Beginning		Charged to										at End
	Description	of Period		Expense		Write-offs			Recoveries		Other			of Period
Reorganized Company 2003	For the period  April 3 through  December 31   Allowance for    doubtful    accounts	$	—	$	448	$	(85	)	$	44	$	31		$	438
Predecessor Company 2003	For the period  January 1  through April 2   Allowance for    doubtful    accounts	$	1,334	$	113	$	—		$	1	$	(8	)	$	1,440

      The Company has a broad base of customers, with no single customer accounting for more than 6% of sales or 4% of receivables.

5. Inventories (Dollars in Thousands)

      Inventories consisted of:

	Predecessor		Reorganized
	Company		Company
	2002		2003
Raw materials	$	3,872	$	4,328
Work in process		13,394		13,679
Finished products		13,321		13,731
	$	30,587	$	31,738

      Approximately 47% and 52% of the Company’s inventories at December 31, 2003 and 2002, respectively, were valued at LIFO. Remaining inventories, primarily foreign, are valued at the lower of FIFO cost or market. At December 31, 2003 and 2002, the LIFO values exceeded current manufacturing cost by approximately $317 and $687, respectively. During 2002, the Company wrote down $383 of LIFO inventories to its lower of cost or market value. The charge is included in cost of sales. Inventories were net of reserves for obsolete and slow-moving inventory of $0 and $2,725 at December 31, 2003 and 2002, respectively.

F-20

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Property, Plant and Equipment (Dollars in Thousands)

		Predecessor		Reorganized
		Company		Company
		2002		2003
Property, plant and equipment
	Land and improvements	$	4,253	$	4,733
	Buildings and improvements		28,631		24,273
	Machinery and equipment		121,185		56,254
	Construction in progress		3,428		5,079
Capital leases
	Machinery and equipment		88,937		9,500
		$	246,434	$	99,839

      Capitalized interest for the reorganized period in 2003 and predecessor period in 2002 and 2001 totaled $98, $81 and $290, respectively. Maintenance and repairs charged to costs and expenses for 2003, 2002 and 2001 aggregated $14,548, $13,142, and $12,789 respectively. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. Estimated useful lives of land improvements range from 15 to 30 years; building and improvements range from 10 to 32 years; and machinery and equipment, including capital leases, range from 2 to 15 years.

      Land and buildings include property held for sale; these properties have a net book value of $2,293 and $4,162 at December 31, 2003 and December 31, 2002, respectively. During 2003, properties held for sale had a net book value of $4,963, of which property with a net book value of $2,179 was disposed of during the reorganized period.

7. Other Assets (Dollars in Thousands)

		Predecessor		Reorganized
		Company		Company
		2002		2003
Patents		$	20,000	$	4,598
Less accumulated amortization			18,000		345
	Patents, net		2,000		4,253
Other intangibles			—		1,236
Less accumulated amortization			—		464
	Other intangibles, net		—		772
Miscellaneous			4,854		5,599
		$	6,854	$	10,624

      Patents are amortized on the straight-line method over an estimated average useful life of 10 years. Other intangibles, established in fresh-start, represent the fair market value of non-compete agreements and is being amortized over two years, the term of the non-compete agreement. Miscellaneous other assets include an income tax refund receivable in the amount of $4,969 and $3,870 at December 31, 2003 and 2002, respectively.

F-21

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Accrued Liabilities Not Subject to Compromise (Dollars in Thousands)

      Accrued liabilities were comprised of:

	Predecessor		Reorganized
	Company		Company
	2002		2003
Compensation and employee benefits	$	13,528	$	15,990
Taxes		3,911		2,525
Accrued volume and sales rebates		2,285		1,566
Restructuring (see note 12)		2,773		1,840
Other		5,421		6,355
	$	27,918	$	28,276

9. Debt Obligations (Dollars and Shares in Thousands, Except for Number of Shares and Per Share and Per Bond Amounts)

      Outstanding short-term and long-term debt consisted of:

			Predecessor		Reorganized
			Company		Company
			2002		2003
Short-term debt, current maturity of long-term debt and capital lease obligations not subject to compromise
	Revolving Credit Facility
	Viskase Capital Lease Obligation		$	64,106	$	21,299
	Other			177		4
		Total short-term debt not subject to compromise	$	64,283	$	21,303
Current liabilities subject to compromise 10.25% Senior Notes due 2001			$	163,060	$	—
	Accrued interest			25,098		—
	Other current liabilities			40		—
		Total current liabilities subject to compromise	$	188,198	$	—
Long-term debt not subject to compromise 8% Senior Subordinated Secured Notes			$	—	$	46,248
	Viskase Capital Lease Obligation					23,500
	Other			85		102
		Total long-term debt not subject to compromise	$	85	$	69,850

Reorganized Company

Revolving Credit Facility

      The Company has a secured revolving credit facility (“Revolving Credit Facility”) with an initial availability of $10,000 with Arnos Corp., an affiliate of Carl C. Icahn. During February 2004, the amount of the Revolving Credit Facility availability increased by $10,000 to an aggregate amount of $20,000. The Revolving Credit Facility expires on April 3, 2006. Borrowings under the Revolving Credit Facility bear interest at a rate per annum at the prime rate plus 200 basis points. The average interest rates for borrowings during 2003 were 6.2%. There were no short-term borrowings during 2002.

F-22

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Revolving Credit Facility is secured by a collateral pool comprised of (1) all domestic accounts receivables (including intercompany receivables) and inventory, (2) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements), (3) substantially all domestic fixed assets (other than assets subject to the Company’s lease agreement with General Electric Capital Corporation (“GECC”)) and (4) a pledge of 65% of the capital stock of Viskase Europe Limited and Viskase Brasil Embalagens Ltda. The Revolving Credit Facility is also guaranteed by the significant domestic subsidiaries. Such guarantees and substantially all of such collateral are shared by the lender under the Revolving Credit Facility, the holders of the 8% Senior Notes and GECC under the GECC lease pursuant to an intercreditor agreement. Pursuant to such intercreditor agreement, the security interest of Revolving Credit Facility has priority over all other liens on such collateral.

      Under the terms of the Revolving Credit Facility, the Company is required to maintain a minimum annual level of earnings before depreciation, interest, amortization and taxes of $16,000 calculated at the end of each calendar quarter. The Revolving Credit Facility contains covenants with respect to Viskase and its subsidiaries limiting (subject to a number of important qualifications), among other things, (1) the ability to pay dividends or redeem or repurchase common stock, (2) incurrence of indebtedness, (3) creation of liens, (4) certain affiliate transactions, (5) the ability to merge into another entity, (6) the ability to consolidate with or merge with another entity and (7) the ability to dispose of assets. The Company is in compliance with the covenant at December 31, 2003.

8% Senior Notes

      The 8% Senior Notes bear interest at a rate of 8% per year, and will accrue interest from December 1, 2001, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in the form of 8% Senior Notes (paid-in-kind) for the first three years. Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of New 8% Senior Notes (paid-in-kind). Thereafter, interest will be payable in cash. The 8% Senior Notes would mature on December 1, 2008, with an accreted value of approximately $88,894, assuming interest in the first five years is paid-in-kind. The 8% Senior Notes were recorded on the books at April 3, 2003, at their discounted value of $33,242. The carrying value of the 8% Senior Notes at December 31, 2003, is $46,248.

      The 8% Senior Notes are secured by a collateral pool comprised of (1) all domestic accounts receivable and inventory, (2) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements), (3) all instruments, investment property and other intangible assets, and (4) substantially all domestic fixed assets, but excluding assets subject to the GECC lease, certain real estate and certain assets subject to prior liens. Pursuant to an intercreditor agreement, the security interest of the holders of the 8% Senior Notes in such collateral is subordinated to the lender under the Revolving Credit Facility and are senior to the security interest of GECC under the GECC lease.

      The 8% Senior Notes were valued at market in Fresh-Start Accounting. The discount to face value is being amortized using the effective-interest rate methodology through maturity with an effective interest rate of 10.46%. The following table summarizes the carrying value of the 8% Senior Notes at December 31:

		2004		2005		2006		2007
8% Senior Subordinated Secured Notes
	Accreted value	$	76,041	$	82,124	$	88,894	$	88,894
	Discount		20,107		15,725		10,863		5,466
	Carrying value	$	55,934	$	66,399	$	78,031	$	83,428

F-23

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Letter of Credit Facility

      Letters of credit in the amount of $25,441 were outstanding under letter of credit facilities with commercial banks, and were cash collateralized at December 31, 2003.

      The Company finances its working capital needs through a combination of internally generated cash from operations, cash on hand, and the Revolving Credit Facility.

GECC

      The Company and GECC amended certain lease documents upon the emergence from bankruptcy. The amendment permanently waived prior non-compliance with the Fixed Charge Coverage Ratio and established a new Fixed Charge Coverage Ratio for the remainder of the lease term. The amendment also changed the February 28, 2004 lease payment, with $11,750 due on February 28, 2004, and $11,749 due on August 28, 2004.

      In April 2004, the Company renegotiated and amended its lease arrangement with GECC. Under terms of the amended lease, six payments of approximately $6,092 are due semi-annually on February 28 and August 28 beginning in February 2005. As part of the renegotiation of the lease, the Company agreed to purchase the assets at their fair market value of $9,501. The Company has the option to terminate the lease early upon payment of $33,000 through February 28, 2005, thereafter the amount of the early termination payment will decrease upon payment of each semi-annual capital lease payment. The equipment will transfer to the Company free and clear of all liens on the earlier of (i) the payment of the early termination amount, plus any accrued interest due and payable at 6% per annum or (ii) the payment of the final installment due August 28, 2007.

      The following is a schedule of minimum future lease payments under the GECC capital lease obligations together with the present value of the net minimum lease payments as of December 31, 2004, 2005, 2006 and 2007. The lease payment maturities conform to contractual payments under the lease:

Year ending December 31,
2004	$	23,500
2005		12,183
2006		12,183
2007		12,184
Net minimum lease payments		60,050
Less amount representing interest		5,750
	$	54,300

Other

      The fair value of the Company’s debt obligations (excluding capital lease obligations) is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for the debt of the same remaining maturities. At December 31, 2003, the carrying amount and estimated fair value of debt obligations (excluding capital lease obligations) were $46,248 and $45,697, respectively.

F-24

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Aggregate maturities of debt for each of the next five years are:

	2004		2005		2006		2007		2008
8% Senior Notes		—		—		—		—	$	88,894
GECC	$	21,300	$	23,500		—		—		—
Other		3		—		—		—		—
	$	21,303	$	23,500	$	—	$	—	$	88,894

Predecessor Company

Old Senior Notes

      On November 13, 2002, the Company filed a prepackaged Chapter 11 bankruptcy in the United States Bankruptcy Court for the Northern District of Illinois (“Bankruptcy Court”). The Chapter 11 filing was for the Company only and did not include any of the Company’s domestic or foreign subsidiaries. On December 20, 2002, the Bankruptcy Court confirmed the Plan, as modified. The Company emerged from Chapter 11 bankruptcy on April 3, 2003.

      Cash flows from operations for the Company were insufficient to pay the Old Senior Notes when they matured on December 1, 2001, and, accordingly, the Company did not pay the $163,060 principal and $8,357 interest that became due at that time. In September 2001, certain of the holders of the Old Senior Notes formed an Ad Hoc Committee to participate in the development of a plan to restructure the Company’s capital structure and address its future cash flow needs. On July 15, 2002, the Company executed a restructuring agreement with the Ad Hoc Committee for the restructuring of the Old Senior Notes. Under terms of the restructuring agreement, on or about August 21, 2002, the Company initiated an exchange offer to exchange the Old Senior Notes for New 8% Senior Notes and shares of preferred stock. The proposed exchange offer was subject to acceptance by holders of 100% of the outstanding Old Senior Notes, unless waived by the Company and approved by the Ad Hoc Committee. The exchange offer was conducted simultaneously with a solicitation for the Plan by the Company which required the consent of a majority in number of the holders and at least 66 2/3% in principal amount of Old Senior Notes actually voting in the solicitation. Under the restructuring agreement, if less than 100% of the outstanding Old Senior Notes accepted the exchange offer, but a sufficient number of holders and aggregate amount of Old Senior Notes voted in favor of acceptance of the Plan, the Company agreed to commence a voluntary Chapter 11 petition to seek confirmation of the Plan. The Plan contained substantially the same economic terms as the exchange offer.

      On November 13, 2002, the Company filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court to seek confirmation of the Plan.

      Under the terms of the Plan, the Company’s wholly-owned operating subsidiary, Viskase Corporation, was merged with and into the Company immediately prior to or upon consummation of the Plan, with the Company being the surviving corporation. Holders of Old Senior Notes received 8% Senior Notes and shares of New Common Stock on a basis of $367.96271 principal amount of 8% Senior Notes (i.e., $60,000) and 63.4122 shares of New Common Stock (i.e., 10,340,000 shares or 94% of the New Common Stock) for each one thousand dollar principal amount of Old Senior Notes. The existing shares of Old Common Stock of the Company were canceled. Holders of the Old Common Stock received Warrants with a term of seven years to purchase shares of New Common Stock equal to 2.7% of the Company’s New Common Stock on a fully diluted basis at an exercise price of $10.00 per share. Assuming all Warrants are exercised, holders of the Old Senior Notes received approximately 91.5% of the New Common Stock and approximately 5.8% of the New Common Stock was issued or reserved for issuance to the Company’s management and employees.

F-25

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Under the proposed restructuring, 660,000 shares of New Common Stock, initially representing 6% of the New Common Stock, were reserved for Company management and employees. Such shares will be subject to a vesting schedule with acceleration upon the occurrence of certain events.

Current Liabilities Subject to Compromise

      Under Chapter 11, certain claims against the Company (the “Debtor”) in existence prior to the Petition Date (November 13, 2002) were stayed while the Company continued business operations as a debtor-in-possession. These claims are reflected in the December 31, 2002 balance sheet as “Current liabilities subject to compromise.” As of the Petition Date, the Company stopped accruing interest on the Old Senior Notes.

      The principal categories of claims reclassified in the Consolidated Balance Sheets and included in Current liabilities subject to compromise are identified below. At the Petition Date the amounts reflected below are for the Old Senior Notes and accrued interest through the Petition Date. Current liabilities subject to compromise are as follows (in thousands):

Old Senior Notes	$	163,060
Accrued interest		25,098
Other current liabilities		40
	$	188,198

10. Operating Leases (Dollars in Thousands)

      The Company has operating lease agreements for machinery, equipment and facilities. The majority of the facilities leases require the Company to pay maintenance, insurance and real estate taxes.

      Future minimum lease payments for operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2003, are:

2004		$	2,097
2005			1,925
2006			1,830
2007			1,546
2008			1,520
Total thereafter			1,919
	Total minimum lease payments	$	10,837

      Total rent expense during 2003, 2002 and 2001 amounted to $2,259, $1,971 and $1,682, respectively.

11. Retirement Plans

      The Company and its subsidiaries have defined contribution and defined benefit plans varying by country and subsidiary.

      At December 31, 2003, the North American operations of the Company maintained several non-contributory defined benefit retirement plans. The plans cover substantially all salaried and full-time hourly employees, and benefits are based on final average compensation and years of credited service. The Company’s policy is to fund the minimum actuarially computed annual contribution required under the Employee Retirement Income Security Act of 1974. The discount rate used approximates the average yield for high-quality corporate bonds as of the valuation date.

      In December of 2002, the Company recognized a minimum pension liability adjustment that is due to changes in plan return assumptions and asset performance (see note 18, Comprehensive Gain (Loss)).

F-26

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pensions and Other Postretirement Benefits Plans — North America (Dollars in Thousands)

			Pension Benefits
			Predecessor Company									Reorganized
												Company
									January 1			April 3
									Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Accumulated benefit obligation (ABO)			$	93,215		$	102,190		$	105,878		$	113,127
Change in benefit obligation
	Projected benefit obligation at beginning of year		$	103,641		$	107,251		$	115,186		$	117,453
	Service cost			1,806			1,924			545			1,556
	Interest cost			7,347			7,521			1,872			5,634
	Actuarial losses			1,946			5,711			2,389			6,644
	Benefits paid			(7,136	)		(7,275	)		(1,654	)		(5,818	)
	Effect of special termination benefits			—			—			(1,237	)		—
	Plan amendment			—			(4	)		—			—
	Translation			(353	)		58			352			618
	Estimated benefit obligation at end of period		$	107,251		$	115,186		$	117,453		$	126,087
Change in plan assets
	Fair value of plan assets at beginning of period		$	98,687		$	89,058		$	75,119		$	72,161
	Actual return on plan assets			(6,308	)		(7,888	)		(798	)		13,768
	Employer contribution			4,162			1,164			345			633
	Benefits paid			(7,136	)		(7,275	)		(2,855	)		(5,818	)
	Translation			(347	)		56			350			609
	Estimated fair value of plan assets at end of period		$	89,058		$	75,115		$	72,161		$	81,353
Reconciliation of accrued benefit cost at end of period Funded status			$	(18,193	)	$	(40,071	)	$	(45,292	)	$	(44,734	)
	Unrecognized net (gain) loss			13,117			33,940			—			(2,683	)
	Unrecognized prior service cost			499			437			—			—
		Accrued benefit cost	$	(4,577	)	$	(5,694	)	$	(45,292	)	$	(47,417	)
Amounts recognized in statement of financial position
		Prepaid benefit cost	$	—		$	29		$	—		$	—
		Accrued benefit liability		(10,134	)		(32,806	)		(45,292	)		(47,517	)
		Intangible asset		385			338			—			—
		Accumulated other comprehensive loss		5,172			26,745			—			100
	Net amount recognized		$	(4,577	)	$	(5,694	)	$	(45,292	)	$	(47,417	)
Weighted-average assumptions as of end of period
	Discount rate			7.22	%		6.75	%		6.75	%		6.50	%
	Expected return on plan assets			8.81	%		8.89	%		8.67	%		8.67	%
	Rate of compensation increase			4.25	%		3.75	%		3.75	%		3.50	%

F-27

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

		Other Benefits
		Predecessor Company									Reorganized
											Company
								January 1			April 3
								Through			Through
								April 2,			December 31,
		2001			2002			2003			2003
Accumulated benefit obligation (ABO)
Change in benefit obligation
	Projected benefit obligation at beginning of period	$	41,404		$	44,615		$	50,846		$	53,038
	Service cost		762			777			227			709
	Interest cost		3,021			3,270			837			2,585
	Actuarial losses		1,458			4,481			1,502			3,542
	Benefits paid		(1,877	)		(2,322	)		(574	)		(2,603	)
	Translation		(153	)		25			200			431
	Estimated benefit obligation at end of period	$	44,615		$	50,846		$	53,038		$	57,702
Change in plan assets
	Fair value of plan assets at beginning of period	$	—		$	—		$	—		$	—
	Actual return on plan assets		—			—			—			—
	Employer contribution		1,877			2,322			574			2,603
	Benefits paid		(1,877	)		(2,322	)		(574	)		(2,603	)
Estimated fair value of plan assets at end of period		$	—		$	—		$	—		$	—
Reconciliation of accrued benefit cost at end of period
	Funded status	$	(44,615	)	$	(50,846	)	$	(53,038	)	$	(57,702	)
	Unrecognized net loss		5,118			9,236			—			—
	Unrecognized prior service cost		—			—			—			3,401
	Accrued benefit cost	$	(39,497	)	$	(41,610	)	$	(53,038	)	$	(54,301	)
Weighted-average assumptions as of end of period
	Discount rate		7.23	%		6.73	%		6.50	%		6.27	%

      For measurement purposes, a 7.0% and 9.0% annual rate of increase in the per capita cost of covered health care benefits was assumed in 2003 for the U.S. and Canadian plans, respectively. The rates were assumed to decrease to 6.5% in 2004 for the U.S. plan and gradually decrease to 5% through 2007 for the Canadian plan.

      On December 8, 2003, President Bush signed into law a bill that expands Medicare, primarily by adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. Pursuant to instructions in Financial Accounting Standards Board Staff Position 106-1 and the election by Viskase to defer recognition, the retiree medical obligations and costs reported in this financial statement do not yet reflect the impact of those new Medicare benefits. By 2006, the Company expects to modify its retiree medical plans to coordinate with the new Medicare prescription drug program. As a result, the Company anticipates that its overall obligations and costs will be lower once those modifications are reflected.

F-28

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Pension Benefits
			Predecessor Company									Reorganized
												Company
									January 1			April 3
									Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Component of net period benefit cost
	Service cost		$	1,806		$	1,924		$	545		$	1,556
	Interest cost			7,347			7,522			1,872			5,634
	Expected return on plan assets			(8,627	)		(7,686	)		(1,396	)		(4,585	)
	Amortization of net pension obligation			—			—			—			—
	Amortization of prior service cost			67			56			14			144
	Amortization of actuarial (gain) loss			91			463			532			—
		Net periodic benefit cost		684			2,279			1,567			2,749
	One-time recognition of unamortized balance			—			—			38,376			—
		Total net periodic benefit cost	$	684		$	2,279		$	39,943		$	2,749

      Upon emergence from bankruptcy, the liabilities of the plans were remeasured as of April 2, 2003. A one-time charge of $38,376 was recorded to immediately recognize all unrecognized gains and losses.

			Other Benefits
			Predecessor Company						Reorganized
									Company
							January 1		April 3
							Through		Through
							April 2,		December 31,
			2001		2002		2003		2003
Component of net period benefit cost
	Service cost		$	762	$	777	$	227	$	709
	Interest cost			3,021		3,270		837		2,585
	Expected return on plan assets			—		—		—		—
	Amortization of net pension obligation			—		—		—		—
	Amortization of prior service cost			—		—		—		141
	Amortization of actuarial (gain) loss			136		363		112		—
		Net periodic benefit cost		3,919		4,410		1,176		3,435
	One-time recognition of unamortized balance			—		—		10,627		—
		Total net periodic benefit cost	$	3,919	$	4,410	$	11,803	$	3,435

F-29

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Assumed health care cost trend rates have a significant effect on the amounts reported for healthcare plans. A one-percentage point change in assumed healthcare cost trend rates would have the following effects:

			Other Benefits
			Predecessor Company									Reorganized
												Company
									January 1			April 3
									Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Effect of 1% change in medical trend cost
	Based on a 1% increase
		Change in accumulated postretirement benefit obligation	$	2,018		$	2,272		$	2,244		$	2,450
		Change in service cost and interest		162			179			45			184
	Based on a 1% decrease
		Change in accumulated postretirement benefit obligation		(2,311	)		(2,593	)		(2,563	)		(2,792	)
		Change in service cost and interest		(190	)		(207	)		(51	)		(210	)

Savings Plans (Dollars in Thousands)

      The Company also has defined contribution savings and similar plans, which vary by subsidiary, and, accordingly, are available to substantially all full-time United States employees not covered by collective bargaining agreements. The defined contribution savings plans allow employees to choose among various investment alternatives. The Company’s aggregate contributions to these plans are based on eligible employee contributions and certain other factors. The Company expense for these plans was $684, $754 and $762 in 2003, 2002 and 2001, respectively.

International Plans (Dollars in Thousands)

      The Company maintains various pension and statutory separation pay plans for its European employees. The expense for these plans in 2003, 2002 and 2001 was $285, $42 and $301, respectively. As of their most recent valuation dates, in plans where vested benefits exceeded plan assets, the actuarially computed value of vested benefits exceeded those plans’ assets by approximately $3,478.

12. Restructuring Charges (Dollars in Millions)

      During the third and fourth quarters of 2003, the Company committed to a restructuring plan to address the industry’s competitive environment. The plan resulted in a before-tax charge of $2.6 million. Approximately 2% of the Company’s worldwide workforce was laid off due to the 2003 restructuring plan. The Company reversed an excess reserve of $1.6 million, of which $1.3 million was Nucel® technology third-party license fees that had been renegotiated. The Nucel® technology third-party license fees were originally reflected in the 2000 restructuring reserve. The remaining $0.3 million represents an excess reserve for employee costs that were originally reflected in the 2002 restructuring reserve.

      During the second quarter of 2002, the Company committed to a restructuring plan to address the industry’s competitive environment. The plan resulted in a before-tax charge of $3.2 million. Approximately 2% of the Company’s worldwide workforce was laid off due to the 2002 restructuring plan. In connection with the restructuring, the Company wrote off the remaining net book value of the Nucel® equipment and the costs associated with the decommissioning of this equipment. The Company also reversed an excess reserve of $9.3 million for Nucel® technology third-party license fees that had been renegotiated during the second

F-30

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

quarter of 2002. The Nucel® technology license fees were originally reflected in the 2000 restructuring reserve.

      In the fourth quarter of 2002 and the year-to-date period, the Company paid third-party license fees of approximately $0.6 million and $2.3 million, respectively. The renegotiated Nucel® technology third-party license fee payments remaining are estimated at $0.9 million, $0.4 million, $0.2 million, $0.2 million and $0.5 million for the year periods 2003 to 2007 and are included in the 2000 restructuring reserve.

2003 Restructuring

										2003
										Restructuring
										Reserve as of
		2003						Other		December 31,
		Charge			Payments			Adjustments		2003
Employee costs		$	2.6		$	(1.0	)	$	—	$	1.6
	Total restructuring charge		2.6		$	(1.0	)	$	—	$	1.6
Reversal of 2000 and 2002 restructuring			(1.6	)
	Restructuring expense	$	1.0

2002 Restructuring

      The following table provides details of the 2002 restructuring reserve for the year ended December 31, 2003:

		2002								2002
		Restructuring								Restructuring
		Reserve as of								Reserve as of
		December 31,					Other			December 31,
		2002		Payments			Adjustments			2003
Employee costs		$	0.5	$	(0.2	)	$	(0.3	)	$	—
Decommissioning			0.1		(0.1	)		—			—
	Total restructuring reserve	$	0.6	$	(0.3	)	$	(0.3	)	$	—

      The following table provides details of the 2002 restructuring reserve for the year ended December 31, 2002:

											2002
											Restructuring
											Reserve as of
		2002						Write-			December 31,
		Charge			Payments			Down			2002
Employee costs		$	1.4		$	(0.9	)	$	—		$	0.5
Nucel® equipment			1.0			—			(1.0	)		—
Decommissioning			0.8			(0.7	)		—			0.1
	Total restructuring charge		3.2		$	(1.6	)	$	(1.0	)	$	0.6
Reversal of 2000 excess reserve			(9.3	)
	Restructuring income	$	(6.1	)

F-31

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2000 Restructuring

      The following table provides details of the 2000 restructuring reserve for the year ended December 31, 2003:

		2000								2000
		Restructuring								Restructuring
		Reserve as of								Reserve as of
		December 31,					Other			December 31,
		2002		Payments			Adjustments			2003
Nucel® license fees		$	2.2	$	(0.8	)	$	(1.2	)	$	0.2
Decommissioning			0.1		(0.1	)		—			—
	Total restructuring reserve	$	2.3	$	(0.9	)	$	(1.2	)	$	0.2

      The following table provides details of the 2000 restructuring reserve for the year ended December 31, 2002:

		2000								2000
		Restructuring								Restructuring
		Reserve as of								Reserve as of
		December 31,					Other			December 31,
		2001		Payments			Adjustments			2002
Employee costs		$	1.0	$	(1.0	)	$	—		$	—
Nucel® license fees			13.8		(2.3	)		(9.3	)		2.2
Decommissioning			0.3		(0.2	)		—			0.1
	Total restructuring reserve	$	15.1	$	(3.5	)	$	(9.3	)	$	2.3

      The following table provides details of the 2000 restructuring reserve for the year ended December 31, 2001:

		2000								2000
		Restructuring								Restructuring
		Reserve as of								Reserve as of
		December 31,					Other			December 31,
		2000		Payments			Adjustments			2001
Employee costs		$	11.2	$	(9.8	)	$	(0.4	)	$	1.0
Nucel® license fees			15.3		(1.6	)		0.1			13.8
Decommissioning			0.6		(0.3	)		—			0.3
	Total restructuring reserve	$	27.1	$	(11.7	)	$	(0.3	)	$	15.1

      During 2001, the Company incurred a restructuring charge of $4.8 million for the write-down of facilities held for sale. These facilities are included in property held for sale (see note 6).

F-32

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table provides details of the 2000 restructuring reserve for the year ended December 31, 2000:

														Year
		2000						Write-			Other			Ended
		Charge			Payments			Down			Adjustments			2000
Employee costs		$	13.4		$	(2.1	)	$	—		$	(0.1	)	$	11.2
Write-down of building and equipment			13.4			—			(13.4	)		—			—
Nucel® building and equipment			42.4			—			(42.4	)		—			—
Nucel® other			24.2			(3.0	)		—			(5.9	)		15.3
Decommissioning			2.3			(0.1	)		—			(1.6	)		0.6
	Total restructuring charge		95.7		$	(5.2	)	$	(55.8	)	$	(7.6	)	$	27.1
Reversal of excess reserve			(0.8	)
	Restructuring charge	$	94.9

      Approximately 15% of the Company’s worldwide workforce was laid off due to the 2000 restructuring plan.

13. Income Taxes (Dollars in Thousands)

		Predecessor Company
										Reorganized
										Company
		Year Ended						January 1		April 3
		December 31,						Through		Through
								April 2,		December 31,
		2001			2002			2003		2003
Pretax income (loss) from continuing operations consisted of
	Domestic	$	(28,353	)	$	(18,417	)	$	151,141	$	(47,739	)
	Foreign		(11,869	)		(2,210	)		1,011		522
	Total	$	(40,222	)	$	(20,627	)	$	152,152	$	(47,217	)

F-33

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The provision (benefit) for income taxes from continuing operations consisted of:

			Predecessor Company
												Reorganized
												Company
			Year Ended						January 1			April 3
			December 31,						Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Current
	Federal		$	—		$	(2,145	)	$	—		$	—
	Foreign			(2,810	)		1,530			614			449
	State			138			36			4			13
		Total current		(2,672	)		(579	)		618			462
Deferred Federal				—			—			—			—
	Foreign			(698	)		(718	)		(339	)		(1,052	)
	State			—			—			—			—
		Total deferred		(698	)		(718	)		(339	)		(1,052	)
		Total	$	(3,370	)	$	(1,297	)	$	279		$	(590	)

      A reconciliation from the statutory Federal tax rate to the effective tax rate for continuing operations follows:

			Predecessor Company
												Reorganized
												Company
			Year Ended						January 1			April 3
			December 31,						Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Statutory Federal tax rate				35.00	%		35.00	%		35.00	%		35.00	%
Increase (decrease) in tax rate due to State and local taxes net of related Federal tax benefit				(0.34	)		(0.17	)		—			0.03
	Net effect of taxes relating to foreign operations			(1.61	)		(2.03	)		(0.07	)		2.28
	Reversal of overaccrued taxes
	Valuation allowance changes and other			(24.67	)		(26.50	)		(34.75	)		(35.89	)
	Other			—			—			0.01			(0.06	)
		Effective tax rate from continuing operations		8.38	%		6.30	%		0.19	%		1.36	%

F-34

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Temporary differences and carryforwards that give rise to a significant portion of deferred tax assets and liabilities for 2003 and 2002 are as follows:

	Year 2003
	Temporary Difference				Tax Effected
	Deferred		Deferred		Deferred		Deferred
	Tax		Tax		Tax		Tax
	Assets		Liabilities		Assets		Liabilities
Depreciation basis differences	$	—	$	66,358	$	—	$	25,880
Inventory basis differences		—		4,743		—		1,850
Lease transaction		44,799		—		17,472		—
Pension and health care		73,947		—		28,838		—
Employee benefits accruals		5,084		—		1,983		—
Self insurance accruals and reserves		3,153		—		1,230		—
Other accruals and reserves		15		—		6		—
Foreign exchange and other		—		23,943		—		9,338
Valuation allowances		—		78,670		—		30,680
	$	126,998	$	173,714	$	49,529	$	67,748

	Year 2002
	Temporary Difference				Tax Effected
	Deferred		Deferred		Deferred		Deferred
	Tax		Tax		Tax		Tax
	Assets		Liabilities		Assets		Liabilities
Depreciation basis differences	$	—	$	57,415	$	—	$	22,392
Inventory basis differences		—		4,609		—		1,798
Intangible basis differences		—		2,000		—		780
Lease transaction		64,105		—		25,001		—
Pension and health care		47,955		—		18,702		—
Employee benefits accruals		6,006		—		2,342		—
Loss and other carryforwards		56,875		—		22,181		—
AMT carryover		9,749		—		3,412		—
Restructuring reserve		20,510		—		7,999		—
Self insurance accruals and reserves		3,354		—		1,308		—
Other accruals and reserves		551		—		216		—
Foreign exchange and other		—		23,526		—		9,175
Valuation allowances		—		187,407		—		73,089
	$	209,105	$	274,957	$	81,161	$	107,234

      During the calendar year 2003, the Company emerged out of bankruptcy with the conversion of $163 million of Old Senior Notes being converted to 8% Senior Notes and stock. This results in a $103 million reduction of debt, which represents cancellation of debt income (“COD”), which is governed by Internal Revenue Code Section 108. Under Section 108, the Company will not recognize any taxable income for calendar year 2003 but must reduce tax attributes up to the extent of the COD income. This tax attribute reduction will be used to eliminate the Company’s Net Operating Loss carryforward and reduce the tax basis of assets that the Company had previously written off for book purposes.

F-35

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The Company joins in filing a United States consolidated Federal income tax return including all of its domestic subsidiaries.

14. Commitments (Dollars in Thousands)

      As of December 31, 2003 and 2002, the Company had capital expenditure commitments outstanding of approximately $7,373 and $332, respectively.

15. Contingencies

      In 1988, Viskase Canada Inc. (“Viskase Canada”), a subsidiary of the Company, commenced a lawsuit against Union Carbide Canada Limited and Union Carbide Corporation (“Union Carbide”) in the Ontario Superior Court of Justice, Court File No.: 292270188 seeking damages resulting from Union Carbide’s breach of environmental representations and warranties under the Amended and Restated Purchase and Sale Agreement, dated January 31, 1986 (“Agreement”). Pursuant to the Agreement, Viskase Corporation and various affiliates (including Viskase Canada) purchased from Union Carbide and Union Carbide Films Packaging, Inc., its cellulosic casings business and plastic barrier films business (“Business”), which purchase included a facility in Lindsay, Ontario, Canada (“Site”). Viskase Canada is claiming that Union Carbide breached several representations and warranties and deliberately and/or negligently failed to disclose to Viskase Canada the existence of contamination on the Site.

      In November 2000, the Ontario Ministry of the Environment (“MOE”) notified Viskase Canada that it had evidence to suggest that the Site was a source of polychlorinated biphenyl (“PCB”) contamination. Viskase Canada has been working with the MOE in investigating the PCB contamination and developing and implementing, if appropriate, a remedial plan for the Site and the affected area. Viskase Canada and others have been advised by the MOE that the MOE expects to issue certain Director’s Orders requiring remediation under applicable environmental legislation against Viskase Canada, The Dow Chemical Company (corporate successor to Union Carbide) (“Dow”), and others in the next few months. Dow, which has replaced or soon will replace Union Carbide as the defendant in the lawsuit against Union Carbide, has consented to and amendment to the lawsuit, which Viskase Canada will file with the court as soon as the claim can be adequately quantified, that alleges that any PCB contamination at or around the Site was generated from Union Carbide’s plastics extrusion business, which was operated at the Site by Union Carbide prior to the purchase of the Business. Union Carbide’s plastics extrusion business was not part of the Business purchased by Viskase Corporation and its affiliates. Viskase Canada will be asking the court to require Union Carbide to repurchase the Site from Viskase Canada and award Viskase Canada damages in excess of $2.0 million (Canadian). The Company has reserved $0.75 million (U.S.) for the property remediation. The lawsuit is still pending and is expected to proceed to trial in 2005.

      In 1993, the Illinois Department of Revenue (“IDR”) submitted a proof of claim against Envirodyne Industries, Inc. (our former corporate name) and its subsidiaries in the Bankruptcy Court, Bankruptcy Case Number 93 B 319 for alleged liability with respect to the IDR’s denial of the Company’s allegedly incorrect utilization of certain loss carryforwards of certain of its subsidiaries. In September 2001, the Bankruptcy Court denied the IDR’s claim and determined the debtors were not responsible for 1998 and 1999 tax liabilities, interest and penalties. The IDR appealed the Bankruptcy Court’s decision to the United States District Court, Northern District of Illinois, Case Number 01 C 7861; and in February 2002, the district court affirmed the Bankruptcy Court’s order. IDR appealed the district court’s order to United States Court of Appeals for the Seventh Circuit, Case Number 02-1632. On January 6, 2004, the appeals court reversed the judgment of the district court and remanded the case for further proceedings. The matter is now before the Bankruptcy Court for further determination.

      In August 2001, the Department of Revenue of the Province of Quebec, Canada issued an assessment against Viskase Canada in the amount of $2.7 million (Canadian) plus interest and possible penalties. This

F-36

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assessment is based upon Viskase Canada’s failure to collect and remit sales tax during the period July 1, 1997 to May 31, 2001. During this period, Viskase Canada did not collect and remit sales tax in Quebec on reliance of the written advice of its outside accounting firm. Viskase Canada filed a Notice of Objection in November 2001 with supplementary submission in October 2002. The Notice of Objection found in favor of the Department of Revenue. The Company has appealed the decision. The ultimate liability for the Quebec sales tax lies with the customers of Viskase Canada during the relevant period. Viskase Canada could be required to pay the amount of the underlying sales tax prior to receiving reimbursement for such tax from its customers. The Company has, however, provided for a reserve of $0.3 million (U.S.) for interest and penalties, if any, but has not provided for a reserve for the underlying sales tax. Viskase Canada is negotiating with the Quebec Department of Ministry to avoid having to collect the sales tax from customers who will then be entitled to credit for such sales tax collected.

      During 1999 and 2000, the Company and certain of its subsidiaries and one other sausage casings manufacturer were named in 10 virtually identical civil complaints filed in the United States District Court for the District of New Jersey. Each complaint brought on behalf of a purported class of sausage casings customers alleges that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. In 2001, all of the consolidated cases were transferred to the United States District Court for the Northern District of Illinois, Eastern Division. The Company strongly denies the allegations set forth in these complaints.

      In May 2004, the Company entered into a settlement agreement, without the admission of any liability (“Settlement Agreement”) with the plaintiffs. Under terms of the Settlement Agreement, the plaintiffs will fully released the Company and its subsidiaries from all liabilities and claims arising from the civil action in exchange for the payment of a $0.3 million settlement amount, which amount was reserved in the December 31, 2003 financial statements.

      The Company and its subsidiaries are involved in these and various other legal proceedings arising out of their business and other environmental matters, none of which is expected to have a material adverse effect upon results of operations, cash flows or financial condition.

16. Capital Stock and Paid-In Capital

      Authorized shares of preferred stock ($0.01 par value per share) and common stock ($0.01 par value per share) for the Company are 50,000,000 shares and 50,000,000 shares, respectively. A total of 10,670,053 shares of common stock were issued and outstanding as of December 31, 2003.

      Under terms of the restructuring, 660,000 shares of common stock were reserved for grant to management and employees under the Viskase Companies, Inc. Restricted Stock Plan. On April 3, 2003, the Company granted 330,070 shares of restricted common stock (“Restricted Stock”) under the Restricted Stock Plan. Shares granted under the Restricted Stock Plan vested 12.5% on grant date; 17.5% on the first anniversary of grant date; 20% on the second anniversary of grant date; 20% on the third anniversary; and, 30% on the fourth anniversary of the grant date, subject to acceleration upon the occurrence of certain events. The Restricted Stock expense for the nine-month period ended December 31, 2003, for the Reorganized Company is $11 thousand. The value of the Restricted Stock was calculated based on the fair market value of the new common stock upon emergence from bankruptcy using a multiple of cash flow calculation to determine enterprise value and the related equity value.

F-37

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

17. Earnings Per Share

      Following are the reconciliations of the numerators and denominators of the basic and diluted EPS (in thousands, except for number of shares and per share amounts):

			Predecessor Company								Reorganized
											Company
									January 1		April 3
			Year Ended December 31,						Through		Through
									April 2,		December 31,
			2001			2002			2003		2003
Numerator
	(Loss) income available to common stockholders
		From continuing operations	$	(28,715	)	$	(19,330	)	$	151,873	$	(46,627	)
	Discontinued operations net of income taxes Gain on disposal			3,189			—			—		—
Net loss available to common stockholders for basic and diluted EPS			$	(25,526	)	$	(19,330	)	$	151,873	$	(46,627	)
Denominator
Weighted-average shares outstanding for basic EPS				15,309,616			15,316,183			15,313,737		10,670,053
	Effect of dilutive securities			—			—			—		—
	Weighted-average shares outstanding for diluted EPS			15,309,616			15,316,183			15,313,737		10,670,053

      Common stock equivalents, consisting of common stock options (all of which were cancelled upon emergence from bankruptcy), are excluded from the weighted-average shares outstanding as the effect is antidilutive on the Predecessor Company.

      A total of 330,070 issued shares of Restricted Stock are included in the weighted-average shares outstanding for basic earnings per share for the Reorganized Company. The 2010 Warrants issued by the Reorganized Company, exercisable for a total of 304,127 shares of common stock, have been excluded as their effect is antidilutive.

F-38

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

18. Comprehensive Gain (Loss)

      The following sets forth the changes in the components of other comprehensive income (loss) and the related income tax (benefit) provision (in thousands):

		Predecessor Company									Reorganized
											Company
								January 1			April 3
		Year Ended December 31,						Through			Through
								April 2,			December 31,
		2001			2002			2003			2003
Other comprehensive income (loss)
	Foreign currency translation adjustment(1)	$	(129	)	$	3,711		$	(845	)	$	4,547
	Minimum pension liability adjustment(2)		(5,172	)		(21,573	)		—			—
Other comprehensive gain (loss), net of tax		$	(5,301	)	$	(17,862	)	$	(845	)	$	4,547

(1)	Foreign currency translation adjustments, net of related tax provision of $0 for the predecessor period ended April 3, 2003, and $0 for the predecessor periods ended December 31, 2002 and 2001. Foreign currency translation adjustment, net of related tax of $0, for the Reorganized Company.
(2)	Minimum pension liability adjustment, net of a related tax provision of $0 in 2002 and 2001. The minimum pension liability adjustment is due to changes in plan return assumptions and asset performance.

19. Fair Value of Financial Instruments

      The following table presents the carrying value and estimated fair value for the Reorganized Company as of December 31, 2003, of the Company’s financial instruments (refer to Note 9) (dollars in thousands):

		Carrying		Estimated
		Value		Fair Value
Assets
	Cash and cash equivalents	$	23,160	$	23,160
	Restricted cash		26,245		26,245
Liabilities
	8% Senior Subordinated Secured Notes		46,248		45,697

20. Research and Development Costs (Dollars in Thousands)

      Research and development costs from continuing operations for the Predecessor Company are expensed as incurred and totaled $970, $4,837 and $5,474 for 2003, 2002 and 2001, respectively. Research and development costs from continuing operations for the Reorganized Company are expensed as incurred and totaled $2,628 for the nine-month period.

21. Related-Party Transactions (Dollars in Thousands)

      During the period from April to December 2003, Mr. Weber, the President and Chief Executive Officer of the Company, received a salary of $170,000 and other benefits (including 401(k) contributions and medical and life insurance) of approximately $10,000 from a wholly-owned subsidiary of Icahn Associates Corp. as compensation for Mr. Weber’s services to the Company and to other companies affiliated with Icahn Associates Corp.

F-39

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      Arnos Corp., an affiliate of Mr. Icahn, is the lender under the Company’s existing revolving credit facility. We paid Arnos Corp. origination fees, interest and unused commitment fees of $175 during the period from April 3 through December 31, 2003.

      Gregory R. Page, the President and Chief Operating Officer of Cargill, Inc., resigned as a director of the Company as of the date the Company emerged from bankruptcy in April 2003. During 2003, the Company had sales in the ordinary course of business of $613 to Cargill, Inc. and its affiliates, $200 of which occurred prior to Mr. Page’s resignation in April 2003.

22. Business Segment Information and Geographic Area Information (Dollars in Thousands)

      The Company primarily manufactures and sells cellulosic food casings. The Company’s operations are primarily in North America, South America and Europe. Intercompany sales and charges (including royalties) have been reflected as appropriate in the following information. Certain items are maintained at the Company’s corporate headquarters and are not allocated to the segments. They include most of the Company’s debt and related interest expense and income tax benefits. Other expense for 2003 (for Reorganized Company and Predecessor Company), 2002 and 2001 includes net foreign exchange transaction gains (losses) of approximately $3,280, $1,474, $1,659 and $(2,309), respectively.

F-40

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Geographic Area Information

			Predecessor Company									Reorganized
												Company
									January 1			April 3
			Year Ended December 31,						Through			Through
									April 2,			December 31,
			2001			2002			2003			2003
Net sales
	United States		$	120,300		$	115,798		$	29,470		$	97,832
	Canada			8,188			6,850			0			0
	South America			7,861			7,424			1,606			5,857
	Europe			70,058			66,458			17,939			60,705
	Other and eliminations			(17,092	)		(12,953	)		(3,613	)		(11,986	)
		Total	$	189,315		$	183,577		$	45,402		$	152,408
Operating (loss) income
	United States		$	(10,237	)	$	4,040		$	(1,433	)	$	(37,063	)
	Canada			(520	)		(449	)		(98	)		(376	)
	South America			(633	)		(1,435	)		(190	)		(900	)
	Europe			(2,346	)		186			(298	)		(2,474	)
	Other and eliminations			—			—			—			—
		Total	$	(13,736	)	$	2,342		$	(2,019	)	$	(40,813	)
Identifiable assets
	United States		$	138,240		$	131,447		$	114,997		$	115,711
	Canada			6,762			1,466			770			745
	South America			9,487			8,849			8,937			7,870
	Europe			79,539			76,919			75,597			87,767
	Other and eliminations			—			—			—			—
		Total	$	234,028		$	218,681		$	200,301		$	212,093

23. Quarterly Data (Unaudited)

      Quarterly financial information for 2003 and 2002 is as follows (in thousands, except for per share amounts):

	Predecessor			Reorganized Company
	Company
	January 1											April 3
	Through			Second		Third			Fourth			Through
2003	April 2			Quarter		Quarter			Quarter			December 31
Net sales	$	45,402		$	49,636	$	51,458		$	51,314		$	152,408
Gross margin		7,371			10,762		11,684			9,973			32,419
Operating (loss) income		(2,019	)		2,498		1,602			(44,913	)		(40,813	)
Net income (loss)		151,873			830		(1,295	)		(46,162	)		(46,627	)
Net income (loss) per share — basic and diluted		9.91			0.08		(0.12	)		(4.33	)		(4.37	)

F-41

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Predecessor Company
	First			Second		Third			Fourth
2002	Quarter			Quarter		Quarter			Quarter			Annual
Net sales	$	43,387		$	46,291	$	48,673		$	45,226		$	183,577
Gross margin		8,676			10,003		9,972			8,085			36,736
Operating (loss) income		(2,435	)		6,053		(2,920	)		1,644			2,342
Net (loss) income		(7,883	)		1,131		(8,683	)		(3,895	)		(19,330	)
Net (loss) income per share — basic and diluted		(0.51	)		0.07		(0.57	)		(0.25	)		(1.26	)

      During the period January 1 through April 2, 2003, the Predecessor Company recognized the cancellation of debt and interest as income in the amount of $153,946 as a result of the Plan.

      During the second quarter of 2003, the Company recognized a reversal of $333 for an excess reserve related to the 2002 restructuring reserve. The restructuring income is the result of a revised estimate for employee costs.

      During the third quarter of 2003, the Company recognized restructuring expense of $1,500. The restructuring expense is a result of addressing the industry’s competitive environment and is composed of U.S. employee costs.

      During the fourth quarter of 2003, the Company recognized a write-off of goodwill of $44,430 and intangibles of $2,375. In addition, the Company recognized a European restructuring charge of $1,002 addressing the industry’s competitive environment. This amount was offset by a reversal of an excess reserve of $1,200 for the renegotiated Nucel® license fee, originally recognized in the 2000 restructuring reserve.

      During the second quarter of 2002, the Company recognized a net restructuring income of $6,132. The restructuring income is the result of a reversal of $9,289 of excess reserve from the year 2000 for the reduction of the Nucel® technology third party license fees, offset by a year 2002 restructuring charge of $3,157 (see note 12).

24. Discontinued Operations (Dollars in Thousands)

      On January 17, 2000, the Company’s Board of Directors announced its intent to sell the Company’s plastic barrier and non-barrier shrink films business. The sale of the films business was completed on August 31, 2000. The aggregate proceeds of approximately $255,000, including a Working Capital Adjustment of $10,300, were used to retire debt, pay GECC and for general corporate purposes. The Company recognized a net gain in the amount of $3,189 in 2001.

      The operating results of the films business have been segregated from continuing operations and reported as a separate line item on the income statement under the heading Discontinued Operations.

25. Subsequent Event

      In April 2004, the Company renegotiated and amended its lease arrangement with GECC. Under terms of the amended lease, six payments of approximately $6.1 million are due semi-annually on February 28 and August 28 beginning in February 2005. As part of the renegotiation of the lease, the Company agreed to purchase the assets at their fair market value of $9.5 million, which amount was reflected in Fresh-Start Accounting. The Company has the option to terminate the lease early upon payment of $33.0 million through February 28, 2005, thereafter the amount of the early termination payment will decrease upon payment of each semi-annual capital lease payment. The equipment will transfer to the Company free and clear of all liens on the earlier of (i) the payment of the early termination amount, plus any accrued interest due and payable at 6% per annum or (ii) the payment of the final installment due August 28, 2007.

F-42

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

		Balance at		Provision										Balance
		Beginning		Charged to										at End
	Description	of Period		Expense		Write-offs			Recoveries		Other(1)			of Period
2004	For the period January 1 to September 30 Allowance for doubtful accounts	$	523	$	144	$	—		$	81	$	9		$	757
2003	For the period April 3 to December 31 Allowance for doubtful accounts	$	—	$	448	$	—		$	44	$	31		$	523
2003	For the period January 1 to April 2 Allowance for doubtful accounts		1,334		113		—			1		(8	)		1,440
2002	For the year ended December 31 Allowance for doubtful accounts		1,470		477		(711	)		22		76			1,334
2001	For the year ended December 31 Allowance for doubtful accounts		1,675		425		(554	)		54		(130	)		1,470
2004	For the period January 1 to September 30 Reserve for obsolete and slow-moving  inventories		1,722		314		—			—		7			2,043
2003	For the period April 3 to December 31 Reserve for obsolete and slow-moving  inventories		—		1,605		—			—		117			1,722
2003	For the period January 1 to April 2 Reserve for obsolete and slow-moving  inventories		2,725		171		(79	)		—		6			2,823
2002	For the year ended December 31 Reserve for obsolete and slow-moving  inventories		2,816		1,670		(1,877	)		—		116			2,725
2001	For the year ended December 31 Reserve for obsolete and slow-moving  inventories		5,029		1,150		(2,029	)		—		(1,334	)		2,816

(1)  Foreign currency translation

F-43

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			September 30, 2004			December 31, 2003
ASSETS
Current assets:
	Cash and cash equivalents		$	30,539		$	23,160
	Restricted cash			2,710			26,245
	Receivables, net			30,769			29,065
	Inventories			30,535			31,738
	Other current assets			9,343			8,309
		Total current assets	$	103,896		$	118,517
Property, plant and equipment, including those under capital leases				107,701			99,839
Less accumulated depreciation and amortization				21,441			17,109
	Property, plant and equipment, net			86,620			82,730
Deferred financing costs, net				3,754			222
Other assets				9,635			10,624
		Total Assets	$	203,545		$	212,093
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Short-term debt including current portion of long-term debt and obligations under capital leases			$	351		$	21,303
Accounts payable				12,807			14,893
Accrued liabilities				25,270			28,276
Current deferred income taxes				1,844			1,844
		Total current liabilities		40,272			66,316
Long-term debt including obligations under capital leases				100,368			69,850
Accrued employee benefits				103,422			100,652
Noncurrent deferred income taxes				15,309			16,375
Commitments and contingencies Stockholders’ deficit
	Preferred stock, $.01 par value; none outstanding
	Common stock, $.01 par value 10,670,053 shares issued and 9,864,783 outstanding at September 30, 2004 and 10,670,053 shares issued and outstanding at December 31, 2003			106			106
	Paid in capital			1,895			894
	Accumulated (deficit)			(61,729	)
	Accumulated (deficit) from April 3, 2003 to December 31, 2003						(46,627	)
	Less 805,270 treasury shares, at cost			(298	)
	Accumulated other comprehensive income			4,215			4,547
	Unearned restricted stock issued for future service			(15	)		(20	)
		Total stockholders’ (deficit)		(55,826	)		(41,100	)
		Total Liabilities and Stockholders’ Deficit	$	203,545		$	212,093

The accompanying notes are an integral part of the consolidated financial statements.

F-44

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

		Reorganized Company
														Predecessor
		3 Months			3 Months			9 Months			April 3			Company
		Ended			Ended			Ended			Through			January 1
		September 30,			September 30,			September 30,			September 30,			Through
		2004			2003			2004			2003			April 2, 2003
NET SALES		$	52,954		$	51,458		$	154,366		$	101,094		$	45,402
COSTS AND EXPENSES
	Cost of sales		42,048			39,774			121,690			78,648			38,031
	Selling, general and administrative		7,373			8,313			22,779			16,645			8,890
	Amortization of intangibles		269			269			808			539			500
	Restructuring expense		—			1,500			668			1,162
OPERATING INCOME (LOSS)			3,264			1,602			8,421			4,100			(2,019	)
	Interest income		131			145			349			354			323
	Interest expense		3,409			3,496			9,747			6,821			1,204
	Other (income) expense, net		(1,860	)		(335	)		1,436			(2,292	)		(1,505	)
	Loss (gain) on early extinguishment of debt, net of income tax provision of $0 in 2004 and 2003		—			—			13,083			—			(153,946	)
INCOME (LOSS) BEFORE REORGANIZATION EXPENSES AND INCOME TAXES			1,846			(1,414	)		(15,496	)		(75	)		152,551
	Reorganization expense		—			17			—			403			399
INCOME (LOSS) BEFORE INCOME TAXES			1,846			(1,431	)		(15,496	)		(478	)		152,152
	Income tax (benefit) provision		(154	)		136			(393	)		(13	)		279
NET INCOME (LOSS)			2,000			(1,295	)		(15,103	)		(465	)		151,873
	Other comprehensive (loss) income:
	Foreign currency translation adjustments		(659	)		(1,596	)		(332	)		1,239			(845	)
COMPREHENSIVE INCOME (LOSS)		$	1,341		$	(2,891	)	$	(15,435	)	$	774		$	151,028
WEIGHTED AVERAGE COMMON SHARES — BASIC			9,864,783			10,670,053			10,393,792			10,670,053			15,314,553
PER SHARE AMOUNTS:
INCOME (LOSS) EARNINGS PER SHARE — basic
Net income (loss)		$	.20		$	(.12	)	$	(1.45	)	$	(.04	)	$	9.91
WEIGHTED AVERAGE COMMON SHARES — DILUTED			10,663,857			10,670,053			10,393,792			10,670,053			15,314,553
PER SHARE AMOUNTS:
INCOME (LOSS) EARNINGS PER SHARE — diluted
Net income (loss)		$	.19		$	(.12	)	$	(1.45	)	$	(.04	)	$	9.91

The accompanying notes are an integral part of the consolidated financial statements.

F-45

VISKASE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

				Reorganized Company						Predecessor
										Company
				9 Months			April 3			January 1
				Ended			Through			Through
				September 30,			September 30,			April 2,
				2004			2003			2003
				(In thousands)
Cash flows from operating activities:
	Net (loss) income			$	(15,103	)	$	(465	)	$	151,873
	Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
		Depreciation and amortization under capital lease			8,011			6,183			4,838
		Amortization of intangibles			808			539			500
		Amortization of deferred financing fees			223			41			3
		Reorganization item						403			399
		(Decrease) increase in deferred income taxes			(707	)		1,362			(339	)
		Foreign currency translation (gain) loss			(17	)		(236	)		311
		Loss (gain) in disposition of assets			144			(154	)		(330	)
		Bad debt provision			122			259			113
		Loss (gain) on debt extinguishment			13,083						(153,946	)
		Non-cash interest on 8% Notes			5,263
		Payment of interest on 8% Notes			(2,196	)
		Changes in operating assets and liabilities:
			Receivables		(2,255	)		(2,540	)		(1,358	)
			Inventories		770			1,422			(1,407	)
			Other current assets		(1,151	)		1,114			(2,143	)
			Accounts payable and accrued liabilities		(4,606	)		(3,405	)		(1,429	)
			Other		11,888			5,489			(404	)
		Total adjustments			29,380			10,477			(155,192	)
			Net cash provided by (used in) operating activities before reorganization expense		14,277			10,012			(3,319	)
Net cash used for reorganization								(403	)		(386	)
Cash flows from investing activities:
	Capital expenditures				(3,898	)		(1,349	)		(527	)
	Reacquisition of leased assets				(9,500	)		—
	Proceeds from disposition of assets				(298	)		2,341			1,302
	Restricted cash				1,349			2,142			(4	)
			Net cash provided by investing activities		23,535			3,134			771
Cash flows from financing activities:
	Deferred financing costs				11,188			(228	)
	Proceeds from issuance of long-term debt				(4,015	)
	Treasury stock purchase				89,348
	Proceeds from issuance of warrants				1,001
	Repayment of long-term borrowings and capital obligation				(104,273	)		(4,253	)		(15,242	)
			Net cash (used in) financing activities		(17,939	)		(4,481	)		(15,242	)
Effect of currency exchange rate changes on cash					(147	)		621			354
Net increase (decrease) in cash and equivalents					7,379			8,883			(17,822	)
Cash and equivalents at beginning of period					23,160			9,878			27,700
Cash and equivalents at end of period				$	30,534		$	18,761		$	9,878
Supplemental cash flow information:
	Interest paid less capitalized interest			$	3,218		$	1,015		$	3,311
	Income taxes paid			$	34		$	295		$	843

The accompanying notes are an integral part of the consolidated financial statements.

F-46

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1.  Reorganization Under Chapter 11 and Basis of Presentation In Thousands, Except Number of Shares and Per Share and Per Bond Amounts)

      Viskase Companies, Inc., a stand-alone-entity (“VCI”), filed a prepackaged Chapter 11 bankruptcy plan in the United States Bankruptcy Court for the Northern District of Illinois (“Bankruptcy Court”) on November 13, 2002. The Chapter 11 filing was for VCI only and did not include any domestic or foreign subsidiaries.

      On April 3, 2003, VCI consummated its prepackaged Chapter 11 bankruptcy plan, as modified (“Plan”), which had previously been confirmed by order of the Bankruptcy Court. Under the Plan, holders of the Company’s 10.25% Senior Notes due 2001 (“Old Senior Notes”) received just over 90% of the VCI’s equity on a fully diluted basis. Suppliers and other trade creditors were not affected by the consummation of the Plan.

      As a result of VCI’s emergence from Chapter 11 bankruptcy on April 3, 2003 and the application of fresh-start accounting (see Note 2 — Fresh-Start Accounting), consolidated financial statements for VCI and its domestic and foreign subsidiaries (collectively, the “Company”) for the periods subsequent to the effective date of VCI’s plan of reorganization in the bankruptcy proceedings are referred to as the “Reorganized Company” and are not comparable to those for the periods prior to this date, which are referred to as the “Predecessor Company.” The March 31, 2003 unaudited consolidated financial statements were used for the predecessor period ended April 2, 2003; subsequent to March 31, 2003 and through the period ending April 2, 2003, net income reflects a $153,946 gain representing the gain on debt extinguishment (refer to Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 2). A black line has been drawn in the consolidated financial statements to distinguish, for accounting purposes, the periods associated with the Reorganized Company and the Predecessor Company. Aside from the effects of fresh-start accounting and new accounting pronouncements adopted as of the effective date of the plan of reorganization, the Reorganized Company follows the same accounting policies as the Predecessor Company.

      Condensed financial information of VCI subsequent to the Petition Date is presented below:

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION STATEMENT OF OPERATIONS

(Unaudited)

		January 1, 2003			November 13, 2002
		to			to
		March 31, 2003			December 31, 2002
		(Dollars in thousands)
Selling, general and administrative		$	76		$	49
Other expense, net			34			30
Intercompany (expense) income, net			(2,386	)		5,049
	Income (loss) before taxes and reorganization items		(2,496	)		4,970
Reorganization expense			399			452
Income tax provision			—			—
	NET INCOME (LOSS)	$	(2,895	)	$	4,518

F-47

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION CONDENSED STATEMENT OF CASH FLOWS

(Unaudited)

				January 1, 2003			November 13, 2002
				to			to
				March 31, 2003			December 31, 2002
				(Dollars in thousands)
Cash flows from operating activities:
	Net income (loss)			$	(2,895	)	$	4,518
	Adjustments to reconcile net income to net cash:
		Changes in operating assets and liabilities
			Other current assets		(1	)		(169	)
			Accrued liabilities		1			513
			Decrease in deferred tax		(12	)		(26	)
			Intercompany accounts		2,904			(4,855	)
			Other		3			19
		Net cash (used in) operating activities			—			—
		Net decrease in cash and equivalents			—			—
Cash and equivalents at beginning of period					—			—
	Cash and equivalents at end of period			$	—		$	—

F-48

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

VISKASE COMPANIES, INC.

CHAPTER 11 FILING ENTITY

DEBTOR-IN-POSSESSION BALANCE SHEET

(Unaudited)

				March 31, 2003			December 31, 2002
				(Dollars in thousands)
ASSETS
	Current assets
		Other current assets		$	170		$	169
			Total current assets		170			169
	Deferred financing				36			39
	Intercompany receivables				418,647			411,629
	Investment in affiliate entities				(358,176	)		(348,254	)
			Total assets	$	60,677		$	63,583
LIABILITIES AND STOCKHOLDERS’ DEFICIT
	Current liabilities not subject to compromise:
		Overdrafts payable		$	52		$	52
		Accounts payable			364			407
		Accrued liabilities			98			54
			Total current liabilities not subject to compromise		514			513
Current liabilities subject to compromise					188,198			188,198
	Deferred income taxes				50,006			50,018
		Total liabilities			238,718			238,729
	Stockholders’ deficit				(178,041	)		(175,146	)
		Total Liabilities and Stockholders’ Deficit		$	60,677		$	63,583

Liquidity

      As discussed above, VCI emerged from bankruptcy on April 3, 2003. For the nine months ended September 30, 2004, the Company recorded a net loss of $(15,103) and cash flow provided by operating activities of $14,277. In connection with its emergence from bankruptcy, the Company restructured its debt and equity, and the amount due under its capital lease was renegotiated with the lessor. As of September 30, 2004, the Company had positive working capital of approximately $63,624 including restricted cash of $2,710, with additional amounts available under its revolving credit facility. While the Company could decide to raise additional amounts through the issuance of new debt or equity, management believes that the existing resources available to it will be adequate to satisfy current and planned operations for at least the next twelve months.

Summary of the Plan

      Under the terms of the Plan, the Company’s wholly owned operating subsidiary, Viskase Corporation, was merged into the Company with the Company being the surviving corporation.

      The holders of the Company’s outstanding $163,060 of Old Senior Notes received a pro rata share of $60,000 face value of new 8% Senior Subordinated Secured Notes due December 1, 2008 (“8% Notes”) and

F-49

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10,340,000 shares of new common stock (“New Common Stock”) issued by the Company on a basis of $367.96271 principal amount of 8% Notes and 63.4122 shares of New Common Stock for each one thousand dollar ($1,000) principal amount of Old Senior Notes.

      The 8% Notes bear interest at a stated rate of 8% per year, and accrue interest from December 1, 2001, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in the form of 8% Notes (paid-in-kind) for the first three years. The first interest payment date on the 8% Notes was June 30, 2003. Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of 8% Notes (paid-in-kind). Thereafter, interest will be payable in cash. The 8% Notes mature on December 1, 2008.

      The 8% Notes were originally secured by a collateral pool consisting of substantially all of the Company’s personal property other than assets that were subject to the Company’s capital lease obligations. On June 29, 2004, in accordance with the indenture for the 8% Notes, holders of at least 66 2/3% of the 8% Notes consented to the release of all of the collateral and the related liens. As of June 29, 2004, the 8% Notes are no longer secured by the collateral pool nor are the 8% Notes senior to the other existing senior secured debt of the Company.

      Shares of common stock (“Old Common Stock”), including the stock issued to employees to celebrate the Company’s 75th Anniversary, and options of the Company outstanding prior to the Company’s emergence from bankruptcy were canceled pursuant to the Plan. In addition, the Company’s Stockholder Rights Plan was terminated pursuant to the Plan. Holders of the Old Common Stock received a pro rata share of 306,291 warrants (“2010 Warrants”) to purchase shares of New Common Stock. The 2010 Warrants have a seven-year term expiring on April 2, 2010, and have an exercise price of $10.00 per share.

      Under the restructuring, 660,000 shares of Restricted Stock were authorized for Company management and employees under a new Restricted Stock Plan. Any such shares that are issued are subject to a vesting schedule with acceleration upon the occurrence of certain events.

      The Company also entered into a three year $20,000 revolving credit facility (“Old Revolving Credit Facility”) to provide the Company with additional financial flexibility. The Old Revolving Credit Facility, which was subsequently terminated and replaced with a new revolving credit facility, was senior to the 8% Notes. The Old Revolving Credit Facility was a three-year facility. Interest under the Old Revolving Credit Facility was prime plus 200 basis points. The Old Revolving Credit Facility contained one financial covenant that required a $16.0 million minimum level of earnings before depreciation, interest, amortization and taxes (“EBITDA”) calculated on a rolling four-quarter basis.

      Following the approval of the Plan, the Company adopted Statement of Position (“SOP”) 90-7, “Fresh Start” accounting, resulting in recording all assets and liabilities at fair value. As a result, the effects of the adjustments on reported amounts of individual assets and liabilities resulting from the adoption of fresh-start accounting and the effects of the forgiveness of debt are reflected in the Company’s historical statement of operations. Upon emergence from bankruptcy, the amounts and classifications reported in the consolidated historical financial statements materially changed.

      The conversion of $163,060 of Old Senior Notes to 8% Notes and New Common Stock resulted in a $103,060 reduction of debt, which represented cancellation of debt income (“COD”), which is governed by Internal Revenue Code Section 108. Under Section 108, the Company did not recognize any taxable income for calendar year 2003, but must reduce tax attributes up to the extent of the COD income. This tax attribute reduction was used to eliminate the Company’s Net Operating Loss carryforward and reduce the tax basis of assets that the Company had previously written off for book purposes.

F-50

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2.  Fresh-Start Accounting (Dollars in Thousands)

      As previously discussed, the accompanying consolidated financial statements reflect the use of fresh-start accounting as required by SOP 90-7, because the reorganized value of the Company’s assets immediately before emergence from bankruptcy was less than all post-petition liabilities, and the Predecessor Company’s stockholders received less than 50% of the Reorganized Company’s voting shares upon emergence from bankruptcy. Under fresh-start accounting, the Company’s assets and liabilities were adjusted to fair values and a reorganization value for the entity was determined by the Company based upon the estimated fair value of the enterprise before considering values allocated to debt. The portion of the reorganization value, which could not be attributed to specific tangible or identified intangible assets of the Reorganized Company, totaled $44,430. In accordance with SFAS No. 142, this amount is reported as “Goodwill” in the consolidated financial statements. Fresh-start accounting resulted in the creation of a new reporting entity with no accumulated deficit as of April 3, 2003. The reorganization value of the Company was based upon the compilation of many factors and various valuation methods, including: (i) discounted cash flow analysis using five-year projected financial information applying discount rates between 16% and 18% and terminal cash flow multiples of 5.0X to 6.0X based upon review of selected publicly traded company market multiples of certain companies operating businesses viewed to be similar to that of the Company; and (ii) other applicable ratios and valuation techniques believed by the Company and its financial advisors to be representative of the Company’s business and industry.

      The valuation was based upon a number of estimates and assumptions, which are inherently subject to significant uncertainties and contingencies beyond the control of the Company.

      Upon the adoption of fresh-start accounting, as of April 3, 2003, the Company recorded goodwill of $44,430, which equals the reorganization value in excess of amounts allocable to identifiable net assets recorded in accordance with SOP 90-7. In the fourth quarter of 2003, the Company performed its first annual goodwill impairment analysis under SFAS No. 142. Due to the fact the fair value of the Company’s single reporting unit, as estimated by the Company’s market capitalization, was significantly less than the net book

F-51

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value at December 31, 2003, the Company wrote off the entire $44,430 goodwill balance in the fourth quarter of 2003.

		Predecessor								Reorganized
		Company		Adjustments						Company
		March 31,								April 3,
		2003		Reorganization			Fresh-Start			2003
ASSETS
Current assets:
	Cash and cash equivalents	$	9,878							$	9,878
	Restricted cash		28,351								28,351
	Receivables, net		26,715								26,715
	Inventories		32,235					(399	)(10)		31,836
	Other current assets		9,376								9,376
	Total current assets		106,555		—			(399	)		106,156
Property, plant and equipment, including those under capital leases			246,238					(160,696	)(11)		85,542
	Less accumulated depreciation and amortization		158,903					(158,903	)(11a)		—
	Property, plant and equipment, net		87,335		—			(1,793	)		85,542
Deferred financing costs, net			36								36
Other assets			6,375					6,371	(12)		12,746
Excess reorganization value/goodwill					30,495	(1)		13,935	(13)		44,430
	Total Assets	$	200,301	$	30,495		$	18,114		$	248,910

F-52

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Predecessor									Reorganized
			Company			Adjustments						Company
			March 31,									April 3,
			2003			Reorganization			Fresh-Start			2003
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities not subject to compromise:
	Short-term debt including current portion of long-term debt and obligations under capital leases		$	14,894									14,894
	Accounts payable			12,387									12,387
	Accrued liabilities			25,284			40	(2)		3,150	(14)		28,474
	Current deferred income taxes			1,597									1,597
		Total current liabilities not subject to compromise		54,162			40			3,150			57,352
Current liabilities subject to compromise				188,198			(188,198	)(3)					0
Long-term debt including obligations under capital leases not subject to compromise				34,235			39,643	(4)					73,878
Accrued employee benefits				77,581						22,662	(15)		100,243
Noncurrent deferred income taxes				24,166						(7,698	)(16)		16,468
Commitments and contingencies Stockholders’ (deficit) equity:
	Old common stock, $.01 par value; 15,314,562 shares issued and outstanding			153			(153	)(5)					0
	New common stock, $.01 par value; 10,670,053 shares issued and outstanding						106	(6)					106
	Paid in capital			138,004			(137,110	)(7)					894
	Accumulated (deficit)			(293,977	)		293,977	(8)					0
	Accumulated other comprehensive (loss)			(22,168	)		22,168	(5)					0
	Unearned restricted stock issued for future service			(53	)		22	(9)					(31	)
		Total stockholders’ (deficit) equity		(178,041	)		179,010			0			969
		Total Liabilities and Stockholders’ (Deficit) Equity	$	200,301		$	30,495		$	18,114		$	248,910

F-53

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reorganization Adjustments:

(1)	Excess reorganization value consisted of the following:
	a.	Eliminate the accumulated other comprehensive loss	$	22,168
	b.	Eliminate the unearned restricted stock		53
	c.	Eliminate the accumulated deficit		140,031
	d.	Recognize the accreted interest for the period December 1, 2001 through March 31, 2003		6,400
	e.	Eliminate the par value of Old Common Stock		(153	)
	f.	Eliminate the paid in capital for Old Common Stock		(138,004	)
			$	30,495
(2)	To reclassify the pre-petition other current liabilities to accrued liabilities		$	40
(3)	The adjustment to liabilities subject to compromise consisted of the following:
	a.	Pursuant to the Plan, the Old Senior Notes were exchanged for 8% Senior Notes	$	(163,060	)
	b.	Pursuant to the Plan, eliminate the accrued interest payable on the Old Senior Notes		(25,098	)
	c.	Reclassify the pre-petition other current liabilities		(40	)
			$	(188,198	)
(4)	The adjustment to long-term debt consisted of the following:
	a.	Pursuant to the Plan, issuance of 8% Senior Notes at fair market value	$	33,243
	b.	Recognize the accreted paid-in-kind (PIK) and effective interest on the 8% Senior Notes for the period December 1, 2001 to March 31, 2003		6,400
			$	39,643
(5)	Eliminate Old Common Stock of ($153) and the accumulated other comprehensive loss of $22,168
(6)	Adjustments to New Common Stock consist of the following:
	a.	Pursuant to the Plan, represents the par value of equity at fair market value exchanged for Old Senior Notes	$	103
	b.	Pursuant to the Plan, represents the par value of shares issued to management for the new Restricted Stock Plan		3
			$	106
(7)	The adjustment to paid in capital consists of the following:
	a.	Eliminate the paid in capital for Old Common Stock	$	(138,004	)
	b.	Recognize the paid in capital on equity at fair market value exchanged for Old Senior Notes		866
	c.	Recognize the paid in capital value of shares at fair market value issued to management from the new Restricted Stock Plan		28
			$	(137,110	)

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VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(8)	The adjustment to the accumulated deficit consists of the following:
	a.	Pursuant to the Plan, the issuance of New 8% Senior Notes at fair market value	$	(33,243	)
	b.	Recognize the equity at fair market value exchanged for Old Senior Notes		(969	)
	c.	Pursuant to the Plan, the Old Senior Notes were exchanged for New 8% Senior Notes		163,060
	d.	Pursuant to the Plan, eliminate the accrued interest payable on the Old Senior Notes		25,098
	e.	Eliminate accumulated deficit		140,031
			$	293,977
(9)	a.	Recognize the fair market value of the new Restricted Stock Plan shares issued to management	$	(31	)
	b.	Eliminate the old unearned restricted stock		53
			$	22

Fresh-Start Adjustments:

(10)	Represents adjustment to write down inventories to net realizable value		$	(399	)
(11)	Adjustments to property, plant and equipment consist of the following:
	a.	Eliminate accumulated depreciation	$	(158,903	)
	b.	Write-up U.S. property, plant and equipment to fair market value		8,323
	c.	Write-up Chicago East Plant to fair market value		1,493
	d.	Write-up Europe property, plant and equipment to fair market value		2,747
	e.	Write-off property, plant and equipment for Brazil		(3,436	)
	f.	Write-down GECC assets for fair market value		(10,920	)
			$	(160,696	)
(12)	Adjustments to other assets consist of the following:
	a.	Adjustment to write-up patents to fair market value	$	3,098
	b.	Fair market value of non-compete agreements		1,236
	c.	Fair market value of customer backlog		2,375
	d.	Write-off intangible pension assets		(338	)
			$	6,371

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VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(13)	The adjustments to reorganization value in excess of amounts allocable to identifiable assets and liabilities:
	a.	Represents adjustment to write down inventories to net realizable value	$	399
	b.	Write-up U.S. property, plant and equipment to fair market value		(8,323	)
	c.	Adjustment to write-up patents to fair market value		(3,098	)
	d.	Recognize a liability for the foreign and domestic projected benefit obligation (PBO) in excess of plan assets		22,662
	e.	Recognize a liability due to emergence		3,150
	f.	Write-up Chicago East Plant to fair market value		(1,493	)
	g.	Write-up Europe property, plant and equipment to fair market value		(2,747	)
	h.	Write-off property, plant and equipment for Brazil		3,436
	i.	Fair market value of non-compete agreements		(1,236	)
	j.	Fair market value of customer backlog		(2,375	)
	k.	Write-off intangible pension assets		338
	l.	Adjust the deferred tax liability to fair market value		(7,698	)
	m.	Write-down GECC assets to fair market value		10,920
			$	13,935
	Recognize a liability for severance obligation due to former
(14)	chief chang of re conti	executive officer and president that was triggered by e of control upon emergence from bankruptcy and recognition serves for legal services related to specific loss ngencies	$	3,150
(15)	To recognize a liability for the foreign and domestic PBO in excess of plan assets		$	22,662
(16)	To adjust the deferred tax liability to fair market value		$	(7,698	)

3.  Cash and Cash Equivalents (Dollars in Thousands)

	September 30, 2004		December 31, 2003
Cash and cash equivalents	$	30,539	$	23,160
Restricted cash		2,710		26,245
	$	33,249	$	49,405

As of September 30, 2004, cash equivalents and restricted cash of $27,422 are invested in short-term investments.

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VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.  Inventories (Dollars in Thousands)

      Inventories consisted of:

	September 30, 2004		December 31, 2003
Raw materials	$	4,598	$	4,328
Work in process		11,920		13,679
Finished products		14,017		13,731
	$	30,535	$	31,738

      Approximately 47% of the Company’s inventories at September 30, 2004 are valued at LIFO. Remaining inventories, primarily foreign, are valued at the lower of first-in, first-out (“FIFO”) cost or market.

5.  Debt Obligations (Dollars in Thousands, Except for Number of Shares and Warrants and Per Share, Per Warrant and Per Bond Amounts)

      On June 29, 2004, the Company issued $90,000 of new 11.5% Senior Secured Notes due 2011 (“11.5% Senior Secured Notes”) and 90,000 warrants (“New Warrants”) to purchase an aggregate of 805,230 shares of common stock of the Company. The proceeds of the 11.5% Senior Secured Notes and the 90,000 New Warrants totaled $90,000. The 11.5% Senior Secured Notes have a maturity date of, and the New Warrants expire on June 15, 2011. The $90,000 proceeds were used for the (i) repurchase $55,527 principal amount of the 8% Notes at a price of 90% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon; (ii) early termination of the General Electric Capital Corporation (“GECC”) capital lease and repurchase of the operating assets subject thereto for a purchase price of $33,000; and (iii) payment of fees and expenses associated with the refinancing and repurchase of existing debt. In addition, the Company entered into a new $20,000 revolving credit facility with a financial institution. The revolving credit facility is a five-year facility with a June  29, 2009 maturity date.

      Each of the 90,000 New Warrants entitles the holder to purchase 8.947 shares of the Company’s common stock at an exercise price of $.01 per share. The New Warrants were valued for accounting purposes using the Black-Scholes model. Using the Black-Scholes model, each of the 90,000 New Warrants was valued at $11.117 for an aggregate fair value of the warrant issuance of $1,001. The remaining $88,899 of aggregate proceeds were allocated to the carrying value of the 11.5% Senior Secured Notes as of June 29, 2004.

      Outstanding short-term and long-term debt consisted of:

			September 30, 2004		December 31, 2003
Short-term debt, current maturity of long-term debt, and capital lease obligation:
	Capital Lease Obligation				$	21,299
	Other		$	351		4
		Total short-term debt	$	351	$	21,303
Long-term debt:
	11.5% Senior Secured Notes		$	89,035
	8% Notes			11,234	$	46,248
	Capital Lease Obligation					23,500
	Other			99		102
		Total long-term debt	$	100,368	$	69,850

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VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

New Revolving Credit Facility

      On June 29, 2004, the Company entered into a new $20,000 secured revolving credit facility (“New Revolving Credit Facility”). The New Revolving Credit Facility includes a letter of credit subfacility of up to $10,000 of the total $20,000 maximum facility amount. The New Revolving Credit Facility expires on June 29, 2009. Borrowings under the loan and security agreement governing this New Revolving Credit Facility are subject to a borrowing base formula based on percentages of eligible domestic receivables and eligible domestic inventory. Under the New Revolving Credit Facility, we will be able to choose between two per annum interest rate options: (i) the lender’s prime rate and (ii) LIBOR plus a margin of 2.50% (which margin will be subject to performance based increases up to 2.50% and decreases down to 2.00%); provided that the minimum interest rate shall be at least equal to 3.00%. Letter of credit fees will be charged a per annum rate equal to the then applicable LIBOR rate margin less 50 basis points. The New Revolving Credit Facility also provides for an unused line fee of 0.375% per annum.

      Indebtedness under the New Revolving Credit Facility is secured by liens on substantially all of the Company and the Company’s domestic subsidiaries’ assets, with liens (i) on inventory, account receivables, lockboxes, deposit accounts into which payments are deposited and proceeds thereof, will be contractually senior to the liens securing the 11.5% Senior Secured Notes and the related guarantees pursuant to an intercreditor agreement, (ii) on real property, fixtures and improvements thereon, equipment and proceeds thereof, will be contractually subordinate to the liens securing the 11.5% Senior Secured Notes and such guarantees pursuant to such intercreditor agreement, (iii) on all other assets, will be contractually pari passu with the liens securing the 11.5% Senior Secured Notes and such guarantees pursuant to such intercreditor agreement.

      The New Revolving Credit Facility contains various covenants which will restrict the Company’s ability to, among other things, incur indebtedness, enter into mergers or consolidation transactions, dispose of assets (other than in the ordinary course of business), acquire assets, make certain restricted payments, prepay any of the 8% Notes at a purchase price in excess of 90% of the aggregate principal amount thereof (together with accrued and unpaid interest to the date of such prepayment), create liens on our assets, make investments, create guarantee obligations and enter into sale and leaseback transactions and transactions with affiliates, in each case subject to permitted exceptions. The New Revolving Credit Facility also requires that we comply with various financial covenants, including meeting a minimum EBITDA requirement and limitations on capital expenditures in the event our usage of the New Revolving Credit Facility exceeds 30% of the facility amount. The New Revolving Credit Facility also requires payment of a prepayment premium in the event that it is terminated prior to maturity. The prepayment premium, as a percentage of the $20,000 facility amount, is 3% through June 29, 2005, 2% through June 29, 2006, and 1% through June 29, 2007.

Old Revolving Credit Facility

      The Company had a secured revolving credit facility (“Old Revolving Credit Facility”) with an initial availability of $10,000 with Arnos Corp., an affiliate of Carl C. Icahn. During February 2004, the amount of the Old Revolving Credit Facility availability increased by $10,000 to an aggregate amount of $20,000. The Old Revolving Credit Facility was terminated on June 29, 2004 in connection with the issuance of the 11.5% Senior Secured Notes discussed below. Borrowings under the Old Revolving Credit Facility bore interest at a rate per annum at the prime rate plus 200 basis points.

      The Old Revolving Credit Facility was secured by a collateral pool (“Collateral Pool”) comprised of (i) all domestic accounts receivable (including intercompany receivables) and inventory; (ii) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements); (iii) substantially all domestic fixed assets (other than assets subject to the Company’s lease agreement with GECC); and (iv) a pledge of 65% of the capital stock of Viskase Europe Limited and Viskase Brasil Embalagens Ltda. The Old Revolving Credit Facility was also guaranteed by the Company’s significant domestic subsidiaries. Such

F-58

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

guarantees and substantially all of such collateral were shared by the lender under the Old Revolving Credit Facility, the holders of the 8% Notes and GECC under the GECC lease pursuant to intercreditor agreements. Pursuant to such intercreditor agreements, the security interest of the Old Revolving Credit Facility had priority over all other liens on such Collateral Pool.

      Under the terms of the Old Revolving Credit Facility, the Company was required to maintain a minimum annual level of EBITDA of $16,000 calculated at the end of each calendar quarter. The Old Revolving Credit Facility contained covenants with respect to the Company limiting (subject to a number of important qualifications), among other things, (i) the ability to pay dividends or redeem or repurchase common stock, (ii) incurrence of indebtedness, (iii) creation of liens, (iv) certain affiliate transactions, (v) the ability to merge into another entity, (vi) the ability to consolidate with or merge with another entity and (vi) the ability to dispose of assets.

      The average interest rate for borrowings during 2003 under the Old Revolving Credit Facility was 6.2%.

      There were no short-term borrowings under either of the revolving credit facilities during the first nine months of 2004.

11.5% Senior Secured Notes

      On June 29, 2004, the Company issued $90,000 of 11.5% Senior Secured Notes that bear interest at a rate of 11.5% per annum, payable semi-annually in cash on June 15 and December 15, commencing on December 15, 2004. The 11.5% Senior Secured Notes mature on June 15, 2011.

      The 11.5% Senior Secured Notes will be guaranteed on a senior secured basis by all of our future domestic restricted subsidiaries that are not immaterial subsidiaries (as defined). The 11.5% Senior Secured Notes and the related guarantees (if any) are secured by substantially all of the tangible and intangible assets of the Company and guarantor subsidiaries (if any); and includes the pledge of the capital stock directly owned by the Company or the guarantors; provided that no such pledge will include more than 65% of any foreign subsidiary directly owned by the Company or the guarantor. The Indenture and the security documents related thereto provide that, to the extent that any rule is adopted, amended or interpreted that would require the filing with the SEC (or any other governmental agency) of separate financial statements for any of our subsidiaries due to the fact that such subsidiary’s capital stock secures the Notes, then such capital stock will automatically be deemed not to be part of the collateral securing the Notes to the extent necessary to not be subject to such requirement. In such event, the security documents may be amended, without the consent of any holder of Notes, to the extent necessary to release the liens on such capital stock.

      With limited exceptions, the 11.5% Senior Secured Notes require that the Company maintain a minimum annual level of EBITDA calculated at the end of each fiscal quarter as follows:

Fiscal quarter ending	Amount
September 30, 2004 through September 30, 2006	$	16,000
December 31, 2006 through September 30, 2008	$	18,000
December 31, 2008 and thereafter	$	20,000

unless the sum of (i) unrestricted cash of the Company and its restricted subsidiaries as of such day and (ii) the aggregate amount of advances that the Company is actually able to borrow under the New Revolving Credit Facility on such day (after giving effect to any borrowings thereunder on such day) is at least $15.0 million. The minimum annual level of EBITDA covenant is not currently in effect as the Company’s unrestricted cash and the amount of available credit under the New Revolving Credit Facility exceeds $15.0 million.

F-59

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The 11.5% Senior Secured Notes limit the ability of the Company to (i) incur additional indebtedness; (ii) pay dividends, redeem subordinated debt, or make other restricted payments, (iii) make certain investments or acquisitions; (iv) issue stock of subsidiaries; (v) grant or permit to exist certain liens; (vi) enter into certain transactions with affiliates; (vii) merge, consolidate, or transfer substantially all of our assets; (viii) incur dividend or other payment restrictions affecting certain subsidiaries; (ix) transfer, sell or acquire assets, including capital stock of subsidiaries; and, (x) change the nature of our business. At any time prior to June 15, 2008, the Company may redeem, at its option, some or all of the 11.5% Senior Secured Notes at a make-whole redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 11.5% Senior Secured Notes being redeemed and (ii) the sum of the present values of 105 3/4% of the aggregate principal amount of such 11.5% Senior Secured Notes and scheduled payments of interest on such 11.5% Senior Secured Notes to and including June 15, 2008, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, together with, in each case, accrued and unpaid interest and additional interest, if any, to the date of redemption. The make-whole redemption price as of September 30, 2004 is approximately 133%.

      On or after June 15, 2008, the Company may redeem, at its option, some or all of the 11.5% Senior Secured Notes at the following redemption prices, plus accrued and unpaid interest to the date of redemption:

For the periods below	Percentage
On or after June 15, 2008		105 3/4	%
On or after June 15, 2009		102 7/8	%
On or after June 15, 2010		100	%

      Prior to June 15, 2007, the Company may redeem, at its option, up to 35% of the aggregate principal amount of the 11.5% Senior Secured Notes with the net proceeds of any equity offering at 111 1/2% of their principal amount, plus accrued and unpaid interest to the date of redemption, provided that at least 65% of the aggregate principal amount of the 11.5% Senior Secured Notes remains outstanding immediately following the redemption.

      Within 90 days after the end of each fiscal year ending in 2006 and thereafter, for which the Company’s Excess Cash Flow (as defined) was greater than or equal to $2.0 million, the Company must offer to purchase a portion of the 11.5% Senior Secured Notes at 101% of principal amount, together with accrued and unpaid interest to the date of purchase, with 50% of our Excess Cash Flow from such fiscal year (“Excess Cash Flow Offer Amount”); except that no such offer shall be required if the New Revolving Credit Facility prohibits such offer from being made because, among other things, a default or an event of default is then outstanding thereunder. The Excess Cash Flow Offer Amount shall be reduced by the aggregate principal amount of 11.5% Senior Secured Notes purchased in eligible open market purchases as provided in the indenture.

      If the Company undergoes a change of control (as defined), the holders of the 11.5% Senior Secured Notes will have the right to require the Company to repurchase their 11.5% Senior Secured Notes at 101% of their principal amount, plus accrued and unpaid interest to the date of purchase.

      If the Company engages in asset sales, it must either invest the net cash proceeds from such sales in its business within a certain period of time (subject to certain exceptions), prepay indebtedness under the New Revolving Credit Facility (unless the assets that are the subject of such sales are comprised of real property, fixtures or improvements thereon or equipment) or make an offer to purchase a principal amount of the 11.5% Senior Secured Notes equal to the excess net cash proceeds. The purchase price of each 11.5% Senior Secured Note so purchased will be 100% of its principal amount, plus accrued and unpaid interest to the date of purchase.

F-60

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      8% Notes

      The 8% Notes bear interest at a rate of 8% per year, and accrue interest from December 1, 2001, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in the form of 8% Notes (pay-in-kind) for the first three years. Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in the form of 8% Notes (pay-in-kind). Thereafter, interest will be payable in cash. The 8% Notes mature on December 1, 2008.

      On June 29, 2004, the Company repurchased $55,527 aggregate principal amount of its 8% Notes, and the holders (i) released the liens on the collateral that secured the 8% Notes, (ii) contractually subordinated the Company’s obligations under the 8% Notes to obligations under certain indebtedness, including the new 11.5% Senior Secured Notes and the New Revolving Credit Facility; and (iii) eliminated substantially all of the restrictive covenants contained in the indenture governing the 8% Notes. The carrying amount of the remaining 8% Notes outstanding at September 30, 2004 is $11,234.

      Prior to June 29, 2004, the 8% Notes were secured by a collateral pool comprised of (1) all domestic accounts receivable and inventory; (2) all patents, trademarks and other intellectual property (subject to non-exclusive licensing agreements); (3) all instruments, investment property and other intangible assets, (4) substantially all domestic fixed assets and (5) a pledge of 100% of the capital stock of two of the Company’s domestic subsidiaries, but excluding assets subject to the GECC lease, certain real estate and certain assets subject to prior liens. Pursuant to an intercreditor agreement, the prior security interest of the holders of the 8% Notes in such collateral was subordinated to the lender under the Old Revolving Credit Facility and was senior to the security interest of GECC under the GECC lease. As of June 29, 2004, the 8% Notes are no longer secured by the collateral pool and accordingly, are effectively subordinated to the 11.5% Senior Secured Notes.

      The 8% Notes were valued at market in fresh-start accounting. The discount to face value is being amortized using the effective-interest rate methodology through maturity with an effective interest rate of 10.46%. The principal amount and the carrying amount of the remaining 8% Notes outstanding at September 30, 2004 are $15,675 and $11,234, respectively.

      The following table summarizes the carrying value of the 8% Notes at December 31 assuming interest through 2006 is paid in the form of 8% Notes (paid-in-kind):

		2004		2005		2006		2007
8% Notes
	Principal	$	15,983	$	17,261	$	18,684	$	18,684
	Discount		4,226		3,305		2,283		1,148
	Carrying value	$	11,757	$	13,956	$	16,401	$	17,536

Letter of Credit Facility

      Letters of credit in the amount of $1,902 were outstanding under letter of credit facilities with commercial banks, and were cash collateralized at September 30, 2004.

      The Company finances its working capital needs through a combination of internally generated cash from operations and cash on hand. The New Revolving Credit Facility provides additional financial flexibility.

F-61

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GECC

      In April 2004, the Company renegotiated and amended its lease arrangement with GECC. Under terms of the amended lease, six payments of approximately $6,092 were due semi-annually on February 28 and August 28 beginning in February 2005. As part of the renegotiation of the lease, the Company agreed to purchase the assets at their fair market value of $9,500. The Company obtained the option to terminate the lease early upon payment of $33,000 through February 28, 2005; thereafter the amount of the early termination payment would decrease upon payment of each semi-annual capital lease payment. The equipment would transfer to the Company free and clear of all liens on the earlier of (i) the payment of the early termination amount, plus any accrued interest due and payable at 6% per annum or (ii) the payment of the final installment due August 28, 2007.

      On June 29, 2004, the Company exercised its $33,000 early termination payment option, terminated the lease and acquired title to the leased equipment. The leased equipment was transferred to the Company free and clear of all liens.

6.  Contingencies

      In 1988, Viskase Canada Inc. (“Viskase Canada”), a subsidiary of the Company, commenced a lawsuit against Union Carbide Canada Limited and Union Carbide Corporation (“Union Carbide”) in the Ontario Superior Court of Justice, Court File No.: 292270188 seeking damages resulting from Union Carbide’s breach of environmental representations and warranties under the Amended and Restated Purchase and Sale Agreement, dated January 31, 1986 (“Agreement”). Pursuant to the Agreement, Viskase Corporation and various affiliates (including Viskase Canada) purchased from Union Carbide and Union Carbide Films Packaging, Inc., its cellulosic casings business and plastic barrier films business (“Business”), which purchase included a facility in Lindsay, Ontario, Canada (“Site”). Viskase Canada is claiming that Union Carbide breached several representations and warranties and deliberately and/or negligently failed to disclose to Viskase Canada the existence of contamination on the Site.

      In November 2000, the Ontario Ministry of the Environment (“MOE”) notified Viskase Canada that it had evidence to suggest that the Site was a source of polychlorinated biphenyl (“PCB”) contamination. Viskase Canada has been working with the MOE in investigating the PCB contamination and developing and implementing, if appropriate, a remedial plan for the Site and the affected area. Viskase Canada and others have been advised by the MOE that the MOE expects to issue certain Director’s Orders requiring remediation under applicable environmental legislation against Viskase Canada, The Dow Chemical Company, corporate successor to Union Carbide (“Dow”), and others in the next few months. Dow, which has replaced or soon will replace Union Carbide as the defendant in the lawsuit against Union Carbide, has consented to an amendment to the lawsuit, which Viskase Canada will file with the court as soon as the claim can be adequately quantified, that alleges that any PCB contamination at or around the Site was generated from Union Carbide’s plastics extrusion business, which was operated at the Site by Union Carbide prior to the purchase of the Business. Union Carbide’s plastics extrusion business was not part of the Business purchased by Viskase Corporation and its affiliates. Viskase Canada will be asking the court to require Union Carbide to repurchase the Site from Viskase Canada and award Viskase Canada damages in excess of $2.0 million (Canadian). The Company has reserved $0.75 million (U.S.) for the property remediation. The lawsuit is still pending and is expected to proceed to trial in 2005.

      In 1993, the Illinois Department of Revenue (“IDR”) submitted a proof of claim against Envirodyne Industries, Inc. (now known as Viskase Companies, Inc.) and its subsidiaries in Bankruptcy Court, Bankruptcy Case Number 93 B 319 for alleged liability with respect to the IDR’s denial of the Company’s allegedly incorrect utilization of certain loss carry-forwards of certain of its subsidiaries. In September 2001, the Bankruptcy Court denied the IDR’s claim and determined the debtors were not responsible for 1998 and 1999 tax liabilities, interest and penalties. The IDR appealed the Bankruptcy Court’s decision to the United States

F-62

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

District Court, Northern District of Illinois, Case Number 01 C 7861; and in February 2002 the district court affirmed the Bankruptcy Court’s order. IDR appealed the district court’s order to United States Court of Appeals for the Seventh Circuit, Case Number 02-1632. On January 6, 2004, the appeals court reversed the judgment of the district court and remanded the case for further proceedings. The matter is now before the Bankruptcy Court for further determination.

      In August 2001, the Department of Revenue of the Province of Quebec, Canada issued an assessment against Viskase Canada in the amount of $2.7 million (Canadian) plus interest and possible penalties. This assessment is based upon Viskase Canada’s failure to collect and remit sales tax during the period July 1, 1997 to May 31, 2001. During this period, Viskase Canada did not collect and remit sales tax in Quebec on reliance of the written advice of its outside accounting firm. Viskase Canada filed a Notice of Objection in November 2001 with supplementary submission in October 2002. The Notice of Objection found in favor of the Department of Revenue. The Company has appealed the decision. The ultimate liability for the Quebec sales tax lies with the customers of Viskase Canada during the relevant period. Viskase Canada could be required to pay the amount of the underlying sales tax prior to receiving reimbursement for such tax from its customers. The Company has, however, provided for a reserve of $0.3 million (U.S.) for interest and penalties, if any, but has not provided for a reserve for the underlying sales tax. Viskase Canada is negotiating with the Quebec Department of Ministry to avoid having to collect the sales tax from customers who will then be entitled to credit for such sales tax collected.

      During 1999 and 2000, the Company and certain of its subsidiaries and one other sausage casings manufacturer were named in ten virtually identical civil complaints filed in the United States District Court for the District of New Jersey. The District Circuit ordered all of these cases consolidated in Civil Action No. 99-5195-MLC (D.N.J.). Each complaint brought on behalf of a purported class of sausage casings customers alleges that the defendants unlawfully conspired to fix prices and allocate business in the sausage casings industry. In 2001, all of the consolidated cases were transferred to the United States District Court for the Northern District of Illinois, Eastern Division. The Company strongly denies the allegations set forth in these complaints.

      In May 2004, the Company entered into settlement agreement, without the admission of any liability (“Settlement Agreement”) with the plaintiffs. Under terms of the Settlement Agreement, the plaintiffs fully released the Company and its subsidiaries from all liabilities and claims arising from the civil action in exchange for the payment of a $0.3 million settlement amount, which amount was reserved in the December 31, 2003 financial statements.

      Under the Clean Air Act Amendments of 1990, various industries, including casings manufacturers, will be required to meet maximum achievable control technology (“MACT”) air emissions standards for certain chemicals. MACT standards applicable to all U.S. cellulosic casing manufacturers were promulgated June 11, 2002. The Company submitted extensive comments to the EPA during the public comment period. Compliance with these new rules is required by June 13, 2005, although the Company has obtained a one-year extension for both of its facilities. To date, the Company has over $2.9 million in capital expenditures, and expects to spend over $7.4 million over the next 12 months, to become compliant with MACT rules at our two U.S. extrusion facilities. Although the Company is in the process of installing the technology necessary to meet these emissions standards at our two extrusion facilities, our failure to do so, or our failure to receive a compliance extension from the regulatory agencies, could result in substantial penalties, including civil fines of up to $50,000 per facility per day or a shutdown of our U.S. extrusion operations.

      The Company is involved in these and various other legal proceedings arising out of their business and other environmental matters, none of which is expected to have a material adverse effect upon results of operations, cash flows or financial condition.

F-63

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7.  Restructuring Charge (Dollars in Millions)

      During the first quarter of 2004, the Company committed to a restructuring plan to continue to address the Company’s competitive environment. The plan resulted in a before tax charge of $0.8 million. Approximately 13% of the home office personnel were laid off due to the restructuring plan. The 2004 restructuring charge is offset by a reversal of an excess reserve of $0.1 million relating to the 2003 restructuring reserve.

      During the third and fourth quarters of 2003, the Company committed to a restructuring plan to address the industry’s competitive environment. The plan resulted in a before tax charge of $2.6 million. Approximately 2% of the Company’s worldwide workforce was laid off due to the 2003 restructuring plan. The Company reversed an excess reserve of $1.6 million of which $1.3 was Nucel® technology third party license fees that had been renegotiated. The Nucel® technology third party license fees were originally reflected in the 2000 restructuring reserve. The remaining $0.3 million represents an excess reserve for employee costs that were originally reflected in the 2002 restructuring reserve.

Restructuring Reserves

      The following table provides details of the 2004, 2003 and 2000 restructuring reserves for the period ended September 30, 2004:

		Restructuring
		Reserve as of								Restructuring
		December 31,		2004					Other	Reserve as of
		2003		Charge		Payments			Adjustments	September 30, 2004
2004 employee costs				$	.8	$	(.6	)		$	.2
2003 employee costs		$	1.6				(1.3	)			.3
2000 Nucel® license fees			.2								.2
	Total restructuring charge	$	1.8	$	.8	$	(1.9	)		$	.7

8.  New Warrants (Dollars in Thousands, Except Per Share and Per Warrant Amounts)

      On June 29, 2004, the Company issued $90,000 of 11.5% Senior Secured Notes together with the 90,000 New Warrants to purchase an aggregate of 805,230 shares of common stock of the Company. The aggregate purchase price of the 11.5% Senior Secured Notes and the 90,000 of New Warrants was $90,000. Each of the New Warrants entitles the holder to purchase 8.947 shares of the Company’s common stock at an exercise price of $.01 per share through the June 15, 2011 expiration date.

      The New Warrants were valued for accounting purposes using the Black-Scholes model. Using the Black-Scholes model, each of the New Warrants was valued at $11.117 for an aggregate fair value of the warrant issuance of $1,001.

9.  Treasury Stock (Dollars in Thousands)

      In connection with the June 29, 2004 refinancing transaction, the Company purchased 805,270 shares of its common stock from the underwriter for a purchase price of $298. The common stock has been accounted for as treasury stock. The treasury shares are being held for use in connection with any exercise of the New Warrants.

F-64

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10.  Earnings Per Share (“EPS”) (In Thousands, Except for Weighted Average Shares Outstanding)

      Following are the reconciliations of the numerators and denominators of the basic and diluted EPS.

	Reorganized Company
												Predecessor
	3 Months		3 Months			9 Months			April 3			Company
	Ended		Ended			Ended			through			January 1
	September 30,		September 30,			September 30,			September 30,			through
	2004		2003			2004			2003			April 2, 2003
NUMERATOR:
Income (loss) available to common stockholders:
Net income (loss)	$	2,000	$	(1,295	)	$	(15,103	)	$	(465	)	$	151,873
Net income (loss) available to common stockholders for basic and diluted EPS	$	2,000	$	(1,295	)	$	(15,103	)	$	(465	)	$	151,873
DENOMINATOR:
Weighted average shares outstanding for basic EPS		9,864,783		10,670,053			10,393,792			10,670,053			15,314,553
Effect of dilutive securities		799,074
Weighted average shares outstanding for diluted EPS		10,663,857		10,670,053			10,393,792			10,670,053			15,314,553

      For the 9 months ended September 30, 2004 and for the predecessor company, common stock equivalents are excluded from the loss per share calculations as the result is antidilutive.

11.  Retirement Plans (Dollars in Thousands)

Pension contributions

      The Company paid $5,032 during the third quarter of 2004 bringing the total to $6,724 for the year; and expects to contribute an additional $237 during the remainder of the year.

Pension expense

      The Company has expensed $210 in the third quarter of 2004 and expects its pension expense to be $2,324 for the year.

Postretirement benefits

      The Company has paid $963 of net contributions during the third quarter of 2004 and expects to pay approximately $947 for the remainder of the year, totaling $3,518 for the year.

Postretirement expense

      The Company has expensed $1,399 in the third quarter of 2004 and expects its postretirement benefits expense to be $5,075 for the year.

12.  Recent Accounting Pronouncements

      In December 2003, a revised version of FIN 46 (“Revised FIN 46”) was issued by the FASB. The revisions clarify some requirements, ease some implementation problems, add new scope exceptions, and add applicability judgments. Revised FIN 46 is required to be adopted by most public companies no later than

F-65

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2004. The Company believes that the adoption of Revised FIN 46 will not have a material impact on the Company’s results of operations or financial position.

      In December 2003, The FASB issued SFAS No. 132, “Employers’ Disclosures About Pensions and Other Postretirement Benefits — an Amendment of FASB Statements No. 87, 88, and 106.” The statement was developed in response to concerns expressed by users of financial statements regarding more information about pension plan assets, obligations, benefit payments, contributions and net benefit cost. Disclosures about postretirement benefits other than pensions are required. All new provisions for domestic plans are effective for fiscal years ending after December 15, 2003. Foreign and non-public entities disclosures are required effective for fiscal years ending after June 15, 2004. The Company has adopted the standard for the year 2004.

      On December 17, 2003, the Staff of Securities and Exchange Commission (“SEC” or the “Staff”) issued Staff Accounting Bulletin (“SAB”) 104, “Revenue Recognition,” which amends SAB 101, “Revenue Recognition in Financial Statements.” SAB 104’s primary purpose is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, superseded as a result of the issuance of EITF No. 00-21. Additionally, SAB 104 rescinds the SEC’s “Revenue Recognition in Financial Statements Frequently Asked Questions and Answers” (the “FAQ”) issued with SAB 101 (that had been codified in SEC Topic 13, “Revenue Recognition”). Selected portions of the FAQ have been incorporated into SAB 104. While the wording of SAB 104 has changed to reflect the issuance of EITF No. 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104. The adoption of SAB 104 did not have a material impact on the Company’s results of operations or financial position.

13.  Business Segment Information and Geographic Area Information (Dollars in Thousands)

      The Company primarily manufactures and sells cellulosic food casings. The Company’s operations are primarily in North America, South America and Europe. Intercompany sales and charges (including royalties) have been reflected as appropriate in the following information. Certain items are maintained at the Company’s corporate headquarters and are not allocated to the segments. They include most of the Company’s debt and related interest expense and income tax benefits.

F-66

VISKASE COMPANIES, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The following table shows our net sales, operating (loss) income, identifiable assets and U.S. export sales by geographic region for the third quarter of 2004 and for the comparable prior year period (in millions):

			Predecessor
			Company
						Reorganized Company
			January 1
			Through			April 3 Through			January 1 Through
			April 2, 2003			September 30, 2003			September 30, 2004
Net Sales
	United States		$	29.5		$	64.8		$	98.4
	Canada			—			—			—
	South America			1.6			4.0			5.8
	Europe			17.9			42.3			63.6
	Other and eliminations			(3.6	)		(8.0	)		(13.4	)
		Total	$	45.4		$	101.1		$	154.4
Operating (loss) income
	United States		$	(1.4	)	$	5.3		$	10.3
	Canada			(0.1	)		(0.4	)		(0.5	)
	South America			(0.2	)		(0.4	)		(0.7	)
	Europe			(0.3	)		(0.4	)		(0.7	)
	Other and eliminations			—			—			—
		Total	$	(2.0	)	$	4.1		$	8.4
Identifiable Assets
	United States		$	115.0		$	162.7		$	111.6
	Canada			0.8			0.8			0.6
	South America			8.9			7.5			7.5
	Europe			75.6			82.5			83.8
	Other and eliminations			—			—			—
		Total	$	200.3		$	253.5		$	203.5

14.  Subsequent Events

      The Company will terminate postretirement medical benefits as of December 31, 2004 for all active employees and retirees in the United States who are not covered by a collective bargaining agreement. It is estimated that said termination will result in a projected $35 million reduction in the unfunded postretirement liability included in “Accrued Employee Benefits” on the Consolidated Balance Sheets.

F-67

$90,000,000

11 1/2% Senior Secured Notes Due 2011

EXCHANGE OFFER

PROSPECTUS

          l          , 2004

        Until        l       (90 days after the date of this prospectus), all dealers effecting transactions in the Exchange Notes, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments of subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

General Corporation Law

      The Company is incorporated under the laws of the State of Delaware. Section 145 (“Section 145”) of the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (the “General Corporation Law”), inter alia, provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reasons of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer, director, employee or agent is successful on the merits or otherwise in the defense of any action referred to above, a Delaware corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.

      Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Certificate of Incorporation and Bylaws

      The Company’s Certificate of Incorporation and Bylaws provide for the indemnification of officers and directors to the fullest extent permitted by the General Corporation Law.

Liability Insurance

      The Company’s directors and officers are covered under directors’ and officers’ liability insurance policies maintained by us with coverage up to $5.0 million.

Item 21. Exhibits and Financial Statement Schedules.

      The exhibits listed below in the “Index to Exhibits” are part of this Registration Statement on Form S-4 and are numbered in accordance with Item 601 of Regulation S-K.

      All other schedules for which provision is made in the applicable accounting regulations of the Commission are not required under the related instructions, are inapplicable or not material, or the information called for thereby is otherwise included in the financial statements and therefore has been omitted.

II-1

Item 22. Undertakings.

      Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 20 or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes:

      (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

      (a) to include any prospectus required by section 10(a)(3) of the Securities Act;

      (b) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

      (c) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

      (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

      (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

      (4) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means, including information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request; and

      (5) to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-2

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, Viskase Companies, Inc. as duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Willowbrook, State of Illinois on December 22, 2004.

VISKASE COMPANIES, INC.

By:  /s/ GORDON S. DONOVAN

Gordon S. Donovan

Vice President and Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title
/s/ ROBERT L. WEISMAN Robert L. Weisman	President and Chief Executive Officer (principal executive officer)
/s/ GORDON S. DONOVAN Gordon S. Donovan	Vice President and Chief Financial Officer (principal financial and accounting officer)
* Vincent J. Intrieri	Chairman of the Board, Director
* Eugene I. Davis	Director
* Thomas S. Hyland	Director
* James L. Nelson	Director
* Jon F. Weber	Director
/s/ GORDON S. DONOVAN Gordon S. Donovan	Attorney-in-Fact
* Executed by Attorney-in-Fact

II-3

INDEX TO EXHIBITS

Exhibit No.			Document
	3	.1	Amended and Restated Certificate of Incorporation of Viskase Companies, Inc. (the “Company”), dated April 3, 2003*
	3	.2	Amended and Restated Bylaws of the Company*
	4	.1	Indenture, dated as of June 29, 2004, among the Company, as issuer, and LaSalle Bank National Association, as trustee and collateral agent**
	4	.2	Form of 11 1/2% Senior Secured Notes due 2011*
	4	.3	Registration Rights Agreement, dated as of June 29, 2004, by and between the Company and Jefferies & Company, Inc.*
	4	.4	Purchase Agreement, dated as of June 17, 2004, by and between the Company and Jefferies & Company, Inc.*
	5	.1	Opinion of Jenner & Block LLP regarding the legality of securities being offered, dated as of December   **
	10	.1	Loan and Security Agreement, dated as of June 29, 2004, by and between the Company and Wells Fargo Foothill, Inc.**
	10	.2	Intellectual Property Security Agreement, dated as of June 29, 2004, by and between the Company and Wells Fargo Foothill, Inc.**
	10	.3	Pledge Agreement (domestic), dated as of June 29, 2004, by and between the Company and Wells Fargo Foothill, Inc.**
	10	.4	Pledge Agreement (foreign), dated as of June 29, 2004, by and between the Company and Wells Fargo Foothill, Inc.**
	10	.5	Intercreditor Agreement, dated as of June 29, 2004, by and among the Company, the Company’s subsidiaries, Wells Fargo Foothill, Inc, and LaSalle Bank National Association*
	10	.6	Indenture, dated as of April 3, 2003, among the Company, as issuer, and Wells Fargo Minnesota National Association as trustee for $60,000,000 of 8% Senior Subordinated Secured Notes due 2008*
	10	.7	First Supplemental Indenture, dated as of June 29, 2004, among the Company and Wells Fargo Bank National Association**
	10	.8	Restricted Stock Plan of the Company*
	10	.9	Management Incentive Plan for Fiscal Year 2004 of the Company**
	10	.10	Parallel Envirodyne Nonqualified Thrift Plan, dated as of January 1, 1987*
	10	.11	Amendment to the Company Parallel Nonqualified Savings Plan, dated as of July 29, 1999*
	10	.12	Employment Agreement, dated as of October 4, 2004, by and between the Company and Robert L. Weisman*
	10	.13	Employment Agreement, dated November 29, 2001, by and among the Company, Viskase Corporation and Gordon S. Donovan*
	10	.14	Severance Plan of the Company, dated as of July 22, 2003**
	10	.15	Restructuring Agreement, dated as of July 15, 2002, by and among the Company and High River Limited Partnership, Debt Strategies Fund, Inc., Northeast Investors Trust**
	10	.16	Security Agreement, dated as of June 29, 2004, by and among the Company, the Company’s Restricted Domestic Subsidiaries, and LaSalle Bank National Association**
	10	.17	Intellectual Property Security Agreement, dated as of June 29, 2004, by and between the Company and LaSalle Bank National Association**
	10	.18	Pledge Agreement, dated as of June 29, 2004, by and among the Company, the Company’s Restricted Domestic Subsidiaries, and LaSalle Bank National Association**
	12	.1	Statement re: Computation of Ratio of Earnings to Fixed Charges*
	16	.1	Letter re: Change in Certifying Accountant*
	21	.1	List of Subsidiaries of the Company**

Exhibit No.			Document
	23	.1	Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for the Company, dated as of December   , 2004**
	23	.2	Consent of Grant Thornton LLP, independent registered public accounting firm for the Company, dated as of December   , 2004**
	24	.1	Powers of Attorney (included on signature pages)*
	25	.1	Form T-1, statement of Eligibility and Qualification of Trustee*
	99	.1	Form of Letter of Transmittal**
	99	.2	Form of Notice of Guaranteed Delivery*

*  Previously filed

**  Filed herewith

EX-4.1

                                                                     EXHIBIT 4.1

================================================================================

                                   INDENTURE,

                           Dated as of June 29, 2004,

                                      among

                            VISKASE COMPANIES, INC.,

                                   as Issuer,

                       LASALLE BANK NATIONAL ASSOCIATION,

                       as Trustee and as Collateral Agent,

                      11 1/2% SENIOR SECURED NOTES DUE 2011

================================================================================



                              CROSS-REFERENCE TABLE



  TIA                                                                                            INDENTURE
SECTION                                                                                          SECTION
- -------                                                                                          ---------
                                                                                              
310(a)(1)      ..............................................................................    7.10
   (a)(2)      ..............................................................................    7.10
   (a)(3)      ..............................................................................    7.10
   (a)(4)      ..............................................................................    N.A.
   (a)(5)      ..............................................................................    7.10
   (b)         ..............................................................................    7.03; 7.08; 7.10
   (c)         ..............................................................................    N.A.
311(a)         ...............................................................................   7.03; 7.11
   (b)         ..............................................................................    7.03; 7.11
312(a)         ...............................................................................   2.05
   (b)         ..............................................................................    7.07; 11.03
   (c)         ..............................................................................    11.03
313(a)         ...............................................................................   7.06
   (b)         ..............................................................................    7.06
   (c)         ..............................................................................    7.06
   (d)         ..............................................................................    7.06
314(a)         ...............................................................................   4.06; 4.21
   (b)         ..............................................................................    12.02
   (c)(1)      ..............................................................................    4.06; 11.04
   (c)(2)      ..............................................................................    11.04
   (c)(3)      ..............................................................................    4.06
   (d)         ..............................................................................    12.03
   (e)         ..............................................................................    11.05
   (f)         ..............................................................................    N.A.
315(a)         ..............................................................................    7.01(b)
   (b)         ..............................................................................    7.05
   (c)         ..............................................................................    7.01(a)
   (d)         ..............................................................................    7.01(c)
   (e)         ..............................................................................    6.11
316(a)(last sentence).........................................................................   2.09
   (a)(1)(A)   ..............................................................................    6.05
   (a)(1)(B)   ..............................................................................    6.04
   (a)(2)      ..............................................................................    N.A.
   (b)         ..............................................................................    6.07
   (c)         ..............................................................................    9.04
317(a)(1)      ..............................................................................    6.08
   (a)(2)      ..............................................................................    6.09
   (b)         ..............................................................................    2.04
318(a)         ..............................................................................    11.01
   (b)         ..............................................................................    N.A.
   (c)         ..............................................................................    11.01


- --------------------
N.A. means Not Applicable

NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.



                                TABLE OF CONTENTS



                                                                                                                     PAGE
                                                                                                                  
                                  ARTICLE ONE
                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.         Definitions...............................................................................       1

SECTION 1.02.         Incorporation by Reference of Trust Indenture Act.........................................      29

SECTION 1.03.         Rules of Construction.....................................................................      29

                                   ARTICLE TWO
                                    THE NOTES

SECTION 2.01.         Form and Dating...........................................................................      30

SECTION 2.02.         Execution and Authentication; Aggregate Principal Amount..................................      31

SECTION 2.03.         Registrar and Paying Agent................................................................      31

SECTION 2.04.         Obligations of Paying Agent...............................................................      32

SECTION 2.05.         Holder Lists..............................................................................      32

SECTION 2.06.         Transfer and Exchange.....................................................................      32

SECTION 2.07.         Replacement Notes.........................................................................      33

SECTION 2.08.         Outstanding Notes.........................................................................      33

SECTION 2.09.         Treasury Notes; When Notes are Disregarded................................................      34

SECTION 2.10.         Temporary Notes...........................................................................      34

SECTION 2.11.         Cancellation..............................................................................      34

SECTION 2.12.         CUSIP Numbers.............................................................................      34

SECTION 2.13.         Deposit of Moneys.........................................................................      35

SECTION 2.14.         Book-Entry Provisions for Global Notes....................................................      35

SECTION 2.15.         Special Transfer Provisions...............................................................      36

SECTION 2.16.         Transfers of Global Notes and Physical Notes..............................................      37

                                  ARTICLE THREE
                                   REDEMPTION

SECTION 3.01.         Optional Redemption.......................................................................      38

SECTION 3.02.         Selection of Notes to be Redeemed.........................................................      38

SECTION 3.03.         Notice of Redemption......................................................................      38

SECTION 3.04.         Effect of Notice of Redemption............................................................      39

SECTION 3.05.         Deposit of Redemption Price...............................................................      39

SECTION 3.06.         Notes Redeemed in Part....................................................................      40

SECTION 3.07.         Mandatory Redemption; Offers to Purchase; Open Market Purchases...........................      40


                                      -i-



                                TABLE OF CONTENTS
                                  (Continued)



                                                                                                                     PAGE
                                                                                                                  
                                            ARTICLE FOUR
                                              COVENANTS

SECTION 4.01.         Payment of Notes..........................................................................      40

SECTION 4.02.         Maintenance of Office or Agency...........................................................      40

SECTION 4.03.         Corporate Existence.......................................................................      41

SECTION 4.04.         Payment of Taxes and Other Claims.........................................................      41

SECTION 4.05.         Maintenance of Properties and Insurance...................................................      41

SECTION 4.06.         Compliance Certificate; Notice of Default.................................................      41

SECTION 4.07.         Waiver of Stay, Extension or Usury Laws...................................................      42

SECTION 4.08.         Limitation on Incurrence of Additional Indebtedness.......................................      42

SECTION 4.09.         Limitation on Restricted Payments.........................................................      43

SECTION 4.10.         Limitation on Asset Sales.................................................................      46

SECTION 4.11.         Limitation on Dividend and Other Payment Restrictions Affecting Restricted
                      Subsidiaries..............................................................................      48

SECTION 4.12.         Limitation on Issuances and Sales of Capital Stock of Subsidiaries........................      49

SECTION 4.13.         Limitation on Liens.......................................................................      50

SECTION 4.14.         Limitations on Transactions with Affiliates...............................................      50

SECTION 4.15.         Additional Subsidiary Guarantees..........................................................      51

SECTION 4.16.         Impairment of Security Interest...........................................................      52

SECTION 4.17.         Minimum EBITDA............................................................................      52

SECTION 4.18.         Real Estate Mortgages and Filings.........................................................      53

SECTION 4.19.         Leasehold Mortgages and Filings...........................................................      54

SECTION 4.20.         Landlord, Bailee and Consignee Waivers....................................................      54

SECTION 4.21.         Pledge of Future Foreign Assets...........................................................      55

SECTION 4.22.         Conduct of Business; Corporate Separateness...............................................      55

SECTION 4.23.         Reports to Holders........................................................................      55

SECTION 4.24.         Excess Cash Flow Offer....................................................................      56

SECTION 4.25.         Repurchase upon Change of Control.........................................................      57

                                            ARTICLE FIVE
                                        SUCCESSOR CORPORATION

SECTION 5.01.         Merger, Consolidation and Sale of Assets..................................................      60

SECTION 5.02.         Successor Entity Substituted..............................................................      61


                                      -ii-



                                TABLE OF CONTENTS
                                  (Continued)



                                                                                                                     PAGE
                                                                                                                  
                                             ARTICLE SIX
                                        DEFAULT AND REMEDIES

SECTION 6.01.         Events of Default.........................................................................      61

SECTION 6.02.         Acceleration..............................................................................      62

SECTION 6.03.         Other Remedies............................................................................      63

SECTION 6.04.         Waiver of Past Defaults...................................................................      63

SECTION 6.05.         Control by Majority.......................................................................      64

SECTION 6.06.         Limitation on Suits.......................................................................      64

SECTION 6.07.         Rights of Holders to Receive Payment......................................................      64

SECTION 6.08.         Collection Suit by Trustee or Collateral Agent............................................      64

SECTION 6.09.         Trustee May File Proofs of Claim..........................................................      65

SECTION 6.10.         Priorities................................................................................      65

SECTION 6.11.         Undertaking for Costs.....................................................................      66

SECTION 6.12.         Restoration of Rights and Remedies........................................................      66

                                            ARTICLE SEVEN
                                               TRUSTEE

SECTION 7.01.         Duties of Trustee.........................................................................      66

SECTION 7.02.         Rights of Trustee.........................................................................      67

SECTION 7.03.         Individual Rights of Trustee..............................................................      68

SECTION 7.04.         Trustee's Disclaimer......................................................................      69

SECTION 7.05.         Notice of Default.........................................................................      69

SECTION 7.06.         Reports by Trustee to Holders.............................................................      69

SECTION 7.07.         Compensation and Indemnity................................................................      70

SECTION 7.08.         Replacement of Trustee....................................................................      71

SECTION 7.09.         Successor Trustee by Merger, Etc..........................................................      72

SECTION 7.10.         Eligibility; Disqualification.............................................................      72

SECTION 7.11.         Preferential Collection of Claims Against Company.........................................      72

SECTION 7.12.         Trustee as Paying Agent and Collateral Agent..............................................      72

SECTION 7.13.         Co-Trustees , Co-Collateral Agent and Separate Trustees and Collateral Agent..............      72

SECTION 7.14.         Form of Documents Delivered to Trustee....................................................      74

                                            ARTICLE EIGHT
                               SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 8.01.         Legal Defeasance and Covenant Defeasance..................................................      74


                                     -iii-



                                TABLE OF CONTENTS
                                  (Continued)



                                                                                                                     PAGE
                                                                                                                  
SECTION 8.02.         Satisfaction and Discharge................................................................      76

SECTION 8.03.         Survival of Certain Obligations...........................................................      77

SECTION 8.04.         Acknowledgment of Discharge by Trustee....................................................      77

SECTION 8.05.         Application of Trust Moneys...............................................................      77

SECTION 8.06.         Repayment to the Company; Unclaimed Money.................................................      78

SECTION 8.07.         Reinstatement.............................................................................      78

                                            ARTICLE NINE
                                 AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01.         Without Consent of Holders................................................................      78

SECTION 9.02.         With Consent of Holders...................................................................      79

SECTION 9.03.         Compliance with TIA.......................................................................      81

SECTION 9.04.         Revocation and Effect of Consents.........................................................      81

SECTION 9.05.         Notation on or Exchange of Notes..........................................................      81

SECTION 9.06.         Trustee to Sign Amendments, Etc...........................................................      82

SECTION 9.07.         Conformity with Trust Indenture Act.......................................................      82

                                             ARTICLE TEN
                                              GUARANTEE

SECTION 10.01.        Guarantee.................................................................................      82

SECTION 10.02.        Release of a Guarantor....................................................................      83

SECTION 10.03.        Limitation of Guarantor's Liability.......................................................      84

SECTION 10.04.        Guarantors May Consolidate, etc., on Certain Terms........................................      84

SECTION 10.05.        Contribution..............................................................................      85

SECTION 10.06.        Waiver of Subrogation.....................................................................      85

SECTION 10.07.        Evidence of Guarantee.....................................................................      85

SECTION 10.08.        Waiver of Stay, Extension or Usury Laws...................................................      85

                                           ARTICLE ELEVEN
                                            MISCELLANEOUS

SECTION 11.01.        Trust Indenture Act Controls..............................................................      86

SECTION 11.02.        Notices...................................................................................      86

SECTION 11.03.        Communications by Holders with Other Holders..............................................      87

SECTION 11.04.        Certificate and Opinion as to Conditions Precedent........................................      87

SECTION 11.05.        Statements Required in Certificate or Opinion.............................................      87

SECTION 11.06.        Rules by Trustee, Paying Agent, Registrar.................................................      88


                                      -iv-



                                TABLE OF CONTENTS
                                  (Continued)



                                                                                                                     PAGE
                                                                                                                  
SECTION 11.07.        Legal Holidays............................................................................      88

SECTION 11.08.        Governing Law.............................................................................      88

SECTION 11.09.        No Adverse Interpretation of Other Agreements.............................................      88

SECTION 11.10.        No Recourse Against Others................................................................      88

SECTION 11.11.        Successors................................................................................      88

SECTION 11.12.        Duplicate Originals.......................................................................      88

SECTION 11.13.        Severability..............................................................................      89

SECTION 11.14.        Waiver of Jury Trial......................................................................      89

                                           ARTICLE TWELVE
                                              SECURITY

SECTION 12.01.        Grant of Security Interest................................................................      89

SECTION 12.02.        Opinions..................................................................................      90

SECTION 12.03.        Release of Collateral.....................................................................      90

SECTION 12.04.        Specified Releases of Collateral..........................................................      91

SECTION 12.05.        Release upon Satisfaction or Defeasance of all Outstanding Obligations....................      93

SECTION 12.06.        Form and Sufficiency of Release...........................................................      93

SECTION 12.07.        Purchaser Protected.......................................................................      93

SECTION 12.08.        Authorization of Actions to be Taken by the Collateral Agent Under the Collateral
                      Agreements................................................................................      93

SECTION 12.09.        Authorization of Receipt of Funds by the Trustee Under the Collateral Agreements..........      94

SECTION 12.10.        Intercreditor Agreement...................................................................      94

Exhibit A         -        Form of  Initial Note................................................................      A
Exhibit B         -        Form of Unit.........................................................................      B
Exhibit C         -        Form of Exchange Note................................................................      C
Exhibit D         -        Form of Legend for Global Notes......................................................      D
Exhibit E         -        Form of Certificate to Be Delivered in Connection with Transfers to
                               Non-QIB Accredited Investors.....................................................      E
Exhibit F         -        Form of Certificate to Be Delivered in Connection with Transfers
                               Pursuant to Regulation S.........................................................      F


NOTE:    This Table of Contents shall not, for any purpose, be deemed to be part
         of this Indenture.

                                      -v-



      INDENTURE, dated as of June 29, 2004, among Viskase Companies, Inc., a
Delaware corporation (the "Company"), and LaSalle Bank National Association, as
Trustee (in such capacity, the "Trustee") and Collateral Agent (in such
capacity, the "Collateral Agent").

                                   WITNESSETH:

      WHEREAS, the Company has duly authorized the creation of an issue of
90,000 units consisting of 11 1/2% Senior Secured Notes due 2011 and 90,000
warrants.

      WHEREAS, the Company has duly authorized the creation of an issue of 11
1/2% Senior Secured Notes due 2011 (the "Initial Notes"), and 11 1/2% Senior
Secured Exchange Notes due 2011 (the "Exchange Notes," and collectively with the
Initial Notes and any Additional Notes (as herein defined) the "Notes") and, to
provide therefor, the Company has duly authorized the execution and delivery of
this Indenture; and

      WHEREAS, all things necessary to make the Notes, when duly issued and
executed by the Company, and authenticated and delivered hereunder, the valid
obligations of the Company to make this Indenture a valid and binding agreement
of the Company, have been done.

      NOW, THEREFORE, each party hereto agrees as follows for the benefit of the
other parties and for the equal and ratable benefit of the Holders:

                                  ARTICLE ONE

                   DEFINITIONS AND INCORPORATION BY REFERENCE

      SECTION 1.01. Definitions.

      "144A Global Notes" has the meaning set forth in Section 2.01.

      "8% Senior Notes" means the Company's 8% Senior Subordinated Secured Notes
due 2008.

      "Acceleration Notice" has the meaning set forth in Section 6.02.

      "Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with or into the Company or
any of its Restricted Subsidiaries or assumed in connection with the acquisition
of assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company or such acquisition, merger or
consolidation and which Indebtedness is without recourse to the Company or any
of its Subsidiaries (other than in the event of such a merger, consolidation or
acquisition of assets in which the Company or any of its Subsidiaries is the
surviving entity or assumes such Indebtedness) or to any of their respective
properties or assets other than the Person or the assets to which such
Indebtedness related prior to the time such Person became a Restricted
Subsidiary of the Company or the time of such acquisition, merger or
consolidation.

      "Additional Interest" has the meaning set forth in the Registration Rights
Agreement.

      "Additional Notes" means the Notes originally issued after the Issue Date
from time to time in accordance with the terms of this Indenture, including,
without limitation, the provisions of Section 2.02.



      "Administrative Agent" means (i) the initial Lender under the Credit
Agreement until such time as an agent is appointed to act on behalf of the
Lenders thereunder and (ii) from and after the appointment of such agent, such
agent.

      "Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided
that Beneficial Ownership of 10% or more of the Voting Stock of the Person shall
be deemed to be control. The terms "controlling" and "controlled" have meanings
correlative of the foregoing.

      "Affiliate Transaction" has the meaning set forth in Section 4.14.

      "Agent" means any Registrar, Paying Agent or co-Registrar.

      "Agent Members" has the meaning set forth in Section 2.14 and means, with
respect to DTC, Euroclear or Clearstream, a Person who has an account with DTC,
Euroclear or Clearstream, respectively (and with respect to DTC, shall include
Euroclear and Clearstream).

      "Applicable Indebtedness" means:

            (1) in respect of any asset that is the subject of an Asset Sale at
      a time when such asset is included in the Collateral, Indebtedness that is
      pari passu with the Notes and secured at such time by Collateral; or

            (2) in respect of any other asset, Indebtedness that is pari passu
      with the Notes.

      "Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of DTC,
Euroclear and Clearstream that apply to such transfer or exchange.

      "Asset Acquisition" means:

            (1) an Investment by the Company or any Restricted Subsidiary of the
      Company in any other Person pursuant to which such Person shall become a
      Restricted Subsidiary of the Company or any Restricted Subsidiary of the
      Company, or shall be merged with or into the Company or any Restricted
      Subsidiary of the Company, or

            (2) the acquisition by the Company or any Restricted Subsidiary of
      the Company of the assets of any Person (other than a Restricted
      Subsidiary of the Company) which constitute all or substantially all of
      the assets of such Person or comprise any division or line of business of
      such Person or any other properties or assets of such Person other than in
      the ordinary course of business.

      "Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases or non-exclusive licenses, in each
case, entered into in the ordinary course of business), assignment or other
transfer (other than a Lien in accordance with this Indenture) for value by (x)
the Company or any of its Restricted Subsidiaries to any Person other than the
Company or a Guarantor or (y) a Foreign Restricted Subsidiary to any Person
other than the Company or a Wholly-Owned Subsidiary of the Company of:

                                     - 2 -



            (1) any Capital Stock of any Restricted Subsidiary of the Company;
      or

            (2) any other property or assets of the Company or any Restricted
      Subsidiary of the Company other than in the ordinary course of business;

      provided, however, that Asset Sales shall not include:

                  (a) any transaction or series of related transactions for
            which the Company or its Restricted Subsidiaries receive aggregate
            consideration of less than $500,000;

                  (b) the sale, lease, conveyance, disposition or other transfer
            of all or substantially all of the assets of the Company as
            permitted under Section 5.01;

                  (c) any Restricted Payment permitted under Section 4.09,
            including a Permitted Investment;

                  (d) the sale of inventory in the ordinary course of business;

                  (e) the sale of Cash Equivalents; and

                  (f) the sale or other disposition of used, worn out, obsolete
            or surplus equipment.

      "Authenticating Agent" has the meaning set forth in Section 2.02.

      "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended, and
codified as 11 U.S.C. Sections 101 et seq.

      "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" have meanings correlative to the
foregoing.

      "Board of Directors" means, as to any Person, the board of directors or
similar governing body of such Person or any duly authorized committee thereof.

      "Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

      "Business Day" means a day that is not a Legal Holiday.

      "Capital Stock" means:

            (1) with respect to any Person that is a corporation, any and all
      shares, interests, participations or other equivalents (however designated
      and whether or not voting) of corporate stock, including each class of
      Common Stock and Preferred Stock of such Person;

                                     - 3 -



            (2) with respect to any Person that is not a corporation, any and
      all partnership, membership or other equity interests of such Person; and

            (3) any warrants, rights or options to purchase any of the
      instruments or interests referred to in clause (1) or (2) above.

      "Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.

      "Cash Equivalents" means:

            (1) marketable direct obligations issued by, or unconditionally
      guaranteed by, the United States Government or issued by any agency
      thereof and backed by the full faith and credit of the United States, in
      each case maturing within one year from the date of acquisition thereof;

            (2) marketable direct obligations issued by any state of the United
      States of America or any political subdivision of any such state or any
      public instrumentality thereof maturing within one year from the date of
      acquisition thereof and, at the time of acquisition, having one of the two
      highest ratings obtainable from either Standard & Poor's Rating Group ("S
      & P") or Moody's Investor Service, Inc. ("Moody's");

            (3) commercial paper maturing no more than one year from the date of
      creation thereof and, at the time of acquisition, having a rating of at
      least A-1 from S&P or at least P-1 from Moody's;

            (4) certificates of deposit or bankers' acceptances maturing within
      one year from the date of acquisition thereof issued by any bank organized
      under the laws of the United States of America or any state thereof or the
      District of Columbia or any U.S. branch of a foreign bank having at the
      date of acquisition thereof combined net capital and surplus of not less
      than $250.0 million;

            (5) repurchase obligations with a term of not more than seven days
      for underlying securities of the types described in clause (1) above
      entered into with any bank meeting the qualifications specified in clause
      (4) above; and

            (6) investments in money market funds that invest substantially all
      their assets in securities of the types described in clauses (1) through
      (5) above.

      "Change of Control" means the occurrence of one or more of the following
events:

            (1) any direct or indirect sale, lease, transfer, conveyance or
      other disposition (other than by way of merger or consolidation), in one
      transaction or a series of related transactions, of all or substantially
      all of the assets of the Company to any Person or group of related Persons
      for purposes of Section 13(d) of the Exchange Act (a "Group"), other than
      a transaction in which the transferee is controlled by one or more
      Permitted Holders;

            (2) any Person or Group, other than Permitted Holders, is or becomes
      the Beneficial Owner, directly or indirectly whether by merger or
      consolidation, of a majority of the total outstanding Voting Stock of the
      Company as measured by voting power; provided that there shall

                                     - 4 -



      be no Change of Control pursuant to this clause (2) if the Permitted
      Holders continue to have the right or ability by voting power; contract or
      otherwise to elect or designate for election a majority of the Board of
      Directors of the Company;

            (3) the adoption of a plan for the liquidation or dissolution of the
      Company; or

            (4) individuals who on the Issue Date constituted the Board of
      Directors (together with any new directors whose election by such Board of
      Directors or whose nomination for election by the stockholders of the
      Company was approved pursuant to a vote of a majority of the directors
      then still in office who were either directors on the Issue Date or whose
      election or nomination for election was previously so approved) cease for
      any reason to constitute a majority of the Board of Directors then in
      office; provided that there shall be no Change of Control pursuant to this
      clause (4) if since the Issue Date the Permitted Holders continue to own,
      directly or indirectly, (a) at least 90% of the Voting Stock of the
      Company held by the Permitted Holders as of the Issue Date, (b) more
      Voting Stock than any other Person or Group (other than a Group consisting
      solely of Merrill Lynch and Co., Inc., Northeast Investors Trust and their
      respective Affiliates), (c) more Voting Stock than Merrill Lynch & Co.,
      Inc. and its Affiliates and (d) more Voting Stock than Northeast Investors
      Trust and its Affiliates.

Notwithstanding anything to the contrary in the immediately preceding sentence,
none of the events described in clauses (1) through (4) thereof shall be deemed
to constitute a "Change of Control" if (x) such event shall have occurred (aa)
prior to the second anniversary of the Issue Date or (bb) subsequent to such
second anniversary within 10 Business Days of the receipt by the relevant
parties of any requisite governmental approval or consent relating to the
transaction giving rise to such event and the only reason with respect to which
such transaction could not have occurred prior to such second anniversary was
the failure of such parties to have obtained such governmental approval or
consent, and (y) immediately after giving effect thereto, (i) the Consolidated
Leverage Ratio of the Company is 0.5 times lower on a pro forma basis than the
Consolidated Leverage Ratio of the Company immediately before the occurrence of
such event and (ii) no Default or Event of Default shall have occurred and be
continuing.

      "Change of Control Offer" has its meaning set forth in Section 4.25.

      "Change of Control Payment Date" has its meaning set forth in Section
4.25.

      "Collateral" shall mean collateral as such term is defined in the Security
Agreement, all property mortgaged under the Mortgages and any other property,
whether now owned or hereafter acquired, upon which a Lien securing the
Obligations is granted or purported to be granted under any Collateral
Agreement.

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

      "Collateral Agent" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.

      "Collateral Agreements" means, collectively, the Security Agreement, the
Pledge Agreement, the Control Agreements (as defined in the Security Agreement),
the Intellectual Property Security Agreement (as defined in the Security
Agreement), each Mortgage and each Foreign Collateral Agreement, in each case,
as the same may be in force from time to time.

      "Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common

                                     - 5 -



stock, whether outstanding on the Issue Date or issued after the Issue Date, and
includes, without limitation, all series and classes of such common stock.

      "Comparable Treasury Issue" means the United States Treasury security
selected by a Reference Treasury Dealer appointed by the Company as having a
maturity comparable to the remaining term of the Notes (as if the final maturity
of the Notes was June 15, 2008) that would be utilized at the time of selection
and in accordance with customary financial practice in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes (as if the final maturity of the notes was June 15, 2008).

      "Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotation or (B)
if the Company obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.

      "Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of:

            (1) Consolidated Net Income; and

            (2) to the extent Consolidated Net Income has been reduced thereby:

                  (a) all income taxes of such Person and its Restricted
            Subsidiaries paid or accrued in accordance with GAAP for such
            period;

                  (b) Consolidated Interest Expense and interest expense
            attributable to amortization and write-offs of deferred financing
            costs; and

                  (c) Consolidated Non-cash Charges less any non-cash items
            increasing Consolidated Net Income for such period;

      all as determined on a consolidated basis for such Person and its
      Restricted Subsidiaries in accordance with GAAP.

      "Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four
consecutive full fiscal quarters (the "Four Quarter Period") most recently
ending on or prior to the date of the transaction or event giving rise to the
need to calculate the Consolidated Fixed Charge Coverage Ratio for which
financial statements are available (the "Transaction Date") to Consolidated
Fixed Charges of such Person for the Four Quarter Period.

      In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to:

                                     - 6 -



            (1) (a) the incurrence or repayment of any Indebtedness (other than
      in respect of the Credit Agreement) of such Person or any of its
      Restricted Subsidiaries (and the application of the proceeds thereof)
      giving rise to the need to make such calculation and any incurrence or
      repayment of other Indebtedness (and the application of the proceeds
      thereof), occurring during the Four Quarter Period or at any time
      subsequent to the last day of the Four Quarter Period and on or prior to
      the Transaction Date, as if such incurrence or repayment, as the case may
      be (and the application of the proceeds thereof), occurred on the first
      day of the Four Quarter Period and (b) (i) if a Specified Transaction is
      occurring on, or has occurred prior to, the Transaction Date, the deemed
      incurrence of Indebtedness under the Credit Agreement on the first day of
      the Four Quarter Period and for such entire Four Quarter Period and the
      Transaction Date at a rate of interest equal to the maximum non-default
      rate of interest applicable to extensions of credit thereunder and in an
      aggregate principal amount equal to the Maximum RCF Debt Amount then in
      effect regardless of whether the Company could have obtained extensions of
      credit thereunder in an aggregate principal amount equal to the Maximum
      RCF Debt Amount then in effect and (ii) if a Specified Transaction is not
      occurring on, and has not occurred prior to, the Transaction Date, the
      deemed incurrence of Indebtedness under the Credit Agreement on the first
      day of the Four Quarter Period and for such entire Four Quarter Period and
      the Transaction Date at a rate of interest equal to the rate of interest
      applicable to extensions of credit thereunder and in an aggregate
      principal amount equal to the outstanding aggregate principal amount of
      extensions of credit thereunder, in each case, immediately after giving
      effect to such transaction or event; and

            (2) any Asset Sale or other disposition or Asset Acquisition
      (including, without limitation, any Asset Acquisition giving rise to the
      need to make such calculation as a result of such Person or one of its
      Restricted Subsidiaries (including any Person who becomes a Restricted
      Subsidiary as a result of any such Asset Acquisition) incurring, assuming
      or otherwise being liable for Acquired Indebtedness during the Four
      Quarter Period or at any time subsequent to the last day of the Four
      Quarter Period and on or prior to the Transaction Date), as if such Asset
      Sale or other disposition or Asset Acquisition (including the incurrence,
      assumption or liability for any such Indebtedness or Acquired Indebtedness
      and also including any Consolidated EBITDA associated with such Asset Sale
      or other disposition or Asset Acquisition and any expense or costs savings
      (calculated on a basis consistent with Regulation S-X under the Exchange
      Act of 1934) attributable to the assets that are the subject of the Asset
      Sale or other disposition or Asset Acquisition; provided that (x) such
      expense or cost savings were identified and quantified in an Officers'
      Certificate delivered to the Trustee at the time of the consummation of
      such Asset Sale or other disposition or Asset Acquisition and such
      Officers' Certificate states that such officers believe in good faith that
      actions will be commenced or initiated within 90 days of the consummation
      of such Asset Sale or other disposition or Asset Acquisition to effect
      such expense or cost savings and sets forth the specific steps to be taken
      within such 90 day period to accomplish such expense or cost savings, and
      (y) with respect to each Asset Sale or other disposition or Asset
      Acquisition completed prior to the 90th day preceding such date of
      determination, actions were commenced or initiated by the Company or any
      of its Restricted Subsidiaries within 90 days of such acquisition, merger
      or consolidation to effect the expense and cost savings identified in such
      Officers' Certificate) occurred on the first day of the Four Quarter
      Period provided that the Consolidated EBITDA of any Person acquired shall
      be included only to the extent includible pursuant to the definition of
      "Consolidated Net Income." If such Person or any of its Restricted
      Subsidiaries directly or indirectly guarantees Indebtedness of a third
      Person, the preceding sentence shall give effect to the incurrence of such
      guaranteed Indebtedness as if such Person or any Restricted Subsidiary of
      such Person had directly incurred or otherwise assumed such guaranteed
      Indebtedness.

                                     - 7 -



      Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio":

            (a) interest on outstanding Indebtedness determined on a fluctuating
      basis as of the Transaction Date (including Indebtedness actually incurred
      on the Transaction Date) and which will continue to be so determined
      thereafter shall be deemed to have accrued at a fixed rate per annum equal
      to the rate of interest on such Indebtedness in effect on the Transaction
      Date; and

            (b) notwithstanding clause (1) above, interest on Indebtedness
      determined on a fluctuating basis, to the extent such interest is covered
      by agreements relating to Interest Swap Obligations, shall be deemed to
      accrue at the rate per annum resulting after giving effect to the
      operation of such agreements.

      "Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of:

            (1) Consolidated Interest Expense; plus

            (2) the product of (x) the amount of all dividend payments on any
      Disqualified Capital Stock of such Person and any series of Preferred
      Stock of such Person (other than dividends paid in Qualified Capital
      Stock) paid, accrued or scheduled to be paid or accrued during such period
      times (y) a fraction, the numerator of which is one and the denominator of
      which is one minus the then current effective consolidated federal, state
      and local tax rate of such Person, expressed as a decimal.

      "Consolidated Interest Expense" means, with respect to any Person for any
period, the aggregate of the interest expense (excluding amortization or
write-off of deferred financing costs) of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, as determined in
accordance with GAAP, and including, without duplication, (a) all amortization
or accretion of original issue discount; (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries during such period; and
(c) net cash costs under all Interest Swap Obligations (including amortization
of fees).

      "Consolidated Leverage Ratio" means, with respect to any Person, as of any
Transaction Date, the ratio of (x) Consolidated Total Debt of such Person as of
the Transaction Date to (y) Consolidated EBITDA of such Person for the four
consecutive full fiscal quarters (the "Four Quarter Period") most recently
ending on or prior to the Transaction Date for which financial statements are
available (the "Transaction Date").

      In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated Total Debt" and "Consolidated EBITDA" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation and the Transaction Date, as applicable, to:

            (1) (a) the incurrence or repayment of any Indebtedness (other than
      in respect of the Credit Agreement) of such Person or any of its
      Restricted Subsidiaries (and the application of the proceeds thereof)
      giving rise to the need to make such calculation and any incurrence or
      repayment of other Indebtedness (and the application of the proceeds
      thereof), occurring during the Four Quarter Period or at any time
      subsequent to the last day of the Four Quarter Period and on or prior to
      the Transaction Date, as if such incurrence or repayment, as the case may
      be (and the application of the proceeds thereof), occurred on the first
      day of the Four Quarter Period and (b) (i) if a Specified Transaction is
      occurring on, or has occurred prior to, the Transaction Date, if

                                     - 8 -



      a Specified Transaction is occurring on, or has occurred prior to, the
      Transaction Date, the deemed incurrence of Indebtedness under the Credit
      Agreement on the first day of the Four Quarter Period and for such entire
      Four Quarter Period and the Transaction Date at a rate of interest equal
      to the maximum non-default rate of interest applicable to extensions of
      credit thereunder and in an aggregate principal amount equal to the
      Maximum RCF Debt Amount then in effect regardless of whether the Company
      could have obtained extensions of credit thereunder in an aggregate
      principal amount equal to the Maximum RCF Debt Amount then in effect and
      (ii) if a Specified Transaction is not occurring on, and has not occurred
      prior to, the Transaction Date, the deemed incurrence of Indebtedness
      under the Credit Agreement on the first day of the Four Quarter Period and
      for such entire Four Quarter Period and the Transaction Date at a rate of
      interest equal to the rate of interest applicable to extensions of credit
      thereunder and in an aggregate principal amount equal to the outstanding
      aggregate principal amount of extensions of credit thereunder, in each
      case, immediately after giving effect to such transaction or event; and

            (2) any Asset Sale or other disposition or Asset Acquisition
      (including, without limitation, any Asset Acquisition giving rise to the
      need to make such calculation as a result of such Person or one of its
      Restricted Subsidiaries (including any Person who becomes a Restricted
      Subsidiary as a result of any such Asset Acquisition) incurring, assuming
      or otherwise being liable for Acquired Indebtedness during the Four
      Quarter Period or at any time subsequent to the last day of the Four
      Quarter Period and on or prior to the Transaction Date), as if such Asset
      Sale or other disposition or Asset Acquisition (including the incurrence,
      assumption or liability for any such Indebtedness or Acquired Indebtedness
      and also including any Consolidated EBITDA associated with such Asset Sale
      or other disposition or Asset Acquisition and any expense or costs savings
      (calculated on a basis consistent with Regulation S-X under the Exchange
      Act of 1934) attributable to the assets that are the subject of the Asset
      Sale or other disposition or Asset Acquisition; provided that (x) such
      expense or cost savings were identified and quantified in an Officers'
      Certificate delivered to the Trustee at the time of the consummation of
      such Asset Sale or other disposition or Asset Acquisition and such
      Officers' Certificate states that such officers believe in good faith that
      actions will be commenced or initiated within 90 days of the consummation
      of such Asset Sale or other disposition or Asset Acquisition to effect
      such expense or cost savings and sets forth the specific steps to be taken
      within such 90 day period to accomplish such expense or cost savings, and
      (y) with respect to each Asset Sale or other disposition or Asset
      Acquisition completed prior to the 90th day preceding such date of
      determination, actions were commenced or initiated by the Company or any
      of its Restricted Subsidiaries within 90 days of such acquisition, merger
      or consolidation to effect the expense and cost savings identified in such
      Officers' Certificate) occurred on the first day of the Four Quarter
      Period provided that the Consolidated EBITDA of any Person acquired shall
      be included only to the extent includible pursuant to the definition of
      "Consolidated Net Income." If such Person or any of its Restricted
      Subsidiaries directly or indirectly guarantees Indebtedness of a third
      Person, the preceding sentence shall give effect to the incurrence of such
      guaranteed Indebtedness as if such Person or any Restricted Subsidiary of
      such Person had directly incurred or otherwise assumed such guaranteed
      Indebtedness.

      "Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall be excluded therefrom, without
duplication:

            (1) after-tax gains and losses from Asset Sales or abandonments or
      reserves relating thereto;

                                     - 9 -



            (2) after-tax items classified extraordinary or non-recurring gains
      and losses;

            (3) the net income (but not loss) of any Restricted Subsidiary of
      the referent Person to the extent that the declaration of dividends or
      similar distributions by that Restricted Subsidiary of that income is
      restricted by a contract, operation of law or otherwise;

            (4) the net income of any Person, other than the referent Person or
      a Restricted Subsidiary of the referent Person, except to the extent of
      cash dividends or distributions paid to the referent Person or to a
      Wholly-Owned Subsidiary of the referent Person by such Person;

            (5) any restoration to income of any material contingency reserve,
      except to the extent that provision for such reserve was made out of
      Consolidated Net Income accrued at any time following the Issue Date;

            (6) income or loss attributable to discontinued operations
      (including, without limitation, operations disposed of during such period
      whether or not such operations were classified as discontinued);

            (7) all gains and losses realized on or because of the purchase or
      other acquisition by such Person or any of its Restricted Subsidiaries of
      any securities of such Person or any of its Restricted Subsidiaries;

            (8) the cumulative effect of a change in accounting principles;

            (9) non-cash charges resulting from the impairment of intangible
      assets; and

            (10) in the case of a successor to the referent Person by
      consolidation or merger or as a transferee of the referent Person's
      assets, any earnings of the successor corporation prior to such
      consolidation, merger or transfer of assets.

      "Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.

      "Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash items and
expenses of such Person and its Restricted Subsidiaries to the extent they
reduce Consolidated Net Income of such Person and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP
(excluding any such charges constituting an extraordinary item or loss or any
such charge which requires an accrual of or a reserve for cash charges for any
future period).

      "Consolidated Total Debt" means, with respect to any Person, as of any
date, the consolidated Indebtedness of such Person and its Restricted
Subsidiaries of the nature referred to in clauses (1), (2), (3), (4), (5) and
(9) of the definition of the term "Indebtedness."

      "Consolidated Working Capital" means, with respect to any Person, at any
date, the excess of (a) the sum of all amounts (other than cash and Cash
Equivalents) that would, in conformity with GAAP, be set forth opposite the
caption "total current assets" (or any like caption) on a consolidated balance
sheet of such Person and its Restricted Subsidiaries at such date over (b) the
sum of all amounts that would, in conformity with GAAP, be set forth opposite
the caption "total current liabilities" (or any like caption) on a consolidated
balance sheet of such Person and its Restricted Subsidiaries on such date,

                                     - 10 -



but excluding (i) the current portion of liabilities in respect of pension
contributions and postretirement benefits of such Person and its Restricted
Subsidiaries to the extent not included in clauses (D) and (E), respectively, of
clause (ii) of the definition of the term "Excess Cash Flow" and (ii) any Funded
Debt.

      "Covenant Defeasance" has the meaning set forth in Section 8.01.

      "Credit Agreement" means the Loan and Security Agreement dated as of the
Issue Date, among the Company and the lender or the lenders party thereto
(together with its or their successors and assigns, the "Lender" or "Lenders")
and the Administrative Agent, together with the related documents thereto
(including, without limitation, any notes, guarantee agreements and security
documents), in each case as such agreement and related documents may be amended,
restated, supplemented or otherwise modified from time to time, in whole or in
part, including any amendment, restatement, supplement or other modification
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings does not exceed the aggregate amount of
Indebtedness permitted under clauses (2) and (16) of the definition of the term
"Permitted Indebtedness") or adding Subsidiaries of the Company as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders, but excluding any amendment,
restatement, supplement or other modification that provides for terms more
adverse to the Holders or less favorable or more onerous to the Company and its
Restricted Subsidiaries.

      "Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.

      "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Code.

      "Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.

      "Depository" means DTC, its nominees and successors.

      "Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder
thereof), or upon the happening of any event (other than an event that would
constitute a Change of Control), matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof (except in each case, upon the occurrence of a Change of
Control) on or prior to the 91st day after the final maturity date of the Notes
for cash or is convertible into or exchangeable for debt securities of the
Company or its Subsidiaries at any time prior to such 91st day.

      "Domestic Restricted Subsidiary" means, with respect to any Person, a
Domestic Subsidiary of such Person that is a Restricted Subsidiary of such
Person.

      "Domestic Subsidiary" means, with respect to any Person, a Subsidiary of
such Person that is not a Foreign Subsidiary of such Person.

      "DTC" means The Depositary Trust Company, its nominees and successors.

                                     - 11 -



      "Eligible Accounts Receivable" mean the accounts receivable (net of any
reserves and allowances for doubtful accounts in accordance with GAAP) of the
Company and the Guarantors that are not more than 90 days past their due date
and that were entered into in the ordinary course of business on normal payment
terms as shown on the most recent financial consolidated balance sheet of the
Company and the Guarantors, all in accordance with GAAP.

      "Eligible Inventory" means inventory of the Company and the Guarantors
consisting of finished goods held by the Company or any Guarantor for sale in
the ordinary course of business.

      "Eligible Raw Inventory" means inventory of the Company and the Guarantors
consisting of raw material to be consumed or used by the Company or any
Guarantor in the production of goods to be held by the Company or any Guarantor
for sale in the ordinary course of business.

      "Eligible WIP Inventory" means inventory of the Company and the Guarantors
consisting of work-in-process relating to the production of goods to be held by
the Company or any Guarantor for sale in the ordinary course of business.

      "Equity Offering" means an underwritten public offering of Common Stock of
the Company or any holding company of the Company pursuant to a registration
statement filed with the SEC (other than on Form S-8) or any private placement
of Common Stock of the Company or any holding company of the Company to any
Person other than issuances upon exercise of options by employees of any holding
company, the Company or any of the Restricted Subsidiaries.

      "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear
System.

      "Event of Default" has the meaning set forth in Section 6.01.

      "Excess Cash Flow" means, with respect to any fiscal year of the Company,
the excess of (i) the sum of (A) Consolidated EBITDA of the Company and its
Restricted Subsidiaries for such fiscal year and (B) decreases in Consolidated
Working Capital of the Company and its Restricted Subsidiaries for such fiscal
year over (ii) the sum of (A) consolidated capital expenditures actually made in
cash by the Company and its Restricted Subsidiaries during such fiscal year, (B)
Consolidated Interest Expense of the Company and its Restricted Subsidiaries for
such fiscal year but only to the extent such Consolidated Interest Expense was
actually paid in cash during such fiscal year, (C) income taxes actually paid in
cash by the Company and its Restricted Subsidiaries during such fiscal year, (D)
pension contributions actually made in cash by the Company and its Restricted
Subsidiaries during such fiscal year but only to the extent such contributions
were not deducted in calculating such Consolidated EBITDA, (E) postretirement
benefits actually paid in cash by the Company and its Restricted Subsidiaries
during such fiscal year but only to the extent such payments were not deducted
in calculating such Consolidated EBITDA and (F) increases in Consolidated
Working Capital of the Company and its Restricted Subsidiaries for such fiscal
year.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.

      "Exchange Notes" has the meaning set forth in the first recital of this
Indenture.

      "Exchange Offer" means an exchange offer that may be made by the Company,
pursuant to the Registration Rights Agreement, to exchange for any and all the
Notes a like aggregate principal amount of notes having substantially identical
terms to the Notes registered under the Securities Act.

                                     - 12 -



      "Excluded Assets" means, with respect to the Company or any of its
Restricted Subsidiaries that is an obligor under any Collateral Agreement, (a)
Voting Stock of any first-tier Foreign Subsidiary of such obligor constituting
more than sixty-five percent (65%) of the issued and outstanding Voting Stock of
such first-tier Foreign Subsidiary, (b) the Excluded Capital Stock of any
Subsidiary of such obligor, (c) any rights under any Account (as defined in the
Security Agreement), contract, license or other agreement or any General
Intangible (as defined in the Security Agreement), in each case, to the extent
that the grant of a security interest under any Collateral Agreement (i) would
invalidate the underlying rights of such obligor in such General Intangible,
(ii) is prohibited by such Account, contract, license, agreement, intellectual
property or General Intangible without the consent of any other party thereto,
(iii) would give any other party to such Account, contract, license, agreement
or General Intangible the right to terminate its obligations thereunder, or (iv)
is not permitted without consent, unless in each case, all necessary consents to
such grant of a security interest have been obtained from the other parties
thereto; provided, however, that nothing herein shall be intended to limit the
affect of 9-406 of the Code (as defined in the Security Agreement) or otherwise
limit or restrict the conveyance by such obligor of any rights under any such
Account, contracts, licenses, agreements or General Intangibles to the extent
which would not be violative of the restrictive terms thereof or (d) Equipment
(as defined in the Security Agreement) subject to a Permitted Lien of the type
described in clauses (6), (7), (13), (14) and (18) of the definition thereof, in
each case, with respect to which such obligor is prohibited from granting a
security interest under the terms of the Indebtedness incurred to finance the
purchase of such Equipment.

      "Excluded Capital Stock" means, with respect to any Subsidiary of the
Company whose Capital Stock is pledged by the Company or any of its Restricted
Subsidiaries as an obligor under any Collateral Agreement in favor of the
Collateral Agent, that portion of such Subsidiary's Capital Stock that would
otherwise constitute Collateral to the extent the greater of the par value, book
value as carried by such obligor or the market value of any such Capital Stock
is equal to or greater than 20% of the aggregate principal amount of the Notes
then outstanding.

      "Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's length, free market transaction, for
cash, between a willing seller and a willing and able buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors of the Company acting in
good faith and shall be evidenced by a Board Resolution of the Board of
Directors of the Company delivered to the Trustee.

      "Foreign Collateral" means the tangible and intangible assets of any
Foreign Restricted Subsidiary of the Company in which a Lien has been granted in
favor of the Collateral Agent pursuant to a Foreign Collateral Agreement.

      "Foreign Collateral Agreement" means each agreement executed and delivered
by any Foreign Restricted Subsidiary of the Company pursuant to which such
Foreign Restricted Subsidiary has granted a Lien on any of its tangible or
intangible assets in favor of the Collateral Agent.

      "Foreign Grantor" means each Foreign Restricted Subsidiary of the Company
that has granted a Lien on any of its tangible or intangible assets in favor of
the Collateral Agent pursuant to a Foreign Collateral Agreement.

      "Foreign Restricted Subsidiary" means any Restricted Subsidiary that is
organized under the laws of any jurisdiction other than the United States of
America, any state thereof or the District of Columbia.

                                     - 13 -



      "Foreign Subsidiary" means, with respect to any Person, any Subsidiary of
such Person that is organized under the laws of any jurisdiction other than the
United States of America, any state thereof or the District of Columbia.

      "Four Quarter Period" has the meaning set forth in the definition of the
term "Consolidated Fixed Charge Coverage Ratio".

      "Funded Debt" means all Indebtedness for borrowed money of the Company and
its Restricted Subsidiaries that matures more than one year from the date of its
incurrence or matures within one year from such date and is renewable or
extendable, at the option of the Company or one of its Restricted Subsidiaries,
to a date more than one year from such date or arises under a revolving credit
or similar agreement that obligates the lender or lenders thereunder to extend
credit during a period of more than one year from such date, including all
amounts of Funded Debt required to be paid or prepaid within one year from the
date of its creation and, in the case of the Company, Indebtedness in respect of
the Notes.

      "GAAP" means accounting principles generally accepted in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect from time to
time.

      "Global Notes" has the meaning set forth in Section 2.01.

      "Guarantee" has the meaning set forth in Section 10.01.

      "Guarantor" means each of the Company's Domestic Restricted Subsidiaries
that in the future executes a supplemental indenture in which such Domestic
Restricted Subsidiary agrees to be bound by the terms of this Indenture as a
Guarantor; provided that any Person constituting a Guarantor as described above
shall cease to constitute a Guarantor when its respective Guarantee is released
in accordance with the terms of this Indenture.

      "Holder" means the Person in whose name a Note is registered on the
registrar's books.

      "IAI Global Notes" has the meaning set forth in Section 2.01.

      "Immaterial Subsidiary" means any Restricted Subsidiary of the Company
that has (1) assets with a Fair Market Value or book value (whichever is
greater) less than $500,000 and (2) revenues not exceeding $1,000,000 during the
last twelve months preceding the Issue Date and, thereafter, during the twelve
months preceding the Company's most recent fiscal quarter.

      "incur" has the meaning set forth in Section 4.08.

      "Indebtedness" means with respect to any Person, without duplication:

            (1) all Obligations of such Person for borrowed money;

            (2) all Obligations of such Person evidenced by bonds, debentures,
      notes or other similar instruments;

            (3) all Capitalized Lease Obligations of such Person, other than
      Capital Lease Obligations that are not or will not be included in the
      audited consolidated financial statements of

                                     - 14 -



      such Person prepared in accordance with GAAP due to the immateriality, as
      determined in good faith by such Person, of such obligations;

            (4) all Obligations of such Person issued or assumed as the deferred
      purchase price of property, all conditional sale obligations and all
      Obligations under any title retention agreement (but excluding trade
      accounts payable and other accrued liabilities arising in the ordinary
      course of business that are not overdue by 90 days or more or are being
      contested in good faith by appropriate proceedings promptly instituted and
      diligently conducted and any deferred purchase price represented by earn
      outs consistent with the Company's past practice);

            (5) all Obligations for the reimbursement of any obligor on any
      letter of credit, banker's acceptance or similar credit transaction,
      whether or not then due;

            (6) guarantees and other contingent obligations in respect of
      Indebtedness referred to in clauses (1) through (5) above and clauses (7)
      through (9) below;

            (7) all Obligations of any other Person of the type referred to in
      clauses (1) through (6) above and clauses (8) and (9) below which are
      secured by any Lien on any property or asset of such Person, the amount of
      any such Obligation being deemed to be the lesser of the Fair Market Value
      of the property or asset securing such Obligation or the amount of such
      Obligation;

            (8) all Interest Swap Obligations and all Obligations under Currency
      Agreements of such Person; and

            (9) all Disqualified Capital Stock issued by such Person with the
      amount of Indebtedness represented by such Disqualified Capital Stock
      being equal to the greater of its voluntary or involuntary liquidation
      preference and its maximum fixed repurchase price, but excluding accrued
      dividends, if any.

For purposes hereof, (a) the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified
Capital Stock, such Fair Market Value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital Stock
and (b) the outstanding principal amount of any Indebtedness with original issue
discount as of any date shall be the accreted value thereof.

      "Indemnified Party" has the meaning set forth in Section 7.07.

      "Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.

      "Indenture Documents" means, collectively, this Indenture, the Notes, the
Guarantees, and the Collateral Agreements.

      "Independent Financial Advisor" means a nationally-recognized accounting,
appraisal or investment banking firm: (1) that does not, and whose directors,
officers and employees or Affiliates do not, have a direct or indirect financial
interest in the Company; and (2) that, in the judgment of the Board of Directors
of the Company, is otherwise independent and qualified to perform the task for
which it is to be engaged.

                                     - 15 -



      "Initial Notes" has the meaning set forth in the first recital to this
Indenture.

      "Initial Purchasers" means Jefferies & Company, Inc.

      "Intercreditor Agreement" means the Intercreditor Agreement among the
Administrative Agent, the Collateral Agent, the Company and the Guarantors,
dated as of the Issue Date, as the same may be amended, supplemented or modified
from time to time.

      "Interest Payment Date" means June 15 and December 15 of each year.

      "Interest Swap Obligations" means the obligations of any Person pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.

      "Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee,
but excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business) or capital contribution to (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition for
value by such Person of any Capital Stock, bonds, notes, debentures or other
securities or evidences of Indebtedness issued by, any other Person.
"Investment" shall exclude extensions of trade credit by the Company and its
Restricted Subsidiaries on commercially reasonable terms in accordance with
normal trade practices of the Company or such Restricted Subsidiary, as the case
may be, that are recorded as accounts receivable on the balance sheet of the
Company or such Restricted Subsidiary, as the case may be. For the purposes of
Section 4.09 covenant, (i) "Investment" shall include and be valued at the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Company or any of its Restricted
Subsidiaries, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment, reduced by
the payment of dividends or distributions in connection with such Investment or
any other amounts received in respect of such Investment; provided that no such
payment of dividends or distributions or receipt of any such other amounts shall
reduce the amount of any Investment if such payment of dividends or
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary sells or otherwise
disposes of any Capital Stock of a Restricted Subsidiary (including any issuance
of Capital Stock by a Restricted Subsidiary) such that, after giving effect to
any such sale or disposition, such Restricted Subsidiary would cease to be a
Subsidiary of the Company, the Company shall be deemed to have made an
"Investment" on the date of any such sale or disposition equal to sum of the
Fair Market Value of the Capital Stock of such former Restricted Subsidiary held
by the Company or any Restricted Subsidiary immediately following such sale or
other disposition.

      "Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.

      "Issue Date" means the date of original issuance of the Notes.

      "Leased Premises" has the meaning set forth in Section 4.19.

                                     - 16 -



      "Legal Defeasance" has the meaning set forth in Section 8.01.

      "Legal Holiday" has the meaning set forth in Section 11.07.

      "Lenders" has the meaning set forth in the definition of the term "Credit
Agreement."

      "Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

      "Maturity Date" means June 15, 2011.

      "Maximum RCF Debt Amount" means as of any date occurring (1) prior to the
date that a Specified Transaction has occurred, the excess of (x) $20.0 million
over (y) the aggregate amount of repayments of Indebtedness under the Credit
Agreement with the proceeds of Shared Collateral pursuant to clause (3)(a) of
Section 4.10 and (2) on or subsequent to the date that a Specified Transaction
has occurred, the excess of (x) the greater of (a) $20.0 million and (b) the sum
of (i) 90% of the aggregate amount of all Eligible Accounts Receivable, (ii) 70%
of the value of all Eligible Inventory, in each case, on such date (iii) 70% of
the value of all Eligible WIP Inventory and (iv) 70% of the value of all
Eligible Raw Inventory and (y) the aggregate amount of repayments of
Indebtedness under the Credit Agreement with the proceeds of Shared Collateral
pursuant to clause (3)(a) of Section 4.10.

      "Merger Proceeds" has the meaning set forth in Section 4.09.

      "Mortgages" means the mortgages, deeds of trust, deeds to secure
Indebtedness or other similar documents securing Liens on the Premises and/or
the Leased Premises, as well as the other Collateral secured by and described in
the mortgages, deeds of trust, deeds to secure Indebtedness or other similar
documents.

      "Net Cash Proceeds" means, with respect to any Asset Sale or Specified
Issuance, the proceeds in the form of cash or Cash Equivalents including
payments in respect of deferred payment obligations when received in the form of
cash or Cash Equivalents (other than the portion of any such deferred payment
constituting interest) received by the Company or any of its Restricted
Subsidiaries from such Asset Sale or such Specified Issuance, as the case may
be, net of:

            (1) reasonable out-of-pocket costs, commissions, expenses and fees
      relating to such Asset Sale or such Specified Issuance, as the case may be
      (including, without limitation, legal, accounting and investment banking
      fees and sales commissions);

            (2) all taxes and other costs and expenses actually paid or
      estimated by the Company (in good faith) to be payable in cash or accruing
      or to be accrued in connection with such Asset Sale or such Specified
      Issuance, as the case may be;

            (3) repayment of Indebtedness that is secured by the property or
      assets that are the subject of such Asset Sale and is required to be
      repaid in connection with such Asset Sale or Specified Issuance, as the
      case may be; and

            (4) appropriate amounts to be provided by the Company or any
      Restricted Subsidiary, as the case may be, as a reserve, in accordance
      with GAAP, against any liabilities associated with such Asset Sale and
      retained by the Company or any Restricted Subsidiary, as the case may be,
      after such Asset Sale, including, without limitation, pension and other
      post-employment benefit

                                     - 17 -



      liabilities, liabilities related to environmental matters and liabilities
      under any indemnification obligations associated with such Asset Sale or
      such Specified Issuance, as the case may be.

      "Net Proceeds Offer" has the meaning set forth in Section 4.10.

      "Net Proceeds Offer Amount" has the meaning set forth in Section 4.10.

      "Net Proceeds Offer Payment Date" has the meaning set forth in Section
4.10.

      "Net Proceeds Offer Trigger Date" has the meaning set forth in Section
4.10.

      "Non-U.S. Person" means a Person who is not a U.S. person, as defined in
Regulation S.

      "Notes" has the meaning set forth in the first recital to this Indenture.

      "Notes Priority Collateral" means all existing and after-acquired real
property, fixtures and improvements thereon, equipment and proceeds thereof of
the Company and the Guarantors.

      "Obligations" means all obligations for principal, premium, interest,
Additional Interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any
Indebtedness.

      "Offering" means the offering of the Notes hereunder.

      "Officer" means the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President or the Treasurer of the Company.

      "Officers' Certificate" means a certificate signed by two Officers of the
Company, at least one of whom shall be the principal financial officer of the
Company, and delivered to the Trustee.

      "Offshore Physical Notes" has the meaning set forth in Section 2.01.

      "Opinion of Counsel" means a written opinion of counsel who shall be
reasonably acceptable to the Trustee or Collateral Agent, as applicable,
complying with the requirements of Sections 11.04 and 11.05, as they relate to
the giving of an Opinion of Counsel.

      "Paying Agent" has the meaning set forth in Section 2.03.

      "Permitted Holders" means Carl C. Icahn and his Affiliates.

      "Permitted Indebtedness" means, without duplication, each of the
following:

            (1) Indebtedness under the Notes issued in the Offering or in the
      Exchange Offer in an aggregate outstanding principal amount not to exceed
      $90.0 million and the related Guarantees;

            (2) Indebtedness incurred pursuant to the Credit Agreement in an
      aggregate principal amount at any time outstanding not to exceed the
      Maximum RCF Debt Amount;

            (3) Indebtedness of the Company and its Restricted Subsidiaries
      outstanding on the Issue Date (other than Indebtedness evidenced by the
      Notes or under the Credit Agreement);

                                     - 18 -



            (4) Interest Swap Obligations of the Company or any Restricted
      Subsidiary of the Company covering Indebtedness of the Company or any of
      its Restricted Subsidiaries; provided, however, that such Interest Swap
      Obligations are entered into for the purpose of fixing or hedging interest
      rates with respect to any fixed or variable rate Indebtedness that is
      permitted by this Indenture to be outstanding to the extent that the
      notional amount of any such Interest Swap Obligation does not exceed the
      principal amount of Indebtedness to which such Interest Swap Obligation
      relates;

            (5) Indebtedness under Currency Agreements; provided that in the
      case of Currency Agreements which relate to Indebtedness, such Currency
      Agreements do not increase the Indebtedness of the Company and its
      Restricted Subsidiaries outstanding other than as a result of fluctuations
      in foreign currency exchange rates or by reason of fees, indemnities and
      compensation payable thereunder;

            (6) (a) Intercompany Indebtedness of the Company or a Guarantor for
      so long as such Indebtedness is held by the Company or a Guarantor;
      provided that (i) such Indebtedness shall be unsecured and contractually
      subordinated in all respects to the obligations of the Company under the
      Notes or such Guarantor under its Guarantee, as the case may be, and (ii)
      if as of any date any Person other than the Company or a Guarantor owns or
      holds any such Indebtedness or holds a Lien in respect of such
      Indebtedness, such date shall be deemed the incurrence of Indebtedness not
      constituting Permitted Indebtedness under this clause (6) by the issuer of
      such Indebtedness and (b) intercompany Indebtedness of any Foreign
      Restricted Subsidiary for so long as such Indebtedness is held by (i) the
      Company or any Guarantor and is permitted to be made by the Company or
      such Guarantor in such Restricted Subsidiary pursuant to clause (1)(b)(i)
      of the definition of the term "Permitted Investment" or (ii) any other
      Foreign Restricted Subsidiary; provided that if as of any date any Person
      other than the Company or a Guarantor owns or holds any such Indebtedness
      or holds a Lien in respect of such Indebtedness, such date shall be deemed
      the incurrence of Indebtedness not constituting Permitted Indebtedness
      under this clause (6) by the issuer of such Indebtedness;

            (7) Indebtedness arising from the honoring by a bank or other
      financial institution of a check, draft or similar instrument
      inadvertently (except in the case of daylight overdrafts) drawn against
      insufficient funds in the ordinary course of business; provided, however,
      that such Indebtedness is extinguished within five Business Days of
      incurrence;

            (8) Indebtedness of the Company or any of its Restricted
      Subsidiaries represented by letters of credit for the account of the
      Company or such Restricted Subsidiary, as the case may be, in order to
      provide security for workers' compensation claims, payment obligations in
      connection with self-insurance or similar requirements in the ordinary
      course of business;

            (9) Indebtedness represented by Capitalized Lease Obligations and
      Purchase Money Indebtedness of the Company and its Restricted Subsidiaries
      incurred in the ordinary course of business (including Refinancings
      thereof that do not result in an increase in the aggregate principal
      amount of Indebtedness of such Person as of the date of such proposed
      Refinancing (plus the amount of any premium required to be paid under the
      terms of the instrument governing such Indebtedness and plus the amount of
      reasonable expenses incurred by the Company in connection with such
      Refinancing)) not to exceed $10.0 million at any time outstanding;

            (10) Refinancing Indebtedness;

                                     - 19 -



            (11) Indebtedness represented by guarantees by the Company or a
      Restricted Subsidiary of Indebtedness incurred by the Company or a
      Restricted Subsidiary so long as the incurrence of such Indebtedness by
      the Company or any such Restricted Subsidiary is otherwise permitted by
      the terms of this Indenture;

            (12) Indebtedness arising from agreements of the Company or a
      Subsidiary providing for indemnification, adjustment of purchase price or
      similar obligations, in each case, incurred in connection with the
      disposition of any business, assets or Subsidiary, other than guarantees
      of Indebtedness incurred by any Person acquiring all or any portion of
      such business, assets or Subsidiary for the purpose of financing such
      acquisition; provided that the maximum aggregate liability in respect of
      all such Indebtedness shall at no time exceed the gross proceeds actually
      received by the Company and the Subsidiary in connection with such
      disposition;

            (13) Indebtedness of the Company or any of its Restricted
      Subsidiaries to the extent the net proceeds thereof are concurrently with
      the incurrence thereof used to redeem the Notes in full or deposited to
      defease or discharge the Notes, in each case, in accordance with this
      Indenture;

            (14) obligations of the Company or any of its Restricted
      Subsidiaries in respect of performance and surety bonds and completion
      guarantees incurred in the ordinary course of business;

            (15) Indebtedness of Foreign Restricted Subsidiaries in an aggregate
      outstanding principal amount not to exceed $2.0 million; and

            (16) additional Indebtedness of the Company and its Restricted
      Subsidiaries in an aggregate principal amount not to exceed $5.0 million
      at any time outstanding (which amount may, but need not be, incurred in
      whole or in part under the Credit Agreement).

      For purposes of determining compliance with Section 4.08, (a) the
outstanding principal amount of any item of Indebtedness shall be counted only
once and (b) in the event that an item of Indebtedness meets the criteria of
more than one of the categories of Permitted Indebtedness described in clauses
(1) through (16) above or is entitled to be incurred pursuant to the
Consolidated Fixed Charge Coverage Ratio provisions of such covenant, the
Company shall, in its sole discretion, classify (or later reclassify) such item
of Indebtedness in any manner that complies with Section 4.08. Accrual of
interest, accretion or amortization of original issue discount, the payment of
interest on any Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Capital Stock in the
form of additional shares of the same class of Disqualified Capital Stock will
not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified
Capital Stock for purposes of Section 4.08.

      "Permitted Investments" means:

            (1) (a) Investments by the Company or any Restricted Subsidiary of
      the Company in any Person that is or will become immediately after such
      Investment a Guarantor or that will merge or consolidate with or into the
      Company or a Guarantor, or that transfers or conveys all or substantially
      all of its assets to the Company or a Guarantor and (b) Investments in any
      Person that is or will become immediately after such Investment a Foreign
      Restricted Subsidiary by (i) the Company or any Guarantor so long as the
      aggregate amount of all such Investments are in the form of intercompany
      loans entered into in the ordinary course of business that rank equally in
      right of payment with all other senior obligations of such Person, are not
      subordinated in right of payment to any other Indebtedness of such Person,
      and do not exceed $15.0 million at any time outstanding and (ii) any other
      Foreign Restricted Subsidiary;

                                     - 20 -



            (2) Investments in the Company by any Restricted Subsidiary of the
      Company; provided that any Indebtedness evidencing such Investment is
      unsecured and subordinated, pursuant to a written agreement, to the
      Company's Obligations under the Notes and the Indenture;

            (3) Investments in cash and Cash Equivalents;

            (4) Currency Agreements and Interest Swap Obligations entered into
      in the ordinary course of the Company's or its Restricted Subsidiaries'
      businesses and otherwise in compliance with this Indenture;

            (5) Investments in the Notes;

            (6) Investments in securities of trade creditors or customers
      received pursuant to any plan of reorganization or similar arrangement
      upon the bankruptcy or insolvency of such trade creditors or customers in
      exchange for claims against such trade creditors or customers;

            (7) Investments made by the Company or its Restricted Subsidiaries
      as a result of consideration received in connection with an Asset Sale
      made in compliance with Section 4.10;

            (8) Investments in existence on the Issue Date;

            (9) loans and advances, including advances for travel and moving
      expenses, to employees, officers and directors of the Company and its
      Restricted Subsidiaries in the ordinary course of business for bona fide
      business purposes not in excess of $1.0 million at any one time
      outstanding;

            (10) advances to suppliers and customers in the ordinary course of
      business; and

            (11) additional Investments not to exceed $2.0 million at any time
      outstanding.

      "Permitted Liens" means the following types of Liens:

            (1) Liens for taxes, assessments or governmental charges or claims
      either (a) not delinquent or (b) contested in good faith by appropriate
      proceedings and as to which the Company or its Restricted Subsidiaries
      shall have set aside on its books such reserves as may be required
      pursuant to GAAP;

            (2) statutory Liens of landlords and Liens of carriers,
      warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
      imposed by law or pursuant to customary reservations or retentions of
      title incurred in the ordinary course of business for sums not yet
      delinquent or being contested in good faith, if such reserve or other
      appropriate provision, if any, as shall be required by GAAP shall have
      been made in respect thereof;

            (3) Liens incurred or deposits made in the ordinary course of
      business in connection with workers' compensation, unemployment insurance
      and other types of social security, including any Lien securing letters of
      credit issued in the ordinary course of business consistent with past
      practice in connection therewith, or to secure the performance of tenders,
      statutory obligations, surety and appeal bonds, bids, leases, or
      government contracts, performance and return-of-money bonds and other
      similar obligations (exclusive of obligations for the payment of borrowed
      money);

                                     - 21 -



            (4) any judgment Lien not giving rise to an Event of Default;

            (5) easements, rights-of-way, zoning restrictions and other similar
      charges, encumbrances or title defects in respect of real property not
      interfering in any material respect with the ordinary conduct of the
      business of the Company or any of its Restricted Subsidiaries;

            (6) any interest or title of a lessor under any Capitalized Lease
      Obligation permitted pursuant to clause (9) of the definition of
      "Permitted Indebtedness;" provided that such Liens do not extend to any
      property or assets which is not leased property subject to such
      Capitalized Lease Obligation;

            (7) Liens securing Purchase Money Indebtedness permitted pursuant to
      clause (9) of the definition of "Permitted Indebtedness;"

            (8) Liens upon specific items of inventory or other goods and
      proceeds of any Person securing such Person's obligations in respect of
      bankers' acceptances issued or created for the account of such Person to
      facilitate the purchase, shipment or storage of such inventory or other
      goods;

            (9) Liens securing reimbursement obligations with respect to
      commercial letters of credit which encumber documents and other property
      relating to such letters of credit and products and proceeds thereof;

            (10) Liens encumbering deposits made to secure obligations arising
      from statutory, regulatory, contractual, or warranty requirements of the
      Company or any of its Restricted Subsidiaries, including rights of offset
      and set-off;

            (11) Liens securing Interest Swap Obligations which Interest Swap
      Obligations relate to Indebtedness that is otherwise permitted under this
      Indenture;

            (12) Liens securing Indebtedness under Currency Agreements that are
      permitted under this Indenture;

            (13) Liens securing Acquired Indebtedness incurred in accordance
      with Section 4.08; provided that:

                  (a) such Liens secured such Acquired Indebtedness at the time
            of and prior to the incurrence of such Acquired Indebtedness by the
            Company or a Restricted Subsidiary of the Company and were not
            granted in connection with, or in anticipation of, the incurrence of
            such Acquired Indebtedness by the Company or a Restricted Subsidiary
            of the Company; and

                  (b) such Liens do not extend to or cover any property or
            assets of the Company or of any of its Restricted Subsidiaries other
            than the property or assets that secured the Acquired Indebtedness
            prior to the time such Indebtedness became Acquired Indebtedness of
            the Company or a Restricted Subsidiary of the Company and are no
            more favorable to the lienholders than those securing the Acquired
            Indebtedness prior to the incurrence of such Acquired Indebtedness
            by the Company or a Restricted Subsidiary of the Company;

                                     - 22 -



            (14) Liens existing as of the Issue Date and securing Permitted
      Indebtedness of the type described in clause (3) of the definition thereof
      to the extent and in the manner such Liens are in effect on the Issue
      Date;

            (15) Liens securing the Notes and all other monetary obligations
      under this Indenture and the Guarantees;

            (16) Liens securing Indebtedness under the Credit Agreement to the
      extent such Liens are subject to the provisions of the Intercreditor
      Agreement and such Indebtedness is permitted under clause (2) or (16) of
      the definition of the term "Permitted Indebtedness" and all other
      Obligations thereunder;

            (17) Liens securing Indebtedness of Foreign Restricted Subsidiaries
      to the extent such Indebtedness is permitted under clause (15) of the
      definition of the term "Permitted Indebtedness;" provided, however, that
      no asset of the Company or any Domestic Restricted Subsidiary shall be
      subject to any such Lien; and

            (18) Liens securing Refinancing Indebtedness which is incurred to
      Refinance any Indebtedness which has been secured by a Lien permitted
      under this Indenture and which has been incurred in accordance with
      Section 4.08; provided, however, that such Liens: (i) are no less
      favorable to the Holders and are not more favorable to the lienholders
      with respect to such Liens than the Liens in respect of the Indebtedness
      being Refinanced; and (ii) do not extend to or cover any property or
      assets of the Company or any of its Restricted Subsidiaries not securing
      the Indebtedness so Refinanced.

      "Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.

      "Physical Notes" has the meaning set forth in Section 2.01.

      "Pledge Agreement" means the Pledge Agreement, dated as of the Issue Date,
made by the Company and the Guarantors that become parties thereto in favor of
the Collateral Agent, as amended or supplemented from time to time in accordance
with its terms.

      "Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.

      "Premises" has the meaning set forth in Section 4.18.

      "Private Placement Legend" means the legend set forth on the Initial Notes
in the form set forth in Exhibit A.

      "Public Equity Offering" means an underwritten public offering of Common
Stock of the Company or any holding company of the Company pursuant to a
registration statement filed with the SEC (other than on Form S-8).

      "Purchase Money Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries incurred for the purpose of financing all or any part of
the purchase price, or the cost of installation, construction or improvement, of
property or equipment; provided, that (1) the aggregate principal amount of such
Indebtedness does not exceed the lesser of the Fair Market Value of such

                                     - 23 -


property or such purchase price or cost, (2) such Indebtedness shall not be
secured by a Lien on any property or assets of the Company or any Restricted
Subsidiary of the Company other than such property or assets so acquired or
constructed and improvements thereto with such financing and (3) such
Indebtedness is incurred either concurrently or within 30 days of such
acquisition, installation, construction or improvement.

      "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

      "Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

      "RCF Excess Cash Flow Offer Conditions" means, as of any date of
determination, (i) both before and after giving effect to the payment to be made
pursuant to an Excess Cash Flow Offer, no Default or Event of Default shall have
occurred and be continuing under the Credit Agreement , and (ii) (A) if the
Company will not borrow under the Credit Agreement to make such payment, the
Company shall have had the ability to draw at least $5,000,000 under the Credit
Agreement for the thirty-day period ending on the date of such payment and
believes that it will continue to have such ability for the thirty-day period
commencing on such date, and (B) if the Company will borrow under the Credit
Agreement to make all or any portion of such payment, the Company shall have had
the ability to draw at least $10,000,000 under the Credit Agreement for the
thirty-day period ending on the date of such payment and believes that it will
continue to have such ability for the thirty-day period commencing on such date.
Each condition set forth in the immediately preceding sentence shall only be
applicable to the extent the Credit Agreement contains a covenant containing
such condition that prohibits the Company from consummating any Excess Cash Flow
Offer.

      "RCF Priority Collateral" means all existing and after-acquired inventory,
accounts receivable, lockboxes, deposit accounts into which payments therefor
are deposited and proceeds thereof of the Company and the Guarantors.

      "Record Date" means any of the Record Dates specified in the Notes,
whether or not a Legal Holiday.

      "Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for redemption pursuant to this Indenture and the
Notes.

      "Redemption Price" means, when used with respect to any Note to be
redeemed, the price fixed for redemption pursuant to this Indenture and the
Notes.

      "Reference Date" has the meaning set forth in Section 4.09.

      "Reference Treasury Dealer" means any primary U.S. government securities
dealer in the City of New York selected by the Company.

      "Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such Redemption Date.

      "Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or

                                     - 24 -



replacement for, such security or Indebtedness in whole or in part. "Refinanced"
and "Refinancing" shall have correlative meanings.

      "Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
Section 4.08 (other than pursuant to Permitted Indebtedness) or clause (1), (3)
or (10) of the definition of Permitted Indebtedness, in each case that does not:

            (1) have an aggregate principal amount (or, if such Indebtedness is
      issued with original issue discount, an aggregate offering price) greater
      than the sum of (x) the aggregate principal amount of the Indebtedness
      being Refinanced (or, if such Indebtedness being Refinanced is issued with
      original issue discount, the aggregate accreted value) as of the date of
      such proposed Refinancing, (y) the amount of accrued but unpaid interest
      thereon and any premium required to be paid thereon under the terms of the
      instrument governing such Indebtedness and (z) the amount of reasonable
      fees, expenses and defeasance costs relating to the Refinancing of such
      Indebtedness being Refinanced;

            (2) create Indebtedness with: (a) a Weighted Average Life to
      Maturity that is less than the Weighted Average Life to Maturity of the
      Indebtedness being Refinanced; or (b) a final maturity earlier than the
      final maturity of the Indebtedness being Refinanced;

            (3) if the obligor of the Indebtedness that is being Refinanced is
      the Company, change the obligor or add any additional obligors on such
      Refinancing Indebtedness;

            (4) affect the security, if any, for such Refinancing Indebtedness
      (except to the extent that less security is granted to holders of such
      Refinancing Indebtedness); or

            (5) afford the holders of such Refinancing Indebtedness covenants,
      defaults, rights or remedies more burdensome to the obligors than those
      contained in the Indebtedness being Refinanced.

      If such Indebtedness being Refinanced is subordinate or junior by its
terms to the Notes, then such Refinancing Indebtedness shall be subordinate by
its terms to the Notes at least to the same extent and in the same manner as the
Indebtedness being Refinanced.

      "Register" is defined in Section 2.03.

      "Registrar" has the meaning set forth in Section 2.03.

      "Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Issue Date, between the Company, the Guarantors and the Initial
Purchaser, as the same may be amended or modified from time to time in
accordance with the terms thereof.

      "Regulation S" means Regulation S under the Securities Act.

      "Regulation S Global Notes" has the meaning set forth in Section 2.01.

      "Related Businesses" means any business in which the Company or any
Restricted Subsidiary of the Company was engaged on the Issue Date and any other
businesses that in the good faith judgment of the Board of Directors of the
Company are similar or reasonably related to the businesses in which the Company
and its Restricted Subsidiaries are engaged on the Issue Date.

                                     - 25 -



      "Replacement Assets" has the meaning set forth in Section 4.10.

      "Released Interests" has the meaning set forth in Section 12.04.

      "Restricted Payment" has the meaning set forth in Section 4.09.

      "Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely on an Opinion of counsel with respect to
whether any Note constitutes a Restricted Security.

      "Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary. Unless the
context otherwise requires, references to Restricted Subsidiaries shall be
deemed to be references to Restricted Subsidiaries of the Company.

      "Rule 144A" means Rule 144A under the Securities Act.

      "SEC" has the meaning set forth in Section 4.23.

      "Secured Parties" has the meaning set forth in the Security Agreement.

      "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

      "Security Agreement" means the Security Agreement, dated as of the Issue
Date, made by the Company and the Guarantors in favor of the Collateral Agent,
as amended or supplemented from time to time in accordance with its terms.

      "Shared Collateral" means all Collateral other than the Notes Priority
Collateral, the RCF Priority Collateral and any Foreign Collateral.

      "Significant Subsidiary" with respect to any Person, means any Restricted
Subsidiary of such Person that satisfies the criteria for a "significant
subsidiary" set forth in Rule 1-02(w) of Regulation S-X under the Exchange Act.

      "Specified Issuance" means any issuance of Qualified Capital Stock
described in clause (10) of clause (b) of Section 4.09.

      "Specified Transaction" means any transaction consummated after the Issue
Date pursuant to which (1) the Company or any Restricted Subsidiary of the
Company acquires (a) all of the Capital Stock of any Person engaged in a Related
Business or (b) all or substantially all of the assets of any Person
constituting a business or business line that is a Related Business, or (2) any
Person engaged in a Related Business acquires all of the Capital Stock or all or
substantially all of the assets of the Company in accordance with Section 5.01
and pursuant thereto becomes the issuer of the Notes, in each such case, for
aggregate consideration in excess of $1.0 million.

      "Subsidiary" with respect to any Person, means:

            (1) any corporation of which the outstanding Capital Stock having at
      least a majority of the votes entitled to be cast in the election of
      directors under ordinary circumstances shall at the time be owned,
      directly or indirectly, by such Person; or

                                     - 26 -



            (2) any other Person of which at least a majority of the voting
      interest under ordinary circumstances is at the time, directly or
      indirectly, owned by such Person.

      Unless the context otherwise specifically requires, the term "Subsidiary"
shall be a reference to a Subsidiary of the Company.

      "Surviving Entity" has the meaning set forth in Section 5.01.

      "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. SS 77aaa-77bbbb) as
amended, as in effect on the date of this Indenture.

      "Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption period.

      "Transaction Date" has the meaning set forth in the definition of the term
"Consolidated Fixed Charge Coverage Ratio".

      "Trustee" has the meaning set forth in the preamble to this Indenture.

      "Trust Officer" means, when used with respect to the Trustee, any officer
within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

      "Unit" means a unit consisting of one Note in aggregate principal amount
of $1,000 and one Warrant.

      "Unrestricted Cash" means, at any time, cash and Cash Equivalents of the
Company and its Restricted Subsidiaries to the extent such cash and Cash
Equivalents is (i)(a) not subject to any Lien (other than a Permitted Lien
described in clause (15) or (16) of the definition thereof) or (b) on deposit
in, or credited to, any escrow or similar account and (ii) included in "cash and
cash equivalents" and not "restricted cash" on the consolidated balance sheet of
the Company or any such Restricted Subsidiary.

      "Unrestricted Subsidiary" of any Person means:

            (1) any Subsidiary of such Person that at the time of determination
      shall be or continue to be designated an Unrestricted Subsidiary by the
      Board of Directs of such Person in the manner provided below; and

            (2) any Subsidiary of an Unrestricted Subsidiary.

      The Board of Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated, provided that:

            (1) the Company certifies to the Trustee that such designation
      complies with Section 4.09; and

                                     - 27 -



            (2) each Subsidiary to be so designated and each of its Subsidiaries
      has not at the time of designation, and does not thereafter, create,
      incur, issue, assume, guarantee or otherwise become directly or indirectly
      liable with respect to any Indebtedness pursuant to which the lender has
      recourse to any of the assets of the Company or any of its Restricted
      Subsidiaries.

      The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if:

            (1) immediately after giving effect to such designation, the Company
      is able to incur at least $1.00 of additional Indebtedness (other than
      Permitted Indebtedness) in compliance with Section 4.08; and

            (2) immediately before and immediately after giving effect to such
      designation, no Default or Event of Default shall have occurred and be
      continuing.

      Any such designation by the Board of Directors shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions.

      "U.S. Government Obligations" means direct obligations of, and obligations
guaranteed by, the United States of America for the payment of which the full
faith and credit of the United States of America is pledged.

      "U.S. Legal Tender" means such coin or currency of the United States
which, as at the time of payment, shall be immediately available legal tender
for the payment of public and private debts.

      "U.S. Physical Notes" has the meaning set forth in Section 2.01.

      "Valuation Date" has the meaning set forth in Section 12.04.

      "Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock of such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
Board of Directors (or equivalent governing body) of such Person.

      "Warrant Agreement" means the Warrant Agreement dated as of the date
hereof among the Company and Wells Fargo Bank, National Association, as warrant
agent, as such agreement may be amended, modified and supplemented from time to
time in accordance with the terms thereof.

      "Warrants" has the meaning given to such term in the Warrant Agreement.

      "Warrant Shares" has the meaning given to such term in the Warrant
Agreement.

      "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (1) the then
outstanding aggregate principal amount of such Indebtedness into (2) the sum of
the total of the products obtained by multiplying:

            (a) the amount of each then remaining installment, sinking fund,
      serial maturity or other required payment of principal, including payment
      at final maturity, in respect thereof, by

            (b) the number of years (calculated to the nearest one-twelfth)
      which will elapse between such date and the making of such payment.

                                     - 28 -



      "Wholly-Owned Subsidiary" of any Person means any Restricted Subsidiary of
such Person of which all the outstanding Capital Stock (other than in the case
of a Foreign Restricted Subsidiary, directors' qualifying shares or an
immaterial amount of shares required to be owned by other Persons pursuant to
applicable law) are owned by such Person or any Wholly-Owned Subsidiary of such
Person.

      SECTION 1.02. Incorporation by Reference of Trust Indenture Act.

      Whenever this Indenture refers to a provision of the TIA, such provision
is incorporated by reference in, and made a part of, this Indenture. The
following TIA terms used in this Indenture have the following meanings:

      "indenture securities" means the Notes.

      "indenture security holder" means a Holder.

      "indenture to be qualified" means this Indenture.

      "indenture trustee" or "institutional trustee" means the Trustee.

      "obligor" on the indenture securities means the Company or any other
obligor on the Notes.

      All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.

      SECTION 1.03. Rules of Construction.

      Unless the context otherwise requires:

            (1) a term has the meaning assigned to it;

            (2) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with GAAP;

            (3) "or" is not exclusive;

            (4) words in the singular include the plural, and words in the
      plural include the singular;

            (5) "herein," "hereof" and other words of similar import refer to
      this Indenture as a whole and not to any particular Article, Section or
      other subdivision;

            (6) when the words "includes" or "including" are used herein, they
      shall be deemed to be followed by the words "without limitation";

            (7) all references to Sections or Articles refer to Sections or
      Articles of this Indenture unless otherwise indicated; and

            (8) unless otherwise defined or the context otherwise requires,
      terms for which meanings are provided in this Indenture shall have such
      meanings when used in each other Indenture Document.

                                     - 29 -



                                   ARTICLE TWO

                                    THE NOTES

      SECTION 2.01. Form and Dating.

      The Initial Notes and the Additional Notes and the Trustee's certificate
of authentication thereon shall be substantially in the form of Exhibit A
hereto. The Units shall be substantially in the form of Exhibit B hereto. The
Exchange Notes and the Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit C hereto. The Notes and Warrants will be
mandatorily separated upon the earlier to occur of (i) 180 days following the
consummation of the Issue Date; (ii) the date on which a registration statement
for a registered exchange offer with respect to the Notes is declared effective
under the Securities Act; (iii) the date on which a shelf registration statement
with respect to Warrant Shares is declared effective under the Securities Act;
and (iv) such date as the Initial Purchaser in its sole discretion shall
determine. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or DTC rule or usage. The Company and the Trustee shall
approve the form of the Notes and any notation, legend or endorsement on them.
Each Note shall be dated the date of its authentication.

      The terms and provisions contained in the forms of the Notes annexed
hereto as Exhibit A and Exhibit C, shall constitute, and are hereby expressly
made, a part of this Indenture and, to the extent applicable, the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.

      Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global notes in registered form,
substantially in the form set forth in Exhibit A (the "144A Global Notes"),
deposited with the Trustee, as custodian for DTC, duly executed by the Company
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in Exhibit D.

      Notes offered and sold in reliance on Rule 501(a)(1), (2), (3) or (7)
under the Securities Act shall be issued initially in the form of one or more
permanent global notes registered form, substantially in the form set forth in
Exhibit A (the "IAI Global Notes"), deposited with the Trustee, as custodian for
DTC, duly executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the legend set forth in Exhibit D.

      Notes offered and sold in offshore transactions in reliance on Regulation
S shall be issued initially (i) in the form of one or more global notes
registered form, substantially in the form set forth in Exhibit A ("Regulation S
Global Notes", and, together with the 144A Global Notes and IAI Global Notes,
the "Global Notes") deposited with the Trustee, as custodian for DTC, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and shall bear the legend set forth in Exhibit D or (ii) in the form of
certificated Notes in registered form set forth in Exhibit A (the "Offshore
Physical Notes").

      The aggregate principal amount of any Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC, as hereinafter provided.

      Notes offered and sold in reliance on any exemption from registration
under the Securities Act other than pursuant to Rule 144A or Rule 501(a)(1),
(2), (3) or (7) or Regulation S shall be issued, and Notes offered and sold in
reliance on Rule 144A and Rule 501(a)(1), (2), (3) or (7) may be issued, in the
form of certificated Notes and Notes in registered form in substantially the
form set forth in Exhibit A (the "U.S. Physical Notes"). The Offshore Physical
Notes and the U.S. Physical Notes are sometimes collectively herein referred to
as the "Physical Notes."

                                     - 30 -



      The definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officer executing such Notes, as evidenced
by their execution of such Notes.

      SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.

      An Officer (who shall have been duly authorized by all requisite corporate
actions) shall sign the Notes for the Company by manual or facsimile signature.

      If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office or position at the time the
Trustee authenticates the Note, the Note shall nevertheless be valid.

      A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.

      The Trustee shall authenticate (i) Initial Notes for original issue in the
aggregate principal amount not to exceed $90,000,000, (ii) Exchange Notes from
time to time for issue only in exchange for a like principal amount of Initial
Notes, (iii) subject to compliance with Section 4.08, one or more series of
Additional Notes in an unlimited amount and (iv) Initial Units of 90,000, in
each case, upon written orders of the Company in the form of an authentication
and delivery order, which authentication and delivery order shall, in the case
of any issuance of Additional Notes, certify that such issuance is in compliance
with Section 4.08. In addition, each authentication and delivery order shall
specify the amount of Notes and Units to be authenticated and the date on which
the Notes and Units are to be authenticated, whether the Notes are to be Initial
Notes, Exchange Notes or Additional Notes, and shall further specify the amount
of such Notes and Units to be issued as Global Notes, Offshore Physical Notes or
U.S. Physical Notes or Global Units, Offshore Physical Units or U.S. Physical
Units, respectively. All Notes issued under this Indenture shall vote and
consent together on all matters as one class and no series of Notes shall have
the right to vote or consent as a separate class on any matter.

      The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company.

      The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 in principal amount and any integral
multiple thereof.

      SECTION 2.03. Registrar and Paying Agent.

      The Company shall maintain an office or agency which shall initially be
the office of the Trustee in the Borough of Manhattan, The City of New York,
where (a) Notes may be presented or surrendered for registration of transfer or
for exchange (the "Registrar"), (b) Notes may be presented or surrendered for
payment (the "Paying Agent") and (c) notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served. The Registrar shall
keep a register of the Notes and of their transfer and exchange (the
"Register"). The Company, upon prior written notice to the Trustee, may have one
or more co-Registrars and one or more additional Paying Agents reasonably
acceptable to the

                                     - 31 -



Trustee. The term "Paying Agent" includes any additional Paying Agent. Neither
the Company nor any Affiliate of the Company may act as Paying Agent.

      The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee in writing, in advance, of
the name and address of any such Agent and otherwise be reasonably satisfactory
to the Trustee. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Trustee shall act as such.

      The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of demands and notices in connection with the Notes. The
Paying Agent or Registrar may resign upon thirty (30) days' written notice to
the Company.

      SECTION 2.04. Obligations of Paying Agent.

      The Company shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold separate and apart from, and
not commingle with any other properties, for the benefit of the Holders or the
Trustee, all assets held by the Paying Agent for the payment of principal of, or
interest on, the Notes (whether such assets have been distributed to it by the
Company or any other obligor on the Notes), and the Company and the Paying Agent
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Notes) in making any such payment. The Company at any time may
require a Paying Agent to distribute all assets held by it to the Trustee and
account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee and
to account for any assets distributed. Upon receipt by the Trustee of all assets
that shall have been delivered by the Company to the Paying Agent, the Paying
Agent shall have no further liability for such assets.

      SECTION 2.05. Holder Lists.

      The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish or cause the Registrar to
furnish to the Trustee before each Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably request of the names and addresses of the Holders, which
list may be conclusively relied upon by the Trustee.

      SECTION 2.06. Transfer and Exchange.

      Subject to the provisions of Sections 2.14 and 2.15, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal principal amount
of Notes of other authorized denominations, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested; provided, however, that
the Notes presented or surrendered for registration of transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing and
such other documents as the Registrar or co-Registrar may reasonably require. To
permit registrations of transfers and exchanges, the Company shall issue and the
Trustee shall authenticate Notes at the Registrar's or co-Registrar's request.
No service charge shall be made for any registration of transfer or exchange,
but the Company or the Trustee may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge

                                     - 32 -



payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchanges or transfers pursuant to Section
2.10, 3.06, 4.10 or 4.23, in which event the Company shall be responsible for
the payment of such taxes).

      The Registrar or co-Registrar shall not be required to register the
transfer or exchange of any Note (i) during a period beginning at the opening of
business fifteen (15) days before the mailing of a notice of redemption of Notes
and ending at the close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three, except the
unredeemed portion of any Note being redeemed in part.

      Any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Note may be effected
only through DTC, in accordance with this Indenture and the Applicable
Procedures.

      SECTION 2.07. Replacement Notes.

      If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims in writing that the Note has been lost, destroyed or wrongfully
taken, then, in the absence of written notice to the Company upon its request or
the Trustee that such Note has been acquired by a protected purchaser, the
Company shall issue and the Trustee shall authenticate a replacement Note of
like tenor and principal amount and bearing a number not contemporaneously
outstanding if the Trustee's requirements are met. Except with respect to
mutilated Notes, if required by the Trustee or the Company, such Holder must
provide an affidavit of lost certificate and an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Note is replaced. The Company may charge such Holder for its
reasonable out-of-pocket expenses in replacing a Note, including reasonable fees
and expenses of its counsel and of the Trustee and its counsel. In case any
mutilated, lost, destroyed or wrongfully taken Note has become or is about to
become due and payable, the Company in its discretion may pay such Note instead
of issuing a new Note in replacement thereof. Every replacement Note shall
constitute an additional obligation of the Company, entitled to the benefits of
this Indenture.

      SECTION 2.08. Outstanding Notes.

      Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those cancelled by it, those delivered to it
for cancellation and those described in this Section 2.08 as not outstanding.
Subject to the provisions of Section 2.09, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.

      If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.

      If on a Redemption Date or the Maturity Date the Paying Agent holds U.S.
Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Notes payable on that date and is not
prohibited from paying such money to the Holders thereof pursuant to the terms
of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.

                                     - 33 -



      SECTION 2.09. Treasury Notes; When Notes are Disregarded.

      (a) Notwithstanding anything to the contrary as set forth in Section
316(a) of the TIA, in determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver, consent or notice,
Notes owned by the Company or any Subsidiary of the Company or any other obligor
of the Notes shall be considered as though they are not outstanding (but the
Notes owned of record or beneficially by any other Affiliates shall be deemed
outstanding for all purposes under the Indenture), and (b) in determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, notice, direction, amendment, supplement, waiver or consent, only
Notes owned by the Company, its Subsidiaries or any other obligor on the Notes
which the Trustee knows are so owned shall be considered as though they are not
outstanding.

      SECTION 2.10. Temporary Notes.

      Until definitive Notes are ready for delivery, the Company may prepare and
execute and the Trustee shall authenticate temporary Notes upon receipt of a
written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Notes to be
authenticated and the date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company considers appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate upon receipt of a written order of the Company pursuant to Section
2.02 definitive Notes in exchange for temporary Notes. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.

      SECTION 2.11. Cancellation.

      The Company at any time may deliver Notes previously authenticated
hereunder which the Company has acquired in any lawful manner, to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Notes to replace Notes that it has paid or delivered to the Trustee for
cancellation. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11. The Trustee shall
dispose of all cancelled Notes in accordance with customary procedures or, at
the written request of the Company, shall return the same to the Company.

      SECTION 2.12. CUSIP Numbers.

      A "CUSIP" number shall be printed on the Notes, and the Trustee shall use
the CUSIP number in notices of redemption, purchase or exchange as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness or accuracy of the CUSIP number printed in the notice
or on the Notes and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in the CUSIP number.

                                     - 34 -


      SECTION 2.13. Deposit of Moneys.

      Prior to 11:00 a.m. New York City time on each Interest Payment Date and
the Maturity Date, the Company shall deposit with the Paying Agent U.S. Legal
Tender sufficient to make cash payments, if any, due on such Interest Payment
Date or the Maturity Date, as the case may be.

      SECTION 2.14. Book-Entry Provisions for Global Notes.

      (a) The Global Notes and Global Units initially shall (i) be registered in
the name of DTC or the nominee of DTC, (ii) be delivered to the Trustee as
custodian for DTC and (iii) bear legends as set forth in Exhibit D.

      Members of, or participants in, DTC ("Agent Members") shall have no rights
under this Indenture with respect to any Global Note held on their behalf by
DTC, or the Trustee as its custodian, or under any Global Note, and DTC may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by DTC or impair,
as between DTC and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.

      (b) Transfers of the Global Notes or Global Units shall be limited to
transfers in whole, but not in part, to DTC, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes and Global Units
may be transferred or exchanged in accordance with the Applicable Procedures of
DTC and the provisions of Section 2.15. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Notes if (i) DTC notifies the Company that it is unwilling or
unable to continue as Depository for the Global Notes and a successor Depository
is not appointed by the Company within ninety (90) days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a request from DTC to issue Physical Notes.

      (c) Any beneficial interest in one of the Global Notes or Global Units
that is transferred to a person who takes delivery in the form of an interest in
another Global Note or Global Unit shall, upon transfer, cease to be an interest
in such Global Note or Global Unit and become a beneficial interest in such
other Global Note or Global Unit and, accordingly, shall thereafter be subject
to all transfer restrictions, if any, and other procedures applicable to a
beneficial interest in such other Global Notes or Global Unit for as long as it
remains such an interest.

      (d) In connection with any transfer or exchange of a portion of the
beneficial interest in the Global Note to beneficial owners pursuant to clause
(b) of this Section 2.14, the Registrar shall (if one or more Physical Notes are
to be issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more
Physical Notes of like tenor and aggregate principal amount.

      (e) In connection with the transfer of an entire Global Note to beneficial
owners pursuant to clause (b) of this Section 2.14, the Global Notes shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by DTC in exchange for its beneficial interest in the Global
Notes, an equal aggregate principal amount of Physical Notes of authorized
denominations.

                                     - 35 -


      (f) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in the Global Note pursuant to clause (b) or (c) shall,
except as otherwise provided by clause (a)(i)(x) and (c) of Section 2.15, bear
the legend regarding transfer restrictions applicable to the Physical Notes set
forth in Exhibits A.

      (g) The Holder of a Global Note may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.

      SECTION 2.15. Special Transfer Provisions.

      (a) Transfers to Non-QIB Institutional Accredited Investors and Non-U.S.
Persons. The following provisions shall apply with respect to the registration
of any proposed transfer of a Note constituting a Restricted Security to any
Institutional Accredited Investor which is not a QIB or to any Non-U.S. Person:

            (i) the Registrar shall register the transfer of any Note
      constituting a Restricted Security, whether or not such Note bears the
      Private Placement Legend, if (x) the requested transfer is after June 29,
      2006 or (y) (1) in the case of a transfer to an Institutional Accredited
      Investor which is not a QIB (excluding Non-U.S. Persons), the proposed
      transferee has delivered to the Registrar a certificate substantially in
      the form of Exhibit E hereto or (2) in the case of a transfer to a
      Non-U.S. Person, the proposed transferor has delivered to the Registrar a
      certificate substantially in the form of Exhibit F hereto; and

            (ii) if the proposed transferor is an Agent Member holding a
      beneficial interest in the Global Note, upon receipt by the Registrar of
      (x) the certificate, if any, required by clause (i) above and (y)
      instructions given in accordance with the Applicable Procedures and the
      Registrar's procedures,

whereupon (1) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of the Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (2) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Notes of like tenor and principal
amount.

      (b) Transfers to QIBs. The following provisions shall apply with respect
to the registration of any proposed transfer of a Note constituting a Restricted
Security to a QIB (excluding transfers to Non-U.S. Persons):

            (i) the Registrar shall register the transfer if such transfer is
      being made by a proposed transferor who has checked the box provided for
      on the form of Note stating, or has otherwise advised the Company and the
      Registrar in writing, that the sale has been made in compliance with the
      provisions of Rule 144A to a transferee who has signed the certification
      provided for on the form of Note stating, or has otherwise advised the
      Company and the Registrar in writing, that it is purchasing the Note for
      its own account or an account with respect to which it exercises sole
      investment discretion and that it and any such account is a QIB within the
      meaning of Rule 144A, and is aware that the sale to it is being made in
      reliance on Rule 144A and acknowledges that it has received such
      information regarding the Company as it has requested pursuant to Rule
      144A or has determined not to request such information and that it is
      aware that the transferor is relying upon its foregoing representations in
      order to claim the exemption from registration provided by Rule 144A; and

                                     - 36 -


            (ii) if the proposed transferee is an Agent Member, and the Notes to
      be transferred consist of Physical Notes which after transfer are to be
      evidenced by an interest in the Global Note, upon receipt by the Registrar
      of instructions given in accordance with the Applicable Procedures and the
      Registrar's procedures, the Registrar shall reflect on its books and
      records the date and an increase in the principal amount of the Global
      Note in an amount equal to the principal amount of the Physical Notes to
      be transferred, and the Trustee shall cancel the Physical Notes so
      transferred.

      (c) Private Placement Legend. Upon the transfer, exchange or replacement
of Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend, the Registrar
shall deliver only Notes that bear the Private Placement Legend unless (i) the
circumstance contemplated by clause (a)(i)(x) of this Section 2.15 exists or
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act. The Registrar
shall not register a transfer of any Note unless such transfer complies with the
restrictions on transfer of such Note set forth in this Indenture. In connection
with any transfer of Notes, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
the Registrar shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.

      (d) General. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it shall transfer such Note only as provided in this Indenture.

      The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.

      The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Agent Members or
beneficial owners of interests in any Global Note) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

      Neither the Trustee nor any Agent shall have any responsibility for any
actions taken or not taken by DTC.

      SECTION 2.16. Transfers of Global Notes and Physical Notes.

      A transfer of a Global Note or a Physical Note (including the right to
receive principal and interest payable thereon) may be made only by the
Registrar's entering the transfer in the Register. Prior to such entry, the
Company shall treat the person in whose name such Note is registered as the
owner of the Note for all purposes.

                                     - 37 -


                                  ARTICLE THREE

                                   REDEMPTION

      SECTION 3.01. Optional Redemption.

      The Company may, at its option, redeem the Notes, in whole or in part, at
specified times and under the specified conditions, as set forth in Paragraph 6
of the Notes. If the Company elects to redeem Notes pursuant to Paragraph 6 of
the Notes, it shall furnish to the Trustee and Paying Agent an Officers'
Certificate setting forth the Redemption Date and the principal amount of the
Notes to be redeemed and the clause of this Indenture or the Notes pursuant to
which the redemption shall occur.

      Each Officers' Certificate provided for in this Section 3.01 shall be
accompanied by an Opinion of Counsel stating that such redemption shall comply
with the conditions contained herein and in the Notes.

      SECTION 3.02. Selection of Notes to be Redeemed

      If fewer than all of the Notes are to be redeemed pursuant to Paragraph 6
of the Notes, the Trustee shall select the Notes to be redeemed:

            (1) in compliance with the requirements of the principal national
securities exchange, if any, on which such Notes are listed; or

            (2) if such Notes are not then listed on a national securities
exchange, on a pro rata basis, by lot or by such method as the Trustee may
reasonably determine is fair and appropriate; provided that no partial
redemption will reduce the principal amount of a Note not redeemed to less than
$1,000; and provided, further, that if a partial redemption is made with the
proceeds of an Equity Offering then the selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis or
on as nearly a pro rata basis as is practicable (subject to the procedures of
DTC), unless such method is prohibited.

      The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount at maturity thereof, to be
redeemed. Notes in denominations of $1,000 or less in principal amount at
maturity may be redeemed only in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount at maturity or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.

      SECTION 3.03. Notice of Redemption.

      Notice of redemption will be mailed by first-class mail at least 30 but
not more than 60 days before a Redemption Date, postage prepaid, to each Holder
whose Notes are to be redeemed at its registered address, with a copy to the
Trustee and any Paying Agent. At the Company's written request, the Trustee
shall give the notice of redemption in the Company's name and at the Company's
expense. Failure to give notice of redemption, or any defect therein to any
Holder of any Note selected for redemption shall not impair or affect the
validity of the redemption of any other Note.

      Each notice of redemption shall identify the Notes to be redeemed and
shall state:

                                     - 38 -


            (1) the Redemption Date;

            (2) the Redemption Price and the amount of accrued interest, if any,
      to be paid;

            (3) the name and address of the Paying Agent;

            (4) the CUSIP number;

            (5) the subparagraph of the Notes pursuant to which such redemption
      is being made;

            (6) the place where such Notes called for redemption must be
      surrendered to the Paying Agent to collect the Redemption Price plus
      accrued interest, if any;

            (7) that, unless the Company fails to deposit with the Paying Agent
      funds in satisfaction of the applicable redemption price, interest on
      Notes called for redemption ceases to accrue on and after the Redemption
      Date in accordance with Section 3.05, and the only remaining right of the
      Holders of such Notes is to receive payment of the Redemption Price plus
      accrued interest, if any, upon surrender to the Paying Agent of the Notes
      redeemed;

            (8) if any Note is being redeemed in part, the portion of the
      principal amount of such Note to be redeemed and that, after the
      Redemption Date, and upon surrender of such Note, a new Note or Notes in
      the aggregate principal amount equal to the unredeemed portion thereof
      shall be issued; and

            (9) if fewer than all the Notes are to be redeemed, the
      identification of the particular Notes (or portion thereof) to be
      redeemed, as well as the aggregate principal amount of Notes to be
      redeemed and the aggregate principal amount of Notes to be outstanding
      after such partial redemption.

      If any of the Notes to be redeemed is in the form of a Global Note, then
the Company shall modify such notice to the extent necessary to accord with the
procedures of DTC applicable to redemption.

      SECTION 3.04. Effect of Notice of Redemption.

      Once notice of redemption is mailed in accordance with Section 3.03, Notes
or portions thereof called for redemption shall become irrevocably due and
payable on the Redemption Date and at the Redemption Price plus accrued
interest, if any. Upon surrender to the Trustee or Paying Agent, such Notes or
portions thereof called for redemption shall be paid at the Redemption Price
plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant Record
Dates referred to in the Notes.

      SECTION 3.05. Deposit of Redemption Price.

      Not later than 10:00 a.m. local time in the place of payment on the
Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal
Tender sufficient to pay the Redemption Price plus accrued interest, if any, of
all Notes or portions thereof to be redeemed on that date.

                                     - 39 -


      The Paying Agent shall promptly return to the Company any U.S. Legal
Tender so deposited which is not required for that purpose, except with respect
to monies owed as obligations to the Trustee pursuant to Article Seven.

      If the Company complies with first paragraph this Section 3.05, then,
unless the Company defaults in the payment of such Redemption Price plus accrued
interest, if any, on the Notes to be redeemed shall cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment.

      SECTION 3.06. Notes Redeemed in Part.

      Upon surrender of a Note that is to be redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder at the expense of the
Company a new Note or Notes equal in principal amount to the unredeemed portion
of the Note surrendered.

      SECTION 3.07. Mandatory Redemption; Offers to Purchase; Open Market
Purchases

      The Company is not required to make any mandatory redemption or sinking
fund payments with respect to the Notes. However, under certain circumstances,
the Company may be required to offer to purchase the Notes pursuant to Section
4.10, Section 4.24 and Section 4.25. The Company may at any time and from time
to time purchase Notes in the open market or otherwise.

                                  ARTICLE FOUR

                                    COVENANTS

      SECTION 4.01. Payment of Notes.

      The Company shall pay the principal of, or premium, if any, or interest,
and Additional Interest, if any, on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. An installment of principal of, or
premium, if any, or interest, and Additional Interest, if any, on the Notes
shall be considered paid on the date it is due if the Trustee or Paying Agent
(other than the Company or an Affiliate of the Company) holds on that date U.S.
Legal Tender designated for and sufficient to pay the installment in full.

      Notwithstanding anything to the contrary contained in this Indenture, the
Company may, to the extent it is required to do so by law, deduct or withhold
income or other similar taxes imposed by the United States from principal or
interest payments hereunder.

      SECTION 4.02. Maintenance of Office or Agency.

      The Company shall maintain the office or agency required under Section
2.03. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.

                                     - 40 -


      SECTION 4.03. Corporate Existence.

      Except as otherwise permitted by Article Four, Article Five and Article
Ten, the Company shall do or cause to be done, at its own cost and expense, all
things necessary to preserve and keep in full force and effect its corporate
existence and the limited liability company, partnership or corporate existence
of each of the Restricted Subsidiaries in accordance with the respective
organizational documents of each such Restricted Subsidiary and the material
rights (charter and statutory) and franchises of the Company and each such
Restricted Subsidiary; provided, however, that the Company shall not be required
to preserve, with respect to itself, any material right or franchise and, with
respect to any of the Restricted Subsidiaries, any such existence, material
right or franchise, if the Board of Directors of the Company, shall determine in
good faith that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Restricted Subsidiaries, taken as a
whole.

      SECTION 4.04. Payment of Taxes and Other Claims.

      The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of the Restricted
Subsidiaries or its properties or any of the Restricted Subsidiaries' properties
and (ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon its properties or any of its Restricted
Subsidiaries' properties; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being or
shall be contested in good faith by appropriate proceedings properly instituted
and diligently conducted for which adequate reserves, to the extent required
under GAAP, have been taken.

      SECTION 4.05. Maintenance of Properties and Insurance.

      (a) The Company shall, and shall cause each of its Domestic Restricted
Subsidiaries to, maintain in good working order and condition in all material
respects (subject to ordinary wear and tear) its properties that are used or
useful in the conduct of its business and that are material to the conduct of
such business, and make all necessary repairs, renewals, replacements,
additions, betterments and improvements thereto and actively conduct and carry
on its business; provided, however, that nothing in this Section 4.05 shall
prevent the Company or any of the Domestic Restricted Subsidiaries from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the good faith judgment of the Board of Directors or other
governing body of the Company or the Domestic Restricted Subsidiary concerned,
as the case may be, desirable in the conduct of its businesses and is not
disadvantageous in any material respect to the Holders.

      (b) The Company shall maintain insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, is adequate and appropriate for the conduct of the
business of the Company and the Domestic Restricted Subsidiaries in a prudent
manner, with reputable insurers or with the government of the United States or
an agency or instrumentality thereof, in such amounts, with such deductibles,
and by such methods as shall be customary, in the good faith judgment of the
Company, for companies similarly situated in the industry in which the Company
and the Domestic Restricted Subsidiaries are engaged.

      SECTION 4.06. Compliance Certificate; Notice of Default.

      (a) The Company shall deliver to the Trustee, within ninety (90) days
after the end of the Company's fiscal year, an Officers' Certificate stating
that a review of the activities of the Company and

                                     - 41 -


its Restricted Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing Officers (one of whom is the principal executive
officer, principal financial officer or principal accounting officer) with a
view to determining whether they have kept, observed, performed and fulfilled
their obligations under this Indenture and the other Indenture Documents and
further stating, as to each such Officer signing such certificate, that to the
best of such Officer's actual knowledge the Company and its Restricted
Subsidiaries during such preceding fiscal year have kept, observed, performed
and fulfilled each and every condition and covenant under this Indenture and the
other Indenture Documents in all material respects and at the date of such
certificate there is no Default or Event of Default that has occurred and is
continuing or, if such signers do know of such Default or Event of Default, the
certificate shall describe the Default or Event of Default and its status with
particularity.

      (b) The annual financial statements delivered pursuant to Section 4.23
shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit of such financial statements nothing has come to their
attention that would lead them to believe that the Company has violated any
provisions of Article Four or Article Five insofar as they relate to accounting
matters or, if they believe that any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.

      (c) The Company shall, so long as any Notes are outstanding, upon any
Officer of the Company becoming aware of any Default or Event of Default,
deliver to the Trustee an Officers' Certificate specifying such Default or Event
of Default within five (5) Business Days of such Officer becoming aware of such
occurrence.

      SECTION 4.07. Waiver of Stay, Extension or Usury Laws.

      The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, premium, if any, or interest or Additional
Interest, if any, on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenant that it shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee or Collateral
Agent, but shall suffer and permit the execution of every such power as though
no such law had been enacted.

      SECTION 4.08. Limitation on Incurrence of Additional Indebtedness.

      The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, "incur") any Indebtedness
(other than Permitted Indebtedness); provided, however, that the Company or any
of its Restricted Subsidiaries that is or, upon such incurrence, becomes a
Guarantor may incur Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such Indebtedness and after
giving effect to the incurrence thereof (1) no Default or Event of Default shall
be outstanding and (2) the Consolidated Fixed Charge Coverage Ratio of the
Company will be greater than 2.0 to 1.0.

                                     - 42 -


      SECTION 4.09. Limitation on Restricted Payments.

      (a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly:

            (1) declare or pay any dividend or make any distribution (other than
      dividends or distributions payable in Qualified Capital Stock of the
      Company and dividends and distributions payable to the Company or another
      Restricted Subsidiary of the Company) on or in respect of shares of
      Capital Stock of the Company or its Restricted Subsidiaries to holders of
      such Capital Stock;

            (2) purchase, redeem or otherwise acquire or retire for value any
      Capital Stock of the Company or its Restricted Subsidiaries (other than
      any such Capital Stock held by the Company or any Restricted Subsidiary);

            (3) make any principal payment on, purchase, defease, redeem,
      prepay, decrease or otherwise acquire or retire for value, prior to any
      scheduled final maturity, scheduled repayment or scheduled sinking fund
      payment, any Indebtedness of the Company or any Guarantor, if any, that is
      subordinate or junior in right of payment to the Notes or a Guarantee; or

            (4) make any Investment (other than Permitted Investments);

(each of the foregoing actions set forth in clauses (1), (2), (3) and (4) being
referred to as a "Restricted Payment"); if at the time of such Restricted
Payment or immediately after giving effect thereto:

            (i) a Default or an Event of Default shall have occurred and be
      continuing;

            (ii) the Company is not able to incur at least $1.00 of additional
      Indebtedness (other than Permitted Indebtedness) in compliance with
      Section 4.08; or

            (iii) the aggregate amount of Restricted Payments (including such
      proposed Restricted Payment) made subsequent to the Issue Date (the amount
      expended for such purposes, if other than in cash, being the Fair Market
      Value of such property at the time of the making thereof) shall exceed the
      sum of:

                  (A) 50% of the cumulative Consolidated Net Income (or if
            cumulative Consolidated Net Income is a loss, minus 100% of such
            loss) of the Company earned during the period beginning on the first
            day of the first completed fiscal quarter of the Company after the
            Issue Date and ending on the last day of the Company's most recent
            fiscal quarter ending prior to the date the Restricted Payment
            occurs for which financial statements are available (the "Reference
            Date") (treating such period as a single accounting period); plus

                  (B) 100% of the aggregate net cash proceeds received by the
            Company from any Person (other than a Subsidiary of the Company)
            from the issuance and sale subsequent to the Issue Date and on or
            prior to the Reference Date of Qualified Capital Stock of the
            Company or options or warrants to acquire the same (excluding any
            net proceeds from an Equity Offering to the extent used to redeem
            Notes pursuant to the provisions described under Paragraph 6 of the
            Notes); plus

                                     - 43 -


                  (C) without duplication of any amounts included in clause
            (iii)(B) above, 100% of the aggregate net cash proceeds of any
            equity contribution received by the Company from a holder of the
            Company's Capital Stock subsequent to the Issue Date and on or prior
            to the Reference Date (excluding any net proceeds from an Equity
            Offering to the extent used to redeem Notes pursuant to the
            provisions described under Paragraph 6 of the Notes; plus

                  (D) 100% of the aggregate net cash proceeds received from the
            issuance (other than to a Subsidiary of the Company) of Indebtedness
            or shares of Disqualified Capital Stock of the Company that have
            been converted into or exchanged for Qualified Capital Stock of the
            Company subsequent to the Issue Date and on or prior to the
            Reference Date; plus

                  (E) the sum of (1) without duplication of any amounts included
            in Consolidated Net Income in clause (iii)(A) above, the aggregate
            amount paid in cash or Cash Equivalents to the Company or a
            Restricted Subsidiary of the Company on or with respect to
            Investments (other than Permitted Investments) made subsequent to
            the Issue Date whether through interest payments, principal
            payments, dividends or other distributions or payments, (2) the net
            cash proceeds received by the Company or any of its Restricted
            Subsidiaries from the disposition of all or any portion of such
            Investments (other than to the Company or a Subsidiary of the
            Company) and (3) upon redesignation of an Unrestricted Subsidiary as
            a Restricted Subsidiary, the product of (x) the fair market value of
            such Subsidiary and (y) the percentage of the Capital Stock of such
            Unrestricted Subsidiary that is held by the Company or any of its
            Restricted Subsidiaries; provided, however, that the sum of clauses
            (1), (2) and (3) above shall not exceed the aggregate amount of all
            such Investments made subsequent to the Issue Date.

            In the case of clauses (iii)(B) and (C) above, any net cash proceeds
from issuances and sales of Qualified Capital Stock of the Company financed
directly or indirectly using funds borrowed from the Company or any Subsidiary
of the Company, shall be excluded until and to the extent such borrowing is
repaid.

      (b) Notwithstanding the foregoing, the provisions set forth in clause (a)
of this Section 4.09 do not prohibit:

            (1) the payment of any dividend or other distribution or redemption
      within 60 days after the date of declaration of such dividend or call for
      redemption, as the case may be, if such dividend or redemption would have
      been permitted on the date of declaration or call for redemption, as the
      case may be;

            (2) if no Default or Event of Default shall have occurred and be
      continuing or would exist after giving effect thereto, the acquisition of
      any shares of Qualified Capital Stock of the Company, either (i) solely in
      exchange for other shares of Qualified Capital Stock of the Company or
      (ii) through the application of net proceeds of a sale for cash (other
      than to a Subsidiary of the Company) of shares of Qualified Capital Stock
      of the Company within 60 days after such sale;

            (3) the acquisition of any Indebtedness of the Company or the
      Guarantors that is subordinate or junior in right of payment to the Notes
      and Guarantees either (i) solely in exchange for shares of Qualified
      Capital Stock of the Company, or (ii) if no Default or Event of Default
      shall have occurred and be continuing or would exist after giving effect
      thereto, through the

                                     - 44 -


      application of net proceeds of a sale for cash (other than to a Subsidiary
      of the Company) within 60 days after such sale of (a) shares of Qualified
      Capital Stock of the Company or (b) Refinancing Indebtedness;

            (4) an Investment either (i) solely in exchange for shares of
      Qualified Capital Stock of the Company or (ii) through the application of
      the net proceeds of a sale for cash (other than to a Subsidiary of the
      Company) of shares of Qualified Capital Stock of the Company within 60
      days after such sale;

            (5) if no Default or Event of Default has occurred and is continuing
      or would exist after giving effect thereto, the repurchase or other
      acquisition of shares of Capital Stock of the Company from employees,
      former employees, directors or former directors of the Company (or
      permitted transferees of such employees, former employees, directors or
      former directors), pursuant to the terms of the agreements (including
      employment agreements) or plans (or amendments thereto) approved by the
      Board of Directors of the Company under which such individuals purchase or
      sell or are granted the option to purchase or sell, shares of such Capital
      Stock; provided, however, that the aggregate amount of such repurchases
      and other acquisitions in any calendar year shall not exceed the sum of
      (x) $1,000,000 and (y) the aggregate amount of Restricted Payments
      permitted (but not made) pursuant to this clause (5) in the immediately
      preceding calendar year;

            (6) repurchases of Capital Stock deemed to occur upon exercise of
      stock options, warrants or other similar rights if such Capital Stock
      represents a portion of the exercise price of such options, warrants or
      other similar rights;

            (7) payments or distributions to dissenting stockholders of Capital
      Stock of the Company pursuant to applicable law, pursuant to or in
      connection with a consolidation, merger or transfer of assets that
      complies with the provisions of this Indenture applicable to mergers,
      consolidations and transfers of all or substantially all of the property
      and assets of the Company or any of its Restricted Subsidiaries;

            (8) the application of the proceeds from the issuance of the Notes
      on the Issue Date as described under the "Use of Proceeds" section of the
      Company's Offering Circular, dated June 17, 2004;

            (9) if no Default or Event of Default shall have occurred and be
      continuing or would exist after giving effect thereto, payments on,
      purchases, defeasances, redemptions and prepayments of, and decreases and
      other acquisitions and retirement for value of, any of the 8% Senior Notes
      so long as the aggregate amount of consideration for any such 8% Senior
      Notes purchased, defeased, redeemed, prepaid or otherwise acquired or
      retired does not exceed 90% of the outstanding principal amount thereof,
      plus accrued and unpaid interest thereon;

            (10) if no Default or Event of Default shall have occurred and be
      continuing or would exist after giving effect thereto, purchases,
      redemptions or other acquisitions or retirements for value of any Capital
      Stock of the Company concurrently with or after any merger of the Company
      with any other Person that is not a Subsidiary of the Company in
      accordance with the terms of Section 5.01; provided, however, that (i) if
      the consideration paid or payable for such Capital Stock consists solely
      of Merger Proceeds (as defined below), or the aggregate consideration paid
      or payable for such Capital Stock so purchased, redeemed or otherwise
      acquired or retired for value shall not exceed the sum of (x) the
      aggregate Net Cash Proceeds received by such other Person from the
      issuance by such other Person of its Qualified Capital Stock and (y) the

                                     - 45 -


      aggregate amount of capital contributions received by such other Person in
      cash (together with such Net Cash Proceeds, "Merger Proceeds"), in each
      case, concurrently with such merger, and (ii) if the consideration paid or
      payable for such Capital Stock does not consist solely of Merger Proceeds,
      immediately after giving effect thereto (including any other transactions
      related thereto), the Consolidated Leverage Ratio of the Company must be
      0.5 times lower on a pro forma basis than the Consolidated Leverage Ratio
      of the Company immediately before the occurrence of such merger; provided
      further, however, that if a Change of Control shall have resulted in
      connection with such purchase, redemption or other acquisition or
      retirement for value or merger, no such purchase, redemption or other
      acquisition or retirement for value may be made until the Change of
      Control Offer related thereto shall have been consummated by the Company
      in accordance with the terms of Section 4.25; and

            (11) if no Default or Event of Default shall have occurred and be
      continuing or would exist after giving effect thereto, other Restricted
      Payments not to exceed $5.0 million outstanding in the aggregate since the
      Issue Date.

      In determining the aggregate amount of Restricted Payments made subsequent
to the Issue Date in accordance with clause (iii) of the first paragraph of this
Section 4.09(a) amounts expended pursuant to clauses (1), (2)(ii), 3(ii)(a),
(4)(ii), (5), (7) and (11) of clause (b) of this Section 4.09 shall be included
in such calculation.

      (c) Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that each such
Restricted Payment complies with this Indenture and setting forth in reasonable
detail the basis upon which the required calculations were computed, which
calculations may be based upon the Company's latest available internal quarterly
financial statements.

      SECTION 4.10. Limitation on Asset Sales.

      The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

            (1) the Company or the applicable Restricted Subsidiary, as the case
      may be, receives consideration at the time of such Asset Sale at least
      equal to the Fair Market Value of the assets sold or otherwise disposed;

            (2) at least 70% of the consideration received by the Company or the
      Restricted Subsidiary, as the case may be, from such Asset Sale is in the
      form of cash or Cash Equivalents and is received at the time of such
      disposition; provided that the amount of any liabilities (as shown on the
      most recent applicable balance sheet) of the Company or such Restricted
      Subsidiary (other than liabilities that are by their terms subordinated to
      the Notes) that are assumed by the transferee of any such assets shall be
      deemed to be cash for purposes of this provision to the extent that the
      documents governing such liabilities provide that there is no further
      recourse to the Company or any of its Subsidiaries with respect to such
      liabilities; and

            (3) the Company shall apply, or cause such Restricted Subsidiary to
      apply, the Net Cash Proceeds relating to such Asset Sale within 360 days
      of receipt thereof either:

                  (a) to the extent the assets and property sold pursuant to
            such Asset Sale constitute RCF Priority Collateral or Shared
            Collateral, to repay Indebtedness under the Credit Agreement;

                                     - 46 -


                  (b) (i) to make an investment in properties and assets that
            replace the properties and/or assets that were the subject of such
            Asset Sale or in long-term properties and/or assets that will be
            used in a Related Business ("Replacement Assets") or (ii) to make
            expenditures for maintenance, repair or improvement of existing
            long-term properties or assets; or

                  (c) a combination of prepayment and investment permitted by
            the foregoing clauses (3)(a) and (3)(b).

      On the 361st day after an Asset Sale or such earlier date, if any, as the
Board of Directors of the Company or of such Restricted Subsidiary determines
not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in
clauses (3)(a), (3)(b) or (3)(c) of the preceding paragraph (each, a "Net
Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (3)(a), (3)(b) and (3)(c) of the preceding paragraph (each
a "Net Proceeds Offer Amount") shall be applied by the Company or such
Restricted Subsidiary to make an offer to purchase (the "Net Proceeds Offer") on
a date (the "Net Proceeds Offer Payment Date") not less than 30 nor more than 60
days following the applicable Net Proceeds Offer Trigger Date, from all Holders
and all holders of other Applicable Indebtedness (other than Indebtedness under
the Credit Agreement) containing provisions similar to those set forth in this
Section 4.10 on a pro rata basis, the maximum principal amount of Notes and such
other Applicable Indebtedness that may be purchased with the Net Proceeds Offer
Amount at a price equal to 100% of the principal amount thereof (or if such
Indebtedness was issued with original issue discount, 100% of the accreted
value), plus accrued and unpaid interest and Additional Interest thereon, if
any, to the date of purchase; provided, however, that (x) if at any time any
non-cash consideration received by the Company or any Restricted Subsidiary of
the Company, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder on the date of
such conversion or disposition, as the case may be, and the Net Cash Proceeds
thereof shall be applied in accordance with this Section 4.10 and (y)
notwithstanding anything to the contrary in this Section 4.10, if within 360
days of any Asset Sale, the Company or any Domestic Restricted Subsidiary enters
into one or more definitive agreements for the acquisition and/or construction
of a Replacement Asset consisting of a manufacturing or distribution facility
having a Fair Market Value of at least $1.0 million, the Net Cash Proceeds of
such Asset Sale shall not constitute a Net Proceeds Offer Amount to the extent
such Net Cash Proceeds are applied in accordance with the terms of such
definitive agreement for (aa) the acquisition of such manufacturing or
distribution facility or the real property upon which such manufacturing or
distribution facility is to be situated and/or (yy) the construction of such
manufacturing or distribution facility.

      The Company may defer any Net Proceeds Offer until there is an aggregate
unutilized Net Proceeds Offer Amount equal to or in excess of $5.0 million
resulting from one or more Asset Sales in which case the accumulation of such
amount shall constitute a Net Proceeds Offer Trigger Date (at which time, the
entire unutilized Net Proceeds Offer Amount, and not just the amount in excess
of $5.0 million, shall be applied as required pursuant to the immediately
preceding paragraph). Upon the completion of each Net Proceeds Offer, the Net
Proceeds Offer Amount will be reset at zero.

      In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, which
transaction does not constitute a Change of Control, the successor entity shall
be deemed to have sold the properties and assets of the Company and its
Restricted Subsidiaries not so transferred for purposes of this Section 4.10,
and shall comply with the provisions of this Section 4.10 with respect to such
deemed sale as if it constituted an Asset Sale. In addition, the Fair Market
Value of

                                     - 47 -


such properties and assets of the Company or its Restricted Subsidiaries deemed
to be sold shall be deemed to be Net Cash Proceeds for purposes of this Section
4.10.

      Each notice of a Net Proceeds Offer shall be mailed first class, postage
prepaid, to the record Holders as shown on the register of Holders within 20
days following the Net Proceeds Offer Trigger Date, with a copy to the Trustee,
and shall comply with the procedures set forth in this Indenture. Upon receiving
notice of the Net Proceeds Offer, Holders may elect to tender their Notes in
whole or in part in integral multiples of $1,000 in exchange for cash. To the
extent Holders properly tender Notes in an amount exceeding the Net Proceeds
Offer Amount, Notes of tendering Holders will be purchased on a pro rata basis
(based on amounts tendered). A Net Proceeds Offer shall remain open for a period
of 20 Business Days or such longer period as may be required by law. If only a
portion of a Note is purchased pursuant to a Net Proceeds Offer, a new Note in a
principal amount equal to the portion thereof not purchased will be issued in
the name of the Holder thereof upon cancellation of the original Note (or
appropriate adjustments to the amount and beneficial interests in a Global Note
will be made). Notes (or portions thereof) purchased pursuant to a Net Proceeds
Offer will be cancelled and cannot be reissued.

      The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this Section
4.10, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations this
Section 4.10 by virtue of such compliance.

      SECTION 4.11. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries

      The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to:

            (1) pay dividends or make any other distributions on or in respect
      of its Capital Stock;

            (2) make loans or advances or to pay any Indebtedness or other
      obligation owed to the Company or any other Restricted Subsidiary of the
      Company; or

            (3) transfer any of its property or assets to the Company or any
      other Restricted Subsidiary of the Company;

except for such encumbrances or restrictions existing under or by reason of:

                  (a) applicable law;

                  (b) this Indenture, the Collateral Agreements and the
            Intercreditor Agreement;

                  (c) customary non-assignment and non-transfer provisions of
            any lease of any Restricted Subsidiary of the Company to the extent
            such provisions restrict the transfer of the lease or license or the
            property leased or licensed thereunder;

                                     - 48 -


                  (d) any instrument governing Acquired Indebtedness, which
            encumbrance or restriction is not applicable to any Person, or the
            properties or assets of any Person, other than the Person or the
            properties or assets of the Person so acquired;

                  (e) the Credit Agreement;

                  (f) agreements existing on the Issue Date to the extent and in
            the manner such agreements are in effect on the Issue Date;

                  (g) restrictions on the transfer of assets subject to any Lien
            permitted under this Indenture;

                  (h) restrictions imposed by any agreement to sell assets or
            Capital Stock permitted under this Indenture to any Person pending
            the closing of such sale;

                  (i) provisions in joint venture agreements and other similar
            agreements (in each case relating solely to the respective joint
            venture or similar entity or the equity interests therein) entered
            into in the ordinary course of business;

                  (j) restrictions contained in the terms of the Purchase Money
            Indebtedness or Capitalized Lease Obligations not incurred in
            violation of this Indenture; provided, that such restrictions relate
            only to the assets financed with such Indebtedness;

                  (k) restrictions in other Indebtedness incurred in compliance
            with Section 4.08, provided that such restrictions, taken as a
            whole, are, in the good faith judgment of the Company's Board of
            Directors, no more materially restrictive with respect to such
            encumbrances and restrictions than those contained in the existing
            agreements referenced in clauses (b), (e) and (f) above;

                  (l) restrictions on cash or other deposits imposed by
            customers under contracts or other arrangements entered into or
            agreed to in the ordinary course of business; or

                  (m) an agreement governing Indebtedness incurred to Refinance
            the Indebtedness issued, assumed or incurred pursuant to an
            agreement referred to in clause (b), (d), (e), (f), (j) or (k)
            above; provided, however, that the provisions relating to such
            encumbrance or restriction contained in any such Indebtedness are no
            less favorable to or more restrictive on the Company in any material
            respect as determined by the Board of Directors of the Company in
            their reasonable and good faith judgment than the provisions
            relating to such encumbrance or restriction contained in agreements
            referred to in such clause (b), (d), (e), (f), (j) or (k).

      SECTION 4.12. Limitation on Issuances and Sales of Capital Stock of
Subsidiaries.

      The Company will not permit or cause any of its Restricted Subsidiaries to
issue or sell any Capital Stock (other than to the Company or to a Wholly-Owned
Subsidiary of the Company) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary of the Company) to own or hold any Capital Stock of any
Restricted Subsidiary of the Company or any Lien or security interest therein
(other than as required by applicable law); provided, however, that this
provision shall not prohibit (1) any issuance or sale if, immediately after
giving effect thereto, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect to such

                                     - 49 -


issuance or sale would have been permitted to be made under Section 4.09 if made
on the date of such issuance or sale or (2) the sale of all of the Capital Stock
of a Restricted Subsidiary in compliance with the provisions of Section 4.10.

      SECTION 4.13. Limitation on Liens.

      The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens (other than Permitted Liens) of any kind against or
upon any property or assets of the Company or any of its Restricted Subsidiaries
whether owned on the Issue Date or acquired after the Issue Date, or any
proceeds therefrom, or assign or otherwise convey any right to receive income or
profits therefrom.

      SECTION 4.14. Limitations on Transactions with Affiliates.

      (a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any of its Affiliates (each an "Affiliate Transaction"), other
than

            (x) Affiliate Transactions permitted under clause (b) below, and

            (y) Affiliate Transactions on terms that are no less favorable than
      those that might reasonably have been obtained in a comparable transaction
      at such time on an arm's-length basis from a Person that is not an
      Affiliate of the Company or such Restricted Subsidiary.

      Except with respect to clause (b) below, with respect to all Affiliate
Transactions and except with respect to Affiliate Transactions involving
aggregate payments or other property with a Fair Market Value of less than $0.5
million, the Company shall deliver an Officers' Certificate to the Trustee
certifying that such transactions are in compliance with clause (a)(y) of the
preceding paragraph. All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan) involving
aggregate payments or other property with a Fair Market Value in excess of $5.0
million shall be approved by a majority of the disinterested members of the
Board of Directors of the Company, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate Fair Market Value of more than $10.0 million, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of the financial terms of
such transaction or series of related transactions to the Company or the
relevant Restricted Subsidiary, as the case may be, from an Independent
Financial Advisor and file the same with the Trustee.

      (b) The restrictions set forth in clause (a) of this Section 4.14 shall
not apply to:

            (1) reasonable and customary (x) fees and compensation (including
      directors' fees) paid to, (y) indemnity provided on behalf of, and (z)
      employee benefit arrangements provided for the benefit of, officers,
      directors, employees or consultants of the Company or any Restricted
      Subsidiary of the Company, in each case, entered into in the ordinary
      course of business and as determined in good faith by the Company's Board
      of Directors;

                                     - 50 -


            (2) transactions exclusively between or among the Company and any of
      its Restricted Subsidiaries or exclusively between or among such
      Restricted Subsidiaries; provided such transactions are not otherwise
      prohibited by the Indenture;

            (3) any agreement as in effect as of the Issue Date and any
      amendment thereto or any replacement agreement thereto so long as any such
      amendment or replacement agreement is not more disadvantageous to the
      Holders in any material respect than the original agreement as in effect
      on the Issue Date;

            (4) Restricted Payments permitted by this Indenture; and

            (5) any merger or other transaction with an Affiliate solely for the
      purpose of reincorporating the Company in another jurisdiction.

      SECTION 4.15. Additional Subsidiary Guarantees.

      If (x) the Company or any of its Restricted Subsidiaries transfers or
causes to be transferred, in one transaction or a series of related
transactions, any property to any Person that is not a Guarantor but becomes a
Domestic Restricted Subsidiary (other than an Immaterial Subsidiary) as a result
of such transaction, (y) if the Company or any of its Restricted Subsidiaries
shall organize, acquire or otherwise invest in another Person that is or becomes
a Domestic Restricted Subsidiary (other than an Immaterial Subsidiary) that is
not a Guarantor or (z) any Domestic Restricted Subsidiary that was an Immaterial
Subsidiary is no longer an Immaterial Subsidiary, then the Company shall cause
such Domestic Restricted Subsidiary that is not a Guarantor to:

            (1) execute and deliver to the Trustee a supplemental indenture in
      form reasonably satisfactory to the Trustee pursuant to which such
      Domestic Restricted Subsidiary shall unconditionally guarantee on a senior
      secured basis all of the Company's obligations under the Notes and this
      Indenture on the terms set forth in this Indenture;

            (2) (a) execute and deliver to the Collateral Agent such amendments
      to the Collateral Agreements as the Collateral Agent deems necessary or
      advisable in order to grant to the Collateral Agent, for the benefit of
      the Holders and the Lenders, a perfected security interest in the Capital
      Stock of such new Domestic Restricted Subsidiary and any debt securities
      of such new Domestic Restricted Subsidiary, subject to the Permitted
      Liens, which are owned by the Company or such new Domestic Restricted
      Subsidiary and required to be pledged pursuant to the Pledge Agreement,
      (b) deliver to the Collateral Agent any certificates representing such
      Capital Stock and debt securities, together with (i) in the case of such
      Capital Stock, undated stock powers or instruments of transfer, as
      applicable, endorsed in blank, and (ii) in the case of such debt
      securities, endorsed in blank, in each case executed and delivered by an
      Officer of the Company or such Subsidiary, as the case may be;

            (3) take such actions necessary or as the Collateral Agent
      reasonably determines to be advisable to grant to the Collateral Agent for
      the benefit of the Holders a perfected security interest in the assets of
      such new Domestic Restricted Subsidiary, subject to Permitted Liens,
      including the filing of Uniform Commercial Code financing statements in
      such jurisdictions as may be required by any Collateral Agreement or by
      law or as may be reasonably requested by the Collateral Agent;

                                     - 51 -


            (4) take such further action and execute and deliver such other
      documents specified in this Indenture or otherwise reasonably requested by
      the Trustee or the Collateral Agent to effectuate the foregoing; and

            (5) deliver to the Trustee an Opinion of Counsel that such
      supplemental indenture and any other documents required to be delivered
      have been duly authorized, executed and delivered by such Domestic
      Restricted Subsidiary and constitutes legal, valid, binding and
      enforceable obligations of such Domestic Restricted Subsidiary and such
      other opinions regarding the perfection of such Liens in the assets of
      such Domestic Restricted Subsidiary as provided for in this Indenture.

      Thereafter, such Domestic Restricted Subsidiary shall be a Guarantor for
all purposes of this Indenture.

      SECTION 4.16. Impairment of Security Interest.

      Subject to the Intercreditor Agreement with respect to the Collateral
(other than the Foreign Collateral), neither the Company nor any of its
Restricted Subsidiaries will take or omit to take any action which would
adversely affect or impair in any material respect the Liens in favor of the
Collateral Agent with respect to the Collateral. Neither the Company nor any of
its Restricted Subsidiaries shall grant to any Person (other than the Collateral
Agent), or permit any Person (other than the Collateral Agent), to retain any
interest whatsoever in the Collateral other than Permitted Liens. Neither the
Company nor any of its Restricted Subsidiaries will enter into any agreement
that requires the proceeds received from any sale of Collateral to be applied to
repay, redeem, defease or otherwise acquire or retire any Indebtedness of any
Person, other than as permitted by this Indenture, the Notes, the Intercreditor
Agreement with respect to the Collateral (other than the Foreign Collateral) and
the Collateral Agreements. The Company shall, and shall cause each such
Restricted Subsidiary to, at their sole cost and expense, execute and deliver
all such agreements and instruments as the Collateral Agent or the Trustee shall
reasonably request to more fully or accurately describe the property intended to
be Collateral or the obligations intended to be secured by the Collateral
Agreements. The Company shall, and shall cause each such Restricted Subsidiary
to, at their sole cost and expense, file any such notice filings or other
agreements or instruments as may be reasonably necessary or desirable under
applicable law to perfect the Liens created by the Collateral Agreements at such
times and at such places as the Collateral Agent or the Trustee may reasonably
request. Notwithstanding anything to the contrary in this covenant, the Company
shall not be required to use more than its reasonable best efforts to cause a
Lien to be granted on any assets acquired after the Issue Date by any of its
Foreign Restricted Subsidiaries to secure the Notes and the Guarantees and in
any event, the Company shall have no such obligation and no such Lien shall be
granted if the Company determines, in the good faith exercise of its sole
discretion, that such Lien could in any way result (in the year such Lien is
obtained or would be deemed to be obtained, or in any other year) in an adverse
tax consequence of any kind to the Company or any successor entity.

      SECTION 4.17. Minimum EBITDA.

      The Company will not permit, as of the last day of any of its fiscal
quarters set forth in the table below, its Consolidated EBITDA for the four
consecutive fiscal quarters ending on such day to be less than the amount set
forth below opposite such fiscal quarter:

                                     - 52 -




                                                     MINIMUM
     FISCAL QUARTER ENDING                           EBITDA
     ---------------------                         -----------
                                                
September 30, 2004 through                         $16,000,000
   September 30, 2006

December 31, 2006 through                          $18,000,000
   September 30, 2008

December 31, 2008 and                              $20,000,000
     thereafter


unless the sum of (i) Unrestricted Cash of the Company and its Restricted
Subsidiaries as of such day and (ii) the aggregate amount of advances that the
Company is actually able to borrow under the Credit Agreement on such day (after
giving effect to any borrowings thereunder on such day) is at least $15,000,000.

      SECTION 4.18. Real Estate Mortgages and Filings.

      With respect to any fee interest in any real property (individually and
collectively, the "Premises") owned by the Company or any of its Domestic
Restricted Subsidiaries on the Issue Date or acquired by the Company or any such
Domestic Restricted Subsidiary after the Issue Date, with (i) a purchase price
or (ii) as of the Issue Date, with a Fair Market Value, of greater than
$1,000,000:

            (1) the Company shall deliver to the Collateral Agent, as mortgagee,
      fully-executed counterparts of Mortgages, each dated as of the Issue Date
      or the date of acquisition of such property, as the case may be, duly
      executed by the Company or the applicable Domestic Restricted Subsidiary,
      together with evidence of the completion (or satisfactory arrangements for
      the completion), of all recordings and filings of such Mortgage as may be
      necessary or, in the reasonable opinion of the Collateral Agent,
      desirable, to create a valid, perfected Lien, subject to Permitted Liens,
      against the properties purported to be covered thereby;

            (2) the Collateral Agent shall have received mortgagee's title
      insurance policies in favor of the Collateral Agent, as mortgagee for the
      ratable benefit of the Collateral Agent, the Trustee and the Holders in an
      amount equal to 100% of the Fair Market Value of the Premises purported to
      be covered by such Mortgage and in form and substance and issued by
      insurers reasonably acceptable to the Collateral Agent, insuring that
      title to such property is marketable and that the interests created by the
      Mortgage constitute valid Liens thereon free and clear of all Liens,
      defects and encumbrances other than Permitted Liens, and such policies
      shall also include, to the extent available, a revolving credit
      endorsement and such other endorsements as the Collateral Agent shall
      reasonably request and shall have the standard exceptions thereto deleted
      (other than the survey exception to the extent required in clause (3)
      below) and shall be accompanied by evidence of the payment in full of all
      premiums thereon; and

            (3) the Company shall deliver to the Collateral Agent, with respect
      to each of the covered Premises, the most recent survey of such Premises
      and, solely to the extent that the title company insuring the Lien of the
      respective Mortgages shall deem such survey acceptable to remove the
      standard survey exception from the applicable title policy and/or to issue
      a survey endorsement with respect thereto, the Company shall have such
      survey exception deleted and such survey endorsement delivered to the
      Collateral Agent.

                                     - 53 -


      SECTION 4.19. Leasehold Mortgages and Filings.

      To the extent delivered to the Administrative Agent for the benefit of the
Lenders under the Credit Agreement, the Company and each of its Domestic
Restricted Subsidiaries (that is or is obligated under the Indenture to become a
Guarantor) shall concurrently deliver to the Collateral Agent, as mortgagee,
Mortgages with respect to the Company's leasehold interests in the premises (the
"Leased Premises") occupied by the Company or such Domestic Restricted
Subsidiary pursuant to leases, together with landlord waivers, title insurance
policies, survey, subordination agreements and other related documents to the
extent delivered to the Administrative Agent and evidence of the completion (or
satisfactory arrangements for the completion), of all recordings and filings of
such Mortgages as may be necessary or, in the reasonable opinion of the
Collateral Agent desirable, to create a valid, perfected Lien, subject to
Permitted Liens, against the properties purported to be covered thereby.

      SECTION 4.20. Landlord, Bailee and Consignee Waivers.

      Each of the Company and each of its Domestic Restricted Subsidiaries (that
is or is obligated under the Indenture to become a Guarantor) that is a lessee
of, or becomes a lessee of, real property on or in which it will maintain,
store, hold or locate all or any of its assets that constitute Priority
Collateral or Shared Collateral and have an aggregate Fair Market Value of at
least $250,000 and with respect to which it has not obtained a Mortgage with
respect to its leasehold interests in such real property pursuant to Section
4.19, is, and will be, required to use commercially reasonable efforts (which
shall not require the expenditure of cash under any relevant lease that was in
effect on the Issue Date or if such Domestic Restricted Subsidiary was not a
Domestic Restricted Subsidiary of the Company on the Issue Date, the date such
Domestic Restricted Subsidiary became a Domestic Restricted Subsidiary of the
Company) to deliver to the Collateral Agent a landlord waiver, substantially in
the form of the exhibit form thereof to be attached to this Indenture, executed
by the lessor of such real property; provided that in the case where such lease
is a lease in existence on the Issue Date or the lessee thereof that is a
Domestic Restricted Subsidiary of the Company (that is or is obligated under the
Indenture to become a Guarantor) was not a Domestic Restricted Subsidiary of the
Company on the Issue Date, the Company or such Domestic Restricted Subsidiary
that is the lessee thereunder shall have 90 days from the Issue Date to satisfy
such requirement and shall be relieved of such obligation with respect to any
landlord waiver to the extent such lessor has refused to deliver such a waiver
following such Person's use of such commercially reasonable efforts. Each of the
Company and each of its Domestic Restricted Subsidiaries (that is or is
obligated under the Indenture to become a Guarantor) that provides any of its
assets that constitute Priority Collateral or Shared Collateral and have an
aggregate Fair Market Value of at least $250,000 to a bailee or consignee agrees
to be bound by the terms of the immediately preceding sentence, mutatis
mutandis; provided, that (i) the terms "landlord", "lessee" and "lease" shall be
replaced, respectively, with the terms "bailee" or "consignee", as applicable,
"bailor" or "consignor", as applicable, and the "applicable agreement" and (ii)
the condition that the lessee maintain, store, hold or locate all or any of its
assets that constitute Priority Collateral or Shared Collateral and have an
aggregate fair market value of at least $250,000 shall instead be replaced with
the condition that the Fair Market Value of the assets subject to the applicable
bailment or consignment have a fair market value of at least $250,000. In
addition, each of the Company and each such Domestic Restricted Subsidiary
shall, to the extent it delivers a landlord, bailee or consignee waiver to the
Administrative Agent for the benefit of the Lenders under the Credit Agreement
and has not already delivered such a waiver under this Section 4.20,
concurrently with such delivery, deliver a comparable waiver from the applicable
landlord, bailee or consignee to the Collateral Agent.

                                     - 54 -


      SECTION 4.21. Pledge of Future Foreign Assets.

      The Company shall use its reasonable best efforts to cause a Lien to be
granted pursuant to one or more Foreign Collateral Agreements (each of which
shall be prepared by the Company and be in form and substance reasonably
satisfactory to the Collateral Agent) on all tangible and intangible assets
acquired after the Issue Date by its Foreign Restricted Subsidiaries to secure
the Notes and the Guarantees (a "Foreign Asset Lien") so long as such assets do
not include more than 65% of the Voting Stock of any Foreign Subsidiary.
Notwithstanding anything to the contrary, the Company shall have no obligation
whatsoever to obtain such a Foreign Asset Lien, and no such Foreign Asset Lien
shall be granted if the Company determines, in the good faith exercise of its
sole discretion, that such Foreign Asset Lien could in any way result (in the
year such Lien is obtained or would be deemed to be obtained, or in any other
year) in an adverse tax consequence of any kind to the Company or any successor
entity.

      SECTION 4.22. Conduct of Business; Corporate Separateness.

      The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage in any businesses which are not Related Businesses.

      SECTION 4.23. Reports to Holders.

      Whether or not required by the rules and regulations of the Securities and
Exchange Commission (the "SEC"), so long as any Notes are outstanding, the
Company will furnish to the Trustee and to the Holders:

            (1) all quarterly and annual financial information that would be
      required to be contained in a filing with the SEC on Forms 10-Q and 10-K
      if the Company were required to file such Forms, including a "Management's
      Discussion and Analysis of Financial Condition and Results of Operations"
      that describes the financial condition and results of operations of the
      Company and its consolidated Subsidiaries (showing in reasonable detail,
      either on the face of the financial statements or in the footnotes thereto
      and in Management's Discussion and Analysis of Financial Condition and
      Results of Operations, the financial condition and results of operations
      of the Company and its Restricted Subsidiaries separate from the financial
      condition and results of operations of the Unrestricted Subsidiaries of
      the Company, if any) and, with respect to the annual information only, a
      report thereon by the Company's certified independent accountants; and

            (2) all current reports that would be required to be filed with the
      SEC on Form 8-K if the Company were required to file such reports

in each case, within the time periods specified in the SEC's rules and
regulations; provided that following the consummation of the Exchange Offer,
such forms and reports may be so furnished no later than five Business Days
following the end of such time periods.

      In addition, following the consummation of the Exchange Offer contemplated
by the Registration Rights Agreement, whether or not required by the rules and
regulations of the SEC, the Company will file a copy of all such information and
reports with the SEC for public availability within the time periods specified
in the SEC's rules and regulations (unless the SEC will not accept such a
filing). In addition, the Company has agreed that, prior to the consummation of
the Exchange Offer, for so long as any Notes remain outstanding, it will furnish
to the Holders upon their request, the information required to be delivered
pursuant to Rule 144(A)(d)(4) under the Securities Act.

                                     - 55 -


      Notwithstanding anything to the contrary in this covenant, solely with
respect to any information delivery requirements relating to the quarter ended
June 30, 2004 that would otherwise have been required to be delivered by August
16, 2004, the Company may, in lieu of complying with the requirements set forth
in clause (1) of the first paragraph of this covenant on or prior to such date,
(i) furnish to the Trustee and to the Holders, on or prior to August 16, 2004,
an unaudited consolidated balance sheet as of June 30, 2004 and an unaudited
consolidated statement of operations, an unaudited consolidated statement of
cash flows and an unaudited consolidated statement of stockholders'
deficit/equity, in each case, for the three months ended June 30, 2004 and for
the six months ended June 30, 2004, (ii) organize, on or prior to August 23,
2004 but not earlier than three business days after compliance with the
immediately preceding clause (i), a telephonic conference call during normal
business hours in which all holders of Notes, or the related units and/or
warrants, may participate and with respect to which the Initial Purchaser has
been provided reasonable advance notice, and (iii) comply, on or prior to August
31, 2004, with the requirements of clause (1) of the first paragraph of this
covenant (without regard to the time periods applicable to such requirements
specified in the SEC's rules and regulations).

      SECTION 4.24. Excess Cash Flow Offer.

      Within 90 days after the end of each fiscal year of the Company (beginning
90 days after the fiscal year of the Company ending in 2006) for which Excess
Cash Flow was greater than or equal to $2.0 million, the Company must offer (the
"Excess Cash Flow Offer") to all Holders to purchase the maximum principal
amount of Notes that may be purchased with 50% of Excess Cash Flow for such
fiscal year at a purchase price in cash equal to 101% of the principal amount of
the Notes to be purchased, plus accrued and unpaid interest and Additional
Interest, if any, to the date of such purchase (such amount, the "Excess Cash
Flow Offer Amount", and such date, the "Excess Cash Flow Offer Purchase Date");
provided, that the Excess Cash Flow Offer Amount shall be reduced by the
aggregate principal amount of Notes purchased in open market purchases during
the period ending one day prior to such Excess Cash Flow Offer Purchase Date and
commencing on the later of (x) the day that is 365 days immediately preceding
such Excess Cash Flow Offer Purchase Date and (y) the Excess Cash Flow Offer
Purchase Date, if any, immediately preceding such Excess Cash Flow Offer
Purchase Date. Each Excess Cash Flow Offer will remain open for a period of 20
business days and no longer, unless a longer period is required by law (the
"Excess Cash Flow Offer Period"). Promptly after the termination of the Excess
Cash Flow Offer Period, the Company will purchase and mail or deliver payment
(up to the Excess Cash Flow Offer Amount) for the Notes or portions thereof
tendered, pro rata (based on amounts tendered) or by such other method as may be
required by law, or, if less than the Excess Cash Flow Offer Amount has been
tendered, all Notes tendered pursuant to the Excess Cash Flow Offer. Upon
receiving notice of the Excess Cash Flow Offer, Holders may elect to tender
their Notes, in whole or in part, in integral multiples of $1,000 in exchange
for cash. If any Excess Cash Flow remains after consummation of an Excess Cash
Flow Offer, the Company may use such remaining Excess Cash Flow for any purpose
not otherwise prohibited by this Indenture.

      Within the time period specified in the immediately preceding paragraph,
the Company must send, by first class mail, postage prepaid, an offer to each
Holder, with a copy to the Trustee, which offer will govern the terms of the
Excess Cash Flow Offer. Such offer will state, among other things:

      -     the purchase price;

      -     the Excess Cash Flow Offer Period;

      -     that the Company is making an Excess Cash Flow Offer;

                                     - 56 -


      -     that any Note not tendered will continue to accrue interest;

      -     that unless the Company defaults on the payment of the purchase
            price, any Notes accepted for payment pursuant to the Excess Cash
            Flow Offer will cease to accrue interest after the Excess Cash Flow
            Offer Period; and

      -     certain procedures that a Holder of Notes must follow to accept the
            Excess Cash Flow Offer or to withdraw such acceptance.

      Holders electing to have a Note purchased pursuant to an Excess Cash Flow
Offer will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to the paying
agent at the address specified in the offer as a condition to receiving payment.

      Promptly after the termination of the Excess Cash Flow Offer Period, the
Company will, to the extent lawful:

      -     accept for payment all Notes or portions thereof properly tendered
            pursuant to the Excess Cash Flow Offer;

      -     deposit with the paying agent an amount equal to the purchase price
            in respect of all Notes or portions thereof so tendered (including
            101% of principal, and the accrued but unpaid interest and
            Additional Interest, if any, to the date of such purchase); and

      -     deliver or cause to be delivered to the Trustee the Notes so
            accepted together with an Officers' Certificate stating the
            aggregate principal amount at maturity of Notes or portions thereof
            being purchased by the Company.

      Notwithstanding the foregoing, the repurchase of Notes by the Company
pursuant to this Section 4.24 shall not be required if the RCF Excess Cash Flow
Offer Conditions would not be satisfied immediately after giving effect to the
consummation of such repurchase.

      The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Excess Cash Flow Offer. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.24, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached the Company's obligations
under this Section 4.24 by virtue thereof.

      SECTION 4.25. Repurchase upon Change of Control.

      (a) Upon the occurrence of a Change of Control, each Holder will have the
right to require that the Company purchase all or a portion (in integral
multiples of $1,000) of such Holder's Notes using immediately available funds
pursuant to the offer described below (the "Change of Control Offer"), at a
purchase price in cash equal to 101% of the principal amount thereof on the date
of purchase, plus accrued and unpaid interest and Additional Interest, if any,
to the date of purchase. Neither the Board of Directors of the Company nor the
Trustee may waive this Section 4.25 to offer to purchase the Notes upon the
occurrence of a Change of Control.

      (b) Within thirty (30) days following the date upon which the Change of
Control occurred, the Company shall send, by first class mail, postage prepaid,
a notice to each record Holder as shown on

                                     - 57 -


the register of Holders, with a copy to the Trustee, which notice shall govern
the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:

            (1) that the Change of Control Offer is being made pursuant to this
      Section 4.25 and that, to the extent lawful, all Notes tendered and not
      withdrawn shall be accepted for payment;

            (2) the purchase price (including the amount of accrued interest, if
      any) and the purchase date (which shall be no earlier than thirty (30)
      days nor later than sixty (60) days from the date such notice is mailed,
      other than as may be required by law) (the "Change of Control Payment
      Date");

            (3) that any Note not tendered shall continue to accrue interest;

            (4) that, unless the Company defaults in making payment therefor,
      any Note accepted for payment pursuant to the Change of Control Offer
      shall cease to accrue interest after the Change of Control Payment Date;

            (5) that Holders electing to have a Note purchased pursuant to a
      Change of Control Offer shall be required to surrender the Note, with the
      form entitled "Option of Holder to Elect Purchase" on the reverse of the
      Note completed, to the Paying Agent at the address specified in the notice
      prior to the close of business on the third Business Day prior to the
      Change of Control Payment Date;

            (6) that Holders shall be entitled to withdraw their election if the
      Paying Agent receives, not later than five (5) Business Days prior to the
      Change of Control Payment Date, a telegram, telex, facsimile transmission
      or letter setting forth the name of the Holder, the principal amount of
      the Notes the Holder delivered for purchase and a statement that such
      Holder is withdrawing its election to have such Notes purchased;

            (7) that Holders whose Notes are purchased only in part shall be
      issued new Notes in a principal amount equal to the unpurchased portion of
      the Notes surrendered; provided that each Note purchased and each new Note
      issued shall be in an original principal amount of $1,000 or integral
      multiples thereof; and

            (8) the circumstances and relevant facts regarding such Change of
      Control.

      If any of the Notes subject to the Change of Control Offer is in the form
of a Global Note, then the Company shall modify such notice to the extent
necessary to comply with the procedures of the Depositary applicable to
repurchases.

      On or before the Change of Control Payment Date, the Company shall, to the
extent lawful (i) accept for payment Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent U.S.
Legal Tender sufficient to pay the purchase price plus accrued interest, if any,
of all Notes or portions thereof so tendered and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail to the
Holders of Notes so tendered the purchase price for such Notes and the Company
shall promptly issue and the Trustee shall promptly (but in any case not later
than five days after the Change of Control Payment Date) authenticate and mail
(or cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered;

                                     - 58 -


provided that each such new Note shall be in a principal amount of $1,000 or an
integral multiple thereof. Any Notes not so accepted shall be promptly mailed by
the Company to the Holders thereof. For purposes of this Section 4.25, the
Trustee shall act as the Paying Agent.

      Any amounts remaining after the purchase of Notes pursuant to a Change of
Control Offer shall be returned by the Trustee to the Company.

      Neither the Board of Directors of the Company nor the Trustee may waive
the Company's obligation to offer to purchase the Notes pursuant to this Section
4.25.

      The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements of this
Section 4.25 and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.

      The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent the
provisions of any securities laws or regulations conflict with the provisions
under this Section 4.25, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached their obligations
under this Section 4.25 by virtue thereof.

      Holders electing to have a Note purchased pursuant to a Change of Control
Offer will be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, to the paying
agent at the address specified in the notice prior to the close of business on
the third business day prior to the Change of Control Payment Date. If only a
portion of a Note is purchased pursuant to a Change of Control Offer, a new Note
in a principal amount equal to the portion thereof not purchased will be issued
in the name of the Holder thereof upon cancellation of the original Note (or
appropriate adjustments to the amount and beneficial interests in a Global Note
will be made). Notes (or portions thereof) purchased pursuant to a Change of
Control Offer will be cancelled and cannot be reissued.

      Notwithstanding the foregoing, if the Company believes that a Change of
Control will occur in connection with a merger described under clause (10) of
clause (b) of Section 4.09, then the Company may, in lieu of the foregoing,
consummate a Change of Control Offer pursuant to the foregoing terms; provided,
however, that the Change of Control Payment Date shall instead be on the date on
which such Change of Control is scheduled to occur and written notice of the
Change of Control Offer is made no sooner than 60 days prior to and no later
than 30 days prior to the date that such Change of Control is scheduled to
occur; provided further, however, that (i) the Company may, on at least ten
Business Days' written notice (which extension notice may only be given once),
extend the Change of Control Payment Date to a date not in excess of 30 days
following the original date on which such Change of Control is scheduled to
occur; (ii) the Company may, on at least five Business Days' written notice,
rescind such Change of Control Offer and (iii) any Holder that properly tendered
all or any portion of its Note(s) in connection with such Change of Control
Offer may withdraw all or any portion of such Note(s) no later than one Business
Day preceding the Change of Control Payment Date then in effect.

      The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.25 and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.

                                     - 59 -


                                  ARTICLE FIVE

                              SUCCESSOR CORPORATION

      SECTION 5.01. Merger, Consolidation and Sale of Assets.

      The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary of the Company to sell, assign, transfer, lease, convey or
otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Company's Restricted
Subsidiaries) whether as an entirety or substantially as an entirety to any
Person unless:

            (1) either:

                  (a) the Company shall be the surviving or continuing
            corporation; or

                  (b) the Person (if other than the Company) formed by such
            consolidation or into which the Company is merged or the Person
            which acquires by sale, assignment, transfer, lease, conveyance or
            other disposition the properties and assets of the Company and of
            the Company's Restricted Subsidiaries substantially as an entirety
            (the "Surviving Entity"):

                        (x) shall be a corporation organized and validly
                  existing under the laws of the United States or any State
                  thereof or the District of Columbia; and

                        (y) shall expressly assume, (i) by supplemental
                  indenture (in form and substance reasonably satisfactory to
                  the Trustee), executed and delivered to the Trustee, the due
                  and punctual payment of the principal of, and premium, if any,
                  interest and Additional Interest, if any, on all of the Notes
                  and the performance of every covenant of the Notes, this
                  Indenture and the Registration Rights Agreement on the part of
                  the Company to be performed or observed thereunder and (ii) by
                  amendment, supplement or other instrument (in form and
                  substance reasonably satisfactory to the Trustee and the
                  Collateral Agent), executed and delivered to the Trustee, all
                  obligations of the Company under the Collateral Agreements and
                  in connection therewith shall cause such instruments to be
                  filed and recorded in such jurisdictions and take such other
                  actions as may be required by applicable law to perfect or
                  continue the perfection of the Lien created under the
                  Collateral Agreements on the Collateral owned by or
                  transferred to the surviving entity;

            (2) immediately after giving effect to such transaction and the
      assumption contemplated by clause (1)(b)(y) above (including after giving
      effect to any Indebtedness and Acquired Indebtedness incurred or
      anticipated to be incurred in connection with or in respect of such
      transaction and any other transaction related thereto (including a merger
      described under clause (10) of clause (b) of Section 4.09 and any other
      transaction related thereto)), the Company or such Surviving Entity, as
      the case may be, (a) shall have a Consolidated Net Worth at least equal to
      the lesser of (i) the Consolidated Net Worth of the Company immediately
      prior to such transaction or (ii) $25.0 million and (b) shall be able to
      incur at least $1.00 of additional Indebtedness (other than Permitted
      Indebtedness) in compliance with Section 4.08;

                                     - 60 -


            (3) immediately after giving effect to such transaction and the
      assumption contemplated by clause (1)(b)(y) above (including, without
      limitation, giving effect to any Indebtedness and Acquired Indebtedness
      incurred or anticipated to be incurred and any Lien granted in connection
      with or in respect of the transaction), no Default or Event of Default
      shall have occurred and be continuing; and

            (4) the Company or the Surviving Entity shall have delivered to the
      Trustee an Officers' Certificate and an Opinion of Counsel, each stating
      that such consolidation, merger, sale, assignment, transfer, lease,
      conveyance or other disposition and, if a supplemental indenture is
      required in connection with such transaction, such supplemental indenture
      comply with the applicable provisions of this Indenture and that all
      conditions precedent in this Indenture relating to such transaction have
      been satisfied.

      For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.

      SECTION 5.02. Successor Entity Substituted.

      Upon any consolidation, combination or merger of the Company or any
transfer of all or substantially all of the assets of the Company in accordance
with the foregoing, in which the Company is not the surviving or the continuing
corporation, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture and the Notes with the same effect as if such
surviving entity had been named as such. Upon such substitution the Company and
any Guarantors that remain Subsidiaries of the Company shall be released from
their respective obligations under this Indenture and the Guarantees.

                                   ARTICLE SIX

                              DEFAULT AND REMEDIES

      SECTION 6.01. Events of Default. The following events are defined as
"Events of Default":

            (1) the failure to pay interest or Additional Interest, if any, on
      any Notes or any other amount (other than principal for the Notes) when
      the same becomes due and payable and the default continues for a period of
      thirty (30) days;

            (2) the failure to pay the principal of or premium, if any, on any
      Notes, when such principal becomes due and payable, at maturity, upon
      redemption or otherwise (including the failure to make a payment to
      purchase Notes tendered pursuant to an Excess Cash Flow Offer a Change of
      Control Offer or a Net Proceeds Offer);

            (3) a default in the observance or performance of any other covenant
      or agreement contained in this Indenture (other than the payment of the
      principal of, or premium, if any, or interest and Additional Interest, if
      any, on any Note) or any Collateral Agreement which default continues for
      a period of thirty (30) days after the Company receives written notice
      specifying the default (and demanding that such default be remedied) from
      the Trustee or the Holders of at least 25% of the outstanding principal
      amount of the Notes (except in the case of a default with respect

                                     - 61 -


      to Section 5.01, which will constitute an Event of Default with such
      notice requirement but without such passage of time requirement);

            (4) the failure to pay at final maturity (giving effect to any
      applicable grace periods and any extensions thereof) the principal amount
      of any Indebtedness of the Company or any Restricted Subsidiary of the
      Company, or the acceleration of the final stated maturity of any such
      Indebtedness (which acceleration is not rescinded, annulled or otherwise
      cured within 20 days from the date of acceleration) if the aggregate
      principal amount of such Indebtedness, together with the principal amount
      of any other such Indebtedness in default for failure to pay principal at
      final maturity or which has been accelerated (in each case with respect to
      which the 20-day period described above has elapsed), aggregates $5.0
      million or more at any time;

            (5) one or more judgments in an aggregate amount in excess of $10.0
      million shall have been rendered against the Company or any of its
      Restricted Subsidiaries (other than any judgment as to which a reputable
      and solvent third party insurer has accepted full coverage) and such
      judgments remain undischarged, unpaid or unstayed for a period of 60 days
      after such judgment or judgments become final and non-appealable;

            (6) certain events of bankruptcy affecting the Company or any of its
      Significant Subsidiaries, with customary grace periods with respect to
      involuntary bankruptcies;

            (7) any Collateral Agreement at any time for any reason shall cease
      to be in full force and effect in all material respects, or ceases to give
      the Collateral Agent the Liens, rights, powers and privileges purported to
      be created thereby, superior to and prior to the rights of all third
      Persons other than the holders of Permitted Liens and subject to no other
      Liens except as expressly permitted by the applicable Collateral
      Agreement;

            (8) any of the Company, the Guarantors or the Foreign Grantors, if
      any, directly or indirectly, contest in any manner the effectiveness,
      validity, binding nature or enforceability of any Collateral Agreement; or

            (9) any Guarantee of a Significant Subsidiary ceases to be in full
      force and effect or any Guarantee of a Significant Subsidiary is declared
      by a court of competent jurisdiction to be null and void and unenforceable
      or any Guarantee of a Significant Subsidiary is found by a court of
      competent jurisdiction to be invalid or any Guarantor denies its liability
      under its Guarantee (other than by reason of release of a Guarantor in
      accordance with the terms of this Indenture).

      SECTION 6.02. Acceleration.

      (a) If an Event of Default (other than an Event of Default specified in
Section 6.01(6) above with respect to the Company) shall occur and be continuing
and has not been waived, the Trustee or the Holders of at least 25% in principal
amount of outstanding Notes may declare the principal of and premium, if any,
accrued interest and Additional Interest, if any, on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the Event
of Default and that it is a "notice of acceleration" (the "Acceleration
Notice"), and the same shall become immediately due and payable.

      (b) If an Event of Default specified in Section 6.01(6) above with respect
to the Company occurs and is continuing, then all unpaid principal of, and
premium, if any, and accrued and unpaid interest and Additional Interest, if
any, on all of the outstanding Notes shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder.

                                     - 62 -


      (c) At any time after a declaration of acceleration with respect to the
Notes as described in Section 6.02 (a) and (b), the Holders of a majority in
principal amount of the Notes may rescind and cancel such declaration and its
consequences:

            (i) if the rescission would not conflict with any judgment or
      decree;

            (ii) if all existing Events of Default have been cured or waived
      except nonpayment of principal, premium, if any, interest or Additional
      Interest, if any, that has become due solely because of the acceleration;

            (iii) to the extent the payment of such interest is lawful, interest
      on overdue installments of interest and overdue principal and premium, if
      any, and Additional Interest, if any, which has become due otherwise than
      by such declaration of acceleration, has been paid;

            (iv) if the Company has paid the Trustee its reasonable compensation
      and reimbursed the Trustee for its reasonable expenses, disbursements and
      its advances; and

            (v) in the event of the cure or waiver of an Event of Default of the
      type described in Section 6.01(7), the Trustee shall have received an
      Officers' Certificate and an Opinion of Counsel that such Event of Default
      has been cured or waived.

      (d) No such rescission shall affect any subsequent Default or impair any
right consequent thereto.

      (e) The Company is required to provide an Officers' Certificate to the
Trustee promptly upon any Officer obtaining knowledge of any Default or Event of
Default (provided that such Officers' Certificate shall be provided at least
annually whether or not such Officers know of any Default or Event of Default)
that has occurred and, if applicable, describe such Default or Event of Default
and the status thereof.

      SECTION 6.03. Other Remedies.

      If an Event of Default occurs and is continuing, each of the Trustee and
the Collateral Agent may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of, premium, if any, or interest, or
Additional Interest, if any, on the Notes or to enforce the performance of any
provision of the Notes, this Indenture or any Collateral Agreement.

      Each of the Trustee and the Collateral Agent may maintain a proceeding
even if it does not possess any of the Notes or does not produce any of them in
the proceeding. A delay or omission by the Trustee, the Collateral Agent or any
Holder in exercising any right or remedy accruing upon an Event of Default shall
not impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.

      SECTION 6.04. Waiver of Past Defaults.

      Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in
principal amount of the Notes may waive any existing Default or Event of Default
and its consequences, except a default in the payment of the principal of or
premium, if any, interest or Additional Interest, if any, on any Notes. When a
Default or Event of Default is waived, it is cured and ceases to exist.

                                     - 63 -


      SECTION 6.05. Control by Majority.

      Subject to Section 2.09, the Holders of a majority in principal amount of
the outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
the Collateral Agent, as the case may be, or exercising any trust or power
conferred on the Trustee or the Collateral Agent, as the case may be, including,
without limitation, any remedies provided for in Section 6.03. Subject to
Section 7.01 and 7.02(f), however, the Trustee or the Collateral Agent, as the
case may be, may refuse to follow any direction (which direction, if sent to the
Trustee or the Collateral Agent, as the case may be, shall be in writing) that
the Trustee or the Collateral Agent, as the case may be, reasonably believes
conflicts with any applicable law or this Indenture, that the Trustee or the
Collateral Agent, as the case may be, determines may be unduly prejudicial to
the rights of another Holder, or that may subject the Trustee or the Collateral
Agent, as the case may be, to personal liability; provided that the Trustee or
the Collateral Agent, as the case may be, may take any other action deemed
proper by the Trustee or the Collateral Agent, as the case may be, which is not
inconsistent with such direction (which direction, if sent to the Trustee or the
Collateral Agent, as the case may be, shall be in writing).

      SECTION 6.06. Limitation on Suits.

      A Holder may not pursue any remedy with respect to this Indenture or the
Notes unless:

            (1) the Holder gives to the Trustee written notice of a continuing
      Event of Default;

            (2) subject to Section 2.09, Holders of at least 25% in principal
      amount of the outstanding Notes make a written request to the Trustee to
      institute proceedings in respect of that Event of Default;

            (3) such Holders offer to the Trustee indemnity reasonably
      satisfactory to the Trustee against any loss, liability or expense to be
      incurred in compliance with such request;

            (4) the Trustee does not comply with the request within sixty (60)
      days after receipt of the request and the offer of indemnity; and

            (5) during such sixty (60) day period the Holders of a majority in
      principal amount of the outstanding Notes do not give the Trustee a
      written direction which, in the opinion of the Trustee, is inconsistent
      with the request.

            A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.

      SECTION 6.07. Rights of Holders to Receive Payment.

            Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, premium, if any, and interest on
a Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.

      SECTION 6.08. Collection Suit by Trustee or Collateral Agent.

            If an Event of Default specified in Section 6.01(1) or (2) occurs
and is continuing, the Trustee or the Collateral Agent may recover judgment (i)
in its own name and (ii)(x) in the case of the

                                     - 64 -


Trustee, as trustee of an express trust or (y) in the case of the Collateral
Agent, as collateral agent on behalf of each of the Secured Parties, in each
case against the Company or any other obligor on the Notes for the whole amount
of principal of, premium, if any, and accrued interest remaining unpaid on, the
Notes, together with interest on overdue principal and, to the extent that
payment of such interest is lawful, interest on overdue installments of interest
at the rate set forth in Section 4.01 and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
the Collateral Agent and their respective agents and counsel and any other
amounts due the Trustee under the Collateral Agreements and Section 7.07.

      SECTION 6.09. Trustee May File Proofs of Claim.

            The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Notes, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, taxes, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under the Collateral
Agreements and Section 7.07. The Company's payment obligations under this
Section 6.09 shall be secured in accordance with the provisions of Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee or the Collateral
Agent, as the case may be, to vote in respect of the claim of any Holder in any
such proceeding.

      SECTION 6.10. Priorities.

            If the Trustee collects any money or property pursuant to this
Article Six, it shall pay out the money in the following order:

            First: to the Trustee, the Collateral Agent, the Paying Agent and
the Registrar for amounts due under Section 7.07 (including payment of all
compensation expense, all liabilities incurred and all advances made by the
Trustee or the Collateral Agent, as the case may be, and the costs and expenses
of collection);

            Second: if the Holders are forced to proceed against the Company
directly without the Trustee or the Collateral Agent, to Holders for their
collection costs;

            Third: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and

            Fourth: to the Company or any other obligor on the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.

                                     - 65 -


            The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.

      SECTION 6.11. Undertaking for Costs.

            All parties to this Indenture agree, and each Holder by its
acceptance of its Note shall be deemed to have agreed, that in any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee or the Collateral Agent, as the case may be, for any action taken or
omitted by it as Trustee or the Collateral Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee or the Collateral Agent, as the case may be, a suit by
a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the outstanding Notes.

      SECTION 6.12. Restoration of Rights and Remedies.

      If the Trustee, the Collateral Agent or any Holder has instituted any
proceedings to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, the Collateral Agent, or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee, the Collateral Agent and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee, the Collateral Agent and the Holders
shall continue as though no such proceeding has been instituted.

                                  ARTICLE SEVEN

                                     TRUSTEE

      SECTION 7.01. Duties of Trustee.

      The duties and responsibilities of the Trustee shall be as provided by the
TIA and as set forth herein.

      (a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.

      (b) Except during the continuance of an Event of Default:

            (1) the duties of the Trustee shall be determined solely by the
      express provisions of this Indenture and the TIA and the Trustee need
      perform only those duties as are specifically set forth in this Indenture
      and no covenants or obligations shall be implied in or read into this
      Indenture against the Trustee; and

            (2) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture;
      provided, however, in case of any such certificates or opinions furnished
      to the Trustee which by the

                                     - 66 -


      provisions hereof are furnished to the Trustee, the Trustee shall examine
      the certificates and opinions to determine whether or not they conform to
      the requirements of this Indenture.

      (c) Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

            (1) this clause (c) does not limit the effect of clause (b) of this
      Section 7.01;

            (2) the Trustee shall not be liable for any error of judgment made
      in good faith by a Trust Officer, unless it is proved that the Trustee was
      negligent in ascertaining the pertinent facts; and

            (3) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05.

      (d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any liability. The Trustee shall be under
no obligation to exercise of any of its rights or powers under this Indenture or
the Collateral Agreements at the request, order or direction of any Holders
unless such Holders have offered to the Trustee security and indemnity
reasonably satisfactory to the Trustee against the costs and expenses which may
be incurred by it in compliance with such request, order or direction.

      (e) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to clauses (a), (b),
(c) and (d) of this Section 7.01.

      (f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Company.
Money and assets held in trust by the Trustee need not be segregated from other
funds or assets held by the Trustee except to the extent required by law.

      SECTION 7.02. Rights of Trustee.

      Subject to Section 7.01:

            (a) The Trustee may conclusively rely and shall be fully protected
      in acting or refraining from acting upon any resolution, certificate,
      statement instrument, opinion, report, request direction, consent, order,
      bond, note or other paper or document believed by it to be genuine and to
      have been signed or presented by the proper Person. The Trustee need not
      investigate any fact or matter stated in the document.

            (b) Before the Trustee acts or refrains from acting, it may consult
      with counsel and may require an Officers' Certificate or an Opinion of
      Counsel, or both, which shall conform to Sections 11.04 and 11.05. The
      Trustee shall not be liable for any action it takes or omits to take in
      good faith in reliance on such Officers' Certificate or Opinion of
      Counsel. The written advice of the Trustee's counsel or any Opinion of
      Counsel shall be full and complete authorization and protection from
      liability in respect of any action taken, suffered or omitted by the
      Trustee hereunder in good faith and in reliance thereon.

            (c) The Trustee may act through its attorneys and agents and shall
      not be responsible for the misconduct or negligence of any agent appointed
      with due care.

                                     - 67 -


            (d) The Trustee shall not be liable for any action that it takes or
      omits to take in good faith which it reasonably believes to be authorized
      or within its rights or powers under this Indenture.

            (e) The Trustee shall not be bound to make any investigation into
      the facts or matters stated in any resolution, certificate, statement,
      instrument, opinion, notice, request, direction, consent, order, bond,
      debenture, or other paper or document, but the Trustee, in its discretion,
      may make such further inquiry or investigation into such facts or matters
      as it may see fit and, if the Trustee shall determine to make such further
      inquiry or investigation, it shall be entitled, upon reasonable notice to
      the Company, to examine the books, records and premises of the Company,
      personally or by agent or attorney and to consult with the officers and
      representatives of the Company, including the Company's accountants and
      attorneys. Except as expressly stated herein to the contrary, in no event
      shall the Trustee have any responsibility to ascertain whether there has
      been compliance with any of the covenants or provisions of Articles Four
      or Five hereof.

            (f) The Trustee shall not be required to give any bond or surety in
      respect of the performance of its powers and duties hereunder.

            (g) Unless otherwise specifically provided in this Indenture, any
      demand, request, direction or notice from the Company shall be sufficient
      if signed by an Officer of the Company and any resolution of the Board of
      Directors shall be sufficient if evidenced by a copy of such resolution
      certified by an Officer of the Company to have been duly adopted and in
      full force and effect on the date hereof.

            (h) The Trustee shall not be deemed to have notice or be charged
      with knowledge of any Default or Event of Default unless the Trustee shall
      have received from the Company, any Guarantor or any other obligor upon
      the Notes or from any Holder written notice thereof at its address set
      forth in Section 11.02 hereof, and such notice references the Notes and
      this Indenture.

            (i) The rights, privileges, protections, immunities and benefits
      given to the Trustee, including, without limitation, its right to be
      indemnified, are extended to, and shall be enforceable by, the Trustee in
      each of its capacities hereunder, and each agent, custodian and other
      Person employed to act hereunder.

            (j) The Trustee may request that the Company deliver an Officers'
      Certificate setting forth the names of individuals and/or titles of
      officers authorized at such time to take specified actions pursuant to
      this Indenture, which Officers' Certificate may be signed by any persons
      authorized to sign an Officers' Certificate, including any person
      specified as so authorized in any such certificate previously delivered
      and not superseded.

            (k) The permissive right of the Trustee to take any action under
      this Indenture or any Collateral Agreements shall not be construed as a
      duty to so act.

      SECTION 7.03. Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company, any Subsidiary of
the Company or its respective Affiliates with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 of this Indenture, and the
Trustee is subject to TIA Sections 310(b) and 311.

                                     - 68 -


      SECTION 7.04. Trustee's Disclaimer.

      The Trustee makes no representation as to the validity, adequacy or
sufficiency of this Indenture, the Notes or the Collateral Agreements, and it
shall not be accountable for the Company's use of the proceeds from the Notes,
and it shall not be responsible for any statement of the Company in this
Indenture, the Notes, the Collateral Agreements or any other documents in
connection with the issuance of the Notes other than the Trustee's certificate
of authentication, which shall be taken as the statement of Company, and the
Trustee assumes no responsibility for their correctness.

      Beyond the exercise of reasonable care in the custody thereof and the
fulfillment of its obligations under this Indenture, the Intercreditor Agreement
and the Collateral Agreements, the Trustee shall have no duty as to any
Collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to preservation of rights against
prior parties or any other rights pertaining thereto. The Trustee shall be
deemed to have exercised reasonable care in the custody of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords its own property.

      The Trustee makes no representations as to and shall not be responsible
for the existence, genuineness, value, sufficiency or condition of any of the
Collateral or as to the security afforded or intended to be afforded thereby,
hereby or by any Collateral Agreement, or for the validity, perfection, priority
or enforceability of the Liens or security interests in any of the Collateral
created or intended to be created by any of the Collateral Agreements, whether
impaired by operation of law or by reason of any action or omission to act on
its part hereunder, except to the extent such action or omission constitutes
gross negligence or willful misconduct on the part of the Trustee, for the
validity or sufficiency of the Collateral, any Collateral Agreements or any
agreement or assignment contained in any thereof, for the validity of the title
of the Company or any Guarantor to the Collateral, for insuring the Collateral
or for the payment of taxes, charges, assessments or Liens upon the Collateral
or otherwise as to the maintenance of the Collateral.

      SECTION 7.05. Notice of Default.

      If a Default or an Event of Default occurs and is continuing and if a
Trust Officer has actual knowledge or has received written notice from the
Company or any Holder, the Trustee shall mail to each Holder, with a copy to the
Company, notice of the Default or Event of Default within thirty (30) days
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, premium, if any, or interest on, any Note, including an
accelerated payment and the failure to make payment on the Change of Control
Payment Date pursuant to a Change of Control Offer and, except in the case of a
failure to comply with Article Five, the Trustee may withhold the notice if and
so long as its Board of Directors, the executive committee of its Board of
Directors or a committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the Holders.

      SECTION 7.06. Reports by Trustee to Holders.

      Within sixty (60) days after each August 15, beginning with August 15,
2004, the Trustee shall, to the extent that any of the events described in TIA
Section 313(a) occurred within the previous twelve months, but not otherwise,
mail to each Holder a brief report dated as of such date that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and (c).

      A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed by the Company with the SEC and each stock
exchange or market, if any, on which the Notes are listed or quoted.

                                     - 69 -


      The Company shall promptly notify the Trustee if the Notes become listed
or quoted on any stock exchange or market and the Trustee shall comply with TIA
Section 313(d) and any delisting thereof.

      SECTION 7.07. Compensation and Indemnity.

      The Company shall pay to the Trustee, Collateral Agent, the Paying Agent
and the Registrar (each an "Indemnified Party") from time to time compensation
for their respective services as Trustee, Paying Agent or Registrar, as the case
may be. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse each
Indemnified Party upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under,
as the case may be, this Indenture or the Collateral Agreements. Such expenses
shall include the reasonable fees and expenses of each of such Indemnified
Party's agents and counsel.

      The Company and the Guarantors, jointly and severally, hereby indemnify
each Indemnified Party and its agents, employees, stockholders and directors and
officers for, and holds each of them harmless against, any loss, cost, claim,
liability or expense (including taxes) incurred by any of them except for such
actions to the extent caused by any gross negligence or willful misconduct on
the part of such Indemnified Party, arising out of or in connection with this
Indenture or the Collateral Agreements, or the administration of this trust,
including the reasonable costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending themselves against any
claim or liability in connection with the exercise or performance of any of
their rights, powers or duties hereunder or thereunder (including the reasonable
fees and expenses of counsel). The Trustee shall notify the Company promptly of
any claim asserted against an Indemnified Party for which such Indemnified Party
has advised the Trustee that it may seek indemnity hereunder or under the
Collateral Agreements. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. At the Indemnified Party's
sole discretion, the Company shall defend the claim and the Indemnified Party
shall cooperate and may participate in the defense; provided that any settlement
of a claim shall be approved in writing by the Indemnified Party. Alternatively,
the Indemnified Party may at its option have separate counsel of its own
choosing and the Company shall pay the reasonable fees and expenses of such
counsel; provided that the Company shall not be required to pay such fees and
expenses if it assumes the Indemnified Party's defense and there is no conflict
of interest between the Company and the Indemnified Party in connection with
such defense as reasonably determined by the Indemnified Party. The Company need
not pay for any settlement made without its written consent, which consent shall
not be unreasonably withheld.

      To secure the Company's and each Guarantor's payment obligations in this
Section 7.07, each Indemnified Party shall have a lien prior to the Notes on all
Collateral held or collected by the Trustee, in its capacity as Trustee, except
assets or money held in trust to pay principal of or interest on particular
Notes which have been called for redemption.

      When an Indemnified Party incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) occurs, such expenses
(including the reasonable fees and expenses of its counsel) and the compensation
for such services are intended to constitute expenses of administration under
any Bankruptcy Code.

      The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture, termination of the Collateral
Agreements or the resignation or removal of the Trustee.

      The Trustee shall comply with the provisions of TIA Section 312(b)(2) to
the extent applicable.

                                     - 70 -


      SECTION 7.08. Replacement of Trustee.

      The Trustee may resign by so notifying the Company. The Holders of a
majority in aggregate principal amount of the outstanding Notes may remove the
Trustee by so notifying the Company and the Trustee in writing and may appoint a
successor Trustee. The Company, by a Board Resolution, may remove the Trustee
if:

            (1) the Trustee fails to comply with Section 7.10;

            (2) the Trustee is adjudged bankrupt or insolvent;

            (3) a receiver or other public officer takes charge of the Trustee
      or its property; or

            (4) the Trustee becomes incapable of acting with respect to the
      Notes.

      If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall notify each Holder in writing of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in aggregate
principal amount of the outstanding Notes may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.

      A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, trusts, duties and obligations of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such Trustee so ceasing to act hereunder subject nevertheless
to its lien, if any, provided for in Section 7.07. Upon request of the Company
or the successor Trustee, such retiring Trustee shall at the expense of the
Company and upon payment of the charges of the Trustee then unpaid, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder.

      If a successor Trustee does not take office within thirty (30) days after
the retiring Trustee resigns or is removed, the retiring Trustee, at the
Company's expense, the Company or the Holders of at least 10% in principal
amount of the outstanding Notes may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

      If the Trustee fails to comply with Section 7.10, any Holder who satisfies
the requirements of TIA Section 310(b) may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.

      The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders in writing.
Each notice shall include the name of the successor Trustee and the address of
its Corporate Trust Office.

      Notwithstanding any resignation or replacement of the Trustee pursuant to
this Section 7.08, the Company's obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.

                                     - 71 -


      SECTION 7.09. Successor Trustee by Merger, Etc.

      If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another Person, the
resulting, surviving or transferee Person without any further act shall, if such
resulting, surviving or transferee Person is otherwise eligible hereunder, be
the successor Trustee; provided, however, that such Person shall be otherwise
qualified and eligible under this Article Seven.

      In case any Notes have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and deliver the Notes
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.

      SECTION 7.10. Eligibility; Disqualification.

      (a) This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2), (3) and (5). The Trustee (or, in
the case of a corporation included in a bank holding company system, the related
bank holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. In addition, if the Trustee is a corporation included in a bank
holding company system, the Trustee, independently of such bank holding company,
shall meet the capital requirements of TIA Section 310(a)(2). The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be excluded
from the operation of TIA Section 310(b)(1) any indenture or indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met. The provisions of TIA
Section 310 shall apply to the Company, as obligor of the Notes.

      (b) If the Trustee has or acquires a conflicting interest within the
meaning of the TIA, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the TIA and this Indenture.

      SECTION 7.11. Preferential Collection of Claims Against Company.

      The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

      SECTION 7.12. Trustee as Paying Agent and Collateral Agent.

      References to the Trustee in Sections 7.01(f), 7.02, 7.03, 7.04, and 7.07
shall include the Trustee in its role as Paying Agent and as Collateral Agent.

      SECTION 7.13. Co-Trustees , Co-Collateral Agent and Separate Trustees and
Collateral Agent.

      (a) At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Collateral may at the time
be located, the Company, the Trustee and the Collateral Agent shall have the
power to appoint, and, upon the written request of the Trustee, the Collateral
Agent or of the Holders of at least 25% in principal amount of the Notes
outstanding, the Company shall for such purpose, join with the Trustee or the
Collateral Agent, as the case may be, in the execution, delivery and performance
of all instruments and agreements necessary or proper to appoint, one or more
Persons approved by the Trustee either to act as co-trustee, jointly with the
Trustee, of all or

                                     - 72 -


any part of the Collateral, to act as co-collateral agent, jointly with the
Collateral Agent, or to act as separate trustees or Collateral Agent of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power, deemed necessary or desirable, subject to
the other provisions of this Section 7.13.

      (b) Should any written instrument from the Company be required by any
co-trustee, co-collateral agent or separate trustee or separate collateral agent
so appointed for more fully confirming to such co-trustee or separate trustee
such property, title, right or power, any and all such instruments shall, on
request, be executed, acknowledged and delivered by the Company.

      (c) Every co-trustee, co-collateral agent or separate trustee or separate
collateral agent shall, to the extent permitted by law, but to such extent only,
be appointed subject to the following terms, namely:

            (i) The Notes shall be authenticated and delivered, and all rights,
      powers, duties and obligations hereunder in respect of the custody of
      securities, cash and other personal property held by, or required to be
      deposited or pledged with, the Trustee hereunder, shall be exercised
      solely, by the Trustee.

            (ii) The rights, powers, duties and obligations hereby conferred or
      imposed upon the Trustee shall be conferred or imposed upon and exercised
      or performed by the Trustee or by the Trustee and such co-trustee or
      separate trustee, or by the Collateral Agent and such co-collateral agent
      or separate collateral agent, jointly as shall be provided in the
      instrument appointing such co-trustee or separate trustee or co-collateral
      agent or separate collateral agent, except to the extent that under any
      law of any jurisdiction in which any particular act is to be performed,
      the Trustee shall be incompetent or unqualified to perform such act, in
      which event such rights, powers, duties and obligations shall be exercised
      and performed by such co-trustee or separate trustee, collateral agent or
      co-collateral agent or separate collateral agent.

            (iii) The Trustee at any time, by an instrument in writing executed
      by it, with the concurrence of the Company evidenced by a Board
      Resolution, may accept the resignation of or remove any co-trustee or
      separate trustee appointed under this Section 7.13, and, in case an Event
      of Default has occurred and is continuing, the Trustee shall have power to
      accept the resignation of, or remove, any such co-trustee, co-collateral
      agent, separate trustee or separate collateral agent without the
      concurrence of the Company. Upon the written request of the Trustee, the
      Company shall join with the Trustee in the execution, delivery and
      performance of all instruments and agreements necessary or proper to
      effectuate such resignation or removal. A successor to any co-trustee,
      co-collateral agent, separate trustee or separate collateral agent so
      resigned or removed may be appointed in the manner provided in this
      Section 7.13.

            (iv) No co-trustee, co-collateral agent or separate trustee or
      separate collateral agent hereunder shall be personally liable by reason
      of any act or omission of the Trustee or any other such trustee or
      collateral agent hereunder.

            (v) Any act of Holders delivered to the Trustee shall be deemed to
      have been delivered to each such co-trustee or separate trustee and any
      act of Holders delivered to the Collateral Agent shall be deemed to have
      been delivered to each such co-collateral agent or separate collateral
      agent.

                                     - 73 -


      SECTION 7.14. Form of Documents Delivered to Trustee.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other Persons as to other matters and any such Person may certify or
give an opinion as to such matters in one or several documents.

      Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion, or
representation by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel or representation by
counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

                                  ARTICLE EIGHT

                     SATISFACTION AND DISCHARGE OF INDENTURE

      SECTION 8.01. Legal Defeasance and Covenant Defeasance.

      (a) The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors and Foreign Grantors, if any,
released and discharged from their obligations with respect to the outstanding
Notes, the Guarantees and the Collateral Agreements on the date the applicable
conditions set forth in clause (c) of this Section 8.01 are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of the matters under this
Indenture referred to in clauses (1), (2), (3) and (4) below, and the Company,
the Guarantors and Foreign Grantors, if any, shall be deemed to have satisfied
all their other obligations under such Notes and this Indenture, the Guarantees
and the Collateral Agreements, except for the following which shall survive
until otherwise terminated or discharged hereunder:

            (1) the rights of Holders to receive payments in respect of the
      principal of, premium, if any, interest and Additional Interest, if any,
      on the Notes when such payments are due;

            (2) the Company's obligations with respect to the Notes concerning
      issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
      or stolen Notes and the maintenance of an office or agency for payments;

            (3) the rights, powers, trust, duties and immunities of the Trustee
      and the Company's obligations in connection therewith; and

            (4) the Legal Defeasance provisions of the Indenture.

                                     - 74 -


      (b) The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors and Foreign Grantors, if any,
released and discharged from their obligations under covenants contained in
Section 4.05, Sections 4.08 through 4.25 (provided that the discharged
obligations may be released only the extent not otherwise required by TIA), and
Section 5.01, with respect to the outstanding Notes on and after the date the
conditions set forth in clause (c) of this Section 8.01 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
to be not "outstanding" for the purpose of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby.
Moreover, subject to the satisfaction of the conditions set forth in clause (c)
below, Sections 6.01(3) through 6.01(9) (except, in the case of Section 6.01(6),
with respect only to Significant Subsidiaries) shall not constitute Events of
Default.

      (c) The following shall be the conditions to application of either Legal
Defeasance or Covenant Defeasance to the outstanding Notes:

            (1) the Company must irrevocably deposit with the Trustee, in trust,
      for the benefit of the Holders, cash in U.S. dollars, non-callable U.S
      government obligations, or a combination thereof, in such amounts and at
      such times as will be sufficient, in the opinion of a nationally
      recognized firm of independent public accountants, to pay the principal
      of, premium, if any, interest and Additional Interest, if any, on the
      Notes on the stated date for payment thereof or on the applicable
      redemption date, as the case may be;

            (2) in the case of Legal Defeasance, the Company shall have
      delivered to the Trustee an Opinion of Counsel in the United States
      reasonably acceptable to the Trustee confirming that:

                  (a) the Company has received from, or there has been published
            by, the Internal Revenue Service a ruling; or

                  (b) since the date of the Indenture, there has been a change
            in the applicable federal income tax law,

      in either case to the effect that, and based thereon such Opinion of
      Counsel shall confirm that, the Holders will not recognize income, gain or
      loss for federal income tax purposes as a result of such Legal Defeasance
      and will be subject to federal income tax on the same amounts, in the same
      manner and at the same times as would have been the case if such Legal
      Defeasance had not occurred;

            (3) in the case of Covenant Defeasance, the Company shall have
      delivered to the Trustee an Opinion of Counsel in the United States
      reasonably acceptable to the Trustee confirming that the Holders will not
      recognize income, gain or loss for federal income tax purposes as a result
      of such Covenant Defeasance and will be subject to federal income tax on
      the same amounts, in the same manner and at the same times as would have
      been the case if such Covenant Defeasance had not occurred;

                                     - 75 -


            (4) no Default or Event of Default shall have occurred and be
      continuing on the date of such deposit pursuant to clause (1) of this
      Section 8.01(c) (except such Default or Event of Default resulting from
      the failure to comply with Section 4.08 as a result of the borrowing of
      funds required to effect such deposit) or insofar as Defaults or Events of
      Default from bankruptcy or insolvency events are concerned, at any time in
      the period ending on the 91st day after the date of such deposit;

            (5) such Legal Defeasance or Covenant Defeasance shall not result in
      a breach of, or constitute a default under the Indenture or any material
      agreement or instrument to which the Company or any of its Subsidiaries is
      a party or by which the Company or any of its Subsidiaries is bound;

            (6) the Company shall have delivered to the Trustee an Officers'
      Certificate stating that the deposit was not made by the Company with the
      intent of preferring the Holders over any other creditors of the Company
      or with the intent of defeating, hindering, delaying or defrauding any
      other creditors of the Company or others;

            (7) the Company shall have delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel, each stating that all conditions
      precedent specified herein relating to the Legal Defeasance of the
      Covenant Defeasance have been complied with; and

            (8) the Company shall have delivered to the Trustee an Opinion of
      Counsel (subject to customary qualifications and exclusions) to the effect
      that the trust resulting from the deposit is not required to register as
      an investment company under the Investment Company Act of 1940.

            In the event all or any portion of the Notes are to be redeemed
through such irrevocable trust, the Company must make arrangements reasonably
satisfactory to the Trustee, at the time of such deposit, for the giving of the
notice of such redemption or redemptions by the Trustee in the name and at the
expense of the Company.

      SECTION 8.02. Satisfaction and Discharge.

            In addition to the Company's rights under Section 8.01, the Company
may terminate all of its obligations under this Indenture (subject to Section
8.03), and this Indenture, the Notes, the Guarantees and the Collateral
Agreements, and all Liens created thereunder securing the Notes and the
Guarantees, shall be discharged and shall cease to be in effect when:

            (1) either:

                  (a) all the Notes theretofore authenticated and delivered
            (except lost, stolen or destroyed Notes which have been replaced or
            paid as provided in Section 2.07 and Notes for whose payment money
            has theretofore been deposited in trust or segregated and held in
            trust by the Company and thereafter repaid to the Company or
            discharged from such trust) have been delivered to the Trustee for
            cancellation; or

                  (b) all Notes not theretofore delivered to the Trustee for
            cancellation (i) have become due and payable, (ii) shall become due
            and payable at their stated maturity within one year or (iii) are to
            be called for redemption within one year under arrangements
            reasonably satisfactory to the Trustee, and the Company has
            irrevocably deposited or caused to be deposited with the Trustee
            funds in an amount sufficient to pay and discharge the entire
            Indebtedness on the Notes not theretofore delivered to the Trustee
            for

                                     - 76 -


            cancellation, for principal of, premium, if any, interest and
            Additional Interest, if any, on the Notes to the date of deposit
            together with irrevocable instructions from the Company directing
            the Trustee to apply such funds to the payment thereof at maturity
            or redemption, as the case may be;

            (2) all other sums payable under this Indenture and the Collateral
      Agreements by the Company have been paid; and

            (3) the Company has delivered to the Trustee an Officers'
      Certificate and an Opinion of Counsel stating that all conditions
      precedent under this Indenture relating to the satisfaction and discharge
      of this Indenture have been complied with.

      SECTION 8.03. Survival of Certain Obligations.

      Notwithstanding the satisfaction and discharge of this Indenture and of
the Notes referred to in Section 8.01 or 8.02, the respective obligations of the
Company and the Trustee under Sections 2.03, 2.04, 2.05, 2.06, 2.07 and 2.08,
Sections 7.07 and 7.08 and Sections 8.05, 8.06 and 8.07 shall survive until the
Notes are no longer outstanding, and thereafter the obligations of the Company
and the Trustee under Sections 7.07, 8.04, 8.05 and 8.06 and 8.07 shall survive.

      SECTION 8.04. Acknowledgment of Discharge by Trustee.

      Subject to Section 8.07, after (i) the conditions of Section 8.01 or 8.02
have been satisfied, (ii) the Company has paid or caused to be paid all other
sums payable hereunder by the Company and (iii) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee, upon written request, shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03 and the Trustee shall execute and deliver
to the Company any document reasonably requested by the Company to effect or
evidence any release and discharge of Lien or Collateral Agreement contemplated
by Section 12.05.

      SECTION 8.05. Application of Trust Moneys.

      The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 8.01. The Trustee shall apply the deposited U.S. Legal Tender or the
U.S. Government obligations, together with earnings thereon, through the Paying
Agent, in accordance with this Indenture and the terms of the irrevocable trust
agreement established pursuant to Section 8.01, to the payment of principal of,
premium, if any, and interest, and Additional Interest, if any, on the Notes.
Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the Company's request
any U.S. Legal Tender or U.S. Government Obligations held by it as provided in
Section 8.01(c) which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.01 or 8.02 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes.

                                     - 77 -


      SECTION 8.06. Repayment to the Company; Unclaimed Money.

      Subject to Sections 7.07, 8.01 and 8.02, the Trustee and the Paying Agent
shall promptly pay to the Company upon written request from the Company any
excess U.S. Legal Tender or U.S. Government Obligations held by them at any
time. The Trustee and the Paying Agent shall pay to the Company, upon receipt by
the Trustee or the Paying Agent, as the case may be, of a written request from
the Company any money held by it for the payment of principal, premium, if any,
or interest that remains unclaimed for two years after payment to the Holders is
required, without interest thereon; provided, however, that the Trustee and the
Paying Agent before being required to make any payment may, but need not, at the
expense of the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder entitled to such
money notice that such money remains unclaimed and that after a date specified
therein, which shall be at least thirty (30) days from the date of such
publication or mailing, any unclaimed balance of such money then remaining shall
be repaid to the Company, without interest thereon. After payment to the
Company, Holders entitled to money must look solely to the Company for payment
as general creditors unless an applicable abandoned property law designated
another Person, and all liability of the Trustee or Paying Agent with respect to
such money shall thereupon cease.

      SECTION 8.07. Reinstatement.

      If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or
U.S. Government Obligations in accordance with Section 8.01 or 8.02 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's and each Guarantors' obligations under this Indenture
and each other Indenture Document to which such person is a party shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.01 or 8.02 until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01 or 8.02; provided, however, that if the Company has made any
payment of premium, if any, or interest on or principal of any Notes because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.

                                  ARTICLE NINE

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

      SECTION 9.01. Without Consent of Holders.

      From time to time, the Company, the Guarantors, any Foreign Grantors, the
Trustee and, if such amendment, modification or supplement relates to any
Collateral Agreement, the Collateral Agent, without the consent of the Holders,
may amend, modify, waive or supplement provisions of this Indenture, the Notes,
the Guarantees, the Registration Rights Agreement and the Collateral Agreements:

            (1) to cure any ambiguity, defect or inconsistency contained
      therein;

            (2) to provide for uncertificated Notes in addition to or in place
      of certificated Notes;

            (3) to provide for the assumption of the Company's or a Guarantor's
      obligations to Holders in accordance with Section 5.01;

                                     - 78 -


            (4) to make any change that would provide any additional rights or
      benefits to the Holders or that does not adversely affect the legal rights
      of any such Holder under this Indenture, the Notes, the Guarantees, the
      Registration Rights Agreement or the Collateral Agreements;

            (5) to comply with requirements of the SEC in order to effect or
      maintain the qualification of this Indenture under the TIA;

            (6) to allow any Subsidiary or any other Person to guarantee the
      Notes;

            (7) to release a Guarantor as permitted by this Indenture and the
      relevant Guarantee; or

            (8) if necessary, in connection with any addition or release of
      Collateral permitted under the terms of this Indenture or Collateral
      Agreements;

so long as such amendment, modification, waiver or supplement does not, in the
opinion of the Trustee and, if such amendment, modification, waiver or
supplement relates to any Collateral Agreement, the Collateral Agent, adversely
affect the rights of any of the Holders in any material respect. In formulating
its opinion on such matters, each of the Trustee and, if such amendment,
modification, waiver or supplement relates to any Collateral Agreement, the
Collateral Agent, will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an Opinion of Counsel.

      After an amendment, modification, waiver or supplement under this Section
9.01 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, modification, waiver or supplement. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amendment,
modification, waiver or supplement.

      SECTION 9.02. With Consent of Holders.

      (a) The Company and the Guarantors, when authorized by a Board Resolution,
and the Trustee, or the Collateral Agent, as applicable, together, with the
written consent of the Holder or Holders of at least a majority in aggregate
principal amount of the outstanding Notes, may amend or supplement this
Indenture, the Notes, any Collateral Agreement or the Guarantees without notice
to any other Holders. The Holder or Holders of a majority in aggregate principal
amount of the outstanding Notes may waive compliance by the Company with any
provision of this Indenture, the Registration Rights Agreement, any Collateral
Agreement or the Notes without notice to any other Holder.

      (b) No amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, shall without the consent of each Holder affected thereby:

            (1) reduce the principal amount of Notes whose Holders must consent
      to an amendment, supplement or waiver of any provision of this Indenture
      or the Notes;

            (2) reduce the rate of or change or have the effect of changing the
      time for payment of interest, including default interest, or Additional
      Interest on any Notes;

            (3) reduce the principal of or change or have the effect of changing
      the fixed maturity of any Notes, or change the date on which any Notes may
      be subject to redemption or reduce the redemption price therefore (other
      than any advance notice requirement with respect to any redemption of the
      Notes);

                                     - 79 -


            (4) make any Notes payable in money other than that stated in the
      Notes;

            (5) make any change in provisions of this Indenture protecting the
      right of each Holder to receive payment of principal of, premium, if any,
      interest and Additional Interest, if any, on such Note on or after the due
      date thereof or to bring suit to enforce such payment, or permitting
      Holders of a majority in principal amount of Notes to waive Defaults or
      Events of Default;

            (6) amend, change or modify in any material respect the obligation
      of the Company to make and consummate an Excess Cash Flow Offer with
      respect to any fiscal year of the Company following the ending thereof,
      make and consummate a Change of Control Offer after the occurrence of a
      Change of Control or make and consummate a Net Proceeds Offer with respect
      to any Asset Sale that has been consummated or, modify any of the
      provisions or definitions with respect thereto (other than any advance
      notice requirement with respect to any redemption of the Notes);

            (7) subordinate the Notes or any Guarantee in right of payment to,
      or the Liens granted under the Collateral Agreements to any Lien on all or
      substantially all of any of (i) Notes Priority Collateral, (ii) the Shared
      Collateral, (iii) except as otherwise provided in the Intercreditor
      Agreement with respect to Liens securing the Credit Agreement, the RCF
      Priority Collateral or (iv) any Foreign Collateral to secure, any other
      Indebtedness of the Company any Guarantor or any Foreign Grantor; or

            (8) make any change to Section 9.01 or this Section 9.02.

      (c) No amendment, supplement or waiver, including a waiver pursuant to
Section 6.04 shall without the consent of Holders of 66 2/3 % of the then
outstanding Notes issued under this Indenture:

            (1) release any Guarantor from any of its obligations under its
      Guarantee or this Indenture otherwise than in accordance with the terms of
      this Indenture; or

            (2) release all or substantially all of the Collateral otherwise
      than in accordance with the terms of this Indenture and the Collateral
      Agreements.

      It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

      Notwithstanding anything to the contrary as set forth in Section 316(a) of
the TIA, (a) in determining whether the Holders of the required principal amount
of Notes have concurred in any request, demand, authorization, notice,
direction, amendment, supplement, waiver or consent, Notes owned of record or
beneficially by the Company or any Subsidiary of the Company or any other
obligor on the Notes shall be considered as though they are not outstanding (but
the Notes owned of record or beneficially by any other Affiliates shall be
deemed outstanding for all purposes under the Indenture) and (b) in determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, notice, direction, amendment, supplement, waiver or consent, only
Notes owned by the Company, its Subsidiaries or any other obligor on the Notes
which the Trustee knows are so owned shall be considered as though they are not
outstanding.

      After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment,

                                     - 80 -


supplement or waiver. Any failure of the Company to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such amendment, supplement or waiver.

      SECTION 9.03. Compliance with TIA.

      Every amendment, waiver or supplement of this Indenture, the Notes, the
Collateral Agreements or the Guarantees shall comply with the TIA as then in
effect and Section 2.09.

      SECTION 9.04. Revocation and Effect of Consents.

      Until an amendment, waiver or supplement becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Note or portion of such Note by written notice to
the Trustee and the Company received before the date on which the Trustee and if
such amendment, waiver or supplement relates to an Collateral Agreement, the
Collateral Agent, receives an Officers' Certificate certifying that the Holders
of the requisite principal amount of Notes have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver. An amendment,
waiver or supplement shall become effective upon receipt by the Trustee or the
Collateral Agent, as the case may be, of written consents from the Holders of
the requisite percentage in principal amount of the outstanding Notes or such
Officers' Certificate, whichever first occurs, and the execution thereof by the
Trustee or the Collateral Agent, as the case may be.

      The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be either (i) at least thirty (30)
days prior to the first solicitation of such consent or (ii) the date of the
most recent list furnished to the Trustee under Section 2.05. If a record date
is fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than ninety (90) days after such record date.

      After an amendment, supplement or waiver becomes effective, it shall bind
every Holder unless it makes a change described in any of clauses (1) through
(8) of Section 9.02(b) or clauses (1) through (2) of Section 9.02(c), in which
case, the amendment, supplement or waiver shall bind only each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note; provided that
any such waiver shall not impair or affect the right of any Holder to receive
payment of principal of, premium, if any, and interest on a Note, on or after
the respective due dates expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates without the
consent of such Holder.

      SECTION 9.05. Notation on or Exchange of Notes.

      If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver the Note to the Trustee.
The Trustee at the written direction of the Company may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make an appropriate notation, or
issue a new Note, shall not affect the validity and effect of such amendment,

                                     - 81 -


supplement or waiver. Any such notation or exchange shall be made at the sole
cost and expense of the Company. Failure to make the appropriate notation or
issue a new Note shall not effect the validity and effect of such amendment,
supplement or waiver.

      SECTION 9.06. Trustee to Sign Amendments, Etc.

      The Trustee and/or the Collateral Agent, as applicable, shall execute any
amendment, supplement or waiver authorized pursuant to this Article Nine;
provided that the Trustee or the Collateral Agent, as the case may be, may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the rights, duties or immunities of the Trustee or the Collateral
Agent, as the case may be, under this Indenture or any Collateral Agreement. The
Trustee or the Collateral Agent, as the case may be, shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate each stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture. Such Opinion of Counsel shall not be an expense of
the Trustee or the Collateral Agent, as the case may be, and shall be paid for
by the Company.

      SECTION 9.07. Conformity with Trust Indenture Act.

      Every supplemental indenture executed pursuant to this Article Nine shall
conform to the requirements of the TIA as then in effect.

                                   ARTICLE TEN

                                    GUARANTEE

      SECTION 10.01. Guarantee.

      Each Guarantor, as of the Issue Date or any time hereafter, hereby fully,
irrevocably and unconditionally, jointly and severally, unconditionally and
irrevocably guarantees (such guarantee to be referred to herein as the
"Guarantee"), to each of the Holders, the Trustee and the Collateral Agent and
its respective successors and assigns that (i) the principal of, premium, if any
and interest, and Additional Interest, if any, on the Notes shall be promptly
paid in full when due, subject to any applicable grace period, whether upon
redemption pursuant to the terms of the Notes, by acceleration or otherwise, and
interest on the overdue principal, if any, and interest on any interest, if any,
to the extent lawful, of the Notes and all other obligations of the Company to
the Holders, the Trustee and the Collateral Agent hereunder, thereunder or under
any Collateral Agreement shall be promptly paid in full or performed, all in
accordance with the terms hereof, thereof and of the Collateral Agreements; and
(ii) in case of any extension of time of payment or renewal of any of the Notes
or of any such other obligations, the same shall be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration or otherwise, subject, however, in the case of clauses (i) and (ii)
above, to the limitations set forth in Section 10.03. The Guarantee of each
Guarantor shall rank senior in right of payment to all subordinated Indebtedness
of such Guarantor and equal in right of payment with all other senior
obligations of such Guarantor. Each Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, this Indenture or any Collateral Agreement, the
absence of any action to enforce the same, any waiver or consent by any of the
Holders with respect to any provisions hereof or thereof, any release of any
other Guarantor, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the

                                     - 82 -


Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes, this Indenture and in this Guarantee. The obligations of each Guarantor
are limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to its contribution obligations under this Indenture, shall result in
the obligations of such Guarantor under the Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law. The net
worth of any Guarantor for such purpose shall include any claim of such
Guarantor against the Company for reimbursement and any claim against any other
Guarantor for contribution. Each Guarantor may consolidate with or merge into or
sell its assets to the Company or another Guarantor without limitation in
accordance with Sections 5.01 and 4.10. If any Holder, the Collateral Agent or
the Trustee is required by any court or otherwise to return to the Company, any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee, the Collateral Agent or such Holder,
this Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect. Each Guarantor further agrees that, as between each
Guarantor, on the one hand, and the Holders, the Collateral Agent and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purposes of this
Guarantee notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.

      SECTION 10.02. Release of a Guarantor.

      A Guarantor, as of the Issue Date or any time hereafter, will be
automatically and unconditionally released from its Guarantee (and the Liens on
its assets in favor of the Trustee shall be released) without any action
required on the part of the Trustee or any Holder:

            (1) if (a) all of the Capital Stock issued by such Guarantor or all
      or substantially all of the assets of such Guarantor are sold or otherwise
      disposed of (including by way of merger or consolidation) to a Person
      other than the Company or any of its Domestic Restricted Subsidiaries or
      (b) such Guarantor ceases to be a Restricted Subsidiary, and the Company
      otherwise complies, to the extent applicable, with Section 4.10, or

            (2) if the Company designates such Guarantor as an Unrestricted
      Subsidiary in accordance with Section 4.09, or

            (3) if the Company exercises its Legal Defeasance option or its
      Covenant Defeasance option as described in Section 8.01, or

            (4) upon satisfaction and discharge of this Indenture or payment in
      full of the principal of, premium, if any, accrued and unpaid interest and
      Additional Interest, if any, on the Notes and all other Obligations that
      are then due and payable.

      At the Company's request and expense, the Trustee shall promptly execute
and deliver an appropriate instrument evidencing such release upon receipt of a
request by the Company accompanied by an Officers' Certificate certifying as to
the compliance with this Section 10.02. Any Guarantor not so released remains
liable for the full amount of its Guarantee as provided in this Article Ten.

                                     - 83 -


      A Guarantor may also be released from its obligations under its Guarantee
in connection with a permitted amendment of this Indenture pursuant to Section
9.01 or 9.02.

      SECTION 10.03. Limitation of Guarantor's Liability.

      Each Guarantor, as of the Issue Date or any time hereafter, and, by its
acceptance hereof, each of the Holders hereby confirms that it is the intention
of all such parties that the guarantee by such Guarantor pursuant to its
Guarantee not constitute a fraudulent transfer or conveyance for purposes of any
Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar Federal or state law. To effectuate the foregoing
intention, the Holders and such Guarantor hereby irrevocably agree that the
obligations of such Guarantor under the Guarantee shall be limited to the
maximum amount as shall, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to Section
10.05, result in the obligations of such Guarantor under the Guarantee not
constituting such fraudulent transfer or conveyance.

      SECTION 10.04. Guarantors May Consolidate, etc., on Certain Terms.

      (a) Each Guarantor (other than any Guarantor whose Guarantee is to be
released in accordance with the terms of the Guarantee and this Indenture in
connection with any transaction complying with Section 4.10) will not, and the
Company will not cause or permit any Guarantor to, consolidate with or merge
with or into any Person other than the Company or any other Guarantor unless:

            (1) the entity formed by or surviving any such consolidation or
      merger (if other than the Guarantor) or to which such sale, lease,
      conveyance or other disposition shall have been made is a corporation
      organized and existing under the laws of the United States or any State
      thereof or the District of Columbia;

            (2) such entity assumes (a) by supplemental indenture (in form and
      substance reasonably satisfactory to the Trustee), executed and delivered
      to the Trustee, all of the obligations of the Guarantor under the
      Guarantee and the performance of every covenant of the Guarantee, this
      Indenture and the Registration Rights Agreement and (b) by amendment,
      supplement or other instrument (in form and substance satisfactory to the
      Trustee and the Collateral Agent) executed and delivered to the Trustee
      and the Collateral Agent, all obligations of the Guarantor under the
      Collateral Agreements and in connection therewith shall cause such
      instruments to be filed and recorded in such jurisdictions and take such
      other actions as may be required by applicable law to perfect or continue
      the perfection of the Lien created under the Collateral Agreements on the
      Collateral owned by or transferred to the surviving entity;

            (3) immediately after giving effect to such transaction, no Default
      or Event of Default shall have occurred and be continuing; and

            (4) immediately after giving effect to such transaction and the use
      of any net proceeds therefrom on a pro forma basis, the Company could
      satisfy the provisions of clause (a)(2) of the first paragraph of this
      Section 10.04.

      (b) Any merger or consolidation of (i) a Guarantor with and into the
Company (with the Company being the surviving entity) or another Guarantor or
(ii) a Guarantor or the Company with an Affiliate organized solely for the
purpose of reincorporating such Guarantor or the Company in another

                                     - 84 -


jurisdiction in the United States or any state thereof or the District of
Columbia or changing the legal form of such Guarantor or the Company need only
comply with:

      (A) clause (4) of the first paragraph of Section 5.01; and

      (B) in the case of a merger or consolidation involving (x) the Company as
described in clause (b)(ii) of this Section 10.04, clause 1(b)(y) of Section
5.01 and (y) a Guarantor as described in clause (b)(ii) of this Section
10.04(b), clause (a)(2) of this Section 10.04.

      SECTION 10.05. Contribution.

      In order to provide for just and equitable contribution among the
Guarantors, as of the Issue Date or any time hereafter, the Guarantors agree,
inter se, that each Guarantor that makes a payment or distribution under a
Guarantee shall be entitled to a pro rata contribution from each other Guarantor
hereunder based on the net assets of each other Guarantor. The preceding
sentence shall in no way affect the rights of the Holders of Notes to the
benefits of this Indenture, the Notes or the Guarantees.

      SECTION 10.06. Waiver of Subrogation.

      Each Guarantor, as of the Issue Date or any time hereafter, agrees that it
shall not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until payment in full of all
obligations guaranteed hereby.

      SECTION 10.07. Evidence of Guarantee.

      To evidence their guarantees to the Holders set forth in this Article Ten,
each of the Guarantors, as of the Issue Date or any time hereafter, hereby
agrees to execute the notation of Guarantee in substantially the form included
in the Notes attached as Exhibits A and B. Each such notation of Guarantee shall
be signed on behalf of each Guarantor by an Officer or an assistant Secretary.
An Officer (who shall, in each case, have been duly authorized by all requisite
corporate actions) of the Guarantors shall execute the Guarantees by manual or
facsimile signature.

      If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office or position at the time the
Trustee authenticates such Note, such Note shall nevertheless be valid.

      Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01
shall remain in full force and effect notwithstanding any failure to endorse on
each Note a notation of such Guarantee.

      If an Officer or assistant Secretary whose signature is on this Indenture
or on the Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Guarantee is endorsed, the Guarantee shall be
valid nevertheless.

      The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Guarantee set forth in this
Indenture on behalf of the Guarantors.

      SECTION 10.08. Waiver of Stay, Extension or Usury Laws.

      Each Guarantor, as of the Issue Date or any time hereafter, covenants to
the extent permitted by law that it shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive

                                     - 85 -


such Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Guarantee; and each Guarantor hereby
expressly waives to the extent permitted by law all benefit or advantage of any
such law, and covenants that it shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.

                                 ARTICLE ELEVEN

                                  MISCELLANEOUS

      SECTION 11.01. Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control. Any provision of the TIA which is required
to be included in a qualified Indenture, but not expressly included herein,
shall be deemed to be included by this reference.

      SECTION 11.02. Notices.

      Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

            if to the Company:

            Viskase Companies, Inc.
            625 Willowbrook Centre Parkway
            Willowbrook, Illinois 60527
            Attn: Chief Financial Officer
            Fax: 630-455-2152

            if to the Trustee or Collateral Agent:

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

      Each of the Company and the Trustee by written notice to each other may
designate additional or different addresses for notices to such Person. Any
notice or communication to the Company or the Trustee shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if faxed; and five (5)
calendar days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address or a notice sent by mail to
the Trustee shall not be deemed to have been given until actually received by
the addressee).

      Any notice or communication mailed to a Holder shall be mailed to such
Holder by first class mail or other equivalent means at such Holder's address as
it appears on the registration books of the Registrar and shall be sufficiently
given to such Holder if so mailed within the time prescribed.

                                     - 86 -


      Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.

      SECTION 11.03. Communications by Holders with Other Holders.

      Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture, any Collateral Agreement, any
Guarantee or the Notes. The Company, the Trustee, the Collateral Agent, the
Registrar and any other Person shall have the protection of TIA Section 312(c).

      SECTION 11.04. Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company or any Guarantor to the
Trustee or the Collateral Agent, as the case may be, to take any action under
this Indenture or any Collateral Agreement, the Company shall furnish to the
Trustee or the Collateral Agent, as the case may be, upon request:

            (1) an Officers' Certificate, in form and substance reasonably
      satisfactory to the Trustee or the Collateral Agent, as the case may be,
      stating that, in the opinion of the signers, all conditions precedent to
      be performed by the Company or the applicable Guarantor, as of the Issue
      Date or any time hereafter, provided for in this Indenture or any
      Collateral Agreement relating to the proposed action have been complied
      with; and

            (2) an Opinion of Counsel stating that, in the opinion of such
      counsel, all such conditions precedent to be performed by the Company or
      the applicable Guarantor (as the case may be), as of the Issue Date or any
      time hereafter, provided for in this Indenture or any Collateral Agreement
      relating to the proposed action have been complied with.

      SECTION 11.05. Statements Required in Certificate or Opinion.

      Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture or any Collateral Agreement, other than
the Officers' Certificate required by Section 4.06, shall include:

            (1) a statement that the Person making such certificate or opinion
      has read such covenant or condition;

            (2) a brief statement as to the nature and scope of the examination
      or investigation upon which the statements or opinions contained in such
      certificate or opinion are based;

            (3) a statement that, in the opinion of such Person, he has made
      such examination or investigation as is reasonably necessary to enable him
      to express an informed opinion as to whether or not such covenant or
      condition has been complied with; and

            (4) a statement as to whether or not, in the opinion of each such
      Person, such condition or covenant has been complied with.

                                     - 87 -


      SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.

      The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.

      SECTION 11.07. Legal Holidays.

      A "Legal Holiday" used with respect to a particular place of payment is a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or at such place of payment are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.

      SECTION 11.08. Governing Law.

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

      SECTION 11.09. No Adverse Interpretation of Other Agreements.

      This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.

      SECTION 11.10. No Recourse Against Others.

      A past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or of the Trustee shall not have any
liability for any obligations of the Company or the Guarantors under the Notes,
the Guarantees, the Collateral Agreements or this Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder, by accepting a Note, waives and releases all such liability. Such waiver
and release are part of the consideration for the issuance of the Notes.

      SECTION 11.11. Successors.

      All agreements of the Company and the Guarantors in this Indenture, the
Notes, and the Guarantees shall bind their successors. All agreements of each of
the Trustee and the Collateral Agent in this Indenture shall bind its respective
successors.

      SECTION 11.12. Duplicate Originals.

      All parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together shall represent the same
agreement.

                                     - 88 -


      SECTION 11.13. Severability.

      In case any one or more of the provisions in this Indenture, the Notes or
in the Guarantees shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.

      SECTION 11.14. Waiver of Jury Trial.

      THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE, THE NOTES, THE GUARANTEES,
THE COLLATERAL AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED BY THIS INDENTURE.

                                 ARTICLE TWELVE

                                    SECURITY

      SECTION 12.01. Grant of Security Interest.

      (a) The Company will execute and deliver the Collateral Agreements to
which it is a party concurrent with this Indenture. The Company hereby covenants
to cause any future Guarantors and any future Foreign Grantors to become parties
to the applicable Collateral Agreements. Notwithstanding anything to the
contrary herein, no Collateral shall consist of any Excluded Assets.

      (b) The Trustee and each Holder, by its acceptance of a Note, consents and
agrees to the terms of each Collateral Agreement, as the same may be in effect
or may be amended from time to time in accordance with their respective terms,
and authorizes and directs the Collateral Agent to enter into the Collateral
Agreements and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall, and shall cause each of its Domestic
Restricted Subsidiaries to, do or cause to be done, at its sole cost and
expense, all such actions and things as may be necessary or proper, or as may be
required by the provisions of the Collateral Agreements, to assure and confirm
to the Collateral Agreement the security interests in the Collateral
contemplated hereby and by the Collateral Agreements, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Notes and Guarantees secured hereby, according to the
intent and purpose herein and therein expressed. The Company shall, and shall
cause each of its Domestic Restricted Subsidiaries to, take any and all actions
required or as may be requested by the Collateral Agent to cause the Collateral
Agreements to create and maintain, as security for the Obligations contained in
this Indenture, the Notes, the Collateral Agreements and the Guarantees valid
and enforceable, perfected (except as expressly provided herein or therein)
security interests in and on all the Collateral, in favor of the Collateral
Agent, superior to and prior to the rights of all third Persons, and subject to
no other Liens, in each case, except as expressly provided herein or therein,
including (i) the filing of financing statements, continuation statements,
collateral assignments and any instruments of further assurance, in such manner
and in such places as may be required by law to preserve and protect fully the
rights of the Holders, the Collateral Agent, and the Trustee under this
Indenture and the Collateral Agreements to all property comprising the
Collateral, and (ii) the delivery of the certificates evidencing the securities
pledged under the Collateral Agreements, duly endorsed in blank, it being
understood that concurrently with the execution of this Indenture the Company
has filed a financing statement in the appropriate filing office. The Company
shall from time to time promptly pay all financing and

                                     - 89 -


continuation statement recording and/or filing fees, charges and recording and
similar taxes relating to this Indenture, the Collateral Agreements and any
amendments hereto or thereto and any other instruments of further assurance
required pursuant hereto or thereto.

      SECTION 12.02. Opinions.

      (a) The Company shall furnish to the Trustee and the Collateral Agent, at
such time as required by TIA Section 314(b), and promptly after the execution
and delivery of any other instrument of further assurance or amendment granting,
perfecting, protecting, preserving or making effective a security interest
pursuant to any Collateral Agreement, an Opinion of Counsel either (i) stating
that, in the opinion of such counsel, this Indenture and the Collateral
Agreements, financing statements and fixture filings then executed and
delivered, as applicable, and all other instruments of further assurance or
amendment then executed and delivered have been properly recorded, registered
and filed, and all certificates evidencing securities pledged to the Collateral
Agent for the benefit of itself, the Trustee and the Holders under the Security
Agreement have been delivered and duly endorsed in blank, to the extent
necessary to perfect the security interests created by this Indenture and the
Collateral Agreements and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and stating that as
to such Collateral Agreements and such other instruments, such recording,
registering, filing and delivery are the only recordings, registerings, filings
and deliveries necessary to perfect such security interest and that no
re-recordings, re-registerings, re-filings or re-deliveries are necessary to
maintain such perfection, and further stating that all financing statements and
continuation statements have been executed and filed, and all such certificates
have been delivered, that are necessary fully to preserve and protect the rights
of and perfect such security interests of the Collateral Agent for the benefit
of itself, the Trustee and the Holders, under the Collateral Agreements or (ii)
stating that, in the Opinion of such Counsel, no such action is necessary to
perfect any security interest created under this Indenture, the Notes or any of
the Collateral Agreements as intended by this Indenture, the Notes or any such
Collateral Agreement; provided that, in either case, such Opinion of Counsel
shall not be required to opine as to the priority or superiority of such
security interests against any third Person.

      (b) Annually, within thirty (30) days after May 1 of each year and
beginning with the year 2005, the Company shall furnish to the Trustee and the
Collateral Agent an Opinion of Counsel, dated as of such date, either (i)
stating that: (A) in the opinion of such counsel, action has been taken with
respect to the registering, recording, filing, re-recording, re-registering and
refiling of this Indenture, and all supplemental indentures, financing
statements, continuation statements and other documents, and delivery of all
certificates, as are then necessary to perfect or continue the perfection of the
security interests created by the Collateral Agreements and reciting the details
of such action or referring to prior Opinions of Counsel in which such details
are given; and (B) based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements, continuation statements and other
documents have been executed and filed that are necessary as of such date and
during the succeeding twenty-four (24) months fully to maintain, perfect or
continue the perfection of such security interests under the Collateral
Agreements with respect to the Collateral and to maintain, preserve, and protect
the rights of the Holders, the Collateral Agent and the Trustee hereunder and
under the Collateral Agreements or (ii) stating that, in the opinion of such
counsel, no such action is then necessary to perfect or continue the perfection
of such security interests.

      SECTION 12.03. Release of Collateral.

      (a) The Collateral Agent shall not at any time release Collateral from the
security interests created by the Collateral Agreements unless such release is
in accordance with the provisions of this Indenture and the applicable
Collateral Agreements.

                                     - 90 -


      (b) At any time when a Default or an Event of Default shall have occurred
and be continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Collateral Agreements shall be effective as against the
Holders, except to the extent otherwise permitted under Section 12.03(d).

      (c) The release of any Collateral from the terms of the Collateral
Agreements shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released pursuant to this Indenture and the Collateral Agreements. To the extent
applicable, the Company shall cause TIA Section 314(d) relating to the release
of property from the security interests created by this Indenture and the
Collateral Agreements to be complied with. Any certificate or opinion required
by TIA Section 314(d) may be made by an Officer of the Company, except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care. A Person is "independent" if such Person (a) is in fact independent, (b)
does not have any direct financial interest or any material indirect financial
interest in the Company or in any Affiliate of the Company and (c) is not an
officer, employee, promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the Company. The
Trustee and the Collateral Agent shall be entitled to receive and rely upon a
certificate provided by any such Person confirming that such Person is
independent within the foregoing definition.

      (d) Notwithstanding any provision to the contrary herein, Collateral
comprised of accounts receivable, inventory or the proceeds of the foregoing
shall be subject to release upon sales of such inventory, collection of the
proceeds of such accounts receivable and the use of proceeds, in each case, in
the ordinary course of business pursuant to transaction not otherwise prohibited
under this Indenture. If requested in writing by the Company, the Trustee shall
instruct the Collateral Agent to execute and deliver such documents, instruments
and statements and to take all such other actions promptly upon receipt of such
instructions from the Trustee as the Company may request to evidence or confirm
that the Collateral falling under this Section 12.03 has been released from the
Liens of each of the Collateral Agreements.

      SECTION 12.04. Specified Releases of Collateral.

      (a) The Company, the Guarantors and the Foreign Grantors shall be entitled
to obtain a full release of items of Collateral (the "Released Interests") from
the security interests created by this Indenture and the Collateral Agreements
upon compliance with the conditions precedent set forth in Section 4.10, 8.01 or
8.02 of this Indenture and the applicable Collateral Agreements or pursuant to
any other asset sale not prohibited by Section 4.10 and otherwise permitted
hereunder. So long as no Default or Event of Default exists, upon the written
request of the Company, any Guarantor or any Foreign Grantor and the furnishing
of each of the items required by Section 12.04(b), the Collateral Agent upon the
direction of the Trustee (or the Trustee if acting as the Collateral Agent)
shall forthwith take such action (at the written request of and the expense of
the Company, such Guarantor or such Foreign Grantor, without recourse or
warranty and without any representation of any kind), including the delivery of
appropriate UCC-3 termination statements, to release and reconvey to the
Company, such Guarantor or such Foreign Grantor all of the Released Interests,
and shall deliver such Released Interests in its possession to the Company, such
Guarantor or such Foreign Grantor.

      (b) So long as no Default or Event of Default exists, the Company, the
Guarantors and the Foreign Grantors shall be entitled to obtain a release of,
and the Trustee shall release, the Released Interests upon compliance with the
condition precedent that the Company, such Guarantor or such Foreign Grantor
shall have satisfied all applicable conditions precedent to any such release set
forth in this Indenture and the applicable Collateral Agreements as set forth in
an Officers' Certificate and an

                                     - 91 -


Opinion of Counsel delivered to the Trustee and the Collateral Agent and shall
have delivered to the Trustee and the Collateral Agent the following, as
applicable:

            (i) in connection with release of Collateral resulting from an Asset
      Sale under Section 4.10 or other asset sale permitted hereunder, notice
      from the Company requesting the release of Released Interests: (A)
      describing the proposed Released Interests; (B) specifying the estimated
      value of such Released Interests on a date within sixty (60) days of such
      notice (the "Valuation Date"); (C) stating that the purchase price
      received is at least equal to the fair market value of the Released
      Interests; (D) stating that the release of such Released Interests, taking
      into account any concurrent replacement of such assets, would not be
      expected to interfere in any material respect with the Collateral Agent's
      ability to realize the value of the remaining Collateral and shall not
      impair in any material respect the maintenance and operation of the
      remaining Collateral; and (E) certifying that such Asset Sale or such
      other asset sale complies with the terms and conditions of this Indenture
      with respect thereto and the applicable Collateral Agreements with respect
      thereto;

            (ii) in connection with release of Collateral resulting from an
      Asset Sale under Section 4.10 or other asset sale permitted hereunder, an
      Officers' Certificate of the Company stating that (A) the release of such
      Released Interests would not be expected to interfere in any material
      respect with the Collateral Agent's ability to realize the value of the
      remaining Collateral and will not impair in any material respect the
      maintenance and operation of the remaining Collateral; (B) such Asset Sale
      or such other asset sale covers only the Released Interests and complies
      with the terms and conditions of this Indenture; (C) there is no Default
      or Event of Default in effect or continuing on the date thereof, the
      Valuation Date or the date of such Asset Sale or such other asset sale;
      (D) the release of the Collateral shall not result in a Default or Event
      of Default under this Indenture; and (E) all conditions precedent in this
      Indenture relating to the release in question have been or shall be
      complied with;

            (iii) in connection with release of Collateral resulting from an
      Asset Sale under Section 4.10, the Net Cash Proceeds and other non-cash
      consideration from the Asset Sale required to be delivered to the Trustee
      pursuant to this Indenture;

            (iv) to the extent required by the TIA, an Officers' Certificate of
      the Company and an Opinion of Counsel certifying that all conditions
      precedent to the release of the Released Interests have been met and that
      such release complies with the terms and conditions of this Indenture and
      the applicable Collateral Agreements; and

            (v) all additional certificates, opinions and other documentation
      required by the TIA, if any.

      If the Company or any Domestic Restricted Subsidiary engage in any direct
or indirect sale, issuance, conveyance, transfer, lease, assignment or other
transfer for value of any Collateral of the type described in clause (a), (c),
(d), or (e), of the proviso to the definition of the term "Asset Sale," the
Liens of the Collateral Agent on such Collateral shall automatically terminate
and be released without any action by the Collateral Agent, and the Collateral
Agent shall, at the sole cost and expense of the Company or such Domestic
Restricted Subsidiary, execute and deliver to the Company or such Domestic
Restricted Subsidiary such documents, without any representation, warranty or
recourse of any kind whatsoever, as the Company or such Domestic Restricted
Subsidiary shall reasonably request to effect or evidence such termination.

                                     - 92 -


      SECTION 12.05. Release upon Satisfaction or Defeasance of all Outstanding
Obligations.

      The Liens on, and pledges of, all Collateral will also be terminated and
released upon (i) payment in full of the principal of, premium, if any, on,
accrued and unpaid interest and Additional Interest, if any, on the Notes and
all other Obligations hereunder, the Guarantees and the Collateral Agreements
that are due and payable at or prior to the time such principal, premium, if
any, accrued and unpaid interest and Additional Interest, if any, are paid, (ii)
a satisfaction and discharge of this Indenture as described above under Section
8.02 and (iii) the later to occur of (A) the occurrence of a Legal Defeasance or
Covenant Defeasance as described above under Section 8.01 or (B) the 91st day
occurring subsequent to the making of the deposit required under Section
8.01(c)(1).

      SECTION 12.06. Form and Sufficiency of Release.

      In the event that the Company, any Guarantor or any Foreign Grantor has
sold, exchanged, or otherwise disposed of or proposes to sell, exchange or
otherwise dispose of any portion of the Collateral that may be sold, exchanged
or otherwise disposed of by the Company, such Guarantor or such Foreign Grantor,
and the Company, such Guarantor or such Foreign Grantor requests in writing that
the Collateral Agent to furnish a written disclaimer, release or quit-claim of
any interest in such property under this Indenture and the Collateral
Agreements, the Collateral Agent shall execute, acknowledge and deliver to the
Company, such Guarantor or such Foreign Grantor (in proper form-prepared by the
Company, such Guarantor or such Foreign Grantor) such an instrument promptly
after satisfaction of the conditions set forth herein for delivery of any such
release. Notwithstanding the preceding sentence, all purchasers and grantees of
any property or rights purporting to be released herefrom shall be entitled to
rely upon any release executed by the Collateral Agent hereunder as sufficient
for the purpose of this Indenture and as constituting a good and valid release
of the property therein described from the Lien of this Indenture or of the
Collateral Agreements.

      SECTION 12.07. Purchaser Protected.

      No purchaser or grantee of any property or rights purporting to be
released herefrom shall be bound to ascertain the authority of the Trustee or
the Collateral Agent to execute the release or to inquire as to the existence of
any conditions herein prescribed for the exercise of such authority; nor shall
any purchaser or grantee of any property or rights permitted by this Indenture
to be sold or otherwise disposed of by the Company be under any obligation to
ascertain or inquire into the authority of the Company to make such sale or
other disposition.

      SECTION 12.08. Authorization of Actions to be Taken by the Collateral
Agent Under the Collateral Agreements.

      Subject to the provisions of the applicable Collateral Agreements, the
Trustee and each Holder, by acceptance of its Note(s) agrees that (a) the
Collateral Agent shall execute and deliver the Collateral Agreements and act in
accordance with the terms thereof, (b) the Collateral Agent may, in its sole
discretion and without the consent of the Trustee or the Holders, take all
actions it deems necessary or appropriate in order to (i) enforce any of the
terms of the Collateral Agreements and (ii) collect and receive any and all
amounts payable in respect of the Obligations of (A) the Company and the
Guarantors hereunder and under the Notes, the Guarantees and the Collateral
Agreements and (B) the Foreign Grantors under the Foreign Collateral Agreements
and (c) the Collateral Agent shall have power to institute and to maintain such
suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any act that may be unlawful or in violation of the Collateral
Agreements or this Indenture, and suits and proceedings as the Collateral Agent
may deem expedient to preserve or protect its interests and the interests of the
Trustee and the Holders in the Collateral (including the power to

                                     - 93 -


institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest thereunder or be prejudicial to the interests of the Collateral Agent,
the Holders or the Trustee). Notwithstanding the foregoing, the Collateral Agent
may, at the expense of the Company, request the direction of the Holders with
respect to any such actions and upon receipt of the written consent of the
Holders of at least a majority in aggregate principal amount of the outstanding
Notes, shall take such actions; provided that all actions so taken shall, at all
times, be in conformity with the requirements of the Intercreditor Agreement.

      SECTION 12.09. Authorization of Receipt of Funds by the Trustee Under the
Collateral Agreements.

      The Collateral Agent is authorized to receive any funds for the benefit of
itself, the Trustee and the Holders distributed under the Collateral Agreements
and to the extent not prohibited under the Intercreditor Agreement, for turnover
to the Trustee to make further distributions of such funds to itself, the
Trustee and the Holders in accordance with the provisions of Section 6.10 and
the other provisions of this Indenture.

      SECTION 12.10. Intercreditor Agreement.

      This Article Twelve and the Collateral Agreements are subject to the
terms, limitations and conditions set forth in the Intercreditor Agreement.

                                     - 94 -


                                   SIGNATURES

         IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.

                              VISKASE COMPANIES, INC.

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

                              LASALLE BANK NATIONAL ASSOCIATION, as Trustee and
                              Collateral Agent

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

                                                                       INDENTURE


                                                                       EXHIBIT A

THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE. TRUSTEE OR
TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.

THIS NOTE WAS INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"),
EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF THE COMPANY'S 11-1/2%
SENIOR SECURED NOTES DUE 2011 (COLLECTIVELY, THE "NOTES") AND ONE WARRANT TO
PURCHASE 8.947 SHARES OF THE COMPANY'S COMMON STOCK (THE "WARRANT SHARES").

PRIOR TO THE EARLIEST TO OCCUR OF (I) 180 DAYS FOLLOWING THE CONSUMMATION OF THE
OFFERING OF THE UNITS, (II) THE DATE ON WHICH A REGISTRATION STATEMENT FOR A
REGISTERED EXCHANGE OFFER WITH RESPECT TO THE NOTES IS DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (III) THE DATE ON WHICH A SHELF REGISTRATION STATEMENT WITH
RESPECT TO THE WARRANT SHARES IS DECLARED EFFECTIVE UNDER THE SECURITIES ACT AND
(IV) SUCH DATE AS JEFFERIES & COMPANY, INC., AS THE INITIAL PURCHASER OF THE
UNITS (THE "INITIAL PURCHASER"), IN ITS SOLE DISCRETION SHALL DETERMINE, THIS
NOTE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED
OR EXCHANGED ONLY AS, A UNIT.

                                      A-2



                             VISKASE COMPANIES, INC.

                      11-1/2 SENIOR SECURED NOTES DUE 2011

CUSIP No.
No.

      Viskase Companies, Inc., a Delaware corporation, for value received
promises to pay to ____________________ or registered assigns, the principal sum
of_____________ DOLLARS ($[ ]) on June 15,2011.

      Interest Rate:                         11-1/2%

      Interest Payment Dates:                June 15 and December 15, commencing
                                             December 15, 2004

      Record Dates:                          June 1 and December 1

      Reference is made to the further provisions of this Note contained on the
reverse side of this Note, which will for all purposes have the same effect as
if set forth at this place.

      IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officer.

                                              VISKASE COMPANIES, INC.

                                              By:_______________________________
                                              Name:
                                              Title:

Dated: June 29, 2004

                                      A-3



                      TRUSTEE CERTIFICATE OF AUTHENTICATION

      This is one of the 11-1/2% Senior Secured Notes due 2011 referred to in
the within- mentioned Indenture.

                                              LASALLE BANK NATIONAL ASSOCIATION,
                                              as Trustee

Dated: ______, 2004                           By:_______________________________
                                                   Authorized Signatory

                                      A-4



                                (REVERSE OF NOTE)

                      11-1/2% SENIOR SECURED NOTE DUE 2011

            1. Interest

                  Viskase Companies Inc. (the " which term includes any
Surviving Entity) promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Note will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from and including the date of issuance. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing December 15,
2004. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.

            2. Method of Payment.

                  The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date, and on or before such Interest Payment Date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts (
Legal Tender") However, the Company may pay principal and interest by check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.

            3. Paying Agent and Registrar.

                  Initially, LaSalle Bank National Association (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co Registrar without notice to the Holders. Neither the Company nor
any Affiliate of the Company shall act as Paying Agent or Registrar.

            4. Indenture

                  The Notes were issued under an Indenture, dated as of June 29,
2Q04 (the "Indenture"), between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture until such
time as the Indenture is qualified under the TIA, and thereafter as in effect on
the date on which the Indenture is qualified under the TIA. Notwithstanding
anything to the contrary herein, the Notes are subject to all such terms, and
Holders of Notes are referred to the Indenture and the TIA for a statement of
such terms. The Notes are senior secured obligations of the Company. Each
Holder, by accepting a Note, agrees to be bound by all of the terms and
provisions of the Indenture and the Registration Rights Agreement, dated as of
January 29, 2004, by and among the Company, the Guarantors and the Initial
Purchaser (the " Rights Agreement") as the same

                                      A-5


may be amended from time to time. Capitalized terms herein are used as defined
in the Indenture unless otherwise defined herein.

            5. Guarantees

                  Payment of principal and premium, if any, interest and
Additional Interest, if any, on the Notes, is unconditionally guaranteed,
jointly and severally, by each of the Guarantors, if any. As of the Issue Date,
there were no Guarantors, however, each future Domestic Restricted Subsidiary
who is not an Immaterial Subsidiary will become a Guarantor and in the event a
Domestic Restricted Subsidiary is no longer an Immaterial Subsidiary, it will be
a Guarantor of the Notes. As a result, the Domestic Restricted Subsidiary will
execute the necessary documents to become bound by the Indenture and the other
Documents.

            6. Redemption

            (a) Optional Make-Whole Redemption. At any time prior to June 15,
2008, the Company may, at its option, redeem the Notes, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at a redemption price equal
to the greater of:

            (1) 100% of the aggregate principal amount of the Notes being
redeemed; and

            (2) the sum of the present values of 105% of the aggregate
principal amount of such Notes and scheduled payments of interest on such Notes
to and including June 15, 2008, discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 50 basis points, together with, in each case, accrued
and unpaid interest and Additional Interest, if any, to the date of redemption.

            (b) Optional Redemption At any time on or after June 15, 2008, the
Company may redeem the Notes, at its option, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the aggregate principal amount thereof) if redeemed
during the twelve-month period commencing on June 15 of the year set forth
below:



Year                                                 Percentage
- ----                                                 ----------
                                                  
2008 ............................................     105-3/4%
2009 ............................................     102-7/8%
2010 and thereafter 100%.........................         100%


                  In addition, the Company must pay accrued and unpaid interest
and Additional Interest, if any, on the aggregate principal amount of the Notes
redeemed.

            (c) Optional Redemption upon Equity Offerings. At any time, or from
time to time, on or prior to June 15, 2007, the Company may, at its option, use
an amount not to exceed the net cash proceeds of one or more Equity Offerings to
redeem up to 35% of the aggregate principal amount of the Notes (including
Additional Notes, if any) originally issued under the Indenture. The Notes will
be redeemed at a redemption price of 111-1/2% of the aggregate

                                      A-6



principal amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the date of redemption, provided that:

      (1) at least 65% of the sum of (i) $90.0 million and (ii) the initial
aggregate principal amount of Additional Notes issued under the Indenture after
the Issue Date remain outstanding immediately after any such redemption; and

      (2) the Company makes such redemption not more than 120 days after the
consummation of any such Equity Offering.

            (d) Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If fewer than all of the Notes are to be redeemed, at any
time, selection of Notes for redemption will be made by the Trustee either in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
m rata basis, by lot or by such method as the Trustee may reasonably determine
is fair and appropriate; provided that no partial redemption will reduce the
principal amount of a Note not redeemed to a denomination of less than $1,000;
and provided, further that any such partial redemption made with the proceeds of
an Equity Offering will be made only on a p rata basis or on as nearly a p rata
basis as practicable (subject to the procedures of the DTC or any other
depository) unless such method is otherwise prohibited. Notes in denominations
of $1,000 or more may be redeemed in part in multiples of $1,000 only.

            Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such redemption date sufficient to pay such redemption
price plus accrued and unpaid interest and Additional Interest, if any, the
Notes called for redemption will cease to bear interest from and after such
redemption date, and the only remaining right of the Holders of such Notes will
be to receive payment of the redemption price plus accrued and unpaid interest
and Additional Interest, if any, as of the redemption date upon surrender to the
Paying Agent of the Notes redeemed.

            7. Offers to Purchase.

            Sections 4.10 and 4.25 of the Indenture provide that after certain
Asset Sales and upon the occurrence of a Change of Control and subject to
further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.

            8. Registration Rights.

            Pursuant to the Registration Rights Agreement, the Company will be
obligated to use its reasonable best efforts to file a registration statement
with respect to a registered offer to exchange the Notes for 111/2% Senior
Secured Exchange Notes due 2011 having substantially identical terms as the
Notes and to cause that registration statement to be declared effective within
specified time periods. The Holders of the Initial Notes shall be entitled to
receive certain additional interest payments in the, event such exchange offer
is not

                                      A-7



consummated and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement.

            9. Denominations: Transfer: Exchange.

                  The Notes are in registered form, without coupons, in
denominations of $1,000 and any integral multiples thereof. A Holder shall
register the transfer of or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes, fees or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption.

            10. Persons Deemed Owners.

                  The registered Holder of a Note shall be treated as the owner
of it and the Notes of which it is composed for all purposes.

            11. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent may pay the money
without interest thereon back to the Company. After that, all liability of the
Trustee and such Paying Agent with respect to such money shall cease.

            12. Discharge Prior to Redemption or Maturity.

                  If the Company at any time deposits with the Trustee U.S.
Legal Tender or U.S. Government Obligations sufficient to pay the principal of
and interest on the Notes to redemption or Maturity and complies with the other
provisions of the Indenture relating thereto, the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes, except for the rights of Holders to receive payments in respect of the
principal of, and premium, if any, interest and Additional Interest, if any, on
the Notes when such payments are due from the deposits referred to above.

            13. Amendment: Supplement: Waiver.

                  So long as an amendment, modification, waiver or supplement
does not, in the opinion of the Trustee, and, if such amendment, modification,
waiver or supplement relates to any Collateral Agreement, the Collateral Agent,
adversely affect the rights of any of the Holders in any material respect, the
Company, any Foreign Grantors, the Trustee and, if such amendment, modification,
waiver or supplement relates `to any Collateral Agreement, the Collateral Agent,
may from time to time amend, modify, waive or supplement the Indenture, the
Notes, the Guarantees, the Registration Rights Agreement, and the Collateral
Agreements, without consent of any Holder to. among other things, cure any
ambiguity, defect or inconsistency; provide for uncertified Notes in addition to
or in place of certified Notes; provide for the assumption of the Company's or a
Guarantor's obligations to Holders in connection with a merger, consolidation or
sale of assets; make any change that would provide any additional

                                      A-8



rights or benefits to the Holders or that does not adversely affect the legal
rights of any such Holder under the Indenture, the Notes, the Guarantees, the
Registration Rights Agreement or the Collateral Agreements; comply with
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; allow any Subsidiary or any other Person to guarantee
the Notes; release a Guarantor as permitted by the Indenture and the relevant
Guarantee; or add or release Collateral as permitted under the terms of the
Indenture or Collateral Agreements. In formulating its opinion on such matters,
each of the Trustee and, if such amendment, modification, waiver or supplement
relates to any Collateral Agreement, the Collateral Agent, will be entitled to
rely on such evidence as it deems appropriate, including, without limitation,
solely on an Opinion of Counsel.

                  Without consent of each Holder affected thereby, no amendment,
modification, waiver or supplement may, among other things, reduce the principal
amount of Notes whose Holders must consent to an amendment, supplement or waiver
of any provision of the Indenture or the Notes; reduce the rate of or change the
time for payment of interest, default interest or Additional Interest, if any,
on any Notes; reduce the principal of or change the fixed maturity of any Notes,
the redemption date or reduce the redemption price (other than any d advance
notice requirement with respect to any redemption of the Notes); make any Notes
payable in money other than that stated in the Notes; change the right of each
Holder to receive payment of principal of, premium, if any, interest and
Additional Interest, if any, or to bring suit to enforce such payment, permit
Holders of a majority in principal amount of Notes to waive Defaults or Events
of Default; amend, change or modify in any material respect the obligation of
the Company to make and consummate an Excess Cash Flow Offer, a Change of
Control Offer or to effect any Net Proceeds Offer; or subordinate the Notes or
any Guarantee in right of payment to, or the Liens granted under the Collateral
Agreements to any Lien on all or substantially all of the Collateral.

                  Without the consent of Holders of 66 2/3% of the then
outstanding Notes issued under the Indenture, no amendment shall release any
Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the term of the Indenture; or release all or
substantially all of the Collateral otherwise than in accordance with the terms
of the Indenture and the Collateral Agreements.

            14. Restrictive Covenants.

                  The Indenture imposes certain limitations on the ability of
the Company and the Restricted Subsidiaries to, among other things, incur
additional Indebtedness or grant Liens, make payments in respect of their
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.

                                      A-9



            15. Successors.

                  When a successor assumes, in accordance with the Indenture,
all the obligations of its predecessor under the Notes, the Guarantees and the
Indenture, the predecessor will be released from those obligations.

            16. Defaults and Remedies.

                  If an Event of Default (other than certain events of
bankruptcy) occurs and is continuing and has not been waived, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding may declare the principal of and premium, if any, accrued interest
and Additional Interest, if any, on all the Notes to be due and payable in the
manner, at the time and with the effect provided in the Indenture. Holders of
Notes may not enforce the Indenture except as provided in the Indenture. The
Trustee is not obligated to enforce the Indenture or the Notes unless it has
received indemnity satisfactory to it. The Indenture permits, subject to certain
limitations therein provided, Holders of a majority in aggregate principal
amount of the Notes then outstanding to direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of Notes notice of any
continuing Default or Event of Default (except a Default in payment of principal
or interest) if it determines that withholding notice is in their interest.

            17. Trustee Dealings with Company.

                  Subject to the terms of the TIA and the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Company, any
Subsidiaries of the Company or its respective Affiliates as if it were not the
Trustee.

            18. No Recourse Against Others.

                  No past, present or future stockholder, director, officer,
employee or, incorporator, as such, of the Company or the Guarantors shall have
any liability for any obligation of the Company under the Notes, the Guarantees,
the Collateral Agreements or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder, by accepting
a Note waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of the Notes.

            19. Intercreditor Agreement Registration Rights Agreement.

                  Each Holder, by its acceptance of its Note, agrees to be bound
by the terms of the Intercreditor Agreement, dated as of June 29, 2004, by and
among the Company, the LaSalle Bank National Association, as Trustee, and Wells
Fargo Foothill, Inc., and the Registration Rights Agreement, and all such
replacement thereof, and each of the Holders hereby authorize the Trustee and
the Collateral Agent to bind the Holders to the extent provided in the
Indenture.

                                      A-10



            20. Excess Cash Flow Offer.

                  Section 4.25 of the Indenture provides that within 90 days
after the end of each fiscal year of the Company (begriming 90 days after the
fiscal year of the Company ending in 2006) for which Excess Cash Flow was
greater than or equal to $2.0 million and subject to further limitations, the
Company must offer to all Holders to purchase the maximum principal amount of
Notes that may be purchased with 50% of Excess Cash Flow for such fiscal year at
a purchase price in cash equal to 101% of the principal amount of the Notes to
be purchased, plus accrued and unpaid interest and Additional Interest, if any,
to the date of such purchase in accordance with the procedures set forth in the
Indenture.

            21. Authentication.

                  This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.

            22. Governing Law

                  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS NOTE, THE
GUARANTEES, THE COLLATERAL AGREEMENTS AND THE INDENTURE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

            23. Waiver of Jury Trial

                  Each of the parties hereto and the holders (by their
acceptance of the Note) hereby irrevocably waives, to the fullest extent
permitted by law, any and all right to trial by jury in any action or proceeding
arising out of or in connection with the Indenture, this Note, the Guarantees,
the Collateral Agreements or the transactions contemplated by the Indenture.

            24. Abbreviations and Defined Terms.

                  Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST ( Custodian), and U/G/MIA (= Uniform Gifts
to Minors Act).

                  The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
Viskase Companies, Inc., 625 Willowbrook Center Parkway, Willowbrook, IL 60527.

                                      A-11



                               [FORM OF GUARANTEE]

                  Each of the undersigned and their respective successors under
the Indenture (collectively, the " has jointly and severally with each of the
other Guarantors, irrevocably and unconditionally guaranteed, on a senior
secured basis to the extent set forth in the Indenture, dated as of June 29,
2004, between the Company and LaSalle Bank National Association as Trustee (the
"Indenture"), (i) the due and punctual payment of the principal of, premium, if
any, arid interest and Additional Interest, if any, on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal of and interest and Additional Interest, if any, on the
Notes, to the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated.

                  THE OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND
TO THE TRUSTEE PURSUANT TO THIS NOTATION OF GUARANTEE (THE "GUARANTEE") AND THE
INDENTURE ARE EXPRESSLY SET FORTH IN ARTICLE TEN OF THE INDENTURE AND REFERENCE
IS HEREBY MADE TO THE INDENTURE FOR THE PRECISE TERMS OF THE GUARANTEE AND ALL
OTHER PROVISIONS OF THE INDENTURE TO WHICH THE GUARANTEE RELATES. EACH HOLDER OF
A NOTE, BY ACCEPTING THE SAME, (A) AGREES TO AND SHALL BE BOUND BY SUCH
PROVISIONS AND (B) APPOINTS THE TRUSTEE ATTORNEY-IN- FACT FOR SUCH HOLDER FOR
SUCH PURPOSES.

                  This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      A-12



                  IN WITNESS WHEREOF, each Guarantor has caused its Guarantee to
be duly executed.

                                [ _____________________________________________]

                                 By:____________________________________________

                                    Name:
                                    Title:

                                      A-13



                                 ASSIGNMENT FORM

                  If you the Holder want to assign this Note, fill in the form
below and have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

                  (Print or type name, address and zip code and
                  social security or tax ID number of assignee

irrevocably appoint_____________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

Dated: ____________________________        Signed:______________________________
                                                  (Sign exactly as your name
                                                   appears on the other side of
                                                   this Note)

Signature Guarantee: ______________________________

                  In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the SEC
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the " Act") covering resales of this Note (which effectiveness
shall not have been suspended or terminated at the date of the transfer) and
(ii) June 29, 2006, the undersigned confirms that it has not utilized any
general solicitation or general advertising in connection with the transfer and
that this Note is being transferred:

                                   [Check One]

(1) ______  to the Company or a subsidiary thereof; or

(2) ______  pursuant to and in compliance with Rule 1 44A under the Securities
            Act; or

(3) ______  to an institutional "accredited investor" (as defined in Rule
            501(a)(1), (2), (3) or (7) under the Securities Act) that has
            furnished to the Trustee a signed letter containing certain
            representations and agreements (the form of which letter can be
            obtained from the Trustee); or

(4) ______  outside the United States to a person other than a "U.S. person" in
            compliance with Rule 904 of Regulation S under the Securities Act;
            or

(5) ______  pursuant to the exemption from registration provided by Rule 144
            under the Securities Act; or

(6) ______  pursuant to an effective registration statement under the Securities
            Act.

                                      A-14



Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided that if box (3), (4) or (5) is checked, the
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such legal opinions, certifications
(including an investment letter in the case of box (3) or (4)) and other
information as the Trustee or the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.

                  If none of the foregoing boxes is checked, the Trustee or
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.15 of the Indenture
shall have been satisfied.

Dated: ____________________________         Signed:_____________________________
                                                  (Sign exactly as your name
                                                  appears on the other side of
                                                         this Note)

Signature Guarantee: ______________________________

              TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

                  The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 1 44A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule I 44A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 1 44A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 1 44A.

Dated: ____________________________           __________________________________
                                              NOTICE: To be executed by an
                                              executive officer

                                      A-15



                   [OPTION OF HOLDER TO ELECT PURCHASE OPTION]

                  If You Want To Elect To Have This Note purchased by the
Company pursuant to Section 4.10, or 4.25 of the Indenture, check the
appropriate box:

                     Section 4.10 [ ]

                     Section 4.25 [ ]

                  I If you want to elect to have only part of this Note
purchased by the Company pursuant to Section 4.10 or 4.25 of the Indenture,
state the amount you elect to have purchased:

$___________________________________

Dated:__________________________          ______________________________________
                                           NOTICE:   The signature on this
                                                     assignment must correspond
                                                     with the name as it appears
                                                     upon the face of the within
                                                     Note in every particular
                                                     without alteration or
                                                     enlargement or any change
                                                     whatsoever and be
                                                     guaranteed by the
                                                     endorser's bank or broker.

                                           Signature Guarantee:________________

                                      A-16



                                                                       EXHIBIT B

                               [FORM OF THE UNITS]

                             VISKASE COMPANIES, INC.

                                      UNIT

CUSIP No.
No.                                                                  [___] Units

      This Global Unit is composed of the attached Global Senior Secured Note
and Global Warrant certificate. The Global Unit, the Global Senior Secured Note
and the Global Warrant certificate are collectively referred to herein as the
"Securities." The Securities are initially issued as part of an issuance of
90,000 units (the "Units"), each of which consists of $1,000 principal amount at
maturity of the 111/2% Senior Secured Notes due 2011 of Viskase Companies, Inc.
(the "Company" and, such notes, collectively, the "Notes") and one warrant
(collectively, the "Warrants") initially entitling the holder thereof to
purchase 8.947 shares of common stock, par value $0.01 per share, of the Company
(such shares, the "Warrant Shares").

      Prior to the earliest of(i) 180 days following the consummation of the
offering of the Units, (ii) the date on which a registration statement with
respect to a registered exchange offer for the Notes is declared effective under
the Securities Act of 1933, as amended (the "Securities Act"), (iii) the date on
which a shelf registration statement with respect to the Warrant Shares is
declared effective under the Securities Act and (iv) such date as Jefferies &
Company, Inc., as the initial purchaser of the Units, in its sole discretion
shall determine, the Notes and the Warrants may be transferred or exchanged only
together as a Unit, and not separately.

      The Company and any transfer agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Unit (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, of any distribution to the holder(s) hereof, and for all
other purposes, and neither the Company nor the transfer agent shall be affected
by any notice to the contrary.

      AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS UNIT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE
SECURITIES LAWS. NEITHER THIS UNIT NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH 17226149 REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.

                                      A-17



      THE HOLDER OF THIS UNIT, BY ITS ACCEPTANCE HEREOF, (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS A NON-U.S. PURCHASER AND IS ACQUIRING THIS UNIT IN AN
OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATIONS UNDER THE SECURITIES ACT,
OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), OR (7) OF RULE 501 UNDER THE SECURITIES ACT, AND (2)
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH UNIT, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS UNIT (OR ANY PREDECESSOR OF SUCH
UNIT), ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THIS UNIT IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PURCHASERS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS UNIT FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S, OR TRANSFER AGENT'S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS UNIT IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR TRANSFER AGENT. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

                                           VISKASE COMPANIES, INC.

                                           By:__________________________________
                                              Name:
                                              Title:

Dated: June 29, 2004

                                      A-18



                      TRUSTEE CERTIFICATE OF AUTHENTICATION

            This is one of the Units consisting of an 11 Y Senior Secured Notes
due 2011 in $1,000 principal amount and a Warrant to purchase 8.974 shares of
Common Stock of Viskase Companies, Inc. referred to in the Indenture governing
the within-mentioned Notes.

                                            LASALLE BANK NATIONAL ASSOCIATION,
                                            as Trustee

Dated: June 29, 2004                        By:_________________________________
                                                  Authorized Signatory



                                                                       EXHIBIT C

                             VISKASE COMPANIES, INC.

                      11-1/2 SENIOR SECURED NOTES DUE 2011

CUSIP No.
No. $

            Viskase Companies, Inc., a Delaware corporation, for value received
promises to pay to ____________________, or registered assigns, the principal
sum of _____________ DOLLARS ($[ ]) on June 15, 2011.

                  Interest Rate:            11-1/2%

                  Interest Payment Dates:   June 15 and December 15, commencing
                                            December 15, 2004

                  Record Dates:             June 1 and December 1

            Reference is made to the further provisions of this Note contained
on the reverse side of this Note, which will for all purposes have the same
effect as if set forth at this place.

            IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officer.

                                               VISKASE COMPANIES, INC.

                                               By:______________________________
                                                  Name:
                                                  Title:

Dated: _____________, 2004

                                      D-1



                      TRUSTEE CERTIFICATE OF AUTHENTICATION

            This is one of the 11 Y Senior Secured Notes due 2011 referred to in
the within- mentioned Indenture.

                                            LASALLE BANK NATIONAL ASSOCIATION,
                                            as Trustee

Dated: ___________, 2004                    By:_________________________________
                                               Authorized Signatory

                                      D-2



                              (REVERSE OF SECURITY)

                      11-1/2 SENIOR SECURED NOTES DUE 2011

            1. Interest.

                  Viskase Companies Inc. (the " which term includes any
Surviving Entity) promises to pay interest on the principal amount of this Note
at the rate per annum shown above. Interest on the Note will accrue from the
most recent date on which interest has been paid or, if no interest has been
paid, from and including the date of issuance. The Company will pay interest
semi-annually in arrears on each Interest Payment Date, commencing December 15,
2004. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months.

            2. Method of Payment.

                  The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date, and on or before such Interest Payment Date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts (
Legal Tender") However, the Company may pay principal and interest by check
payable in such U.S. Legal Tender. The Company may deliver any such interest
payment to the Paying Agent or to a Holder at the Holder's registered address.

            3. Paying Agent and Registrar.

                  Initially, LaSalle Bank National Association (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co Registrar without notice to the Holders. Neither the Company nor
any Affiliate of the Company shall act as Paying Agent or Registrar.

            4. Indenture.

                  The Notes were issued under an Indenture, dated as of June 29,
2004 (the "Indenture"), between the Company and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss. 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of such terms. The
Notes are senior secured obligations of the Company. Each Holder, by accepting a
Note, agrees to be bound by all of the terms and provisions of the Indenture and
the Registration Rights Agreement, as the same may be amended from time to

                                      D-3



time. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein.

            5. Guarantees.

                  Payment of principal and premium, if any, interest and
Additional Interest, if any, on the Notes, is unconditionally guaranteed,
jointly and severally, by each of the Guarantors, if any. As of the Issue Date,
there were no Guarantors, however, each future Domestic Restricted Subsidiary
who is not an immaterial Subsidiary will become a Guarantor and in the event a
Domestic Restricted Subsidiary is no longer an Immaterial Subsidiary, it will be
a Guarantor of the Notes. As a result, the Domestic Restricted Subsidiary will
execute the necessary documents to become bound by the Indenture and the other
Documents.

            6. Redemption.

            (a) Optional Make-Whole Redemption At anytime prior to June 15,
2008, the Company may, at its option, redeem the Notes, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at a redemption price equal
to the greater of:

      (1) 100% of the aggregate principal amount of the Notes being redeemed;
and

      (2) the sum of the present values of 105% of the aggregate principal
amount of such Notes and scheduled payments of interest on such Notes to and
including June 15, 2008, discounted to the date of redemption on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 50 basis points, together with, in each case, accrued and
unpaid interest and Additional Interest, if any, to the date of redemption.

            (b) Optional Redemption. At any time on or after June 15, 2008, the
Company may redeem the Notes, at its option, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the following redemption prices
(expressed as percentages of the aggregate principal amount thereof) if redeemed
during the twelve-month period commencing on June 15 of the year set forth
below:



Year                                                Percentage
- ----                                                ----------
                                                 
2008 ............................................     105-3/4%
2009 ............................................     102-7/8%
2010 and thereafter 100%.........................         100%


In addition, the Company must pay accrued and unpaid interest and Additional
Interest, if any, on the aggregate principal amount of the Notes redeemed.

            (c) Optional Redemption upon Equity Offerings. At any time, or from
time to time, on or prior to June 15, 2007, the Company may, at its option, use
an amount not to exceed the net cash proceeds of one or more Equity Offerings to
redeem up to 35% of the aggregate principal amo of the Notes (including
Additional Notes, if any) originally issued under the Indenture. The Notes will
be redeemed at a redemption price of 111 `/2% of the aggregate

                                      D-4



principal amount thereof, plus accrued and unpaid interest and Additional
Interest, if any, to the date of redemption, provided that:

      (1) at least 65% of the sum of(i) $90.0 million and (ii) the initial
aggregate principal amount of Additional Notes issued under the Indenture after
the Issue Date remain outstanding immediately after any such redemption; and

      (2) the Company makes such redemption not more than 120 days after the
consummation of any such Equity Offering.

            (d) Notice of Redemption. Notice of redemption will be mailed by
first-class mail at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at such Holder's
registered address. If fewer than all of the Notes are to be redeemed, at any
time, selection of Notes for redemption will be made by the Trustee either in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
p rata basis, by lot or by such method as the Trustee may reasonably determine
is fair and appropriate; provided that no partial redemption will reduce the
principal amount of a Note not redeemed to a denomination of less than $1 ,000;
and provided, further that any such partial redemption made with the proceeds of
an Equity Offering will be made only on a p rata basis or on as nearly a p rata
basis as practicable (subject to the procedures of the DTC or any other
depository) unless such method is otherwise prohibited. Notes in denominations
of $1,000 or more may be redeemed in part in multiples of $1,000 only.

            Except as set forth in the Indenture, if monies for the redemption
of the Notes called for redemption shall have been deposited with the Paying
Agent for redemption on such redemption date sufficient to pay such redemption
price plus accrued and unpaid interest and Additional Interest, if any, the
Notes called for redemption will cease to bear interest from and after such
redemption date, and the only remaining right of the Holders of such Notes will
be to receive payment of the redemption price plus accrued and unpaid interest
and Additional Interest, if any, as of the redemption date upon surrender to the
Paying Agent of the Notes redeemed.

            7. Offers to Purchase.

                  C Sections 4.10 and 4.25 of the Indenture provide that after
certain Asset Sales and upon the occurrence of a Change of Control and subject
to further limitations contained therein, the Company will make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.

            8. Denominations; Transfer; Exchange

                  The Notes are in registered form, without coupons, in
denominations of $1,000 and any integral multiples thereof. A Holder shall
register the transfer of or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes, fees or similar
governmental charges payable in connection therewith as permitted by the
Indenture.

                                      D-5



The Registrar need not register the transfer of or exchange of any Notes or
portions thereof selected for redemption.

            9. Persons Deemed Owners.

                  The registered Holder of a Note shall be treated as the owner
of it and the Notes of which it is composed for all purposes.

            10. Unclaimed Money.

                  If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent may pay the money
without interest thereon back to the Company. After that, all liability of the
Trustee and such Paying Agent with respect to such money shall cease.

            11. Discharge Prior to Redemption or Maturity.

                  If the Company at any time deposits with the Trustee U.S.
Legal Tender or U.S. Government Obligations sufficient to pay the principal of
and interest on the Notes to redemption or Maturity and complies with the other
provisions of the Indenture relating thereto, the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the outstanding
Notes, except for the rights of Holders to receive payments in respect of the
principal of, and premium, if any, interest and Additional Interest, if any, on
the Notes when such payments are due from the deposits referred to above.

            12. Amendment; Supplement; Waiver.

                  So long as an amendment, modification, waiver or supplement
does not, in the opinion of the Trustee, and, if such amendment, modification,
waiver or supplement relates to any Collateral Agreement, the Collateral Agent,
adversely affect the rights of any of the Holders in any material respect, the
Company, any Foreign Grantors, the Trustee and, if such amendment, modification,
waiver or supplement relates to any Collateral Agreement, the Collateral Agent,
may from time to time amend, modify, waive or supplement the Indenture, the
Notes, the Guarantees, the Registration Rights Agreement, and the Collateral
Agreements, without consent of any Holder to, among other things, cure any
ambiguity, defect or inconsistency; provide for uncertified Notes in addition to
or in place of certified Notes; provide for the assumption of the Company's or a
Guarantor's obligations to Holders in connection with a merger, consolidation or
sale of assets; make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights of
any such Holder under the Indenture, the Notes, the Guarantees, the Registration
Rights Agreement or the Collateral Agreements; comply with requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; allow any Subsidiary or any other Person to guarantee the Notes; release a
Guarantor as permitted by the Indenture and the relevant Guarantee; or add or
release Collateral as permitted under the terms of the Indenture or Collateral
Agreements. In formulating its opinion on such matters, each of the Trustee and,
if such amendment, modification, waiver or supplement relates to any Collateral
Agreement, the Collateral Agent, will be entitled to rely on such evidence as it
deems appropriate, including, without limitation, solely on an Opinion of
Counsel.

                                      D-6



                  Without consent of each Holder affected thereby, no amendment,
modification, waiver or supplement may, among other things, reduce the principal
amount of Notes whose Holders must consent to an amendment, supplement or waiver
of any provision of the Indenture or the Notes; reduce the rate of or change the
time for payment of interest, default interest or Additional Interest, if any,
on any Notes; reduce the principal of or change the fixed maturity of any Notes,
the redemption date or reduce the redemption price (other than any advance
notice requirement with respect to any redemption of the Notes); make any Notes
payable in money other than that stated in the Notes; change the right of each
Holder to receive payment of principal of, premium, if any, interest and
Additional Interest, if any, or to bring suit to enforce such payment, permit
Holders of a majority in principal amount of Notes to waive Defaults or Events
of Default; amend, change or modify in any material respect the obligation of
the Company to make and consummate an Excess Cash Flow Offer, a Change of
Control Offer or to effect any Net Proceeds Offer; or subordinate the Notes or
any Guarantee in right of a payment to, or the Liens granted under the
Collateral Agreements to any Lien on all or substantially all of the Collateral.

                  Without the consent of Holders of 66 2/3% of the then
outstanding Notes issued under the Indenture, no amendment shall release any
Guarantor from any of its obligations under its Guarantee or the Indenture
otherwise than in accordance with the term of the Indenture; or release all or
substantially all of the Collateral otherwise than in accordance with the terms
of the Indenture and the Collateral Agreements.

            13. Restrictive Covenants.

                  The Indenture imposes certain limitations on the ability of
the Company and the Restricted Subsidiaries to, among other things, incur
additional Indebtedness or grant Liens, make payments in respect of their
Capital Stock or certain Indebtedness, enter into transactions with Affiliates,
create dividend or other payment restrictions affecting Subsidiaries, merge or
consolidate with any other Person, sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.

            14. Successors.

                  When a successor assumes, in accordance with the Indenture,
all the obligations of its predecessor under the Notes, the Guarantees and the
Indenture, the predecessor will be released from those obligations.

            15. Defaults and Remedies.

                  If an Event of Default (other than certain events of
bankruptcy) occurs and is continuing and has not been waived, the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding may declare the principal of and premium, if any, accrued interest
and Additional Interest, if any, on all the Notes to be due and payable in the
manner, at the time and with the effect provided in the Indenture. Holders of
Notes may not enforce the Indenture except as provided in the Indenture. The
Trustee is not obligated to enforce

                                      D-7



the Indenture or the Notes unless it has received indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Notes then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withold from Holders of Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.

            16. Trustee Dealings with Company.

                  Subject to the terms of the TIA and the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledge of Notes and may otherwise deal with the Company, any
Subsidiaries of the Company or its respective Affiliates as if it were not the
Trustee.

            17. No Recourse Against Others

                  No past, present or future stockholder, director, officer,
employee or incorporator, as such, of the Company or the Guarantors shall have
any liability for any obligation of the Company under the Notes, the Guarantees,
the Collateral Agreements or the Indenture or for any claim based on, in respect
of or by reason of such obligations or their creation. Each Holder, by accepting
a Note waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of the Notes.

            18. Intercreditor Agreement

                  Each Holder, by its acceptance of its Note, agrees to be bound
by the terms of the Intercreditor Agreement, dated as of June 29, 2004, by and
among the Company, the LaSalle Bank National Association, as Trustee, and Wells
Fargo Foothill, Inc., and all such replacement Intercreditor Agreements and each
of the Holders hereby authorize the Trustee and the Collateral Agent to bind the
Holders to the extent provided in the Indenture.

            19. Excess Cash Flow Offer

                  Section 4.25 of the Indenture provides that within 90 days
after the end of each fiscal year of the Company (beginning 90 days after the
fiscal year of the Company ending in 2006) for which Excess Cash Flow was
greater than or equal to $2.0 million and subject to further limitations, the
Company must offer to all Holders to purchase the maximum principal amount of
Notes that may be purchased with 50% of Excess Cash Flow for such fiscal year at
a purchase price in cash equal to 101 % of the principal amount of the Notes to
be purchased, plus accrued and unpaid interest and Additional Interest, if any,
to the date of such purchase in accordance with the procedures set forth in the
Indenture.

            20. Authentication

                  This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.

                                      D-8



            21. Governing Law

                  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS NOTE, THE
GUARANTEES, THE COLLATERAL AGREEMENTS AND THE INDENTURE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

            22. Waiver of Jury Trial

                  Each of the parties hereto and the holders (by their
acceptance of the Note) hereby irrevocably waives, to the fullest extent
permitted by law, any and all right to trial by jury in any action or proceeding
arising out of or in connection with the Indenture, this Note, the Guarantees,
the Collateral Agreements or the transactions contemplated by the Indenture.

            23. Abbreviations and Defined Terms

                  Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST ( Custodian), and U/G/MIA (= Uniform Gifts
to Minors Act).

                  The Company will furnish to any Holder of a Note upon written
request and without charge a copy of the Indenture. Requests may be made to:
Viskase Companies, Inc., 625 Willowbrook Center Parkway, Willowbrook, IL 60527.

                                      D-9



                               [FORM OF GUARANTEE]

            Each of the undersigned and their respective successors under the
Indenture (collectively, the "Guarantors") has jointly and severally with each
of the other Guarantors, irrevocably and unconditionally guaranteed, on a senior
secured basis to the extent set forth in the Indenture, dated as of June 29,
2004, between the Company and LaSalle Bank National Association as Trustee (the
"Indenture"), (i) the due and punctual payment of the principal of, premium, if
any, and interest and Additional Interest, if any, on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on the overdue principal of and interest and Additional Interest, if any, on the
Notes, to the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Capitalized terms used herein have the
meanings assigned to them in the Indenture unless otherwise indicated.

            THE OBLIGATIONS OF THE UNDERSIGNED TO HOLDERS OF THE NOTES AND TO
THE TRUSTEE PURSUANT TO THIS NOTATION OF GUARANTEE (THE "GUARANTEE") AND THE
INDENTURE ARE EXPRESSLY SET FORTH IN ARTICLE TEN OF THE INDENTURE AND REFERENCE
IS HEREBY MADE TO THE INDENTURE FOR THE PRECISE TERMS OF THE GUARANTEE AND ALL
OTHER PROVISIONS OF THE INDENTURE TO WHICH THE GUARANTEE RELATES. EACH HOLDER OF
A NOTE, BY ACCEPTING THE SAME, (A) AGREES TO AND SHALL BE BOUND BY SUCH
PROVISIONS AND (B) APPOINTS THE TRUSTEE ATTORNEY-IN FACT FOR SUCH HOLDER FOR
SUCH PURPOSES.

            This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      D-10



                                 ASSIGNMENT FORM

            If you the Holder want to assign this Note, fill in the form below
and have your signature guaranteed:

I or we assign and transfer this Note to:

________________________________________________________________________________

________________________________________________________________________________

                 (Print or type name, address and zip code and
                  social security or tax ID number of assignee

and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

Dated: ____________________________            Signed:__________________________
                                                      (Sign exactly as your name
                                                       appears on the other side
                                                               of this Note)

Signature Guarantee: ______________________________

                                      D-11



                      [OPTION OF HOLDER TO ELECT PURCHASE]

            If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10, or 4.25 of the Indenture, check the appropriate box:

               Section 4.10 [ ]

               Section 4.25 [ ]

            I If you want to elect to have only part of this Note purchased by
the Company pursuant to Section 4.10 or 4.25 of the Indenture, state the amount
you elect to have purchased:

$____________________________________

Dated:_________________________                _________________________________

                                               NOTICE: The signature on this
                                                       assignment must
                                                       correspond with the name
                                                       as it appears upon the
                                                       face of the within Note
                                                       in every particular
                                                       without alteration or
                                                       enlargement or any change
                                                       whatsoever and be
                                                       guaranteed by the
                                                       endorser's bank or
                                                       broker.

                                               Signature Guarantee:_____________

                                      D-12



                                                                       EXHIBIT D

                         FORM OF LEGEND FOR GLOBAL NOTES

            Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:

            THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
      HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
      NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS NOTE IS NOT
      EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
      DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
      THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS
      NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
      NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
      DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES
      DESCRIBED IN THE INDENTURE.

            UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
      OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
      COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
      AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
      SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
      (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
      REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
      OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
      INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
      HEREIN.

                                      D-13



                                                                       EXHIBIT E

                            Form of Certificate To Be
                          Delivered in Connection with
                    Transfers to Non-OIB Accredited Investors

The LaSalle Bank
135 S. LaSalle, Suite 1960
Chicago, IL 60603

            Re:   11-1/2 Senior Secured Notes due 2011 (the "Notes") of Viskase
                  Companies, Inc., a Delaware corporation (the "Company")

Ladies and Gentlemen:

            In connection with our proposed purchase of $______________
aggregate principal amount of the Notes, we confirm that:

            1. We have received a copy of the Offering Circular (the "Offering
Circular"), dated June 17, 2004, relating to the Notes and such other
information as we deem necessary in order to make our investment decision. We
acknowledge that we have read and agreed to the matters stated in the section
entitled "Notice to Investors" of the Offering Circular.

            2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture dated
as of June 29, 2004 relating to the Notes (the "Indenture") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").

            3. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our own behalf
and on behalf of any accounts for which we are acting as hereinafter stated,
that if we should sell or otherwise transfer any Notes prior to the date which
is within two years after the original issuance of the Notes or the last date on
which the Note is owned by the Company or any affiliate of the Company, we will
do so only (i) to the Company or any of its subsidiaries, (ii) inside the United
States in accordance with Rule 1 44A under the Securities Act to a "qualified
institutional buyer" (as defined in Rule 1 44A under the Securities Act), (iii)
inside the United States to an institutional "accredited investor" (as defined
below) provided that, prior to such transfer, the transferee furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to you a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the Notes, substantially in the form of this letter, (iv) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (v) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available) or (vi) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing any of the Notes from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein.

                                      E-1



            4. We are not acquiring the Notes for or on behalf of, and will not
transfer the Notes to, any pension or welfare plan (as defined in Section 3 of
the Employee Retirement Income Security Act of 1974), except as permitted in the
section entitled "Notice to Investors" of the Offering Circular.

            5. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Notes purchased by us will bear a legend to the foregoing
effect.

            6. We are an institutional "accredited investor" (as defined in Rule
501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the % Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or their investment, as the case may be.

            7. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.

            8. We are not acquiring Notes with a view to any distribution
thereof in a transaction that would violate the Securities Act or the securities
laws of any state of the United States or any other applicable jurisdiction;
provided that the disposition of our property and the property of any accounts
for which we are acting as fiduciary shall remain at all times within our and
their control.

            You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby, and we agree to notify you promptly if
any of our representations or warranties herein cease to be accurate and
complete.

            This letter shall be governed by, and construed in accordance with,
the laws of the State of New York without regard to principles of conflicts of
laws.

                                               Very truly yours,

                                               [Name of Transferee]

                                               By:______________________________
                                                      Authorized Signature

                                      E-2



                                                                       EXHIBIT F

                            Form of Certificate To Be
                          Delivered in Connection with
                    Transfers to Non-OIB Accredited Investors

The LaSalle Bank
135 S. LaSalle, Suite 1960
Chicago, IL 60603

            Re:   11-1/2 Senior Secured Notes due 2011 (the "Notes") of Viskase
                  Companies, Inc., a Delaware corporation (the "Company")

Ladies and Gentlemen:

            In connection with our proposed sale of $_________________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act of
1933, as amended (the " Act") and, accordingly, we represent that:

      1.    the offer of the Notes was not made to a person in the United
            States;

      2.    either (a) at the time the buy offer was originated, the transferee
            was outside the United States or we and any person acting on our
            behalf reasonably believed that the transferee was outside the
            United States, or (b) the transaction was executed in, on or through
            the facilities of a designated off-shore securities market and
            neither we nor any person acting on our behalf knows that the
            transaction has been pre-arranged with a buyer in the United States;

      3.    no directed selling efforts have been made in the United States in
            contravention of the requirements of Rule 903(b) or Rule 904(b) of
            Regulation S, as applicable;

      4.    the transaction is not part of a plan or scheme to evade the
            registration requirements of the Securities Act; and

      5.    we have advised the transferee of the transfer restrictions
            applicable to the Notes.

            You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.

                                               Very truly yours,

                                               [Name of Transferee]

                                               By:______________________________

                                       F-1

EX-5.1

                                                                     EXHIBIT 5.1
                                                           [JENNER & BLOCK LOGO]


December 21, 2004                       Jenner & Block LLP        Chicago
                                        One IBM Plaza             Dallas
                                        Chicago, IL 60611         Washington, DC
                                        Tel  312-222-9350
                                        www.jenner.com

Viskase Companies, Inc.
625 Willowbrook Centre Parkway
Willowbrook, Illinois 60527

Ladies and Gentlemen:

         We have acted as counsel to Viskase Companies, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-4 (the "Registration Statement") filed by the Company with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, relating to the issuance by the Company of $90,000,000 aggregate
principal amount of 11 1/2% Senior Secured Notes due 2011 (the "Exchange
Notes"). The Exchange Notes will be issued under an indenture dated as of June
29, 2004 (the "Indenture") among the Company and LaSalle Bank National
Association, as Trustee (the "Trustee"). The Exchange Notes will be offered by
the Company in exchange for all outstanding $90,000,000 11 1/2% Senior Secured
Notes due 2011 of the Company (the "Outstanding Notes"), issued under the same
Indenture.

         We have examined the Registration Statement, the Indenture, and the
form of the Exchange Notes, which is set forth as an exhibit to the Registration
Statement. We also have examined the originals, or duplicates or certified or
conformed copies, of such records, agreements, instruments and other documents
and have made such other and further investigations as we have deemed relevant
and necessary in connection with the opinions expressed herein. As to questions
of fact material to this opinion, we have relied upon certificates of officers
and representatives of the Company.

         In rendering the opinion that follows, we have assumed: (i) the
genuineness of all signatures; (ii) the legal capacity of natural persons; (iii)
the authenticity of all documents submitted to us as originals; (iv) the
conformity to the original documents of all documents submitted to us as
duplicates or certified or conformed copies; and (v) the authenticity of the
originals of such latter documents. We have also assumed that the Indenture is a
valid and legally binding obligation of the Trustee.

         Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that when the Exchange Notes
have been duly executed, authenticated, issued and delivered in accordance with
the provisions of the Indenture in exchange for the



Outstanding Notes, the Exchange Notes will constitute valid and legally binding
obligations of the Company.

         Our opinions set forth above are subject to the effects of: (1)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally; (2)
general equitable principles (whether considered in a proceeding in equity or at
law); (3) the implied covenant of good faith and fair dealing; and (4) public
policy.

         We do not express any opinion herein concerning any law other than the
General Corporation Law of the State of Delaware, the law of the State of
Illinois, the law of the State of New York and the Federal law of the United
States.

         We hereby consent to the filing of this letter as Exhibit 5.1 to the
Registration Statement and the use of our name under the caption "Legal Matters"
in the Prospectus included in the Registration Statement.



                                        Very truly yours,

                                        /s/  Jenner & Block LLP

                                        Jenner & Block LLP



                                       2

EX-10.1

                                                                    EXHIBIT 10.1

================================================================================

                           LOAN AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                             VISKASE COMPANIES, INC.

                                  AS BORROWER,

                                       AND

                           WELLS FARGO FOOTHILL, INC.

                                    AS LENDER

                            DATED AS OF JUNE 29, 2004

================================================================================



                                                                    EXHIBIT 10.1

                           LOAN AND SECURITY AGREEMENT

            THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into
as of June 29, 2004, by and between WELLS FARGO FOOTHILL, INC., a California
corporation ("Lender") and VISKASE COMPANIES, INC., a Delaware corporation
("Borrower").

            The parties hereto hereby agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

      1.1 DEFINITIONS. As used in this Agreement, the following terms shall have
the following definitions:

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

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

            "ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic fund transfers
through the direct Federal Reserve Fedline system) provided by a Bank Product
Provider for the account of Borrower or its Subsidiaries.

            "Additional Documents" has the meaning set forth in Section 4.4(c).

            "Advances" has the meaning set forth in Section 2.1(a).

            "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 or cause the direction of the
management and policies of a Person, whether through the ownership of Stock of
such Person having the right to vote for the election of members of the Board of
Directors or such Person, by contract, or otherwise; provided, however, that,
for purposes of the definition of Eligible Accounts and Section 7.13 hereof, any
Person who has Beneficial Ownership of 10% or more of the Stock of such Person
having the right to vote for the election of members of the Board of Directors
of such Person shall be deemed to be control.

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

            "Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3.00% times



the Maximum Revolver Amount, (b) during the period from and including the date
that is the first anniversary of the Closing Date up to the date that is the
second anniversary of the Closing Date, 2.00% times the Maximum Revolver Amount,
and (c) during the period from and including the date that is the second
anniversary of the Closing Date up to the date that is the third anniversary of
the Closing Date, 1.00% times the Maximum Revolver Amount; provided, however,
the Applicable Prepayment Premium will be waived in full if the prepayment in
full and early termination of this Agreement in accordance with the terms hereof
is the result of a refinancing provided solely by Wells Fargo; provided,
further, the Applicable Prepayment Premium will be reduced by fifty percent
(50%) if such prepayment in full and early termination of this Agreement is the
result of a private placement of Borrower's subordinated debt or equity, a
public offering of Borrower's equity, or the sale of substantially all of the
assets or stock of Borrower.

            "Assignee" has the meaning set forth in Section 14.1(a).

            "Authorized Person" means any officer or employee of Borrower.

            "Availability" means, as of any date of determination, the amount
that Borrower is entitled to borrow as Advances hereunder (after giving effect
to all Revolver Usage, the Rent Reserve and all reserves then applicable
hereunder instituted in accordance with Section 2.1(b)).

            "Bank Product" means any financial accommodation extended to
Borrower or its Subsidiaries by a Bank Product Provider (other than pursuant to
this Agreement) including: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) ACH Transactions, (f) cash
management, including controlled disbursement, accounts or services, or (g)
transactions under Hedge Agreements.

            "Bank Product Agreements" means those agreements entered into from
time to time by Borrower or its Subsidiaries with a Bank Product Provider in
connection with the obtaining of any of the Bank Products.

            "Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to any Bank Product Provider pursuant to or evidenced by the
Bank Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that Borrower or
its Subsidiaries are obligated to reimburse to Lender as a result of Lender
purchasing participations from, or executing indemnities or reimbursement
obligations to, a Bank Product Provider with respect to the Bank Products
provided by such Bank Product Provider to Borrower or its Subsidiaries.

            "Bank Product Provider" means Wells Fargo or any of its Affiliates.

            "Bank Product Reserve" means, as of any date of determination, the
amount of reserves that Lender has established (based upon the Bank Product
Providers' reasonable



determination of the credit exposure of Borrower and its Subsidiaries in respect
of Bank Products) in respect of Bank Products then provided or outstanding.

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

            "Base LIBOR Rate" means the rate per annum, determined by Lender in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/100%), to be the rate at which Dollar deposits (for delivery on the
first day of the requested Interest Period) are offered to major banks in the
London interbank market 2 Business Days prior to the commencement of the
requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a
conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrower in accordance
with this Agreement, which determination shall be conclusive in the absence of
manifest error.

            "Base Rate" means, the rate of interest announced, from time to
time, within Wells Fargo at its principal office in San Francisco as its "prime
rate", with the understanding that the "prime rate" is one of Wells Fargo's base
rates (not necessarily the lowest of such rates) and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Wells Fargo may designate.

            "Base Rate Loan" means the portion of the Advances that bears
interest at a rate determined by reference to the Base Rate.

            "Beneficial Ownership" has the meaning assigned to such term in Rule
132-3 and Rule 13-d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition.

            "Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.

            "Board of Directors" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on behalf
of the board of directors (or comparable managers).

            "Books" means all of Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Borrower's and its



Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).

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

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

            (a) all of its Accounts,

            (b) all of its Books,

            (c) all of its commercial tort claims described on Schedule 5.7(d),

            (d) all of its Deposit Accounts,

            (e) all of its Equipment,

            (f) all of its General Intangibles,

            (g) all of its Inventory,

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

            (i) all of its Negotiable Collateral,

            (j) all of its Supporting Obligations,

            (k) money or other assets of Borrower that now or hereafter come
into the possession, custody, or control of the Lender, and

            (l) the proceeds and products, whether tangible or intangible, of
any of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.

            "Borrower Permitted Liens" shall mean Liens permitted under clauses
(a)-(c), (f), (g), (i) and (j) of the definition of Permitted Liens.

            "Borrowing" means a borrowing hereunder consisting of Advances.

            "Borrowing Base" means (1) so long as less than 30% of the Maximum
Revolver Amount is funded, the result of:



            (a) 85% of the amount of Eligible Domestic Accounts, less the
amount, if any, of the Dilution Reserve, plus

            (b) the lesser of

                  (i) 75% of the amount of Eligible Export Accounts, less the
amount, if any, of the Dilution Reserve, and

                  (ii) $3,750,000, plus

            (c) the lowest of

                  (i) $12,500,000,

                  (ii) 65% of the value of Eligible Inventory, and

                  (iii) 85% times the Net Liquidation Percentage times the book
            value of Borrower's Inventory, minus

            (d) the sum of (i) the Bank Product Reserve, (ii) the aggregate
amount of reserves, if any, established by Lender under Section 2.1(b) and (iii)
the Rent Reserve.

            and (2) so long as 30% or more of the Maximum Revolver Amount is
funded, the result of:

            (a) the lesser of

                  (i) 85% of the amount of Eligible Domestic Accounts, less the
amount, if any, of the Dilution Reserve, and

                  (ii) an amount equal to Borrower's Collections with respect to
Accounts for the immediately preceding 90 day period, plus

            (b) the lowest of

                  (i) 75% of the amount of Eligible Export Accounts, less the
amount, if any, of the Dilution Reserve,

                  (ii) an amount equal to Borrower's Collections with respect to
Accounts for the immediately preceding 90 day period, and

                  (iii) $3,750,000, plus

            (c) the lowest of

                  (i) $12,500,000,

                  (ii) 65% of the value of Eligible Inventory, and



                  (iii) 85% times the Net Liquidation Percentage times the book
            value of Borrower's Inventory, minus

            (d) the sum of (i) the Bank Product Reserve, (ii) the aggregate
amount of reserves, if any, established by Lender under Section 2.1(b) and (iii)
the Rent Reserve.

            "Business Day" means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the state of
Illinois, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.

            "Canadian Dollars" means Canadian dollars.

            "Capital Expenditures" means, with respect to any Person for any
period, the aggregate of all expenditures by such Person and its Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed, other than
reinvestment of asset sale proceeds permitted pursuant to Section 2.4(d) and
capital expenditures made solely with the proceeds of insurance or condemnation
awards, to the extent permitted under Section 6.8 and capital expenditures that
constitute Permitted Acquisitions.

            "Capitalized Lease Obligation" means that portion of the obligations
under a Capital Lease that is required to be capitalized in accordance with
GAAP.

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

            "Cash Equivalents" means (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Moody's Investor Service, Inc.
("Moody's"), (c) commercial paper maturing no more than one year from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody's, (d) certificates of deposit or
bankers' acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof or the District of Columbia or any United States branch of a foreign
bank having at the date of acquisition thereof combined net capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, (f) money
market



funds offered by any bank that satisfies the criteria described in clause (d)
above, (g) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications specified in clause (d) above, and (h)
Investments in money market funds substantially all of whose assets are invested
in the types of assets described in clauses (a) through (g) above.

            "Cash Management Account" has the meaning set forth in Section
2.7(a).

            "Cash Management Agreements" means those certain cash management
agreements, in form and substance reasonably satisfactory to Lender, each of
which is among Borrower or one of its Subsidiaries, Lender, and one of the Cash
Management Banks.

            "Cash Management Bank" has the meaning set forth in Section 2.7(a).

            "Change of Control" means the occurrence of one or more of the
following events:

            (1) any direct or indirect sale, lease, transfer, conveyance or
other disposition (other than by way of merger or consolidation), in one
transaction or a series of related transactions, of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), other than a transaction in
which the transferee is controlled by one or more Permitted Holders;

            (2) any Person or Group, other than Permitted Holders, is or becomes
the Beneficial Owner, directly or indirectly whether by merger or consolidation,
of a majority of the total outstanding Stock of the Company as measured by
voting power; provided that there shall be no Change of Control pursuant to this
clause (2) if the Permitted Holders continue to have the right or ability by
voting power; contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company,

            (3) the adoption of a plan for the liquidation or dissolution of the
Company; or

            (4) individuals who on the Closing Date constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved pursuant to a vote of a majority of the directors then still in
office who were either directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; provided that
there shall be no Change of Control pursuant to this clause (4) if since the
Closing Date the Permitted Holders continue to own, directly or indirectly, (a)
at least 90% of the Stock of the Company held by the Permitted Holders as of the
Closing Date, (b) more Stock than any other Person or Group (other than a Group
consisting solely of Merrill Lynch and Co., Inc., Northeast Investors Trust and
their respective Affiliates), (c) more Stock than Merrill Lynch & Co., Inc. and
its Affiliates and (d) more Stock than Northeast Investors Trust and its
Affiliates.



            "Closing Date" means the date of the making of the initial Advance
(or other extension of credit) hereunder or the date on which Lender sends
Borrower a written notice that each of the conditions precedent set forth in
Section 3.1 either have been satisfied or have been waived.

            "Closing Date Business Plan" means the set of Projections of
Borrower for the 3 calendar year period commencing with 2004 (on a year by year
basis, and for 2004, on a quarter by quarter basis.

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

            "Collateral" means all assets and interests in assets and proceeds
thereof now owned or hereafter acquired by Borrower in or upon which a Lien is
granted under any of the Loan Documents. Notwithstanding the foregoing, the term
Collateral shall in no event include (a) more than sixty-five percent (65%) of
the issued and outstanding Stock of any first-tier Foreign Subsidiary of
Borrower, (b) any rights under any Account, contract, license or other agreement
or any General Intangible, in each case, to the extent that the grant of a
security interest under any Loan Document (i) would invalidate the underlying
rights of Borrower in such General Intangible, (ii) is prohibited by such
Account, contract, license, agreement, intellectual property or General
Intangible without the consent of any other party thereto, (iii) would give any
other party to such Account, contract, license, agreement or General Intangible
the right to terminate its obligations thereunder, or (iv) is not permitted
without consent, unless in each case, all necessary consents to such grant of a
security interest have been obtained from the other parties thereto; provided,
however, that nothing herein shall be intended to limit the affect of 9-406 of
the Code or otherwise limit or restrict the conveyance by the Borrower of any
rights under any such Account, contracts, licenses, agreements or General
Intangibles to the extent which would not be violative of the restrictive terms
thereof or (c) Equipment subject to a Lien permitted under Sections 7.1(b), (c)
and (d) of this Agreement, in each case, with respect to which Borrower is
prohibited from granting a security interest under the terms of the Indebtedness
incurred to finance the purchase of such Equipment.

            "Collateral Agent" means LaSalle Bank National Association, in its
capacity as the collateral agent pursuant to the Collateral Agreements.

            "Collateral Agreements" means each security agreement, mortgage,
leasehold mortgage, pledge agreement and any other document or agreement
providing for a Lien in favor of the Collateral Agent in connection with the
Notes and the Indenture, as any of the



same may be amended or modified in accordance with their respective terms, and
the Intercreditor Agreement and this Agreement.

            "Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in Borrower's or its Subsidiaries' Books, Equipment, or
Inventory, in each case, in form and substance reasonably satisfactory to
Lender.

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

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

            "Compliance Certificate" means a certificate substantially in the
form of Exhibit C-1 delivered by the chief financial officer of Borrower to
Lender.

            "Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Lender, executed and delivered by Borrower, Lender,
and the applicable securities intermediary (with respect to a Securities
Account) or bank (with respect to a Deposit Account).

            "Daily Balance" means, as of any date of determination and with
respect to any Obligation, the amount of such Obligation owed at the end of such
day.

            "Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.

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

            "Designated Account" means the Deposit Account of Borrower
identified on Schedule D-1, as such schedule may be amended or modified from
time to time by Borrower and as consented to by Lender pursuant to the execution
of a Control Agreement by the Lender, the applicable securities intermediary or
bank and the Borrower.

            "Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1, as such schedule may be amended or modified from time to time by
Borrower and as consented to by Lender pursuant to the execution of a Control
Agreement by the Lender, the applicable securities intermediary or bank and the
Borrower.

            "Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 360 consecutive days, that is
the result of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or



other dilutive items with respect to Borrower's Accounts during such period, by
(b) Borrower's billings with respect to Accounts during such period.

            "Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by 1 percentage
point for each percentage point by which Dilution is in excess of 5%.

            "Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Lender regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is reasonably satisfactory to
Lender.

            "Dollars" or "$" means United States dollars.

            "EBITDA" means, with respect to any fiscal period, Borrower's and
its Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains
and interest income, plus interest expense, income taxes, and depreciation and
amortization and non-cash and non-recurring charges for such period, in each
case, as determined in accordance with GAAP.

            "Eligible Accounts" means collectively, Eligible Domestic Accounts
and Eligible Export Accounts.

            "Eligible Domestic Accounts" means those Accounts created by
Borrower in the ordinary course of its business, that arise out of Borrower's
sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit performed by Lender from time to time after the
Closing Date; provided, further, that prior to revising any such criteria, the
Lender shall notify the Borrower and promptly enter into good faith discussions
with the Borrower for such period of time as the Lender deems appropriate in its
Permitted Discretion. In determining the amount to be included, Eligible
Domestic Accounts shall be calculated net of customer deposits and unapplied
cash. Eligible Domestic Accounts shall not include the following:

            (a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date or Accounts with selling terms of more than 60
days,

            (b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,

            (c) Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,



            (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

            (e) Accounts that are not payable in Dollars or Canadian Dollars,

            (f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in the United States or Canada, or
(ii) is not organized under the laws of the United States or Canada or any state
or province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof, unless (y) the Account is supported by an irrevocable
letter of credit reasonably satisfactory to Lender (as to form, substance, and
issuer or domestic confirming bank) that has been delivered to Lender and is
directly drawable by Lender, or (z) the Account is covered by credit insurance
in form, substance, and amount, and by an insurer, reasonably satisfactory to
Lender,

            (g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the United
States (exclusive, however, of Accounts with respect to which Borrower has
complied, to the reasonable satisfaction of Lender, with the Assignment of
Claims Act, 31 USC  Section 3727), or (ii) any state of the United States,

            (h) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute; provided, that only such portion of such
Account subject to any such claim, right of setoff or dispute shall be deemed
ineligible pursuant to this clause (h),

            (i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% (except in the case of Kraft Foods, 20%
and Smithfield Foods, 20%) (such percentage, as applied to a particular Account
Debtor, being subject to reduction by Lender in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that, in each case, the amount of Eligible
Domestic Accounts that are excluded because they exceed the foregoing percentage
shall be determined by Lender based on all of the otherwise Eligible Accounts
prior to giving effect to any eliminations based upon the foregoing
concentration limit,

            (j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,



            (k) Accounts with respect to which the Account Debtor is located in
a state or jurisdiction (e.g., New Jersey, Minnesota, and West Virginia) that
requires, as a condition to access to the courts of such jurisdiction, that a
creditor qualify to transact business, file a business activities report or
other report or form, or take one or more other actions, unless Borrower has so
qualified, filed such reports or forms, or taken such actions (and, in each
case, paid any required fees or other charges), except to the extent that
Borrower may qualify subsequently as a foreign entity authorized to transact
business in such state or jurisdiction and gain access to such courts, without
incurring any cost or penalty viewed by Lender to be significant in amount, and
such later qualification cures any access to such courts to enforce payment of
such Account,

            (l) Accounts, the collection of which, Lender, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,

            (m) Accounts that are not subject to a valid and perfected first
priority Lender's Lien (other than Borrower Permitted Liens),

            (n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

            (o) Accounts that represent the right to receive progress payments
or other advance billings that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.

            "Eligible Export Accounts" means those Accounts created by Borrower
in the ordinary course of its business, that arise out of Borrower's sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made in the Loan Documents, and that are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such criteria may be revised from time
to time by Lender in Lender's Permitted Discretion to address the results of any
audit performed by Lender from time to time after the Closing Date; provided,
further, that prior to revising any such criteria, the Lender shall notify the
Borrower and promptly enter into good faith discussions with the Borrower for
such period of time as the Lender deems appropriate in its Permitted Discretion.
In determining the amount to be included, Eligible Export Accounts shall be
calculated net of customer deposits and unapplied cash. Eligible Export Accounts
shall not include the following:

            (a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date,

            (b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,



            (c) Accounts with respect to which the Account Debtor is an
Affiliate of Borrower or an employee or agent of Borrower or any Affiliate of
Borrower,

            (d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

            (e) Accounts that are not payable in Dollars or Canadian Dollars,

            (f) Accounts with respect to which the Account Debtor is the
government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof, unless (y) the
Account is supported by an irrevocable letter of credit reasonably satisfactory
to Lender (as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Lender and is directly drawable by Lender, or (z) the
Account is covered by credit insurance in form, substance, and amount, and by an
insurer, reasonably satisfactory to Lender,

            (g) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff, or has disputed its
obligation to pay all or any portion of the Account, to the extent of such
claim, right of setoff, or dispute; provided, that only such portion of such
Account subject to any such claim, right of setoff or dispute shall be deemed
ineligible pursuant to this clause (g),

            (h) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 5% (except in the case of Kyokuto Boeki
Kaisha, 10% and McCormick Pace, 10%) such percentage, as applied to a particular
Account Debtor, being subject to reduction by Lender in its Permitted Discretion
if the creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage; provided, however, that, in each case, the amount of
Eligible Export Accounts that are excluded because they exceed the foregoing
percentage shall be determined by Lender based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limit,

            (i) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

            (j) Accounts, the collection of which, Lender, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,

            (k) Accounts that are not subject to a valid and perfected first
priority Lender's Lien (other than Borrower Permitted Liens),



            (l) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

            (m) Accounts that represent the right to receive progress payments
or other advance billings that are due prior to the completion of performance by
Borrower of the subject contract for goods or services.

            "Eligible Inventory" means Inventory (a) consisting of first quality
finished goods held for sale in the ordinary course of Borrower's business, (b)
semi-finished goods or (c) raw materials, that complies with each of the
representations and warranties respecting Eligible Inventory made in the Loan
Documents, and that is not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Lender in Lender's Permitted Discretion to
address the results of any audit or appraisal performed by Lender from time to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrower's historical accounting practices. An item of Inventory shall not
be included in Eligible Inventory if:

            (a) Borrower does not have good, valid, and marketable title
thereto,

            (b) it is not (i) located at one of the locations in the continental
United States or Canada set forth on Schedule E-1 (which Schedule may be amended
from time to time by Borrower as consented to by Lender pursuant to the
execution and delivery of a Collateral Access Agreement or the imposition of a
Rent Reserve with respect to such property) or (ii) in-transit from one such
location to another location permitted in clause (i) above; provided, however
that in no event shall, at any time, more than $750,000 of such in-transit
Inventory constitute any portion of Eligible Inventory for purposes of the
Borrowing Base,

            (c) it is not subject to a valid and perfected first priority
Lender's Lien (other than Borrower Permitted Liens),

            (d) it consists of goods returned or rejected by Borrower's
customers (unless such goods have been re-worked by Borrower as determined by
Lender in its Permitted Discretion), or

            (e) it consists of goods that are obsolete or slow moving as
determined by Lender in its Permitted Discretion or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in Borrower's
business, bill and hold goods, defective goods, "seconds," or Inventory acquired
on consignment.

            "Eligible Transferee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of



any such country and which has total assets in excess of $250,000,000, provided
that such bank is acting through a branch or agency located in the United
States, (c) a finance company, insurance company, or other financial institution
or fund that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having (together
with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate
(other than individuals) of Lender, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Borrower (which
approval of Borrower shall not be unreasonably withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Lender.

            "Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other written communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of Borrower or its U.S. Subsidiaries, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by Borrower or its U.S. Subsidiaries.

            "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy, or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Borrower or its U.S. Subsidiaries, relating to the environment, the effect of
the environment on employee health, or Hazardous Materials, including the
Comprehensive Environmental Response Compensation and Liability Act, 42 USC
Section 9601 et seq.; the Resource Conservation and Recovery Act, 42 USC Section
6901 et seq.; the Federal Water Pollution Control Act, 33 USC Section 1251 et
seq.; the Toxic Substances Control Act, 15 USC Section 2601 et seq.; the Clean
Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC Section 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC
Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC Section
651 et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); any state and local or foreign counterparts or equivalents, in each
case as amended from time to time.

            "Environmental Liabilities and Costs" means all liabilities,
monetary obligations, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.



            "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

            "Equipment" means equipment (as that term is defined in the Code)
and includes machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), computer hardware, tools, parts, and goods
(other than consumer goods, farm products, or Inventory), wherever located,
including all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.

            "ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower or its Subsidiaries under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer as
the employees of Borrower or its Subsidiaries under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower or any of its Subsidiaries is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower or
any of its Subsidiaries and whose employees are aggregated with the employees of
Borrower or its Subsidiaries under IRC Section 414(o).

            "Event of Default" has the meaning set forth in Section 8.

            "Excess Availability" means, as of any date of determination, the
amount equal to Availability minus the aggregate amount, if any, of all trade
payables of Borrower and its Subsidiaries aged in excess of historical levels
with respect thereto and all book overdrafts of Borrower and its Subsidiaries in
excess of historical practices with respect thereto, in each case as determined
by Lender in its Permitted Discretion.

            "Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.

            "Existing Lender" means Arnos Corp.

            "Extraordinary Receipts" means any Collections received by the
Borrower or any of its U.S. Subsidiaries not in the ordinary course of business,
including, (a) proceeds of insurance and (b) condemnation awards (and payments
in lieu thereof), less, with respect to (a) and (b) above, the aggregate amount
actually paid by Borrower or its U.S. Subsidiaries, as applicable, in respect of
maintaining and preserving the properties subject to such insurance or casualty,
preceding the receipt of such Collections.

            "Filing Authorization Letter" means a letter duly executed by
Borrower authorizing Lender to file appropriate financing statements in such
office or offices as may



be necessary or, in the opinion of Lender, desirable to perfect the security
interests to be created by the Loan Documents.

            "Fixed Charges" means with respect to the Borrower and its
Subsidiaries for any period, the sum, without duplication, of (a) cash Interest
Expense, and (b) regularly scheduled principal payments required to be paid
during such period in respect of Indebtedness.

            "Fixed Charge Coverage Ratio" means, with respect to Borrower and
its Subsidiaries for any period, the ratio of (i) EBITDA for such period minus
Capital Expenditures made (to the extent not already incurred in a prior period)
or incurred during such period solely with Advances minus all federal, state and
local income taxes paid during such period, to (ii) Fixed Charges for such
period.

            "Foreign Subsidiaries" means any Subsidiary that is incorporated,
organized or formed under any laws other than the laws of the United States, any
state thereof or the District of Columbia and is a "controlled foreign company"
(as defined in the IRC), including Viskase Europe Limited, Viskase Brasil
Embalagens Ltda., and Viskase Canada Inc.

            "Funding Date" means the date on which a Borrowing occurs.

            "Funding Losses" has the meaning set forth in Section 2.13(b)(ii).

            "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.

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

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

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



            "Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

            "Hedge Agreement" means any and all agreements or documents now
existing or hereafter entered into by Borrower or any of its Subsidiaries 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 Borrower's or any of its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.

            "Indebtedness" means, with respect to a Person, (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 (other
than obligations that are not and will not be included in such Person's audited
consolidated financial statements prepared in accordance with GAAP due to the
immateriality of such obligations as determined in good faith by such Person),
(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, (g) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations under any title retention agreement (but
excluding trade accounts payable and other accrued liabilities arising in the
ordinary course of business that are not overdue by 90 days or more or are
subject to a Permitted Protest), (h) all obligations incurred in connection with
a Permitted Acquisition and (i) 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 (h) above.

            "Indemnified Liabilities" has the meaning set forth in Section 11.3.

            "Indemnified Person" has the meaning set forth in Section 11.3.



            "Indenture" means that certain Indenture governing the issuance of
the Notes by and among the Borrower, the Trustee and the Collateral Agent, and
any successor thereto, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Intercreditor Agreement.

            "Initial Purchaser" means Jefferies & Company, Inc.

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

            "Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.

            "Intellectual Property Security Agreement" means an intellectual
property security agreement executed and delivered by Borrower and Lender, the
form and substance of which is reasonably satisfactory to Lender.

            "Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Borrower and each of its Subsidiaries and
Lender, the form and substance of which is reasonably satisfactory to Lender.

            "Intercreditor Agreement" means an intercreditor agreement by and
among the Collateral Agent, Lender and the Borrower, in form and substance
reasonably satisfactory to Lender, as the same may be amended, supplemented or
modified from time to time in accordance with its terms.

            "Interest Expense" means, for any period, the aggregate of the
interest expense of Borrower and its Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP.

            "Interest Period" means, with respect to each LIBOR Rate Loan, a
period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 or 6 months thereafter; provided,
however, that (a) if any Interest Period would end on a day that is not a
Business Day, such Interest Period shall be extended (subject to clauses (c)-(e)
below) to the next succeeding Business Day, (b) interest shall accrue at the
applicable rate based upon the LIBOR Rate from and including the first day of
each Interest Period to, but excluding, the day on which any Interest Period
expires, (c) any Interest Period that would end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day, (d) with respect to an Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest



Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 or 6 months after the date on which the Interest Period
began, as applicable, and (e) Borrower may not elect an Interest Period which
will end after the Maturity Date.

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

            "Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, relocation and similar advances to officers and employees of such Person
made in the ordinary course of business, and (b) bona fide Accounts or advances
to suppliers, in each case, arising in the ordinary course of business
consistent with past practice), purchases or other acquisitions of Indebtedness,
Stock, or all or substantially all of the assets of such other Person (or of any
division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.

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

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

            "L/C" has the meaning set forth in Section 2.12(a).

            "L/C Disbursement" means a payment made by Lender pursuant to a
Letter of Credit.

            "L/C Undertaking" has the meaning set forth in Section 2.12(a).

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

            "Lender Expenses" means all (a) reasonable costs or expenses
(including taxes, and insurance premiums) required to be paid by Borrower or its
Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by Lender, (b) reasonable fees or charges paid or incurred by Lender in
connection with Lender's transactions with Borrower or its Subsidiaries,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office or the copyright office), filing, recording, publication,
appraisal (including periodic collateral appraisals to the extent of the fees
and charges (and up to the amount of any limitation) contained in this
Agreement), real estate title policies and endorsements, (c) reasonable costs
and expenses incurred by Lender in the disbursement of funds to Borrower (by
wire transfer or otherwise), (d) charges paid or incurred by Lender resulting
from the dishonor of checks, (e) reasonable costs and expenses paid or incurred
by Lender to correct any default or enforce any provision of the Loan Documents,
or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral, or
any



portion thereof, irrespective of whether a sale is consummated, (f)
reasonable audit fees and expenses of Lender related to audit examinations of
the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by Lender in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or Lender's relationship with Borrower or any of its
Subsidiaries, (h) Lender's reasonable costs and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing, administering,
syndicating, or amending the Loan Documents, and (i) Lender's reasonable costs
and expenses (including attorneys, accountants, consultants, and other advisors
fees and expenses) incurred in terminating, enforcing (including attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower or its Subsidiaries or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.

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

            "Lender's Account" means the account identified in Schedule L-1.

            "Lender's Liens" means the Liens granted by Borrower and its
Subsidiaries to Lender under this Agreement or the other Loan Documents.

            "Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.

            "Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.

            "LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).

            "LIBOR Notice" means a written notice in the form of Exhibit L-1.

            "LIBOR Option" has the meaning set forth in Section 2.13(a).

            "LIBOR Rate" means, for each Interest Period for each LIBOR Rate
Loan, the rate per annum determined by Lender (rounded upwards, if necessary, to
the next 1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.

            "LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.

            "LIBOR Rate Margin" means the number of percentage points set forth
below:





                                                         LIBOR Rate
          EBITDA                                           Margin
          ------                                           ------
                                                      
    $21,000,000 or less                                    2.50%
$21,000,001 to $25,000,000                                 2.25%
   $25,000,001 and above                                   2.00%


            For purposes of the foregoing, (x) EBITDA shall be determined as of
the end of each fiscal year based upon the most recent audited consolidated
financial statements of Borrower for such fiscal year delivered pursuant to
Section 6.3(b) and (y) each change in the LIBOR Rate Margin resulting from a
change in EBITDA as determined in accordance with clause (x) above shall be
effective during the period commencing on and including the date of delivery to
Lender of such audited consolidated financial statements indicating such change
in EBITDA and ending on the date immediately preceding the effective date of the
next such change in EBITDA as determined in accordance with clause (x) above.
The preceding notwithstanding, if Section 7.19(a) hereof is breached at any
time, the Borrower acknowledges that the default rate of interest set forth in
Section 2.6(c) shall be applicable.

            "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, collateral assignment,
security deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, 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.

            "Loan Account" has the meaning set forth in Section 2.10.

            "Loan Documents" means this Agreement, the Bank Product Agreements,
the Cash Management Agreements, the Control Agreements, the Disbursement Letter,
the Intellectual Property Security Agreement, the Intercompany Subordination
Agreement, the Letters of Credit, the Mortgages, the Stock Pledge Agreements,
any note or notes executed by Borrower in connection with this Agreement and
payable to Lender, and any other agreement entered into, now or in the future,
by Borrower and Lender in connection with this Agreement, as any of the
foregoing may be amended or modified from time to time in accordance with their
respective terms.

            "Material Adverse Change" means (a) a material adverse change in the
business, operations, results of operations, assets, liabilities or condition
(financial or



otherwise) of Borrower and its Subsidiaries, taken as a whole, (b) a material
impairment of Borrower's and its Subsidiaries' ability to perform their
respective obligations under the Loan Documents to which they are parties or of
Lender's ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of the Lender's
Liens with respect to the Collateral as a result of an action or failure to act
on the part of Borrower or its Subsidiaries.

            "Maturity Date" has the meaning set forth in Section 3.4.

            "Maximum Revolver Amount" means $20,000,000.00.

            "Mortgage Policy" has the meaning set forth in Section 3.1(r).

            "Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Lender, in form and substance reasonably satisfactory to
Lender, that encumber the Real Property Collateral, as the same may be amended
or modified from time to time in accordance with its terms.

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

            "Net Cash Proceeds" means, with respect to any sale or disposition
by any Person or any Subsidiary thereof of property or assets, the amount of
Collections received (directly or indirectly) from time to time (whether as
initial consideration or through the payment of deferred consideration) by or on
behalf of such Person or such Subsidiary, in connection therewith after
deducting therefrom only (i) the amount of any Indebtedness secured by any
Permitted Lien on any asset (other than (A) Indebtedness owing to Lender under
this Agreement or the other Loan Documents and (B) Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such disposition, (ii) reasonable expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, (iii) taxes paid, payable or
estimated in good faith to be payable to any taxing authorities by such Person
or such Subsidiary in connection therewith and are properly attributable to such
transaction and (iv) any reserves required by GAAP to be made by such Person or
such Person's Subsidiary in connection with such sale or disposition.

            "Net Liquidation Percentage" means the percentage of the book value
of Borrower's Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory net of all associated costs and expenses of such
liquidation, such percentage to be as determined from time to time by a
qualified appraisal company selected by Lender.

            "Notes" means those certain 11-1/2% Senior Secured Notes due 2011 of
Borrower in the principal amount of $90,000,000.



            "Obligations" means (a) all loans, Advances, debts, principal,
interest (including any interest that, but for the commencement of an Insolvency
Proceeding, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrower's Loan Account pursuant hereto), obligations
(including indemnification obligations), fees (including the fees provided for
in the Fee Letter), charges, costs, Lender Expenses (including any fees or
expenses that, but for the commencement of an Insolvency Proceeding, would have
accrued), guaranties, covenants, and duties of any kind and description owing by
Borrower to Lender pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Expenses that
Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this Agreement
or in the Loan Documents to the Obligations shall include all extensions,
modifications, renewals or alterations thereof, both prior and subsequent to any
Insolvency Proceeding.

            "Overadvance" has the meaning set forth in Section 2.5.

            "Participant" has the meaning set forth in Section 14.1(d).

            "Pay-Off Letter" means a letter, in form and substance reasonably
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower and its
Subsidiaries owing to Existing Lender and obtain a release of all of the Liens
existing in favor of Existing Lender in and to the assets of Borrower and its
Subsidiaries.

            "Permitted Acquisitions" means any acquisition (whether by merger,
consolidation, stock purchase, asset purchase or otherwise) by Borrower or any
of its Subsidiaries of all or part of the capital stock (or other equity),
assets, or business of a Person engaged in substantially the same general line
of business as that in which the Borrower is engaged; provided, that, (i)
immediately prior to and after giving effect to any such acquisition no Default
or Event of Default shall occur and be continuing; (ii) the Borrower provides
the Lender with prior written notice (which notice shall not be less than 15
days prior to the closing date of such acquisition) of such acquisition
containing the salient terms of such acquisition; (iii) for the 30 day period
prior to consummating such acquisition and after giving effect thereto Borrower
shall have at least $5,000,000 of Availability; (iv) the Borrower shall, and
shall cause its Subsidiaries, to comply with the requirements set forth in
Section 6.15 (to the extent applicable in such acquisition); (v) the Borrower
and its Subsidiaries shall comply with the Fixed Charge Coverage Ratio set forth
in Section 7.19(c) for the four fiscal quarters immediately following the
closing of such acquisition; and (vi) not more than two acquisitions in any
fiscal year shall be consummated and the aggregate amount of consideration for
all such acquisitions in any fiscal year shall not exceed $5,000,000.



            "Permitted Discretion" means a determination made in the exercise of
commercially reasonable (from the perspective of a secured asset-based lender)
business judgment in good faith.

            "Permitted Dispositions" means (a) sales or other dispositions of
assets that are substantially worn, surplus, damaged, or obsolete in the
ordinary course of business, (b) sales of Inventory to buyers in the ordinary
course of business, (c) the use or transfer of money or Cash Equivalents in a
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) the licensing or abandonment of patents, patent applications,
trademarks, trademark applications, copyrights, copyright registrations, trade
secrets, computer programs and software and other intellectual property rights
in the ordinary course of business, (e) any sale of non-core assets acquired in
connection with a Permitted Acquisition or a Permitted Investment, (f) any sale
or disposition of assets permitted under Section 2.4(c), (g) sales or other
dispositions of assets having a fair market value not to exceed $1,500,000 in
the aggregate in any fiscal year of the Borrower, subject in such case to
Section 2.4(c) and (d), (h) any transfer of assets by any Foreign Subsidiary to
another Foreign Subsidiary, (i) any transfer of assets by any Subsidiary to
Borrower, (j) any transfer of assets by Borrower to any U.S. Subsidiary so long
as such U.S. Subsidiary becomes a party to this Agreement pursuant to Section
6.15 hereof and (k) any transfer of assets by Borrower or any U.S. Subsidiary to
any Foreign Subsidiary to the extent constituting (and subject to the
limitations and restrictions) a Permitted Investment under clause (i) thereof.

            "Permitted Holders" means Carl C. Icahn and his Affiliates.

            "Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, (d) Investments received in settlement of amounts due to
Borrower or any of its Subsidiaries effected in the ordinary course of business
or owing to Borrower or any of its Subsidiaries as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of Borrower or its Subsidiaries, (e) Investments by any
Foreign Subsidiary in any other Foreign Subsidiary, (f) Investments by any U.S.
Subsidiary in Borrower, (g) Investments by any Foreign Subsidiary in the
Borrower to the extent permitted under Section 7.1, (h) Investments by Borrower
in any U.S. Subsidiary so long as such U.S. Subsidiary becomes a party to this
Agreement pursuant to Section 6.15 hereof, (i) Investments by Borrower or any
U.S. Subsidiary in any Foreign Subsidiary so long as (1) such Investment is made
in substantially the same general line of business as that in which the Borrower
is engaged, (2) immediately prior to and after giving effect to any such
Investment no Default or Event of Default shall occur and be continuing, (3) the
Borrower provides the Lender with prior written notice (which notice shall not
be less than 15 days prior to the closing date of such Investment) of such
Investment containing the salient terms of such Investment, (4) for the 30 day
period prior to consummating such Investment and after giving effect thereto
Borrower shall have at least $5,000,000 of Availability, (5) the Borrower and
its Subsidiaries shall comply with the Fixed Charge Coverage Ratio set forth in
Section 7.19(c) for the four fiscal quarters immediately following the closing
of such



Investment and (6) the aggregate amount of consideration for all such
Investments in any 12 month period shall not exceed $5,000,000; provided,
however, that during one 12 month period during the term of this Agreement,
Borrower shall be permitted to make a one time aggregate Investment of
$11,000,000 (which amount shall include the $5,000,000 limitation set forth in
this clause (6)), (j) Investments by Borrower or any Subsidiary from
consideration received in connection with any Permitted Acquisition or Permitted
Disposition, subject to Section 2.4(c) and (d) and (k) Investments set forth on
Schedule I-1.

            "Permitted Liens" means (a) Liens held by Lender, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c) the
first priority Liens in favor of the Collateral Agent in the Borrower's
Equipment, fixtures and the Real Property Collateral, and the second priority
Liens in favor of the Collateral Agent in the Borrower's Accounts and Inventory,
and the Liens in favor of the Collateral Agent on a pari passu basis with Lender
in all of the Borrower's other assets and property, including intellectual
property, General Intangibles, deposit accounts, chattel paper, documents,
instruments, and investment property (including interests in Borrower's
Subsidiaries), (d) the interests of lessors under operating leases or landlord
liens arising thereunder, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof and Liens arising from Purchase
Money Indebtedness acquired pursuant to a Permitted Acquisition but subject to
Section 7.1(i), (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business and not in connection with the borrowing of
money, and which Liens either (i) are for sums not yet delinquent, or (ii) are
the subject of Permitted Protests, (g) Liens on amounts deposited to secure
obligations arising from statutory, regulatory, contractual or warranty
requirements of Borrower or its Subsidiaries, including rights of offset and
set-off, (h) Liens securing obligations under Hedge Agreements, (i) Liens on
amounts deposited as security for performance or surety and appeal bonds in
connection with obtaining such bonds in the ordinary course of business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) with respect to any Real Property, easements, rights of way,
zoning restrictions and other charges or encumbrances that do not materially
interfere with or impair the use or operation thereof, (l) Liens securing
Indebtedness acquired by the Borrower or its Subsidiaries; provided, that such
Liens (i) were not granted in connection with, or in anticipation of, the
incurrence of such Indebtedness by Borrower or its Subsidiaries, (ii) do not
cover property or assets of Borrower and its Subsidiaries other than property or
assets which secured such Indebtedness prior to the time such Indebtedness
became acquired Indebtedness and (iii) are no more favorable than the Liens in
such property or assets in favor of Lender and Collateral Agent permitted by
this Agreement, (m) Liens securing Indebtedness of Foreign Subsidiaries to the
extent such Indebtedness is permitted under Section 7.1(j), (n) Liens securing
Indebtedness to be refinanced permitted to Section 7.1(c); provided that (i)
such Lien securing Indebtedness to be refinanced had been a Lien permitted
hereunder, (ii) is not less favorable to Lender than the Liens securing the
Indebtedness to be refinanced and (iii) does not cover any property or assets of
the Borrower or such Subsidiary not securing the



Indebtedness to be refinanced, (o) Liens upon specific items of Inventory or
other goods and proceeds of Borrower or its Subsidiaries securing such Person's
obligations in respect of bankers' acceptances issued or created for the account
of such Person to facilitate the purchase, shipment or storage of such Inventory
or other goods, (p) Liens securing reimbursement obligations of any Foreign
Subsidiary with respect to commercial letters of credit which encumber documents
and other property relating to such letters of credit and products and proceeds
thereof, and (q) Liens set forth on Schedule P-1.

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

            "Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $1,000,000.00
(excluding any such Purchase Money Indebtedness acquired pursuant to a Permitted
Acquisition but subject to Section 7.1(i)).

            "Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

            "Projections" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

            "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

            "Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower or any of its Subsidiaries and the
improvements thereto.

            "Real Property Collateral" means the Real Property identified on
Schedule R-1 and any Real Property hereafter acquired by Borrower or any of its
Subsidiaries.

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



            "Registration Rights Agreement" means that certain Registration
Rights Agreement between the Borrower and the Initial Purchaser in connection
with the Notes.

            "Remedial Action" means all actions required under applicable
Environmental Laws to (a) clean up, remove, remediate, contain, treat, monitor,
assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened release of
Hazardous Materials so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) restore or
reclaim natural resources or the environment, (d) perform any pre-remedial
studies, investigations, or post-remedial operation and maintenance activities,
or (e) conduct any other actions with respect to Hazardous Materials authorized
by Environmental Laws.

            "Rent Reserve" means an amount not to exceed three months rent on
any applicable real property leased by the Borrower or its Subsidiaries from any
Person that is not subject to a Collateral Access Agreement, which amount shall
be reduced with respect to any property in which the Borrower shall have
delivered to the Lender a Collateral Access Agreement.

            "Required Availability" means that Availability exceeds
$10,000,000.00.

            "Reserve Percentage" means, on any day, for Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Lender, but so long as
Lender is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.

            "Revolver Usage" means, as of any date of determination, the sum of
(a) the amount of outstanding Advances, plus (b) the amount of the Letter of
Credit Usage.

            "SEC" means the United States Securities and Exchange Commission and
any successor thereto.

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

            "8% Senior Notes" means those certain 8% Senior Subordinated Secured
Notes due 2008 of Borrower.

            "Solvent" means, with respect to any Person on a particular date,
that such Person is able to pay its debts as they become due.

            "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting,



including common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).

            "Stock Pledge Agreements" means those certain stock pledge
agreements, in form and substance reasonably satisfactory to Lender, executed
and delivered by Borrower to Lender, as the same may be amended or modified from
time to time in accordance with its terms.

            "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

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

            "Taxes" has the meaning set forth in Section 16.5.

            "Triggering Event" means the occurrence of one or more of the
following events: (a) an Event of Default has occurred, (b) the aggregate
principal amount of all outstanding Advances exceeds $5,000,000 and (c) the
amount of Availability is less than $5,000,000.

            "Trustee" means LaSalle Bank National Association in its capacity as
trustee under the Indenture on behalf of the holders of the Notes.

            "Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of Borrower.

            "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

            "United States" means the United States of America.

            "Unrestricted Subsidiary" means (a) any Subsidiary of the Borrower
that at the time of determination shall be or continue to be designated an
Unrestricted Subsidiary by the Board of Directors of the Borrower or any of its
Subsidiaries in the manner provided in Section 7.3 and (b) any Subsidiary of an
Unrestricted Subsidiary.

            "U.S. Subsidiaries" means any Subsidiary other than a Foreign
Subsidiary including, Viskase Films, Inc. and WSC Corporation, each a Delaware
corporation, and wholly-owned by Borrower.



            "Voidable Transfer" has the meaning set forth in Section 16.7.

            "Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.

      1.2 ACCOUNTING TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.

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

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

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



2. LOAN AND TERMS OF PAYMENT.

      2.1 REVOLVER ADVANCES.

            (a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter of Credit
Usage, or (ii) the Borrowing Base less the Letter of Credit Usage.

            (b) Anything to the contrary in this Section 2.1 notwithstanding,
Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, against the Borrowing Base, as Lender in its Permitted
Discretion shall deem necessary or appropriate, against the Borrowing Base,
including reserves with respect to (i) sums that Borrower is required to pay
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
in accordance with the applicable provision of this Agreement or any other Loan
Document (subject to all applicable grace periods, if any), and (ii) amounts
owing by Borrower or its Subsidiaries to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than any existing Permitted
Lien set forth on Schedule P-1 which is specifically identified thereon as
entitled to have priority over the Lender's Liens), which Lien or trust, in the
Permitted Discretion of Lender likely would have a priority superior to the
Lender's Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for
ad valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. Prior to imposing any reserves
against the Borrowing Base or changing any eligibility criteria with respect to
the Borrowing Base, the Lender shall notify the Borrower and promptly enter into
good faith discussions with the Borrower for such period of time as the Lender
deems appropriate in its Permitted Discretion. In addition to the foregoing,
Lender shall have the right to have the Borrower's Inventory reappraised by a
qualified appraisal company selected by Lender from time to time after the
Closing Date for the purpose of re-determining the Net Liquidation Percentage of
Borrower's Inventory and, as a result, re-determining the Borrowing Base;
provided, that unless an Event of Default has occurred, Borrower shall reimburse
Lender for no more than one appraisal in any calendar year.

            (c) Lender shall have no obligation to make additional Advances
hereunder to the extent such additional Advances would cause the Revolver Usage
to exceed the Maximum Revolver Amount.

            (d) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.

      2.2 [INTENTIONALLY OMITTED.]



      2.3 BORROWING PROCEDURES AND SETTLEMENTS.

            (a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Lender. Such
notice must be received by Lender no later than 10:00 a.m. (California time) on
a Business Day specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day. At Lender's election, in
lieu of delivering the above-described written request, any Authorized Person
may give Lender telephonic notice of such request by the required time. In such
circumstances, Borrower agrees that any such telephonic notice will be confirmed
in writing within 24 hours of the giving of such telephonic notice, but the
failure to provide such written confirmation shall not affect the validity of
the request.

            (b) MAKING OF ADVANCES. If Lender has received a timely request for
a Borrowing in accordance with the provisions hereof, and subject to the
satisfaction or waiver in writing of the applicable terms and conditions set
forth herein, Lender shall make the proceeds of such Advance available to
Borrower on the applicable Funding Date by transferring immediately available
federal funds equal to such proceeds to Borrower's Designated Account.

      2.4 PAYMENTS.

            (a) PAYMENTS BY BORROWER.

                        (i) Except as otherwise expressly provided herein, all
            payments by Borrower shall be made to Lender's Account for the
            account of the Lender and shall be made in immediately available
            funds, no later than 11:00 a.m. (California time) on the date
            specified herein. Any payment received by Lender later than 11:00
            a.m. (California time) shall be deemed to have been received on the
            following Business Day and any applicable interest or fee shall
            continue to accrue until such following Business Day.

            (b) APPORTIONMENT AND APPLICATION.

                        (i) All payments shall be remitted to Lender and all
            such payments, and all proceeds of Collateral received by Lender,
            shall be applied as follows, subject only to the terms of the
            Intercreditor Agreement:

                  first, to pay any Lender Expenses then due to Lender under the
                  Loan Documents, until paid in full,

                  second, to pay any fees then due to Lender under the Loan
                  Documents until paid in full,

                  third, to pay interest due in respect of Advances until paid
                  in full,



                  fourth, so long as no Event of Default has occurred and is
                  continuing, and at Lender's election (which election Lender
                  agrees will not be made if an Overadvance would be created
                  thereby), to pay amounts then due and owing by Borrower or its
                  Subsidiaries in respect of Bank Products, until paid in full,

                  fifth, so long as no Event of Default has occurred and is
                  continuing, to pay the principal of all Advances until paid in
                  full,

                  sixth, if an Event of Default has occurred and is continuing,
                  ratably (i) to pay the principal of all Advances until paid in
                  full, (ii) to Lender, to be held by Lender as cash collateral
                  in an amount up to 105% of the Letter of Credit Usage until
                  paid in full, and (iii) to Lender, to be held by Lender, for
                  the benefit of the Bank Product Providers, as cash collateral
                  in an amount up to the amount of the Bank Product Reserve
                  established prior to the occurrence of, and not in
                  contemplation of, the subject Event of Default until
                  Borrower's and its Subsidiaries' obligations in respect of
                  Bank Products have been paid in full or the cash collateral
                  amount has been exhausted,

                  seventh, to pay any other Obligations (including the provision
                  of amounts to Lender, to be held by Lender, for the benefit of
                  the Bank Product Providers, as cash collateral in an amount up
                  to the amount determined by Lender in its Permitted Discretion
                  as the amount necessary to secure Borrower's and its
                  Subsidiaries' obligations in respect of Bank Products), and

                  eighth, to Borrower (to be wired to the Designated Account) or
                  such other Person entitled thereto under applicable law.

                        (ii) In each instance, so long as no Event of Default
      has occurred and is continuing, this Section 2.4(b) shall not apply to any
      payment made by Borrower to Lender and specified by Borrower to be for the
      payment of specific Obligations then due and payable (or prepayable) under
      any provision of this Agreement.

                        (iii) For purposes of the foregoing, "paid in full"
      means payment of all amounts owing under the Loan Documents according to
      the terms thereof (other than contingent indemnification obligations),
      including loan fees, service fees, professional fees, interest (and
      specifically including interest accrued after the commencement of any
      Insolvency Proceeding), default interest, interest on interest, and
      expense reimbursements, whether or not any of the foregoing would be or is
      allowed or disallowed in whole or in part in any Insolvency Proceeding.



                        (iv) In the event of a direct conflict between the
            priority provisions of this Section 2.4 and other provisions
            contained in any other Loan Document, it is the intention of the
            parties hereto that such priority provisions in such documents shall
            be read together and construed, to the fullest extent possible, to
            be in concert with each other. In the event of any actual,
            irreconcilable conflict that cannot be resolved as aforesaid, the
            terms and provisions of this Section 2.4 shall control and govern.

            (c) MANDATORY PREPAYMENTS.

                        (i) Immediately upon any sale or disposition by Borrower
            or any of its U.S. Subsidiaries of property or assets (other than
            Permitted Dispositions set forth in clauses (a) through and
            including (e) and (h) through and including (k)), the Borrower shall
            prepay the outstanding Advances in accordance with clause (d) below
            in an amount equal to 100% of the Net Cash Proceeds received by such
            Person in connection with such sales or dispositions. Nothing
            contained in this subclause (i) shall permit Borrower or any of its
            U.S. Subsidiaries to sell or otherwise dispose of any property or
            assets other than in accordance with Section 7.4.

                        (ii) Upon the receipt by Borrower or any of its U.S.
            Subsidiaries of any Extraordinary Receipts, the Borrower shall
            prepay the outstanding Advances in accordance with clause (d) below
            in an amount equal to 100% of such Extraordinary Receipts, net of
            any reasonable expenses incurred in collecting such Extraordinary
            Receipts. This Section 2.4(c) is subject in all cases to the
            Intercreditor Agreement.

            (d) APPLICATION OF PAYMENTS.

            Each prepayment pursuant to subclause (c)(i) and, with respect to
            insurance proceeds and condemnation awards related to a casualty or
            loss of Collateral, (c)(ii) above shall be applied as follows:

                  (1) If the proceeds are from the sale or disposition of
                  Accounts or Inventory, such proceeds shall be applied to the
                  outstanding Advances.

                  (2) Subject to (3) below, if the proceeds are from the sale or
                  disposition of any other assets or condemnation awards related
                  to a casualty or loss of Collateral, such proceeds shall be
                  applied to the outstanding principal amount of the Advances;
                  provided, that, except during the continuance of an Event of
                  Default, such proceeds shall not be required to be so applied
                  to the extent that such proceeds are used to replace, repair
                  or restore the properties or assets (or to purchase other
                  assets used by the Borrower in its business) in respect of
                  which such proceeds were paid if (i) the amount of proceeds
                  received in respect of such sale, disposition or insurance
                  proceeds or condemnation award is



                  less than $5,000,000, and (ii) Borrower delivers a certificate
                  to Lender within 10 days after such sale or 30 days after the
                  date of such loss, destruction or taking, as the case may be,
                  stating that such proceeds shall be used to replace, repair or
                  restore such properties or assets (or to purchase other assets
                  used by the Borrower in its business) within a period
                  specified in such certificate not to exceed 180 days after the
                  receipt of such proceeds (which certificate shall set forth
                  estimates of the proceeds to be so expended). If a Triggering
                  Event has occurred and is continuing, then such proceeds
                  referenced in this clause (2) shall be immediately deposited
                  in a Deposit Account subject to a Control Agreement.

                  (3) If the proceeds are from a sale or disposition of all or
                  substantially all of the assets of any Person, which sale or
                  disposition includes both Accounts and Inventory and other
                  assets, such proceeds shall be applied as follows: (i) an
                  amount equal to the book value of such Accounts or Inventory,
                  or if greater, an amount equal to the Advances supported by
                  such assets determined using the effective advance rate under
                  the Borrowing Base against such Accounts and Inventory, as the
                  case may be, (determined at the time of such sale or
                  disposition), shall be applied to the outstanding amount of
                  the Advances and (ii) the remaining proceeds shall be applied
                  to the outstanding Advances. This Section 2.4(d) is subject in
                  all cases to the Intercreditor Agreement.

      2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to Lender
pursuant to Section 2.1 or Section 2.12 is greater than any of the limitations
set forth in Section 2.1 or Section 2.12, as applicable (an "Overadvance"),
Borrower immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full as and when due and payable under the terms of this
Agreement and the other Loan Documents.

      2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.

            (a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows (i) if the
relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per
annum rate equal to the Base Rate.



            The foregoing notwithstanding, at no time shall any portion of the
Obligations (other than Bank Product Obligations) bear interest on the Daily
Balance thereof at a per annum rate less than 3%. To the extent that interest
accrued hereunder at the rate set forth herein would be less than the foregoing
minimum daily rate, the interest rate chargeable hereunder for such day
automatically shall be deemed increased to the minimum rate.

            (b) LETTER OF CREDIT FEE. Borrower shall pay Lender a Letter of
Credit fee (in addition to all applicable bank issuance charges and the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
a rate equal to the applicable LIBOR Rate Margin less 0.50 basis points per
annum times the Daily Balance of the undrawn amount of all outstanding Letters
of Credit and is payable monthly in arrears.

            (c) DEFAULT RATE. Upon the occurrence and during the continuation of
an Event of Default (and at the election of Lender),

                  (i) all Obligations (except for undrawn Letters of Credit and
            except for Bank Product Obligations) that have been charged to the
            Loan Account pursuant to the terms hereof shall bear interest on the
            Daily Balance thereof at a per annum rate equal to 2 percentage
            points above the per annum rate otherwise applicable hereunder, and

                  (ii) the Letter of Credit fee provided for above shall be
            increased to 2 percentage points above the per annum rate otherwise
            applicable hereunder.

            (d) PAYMENT. Except as provided to the contrary in Section 2.11 or
Section 2.13(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations are outstanding or at any time that Lender has an
obligation to extend credit hereunder. Borrower hereby authorizes Lender to
charge all interest and fees (when due and payable), all Lender Expenses (as and
when incurred), all charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), all fees and costs provided
for in Section 2.11 (as and when accrued or incurred), and all other payments as
and when due and payable under any Loan Document (including any amounts due and
payable to the Bank Product Providers in respect of Bank Products up to the
amount of the Bank Product Reserve) to Borrower's Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrower's Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder. The Lender shall
provide the Borrower with invoices, to the extent such invoices exist, with
respect to such charges, fees and costs contemplated by this Section 2.6(d).

            (e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of



interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.

            (f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrower and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Advances to the extent of such excess.

      2.7 CASH MANAGEMENT.

            (a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Lender at one or more of the
banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all of its Collections (including those sent directly by its Account
Debtors to Borrower) into a bank account in Borrower's name (a "Cash Management
Account") at one of the Cash Management Banks.

            (b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Lender and Borrower, in form and substance reasonably
acceptable to Lender. Each such Cash Management Agreement shall provide, among
other things, that (i) the Cash Management Bank will, upon written notice by
Lender to such Cash Management Bank that a Triggering Event has occurred in
which event the remaining provisions set forth in this Section 2.7(b) shall
apply until that particular Triggering Event shall have been cured for three
consecutive months, comply with any instructions originated by Lender directing
the disposition of the funds in such Cash Management Account without further
consent by Borrower or its Subsidiaries, as applicable, (ii) the Cash Management
Bank has no rights of setoff or recoupment or any other claim against the
applicable Cash Management Account other than for payment of its service fees
and other charges directly related to the administration of such Cash Management
Account and for returned checks or other items of payment, and (iii) it will
forward, by daily sweep, all amounts in the applicable Cash Management Account
to the Lender's Account. Notwithstanding the foregoing, if at any time during
the three consecutive months following the date a Triggering Event is cured
there are no outstanding amounts due by Borrower to Lender hereunder, then
during such time any funds shall remain in the applicable Cash Management
Account.



            (c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to Lender, and
(ii) prior to the time of the opening of such Cash Management Account, Borrower
and such prospective Cash Management Bank shall have executed and delivered to
Lender a Cash Management Agreement. Borrower shall close any of its Cash
Management Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
of written notice from, and after good faith negotiations with, Lender that the
creditworthiness of any Cash Management Bank is no longer acceptable in Lender's
commercially reasonable judgment, or as promptly as practicable and in any event
within 60 days of written notice from, and after good faith negotiations with,
Lender that the operating performance, funds transfer, or availability
procedures or performance of the Cash Management Bank with respect to Cash
Management Accounts or Lender's liability under any Cash Management Agreement
with such Cash Management Bank is no longer acceptable in Lender's commercially
reasonable judgment.

            (d) The Cash Management Accounts shall be cash collateral accounts
subject to Control Agreements, subject to the terms and provisions of this
Section 2.7.

      2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender (whether
from transfers to Lender by the Cash Management Banks pursuant to the Cash
Management Agreements or otherwise) shall not be considered a payment on account
unless such payment item is a wire transfer of immediately available federal
funds made to the Lender's Account or unless and until such payment item is
honored when presented for payment. Should any payment item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Lender only if it is received into the Lender's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Lender's Account on a non-Business Day or after 11:00 a.m. (California time) on
a Business Day, it shall be deemed to have been received by Lender as of the
opening of business on the immediately following Business Day.

      2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Advances and to
issue the Letters of Credit under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person or,
without instructions, if pursuant to Section 2.6(d). Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances requested by Borrower
and made by Lender hereunder. Unless otherwise agreed by Lender and Borrower,
any Advance requested by Borrower and made by Lender hereunder shall be made to
the Designated Account.

      2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which



Borrower will be charged with all Advances made by Lender to Borrower or for
Borrower's account, the Letters of Credit issued by Lender for Borrower's
account, and with all other payment Obligations hereunder or under the other
Loan Documents (except for Bank Product Obligations), including, accrued
interest, fees and expenses, and Lender Expenses. In accordance with Section
2.8, the Loan Account will be credited with all payments received by Lender from
Borrower or for Borrower's account, including all amounts received in the
Lender's Account from any Cash Management Bank. Lender shall render statements
regarding the Loan Account to Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender
Expenses owing, and such statements, absent manifest error, shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Lender unless, within 30 days after receipt thereof
by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.

      2.11 FEES. Borrower shall pay to Lender the following fees and charges,
which fees and charges shall be fully-earned and non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter):

            (a) UNUSED LINE FEE. On the first day of each month during the term
of this Agreement, an unused line fee in an amount equal to 0.375% per annum
times the result of (i) the Maximum Revolver Amount, less (ii) the sum of (A)
the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (B) the average Daily Balance of the Letter of
Credit Usage during the immediately preceding month,

            (b) SERVICING FEE. On the first day of each month, commencing with
the first day of the month immediately following the Closing Date, through the
date on which all of the Obligations are paid in full in accordance with the
terms of this Agreement and this Agreement is terminated in accordance with its
terms, a servicing fee in an amount equal to $2,500,

            (c) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal, and
valuation fees and charges as follows (i) a fee of $850 per day, per auditor,
plus out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Lender, (ii) if implemented, a fee of $850 per day, per
applicable individual, plus out of pocket expenses for the establishment of
electronic collateral reporting systems, (iii) the daily fee per appraiser
charged by such appraiser, plus out-of-pocket expenses, for each appraisal of
the Collateral, or any portion thereof, performed by a third party appraiser
hired by Lender and reasonably satisfactory to the Borrower, and (iv) the actual
charges paid or incurred by Lender if it elects to employ the services of one or
more third Persons to perform financial audits of Borrower or its Subsidiaries,
to establish electronic collateral reporting systems, or to appraise the
Collateral, or any portion thereof, subject in all cases to Section 6.4 hereof
and



            (d) CLOSING FEE. A closing fee equal to one percent (1%) of the
Maximum Revolver Amount, which is Two Hundred Thousand Dollars ($200,000) and
payable on the Closing Date.

      2.12 LETTERS OF CREDIT.

            (a) Subject to the terms and conditions of this Agreement, Lender
agrees to issue letters of credit for the account of Borrower (each, an "L/C")
or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of Borrower.
Each request for the issuance of a Letter of Credit, or the amendment, renewal,
or extension of any outstanding Letter of Credit, shall be made in writing by an
Authorized Person and delivered to Lender via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be
in form and substance reasonably satisfactory to Lender in its Permitted
Discretion and shall specify (i) the amount of such Letter of Credit, (ii) the
date of issuance, amendment, renewal, or extension of such Letter of Credit,
(iii) the expiration of such Letter of Credit, (iv) the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and (v) such other information (including, in the case of an
amendment, renewal, or extension, identification of the outstanding Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to prepare,
amend, renew, or extend such Letter of Credit. If requested by Lender, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. Lender shall
have no obligation to issue a Letter of Credit if any of the following would
result after giving effect to the issuance of such requested Letter of Credit:

                  (i) the Letter of Credit Usage would exceed the Borrowing Base
            less the outstanding amount of Advances, or

                  (ii) the Letter of Credit Usage would exceed $10,000,000.00,
            or

                  (iii) the Letter of Credit Usage would exceed the Maximum
            Revolver Amount less the outstanding amount of Advances.

            Borrower and Lender acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to Lender
(in the exercise of its Permitted Discretion), including the requirement that
the amounts payable thereunder must be payable in Dollars. If Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Lender by paying to Lender an amount equal to
such L/C Disbursement not later than 11:00 a.m., California time, on the date
that such L/C Disbursement is made, if Borrower shall have received written or
telephonic notice of such



L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Borrower prior to such time on such date, then
not later than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable to
Advances that are Base Rate Loans under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower's obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance.

            (b) Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless from any loss, cost, expense, or liability, and reasonable
out-of-pocket fees of outside attorneys incurred by Lender arising out of or in
connection with any Letter of Credit; provided, however, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
Lender. Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Lender's
interpretations of any L/C issued by Lender to or for Borrower's account, even
though this interpretation may be different from Borrower's own, and Borrower
understands and agrees that Lender shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto, except to the extent cause by
the gross negligence or willful misconduct of the Lender. Borrower understands
that the L/C Undertakings may require Lender to indemnify the Underlying Issuer
for certain costs or liabilities arising out of claims by Borrower against such
Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold
Lender harmless with respect to any loss, cost, expense (including reasonable
out-of-pocket fees of outside attorneys), or liability incurred by Lender under
any L/C Undertaking as a result of Lender's indemnification of any Underlying
Issuer; provided, however, that Borrower shall not be obligated hereunder to
indemnify for any loss, cost, expense, or liability to the extent that it is
caused by the gross negligence or willful misconduct of Lender. Borrower hereby
acknowledges and agrees that Lender shall not be responsible for delays, errors,
or omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.

            (c) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon Lender's instructions with respect to all matters
arising in connection with such Underlying Letter of Credit and the related
application.

            (d) Any and all reasonable charges and commissions and reasonable
out-of-pocket fees,and costs incurred by Lender relating to Underlying Letters
of Credit shall be Lender Expenses for purposes of this Agreement and
immediately shall be reimbursable by Borrower to Lender for the account of
Lender; it being acknowledged and agreed by Borrower that, as of the Closing
Date, the issuance charge imposed by the prospective



Underlying Issuer is .825% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals. The Lender shall provide the
Borrower with invoices, to the extent such invoices exist, with respect to such
charges, fees and costs contemplated by this Section 2.12(d).

            (e) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):

                  (i) any reserve, deposit, or similar requirement is or shall
            be imposed or modified in respect of any Letter of Credit issued
            hereunder, or

                  (ii) there shall be imposed on the Underlying Issuer or Lender
            any other condition regarding any Underlying Letter of Credit or any
            Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Borrower,
and Borrower shall pay on demand such amounts as Lender may specify to be
necessary to compensate Lender for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Lender of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.

      2.13 LIBOR OPTION.

            (a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having interest
charged at the rate based upon the Base Rate, Borrower shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto (provided, however, that, subject to the following
clauses (ii) and (iii), in the case of any Interest Period greater than 3 months
in duration, interest shall be payable at 3 month intervals after the
commencement of the applicable Interest Period and on the last day of such
Interest Period), (ii) the occurrence of an Event of Default in consequence of
which Lender has elected to accelerate the maturity of all or any portion of the
Obligations, or (iii) termination of this Agreement pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly



has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at a rate based
upon the LIBOR Rate and Lender shall have the right to convert the interest rate
on all outstanding LIBOR Rate Loans to the rate then applicable to Base Rate
Loans hereunder.

            (b) LIBOR Election.

                  (i) Borrower may, at any time and from time to time, so long
            as no Event of Default has occurred and is continuing, elect to
            exercise the LIBOR Option by notifying Lender prior to 11:00 a.m.
            (California time) at least two (2) Business Days prior to the
            commencement of the proposed Interest Period (the "LIBOR Deadline").
            Notice of Borrower's election of the LIBOR Option for a permitted
            portion of the Advances and an Interest Period pursuant to this
            Section shall be made by delivery to Lender of a LIBOR Notice
            received by Lender before the LIBOR Deadline, or by telephonic
            notice received by Lender before the LIBOR Deadline (to be confirmed
            by delivery to Lender of a LIBOR Notice received by Lender prior to
            5:00 p.m. (California time) on the same day.

                  (ii) Each LIBOR Notice shall be irrevocable and binding on
            Borrower. In connection with each LIBOR Rate Loan, Borrower shall
            indemnify, defend, and hold Lender harmless against any loss, cost,
            or expense incurred by Lender as a result of (a) the payment of any
            principal of any LIBOR Rate Loan other than on the last day of an
            Interest Period applicable thereto (including as a result of an
            Event of Default), (b) the conversion of any LIBOR Rate Loan other
            than on the last day of the Interest Period applicable thereto, or
            (c) the failure to borrow, convert, continue or prepay any LIBOR
            Rate Loan on the date specified in any LIBOR Notice delivered
            pursuant hereto (such losses, costs, and expenses, collectively,
            "Funding Losses"). Funding Losses shall be deemed to equal the
            amount determined by Lender to be the excess, if any, of (i) the
            amount of interest that would have accrued on the principal amount
            of such LIBOR Rate Loan had such event not occurred, at the LIBOR
            Rate that would have been applicable thereto, for the period from
            the date of such event to the last day of the then current Interest
            Period therefor (or, in the case of a failure to borrow, convert, or
            continue, for the period that would have been the Interest Period
            therefor), minus (ii) the amount of interest that would accrue on
            such principal amount for such period at the interest rate which
            Lender would be offered were it to be offered, at the commencement
            of such period, Dollar deposits of a comparable amount and period in
            the London interbank market. A certificate of Lender delivered to
            Borrower setting forth the calculation in



            reasonable detail of any amount or amounts that Lender is entitled
            to receive pursuant to this Section 2.13 shall be conclusive absent
            manifest error.

                  (iii) Borrower shall have not more than 5 LIBOR Rate Loans in
            effect at any given time. Borrower only may exercise the LIBOR
            Option for LIBOR Rate Loans of at least $1,000,000 and integral
            multiples of $500,000 in excess thereof.

            (c) PREPAYMENTS. Borrower may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Lender of proceeds of Borrower's Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, Borrower shall indemnify, defend, and hold Lender
and its Participants harmless against any and all Funding Losses in accordance
with clause (b)(ii) above.

            (d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

                  (i) The LIBOR Rate may be adjusted by Lender on a prospective
            basis to take into account any additional or increased costs to
            Lender of maintaining or obtaining any eurodollar deposits or
            increased costs due to changes in applicable law occurring
            subsequent to the commencement of the then applicable Interest
            Period, including changes in tax laws (except changes of general
            applicability in corporate income tax laws) and changes in the
            reserve requirements imposed by the Board of Governors of the
            Federal Reserve System (or any successor), excluding the Reserve
            Percentage, which additional or increased costs would increase the
            cost of funding loans bearing interest at the LIBOR Rate. In any
            such event, Lender shall give Borrower written notice of such a
            determination and adjustment and, upon its receipt of the notice
            from Lender, Borrower may, by notice to Lender (y) require Lender to
            furnish to Borrower a statement setting forth the basis for
            adjusting such LIBOR Rate and the method for determining the amount
            of such adjustment, or (z) repay the LIBOR Rate Loans with respect
            to which such adjustment is made (together with any amounts due
            under clause (b)(ii) above).

                  (ii) In the event that any change in market conditions or any
            law, regulation, treaty, or directive, or any change therein or in
            the interpretation of application thereof, shall at any time after
            the date hereof, in the reasonable opinion of Lender, make it
            unlawful or impractical for Lender to fund or maintain LIBOR
            Advances or to continue such funding or maintaining, or to determine
            or charge interest rates at the LIBOR Rate, Lender shall give notice
            of such changed circumstances to Borrower and (y)



            in the case of any LIBOR Rate Loans that are outstanding, the date
            specified in Lender's notice shall be deemed to be the last day of
            the Interest Period of such LIBOR Rate Loans, and interest upon the
            LIBOR Rate Loans thereafter shall accrue interest at the rate then
            applicable to Base Rate Loans, and (z) Borrower shall not be
            entitled to elect the LIBOR Option until Lender determines that it
            would no longer be unlawful or impractical to do so.

            (e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Lender, nor any of its Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate. The
provisions of this Section shall apply as if Lender or its Participants had
match funded any Obligation as to which interest is accruing at the LIBOR Rate
by acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.

      2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), has the effect of reducing the return on Lender's or such holding
company's capital as a consequence of Lender's obligations hereunder to a level
below that which Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration Lender's or such
holding company's then existing policies with respect to capital adequacy and
assuming the full utilization of such entity's capital) by any amount deemed by
Lender to be material, then Lender may notify Borrower thereof. Following
receipt of such notice, Borrower agrees to pay Lender on demand the amount of
such reduction of return of capital as and when such reduction is determined,
payable within 90 days after presentation by Lender of a statement in the amount
and setting forth in reasonable detail Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount,
Lender may use any reasonable averaging and attribution methods.

3. CONDITIONS; TERM OF AGREEMENT.

      3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Lender (the
making of such initial extension of credit by Lender being conclusively deemed
to be its satisfaction or waiver of the following), of each of the following
conditions precedent:

            (a) the Closing Date shall occur on or before June 29, 2004;



            (b) Lender shall have received a Filing Authorization Letter, duly
executed by Borrower, authorizing the filing of appropriate financing statements
in such office or offices as may be necessary or, in the opinion of Lender,
desirable to perfect the Lender's Liens in and to the Collateral;

            (c) Lender shall have received each of the following documents, in
form and substance reasonably satisfactory to Lender, duly executed, and each
such document shall be in full force and effect:

                  (i) the Intellectual Property Security Agreement,

                  (ii) the Intercompany Subordination Agreement,

                  (iii) the Intercreditor Agreement,

                  (iv) the Mortgages,

                  (v) the Pay-Off Letter, together with termination statements
            and other documentation evidencing the termination by Existing
            Lender of its Liens in and to the properties and assets of Borrower
            and its Subsidiaries, and termination statements and other
            documentation evidencing the termination by the applicable trustee
            on behalf of the holders of the 8% Senior Notes of the Liens in and
            to the properties and assets of Borrower and its Subsidiaries, and

                  (vi) the Stock Pledge Agreements, together with (i) all
            original certificates representing the shares of Stock pledged
            thereunder regarding the U.S. Subsidiaries, as well as Stock powers
            with respect thereto endorsed in blank shall be delivered to the
            Collateral Agent, and (ii) the original certificates representing
            the shares of Stock pledged thereunder regarding the first-tier
            Foreign Subsidiaries of the Borrower (other than Viskase Brasil
            Embalagens Ltda., which Stock is not certificated), as well as Stock
            powers with respect thereto endorsed in blank, but with respect to
            only 65% of the issued and outstanding Stock of each of such
            first-tier Foreign Subsidiaries shall be delivered to the Collateral
            Agent.

            (d) Lender shall have received a certificate from the Secretary of
Borrower (i) attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party, (ii) authorizing specific
officers of Borrower to execute the same, and (iii) attesting to the incumbency
and signatures of such specific officers of Borrower;

            (e) Lender shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;



            (f) Lender shall have received a certificate of status with respect
to Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;

            (g) Lender shall have received certificates of status with respect
to Borrower, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Borrower) in which its failure to be duly
qualified or licensed could not reasonably be expected to constitute a Material
Adverse Change, which certificates shall indicate that Borrower is in good
standing in such jurisdictions;

            (h) Lender shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be reasonably satisfactory to Lender;

            (i) Lender shall have received Collateral Access Agreements with
respect to the following locations: (i) 3507 West U.S. Highway 24, Remington,
Indiana, (ii) 222 East State Highway 198, Osceola, Arkansas and (iii) 150
Colborne Street East, Lindsay, Ontario, Canada, and in the event Lender shall
not have received any Collateral Access Agreement, then the Lender shall
forthwith establish the Rent Reserve with respect to such leased location in
accordance with this Agreement;

            (j) Lender shall have received an opinion of Borrower's counsel in
form and substance reasonably satisfactory to Lender;

            (k) Lender shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrower) that all federal and
state income and all other material tax returns required to be filed by Borrower
and its Subsidiaries have been timely filed and all federal and state income and
all other material taxes upon Borrower and its Subsidiaries or their properties,
assets, income, and franchises (including Real Property taxes, sales taxes, and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;

            (l) Borrower shall have the Required Availability after giving
effect to the initial extensions of credit hereunder and the payment of all fees
and expenses required to be paid by Borrower on the Closing Date under this
Agreement or the other Loan Documents;

            (m) Lender shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrower's and its
Subsidiaries' books and records and verification of Borrower's representations
and warranties to Lender, the results of which shall be reasonably satisfactory
to Lender, and (ii) an inspection of each of the locations where Borrower's
Inventory is located, the results of which shall be reasonably satisfactory to
Lender;



            (n) Lender shall have received completed reference checks with
respect to Borrower's senior management, the results of which are reasonably
satisfactory to Lender in its sole discretion;

            (o) Lender shall have received an appraisal of the Net Liquidation
Percentage applicable to Borrower's Inventory, and if available, a copy of any
recent appraisal of the Equipment;

            (p) Lender shall have received Borrower's Closing Date Business Plan
and April 30, 2004 internally prepared financial statements, the results of
which are reasonably satisfactory to Lender;

            (q) Borrower shall have paid all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement and the Lender
shall have delivered to the Borrower any invoices, to the extent any exist, with
respect to the Lender Expenses;

            (r) Lender shall have received (i) if available, a copy of any
appraisal of the Real Property Collateral, (ii) mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company reasonably satisfactory to Lender
(each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
reasonably satisfactory to Lender assuring Lender that the Mortgages on such
Real Property Collateral are valid and enforceable second priority mortgage
Liens (subject to the first priority mortgage Lien in favor of the Trustee) on
such Real Property Collateral free and clear of all defects and encumbrances
except Permitted Liens, and the Mortgage Policies otherwise shall be in form and
substance reasonably satisfactory to Lender, and (iii) if available, the most
recent survey with respect to each parcel composing the Real Property
Collateral;

            (s) If available, Lender shall have received a copy of a phase-I
environmental report with respect to each parcel composing the Real Property
Collateral; the environmental consultants and surveyors retained for such
reports or surveys, the scope of the reports or surveys, and the results thereof
shall be reasonably acceptable to Lender;

            (t) Lender shall have received copies of each of the material
agreements of the Borrower, together with a certificate of the Secretary of
Borrower certifying each such document as being a true, correct, and complete
copy thereof;

            (u) Borrower and each of its Subsidiaries shall have received all
licenses, approvals or evidence of other actions required by any Governmental
Authority in connection with the execution and delivery by Borrower or its
Subsidiaries of the Loan Documents or with the consummation of the transactions
contemplated thereby, except any license, approval or action the failure of
which to receive could not reasonably be expected to constitute a Material
Adverse Change;

            (z) Lender shall have received true, correct and complete copies of
the Notes and any and all material instruments, agreements and documents
executed or delivered



in connection therewith (including, without limitation, the final offering
circular, the Registration Rights Agreement, and all Collateral Agreements),
which shall be in form and substance reasonably acceptable to Lender;

            (aa) the offering of the Notes and the other transactions
contemplated thereby shall have been consummated concurrently herewith and the
proceeds thereof shall have been used by Borrower to (i) purchase approximately
$55.8 million aggregate principal amount of the 8% Senior Notes, (ii) repay all
indebtedness due or owing to the Existing Lender, (iii) effect the early
termination of Borrower's capital lease with General Electric Capital
Corporation, and (iv) pay the transaction costs, expenses and fees incurred by
Borrower in connection therewith;

            (bb) Lender shall have received UCC, tax lien, judgment, fixture,
and pending suit searches on the Borrower in all jurisdictions as reasonably
required by Lender, the results of which shall be reasonably satisfactory to
Lender and Borrower shall have implemented an electronic collateral reporting
system reasonably satisfactory to Lender;

            (cc) Lender shall have received final credit approval for the
financing contemplated by this Agreement;

            (dd) Lender shall have received any and all documents, certificates
and agreements regarding the pension and post retirement benefit plans of
Borrower and its Subsidiaries as Lender may reasonably request, and Lender shall
have obtained reasonable assurance that the unfunded pension obligations of
Borrower and its Subsidiaries will not create or provide a Lien in favor of any
other Person with priority over Lender's Liens in the Borrower's Accounts and
Inventory and the proceeds thereof; and

            (ee) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance reasonably satisfactory to
Lender.

      3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Advances (or otherwise extend credit
hereunder) is subject to the fulfillment or waiver in writing, on or before the
date applicable thereto, of each of the conditions subsequent set forth below
(the failure by Borrower to so perform or cause to be performed constituting an
Event of Default), within 30 days of the Closing Date, deliver to Lender
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be reasonably satisfactory to Lender and its counsel.

      3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make any Advances hereunder at any time (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:

            (a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the date



of such extension of credit, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);

            (b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof; and

            (c) with respect solely to the initial Advance, Lender shall have
received (i) searches reflecting the filing of all financing statements filed by
the Lender against the Borrower, (ii) a pre-funding audit in form satisfactory
to the Lender in its Permitted Discretion, which audit shall constitute one of
the audits during fiscal year 2004 contemplated by Section 6.4, (iii) the
Disbursement Letter, (iv) the Cash Management Agreements (and in no event more
than 15 days following the Closing Date), and (v) the Control Agreements (and in
no event more than 15 days following the Closing Date),

      3.4 TERM. This Agreement shall continue in full force and effect for a
term ending on June 29, 2009 (the "Maturity Date"). The foregoing
notwithstanding, Lender shall have the right to terminate its obligations under
this Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.

      3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Lender in an
amount equal to 105% of the Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Lender, and (b) providing cash collateral
(in an amount determined by Lender as sufficient to satisfy the reasonably
estimated credit exposure) to be held by Lender for the benefit of the Bank
Product Providers with respect to the Bank Product Obligations). No termination
of this Agreement, however, shall relieve or discharge Borrower or its
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Documents and the Lender's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and Lender's obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been paid in full and
Lender's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Lender will, at Borrower's sole expense, execute
and deliver any termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Lender's Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.

      3.6 EARLY TERMINATION BY BORROWER. Borrower has the option, at any time
upon 90 days prior written notice to Lender, to terminate this Agreement by
paying to Lender, in cash, the Obligations (including (a) either (i) providing
cash collateral to be held by Lender in an amount equal to 105% of the Letter of
Credit Usage, or (ii) causing the original Letters



of Credit to be returned to Lender, and (b) providing cash collateral (in an
amount determined by Lender as sufficient to satisfy the reasonably estimated
credit exposure) to be held by Lender for the benefit of the Bank Product
Providers with respect to the Bank Product Obligations), in full, together with
the Applicable Prepayment Premium. If Borrower has sent a notice of termination
pursuant to the provisions of this Section, then Lender's obligations to extend
credit hereunder shall terminate and Borrower shall be obligated to repay the
Obligations (including (a) either (i) providing cash collateral to be held by
Lender in an amount equal to 105% of the Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to Lender, and (b) providing cash
collateral (in an amount determined by Lender as sufficient to satisfy the
reasonably estimated credit exposure) to be held by Lender for the benefit of
the Bank Product Providers with respect to the Bank Product Obligations), in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of Lender to terminate after the occurrence and during the continuation
of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the
Collateral in any Insolvency Proceeding, or (d) restructure, reorganization, or
compromise of the Obligations by the confirmation of a plan of reorganization or
any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to Lender or profits lost by Lender as
a result of such early termination, and by mutual agreement of the parties as to
a reasonable estimation and calculation of the lost profits or damages of
Lender, Borrower shall pay the Applicable Prepayment Premium to Lender, measured
as of the date of such termination.

4. CREATION OF SECURITY INTEREST.

      4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender, for the
benefit of Lender and the Bank Product Providers, a continuing security interest
in all of its right, title, and interest in all currently existing and hereafter
acquired or arising Borrower Collateral in order to secure prompt repayment of
any and all of the Obligations in accordance with the terms and conditions of
the Loan Documents and in order to secure prompt performance by Borrower of each
of its covenants and duties under the Loan Documents. The Lender's Liens in and
to the Borrower Collateral shall attach to all Borrower Collateral without
further act on the part of Lender or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower and its Subsidiaries have no authority, express
or implied, to dispose of any item or portion of the Collateral.

      4.2 NEGOTIABLE COLLATERAL. In the event that any Borrower Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that Lender determines that perfection or priority of Lender's
security interest is dependent on or enhanced by possession, Borrower, promptly
upon the request of Lender, shall endorse and deliver physical possession of
such Negotiable Collateral with an individual value in excess



of $50,000 to the Collateral Agent to be administered in accordance with the
terms of the Intercreditor Agreement.

      4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, Lender or Lender's designee may (a) notify Account Debtors of
Borrower that Borrower's Accounts, chattel paper, or General Intangibles have
been assigned to Lender or that Lender has a security interest therein, or (b)
collect Borrower's Accounts, chattel paper, or General Intangibles directly and
charge the collection costs and expenses to the Loan Account. Borrower agrees
that it will hold in trust for Lender, as Lender's trustee, any of its
Collections that it receives and immediately will deliver such Collections to
Lender or a Cash Management Bank in their original form as received by Borrower.

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

            (a) Borrower authorizes Lender to file any financing statement
necessary or desirable to effectuate the transactions contemplated by the Loan
Documents, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of Borrower where permitted
by applicable law. Borrower hereby ratifies the filing of any financing
statement filed without the signature of Borrower prior to the date hereof.

            (b) If Borrower acquires any commercial tort claims after the date
hereof, Borrower shall promptly (but in any event within 3 Business Days after
such acquisition) deliver to Lender a written description of such commercial
tort claim and shall deliver a written agreement, in form and substance
reasonably satisfactory to Lender, pursuant to which Borrower shall grant a
perfected security interest in all of its right, title and interest in and to
such commercial tort claim to Lender, as security for the Obligations (a
"Commercial Tort Claim Assignment").

            (c) At any time upon the request of Lender, Borrower shall execute
and deliver to, or authorize, as applicable, Lender to file, any and all
financing statements, original financing statements in lieu of continuation
statements, amendments to financing statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (collectively,
the "Additional Documents") that Lender may request in its Permitted Discretion,
in form and substance reasonably satisfactory to Lender, to create, perfect, and
continue perfected or to better perfect the Lender's Liens in the assets of
Borrower (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Lender in
any owned Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Borrower
authorizes Lender to execute any such Additional Documents in Borrower's name
and authorizes Lender to file such executed Additional Documents in any
appropriate filing



office. In addition, on such periodic basis as Lender shall reasonably require,
Borrower shall (i) provide Lender with a report of all new material patents,
patent applications, trademarks, trademark applications, copyrights or copyright
applications acquired or generated by Borrower during the prior period and (ii)
cause to be prepared, executed, and delivered to Lender supplemental schedules
to the applicable Loan Documents to identify such patents, copyrights, and
trademarks as being subject to the security interests created thereunder;
provided, however, that neither Borrower nor any of its Subsidiaries shall
register with the U.S. Copyright Office any unregistered copyrights (whether in
existence on the Closing Date or thereafter acquired, arising, or developed)
unless (A) the Borrower provides Lender with written notice of its intent to
register such copyrights not less than 30 days prior to the date of the proposed
registration, and (B) prior to such registration, the applicable Person executes
and delivers to Lender a copyright security agreement in form and substance
reasonably satisfactory to Lender, supplemental schedules to any existing
copyright security agreement, or such other documentation as Lender reasonably
deems necessary in order to perfect and continue perfected Lender's Liens on
such copyrights following such registration.

      4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender's officers, employees, or agents designated
by Lender) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or bill of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Borrower's Accounts at
any time when an Event of Default has occurred and is continuing, (d) endorse
Borrower's name on any of its payment items (including all of its Collections)
that may come into Lender's possession, (e) at any time that an Event of Default
has occurred and is continuing, make, settle, and adjust all claims under
Borrower's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting Borrower's Accounts, chattel paper, or General Intangibles directly
with Account Debtors, for amounts and upon terms that Lender determines to be
reasonable, and Lender may cause to be executed and delivered any documents and
releases that Lender determines to be necessary. The appointment of Lender as
Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
paid and performed in full and Lender's obligations to extend credit hereunder
are terminated.

      4.6 RIGHT TO INSPECT. To the extent permitted by Section 6.4, Lender
(through any of its officers, employees, or agents) shall have the right to
inspect the Books and make copies or abstracts thereof and to check, test, and
appraise the Collateral, or any portion thereof, in order to verify Borrower's
and its Subsidiaries' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral at such reasonable
times and intervals as Lender may designate, and so long as no Default or Event
of Default has occurred and is continuing, with reasonable prior notice.



      4.7 CONTROL AGREEMENTS. Borrower agrees that it will take all commercially
reasonable steps in order for Lender or the Collateral Agent as contemplated by
the Intercreditor Agreement to obtain control in accordance with Sections 8-106,
9-104, 9-105, 9-106, and 9-107 of the Code with respect to (subject to the
proviso contained in Section 7.12) all of its or their Securities Accounts,
Deposit Accounts, electronic chattel paper, Investment Property, and
letter-of-credit rights (other than petty cash, payroll and zero-balance
accounts so long as the aggregate amount in such accounts does not exceed
$20,000 at any time outstanding). Upon the occurrence and during the continuance
of an Event of Default, Lender may notify any bank or securities intermediary
subject to a Control Agreement to liquidate the applicable Deposit Account or
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Lender's Account.

5. REPRESENTATIONS AND WARRANTIES.

            In order to induce Lender to enter into this Agreement, Borrower
makes the following representations and warranties to Lender which shall be
true, correct, and complete, in all material respects, as of the date hereof,
and shall be true, correct, and complete, in all material respects, as of the
Closing Date, and at and as of the date of the making of each Advance (or other
extension of credit) made thereafter, as though made on and as of the date of
such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:

      5.1 NO ENCUMBRANCES. Borrower and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property and such personal property assets and Real Property of Borrower is
free and clear of Liens except for Permitted Liens.

      5.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by Borrower
as an Eligible Account in a borrowing base report submitted to Lender as of the
date of such borrowing base report, such Account is (a) a bona fide existing
payment obligation of the applicable Account Debtor created by the sale and
delivery of Inventory or the rendition of services to such Account Debtor in the
ordinary course of Borrower's business, (b) owed to Borrower without any known
defenses, disputes, offsets, counterclaims, or rights of return or cancellation
(subject to the limitation provided in clause (h) in the definition of Eligible
Accounts), and (c) not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.

      5.3 ELIGIBLE INVENTORY. As to each item of Inventory that is identified by
Borrower as Eligible Inventory in a borrowing base report submitted to Lender,
such Inventory is (a) of good and merchantable quality, free from known defects,
and (b) as of the date of such borrowing base report, not excluded as ineligible
by virtue of one or more of the excluding criteria set forth in the definition
of Eligible Inventory.



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

      5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory of Borrower is
located at the locations identified on Schedule 5.5 (as such Schedule may be
updated pursuant to Section 6.9).

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

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

            (a) The jurisdiction of organization of Borrower and each of its
Subsidiaries is set forth on Schedule 5.7(a).

            (b) The chief executive office of Borrower and each of its
Subsidiaries is located at the address indicated on Schedule 5.7 (b) (as such
Schedule may be updated pursuant to Section 6.9).

            (c) Borrower's and each of its Subsidiaries' organizational
identification numbers, if any, are identified on Schedule 5.7(c).

            (d) As of the Closing Date, Borrower does not hold any commercial
tort claims, except as set forth on Schedule 5.7(d).

      5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

            (a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.

            (b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
March 31, 2004 and to the best knowledge of Borrower, a description of the
number of shares of each such class that are issued, outstanding and held by a
Person holding at least ten percent (10%) of all such issued and outstanding
capital Stock. Other than as described on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.



            (c) Set forth on Schedule 5.8(c), is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization, (ii) the number of shares of each class of Stock authorized
for each of such Subsidiaries, and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by Borrower.
All of the outstanding capital Stock of each such corporate Subsidiary has been
validly issued and is fully paid and non-assessable.

            (d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Borrower's Subsidiaries'
capital Stock or any security convertible into or exchangeable for any such
capital Stock.

      5.9 DUE AUTHORIZATION; NO CONFLICT.

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

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

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



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

            (e) The Lender's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens (including the first priority
Lien on the Equipment, Real Estate Collateral and fixtures, and second priority
Lien on the Accounts and Inventory, of the Borrower in favor of the Collateral
Agent).

      5.10 LITIGATION. Other than those matters disclosed on Schedule 5.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of Borrower, threatened against
Borrower or any of its Subsidiaries.

      5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Borrower and its Subsidiaries that have been delivered by Borrower to Lender
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrower's and
its Subsidiaries' financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to Borrower and its Subsidiaries since the date of the
latest financial statements submitted to Lender on or before the Closing Date.

      5.12 FRAUDULENT TRANSFER.

            (a) Each of Borrower and each of its Subsidiaries is Solvent.

            (b) No transfer of property is being made by Borrower or its
Subsidiaries and no obligation is being incurred by Borrower or its Subsidiaries
in connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower or its Subsidiaries.

      5.13 EMPLOYEE BENEFITS. Except as set forth on Schedule 5.13, neither
Borrower nor any of its Subsidiaries, or any of their ERISA Affiliates maintains
or contributes to any Benefit Plan.

      5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14, (a) to
Borrower's knowledge, neither Borrower's nor its U.S. Subsidiaries' properties
or assets has ever been used by Borrower or its U.S. Subsidiaries in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such use, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable Environmental Law, (b) to Borrower's knowledge, none of Borrower's or
its U.S. Subsidiaries' properties or assets has ever been designated or
identified in any manner



pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) neither Borrower nor any of its U.S. Subsidiaries has
received written notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by Borrower
or its U.S. Subsidiaries, and (d) neither Borrower nor its U.S. Subsidiaries has
received a written summons, citation, notice, or directive from the United
States Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower or its U.S.
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment in violation of any applicable Environmental Law.

      5.15 BROKERAGE FEES. Neither Borrower nor any of its Subsidiaries has
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from Lender under this Agreement and no brokerage commission
or finders fee is payable by Borrower or its Subsidiaries in connection
herewith.

      5.16 INTELLECTUAL PROPERTY. To Borrower's knowledge, Borrower and its
Subsidiaries own, or hold licenses in, all trademarks, trade names, copyrights,
patents and licenses that are necessary to the conduct of its business as
currently conducted, and attached hereto as Schedule 5.16 (as updated from time
to time) is a true, correct, and complete listing of all material patents,
patent applications, trademarks, trademark applications, copyrights, and
copyright registrations as to which Borrower or one of its Subsidiaries is the
owner or is an exclusive licensee.

      5.17 LEASES. Borrower and its Subsidiaries enjoy peaceful and undisturbed
possession under all leases material to their business and to which they are
parties or under which they are operating, and all of such leases are valid and
subsisting and no material default by Borrower or its Subsidiaries exists under
any of them.

      5.18 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on Schedule 5.18
(as such schedule may be amended from time to time by Borrower and, to the
extent required by Section 4.7 consented to by Lender as evidenced by the
execution and delivery by the Borrower, the applicable securities intermediary
or bank and the Lender of a Control Agreement) is a listing of all of Borrower's
and its Subsidiaries' Deposit Accounts and Securities Accounts, including, with
respect to each bank or securities intermediary (a) the name and address of such
Person, and (b) the account numbers of the Deposit Accounts or Securities
Accounts maintained with such Person.

      5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower or its Subsidiaries in writing to Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower or its Subsidiaries in writing to Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information



(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Lender, such additional Projections represent
Borrower's good faith estimate of its and its Subsidiaries' future performance
for the periods covered thereby.

      5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of Borrower and its Subsidiaries outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and describes the principal terms thereof.

      5.20 U.S. SUBSIDIARIES. Other than WSC Corp. and Viskase Films, Inc., the
Borrower does not have any United States Subsidiaries. The assets of WSC Corp.
and Viskase Films, Inc. in the aggregate do not exceed US$500,000. Neither WSC
Corp. nor Viskase Films, Inc. generates any Accounts nor holds or maintains any
Inventory for sale or lease. In the event the assets of any U.S. Subsidiary
(including, WSC Corp. or Viskase Films, Inc.) exceed US$500,000, then such U.S.
Subsidiary shall be a party to this Agreement as contemplated by Section 6.15
hereof.

      5.21 INDENTURE DOCUMENTS. Borrower has furnished Lender with true, correct
and complete and, as applicable, fully-executed, copies of the Notes and the
Indenture and any and all material instruments, agreements and documents
executed or delivered in connection therewith (including, without limitation,
the final offering circular, the Registration Rights Agreement, and all
Collateral Agreements).

6. AFFIRMATIVE COVENANTS.

            Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the Obligations (other than
contingent indemnification obligations), Borrower shall and shall cause each of
its Subsidiaries to do all of the following:

      6.1   ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep a reporting
system that shows all additions, sales, claims, returns, and allowances with
respect to its and its Subsidiaries' sales.

      6.2   COLLATERAL REPORTING. Provide Lender with the following documents at
the following times in form satisfactory to Lender:



                     
So long as a            (a) sales journal, collection journal, and credit
Triggering Event        register since the last such schedule, a report
shall occur and         regarding credit memoranda that have been issued since
be continuing           the last such report, and a calculation of the Borrowing
and for the 30          Base as of such date,
day period
following the           (b) notice of all claims, offsets, or disputes asserted
cure of a               by Account Debtors with respect to Borrower's Accounts
Triggering Event,       and
weekly
                        (c) Inventory reports specifying the cost and the
                        wholesale market value of Borrower's Inventory, by
                        category, with additional detail showing additions to
                        and deletions therefrom.

Monthly (not            (d) a detailed calculation of the Borrowing Base
later than the          (including detail regarding those Accounts of Borrower
15th day of each        that are not Eligible Accounts),
month with
respect to clauses      (e) a detailed aging, by total, of the Accounts of
(d)-(f) and (h)         Borrower, together with a reconciliation to the detailed
and not later than      calculation of the Borrowing Base previously provided to
the 20th day of         Lender,
each month with
respect to clause       (f) a summary aging, by vendor, of Borrower's accounts
(g))                    payable and any book overdraft,

                        (g) a detailed report regarding Borrower's cash and Cash
                        Equivalents, and

                        (h) a calculation of Dilution for the month most
                        recently ended.

Quarterly               (i)  a detailed list of Borrower's customers, and

                        (j) a report regarding Borrower's accrued, but unpaid,
                        ad valorem taxes,

Upon request by         (k) copies of invoices in connection with Borrower's
Lender                  Accounts, credit memos, remittance advices, deposit
                        slips, shipping and delivery documents in connection
                        with Borrower's Accounts and, for Inventory and
                        Equipment acquired by Borrower, purchase orders and
                        invoices, and

                        (l) such other reports as to the Collateral or the
                        financial condition of Borrower, as Lender may request.



            In addition, Borrower agrees to cooperate fully with Lender to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.

      6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:



            (a) as soon as available, but in any event within 30 days (45 days
in the case of a month that is the end of one of Borrower's fiscal quarters)
after the end of each month during each of Borrower's fiscal years,

                  (i) solely with respect to the months of January and February,
            an unaudited balance sheet and income statement of the Borrower
            covering the Borrower's operations during such period (subject to
            adjustments deemed applicable and appropriate), solely with respect
            to the months of April, May, July, August, October and November, an
            unaudited consolidated balance sheet and income statement covering
            Borrower's and its Subsidiaries' operations during such period
            (subject to adjustments deemed applicable and appropriate), and
            solely with respect to the months of March, June, September and
            December, an unaudited consolidated balance sheet, income statement
            and statement of cash flow covering Borrower's and its Subsidiaries'
            operations during such period (subject to applicable and appropriate
            adjustments) and

                  (ii) a Compliance Certificate,

            (b) as soon as available, but in any event within 90 days after the
end of each of Borrower's fiscal years,

                  (i) consolidated and consolidating financial statements of
            Borrower and its Subsidiaries for each such fiscal year, audited by
            independent certified public accountants reasonably acceptable to
            Lender and certified, without any qualifications (including any (A)
            "going concern" or like qualification or exception, (B)
            qualification or exception as to the scope of such audit, or (C)
            qualification which relates to the treatment or classification of
            any item and which, as a condition to the removal of such
            qualification, would require an adjustment to such item, the effect
            of which would be to cause any noncompliance with the provisions of
            Section 7.19), by such accountants to have been prepared in
            accordance with GAAP (such audited financial statements to include a
            balance sheet, income statement, and statement of cash flow and, if
            prepared, such accountants' letter to management),

                  (ii) a certificate of such accountants addressed to Lender
            stating that such accountants do not have knowledge of the existence
            of any Event of Default under Section 7.19 (to the extent then in
            effect) and

                  (iii) a Compliance Certificate,

            (c) as soon as available, but in any event within 30 days after the
start of each of Borrower's fiscal years, copies of Borrower's Projections, in
form and substance (including as to scope and underlying assumptions)
satisfactory to Lender, in its Permitted Discretion, for the forthcoming 3
years, year by year, and for the forthcoming fiscal year,



month by month, certified by the chief financial officer of Borrower as being
such officer's good faith estimate of the financial performance of Borrower
during the period covered thereby; provided, however, that if during the 30 day
period prior to delivery of the Borrower's Projections 30% or less of the
Maximum Revolver Amount has been funded during such 30 day period, then such
Borrower's Projections to be delivered under this Section 6.3(c) may contain for
such forthcoming fiscal year, quarter by quarter estimates in lieu of month by
month estimates certified by the chief financial officer of Borrower as being
such officer's good faith estimate of the financial performance of Borrower
during the period covered thereby,

            (d) if and when filed by Borrower,

                  (i) Form 10-Q quarterly reports, Form 10-K annual reports, and
            Form 8-K current reports,

                  (ii) any other filings made by Borrower with the SEC,

                  (iii) copies of Borrower's federal income tax returns, and any
            amendments thereto, filed with the Internal Revenue Service, and

                  (iv) any other information that is provided by Borrower to its
            shareholders generally,

            (e) promptly, but in any event within 5 days after Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default, notice thereof and a statement of the curative action that Borrower
proposes to take with respect thereto,

            (f) promptly after the commencement thereof, but in any event within
5 days after the service of process with respect thereto on Borrower or any of
its Subsidiaries, notice of all actions, suits, or proceedings brought by or
against Borrower or any of its Subsidiaries before any Governmental Authority
which reasonably could be expected to result in a Material Adverse Change, and

            (g) upon the request of Lender, any other information reasonably
requested relating to the financial condition of Borrower or its Subsidiaries.

            In addition, Borrower agrees that no Subsidiary of Borrower will
have a fiscal year different from that of Borrower. Borrower also agrees to
cooperate with Lender to allow Lender to consult with its independent certified
public accountants if Lender reasonably requests the right to do so and that, in
such connection, its independent certified public accountants are authorized to
communicate with Lender and to release to whatever financial information
concerning Borrower or its Subsidiaries that Lender reasonably may request
(provided that Borrower is copied on any written correspondence (A) sent by the
Lender to the Borrower's independent certified public accountants and (B)
received by the Lender from the Borrower's independent certified public
accountants and the Borrower is present at any meetings or conference calls).



      6.4 APPRAISALS; AUDITS Without limiting anything contained in this
Agreement, Lender shall have the right (a) annually (or more often if any Event
of Default shall have occurred) to have the Borrower's Inventory appraised by a
qualified appraisal company selected by Lender, and (b) at least one (1) time
per calendar year if the average outstanding amount of the Advances is less than
$5,000,000 during each calendar quarter, and otherwise, at least four (4) times
per year (or more often if any Event of Default shall have occurred) to conduct
field audits and audits and examinations of the Books of the Borrower, performed
by personnel employed by Lender, with all of such costs, expenses and fees to be
paid by Borrower as set forth in this Agreement.

      6.5 RETURNS. Cause returns and allowances, as between Borrower and its
Subsidiaries and their Account Debtors, to be on the same basis and in
accordance with the usual customary practices of Borrower and its Subsidiaries,
as they exist at the time of the execution and delivery of this Agreement;
provided, that Borrower may, in the exercise of its commercially reasonable
business judgment, adjust its usual customary practice to reflect customary
trade practices of Persons in its line of business, provided, further that if
such adjustments are material, then the Borrower will provide the Lender with
prior written notice describing such adjustments in reasonable detail.

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

      6.7 TAXES. Cause all material assessments and all federal and state income
and other material taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against Borrower, its Subsidiaries, or any
of their respective assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will and will cause its Subsidiaries to make timely payment or deposit of all
tax payments and withholding taxes required of it and them by applicable laws,
including those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Lender with
proof satisfactory to Lender indicating that Borrower and its Subsidiaries have
made such payments or deposits.

      6.8 INSURANCE.

            (a) At Borrower's expense, maintain insurance respecting its and its
Subsidiaries' assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as ordinarily are insured by other Persons engaged
in the



same or similar businesses. Borrower shall deliver copies of all such policies
to Lender with an endorsement naming Lender as the sole loss payee (under a
satisfactory lender's loss payable endorsement) or additional insured, as
appropriate. The Borrower will use its commercially reasonable efforts to cause
each policy of insurance or endorsement to contain a clause requiring the
insurer to give not less than 30 days prior written notice to Lender in the
event of cancellation of the policy for any reason whatsoever.

            (b) Borrower shall give Lender prompt notice of any loss covered by
such insurance. Lender shall have the exclusive right to adjust any losses
claimed under any such insurance policies in excess of $3,000,000 (or in any
amount after the occurrence and during the continuation of an Event of Default),
without any liability to Borrower whatsoever in respect of such adjustments. Any
monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
(i) Borrower's Deposit Account, or (ii) if required by Section 2.4(d), to Lender
or at Lender's option to be disbursed to Borrower under staged payment terms
reasonably satisfactory to Lender for application to the cost of repairs,
replacements, or restorations. Any such repairs, replacements, or restorations
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items of property destroyed prior to such damage or
destruction.

            (c) Borrower will not and will not suffer or permit its Subsidiaries
to take out separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 6.8, unless
Lender is included thereon as an additional insured or loss payee under a
lender's loss payable endorsement. Borrower promptly shall notify Lender
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Lender.

      6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep Borrower's Inventory and
Equipment only at the locations identified on Schedule 5.5 and its chief
executive offices only at the locations identified on Schedule 5.7(b); provided,
however, that Borrower may amend Schedule 5.5 and Schedule 5.7 so long as such
amendment occurs by prompt written notice to Lender, so long as such new
location is within the continental United States or Canada or is at such other
location within North America in connection with such one time aggregate
$11,000,000 Permitted Investment described in clause (i) in the definition of
Permitted Investment.

      6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.

      6.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which Borrower or any of its Subsidiaries is a party or by
which Borrower's or any



such Subsidiaries' properties and assets are bound, unless such payments are the
subject of a Permitted Protest.

      6.12 EXISTENCE. Except as otherwise expressly permitted under Section 7.3,
at all times preserve and keep in full force and effect Borrower's and its
Subsidiaries' valid existence and good standing and any rights and franchises
material to their businesses, except where the failure to be in good standing
could reasonably be expected to result in a Material Adverse Change.

      6.13 ENVIRONMENTAL. Keep any property either owned or operated by Borrower
or its U.S. Subsidiaries free of any Environmental Liens other than
Environmental Liens for which bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens have
been posted, (b) comply with Environmental Laws and provide to Lender
documentation of such compliance which Lender reasonably requests except where
the failure to comply which could not reasonably be expected to result in a
Material Adverse Change, (c) promptly notify Lender of any release of a
Hazardous Material in any quantity required to be reported to any Governmental
Authority under an applicable Environmental Law from or onto property owned or
operated by Borrower or its U.S. Subsidiaries which could reasonably be expected
to result in a Material Adverse Change, (d) take any Remedial Actions required
to abate any release of a Hazardous Material in any quantity required to be
reported to any Governmental Authority under an applicable Environmental Law
from or onto property or operating by Borrower or its U.S. Subsidiaries, to the
extent required by applicable Environmental Law, and (e) promptly, but in any
event within 5 days of its receipt thereof, provide Lender with written notice
of any of the following: (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Borrower or its U.S.
Subsidiaries, (ii) commencement of any Environmental Action or written notice
that an Environmental Action will be filed against Borrower or its U.S.
Subsidiaries, and (iii) written notice of a violation, citation, or other
administrative order relating to a violation of Environmental Law, in the case
of clauses (ii) and (iii), which reasonably could be expected to result in a
Material Adverse Change.

      6.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Lender if any written
information, exhibit, or report furnished to Lender contained, at the time it
was furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances in which made. The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
affect of amending or, modifying this Agreement or any of the Schedules hereto.

      6.15 FORMATION OF SUBSIDIARIES. At the time that Borrower forms any direct
or indirect U.S. Subsidiary or acquires any direct or indirect U.S. Subsidiary
after the Closing Date, Borrower shall (a) cause such new U.S. Subsidiary to
provide to Lender a joinder to this Agreement, together with such other security
documents (including Mortgages with



respect to any Real Property of such new U.S. Subsidiary), as well as
appropriate financing statements (and with respect to all property subject to a
Mortgage, fixture filings), all in form and substance satisfactory to Lender
(including being sufficient to grant Lender a first priority Lien (subject to
Permitted Liens and the terms of the Intercreditor Agreement) in and to the
assets of such newly formed or acquired U.S. Subsidiary), (b) provide to Lender
a pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Lender (subject to
the terms of the Intercreditor Agreement), and (c) provide to Lender all other
documentation, including one or more opinions of counsel reasonably satisfactory
to Lender, which in its opinion is appropriate with respect to the execution and
delivery of the applicable documentation referred to above (including policies
of title insurance or other documentation with respect to all property subject
to a Mortgage). At the time that Borrower forms any first-tier Foreign
Subsidiary or acquires any first-tier Foreign Subsidiary after the Closing Date,
Borrower shall provide to Lender a pledge agreement and appropriate certificates
and powers or financing statements, pledging 65% of the Borrower's beneficial
ownership in such new first-tier Foreign Subsidiary, in form and substance
satisfactory to the Lender (subject to the terms of the Intercreditor
Agreement). Any document, agreement, or instrument executed or issued pursuant
to this Section 6.15 shall be a Loan Document

7. NEGATIVE COVENANTS.

            Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until the Obligations are paid and performed in full
(other than contingent indemnification obligations and except as otherwise
provided in Section 7.19 hereof), Borrower will not and will not permit any of
its Subsidiaries to do any of the following:

      7.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

            (a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,

            (b) Indebtedness evidenced by the Notes, and other Indebtedness set
forth on Schedule 5.20,

            (c) Permitted Purchase Money Indebtedness,

            (d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b), (c), (i) and (j) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions are no less
favorable in all respects to such Indebtedness, (ii) such refinancings,
renewals, or extensions do not result in an increase in the principal amount of,
or interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average



weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor
are they on terms or conditions that, taken as a whole, are materially more
burdensome or restrictive to Borrower, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness, and (v) the Indebtedness that is refinanced,
renewed, or extended is not recourse to any Person that is liable on account of
the Obligations other than those Persons which were obligated with respect to
the Indebtedness that was refinanced, renewed, or extended,

            (e) endorsement of instruments or other payment items for deposit,

            (f) Indebtedness composing Permitted Investments,

            (g) Indebtedness of (1) Borrower or any of its U.S. Subsidiaries to
the Borrower or its U.S. Subsidiaries so long as such Indebtedness is subject to
the Intercompany Subordination Agreement and so long as all such U.S.
Subsidiaries are Borrowers hereunder, (2) any Foreign Subsidiary to any other
Foreign Subsidiary and (3) Borrower or any of its Foreign Subsidiaries to the
Borrower or its Foreign Subsidiaries in an amount not to exceed $5,000,000 in
the aggregate at any time outstanding so long as such Indebtedness is subject to
the Intercompany Subordination Agreement,

            (h) Hedge Agreements not entered by Borrower or any of its
Subsidiaries for speculative purposes,

            (i) Indebtedness incurred in connection with a Permitted Acquisition
so long the aggregate amount of such Indebtedness does not exceed $2,000,000 and
so long as (1) such Indebtedness is not secured by the Collateral, (2) such
Indebtedness is secured solely by the assets acquired in connection with such
Permitted Acquisition or (3) such Person subject to such Permitted Acquisition
becomes a Borrower hereunder,

            (j) Indebtedness of Foreign Subsidiaries in an aggregate amount not
to exceed $2,000,000 outstanding so long as such Indebtedness is not secured by
the Collateral and is non-recourse to the Borrower,

            (k) other unsecured Indebtedness from any Person in an aggregate
amount not to exceed $500,000 outstanding and

            (l) Indebtedness incurred in connection with the financing of
insurance premiums in an aggregate amount not to exceed $2,000,000 outstanding.

      7.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced,



renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).

      7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.

            (a) Except as otherwise contemplated by a Permitted Acquisition or
any merger or reorganization of the Borrower with and into a U.S. Subsidiary, a
U.S. Subsidiary with and into the Borrower or any Foreign Subsidiary with and
into the Borrower, subject in all cases to such surviving entity being a party
to this Agreement as contemplated by Section 6.15, any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock. Notwithstanding
the foregoing, a merger of a Foreign Subsidiary with and into another Foreign
Subsidiary shall neither be prohibited by this Agreement nor shall such merger
require that such Foreign Subsidiary that survives such merger be a party to
this Agreement.

            (b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).

            (c) Except for Permitted Dispositions, convey, sell, lease, license,
assign, transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.

            (d) Form any Unrestricted Subsidiary without the prior written
consent of the Lender, in which case if the Lender shall permit the formation of
such Unrestricted Subsidiary, then such Unrestricted Subsidiary shall not be
subject to the provisions set forth in this Agreement and this Agreement shall
be amended to reflect the same.

      7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Borrower's or
its Subsidiaries' assets.

      7.5 CHANGE NAME. Change Borrower's or any of its Subsidiaries' names,
organizational identification number, state of organization or organizational
identity; provided, however, that Borrower or any of its Subsidiaries may change
their names upon at least 30 days prior written notice to Lender of such change
and so long as, at the time of such written notification, Borrower or its
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Lender's Liens.

      7.6 NATURE OF BUSINESS. Make any change in the principal nature of its or
their business, except the Borrower and its Subsidiaries may enter into
businesses which are reasonably related to or supportive of their respective
business or ancillary or similar thereto]

      7.7 PREPAYMENTS AND AMENDMENTS. Except in connection with a refinancing
permitted by Section 7.1(d),

            (a) prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower or its Subsidiaries, other than (i) a Net Proceeds
Offer (as defined in the Indenture) in an amount equal to 100% of the principal
amount of the outstanding



Notes, (ii) a Change of Control Offer (as defined in the Indenture) in an amount
equal to 101% of the principal amount of the outstanding Notes, (iii) on and
after January 1, 2007, an Excess Cash Flow Offer (as defined in the Indenture)
or open market purchases, in each case in an amount not to exceed the estimated
Excess Cash Flow Offer Amount (as defined in the Indenture) so long as solely
with respect to clause (iii) (A) no Default or Event of Default shall have
occurred and be continuing immediately prior to and after giving effect to such
open market purchases or such Excess Cash Flow Offer, (B) if the Borrower uses
Advances to pay for such purchases or redemptions, the Borrower shall have not
less than $10,000,000 of Availability for the 30 day period immediately before
and for the 30 day period immediately after such redemption, (C) if the Borrower
uses funds other than Advances to pay for such redemption, the Borrower shall
have not less than $5,000,000 of Availability for the 30 day period immediately
before and for the 30 day period immediately after giving such redemption, and
(D) the Borrower shall have delivered to the Lender not less than three days
prior to making such open market purchase or consummating such Excess Cash Flow
Offer, unaudited financial statements of the Borrower and its Subsidiaries
setting forth the applicable calculation used to determine the estimated Excess
Cash Flow Offer Amount, (iv) the Obligations in accordance with this Agreement,
or (v) all or any portion of the 8% Senior Notes so long as no Default or Event
of Default shall have occurred and be continuing immediately prior to and after
giving effect to such purchase.

            (b) except to the extent permitted by the Intercreditor Agreement,
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness evidenced by the Notes.

      7.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.

      7.9 CONSIGNMENTS. Consign any of its or their Inventory or sell any of its
or their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale in an aggregate amount in excess of $3,000,000.

      7.10 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding, nor, without the prior written consent of Lender, make at
any time any distribution (whether in cash, assets or otherwise) to any of the
U.S. Subsidiaries.

      7.11 ACCOUNTING METHODS. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm without said accounting firm
agreeing to provide Lender information regarding Borrower's and its
Subsidiaries' financial condition unless the Borrower replaces such third party
accounting firm with a nationally recognized accounting firm.



      7.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower shall not have Permitted Investments (other than in the
Cash Management Accounts) in Deposit Accounts or Securities Accounts in an
aggregate amount in excess of $20,000.00 at any one time unless Borrower and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments in order to perfect (and further establish)
the Lender's Liens in such Permitted Investments. Subject to the foregoing
proviso, Borrower shall not establish or maintain any Deposit Account (other
than payroll, petty cash and zero balance accounts with an aggregate amount not
to exceed $20,000 at any time outstanding) or Securities Account unless Lender
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account.

      7.13 TRANSACTIONS WITH AFFILIATES. Except as otherwise expressly permitted
herein, directly or indirectly enter into or permit to exist any transaction
with any Affiliate of Borrower except for transactions that (a) are in the
ordinary course of Borrower's business, (b) are upon fair and reasonable terms,
(c) are no less favorable to Borrower or its Subsidiaries, as applicable, than
would be obtained in an arm's length transaction with a non-Affiliate, and (d)
do not violate Section 7.10 hereof.

      7.14 SUSPENSION. Except as otherwise expressly permitted under Section
7.3, suspend or go out of a substantial portion of its or their business.

      7.15 INTENTIONALLY OMITTED.

      7.16 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, to (i) repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, (ii) effect the early termination of Borrower's capital lease with
General Electric Capital Corporation, (iii) purchase approximately $55.8 million
aggregate principal amount of the 8% Senior Notes, and (iv) pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents and the Notes, and the transactions contemplated hereby and
thereby, and (b) thereafter, consistent with the terms and conditions hereof,
for the lawful financing of its ongoing working capital and general corporate
needs.

      7.17 INTENTIONALLY OMITTED.

      7.18 INDENTURE DOCUMENTS. Amend, restate or modify the Indenture or the
Notes in order to increase the principal amount of the indebtedness owing
thereunder, without the prior written consent of Lender to the extent required
pursuant to the Intercreditor Agreement.

      7.19 FINANCIAL COVENANTS. The requirements of Sections 7.19 (a) and (b)
shall be effective only during each period commencing on the first day that the
Maximum Revolver Amount is more than 30% funded by Lender hereunder and ending
90 days after 30% or less of the Maximum Revolver Amount is funded by Lender.
The requirements of Section 7.19



(c) shall be effective for the four fiscal quarters immediately following the
closing of a Permitted Acquisition and for the four fiscal quarters immediately
following the closing of a Permitted Investment referred to in clause (i) in the
definition of Permitted Investment.

            (a) MINIMUM EBITDA. Fail to maintain or achieve EBITDA, measured on
a fiscal quarter-end basis, of at least the required amount set forth in the
following table for the applicable period set forth opposite thereto:



Applicable Amount                                         Applicable Period
- -----------------                                         -----------------
                                                
   $14,200,000                                     For the 3 fiscal quarter period
                                                      ending September 30, 2004

   $19,400,000                                     For the 4 fiscal quarter period
                                                       ending December 31, 2004

   $19,400,000                                     For the 4 fiscal quarter period
                                                        ending March 31, 2005

   $19,400,000                                     For the 4 fiscal quarter period
                                                         ending June 30, 2005

   $19,400,000                                     For the 4 fiscal quarter period
                                                      ending September 30, 2005

   $19,400,000                                         For the 4 quarter period
                                                       ending December 31, 2005

   $19,400,000                                     For the 4 fiscal quarter period
                                                        ending March 31, 2006

   $19,400,000                                     For the 4 fiscal quarter period
                                                         ending June 30, 2006

   $19,400,000                                     For the 4 fiscal quarter period
                                                      ending September 30, 2006

   $21,000,000                                     For the 4 fiscal quarter period
                                                ending each fiscal quarter thereafter


            (b) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal
year in excess of the amount set forth in the following table for the applicable
period ;provided that with respect to any portion of the Capital Expenditure
limitation for any fiscal year that is not fully utilized in such fiscal year,
such unused amount may be carried forward to the



immediately following Fiscal Year (but to no other succeeding fiscal year) and
such carried forward amount shall be deemed to be utilized first:




                                                               fiscal year 2006 and each
fiscal year 2004                 fiscal year 2005              fiscal year thereafter
- ----------------                 ----------------              ----------------------
                                                         
   $9,700,000                       $5,500,000                       $6,000,000


            (c) FIXED CHARGE COVERAGE RATIO. Fail to maintain a Fixed Charge
Coverage Ratio of not less than 1.25 to 1.00, measured on a trailing 12 month
basis as of the last day of each fiscal quarter.

8. EVENTS OF DEFAULT.

            Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

      8.1 If Borrower fails to pay (i) when due and payable, or when declared
due and payable, all or any portion of the principal amount of the Advances or
(ii) within 3 days after due and payable or declared due and payable, all or any
portion of interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations, including, without limitation, Obligations arising under Section
2.4);

      8.2 If Borrower or any of its Subsidiaries fails to perform, keep, or
observe any term, provision, condition, covenant, or agreement (i) contained in
Sections 2.7, 4.2, 4.4, 4.6, 6.3(e), 6.8, 6.12, 6.15 or 7 of this Agreement or
(ii) contained in any other provision of this Agreement or in any of the other
Loan Documents and, with respect solely to such provisions referred to in this
clause (ii), such default shall continue unremedied for a period of at least
fifteen (15) days from the date the failure of performance of non-compliance
occurred;

      8.3 If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;

      8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;

      8.5 If an Insolvency Proceeding is commenced against Borrower, or any of
its Subsidiaries, and any of the following events occur: (a) Borrower or such
Subsidiary consents to the institution of such Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted; provided, however, that,



during the pendency of such period, Lender shall be relieved of its obligations
to extend credit hereunder, (c) the petition commencing the Insolvency
Proceeding is not dismissed within 60 calendar days of the date of the filing
thereof; provided, however, that, during the pendency of such period, Lender
shall be relieved of its obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;

      8.6 If Borrower or any of its Subsidiaries is enjoined, restrained, or in
any way prevented by court order from continuing to conduct all or any material
part of its business affairs;

      8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or, except as otherwise expressly
permitted by this Agreement, if at all, if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether choate or
otherwise, upon any of Borrower's or any of its Subsidiaries' assets and the
same is not paid before such payment is delinquent;

      8.8 If a judgment or other claim becomes a Lien or encumbrance in an
amount in excess of $200,000 upon any material portion of Borrower's or any of
its Subsidiaries' assets, unless such judgment or claim is the subject of a
Permitted Protest;

      8.9 If there is a default in any material agreement to which Borrower or
any of its Subsidiaries is a party and such default (a) occurs at the final
maturity of the obligations thereunder, or (b) results in a right by the other
party thereto, irrespective of whether exercised, to accelerate the maturity of
Borrower's or its Subsidiaries' obligations thereunder or to terminate such
agreement;

      8.10 If Borrower or any of its Subsidiaries makes any payment on account
of Indebtedness that has been contractually subordinated in right of payment to
the payment of the Obligations, except to the extent such payment is permitted
by the terms of the subordination provisions applicable to such Indebtedness;

      8.11 If any material misstatement or material misrepresentation exists as
of the date when made or deemed made, in any warranty, representation,
statement, or Record made to Lender by Borrower, its Subsidiaries, or any
officer, employee, agent, or director of Borrower or any of its Subsidiaries;

      8.12 If this Agreement or any other Loan Document that purports to create
a Lien, shall, for any reason, fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien on or security interest in the Collateral covered hereby or
thereby, except as a result of a disposition of the applicable Collateral in a
transaction permitted under this Agreement;



      8.13 If there is a material breach or default of the Intercreditor
Agreement by any party thereto (other than the Lender) and, if such breach or
default is capable of being remedied (as determined by Lender in its Permitted
Discretion), such breach or default is not remedied within five (5) days of such
default;

      8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, which materially and adversely affects any of
Lender's rights under any such Loan Document as determined by Lender in its sole
and absolute determination, or the validity or enforceability thereof shall be
contested by Borrower or its Subsidiaries, or a proceeding shall be commenced by
Borrower or its Subsidiaries, or by any Governmental Authority having
jurisdiction over Borrower or its Subsidiaries seeking to establish the
invalidity or unenforceability thereof, or Borrower or its Subsidiaries, shall
deny that Borrower or its Subsidiaries has any liability or obligation purported
to be created under any Loan Document; or

      8.16 If any breach or default shall occur under or pursuant to the
Indenture, the Notes or any of the Collateral Agreements, after expiration of
any cure period therein, if any.

9. LENDER'S RIGHTS AND REMEDIES.

      9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the continuation,
of an Event of Default, Lender (at its election but without notice of its
election and without demand) may do any one or more of the following, all of
which are authorized by Borrower:

            (a) Declare all or any portion of the Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;

            (b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Lender;

            (c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Lender, but without affecting any of
the Lender's Liens in the Collateral and without affecting the Obligations;

            (d) Settle or adjust disputes and claims directly with Borrower's
Account Debtors for amounts and upon terms which Lender considers advisable, and
in such cases, Lender will credit Borrower's Loan Account with only the net
amounts received by Lender in payment of such disputed Accounts after deducting
all Lender Expenses incurred or expended in connection therewith;

            (e) Cause Borrower to hold all of its returned Inventory in trust
for Lender and segregate all such Inventory from all other assets of Borrower or
in Borrower's possession;



            (f) Without notice to or demand upon Borrower, make such payments
and do such acts as Lender considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the Collateral
if Lender so requires, and to make the Collateral available to Lender at a place
that Lender may designate which is reasonably convenient to both parties.
Borrower authorizes Lender to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of it,
and to pay, purchase, contest, or compromise any Lien that in Lender's
determination appears to conflict with the priority of Lender's Liens in and to
the Collateral and to pay all expenses incurred in connection therewith and to
charge Borrower's Loan Account therefor. With respect to any of Borrower's owned
or leased premises, Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;

            (g) Without notice to Borrower (such notice being expressly waived),
and without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower held
by Lender (including any amounts received in the Cash Management Accounts), or
(ii) Indebtedness at any time owing to or for the credit or the account of
Borrower held by Lender;

            (h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by Lender, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations
(other than contingent indemnification obligations);

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

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

            (k) Except in those circumstances where no notice is required under
the Code, Lender shall give notice of the disposition of the Borrower Collateral
as follows:

                  (i) Lender shall give Borrower a notice in writing of the time
            and place of public sale, or, if the sale is a private sale or some
            other disposition other than a public sale is to be made of the
            Borrower Collateral,



            the time on or after which the private sale or other disposition is
            to be made; and

                  (ii) The notice shall be personally delivered or mailed,
            postage prepaid, to Borrower as provided in Section 12, at least 10
            days before the earliest time of disposition set forth in the
            notice; no notice needs to be given prior to the disposition of any
            portion of the Borrower Collateral that is perishable or threatens
            to decline speedily in value or that is of a type customarily sold
            on a recognized market;

            (l) Lender may credit bid and purchase at any public sale;

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

            (n) Lender shall have all other rights and remedies available at law
or in equity or pursuant to any other Loan Document.

            The foregoing to the contrary notwithstanding, upon the occurrence
of any Event of Default described in Section 8.4 or Section 8.5, in addition to
the remedies set forth above, without any notice to Borrower or any other Person
or any act by the Lender, Lender's obligation to extent credit hereunder shall
terminated and the Obligations then outstanding, together with all accrued and
unpaid interest thereon and all fees and all other amounts due under this
Agreement and the other Loan Documents, shall automatically and immediately
become due and payable, without presentment, demand, protest, or notice of any
kind, all of which are expressly waived by Borrower.

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

10. TAXES AND EXPENSES.

            If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, in each case,
to the extent required under the terms of this Agreement, then, Lender, in its
sole discretion and without prior notice to Borrower, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves against the Borrowing Base or the Maximum Revolver Amount as Lender
deems necessary



to protect Lender from the exposure created by such failure, or (c) in the case
of the failure to comply with Section 6.8 hereof, if an Event of Default shall
occur and be continuing, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.

11. WAIVERS; INDEMNIFICATION.

      11.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrower may in any way be liable.

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

      11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and hold the
Lender-Related Persons, and each Participant (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith or in connection with the enforcement
of this indemnification (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration (including
any restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby, and
(b) with respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The
foregoing to the contrary notwithstanding, Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any



payment to any other Indemnified Person with respect to an Indemnified Liability
as to which Borrower was required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

12. NOTICES.

            Unless otherwise provided in this Agreement, all notices or demands
by Borrower or Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Lender, as applicable, may designate to each
other in accordance herewith), or telefacsimile to Borrower or Lender, as the
case may be, at its address set forth below:

            If to Borrower:         625 Willowbrook Centre Parkway
                                    Willowbrook, IL  60527
                                    ____________________________________
                                    Attn:  President and General Counsel
                                    Fax No.  (630) 455-2152

            with copies to:         Jenner & Block LLP
                                    One IBM Plaza
                                    Chicago, IL  60611
                                    Attn:  Elizabeth Davidson, Esq. and Teri
                                    Lindquist, Esq.
                                    Fax No.  (312) 840-8793 and (312) 923-2932

            If to Lender:           WELLS FARGO FOOTHILL, INC.
                                    One Boston Place, 18th Floor
                                    Boston, Massachusetts  02108
                                    Attn:  Business Finance Manager
                                    Fax No.: 617-523-1697

            with copies to:         Duane Morris LLP
                                    227 West Monroe Street, Suite 3400
                                    Attn:  Kenneth A. Latimer, Esq.
                                    Fax No.  (312) 499-6701



            Lender and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
other than notices by Lender in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices sent
by Lender in connection with the exercise of enforcement rights against Borrower
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above; provided, that with respect
to transmission via (i) telefacsimile, Lender shall have received confirmation
of delivery or (ii) electronic mail, Lender shall not have received notice that
such transmission was not delivered..

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

            (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF ILLINOIS.

            (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
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 LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWER AND LENDER WAIVE, 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 13(b).

            (c) BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS



OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
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.

14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

      14.1 ASSIGNMENTS AND PARTICIPATIONS.

            (a) Lender may assign and delegate to one or more assignees (each an
"Assignee") that are Eligible Transferees all, or any ratable part of all, of
the Obligations and the other rights and obligations of Lender hereunder and
under the other Loan Documents, in a minimum amount of $5,000,000; provided,
however, that Borrower may continue to deal solely and directly with Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower by Lender
and the Assignee, and (ii) Lender and its Assignee have delivered to Borrower an
assignment and acceptance. Anything contained herein to the contrary
notwithstanding, the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.

            (b) From and after the date that Lender provides Borrower with such
written notice and executed assignment and acceptance, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the Lender shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such assignment and acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from any future obligations under this
Agreement (and in the case of an assignment and acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall effect a novation between
Borrower and the Assignee; provided, however, that nothing contained herein
shall release any assigning Lender from obligations that survive the termination
of this Agreement, including such assigning Lender's obligations under Section
16.8 of this Agreement.

            (c) Immediately upon Borrower's receipt of such fully executed
assignment and acceptance agreement, this Agreement shall be deemed to be
amended to the



extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom.

            (d) Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Lender (a
"Participant") participating interests in Obligations and the other rights and
interests of Lender hereunder and under the other Loan Documents; provided,
however, that (i) Lender shall remain the "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations and the other rights and interests of
Lender hereunder shall not constitute a "Lender" hereunder or under the other
Loan Documents and Lender's obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible for the performance of
such obligations, (iii) Borrower and Lender shall continue to deal solely and
directly with each other in connection with Lender's rights and obligations
under this Agreement and the other Loan Documents, (iv) Lender shall not
transfer or grant any participating interest under which the Participant has the
right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) reduce the amount of, the interest or fees payable to such
Participant through Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through Lender
and no Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to Borrower, the Collections of Borrower or
its Subsidiaries, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.

            (e) In connection with any such assignment or participation or
proposed assignment or participation, Lender may, subject to the provisions of
Section 16.8, disclose all documents and information which it now or hereafter
may have relating to Borrower and its Subsidiaries and their respective
businesses.

            (f) Any other provision in this Agreement notwithstanding, Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with



Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR
Section 203.24, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.

      14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that except as otherwise expressly permitted pursuant to Section 7.3, if at all
[to discuss], Borrower may not assign this Agreement or any rights or duties
hereunder without Lender's prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lender shall
release Borrower from its Obligations. Lender may assign this Agreement and the
other Loan Documents and its rights and duties hereunder and thereunder pursuant
to Section 14.1 hereof and, except as expressly required pursuant to Section
14.1 hereof, no consent or approval by Borrower is required in connection with
any such assignment.

15. AMENDMENTS; WAIVERS.

      15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements),
and no consent with respect to any departure by Borrower therefrom, shall be
effective unless the same shall be in writing and signed by Lender and Borrower
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

      15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.

16. GENERAL PROVISIONS.

      16.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Borrower and Lender.

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

      16.3 INTERPRETATION; GOVERNMENT REGULATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed against Lender or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary



meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto. Anything contained in this Agreement to the contrary
notwithstanding, Lender shall not be obligated to extend credit to the Borrower
in violation of any limitation or prohibition provided by any applicable
statute, regulation or law.

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

      16.5 WITHHOLDING TAXES. All payments made by Borrower hereunder or under
any note or other Loan Document will be made without setoff, counterclaim, or
other defense. In addition, all such payments will be made free and clear of,
and without deduction or withholding for, any present or future Taxes, and in
the event any deduction or withholding of Taxes is required, Borrower shall
comply with the penultimate sentence of this Section 16.5, "Taxes" shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of Lender) and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16.5 after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein; provided, however, that
Borrower shall not be required to increase any such amounts if the increase in
such amount payable results from Lender's own willful misconduct or gross
negligence (as finally determined by a court of competent jurisdiction).
Borrower will furnish to Lender as promptly as possible after the date the
payment of any Tax is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower.

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

      16.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer to Lender of any property
should for any reason



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

      16.8 CONFIDENTIALITY.

            Lender agrees that material, non-public information regarding
Borrower and its Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Lender in a confidential manner,
and shall not be disclosed by Lender to Persons who are not parties to this
Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to Lender, provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the
terms of this Section 16.8, (b) to Subsidiaries and Affiliates of Lender
(including the Bank Product Providers), provided that any such Subsidiary or
Affiliate shall have agreed to receive such information hereunder subject to the
terms of this Section 16.8, (c) as may be required by statute, decision or
judicial or administrative order, rule, or regulation, provided that prior to
such disclosure as a result of a decision or judicial or administrative order
Borrower shall be given notice of such requirement and provided to time to file
and objection, (d) as may be agreed to in advance by Borrower or its
Subsidiaries or as requested or required by any Governmental Authority pursuant
to any subpoena or other legal process, provided that prior to such disclosure
Borrower shall be given notice or such subpoena or other legal process and
provided time to file an objection, (e) as to any such information that is or
becomes generally available to the public (other than as a result of disclosure
prohibited by this Section 16.8), (f) in connection with any assignment,
prospective assignment, sale, prospective sale, participation or prospective
participations, or pledge or prospective pledge of Lender's interest under this
Agreement, provided that any such assignee, prospective assignee, purchaser,
prospective purchaser, participant, prospective participant, pledgee, or
prospective pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (g) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents. The
provisions of this Section 16.8 shall survive for 2 years after the payment in
full of the Obligations.

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



      16.10 INTERCREDITOR AGREEMENT.

            (a) The Liens granted hereunder in favor of Lender 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.

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

                          [Signature pages to follow.]



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

                                   VISKASE COMPANIES, INC.
                                   a Delaware corporation

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

                                   WELLS FARGO FOOTHILL, INC.,
                                   a California corporation, as Lender

                                   By:     _____/s/_________________
                                   Title:  Vice President


                                  SCHEDULE D-1

                               DESIGNATED ACCOUNT

Account number _________ of Borrower maintained with Borrower's Designated
Account Bank, or such other deposit account of Borrower (located within the
United States) that has been designed as such, in writing, by Borrower to Agent.

"Designated Account Bank" means LaSalle Bank National Association, whose office
is located at 135 S. LaSalle St., Chicago, Illinois, and whose ABA number is
__________



                                  SCHEDULE E-1

                          ELIGIBLE INVENTORY LOCATIONS

625 Willowbrook Centre Parkway
Willowbrook, Illinois 60527 (Du Page County)

280 Shore Drive
Burr Ridge, Illinois 60521 (Du Page County)

106 Blair Bend Drive
Loudon, Tennessee 37774 (Loudon County)

222 East State Highway 198
Osceola, Arkansas 72370-9704 (Mississippi County)

102 East Bailie Street
Kentland, Indiana 47951 (Newton County)

1100 Westlake Parkway
   Atlanta, GA 30336 (Fulton County)

176 Dingens Street
   Buffalo, NY 14206 (Erie County)

3146 South Chestnut
   Fresno, CA 93725 (Fresno County)

3507 West U.S. Highway 24
   Remington, IN 47977 (Jasper County)

1502 Quebec Avenue
   Saskatoon, Saskatchewan S7K 3P4
   Canada

150 Colborne Street East
   Lindsay, Ontario K9V 6K4
   Canada



                                  SCHEDULE I-1

                                   INVESTMENTS

Note with B.T.T. (France) for (euro)804,169 (zero coupon) due 2026.

Promissory Note dated March 20, 2003 in the original principal amount of
4,931,091.74 pounds sterling made by Viskase Europe Limited payable to the order
of the Borrower.



                                  SCHEDULE P-1

                                 PERMITTED LIENS



        SECURED PARTY                  JURISDICTION      FILE DATE           FILE NUMBER                        DESCRIPTION
- ------------------------------    ---------------------  ----------          -----------              ------------------------------
                                                                                          
LaSalle Bank                      Delaware
National                                                 07/05/2001          10626403                 Money Market account
Association                                                                                           maintained by Borrower with
                                                                                                      Secured Party

LaSalle Bank National             Pennsylvania           07/05/2001          34130129                 Money Market account
Association                                                                                           maintained by Borrower with
                                                                                                      Secured Party

Buckeye Technologies, Inc.        Pennsylvania           04/08/2002          36100310                 Consignment

Heller Financial Leasing, Inc.    Illinois               05/28/1999          4043043                  Equipment lease

Wells Fargo Financial Leasing,    Illinois               10/21/1999          4111394                  Software equipment lease
Inc.

Wells Fargo Financial Leasing,    Illinois               11/23/1999          41253333                 Computer and software
Inc.                                                                                                  equipment lease

Xerox Corp.                       Illinois               12/13/1999          4131174                  Xerox equipment lease

Kimberly K. Duttlinger            Du Page Circuit Court  03/03/2004          2003L001367              Breach of employment contract
                                  Illinois                                                            claim. Plaintiff requested
                                                                                                      punitive damages of $1
                                                                                                      million, trial costs of
                                                                                                      $50,000 and attorney's fees.




                                                                                         
Lift Truck Sales, Service and      Tennessee Dept. of   08/21/2000          300-045148               Truck equipment lease
Rentals                            State





                                  SCHEDULE R-1

                            REAL PROPERTY COLLATERAL

106 Blair Bend Drive
Loudon, Tennessee 37774 (Loudon County)

222 East State Highway 198
Osceola, Arkansas 72370-9704 (Mississippi County)

102 East Bailie Street
Kentland, Indiana 47951 (Newton County)



                                 SCHEDULE 2.7(A)

                              CASH MANAGEMENT BANKS

1. Toronto Dominion Bank

2. LaSalle Bank National Association



                                  SCHEDULE 5.5

                       LOCATION OF INVENTORY AND EQUIPMENT

625 Willowbrook Centre Parkway
Willowbrook, Illinois 60527 (Du Page County)

280 Shore Drive
Burr Ridge, Illinois 60521 (Du Page County)

106 Blair Bend Drive
Loudon, Tennessee 37774 (Loudon County)

222 East State Highway 198
Osceola, Arkansas 72370-9704 (Mississippi County)

102 East Bailie Street
Kentland, Indiana 47951 (Newton County)

1100 Westlake Parkway
Atlanta, GA 30336 (Fulton)

176 Dingens Street
Buffalo, NY 14206 (Erie)

3146 South Chestnut
Fresno, CA 93725 (Fresno)

3507 West U.S. Highway 24
Remington, IN 47977 (Jasper)

1502 Quebec Avenue
Saskatoon, Saskatchewan S7K 3P4
Canada

150 Colborne Street East
Lindsay, Ontario K9V 6K4
Canada

Inland Star Distribution
3146 South Chestnut
Fresno, CA 93745
(Public Warehouse)

Smith Transport
3507 W. U.S. Highway 24
Remington, IN 47977
(Public Warehouse)

Warehouse Basics
1100 Westlake Parkway
Atlanta, GA 30336
(Public Warehouse)

Burnham (Canada) Ltd.
1502 Quebec Avenue
Saskatoon, SK S7K1V7
(Public Warehouse)



Niagara Tying Service
176 Dingens St
Buffalo, NY 14206
(Converter)

Casing Tying Service, Inc.
39 Atlantic Street
Garfield, NJ 07026
(Converter)

Hutchinson Tie Service, Inc.
6514 S. Lavergne Street
Bedford Park, IL 60638
(Converter)

Scotnet
801 William Lane
Reading, PA 19604
(Converter)

Murray's Warehousing
1011 Floral Ln
Davenport, IA 52808
(Customer's Public Warehouse)

Love Box Co.
2500 N. Stadium Blvd, Bldg 4
Columbia, MO 65202
(Customer's Public Warehouse)

Vienna Sausage Mfg. Co.
2501 N. Damen Ave.
Chicago, IL 60647
(Customer)

Cumberland Gap Provision Co.
South 23rd Street
Middlesboro, KY 40965
(Customer)

Dakota Pork Industries
915 East Havens Street
Mitchell, SD 57301
(Customer)

Kunzler & Co. Inc.
648-652 Manor Street
Lancaster, PA 17604
(Customer)

Gwaltney of Smithfield LTD
2175 Elmhurst Lane
Portsmouth, VA 23701
(Customer)



Bar-S-Foods Co.
211 South Locust Street
Clinton, OK 73601
(Customer)

Best Kosher Foods Corp.
3944 S. Morgan Street
Chicago, IL 60609
(Customer)

John Morrell & Company
1400 N. Weber Avenue
Sioux Falls, SD 57117
(Customer)

The Dial Corporation
Route US 61 South
Fort Madison, IA 52627
(Customer)

Hillshire Farms & Kahn's Co.
3241 Spring Grove
Cincinnati, OH 45225
(Customer)

IBP Foods Inc.
2000 Oak Industrial Drive NE
Grand Rapids, MI 49505
(Customer)

St. Joseph Foods
5807 Mitchell Avenue
Saint Joseph, MO 64507
(Customer)

Berks Packing Company, Inc.
319 Bingaman Street
Reading, PA 19610
(Customer)

Conagra Broiler Company
1350 Bloomingdale Road
Queenstown, MD 21658
(Customer)



                                 SCHEDULE 5.7(a)

                             STATES OF ORGANIZATION



            NAME OF ENTITY                                        STATE OF ORGANIZATION
- ---------------------------------------                           ---------------------
                                                               
Viskase Companies, Inc.                                           Delaware

Viskase Films, Inc.
(Dormant to be dissolved 2004)                                    Delaware

WSC Corp. d/b/a Wisconsin Steel Company
                                                                  Delaware

Viskase Brasil Embalagens Ltda.                                   Brazil

Viskase Europe Limited                                            United Kingdom

Viskase Canada Inc.                                               Canada

Viskase S.A.S.                                                    France

Viskase GMBH                                                      Germany

Viskase SpA                                                       Italy

Viskase Polska SP.Z0.0                                            Poland

Viskase Holdings Limited                                          United Kingdom

Viskase International Limited                                     United Kingdom
(Dormant to be dissolved by 2005)

Viskase Limited                                                   United Kingdom

Viskase (UK) Limited                                              United Kingdom
(Dormant to be dissolved by 2005)




                                 SCHEDULE 5.7(b)

                             CHIEF EXECUTIVE OFFICE



            NAME OF ENTITY                                                      CHIEF EXECUTIVE OFFICE
- ---------------------------------------                           --------------------------------------------
                                                               
                                                                  625 Willowbrook Centre Parkway
Viskase Companies, Inc.                                           Willowbrook, Illinois 60527 (Du Page County)

Viskase Films, Inc.                                               Same as above.
[Dormant]

WSC Corp. d/b/a Wisconsin Steel Company                           Same as above.

Viskase Brasil Embalagens Ltda.                                   Same as above.

Viskase Europe Limited                                            Same as above.

Viskase Canada Inc.                                               Same as above.

Viskase S.A.S.                                                    Same as above.

Viskase GMBH                                                      Same as above.

Viskase SpA                                                       Same as above.

Viskase Polska SP.Z0.0                                            Same as above.

Viskase Holdings Limited                                          Same as above.

Viskase International Limited
[Dormant to be dissolved by 2005]                                 Same as above.

Viskase Limited                                                   Same as above.

Viskase (UK) Limited
[Dormant to be dissolved by 2005]                                 Same as above.




                                 SCHEDULE 5.7(c)

                      ORGANIZATIONAL IDENTIFICATION NUMBERS



              NAME OF ENTITY                                      ORGANIZATIONAL I.D. NUMBER
- ---------------------------------------                           --------------------------
                                                               
                                                                  0757401
Viskase Companies, Inc.

Viskase Films, Inc.                                               0838080
[Dormant]

WSC Corp. d/b/a Wisconsin Steel Company                           2065779

Viskase Brasil Embalagens Ltda.                                   Foreign

Viskase Europe Limited                                            Foreign

Viskase Canada Inc.                                               Foreign

Viskase S.A.S.                                                    Foreign

Viskase GMBH                                                      Foreign

Viskase SpA                                                       Foreign

Viskase Polska SP.Z0.0                                            Foreign

Viskase Holdings Limited                                          Foreign

Viskase International Limited
[Dormant to be dissolved by 2005]                                 Foreign

Viskase Limited                                                   Foreign

Viskase (UK) Limited
[Dormant to be dissolved by 2005]                                 Foreign




                                 SCHEDULE 5.7(d)

                             COMMERCIAL TORT CLAIMS

None.



                                SCHEDULE 5.8 (b)

                           CAPITALIZATION OF BORROWER

Viskase Companies, Inc.

Date of Incorporation: 07/21/1970

Authorized Stock: 50,000,000 Common Shares

                  50,000,000 Preferred Stock

Issued Stock: Common-10,670,053

              Preferred-NONE

Par Value: Common-$.01 par value



                                SCHEDULE 5.8 (c)

                    CAPITALIZATION OF BORROWER'S SUBSIDIARIES



                                                                                                 NUMBER & PERCENTAGE OF
   NAME OF                                                         NUMBER OF SHARES                OUTSTANDING SHARES
    ENTITY               JURISDICTION                                 AUTHORIZED                    OWNED BY BORROWER
- ---------------     ----------------------                   ------------------------------  --------------------------------
                                                                                    
Viskase Films,
Inc.                Delaware                                 100                             100
[Dormant]
                                                                                             (100%)
WSC Corp. d/b/a
Wisconsin Steel     Delaware                                 1,000                           1,000
Company                                                                                      (100%)

Viskase Brasil      Brazil                                   33,956,830                      27,335,248
Embalagens Ltda.                                                                             (81%)

Viskase Europe      United Kingdom                           30,000,000                      30,000,000
Limited                                                                                      (100%)

Viskase Canada      Canada                                   Common: Unlimited               20 Common
Inc.                                                         Preferred: Unlimited            (100%)
                                                                                             480,000 Preferred (100%)




                                                                                    
Viskase             France                                   429,543                         429,543
S.A.S.                                                                                       (100%)

(owned by Viskase
Europe Limited)

Viskase GMBH        Germany                                  1                               1
(owned by Viskase                                                                            (100%)
S.A.S.)





                                                                                    
Viskase SpA         Italy                                    45,000                          45,000
(owned by Viskase                                                                            (100%)
S.A.S.)

Viskase Polska      Poland                                   300                             300
SP.Z0.0                                                                                      (100%)
(owned by Viskase
S.A.S.)

Viskase Holdings    United Kingdom                           1,900,100                       20
Limited                                                                                      (100%)
(owned by Viskase
S.A.S.)

Viskase             United Kingdom                           6,895,895                       6,895,895
International                                                                                (100%)
Limited
(Dormant to be
dissolved by 2005)
(owned by Viskase
Holdings Limited)

Viskase Limited     United Kingdom                           16,895,620                      16,895,620
(owned by Viskase                                                                            (100%)
Holdings Limited)

Viskase (UK)        United Kingdom                           6,308,114                       6,308,114
Limited                                                                                      (100%)
(Dormant to be
dissolved by 2005)
(owned by Viskase
(UK) Limited)





                                  SCHEDULE 5.10

                                   LITIGATION



Style of Lawsuit                      Court                                Nature of Action
- ----------------         -------------------------------      ------------------------------------------
                                                        
Tax claim                U.S. Bankruptcy Court (N.D.          Relates to the denial of certain loss
                         Ill.)                                carry-forwards of certain Viskase
                                                              subsidiaries by the Illinois Department of
                                                              Revenue

Tax claim                Department of Revenue of the         Relates to failure of Viskase Canada to
                         Province of Quebec                   collect and remit sales taxes

Employment Claim         Circuit Court of the Eighteenth      Former general counsel alleges she
                         Judicial Circuit, DuPage             terminated her employment for "good cause"
                         County, Illinois                     pursuant to her employment agreement




                                  SCHEDULE 5.13

                                      ERISA

Retirement Program for Employees of Viskase Companies, Inc. provides annual
benefits to employees of the Borrower payable upon retirement.



                                  SCHEDULE 5.14

                              ENVIRONMENTAL MATTERS

Loudon, TN
106 Blair Bend Drive
Loudon, Tennessee 37774 (Loudon County)
Casing extrusion facility
103(c) Superfund Notification provided.

Viskase Canada, Inc.
150 Colborne Street East
Lindsay, Ontario K9V 6K4
Canada

Shortly after the acquisition of the Lindsay facility, Viskase Canada
commenced a lawsuit in Canada against Union Carbide seeking damages
resulting from discovery of ammonium sulphate contamination at the
Lindsay facility and Union Carbide's breach of contractual
representations and warranties relating to the environmental condition
of the facility. In November 2003, the Ontario Ministry of the
Environment ("MOE") notified Viskase Canada that it had evidence to
suggest that the Lindsay facility was a source of PCB contamination in
surrounding areas. Viskase Canada has been working with the MOE in
investigating the alleged PCB contamination and developing and
implementing, if appropriate, a remedial plan for the Lindsay facility
and the affected area. Viskase Canada and others have been advised by
the MOE that the MOE expects to issue certain Director's Orders
requiring remediation under applicable environmental laws and
regulations against Viskase Canada, Dow and others in the next few
months. Dow, which has replaced or soon will replace Union Carbide as
the defendant in the lawsuit against Union Carbide, has consented to an
amendment to the lawsuit, which Viskase Canada will file with the court
as soon as the claim can be adequately quantified, that alleges further
that any PCB contamination at the Lindsay facility was generated from
Union Carbide's prior plastic extrusion business, which was not part of
the business Viskase Canada purchased from Union Carbide. Viskase
Canada is seeking an order to require Union Carbide to repurchase the
Lindsay facility and award Viskase Canada damages in excess of $2
million (Canadian). The Company has reserved $0.75 million (U.S.) for
the property remediation. The lawsuit is currently pending and is
expected to proceed to trial in 2005.



                                  SCHEDULE 5.16

                              INTELLECTUAL PROPERTY

Patents:

See attached list.

Trademarks and Servicemarks:

See attached list.

Copyrights:



                                          If Foreign
                                         Registration,
Description          Application No.        Country     Issue Dates
- -----------          ---------------     -------------  -----------
                                               
NONE
- -----------          ----------------------------------------------
- -----------          ----------------------------------------------
- -----------          ----------------------------------------------


License Agreement:

Nucel(R) Agreement, a license to use certain casing manufacturing technology
from Courtaulds Fibres (Holdings) Limited. Technology not currently being used
by Viskase.



                                  SCHEDULE 5.18

                     DEPOSIT ACCOUNTS AND SECURITY ACCOUNTS



Type of                                        Account
Account              Name of Institution        Number           Branch Address                        Description of Account
- -------              ---------------------     -------  -----------------------------------   --------------------------------------
                                                                                  
A                    LaSalle Bank N.A.                  135 S. LaSalle St.                    Master Sweep Account
                                                        Chicago, Illinois

A                    LaSalle Bank N.A.                  135 S. LaSalle St.                    Controlled Disbursement Account
                                                        Chicago, Illinois

A                    LaSalle Bank N.A.                  135 S. LaSalle St.                    Overnight Investment Account linked to
                                                        Chicago, Illinois                     Master Sweep Account

A                    LaSalle Bank N.A.                  135 S. LaSalle St.                    Restricted Cash - LC
                                                        Chicago, Illinois

A                    Wells Fargo Bank                   Sixth & Marquette                     Restricted Cash
                                                        Minneapolis, MN 55479

B                    First Central Bank                 Knoxville, TN                         Operating Account

B                    Union Planters Bank                303 West Hale Street                  Operating Account
                                                        Osceola, AR 72370

B                    Kentland Bank                      111 North Fourth Street               Operating Account
                                                        Kentland, IN 47951

B                    LaSalle Bank N.A.                  135 S. LaSalle St.                    Domestic Lockbox Deposit Account
                                                        Chicago, Illinois 60603

A                    Toronto Dominion Bank              55 King St. W., Toronto ON  M5K 1A2   General


A = Primary checking account/operating account

B = Petty cash, payroll or zero-balance account



                                  SCHEDULE 5.20

                             PERMITTED INDEBTEDNESS

Note with B.T.T. (France) for (euro)804,169 (zero coupon) due 2026.

Promissory Note dated March 20, 2003 in the original principal amount of
4,931,091.74 pounds sterling made by Viskase Europe Limited payable to the order
of the Borrower.

Letter of credit, #S532438 for $11,749,595.25, for the benefit of U.S. Bank N.A.
for the GECC rent payment (to be terminated at closing).

Letter of credit, #S532424 for $901,995.00, for the benefit of Reliance
Insurance for workers' compensation insurance.

Letter of credit, #S532031 for $500,000.00, for the benefit of Hartford
Insurance for workers' compensation insurance.

Letter of credit, #S535769 for $500,000.00, for the benefit of Hartford
Insurance for workers' compensation insurance.

EX-10.2

                                                                    EXHIBIT 10.2

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

      THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "SECURITY AGREEMENT")
dated as of June 29, 2004, is made by VISKASE COMPANIES, INC., a Delaware
corporation ("GRANTOR"), in favor of WELLS FARGO FOOTHILL, INC., a California
corporation (together with its successors and assigns, "GRANTEE").

                              W I T N E S S E T H:

      WHEREAS, Grantor and Grantee are parties 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"), which provides (i) for
Grantee to make certain loans and other financial accommodations to Grantor, and
(ii) for the grant by Grantor to Grantee of a security interest in Grantor's
assets, including, without limitation, its patents, patent applications,
trademarks, trademark applications, trade names, copyrights, service marks,
service mark applications, goodwill and licenses, and all proceeds thereof.

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

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

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

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

      (ii) trademarks, trademark registrations, trademark applications, trade
names and tradestyles, brand names, service marks, service mark registrations
and service mark applications, including, without limitation, the trademarks,
trade names, brand names, service



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

      (iii) rights under or interests in any patent, trademark, or copyright
license agreements with any other Person (to the extent a security interest may
be granted in such rights without violating the terms of any such license
agreement; with respect to any of the Intellectual Property or any other patent,
trademark, service mark or any application or registration thereof or any other
trade name or tradestyle between Grantor and any other Person, whether Grantor
is a licensor or licensee under any such license agreement, including, without
limitation, the licenses listed on Exhibit C attached hereto and hereby made a
part hereof (all of the foregoing license agreements and Grantor's rights
thereunder are referred to collectively as the "LICENSES"); and

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

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

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

            3. Representations and Warranties. Grantor hereby represents and
warrants to Grantee for the benefit of the Grantee and the Bank Product
Providers, which representations and warranties shall survive the execution and
delivery of this Security Agreement, that:

                                     - 2 -


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

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

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

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

      (v) Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to the Registered Intellectual Property, free
and clear of any liens, security interests, mortgages, charges and encumbrances,
including, without limitation, licenses, consent-to-use agreements, shop rights
and covenants by Grantor not to sue third Persons (except for Permitted Liens);

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

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

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

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

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

            4. Restrictions on Future Agreements. Except as otherwise permitted
pursuant to the Loan Agreement, Grantor agrees that until all Obligations shall
have been satisfied and paid in full (other than contingent indemnification
obligations) and the Loan

                                     - 3 -


Agreement shall have been terminated, Grantor shall not, without the prior
written consent of Grantee, sell, transfer, mortgage, convey, dispose, encumber
or assign any or all of, or grant any license or sublicense under (other than as
commercially reasonable in Grantor's good faith business judgment), the
Intellectual Property, or enter into any other agreement with respect to the
Intellectual Property, and Grantor further agrees that it shall not knowingly
take any action or knowingly permit any action to be taken by others subject to
its control, including, without limitation, licensees or sublicensees, or
knowingly fail to take any action, which would materially adversely affect the
validity or enforcement of the rights Grantee subject to this Security
Agreement, other than in the ordinary course of business.

            5. New Intellectual Property. Grantor hereby represents and warrants
to Grantee for the benefit of the Grantee and the Bank Product Providers that
the Intellectual Property listed on Exhibits A, B and C, respectively,
constitute all of the Registered Intellectual Property now owned by Grantor.
Grantor hereby represents and warrants to Grantee for the benefit of Grantee and
the Bank Product Providers that the Intellectual Property listed on Exhibit C
constitute all of the material Licenses now owned by Grantor. If, before all
Obligations shall have been satisfied in full or before the Loan Agreement has
been terminated, Grantor shall (i) become aware of any existing Registered
Intellectual Property of which Grantor has not previously informed Grantee, (ii)
obtain rights to any Registered Intellectual Property, or (iii) become entitled
to the benefit of any material Intellectual Property which benefit is not in
existence on the date hereof, the provisions of this Security Agreement above
shall automatically apply thereto and Grantor shall give to Grantee prompt
written notice thereof. Grantor hereby authorizes Grantee to modify this
Security Agreement by amending Exhibits A, B, C, and D, as applicable, to
include any such Intellectual Property, and Grantee may file or refile this
Security Agreement with the U.S Patent and Trademark Office and U.S. Copyright
Office. Grantor agrees to execute and deliver any and all documents and
instruments necessary or advisable to record or preserve Grantee's interest in
all Intellectual Property added to Exhibits A, B, C, and D pursuant to this
Section.

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

            7. Grantee's Right to Inspect; Trademark Quality Control. To the
extent permitted by the Loan Agreement, Grantee shall have the right, from time
to time with prior notice (unless an Event of Default has occurred and is
continuing, in which case prior notice shall not be required) and, during normal
business hours and prior to payment in full of all Obligations (other than
contingent indemnification obligations) and termination of the Loan Agreement,
to inspect Grantor's premises and to examine Grantor's books, records and
operations, including, without limitation, Grantor's quality control processes.
Grantor agrees (i)

                                     - 4 -


to maintain the quality of any and all products in connection with which the
material Trademarks are used, consistent with the quality of said products (as
determined by Grantor in its commercially reasonable business judgment) and (ii)
to provide Grantee, upon Grantee's reasonable request from time to time, with a
certificate of an officer of Grantor certifying Grantor's compliance with the
foregoing.

            8. Release of Security Agreement. Upon the payment and performance
in full in cash of the Obligations (other than contingent indemnification
obligations), including the cash collateralization, expiration or cancellation
of all Obligations, if any, consisting of letters of credit, and the full and
final termination of any commitment to extend any financial accommodations under
the Loan Agreement, this Security Agreement shall terminate, and Grantee shall
execute and deliver such documents and instruments and take such further action
reasonably requested by Grantor, at Grantor's expense, as shall be necessary to
evidence termination of the security interest granted by Grantor to Grantee for
the benefit of the Grantee and the Bank Product Providers hereunder.

            9. Expenses. All costs and expenses incurred in connection with the
performance of any of the agreements set forth herein shall be borne by Grantor.
All fees, costs and expenses, of whatever kind or nature, including reasonable
attorneys' and paralegals' fees and legal expenses, incurred by Grantee (for the
benefit of the Grantee and the Bank Product Providers) in connection with the
filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, counsel
fees, maintenance fees, encumbrances or otherwise in protecting, maintaining or
preserving the Intellectual Property, or in defending or prosecuting any actions
or proceedings arising out of or related to the Intellectual Property, shall be
borne by and paid by Grantor on demand by Grantee on behalf of the Grantee and
the Bank Product Providers and until so paid shall bear interest at the "default
rate of interest" set forth in the Loan Agreement.

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

                                     - 5 -


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

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

            13. Severability. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid and
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Security
Agreement in any jurisdiction.

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

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

                                     - 6 -


rights and remedies given it by the terms of this Security Agreement and the
Loan Agreement, all rights and remedies allowed by law, in equity, and the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in Illinois.

            16. Intentionally Omitted.

            17. Binding Effect; Benefits. This Security Agreement shall be
binding upon Grantor and its respective successors and assigns, and shall inure
to the benefit of Grantee, its successors, nominees and assigns; provided,
however, Grantor shall not assign this Security Agreement or any of Grantor's
obligations hereunder without the prior written consent of Grantee.

            18. Governing Law. This Security Agreement shall be governed by,
enforced and construed in accordance with the internal laws of the State of
Illinois, without regard to choice of law or conflict of law principles.

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

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

            21. Survival of Representations. All representations and warranties
of Grantor contained in this Security Agreement shall survive the execution and
delivery of this Security Agreement and shall be remade on the date of each
borrowing under the Loan Agreement.

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

            23. VENUE: JURY TRIAL WAIVER. (a) THE PARTIES AGREE THAT ALL ACTIONS
OR PROCEEDINGS ARISING IN CONNECTION WITH THIS SECURITY AGREEMENT SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
COOK, STATE OF ILLINOIS OR,

                                     - 7 -


AT THE SOLE OPTION OF GRANTEE, IN ANY OTHER COURT IN WHICH GRANTEE SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY.

            (b) TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY
BARGAINED FOR CONSIDERATION TO GRANTEE, GRANTOR HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY (WHICH GRANTEE ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO THIS SECURITY
AGREEMENT. GRANTOR HEREBY EXPRESSLY ACKNOWLEDGES THE INCLUSION OF THIS JURY
TRIAL WAIVER AND ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH
INDEPENDENT LEGAL COUNSEL REGARDING ITS MEANING.

            24. Intercreditor Agreement. (a) The Liens granted hereunder in
favor of the Grantee for the benefit of itself and the Bank Product Providers in
respect of the Intellectual Property and the exercise of any right related
thereto thereby shall be subject, in each case, to the terms of the
Intercreditor Agreement (as defined in the Loan Agreement). (b) In the event of
any direct conflict between the express terms and provisions of this Security
Agreement and of the Intercreditor Agreement, the terms and provisions of the
Intercreditor Agreement shall control.

                            [Signature Page Follows]

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

                                                VISKASE COMPANIES, INC.

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

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

WELLS FARGO FOOTHILL, INC.

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


                                      -8-


                                    EXHIBIT A

                                     PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
*010831        8    US   01/13/1989   09/19/1989   298277        4867204       Granted      IMPROVED TUBULAR CELLULOSIC FOOD
012325              CA   02/18/1983   04/30/1985   421966-0      1188173       Granted      CONTROLLABLY MOISTURIZED MOLD RE
012540              CA   09/02/1983   01/13/1987   436014-1      1216459       Granted      PACKAGE ARTICLE FOR AUTOMATICALL
012541              CA   09/02/1983   11/12/1986   436015-0      1213775       Granted      METHOD AND APPARATUS FOR AUTOMA
012542              CA   09/02/1983   06/03/1986   436013-3      1205321       Granted      ARTICLE FOR USE IN AUTOMATICALLY A
012574         4    CA   10/01/1982   10/29/1985   41264303      1195872       Granted      TAR DEPLETED LIQUID SMOKE AND TREA
012678         1    US   02/13/1985   07/07/1987   701233        H304          Granted      PRINTING INK FOR USE ON FLEXIBLE FIL
012834              CA   08/18/1983   06/10/1986   434846-0      1205669       Granted      COMPOSITE SHIRRED CASING ARTICLE A
012896         1    CA   10/01/1982   05/21/1985   412676-9      1187324       Granted      TAR-DEPLETED LIQUID SMOKE TREATME
012896`        2    US   11/30/1983   09/02/1986   556443        4609559       Granted      TAR-DEPLETED LIQUID SMOKE TREATME
012982         1    CA   09/27/1984   06/21/1988   464185-0      1238230       Granted      FOOD CASING AND METHOD OF PREPARI
012982         1    US   01/26/1984   06/24/1986   573367        4596727       Granted      FOOD CASING AND METHOD OF PREPARI
012984         1    CA   10/01;/1982  05/07/1985   412653-0      1186555       Granted      TAR-DEPLETED LIQUID SMOKE TREATME
012986              CA   04/23/1982   04/23/1985   401525-8      1185838       Granted      LIQUID COATING METHOD AND APPARAT
013154         A    CA   11/21/1985   05/31/1988   495950-7      1237324       Granted      STUFFING METHOD AND APPARATUS.
013154              CA   04/23/1982   02/11/1986   401524-0      1200420       Granted      STUFFING METHOD AND APPARATUS.
013155         2    CA   04/23/1982   10/22/1985   401523-1      1195544       Granted      CORED HIGH DENSITY SHIRRED CASINGS
013155         2    DE   04/29/1982   07/29/1993   P3216011.9    3216011.9     Granted      CORED HIGH DENSITY SHIRRED CASINGS
013155         2    MX   04/30/1982   01/09/1990   192526        160224        Granted      CORED HIGH DENSITY SHIRRED CASINGS
013155         4    US   08/02/1985   08/13/1991   761675        5038832       Granted      CORED HIGH DENSITY SHIRRED CASINGS
013217         2    US   07/13/1989   08/28/1990   380709        4951715       Granted      TENSION SLEEVE SUPPORTED CASING A
013217              CA   05/21/1982   03/05/1985   403499-6      1183396       Granted      TENSION SLEEVE SUPPORTED CASING A
013218              MX   07/16/1982   12/12/1989   193630        160148        Granted      HIGH COHERENCY SHIRRED CASINGS.
013218              US   07/17/1981   03/17/1987   283244        4649961       Granted      HIGH COHERENCY SHIRRED CASINGS.
013218              CA   06/30/1982   06/10/1986   406366-0      1205670       Granted      HIGH COHERENCY SHIRRED CASINGS.
013218         1    US   09/05/1986   07/12/1988   903919        4756057       Granted      HIGH COHERENCY SHIRRED CASINGS.
013308         1    US   09/08/1982   02/25/1986   415862        4572098       Granted      LIQUID SMOKE IMPREGNATION OF FIBRO
013309              IT   09/10/1982   12/31/1986   23205A/82     1152388       Granted      LIQUID SMOKE-IMPREGNATED FIBROUS
013309              BE   09/10/1982   03/10/1983   208994        894373        Granted      LIQUID SMOKE-IMPREGNATED FIBROUS
013309              CA   08/13/1982   09/04/1984   409414-0      1173695       Granted      LIQUID SMOKE-IMPREGNATED FIBROUS


                                        1


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
013309              FI   09/08/1982   10/27/1986   82-3104       70776         Granted      LIQUID SMOKE-IMPREGNATED FIBROUS
013309              FR   09/10/1982   02/17/1986   82-15366      82-15366      Granted      LIQUID SMOKE-IMPREGNATED FIBROUS
013521              CA   02/09/1984   11/12/1986   447123-7      1213770       Granted      TAR-DEPLETED, CONCENTRATED, LIQUID
013646              B3   02/13/1984   09/17/1986   84101439.2    0118784       Granted      INHIBITION OF DISCOLORATION ON CELL
013646              CA   01/25/1984   10/14/1986   445988-1      1212570       Granted      INHIBITION OF DISCOLORATION ON CELL
013646              FI   02/13/1984   03/10/1988   84-0563       74593         Granted      INHIBITION OF DISCOLORATION ON CELL
013646              FR   02/13/1984   09/17/1986   84101439.2    0118784       Granted      INHIBITION OF DISCOLORATION ON CELL
013646              DE   02/13/1984   09/17/1986   84101439.2    P3460726.9    Granted      INHIBITION OF DISCOLORATION ON CELL
013646              GB   02/13/1984   09/17/1986   84101439.2    0118784       Granted      INHIBITION OF DISCOLORATION ON CELL
013687              SE   12/30/1986   09/02/1987   03110536.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013687              MX   10/21/1983   01/27/1989   199173        158374        Granted      METHOD AND APPARATUS FOR COMPAC
013687         1    MX   07/30/1985   08/27/1986   206149        182493        Granted      METHOD AND APPARATUS FOR COMPAC
013687              NO   10/21/1983   12/07/1988   83-1861       159132        Granted      METHOD AND APPARATUS FOR COMPAC
013687              ES   10/21/1983   06/25/1984   526637        526637        Granted      METHOD AND APPARATUS FOR COMPAC
013687              NL   10/21/1983   09/02/1987   83110536.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013687         B    ES   06/01/1984   02/13/1986   279639        279639        Granted      METHOD AND APPARATUS FOR COMPAC
013687              OK   10/21/1983   05/11/1992   4851/83       162568        Granted      METHOD AND APPARATUS FOR COMPAC
013687              CH   10/21/1983   09/02/1987   83110536.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013687              GB   10/21/1983   09/02/1987   83110538.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013687              US   10/22/1982   04/01/1986   436057        4578842       Granted      METHOD AND APPARATUS FOR COMPAC
013687         A    ES   06/01/1984   12/14/1984   533048        533048        Granted      METHOD AND APPARATUS FOR COMPAC
013687              DE   10/21/1983   09/02/1987   83110538.6    P3373259.0    Granted      METHOD AND APPARATUS FOR COMPAC
013687              FI   10/20/1983   08/08/1988   83-3840       75723         Granted      METHOD AND APPARATUS FOR COMPAC
013687         A    GA   04/20/1988   10/06/1992   564579        1308296       Granted      METHOD AND APPARATUS FOR COMPAC
013687         1    ES   07/03/1985   04/15/1991   533048        533048        Granted      METHOD AND APPARATUS FOR COMPAC
013687              GA   09/30/1983   08/23/1988   438092-4      1240878       Granted      METHOD AND APPARATUS FOR COMPAC
013687              BE   10/21/1983   09/02/1987   83110536.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013687         1    AU   10/11/1985   12/09/1987   48580/85      563259        Granted      METHOD AND APPARATUS FOR COMPAC
013687         1    US   02/13/1985   09/01/1987   701309        4690173       Granted      METHOD AND APPARATUS FOR COMPAC
013687              FR   10/21/1983   09/02/1987   83110536.6    0107190       Granted      METHOD AND APPARATUS FOR COMPAC
013774              ES   03/30/1984   09/30/1988   291992        291992        Granted      SHIRRED CASING STICK ARTICLE WITH E
013774         B    ES   07/01/1985   11/14/1986   544762        544762        Granted      SHIRRED CASING STICK ARTICLE WITH E
013774              BE   03/30/1984   09/07/1988   84103560.3    0123933       Granted      SHIRRED CASING STICK ARTICLE WITH E
013774         A    ES   07/01/1985   11/14/1986   544761        544761        Granted      SHIRRED CASING STICK ARTICLE WITH E
013775              CA   03/30/1984   02/16/1988   451038-1      1232788       Granted      ARTICLE, METHOD FOR CONTROLLING C


                                       2


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
013786              CA   11/23/1984   09/20/1986   468577-8      1242060       Granted      TUBULAR CORE FOR SHIRRED CASING A
013836              CA   06/18/1985   01/17/1989   484358-4      1248813       Granted      COMPOSITE SHIRRED CASING ARTICLE
013836         1    US   04/04/1984   06/10/1986   595601        4594251       Granted      PREPARATION OF TAR-DEPLETED LIQUID
013836         1    CA   04/13/1984   10/06/1987   451996-1      1227690       Granted      PREPARATION OF TAR-DEPLETED LIQUID
013924         A    CA   08/18/1988   09/26/1989   575299        1260757       Granted      STUFFING METHOD AND APPARATUS.
013924              CA   05/18/1984   11/15/1988   454756        1244709       Granted      STUFFING METHOD AND APPARATUS.
013924         2    US   07/22/1956   03/17/1987   885753        46496602      Granted      STUFFING METHOD AND APPARATUS
014328              CA   02/08/1985   09/08/1987   473968-0      1226473       Granted      METHOD AND APPARTUS FOR CONTRO
014571              CA   06/18/1985   09/26/1989   484361-4      1261196       Granted      CELLULOSIC FOOD CASINGS.
014848              CA   09/08/1987   05/25/1993   546302        1318175       Granted      FLAT STOCK FIBROUS CELLULOSIC FOO
014995              CA   04/09/1986   05/23/1989   506169        1254439       Granted      DISPOSABLE TENSION SLEEVE FOR A ST
015221              CH   08/03/1989   10/05/1994   89114385.1    0354482       Granted      BURNISHED END SHIRRED CASING STICK
015221              US   08/08/1988   10/17/1989   229661        4873748       Granted      BURNISHED END SHIRRED CASING STICK
015221              FR   08/03/1989   10/05/1994   89114385.1    0354483       Granted      BURNISHED END SHIRRED CASING STICK
015221              BE   08/03/1989   10/05/1994   89114385.1    0354483       Granted      BURNISHED END SHIRRED CASING STICK
015221              GB   08/03/1989   10/05/1984   89114385.1    0354482       Granted      BURNISHED END SHIRRED CASING STICK
015221              CA   08/04/1989   12/27/1994   607604        1333673       Granted      BURNISHED END SHIRRED CASING STICK
015221              DE   08/03/1989   10/05/1994   89114385.1    P68918654.    Granted      BURNISHED END SHIRRED CASING STICK
015221              JP   08/02/1989   08/02/1986   199521/89     2087593       Granted      BURNISHED END SHIRRED CASING STICK
015221              AT   08/03/1989   10/05/1994   89114385.1    0354483       Granted      BURNISHED END SHIRRED CASING STICK
015347              CA   03/19/1987   01/28/1992   532525        1294818       Granted      END CLOSURE FOR SHIRRED CASING STI
015347         1    US   06/16/1987   07/26/1988   062750        4759100       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              GB   03/20/1987   09/19/1990   87104129.9    0239029       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              DE   03/20/1987   09/19/1990   87104129.8    P3764984.1    Granted      END CLOSURE FOR SHIRRED CASING STI
015347              JP   03/23/1987   02/17/1993   065921/87     1732797       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              BE   03/20/1987   09/19/1990   87104129.9    0239029       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              ES   03/20/1987   09/19/1990   87104129.9    0239029       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              US   03/21/1986   09/15/1987   842225        4693280       Granted      END CLOSURE FOR SHIRRED CASING STI
015347              FR   03/20/1987   09/19/1990   87104129.9    0239029       Granted      END CLOSURE FOR SHIRRED CASING STI
020002         1    US   04/19/1988   04/04/1989   183214        4818551       Granted      LIQUID SMOKE IMPREGNATED SHIRRED
020003              CA   10/07/1987   01/23/1990   548610        1264599       Granted      CLAMP MEANS FOR STUFFING MACHINE
020005              CA   07/28/1987   07/11/1989   543180        1257134       Granted      DISPOSABLE TENSION SLEEVE FOR A ST
020006         1    US   01/19/1988   10/18/1980   145083        4778639       Granted      CARAMEL-CONTAINING CELLULOSIC ART
020006         2    US   01/19/1988   11/01/1988   144984        4781931       Granted      CARAMEL-CONTAINING CELLULOSIC ART
020006              US   10/20/1986   07/12/1988   920381        4756914       Granted      CARAMEL-CONTAINING CELLULOSIC ART


                                       3


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020006              MX   10/19/1987   10/19/1987   8897          168651        Granted      CARAMEL-CONTAINING CELLULOSIC ART
020006              CA   10/15/1987   05/25/1993   549353        1318176       Granted      CARAMEL-CONTAINING CELLULOSIC ART
*020016             US   04/16/1987   08/30/1988   039197        4766645       Granted      SIZE CONTROL SYSTEM FOR STUFFING
020026              US   08/31/1987   03/27/1990   091172        4911963       Granted      MULTILAYER FILM CONTAINING AMORPH
020026         1    US   03/26/1990   12/31/1991   498876        5077109       Granted      MULTILAYER FILM CONTAINING AMORPH
020027              US   01/06/1988   07/25/1989   141226        4851290       Granted      MULTILAYER FILM CONTAINING AMORPH
020027              CA   01/05/1989   10/18/1994   587614        1332581       Granted      MULTILAYER FILM CONTAINING AMORPH
020028              CA   09/08/1988   01/28/1992   576768        1294748       Granted      METHOD AND APPARATUS FOR SHIRRIN
020028              BE   09/14/1988   01/08/1992   88114998.3    0314905       Granted      METHOD AND APPARATUS FOR SHIRRIN
020028              US   11/02/1987   09/27/1988   115721        4773127       Granted      METHOD AND APPARATUS FOR SHIRRIN
020028              ES   09/14/1988   01/08/1992   88114998.3    2027745       Granted      METHOD AND APPARATUS FOR SHIRRIN
020030              BE   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030         1    US   04/16/1991   09/06/1994   685950        5344679       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              IT   08/22/1989   05/10/1995   89115458.5    26401BE/95    Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              GB   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              US   08/23/1988   10/01/1991   235258        5053259       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              NL   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              FR   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              SE   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              AT   08/22/1989   05/10/1995   89115458.5    0358038       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              CA   08/17/1989                608589                      Pending      AMORPHOUS NYLON COPOLYMER & COP
020030         2    US   06/30/1994   01/02/1996   268359        5480945       Granted      AMORPHOUS NYLON COPOLYMER & COP
020030              DE   08/22/1989   05/10/1995   89115458.5    P68922554.    Granted      AMORPHOUS NYLON COPOLYMER & COP
020031              SE   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              BE   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031         1    US   09/07/1989   07/09/1991   403964        5030464       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              US   11/09/1987   12/26/1989   117863        4889751       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              FR   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              JP   11/09/1988   02/26/1986   283504/88     2022878       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              DE   11/09/1988   03/11/1992   88118642.3    P3869063.2    Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              GB   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              CA   11/08/1988   05/24/1994   582677        1329721       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              IT   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              AT   11/09/1988   03/11/1992   88118642.3    0315965       Granted      LIQUID SMOKE IMPREGNATED PEELABLE
020031              FI   11/08/1988   04/11/1994   88/5134       90817         Granted      LIQUID SMOKE IMPREGNATED PEELABLE


                                       4


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
*020035             US   04/18/1988   06/13/1989   182531        4837897       Granted      MEAT PRODUCT PACKAGE CONTAINING
020057              US   05/06/1988   01/28/1992   191100        5084283       Granted      FOOD CASING FOR MAKING INDICIA BEA
020057              CA   05/05/1989   04/11/1995   598838        1335184       Granted      FOOD CASING FOR MAKING INDICIA BEA
020068              US   10/13/1989   04/28/1992   420854        5108804       Granted      BUFFERED ACID-TREATED FOOD CASING.
020068         2    US   03/12/1992   05/04/1993   851383        5207609       Granted      BUFFERED ACID-TREATED FOOD CASING.
020068         1    US   03/12/1992   05/04/1993   851385        5207608       Granted      BUFFERED ACID-TREATED FOOD CASING.
020073              BE   07/31/1989   05/18/1994   89114135.0    0353697       Granted      METHOD & APPARATUS FOR SEVERING S
020073              FR   07/31/1989   04/18/1994   89114135.0    0353697       Granted      METHOD & APPARATUS FOR SEVERING S
020073              DE   07/31/1989   04/18/1994   89114135.0    P68915360.    Granted      METHOD & APPARATUS FOR SEVERING S
020073              GB   07/31/1989   04/18/1994   89114135.0    0353697       Granted      METHOD & APPARATUS FOR SEVERING S
020073              JP   07/31/1989   09/19/1996   197031/89     2562969       Granted      METHOD & APPARATUS FOR SEVERING S
020073              US   08/01/1988   12/12/1989   226635        4885821       Granted      METHOD & APPARATUS FOR SEVERING S
020073              CA   07/31/1989   10/26/1993   607050        1323476       Granted      METHOD & APPARATUS FOR SEVERING S
020079         2    US   02/01/1990   06/04/1991   473550        5021252       Granted      FOOD BODY WITH SURFACE COLOR INDI
020079         3    US   02/01/1990   09/17/1991   473553        5049399       Granted      FOOD BODY WITH SURFACE COLOR INDI
020079         1    US   02/01/1990   07/09/1991   473549        5030486       Granted      FOOD BODY WITH SURFACE COLOR INDI
020079              US   12/16/1988   04/17/1990   285454        4917924       Granted      FOOD BODY WITH SURFACE COLOR INDI
020079              CA   05/05/1989   01/31/1995   598839        1334141       Granted      FOOD BODY WITH SURFACE COLOR INDI
020085         1G   EP   11/13/2000                00124260.1                  Pending      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    FR   02/16/1990   04/28/1990   90-103033.8   0384319       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    JP   02/21/1990   06/26/1998   90-038541     2794318       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    FI   02/20/1990   09/15/2000   90-0844       105525        Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    DE   02/16/1990   04/28/1999   90-103033.8   6903307070    Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    AT   02/16/1990   04/28/1999   90-103033.8   0384319       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    CA   `02/14/1990  11/16/1999   2009990-9     2009998       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    AU   02/20/1990   06/23/1994   53023/94      646797        Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    BE   02/16/1990   04/28/1999   90-103033.8   0384319       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1A   GB   08/08/1996   08/16/2001   96112759.4    0750853       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1A   FR   08/08/1996   08/16/2001   96112759.4    0750853       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    NZ   02/13/1990   02/21/1994   244737        244737        Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    ES   02/16/1990   04/28/1999   90-103033.8   ES2132059T    Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         6    US   04/23/1993   11/12/1998   051260        5573801       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1A   NZ   10/14/1992   02/17/1994   244737        244737        Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1A   AU   01/05/1994   04/30/1995   94-53023      665646        Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    IT   02/16/1990   04/28/1999   90-103033.8   0384319       Granted      ANTIMICROBIAL FILM & METHOD FOR SU


                                       5


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020085         1A   DE   08/08/1996   04/30/2001   96112759.4    6903377850    Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         5    US   04/23/1993   11/12/1996   051259        5573800       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         7    US   04/23/1993   11/12/1995   051258        5573797       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1A   BE   08/08/1996   08/16/2001   98112759.4    0750853       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020085         1    GB   02/16/1990   04/28/1999   90-103033.8   0384319       Granted      ANTIMICROBIAL FILM & METHOD FOR SU
020087         1    JP   01/10/1980   07/10/1996   90-001854     2068753       Granted      STUFFING METHOD AND APPARATUS.
020087         1    US   10/26/1989   10/06/1992   425435        5152712       Granted      STUFFING METHOD AND APPARATUS
*020087        2    US   12/01/1989   02/12/1991   442469        4991260       Granted      STUFFING METHOD AND APPARATUS
020087         1    CA   12/18/1989   01/17/1995   2005808-1     2005808       Granted      STUFFING METHOD AND APPARATUS
020093         1    US   08/30/1990   02/04/1992   574850        5085890       Granted      FOOD BODY WITH SURFACE COLOR INDI
020093         2    US   08/30/1990   07/16/1991   574971        5032416       Granted      FOOD BODY WITH SURFACE COLOR INDI
020093         2    CA   05/05/1989   01/31/1995   596836        1334140       Granted      FOOD BODY WITH SURFACE COLOR INDI
020093         1    CA   05/05/1989   01/31/1995   598840        1334142       Granted      FOOD BODY WITH SURFACE COLOR INDI
020097              US   07/11/1990   07/27/1993   551225        5230933       Granted      ACID RESISTANT PEELABLE CASING.
*020104             US   01/12/1990   11/20/1990   463768        4970758       Granted      STUFFING METHOD AND APPARATUS.
*020111             JP   08/07/1991   10/09/1998   91-221190     2836042       Granted      COLORED CELLULOSIC CASING WITH CL.
*020111             MX   08/07/1991   04/05/1995   91/00573      177547        Granted      COLORED CELLULOSIC CASING WITH CL.
*020111             BR   08/06/1991   02/23/1999   P19103380-2   P19103380-2   Granted      COLORED CELLULOSIC CASING WITH CL.
*020111             CA   07/19/1991   04/21/1998   2047477       2047477       Granted      COLORED CELLULOSIC CASING WITH CL.
020111              IT   08/06/1991   04/26/1995   91113147.6    28148BE/95    Granted      COLORED CELLULOSIC CASING WITH CL.
020111              FR   08/06/1991   04/26/1995   91113174.6    0473952       Granted      COLORED CELLULOSIC CASING WITH CL.
*020111        A    MX   08/07/1991                1995000317                  Pending      COLORED CELLULOSIC CASING WITH CL.
*020111        2    US   12/21/1992   04/04/2000   07/993551     6045848       Granted      COLORED CELLULOSIC CASING WITH CL.
*020111             AU   08/07/1991   12/06/1994   81693/91      652167        Granted      COLORED CELLULOSIC CASING WITH CL.
020111              ES   08/06/1991   04/26/1995   91113174.6    ES2071874T    Granted      COLORED CELLULOSIC CASING WITH CL.
*020111             ZA   07/24/1991   04/29/1998   91/5812       91/5812       Granted      COLORED CELLULOSIC CASING WITH CL.
*020111        1    US   06/09/1992   02/06/2001   07/898373     618382681     Granted      COLORED CELLULOSIC CASING WITH CL.
020111              DE   08/06/1991   04/26/1995   91113174.6    691212.5-08   Granted      COLORED CELLULOSIC CASING WITH CL.
020115              PT   09/17/1991   11/12/1997   98993         98993         Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              BE   09/14/1991   05/08/1996   91115622.2    0476553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              DK   09/14/1991   05/08/1998   91115622.2    0476553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              FR   09/14/1991   05/08/1998   81115622.2    0476553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              US   09/18/1990   10/26/1993   584563        5256458       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              NZ   09/04/1991   09/01/1993   239662        239662        Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115         1    US   06/15/1992   04/19/1994   076888        5304385       Granted      SHIRRED THERMOPLASTIC CASING HAVI


                                       6


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020115              MX   09/17/1991   08/01/1994   09/01115      175499        Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              DE   09/14/1991   05/08/1996   91115622.2    69119334.7    Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              GB   09/14/1991   05/08/1996   91115622.2    0476553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              CA   08/30/1991   10/10/1995   2050453       2050453       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              BR   09/18/1991   05/16/2000   P19103999-1   P19103999     Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              AU   09/17/1991   11/29/1994   84502/91      651994        Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              NL   09/14/1991   05/08/1996   91115622.2    0476553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              AT   09/14/1991   05/08/1996   91115822.2    0478553       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              ES   09/14/1991   05/08/1996   91115622.2    ES 2088448    Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115              ZA   09/03/1991   05/27/1992   91/6887       91/6887       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020115         1    US   06/15/1993   04/19/1994   076688        5304385       Granted      SHIRRED THERMOPLASTIC CASING HAVI
020120         1    CA   03/03/1993   10/16/2001   2090684       2090884       Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    MX   03/04/1993                93-01216                    Pending      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    US   02/10/1993   10/25/1994   015751        5358765       Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    BR   03/04/1993   07/11/2000   P19300746-9   P19300746-9   Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    JP   03/04/1993   06/26/1998   93-069438     2794377       Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    GB   03/03/1993   09/25/1996   93301625.5    0559456       Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    DE   03/03/1993   09/25/1996   93301625.5    69304956.1    Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         2    US   07/26/1994   11/26/1995   280744        5470519       Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120         1    FI   03/03/1993   05/15/2001   930930        106913        Granted      CELLULOSIC ARTICLE CONTAINING AN O
020120              DE   03/03/1993   09/25/1996   93301625.5    69304956.1    Granted      CELLULOSIC ARTICLE CONTAINING AN O
020122              US   07/01/1991   07/27/1993   724058        5230651       Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    FR   08/05/1992   11/15/1995   92113356.7    0537435       Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    ES   08/05/1992   11/15/1995   92113356.7    ES2079754T    Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    BR   07/15/1992   04/29/1997   PI-9202691-5  PI 9202691    Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    DE   08/05/1992   11/15/1995   92113356.7    69206101.0    Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    CA   06/12/1992   04/22/1997   2071184       2071184       Granted      METHOD AND APPARATUS FOR SEVERIN
020127         2    BE   08/05/1992   11/15/1995   92113356.7    0537435       Granted      METHOD AND APPARATUS FOR SEVERIN
020127              US   10/15/1991   09/08/1992   775861        5145449       Granted      METHOD AND APPARATUS FOR SEVERIN
020127         1    US   04/15/1992   12/22/1992   668431        5173074       Granted      METHOD AND APPARATUS FOR SEVERIN
020130              JP   12/21/1992   10/03/1996   05-512450     2568156       Granted      CELLULOSE FOOD CASING METHOD AND
020130              AT   12/21/1992   01/29/1997   93901268.6    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              CH   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              GB   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              BE   12/21/1992   01/29/1997   93901238.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND


                                       7


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020130              FR   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              DE   12/21/1992   01/29/1997   93901268.8    69217211.4    Granted      CELLULOSE FOOD CASING METHOD AND
020130              BR   12/21/1992                P19205562-1                 Pending      CELLULOSE FOOD CASING METHOD AND
020130              FI   12/21/1992                93/4067                     Pending      CELLULOSE FOOD CASING METHOD AND
020130         2    US   01/10/1994   09/19/1995   08/179418     5451364       Granted      CELLULOSE FOOD CASING METHOD AND
020130              NL   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              LU   12/21/1992   01/29/1997   3939012268.   0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130         C    EP   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130         3    GB   12/23/1994   10/16/2002   94309829.3    0692194       Granted      CELLULOSE FOOD CASING METHOD AND
020130         3    FR   12/23/1994   10/16/2002   94309829.3    0692194       Granted      CELLULOSE FOOD CASING METHOD AND
020130         3    BE   12/23/1994   10/16/2002   94309829.3    0592194       Granted      CELLULOSE FOOD CASING METHOD AND
020130         2    DE   12/05/1994   08/02/2000   84309828.5    69425240T     Granted      CELLULOSE FOOD CASING METHOD AND
020130         2    FR   12/05/1994   07/12/2000   94309828.5    0662283       Granted      CELLULOSE FOOD CASING METHOD AND
020130         A    EP   12/21/1992   01/29/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130         2    AT   12/05/1994   07/12/2000   94309828.5    0862283       Granted      CELLULOSE FOOD CASING METHOD AND
020130         B    EP   12/21/1992   01/28/1997   93901268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130         5    US   05/04/1995   08/19/1997   08/434709     5658524       Granted      CELLULOSE FOOD CASING METHOD AND
020130         6    US   08/16/1995   12/30/1997   08/515880     5702783       Granted      CELLULOSE FOOD CASING METHOD AND
020130         3    EP   12/23/1994   10/16/2002   94309829.3    0692194       Granted      CELLULOSE FOOD CASING METHOD AND
020130         2    EP   12/23/1994   07/12/2000   94309828.5    0662283       Granted      CELLULOSE FOOD CASING METHOD AND
020130              US   01/17/1992   01/11/1994   822506        5277857       Granted      CELLULOSE FOOD CASING METHOD AND
020130              AU   12/21/1992   02/15/1995   33219/93      654080        Granted      CELLULOSE FOOD CASING METHOD AND
020130              DK   12/21/1992   01/29/1997   93801268.8    0577790       Granted      CELLULOSE FOOD CASING METHOD AND
020130              MX   01/15/1993   12/09/1997   930227        187388        Granted      CELLULOSE FOOD CASING METHOD AND
020130         3    US   07/15/1994   09/03/1996   275669        H1592         Granted      CELLULOSE FOOD CASING METHOD AND
020130              CA   12/21/1992   07/06/1999   2096143       2906143       Granted      CELLULOSE FOOD CASING METHOD AND
020130         4    US   03/28/1995   01/28/1997   08412677      5597587       Granted      CELLULOSE FOOD CASING METHOD AND
020130         2    BE   12/05/1994   07/12/2000   94309828.5    0662283       Granted      CELLULOSE FOOD CASING METHOD AND
020133              JP   03/24/1993   02/13/1997   93-087876     20606781      Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              IT   03/26/1993   06/12/1996   93302345.9    056282        Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              DE   03/26/1993   06/12/1996   93392345.9    69303103.4    Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              AT   03/26/1993   06/12/1996   93302345.9    0565282       Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              MX   03/29/1993   12/06/1996   93-01758      183481        Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              CA   03/24/1993   07/09/1996   2092326       2092326       Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              US   03/30/1993   07/12/1996   859763        5326733       Granted      SHIRRED FIBROUS CASING ARTICLE AND


                                       8


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020133         1    US   02/15/1994   03/21/1995   196722        5399213       Granted      SHIRRED FIBROUS CASING ARTICLE AND
020133              FR   03/26/1993   06/12/1996   93302345.9    0565282       Granted      SHIRRED FIBROUS CASING ARTICLE AND
020137              US   09/23/1992   12/16/1997   949228        5698279       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              DE   09/22/1993   06/17/1998   93115271.4    6931915.3     Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              NL   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              MX   09/22/1993   10/18/1999   93058.8       193728        Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              IT   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              CH   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              IE   09/22/1993   06/17/1998   93114271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              AU   09/22/1993   06/27/1996   47501/93      669926        Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              AR   09/21/1993   07/31/1997   325055        250834        Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              BR   09/20/1993   09/05/2000   PI-9303833-0  PI9303833-0   Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              CA   08/19/1993   05/11/1999   2104444       2104444       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              GB   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              SE   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              ES   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              PT   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              LU   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              GR   09/22/1993   06/17/1998   93115271.4    980401755     Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              BE   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              AT   09/22/1993   06/17/1998   93115271.4    E167 430      Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              DK   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020137              FR   09/22/1993   06/17/1998   93115271.4    0589431       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              BR   09/20/1993   09/05/2000   PI 9303834-8  PI9303834-8   Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138         A    EP   09/22/1993   07/16/1997   93115288.8    0589436       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              US   09/23/1993   08/27/1996   948552        5549943       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              IT   09/22/1993   07/16/1997   93115288.8    0589436       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              MX   09/22/1993   12/10/1997   935617        197424        Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              NZ   08/31/1993                248545        248545        Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138         B    EP   09/22/1993   07/16/1997   93115288.8    0589435       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              AR   11/02/1993   06/25/1999   326470        253.391       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              CA   08/19/1993   03/30/1999   2104442       2104442       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              ES   09/22/1993   07/16/1997   93115288.8    2105028       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              GB   09/22/1993   07/16/1997   93115288.8    0566436       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              AU   09/22/1993   11/09/1995   4749993       664308        Granted      HEAT SHRINKABLE NYLON FOOD CASIN


                                       9


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020138              DE   09/22/1993   07/16/1997   93115288.8    69312195.5    Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              FR   09/22/1993   07/16/1997   93115288.8    0589436       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020138              BE   09/22/1993   07/16/1997   93115288.8    0589436       Granted      HEAT SHRINKABLE NYLON FOOD CASIN
020143              MX   08/19/1993   12/17/1996   93-05050      183597        Granted      END CLOSURES FOR SHIRRED CASING S
020143              JP   06/10/1993   05/09/1997   93-163809     2646326       Granted      END CLOSURES FOR SHIRRED CASING S
020143              US   08/20/1992   08/24/1993   932530        5238443       Granted      END CLOSURES FOR SHIRRED CASING S
020143              FR   08/18/1993   05/29/1996   93113221.1    0583790       Granted      END CLOSURES FOR SHIRRED CASING S
020143              BE   08/18/1993   05/29/1996   93113221.1    0583780       Granted      END CLOSURES FOR SHIRRED CASING S
020143              CA   04/14/1993   01/16/1996   2093980       2093980       Granted      END CLOSURES FOR SHIRRED CASING S
020143              BR   08/12/1993   09/29/1998   PI9303366-4   PI9303366-4   Granted      END CLOSURES FOR SHIRRED CASING S
020143              ES   08/18/1993   05/29/1996   93113221.1    ES2087624T    Granted      END CLOSURES FOR SHIRRED CASING S
020143              DE   08/18/1993   05/29/1996   93113221.1    69302868      Granted      END CLOSURES FOR SHIRRED CASING S
020149              GB   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              DE   11/17/1995   10/10/2001   95118159.3    6952311540    Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              CA   08/23/1995                2156765                     Pending      A COMPOUND FIBROUS DOPE COMPOSITI
020149              JP   11/16/1995   08/25/2000   07-321271     3103756       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              BE   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              DK   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              FR   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              BR   10/05/1995                PI 9504780-6                Pending      A COMPOUND FIBROUS DOPE COMPOSITI
020149              MX   11/16/1995   07/27/1999   954797        192773        Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              IT   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              NL   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149         1    US   04/15/1996   04/28/1996   632051        5744251       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              CH   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              AT   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              LI   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              AU   11/17/1995   11/17/1995   95-37924      699226        Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              FI   11/17/1995                955573                      Pending      A COMPOUND FIBROUS DOPE COMPOSITI
020149              SE   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              LU   11/17/1995   10/10/2001   95118159.3    0712889       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020149              US   11/18/1994   02/18/1997   342287        5603884       Granted      A COMPOUND FIBROUS DOPE COMPOSITI
020151              MX   03/11/1994   11/07/1997   941819        186934        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              BR   03/11/1994   11/24/1994   PI9401134-6   PI9401134-6   Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              JP   03/10/1994   04/05/2002   06-065457     3295219       Granted      PACKAGE OF SHIRRED FOOD CASING AN


                                       10


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020151         1    US   03/11/1994   01/17/1995   209128        5382190       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              GB   02/25/1994   07/22/1998   94301356.5    614610        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              NL   02/25/1994   07/22/1998   94301356.5    614610        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              FR   02/25/1994   07/22/1998   94301356.5    614610        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              ES   02/25/1994   07/22/1998   94301356.5    614610        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              BE   02/25/1994   07/22/1998   94301356.5    614610        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              US   03/12/1993   01/17/1995   030923        5381643       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              PH   03/11/1994   09/16/1997   47912         30652         Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151         1    CA   05/16/1994   02/21/1997   2123655       2123655       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              DE   02/25/1994   07/22/1998   94301356.5    69411785      Granted      PACKAGE OF SHIRRED FOOD CASING AN
020151              CA   02/22/1994   09/23/1997   2116189       2116189       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020154         1    US   02/22/1999   11/07/2000   09/255.006    6143344       Granted      SELF-COLORING CASING WITH A BETTER
020154              ES   09/21/1994   06/19/1996   P9401993      2076904       Granted      SELF-COLORING CASING WITH A BETTER
020154              US   09/21/1993   09/21/1999   08/124063     5955126       Granted      SELF-COLORING CASING WITH A BETTER
020154              BR   09/20/1994                PI9403792-2                 Pending      SELF-COLORING CASING WITH A BETTER
020154              CL   09/20/1994   12/21/1998   94-01360      39.828        Granted      SELF-COLORING CASING WITH A BETTER
020156              DE   08/15/1994   10/21/1998   94306008.7    69414059      Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              BE   08/15/1994   10/21/1998   94306008.7    0641725       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              ES   08/15/1994   10/21/1998   9430600837    0641725       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              FR   08/15/1994   10/21/1998   94306008.7    0641725       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              GB   08/15/1994   10/21/1998   94306008.7    0641725       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              US   08/27/1993   10/18/1994   112527        6356007       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              JP   08/18/1994                94-215244                   Pending      PACKAGE OF SHIRRED FOOD CASING AN
020156              CA   07/13/1994   11/16/1999   2127955       2127955       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              MX   08/26/1994   12/15/1997   946527        187485        Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              NL   08/15/1994   10/21/1998   94306008.7    0641725       Granted      PACKAGE OF SHIRRED FOOD CASING AN
020156              BR   08/26/1994   11/24/1998   PI9403342-0   PI9403342-0   Granted      PACKAGE OF SHIRRED FOOD CASING AN
020162              DE   01/10/1995   03/25/1998   95100261.7    69501843      Granted      METHOD AND APPARATUS FOR PACKAGI
020162              ES   01/10/1995   03/25/1998   95100261.7    2114233T3     Granted      METHOD AND APPARATUS FOR PACKAGI
020162              GB   01/10/1995   03/25/1998   95100261.7    0675043       Granted      METHOD AND APPARATUS FOR PACKAGI
020162              AU   01/09/1995   08/14/1997   10098/95      677469        Granted      METHOD AND APPARATUS FOR PACKAGI
020162              BR   03/10/1995   08/08/2000   PI9500060-7   PI9500060-7   Granted      METHOD AND APPARATUS FOR PACKAGI
020162              MX   01/10/1995   10/08/1997   95-00394      186322        Granted      METHOD AND APPARATUS FOR PACKAGI
020162              CA   11/16/1994   11/24/1998   2135943       2135943       Granted      METHOD AND APPARATUS FOR PACKAGI
020162              FR   01/10/1995   03/25/1998   95100261.7    0675043       Granted      METHOD AND APPARATUS FOR PACKAGI


                                       11


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020162              US   03/29/1994   02/21/1998   219564        5391108       Granted      METHOD AND APPARATUS FOR PACKAGI
020162              BE   01/10/1995   03/25/1998   95100261.7    0675043       Granted      METHOD AND APPARATUS FOR PACKAGI
020163              FR   08/07/1995   11/04/1998   95112413.0    0696542       Granted      PERFORATED PACKAGING FOR FOOD CA
020163              CA   07/12/1995   10/17/2000   2153713       2153713       Granted      PERFORATED PACKAGING FOR FOOD CA
020163              ES   08/07/1995   11/04/1998   95112413.0    ES2125534T    Granted      PERFORATED PACKAGING FOR FOOD CA
020163              DE   08/07/1995   11/04/1998   95112413.0    69505751.0    Granted      PERFORATED PACKAGING FOR FOOD CA
020163              BE   08/07/1995   11/04/1998   95112413.0    0696542       Granted      PERFORATED PACKAGING FOR FOOD CA
020193              IT   08/13/1999                99306405-4                  Pending      METHOD FOR REMOVING CELLULOSIC C
020193              FR   08/13/1999                99306405-4                  Pending      METHOD FOR REMOVING CELLULOSIC C
020193              ES   08/13/1999                99306405-4                  Pending      METHOD FOR REMOVING CELLULOSIC C
020193              NL   08/13/1999                99306405-4                  Pending      METHOD FOR REMOVING CELLULOSIC C
020195              CA   04/28/1999                2270297                     Pending      METHOD FOR THE NON CONTACT PRINTI
020195              US   10/13/1998   03/13/2001   09/169990     6200510.81    Granted      METHOD FOR THE NON CONTACT PRINTI
020197              US   04/22/1999   07/24/2001   09/296288     6264874       Granted      METHOD FOR CONTROLLING THE DIAMET
020197              CA   09/21/9999                2282927                     Pending      METHOD FOR CONTROLLING THE DIAMET
020201              CA   02/21/2000                2299191                     Pending      METHOD FOR EXTRUDING TUBULAR FILM
020201              GB   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              US   08/27/1999   11/20/2001   09/384106     6319457       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              AT   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              DE   04/18/2000   09/04/2002   00303270.3    6000039810    Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              BE   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              FR   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              FI   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020201              ES   04/18/2000   09/04/2002   00303270.3    1078730       Granted      METHOD FOR EXTRUDING TUBULAR FILM
020202              CA   05/16/2000                2308906                     Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              GB   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              BE   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              FI   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              FR   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              US   10/18/1999                09/419.933                  Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              DE   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020202              ES   07/14/2000                003059623                   Pending      CELLULOSE FOOD CASING, CELLULOSE
020203              CA   06/07/2000                2310948                     Pending      METHOD FOR IMPROVING THE REWET SHR
020203              ES   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              US   11/17/1999                09/441517                   Pending      METHOD FOR IMPROVING THE REWET SHR


                                       12


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020203              AT   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              MX   09/21/2000                0009263                     Pending      METHOD FOR IMPROVING THE REWET SHR
020203              BE   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              FI   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              GB   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              DE   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020203              FR   07/14/2000                00306019.1                  Pending      METHOD FOR IMPROVING THE REWET SHR
020206              GB   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              PL   05/09/2001                P347449                     Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              LT   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              FI   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              DE   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              FR   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              BE   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              AT   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              MX   07/18/2001                2001005024                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              CA   04/26/2001                2345193                     Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              AU   05/18/2001                4611001                     Pending      MANDREL STRUCTURE FOR USE IN MAN
020206              US   05/19/2000   09/03/2002   09/574209     6444161       Granted      MANDREL STRUCTURE FOR USE IN MAN
020206              ES   05/02/2001                01304018.3                  Pending      MANDREL STRUCTURE FOR USE IN MAN
020213              US   05/26/2002                60/383107                   Pending      FOOD PROCESSING AND PACKAGING FIL
020214              MX   10/03/2001                2001/009994                 Pending      METHOD AND APPARATUS FOR USE IN M
020214              IE   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              ES   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              AU   10/01/2001                7731801                     Pending      METHOD AND APPARATUS FOR USE IN M
020214              DE   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              FR   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              AT   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              US   10/04/2001                09/971245                   Pending      METHOD AND APPARATUS FOR USE IN M
020214              CA   10/02/2001                2358016                     Pending      METHOD AND APPARATUS FOR USE IN M
020214              GB   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020214              BE   10/02/2001                01308396.9                  Pending      METHOD AND APPARATUS FOR USE IN M
020215              US   10/16/2001                09/688556                   Pending      FOOD CASING
020216              CA   04/05/2002                2380778                     Pending      SELF-COLORING RED SMOKED CASING
020216              US   03/22/2002                10/102724                   Pending      SELF-COLORING RED SMOKED CASING


                                       13


                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER    SUB  COUN    FILDATE      ISSDATE     APPLNUMBER    PATNUMBER    STATUS                      TITLE
- ----------    ---  ----    -------      -------     ----------    ---------    ------                      -----
                                                                    
020218              CA   03/21/2002                2378040                     Pending      PROCESSING WRAP CONTAINING COLOR
020218              US   03/06/2002                10/090833                   Pending      PROCESSING WRAP CONTAINING COLOR
020219              US   05/10/2002                10/142160                   Pending      NYLON FOOD CASING HAVING A BARRIE
020219              CA   05.39.2992                2388087                     Pending      NYLON FOOD CASING HAVING A BARRIE
020219              MX   06/16/2003                2002006052                  Pending      NYLON FOOD CASING HAVING A BARRIE
020220              US   05/06/2003                60/377655                   Pending      PROCESS FOR IMPROVING SMOKY COLO


* = Licensed to third party(ies)

                                       14


                              ADDENDUM TO ANNEX 1

                                    PATENTS



                         SERIAL NO.     FILING OR
                             OR           ISSUE                               ASSIGNMENT
         TITLE            PAT. NO.        DATE        CURRENT OWNER             HISTORY          STATUS
         -----            --------        ----        -------------             -------          ------
                                                                                  
Improving Rewet Shrink                                 Viskase
Properties Of Casing     6,630,214      10/07/2003     Corporation        None                   Issued

Method And Apparatus
For Use In Manufacture                                 Viskase
Of Cellulose Casing      6,565,796      05/20/2003     Corporation        None                   Issued

Cellulose Food Casing,
Cellulose Composition
And Production Method                                  Viskase
Therefor                 6,547,999      04/15/2003     Corporation        None                   Issued

Food Casing Package                                    Viskase
And Method Of Preparing  6,279,737      08/28/2001     Corporation        None                   Issued

Method For Removing
Cellulosic Casings                                     Viskase
From Sausages            6,132,779      10/17/2000     Corporation        None                   Issued

Method And Apparatus
For Forming A
Cellulose Article
Including Solvent                                      Viskase
Recovery Means           6,096,258      08/01/2000     Corporation        None                   Issued

Cellulase Resistant
Cellulose Casing And                                   Viskase
Process                  6,083,581      07/04/2000     Corporation        None                   Issued

Noncircular Fiber
Battery Separator And                                  Viskase
Method                   6,051,335      04/18/2000     Corporation        None                   Issued

Method For Removing
Cellulosic Casings                                     Viskase
From Sausages            6,042,853      03/28/2000     Corporation        None                   Issued

Edible Film And Method   5,962,053      10/05/1999     Viskase            None                   Issued
                                                       Corporation

Method Of Making A
Cellulose Food Casing
Including Solvent                                      Viskase
Recovery                 5,942,167      08/24/1999     Corporation        None                   Issued

Reduced Curl Battery                                   Viskase
Separator and Method     5,942,354      12/02/1997     Corporation        None                   Issued






                         SERIAL NO.     FILING OR
                             OR           ISSUE                               ASSIGNMENT
         TITLE            PAT. NO.        DATE        CURRENT OWNER             HISTORY          STATUS
         -----            --------        ----        -------------             -------          ------
                                                                                  
Perforated Food                                        Viskase
Casings And Method       5,919,534      07/06/1999     Corporation        None                   Issued

Cellulose Food Casing                                  Viskase
Manufacturing Method     5,766,540      06/16/1998     Corporation        None                   Issued

Mandrel Structure For
Use In Manufacture Of                                  Viskase
Cellulose Food Casing    5,759,478      06/02/1998     Corporation        None                   Issued

Fibrous Composite
Cellulosic Film And                                    Viskase
Method                   5,747,125      05/05/1998     Corporation        None                   Issued

                                                                          Thomas Danko and
                                                                          Myron Donald
Lond Life Battery                                      Viskase            Nicholson to
Separator                5,700,600      12/23/1997     Corporation        Viskase Corporation    Issued

Method Of Preparing A
Food Product Encased                                   Viskase
In A Glucomannan Film    5,695,800      12/09/1997     Corporation        None                   Issued

Cellulose Food Casing                                  Viskase
Manufacturing Method     5,658,525      08/19/1997     Corporation        None                   Issued

Apparatus For The
Manufacture Of                                         Viskase
Cellulose Food Casing    5,597,587      01/28/1997     Corporation        None                   Issued

                                                                          [BREAK IN TITLE FROM
Production Of High                                                        ALLIEDSIGNAL INC. TO
Tenacity, Low Shrink                                   Viskase            COURTAULDS FIBRES
Polyester Fiber          5,277,858      01/11/1994     Corporation        LIMITED.]              Issued

                                                                          Courtaulds Fibres
                                                                          Limited to
                                                                          Viskase Corporation

                                                                          Vitas Niaura,
                                                                          Jeffery A. Oxley and
Food Body With Surface                                 Viskase            Elio E. Tarika to
Color Indicia            4,985,260      01/15/1991     Corporation        Viskase Corporation    Issued

Tension Sleeve
Supported Casing                                       Viskase
Article                  4,951,715      08/28/1990     Corporation        None                   Issued






                         SERIAL NO.     FILING OR
                             OR           ISSUE                               ASSIGNMENT
         TITLE            PAT. NO.        DATE        CURRENT OWNER             HISTORY          STATUS
         -----            --------        ----        -------------             -------          ------
                                                                                  

Method For External
Liquid Smoke Treatment
Of Cellulosic Food                                     Viskase
Casings                  4,933,217      06/12/1990     Corporation        None                   Issued

Spice-Odor Antimycotic
Containing Cellulosic                                  Viskase
Casing Article           4,874,622      10/17/1989     Corporation        None                   Issued

Method For External
Liquid Smoke Treatment
Of Cellulosic Food                                     Viskase
Casings                  4,834,993      05/30/1989     Corporation        None                   Issued

Method Of Making High
Coherency Shirred                                      Viskase
Casing                   4,756,057      07/12/1988     Corporation        None                   Issued

                                                       Viskase
Shirred Casing Article   4,690,173      09/01/1987     Corporation        None                   Issued




                                   EXHIBIT B

                                   TRADEMARKS

                                  TRADE NAMES



                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
NOJAX (STYLIZED)          UY      REGISTERED         220964         314146           03-Jul-09
NOJAX (STYLIZED)          YU      REGISTERED        2412/54          13316           21-Mar-05
NOJAX (STYLIZED)          EC      REGISTERED            43B         141/56           23-Apr-01
NOJAX (STYLIZED)          PH      REGISTERED           4317          R1699           11-Jun-16
NOJAX (STYLIZED)          PT      REGISTERED          81507          81507           15-Mar-05
NOJAX (STYLIZED)          HB      REGISTERED       Z950811N        Z950811           21-Mar-05
NOJAX (STYLIZED)          MK      REGISTERED       PZ200/95          06376           21-Mar-05
NOJAX (STYLIZED)          TN      REGISTERED                      EE991274           05-Aug-14
NOJAX (STYLIZED)          PO      REGISTERED          17713          17713           23-Aug-02
NOJAX (STYLIZED)          ES      REGISTERED         263469         263469           25-Jun-04
NOJAX (STYLIZED)          CZ      REGISTERED           4209         151691           07-Jan-05
NOJAX (STYLIZED)          BX      REGISTERED         020375          64599           02-Dec-11
NOJAX (STYLIZED)          AU      REGISTERED         121443        a121443           21-Dec-06
NOJAX (STYLIZED)          SK      REGISTERED                        151691           07-Jan-05
NOJAX (STYLIZED)          CA      REGISTERED         202631    N533024/129           28-Mar-09
NOJAX (STYLIZED)          DO      REGISTERED           9033           9033           10-Mar-05
NOJAX (STYLIZED)          AR      REGISTERED         427935         354602           13-Mar-08
NOJAX (STYLIZED)          FI      REGISTERED          32/53          26721           26-Jun-03
NOJAX (STYLIZED)          BR      REGISTERED         177595      002489562           16-Oct-10
NOJAX (STYLIZED)          SE      REGISTERED        1245/46          61647           30-Aug-05
NOJAX (STYLIZED)          MX      REGISTERED          54801          71166           18-Jun-02
NOJAX (STYLIZED)          IT      REGISTERED         28/123         638959           10-Jan-02
NOJAX (STYLIZED)          HN      REGISTERED                          7504           04-Dec-06
NOJAX (STYLIZED)          SI      REGISTERED       Z9570767        9570767           20-Jun-05
NOJAX (STYLIZED)          AT      REGISTERED        2462/54          32013           05-Mar-05
NOJAX AL                  US      UNIFIED
NOJAX (STYLIZED)          HK      REGISTERED                      415/1955           30-Dec-10
NUCEL                     US      REGISTERED     74/453.651        2132918           27-Jan-07
NUCEL                     EU      REGISTERED      001516582      001516562           14-Jun-10






                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
OPTIMER                   US      SEARCH
PAL-PAC                   US      SEARCH
PAUL'S VALLEY             US      SEARCH
PORKGUARD                 US      SEARCH
PRECISION SIZER           US      SEARCH
PROGUARD                  US      SEARCH
REELKASE                  US      REGISTERED      74/403524        1827476           22-Mar-04
REELSMOKE                 US      REGISTERED      74/403525        1827479           22-Mar-04
ROLLMATIC                 US      REGISTERED         566197        1414997           26-Oct-06
ROLLMATIC                 CA      REGISTERED         559006         352466           03-Mar-04
SANGOFLEX                 WO      REGISTERED                       6372282           02-Oct-10
SANGOFLEX                 CH      REGISTERED                        381917           17-Apr-10
SENTINEL                  MX      REGISTERED         205560         477742           16-Jul-04
SENTINEL                  US      REGISTERED      74/096561        1653667           13-Aug-11
SENTRY                    US      SEARCH
SEPRA-CEL                 US      REGISTERED      74/616345        1946715           09-Jan-06
SHIRMATIC                 IE      REGISTERED        1088/83         109349           20-Apr-04
SHIRMATIC                 MX      REGISTERED         114309         417650           03-Jun-11
SHIRMATIC                 NZ      REGISTERED         119115         119115           18-Apr-12
SHIRMATIC                 NZ      REGISTERED         119116         119116           18-Apr-12
SHIRMATIC                 NO      REGISTERED        8313033         117653           19-Jul-04
SHIRMATIC                 PA      REGISTERED          32925          32925           27-Jun-04
SHIRMATIC                 GB      REGISTERED        1077271        1077271           20-Apr-08
SHIRMATIC                 HK      REGISTERED        1248/83        2456/83           05-May-04
SHIRMATIC                 PH      UNFILED      NOT-RECEIVED
SHIRMATIC                 MX      REGISTERED         114308         417649           03-Jun-11
SHIRMATIC                 IE      REGISTERED        1087/83         109348           20-Apr-04
SHIRMATIC                 FI      REGISTERED        1926/77          75788           23-Dec-10
SHIRMATIC                 CA      REGISTERED         408422         233990           29-Jun-09
SHIRMATIC                 CA      REGISTERED         408751         229477           04-Aug-08
SHIRMATIC                 CO      REGISTERED         337666         144506           16-Nov-03
SHIRMATIC                 CO      REGISTERED         337667         161088           30-May-04
SHIRMATIC                 DK      REGISTERED        2107/83        3872/84           09-Nov-04
SHIRMATIC                 AR      REGISTERED        1608609        1721037           11-Feb-09
SHIRMATIC                 WO      REGISTERED                        432852           19-Aug-17
SHIRMATIC                 AU      REGISTERED         306240        A306240           13-Apr-08
SHIRMATIC                 AU      REGISTERED         306241        A306241           13-Apr-08






                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
SHIRMATIC                 BR      REGISTERED       16956-77      006760155           10-Sep-08
SHIRMATIC                 HK      REGISTERED       1248A/83        1249/84           05-May-04
SHIRMATIC                 CH      REGISTERED           1416         288875           24-Mar-07
SHIRMATIC                 VE      REGISTERED           3667          92311           17-Oct-04
SHIRMATIC                 PE      REGISTERED                         79909           12-May-04
SHIRMATIC                 AR      REGISTERED        1608610        1721038           11-Feb-09
SHIRMATIC                 BR      REGISTERED       16955-77      006760147           10-Sep-08
SHIRMATIC                 US      REGISTERED          11300        1076298           01-Nov-07
SHIRMATIC                 US      REGISTERED         108846        1086943           07-Mar-08
SHIRMATIC                 FL      REGISTERED        Z-B1235          60042           13-Jun-03
SHIRMATIC                 GB      REGISTERED        0177272        0177272           20-Apr-08
SHIRMATIC                 SE      REGISTERED        77-1941         160758           16-Sep-07
SHIRMATIC                 VE      REGISTERED           3668        91984-F           13-Sep-04
SHIRMATIC & KATAKANA      JP      REGISTERED         560/94        3303038           09-May-07
SMOKE MASTER              US      SEARCH          78/189030
SOUP SAC                  US      SEARCH
STC                       US      SEARCH
STRIPPER                  US      SEARCH
SUPARAP                   US      SEARCH
TEGRA                     US      SEARCH
TENDRJAX                  CH      REGISTERED                        399894           07-Jan-12
TENDRJAN                  WO      REGISTERED                       R389793           06-Jul-12
TITECADDIE                CA      REGISTERED         381593         214820           16-Jul-06
TITECADDIE                GH      REGISTERED           1696         407446           25-Mar-13
V-VAC                     US      REGISTERED      74/459357        1865580           06-Dec-04
VISCORA (LOGO)            IS      REGISTERED        93/1988       395/1988           09-Sep-98
VISCORA (LOGO)            NO      REGISTERED         880776         137130           22-Jun-99
VISCORA (LOGO)            WO      REGISTERED                        523837           17-Feb-08
VISCORA (LOGO)            FR      REGISTERED         873394        1423936           21-Aug-97
VISI-CASE                 JP      REGISTERED    103376/1986        2078008           30-Sep-08
VISKASE                   DK      REGISTERED                      00211995           13-Jan-05
VISKASE                   IE      REGISTERED                         74268           08-Jul-03
VISKASE                   WO      REGISTERED                        589658           13-Apr-12
VISKASE                   KE      REGISTERED           9117           9117           10-Apr-94
VISKASE                   FI      REGISTERED                        140021           20-Sep-05
VISKASE                   SE      REGISTERED        9308475         262395           23-Dec-04
VISKASE                   NO      REGISTERED                        168076           08-Jun-05






                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
VISKASE                   FR      REGISTERED                       1604356           05-Jul-98
VISKASE                   NZ      REGISTERED          55963          55983           17-Jan-04
VISKASE                   AR      REGISTERED        1892042        1521918           31-May-04
VISKASE                   GB      REGISTERED                        725640           11-Jan-03
VISKASE                   PE      REGISTERED         015337          29534           24-Sep-06
VISKASE                   TY      REGISTERED           6066           6066           12-May-08
VISKASE                   AR      REGISTERED        1872778        1506872           28-Feb-04
VISKASE                   CA      REGISTERED         559007         379431           08-Feb-06
VISKASE                   AU      REGISTERED         569819        A569819           23-Dec-08
VISKASE                   AU      REGISTERED         121619        A121619           13-Jan-07
VISKASE                   US      REGISTERED         586212        1444069           23-Jun-07
VISKASE                   GB      REGISTERED                       1326547           11-Nov-04
VISKASE AND DESIGN        CO      REGISTERED         279616         132101           28-Dec-05
VISKASE AND DESIGN        ZA      REGISTERED        67/6666        67/6666           10-Sep-07
VISKASE AND DESIGN        TH      REGISTERED         348692        TM65790           22-Oct-07
VISKASE AND DESIGN        GB      REGISTERED        1326547        1326547           11-Nov-04
VISKASE AND DESIGN        KR      REGISTERED     17258/1987         168758           02-Mar-09
VISKASE AND DESIGN        JP      REGISTERED    100380/1987        2722016           06-Jun-07
VISKASE AND DESIGN        HK      REGISTERED         518/88        1261/89           30-Jan-09
VISKASE AND DESIGN        CO      REGISTERED         279565         132098           28-Dec-05
VISKASE AND DESIGN        CN      REGISTERED          32386         383899           09-Aug-08
VISKASE AND DESIGN        CA      REGISTERED         559012         379432           08-Feb-06
VISKASE AND DESIGN        PH      REGISTERED          63175          46153           25-Aug-09
VISKASE AND DESIGN        VE      REGISTERED       14671-87         143456           05-Mar-06
VISKASE AND DESIGN        AR      REGISTERED        1618687        1322027           09-Feb-09
VISKASE AND DESIGN        HK      REGISTERED        518A/88        1261/89           30-Jan-09
VISKASE AND DESIGN        BR      REGISTERED      814235654      814235654           13-Apr-10
VISKASE AND DESIGN        MX      REGISTERED          49413         366524           28-Sep-03
VISKASE AND DESIGN        UY      REGISTERED         268054         268054           06-Mar-06
VISKASE AND DESIGN        CL      REGISTERED         263725         435136           30-Nov-04
VISKASE AND DESIGN        FY      REGISTERED         437-94         171868           12-Oct-04
VISKASE AND DESIGN        UY      REGISTERED         268053         268053           06-Mar-06
VISKASE AND DESIGN        PY      REGISTERED         437-94         173611           14-Dec-04
VISKASE AND DESIGN        PT      REGISTERED         306285         306285           07-Dec-05
VISKASE AND DESIGN        AR      REGISTERED        1892043        1521919           31-May-04
VISKASE AND DESIGN        BR      REGISTERED      814235646      814235646           03-Apr-10
VISKASE AND DESIGN        BR      REGISTERED      814235638      814235638           03-Apr-10






                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
VISKASE AND DESIGN        VE      REGISTERED       14672-67         143457           05-Mar-06
VISKASE AND DESIGN        CN      REGISTERED          32386         320856           10-Aug-08
VISKASE AND DESIGN        AF      UNFILED
VISKASE AND DESIGN        IE      REGISTERED       67/02972         124836           02-Sep-08
VISKASE AND DESIGN        MX      REGISTERED         479880         479880           12-Apr-04
VISKASE AND DESIGN        FR      UNFILED                           105681
VISKASE AND DESIGN        US      REGISTERED         586196        1444068           23-Jun-07
VISKASE POLYFILM AND      BR      REGISTERED      816840296      816840296           16-Feb-04
VISKASE POLYFILM AND      BR      REGISTERED      816840300      816840300           08-Mar-04
VISKING                   YU      REGISTERED        Z356/53          12930           19-Feb-11
VISKING                   HR      REGISTERED        Z940422        Z940422           14-Feb-04
VISKING                   MK      PENDING        PZ-1323/94
VISKING                   VD      PENDING           4259/54
VISKING                   MK      PENDING        PZ-1323/94                          19-Feb-04
VISKING                   CH      REGISTERED           7091         391192           25-Jun-11
VISKING RIBBON & CRO      AU      REGISTERED         100196        A100196           26-Sep-05
VISKING RIBBON & CRO      SE      REGISTERED        1836/49          67632           20-Jan-10
VISKING RIBBON & CRO      GB      REGISTERED         705237         705237           26-Feb-11
VISKING RIBBON & CRO      CH      REGISTERED           7091         378199           26-Sep-09
VISKASE & DEVICE          US      REGISTERED
VISKASE & DEVICE          DE      REGISTERED                        666911
VISKING & KATAKANA C      JP      REGISTERED       56033/88        2297491           31-Jan-11
VISKING (LOWE CASE LE     IT      REGISTERED      35441C/83         483860           10-Nov-03
VISKING (LOWER CASE L     IR      REGISTERED          16679          13394           22-Dec-04
VISKING (LOWER CASE L     NZ      REGISTERED          32374          32374           03-Oct-03
VISKING (LOWER CASE L     GB      REGISTERED         544621         544621           19-Sep-03
VISKING (LOWER CASE L     AU      REGISTERED          62654         A62654           10-Oct-03
VISKING CASING & KING     BR      REGISTERED         177597      002832356           30-Jun-03
VISKING CASING & KING     SE      REGISTERED          62560          62560           22-Feb-07
VISKING CASING & KING     CH      REGISTERED           3076         363143           02-May-08
VISKING RIBBON & CRO      NZ      REGISTERED          48166          48168           16-Aug-12
VISKING LOWER CASE LE     HK      REGISTERED         977/54       416/1955           30-Dec-10
VISKING(LOWER CASE LE     AT      REGISTERED      AM2021/53          29863           04-Feb-04
VISKIT                    CA      REGISTERED         271291         130547           11-Apr-08
VISLEX                    US      REGISTERED     75/392.120        2225539           23-Feb-09
VISLON                    US      REGISTERED      75/392128        2209002           08-Dec-08
VISMAX                    US      PENDING         76/259177






                                               APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY     STATUS        NUMBER         NUMBER      NEXT RENEWAL DATE
     ---------          -------     ------        ------         ------      -----------------
                                                              
VISNAT                    WO      REGISTERED                        478307           27-Jul-03
VISNAT                    FR      REGISTERED                       1233599           19-Apr-03
VISREX                    WO      REGISTERED         200763        R280670           05-Mar-04
VISTAKON LOGO             US      SEARCH
VISTEN                    CA      REGISTERED         202630      129/33025           28-Mar-09
VISTEN                    US      REGISTERED         521546         502256           21-Sep-08
VISTEN                    MX      REGISTERED          47805          65297           04-Sep-10
VISTEN                    US      REGISTERED       71521545         525848           06-Jun-10
VIZPAK                    US      SEARCH
ZEPHYR                    CA      REGISTERED         202629      129/33023           28-Mar-09
ZEPHYR                    US      REGISTERED         428452         379873           30-Jul-10
ZEPHYR                    US      UNFILED
ZEPHYR (STYLIZED)         FR      REGISTERED          65453        1685751           08-Aug-11
ZEPHYR (STYLIZED)         IT      REGISTERED         28/171         756925           22-May-06
ZEPHYR (STYLIZED)         BR      REGISTERED         177598      002523078           18-Dec-10




                              ADDENDUM TO ANNEX 2

                                  TRADE NAMES



                                           Registration    Filing or
Trademark         Country        Status         No.        Reg. Date
- ---------         -------        ------         ---        ---------
                                               
Crustpak            US         Registered   1,501.289      08/23/1988
EZ Smoke            US         Registered   1,308,994      06/28/1993
EZ Smoke            US         Registered   1,243,660      06/28/1983
EZ Peel             US         Registered   1,671,120      01/07/1992
EZ Load             US         Registered   1,775,218      06/08/1993
MP and Design       US         Registered   843,472        02/06/1968
NOJAX (Stylized)    US         Registered   417,447        10/30/1945
Visflex             US         Registered   2,610,085      08/20/2002




                                   EXHIBIT C

                               LICENSE AGREEMENTS

Nucel(R)Agreement: A license to use certain casing manufacturing technology from
Courtaulds Fibres (Holdings) Limited.



                                   EXHIBIT D

                                   COPYRIGHTS

                                     None.

EX-10.3

                                                                    EXHIBIT 10.3

                                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. Pledgor is the sole shareholder of (i) Viskase Films, Inc., a Delaware
corporation ("Viskase Films"), and (ii) WSC Corp., a Delaware corporation doing
business as Wisconsin Steel Company ("WSC").

      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 PLEDGED COLLATERAL. As used herein, the term "Pledged
Collateral" shall mean the securities and investment property described on Annex
A attached hereto and made a part hereof, and any additional Pledged Collateral
acquired pursuant to Section 3.2 below which 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 Collateral owned by Pledgor with respect to each of Viskase Films and
WSC; and (b) the Pledgor is the holder of record and sole beneficial and legal
owner of such 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, (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.

      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 of Viskase Films and WSC (whether by purchase, dividend, merger,
consolidation, sale of assets, split, spin-off, or any other dividend or
distribution of any kind or otherwise), 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

                                     - 2 -


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.

      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; 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.

                                     - 3 -


      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;

      (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

                                     - 4 -


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.

      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

                                     - 5 -


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 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

                                     - 6 -


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.

      (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
Viskase Films and WSC. The Pledgor is the sole shareholder of each of Viskase
Films and WSC.

      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.

                                     - 7 -


      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 Viskase Films and
WSC 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 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.

                                     - 8 -


      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
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 Viskase Film's and WSC's Records. The Pledgor shall cause each of
Viskase Films and WSC 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

                                     - 9 -


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 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

                                     - 10 -


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 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.

                                     - 11 -


      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 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

                                     - 12 -


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.

      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.

                                     - 13 -


      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 Viskase Films, Inc. and WSC Corp. 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 Viskase Films, Inc. and WSC
Corporation 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 FILMS, INC.

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

WSC CORP.

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


                           Annex A to Pledge Agreement



                   NO. OF                                 %
    ISSUER         SHARES       CLASS     CERT. NO.   OWNERSHIP   JURISDICTION   CERT./UNCERT.
    ------         ------       -----     ---------   ---------   ------------   -------------
                                                               
Viskase Films,
      Inc.            100      Common        3           100%          DE            Cert.

   WSC Corp.        1,000      Common        6           100%          DE            Cert.

EX-10.4

                                                                    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



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.

                                     - 2 -


      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.

                                     - 3 -


      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;

                                     - 4 -


      (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.

                                     - 5 -


      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

                                     - 6 -


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.

                                     - 7 -


      (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

                                     - 8 -


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

                                     - 9 -


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 -


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 -


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 -


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 -


      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 -


      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


                           Annex A to Pledge Agreement



                     NO. OF                     CERT.           %
     ISSUER          SHARES           CLASS      NO.        OWNERSHIP      JURISDICTION   CERT./UNCERT.
     ------          ------           -----      ---        ---------      ------------   -------------
                                                                        
                                                               81%
                                                           81% of which
                                                           is pledged
                                                            hereunder -
                     27,335,248                          representing
                      of which                            65% of the
                   22,071,940 are                            total
Viskase Brasil         pledged                            outstanding
Embalagens Ltda.      hereunder      Common      N/A          shares          Brazil         Uncert.

                     30,000,000                              100%
                      of which                           65% of which
                   19,500,000 are                         is pledged
Viskase Europe         pledged                            pursuant to
    Limited           hereunder     Ordinary      6      certificate #6      England          Cert.

                                                              100%
                         20                              65% of which
                     of which 13                          is pledged
Viskase Canada       are pledged                         pursuant to
     Inc.             hereunder      Common      C-7     certificate C-7     Canada           Cert.

                       480,000                               100%
                      of which                           65% of which
                     312,000 are                          is pledged
Viskase Canada         pledged                            pursuant to
     Inc.             hereunder     Preferred    P-6     certificate P-6     Canada           Cert.

EX-10.7

                                                                    EXHIBIT 10.7

                          FIRST SUPPLEMENTAL INDENTURE

      This FIRST SUPPLEMENTAL INDENTURE (this "First Supplemental Indenture"),
dated as of June 29, 2004, is entered into by and between Viskase Companies,
Inc., a Delaware corporation (the "Company"), and Wells Fargo Bank N.A.
(successor by merger to Wells Fargo Bank Minnesota, N.A.), as trustee (the
"Trustee"). Capitalized terms used but not otherwise defined herein shall have
the meaning given to such terms in the Indenture.

                              W I T N E S S E T H:

      WHEREAS, the Company and the Trustee are parties to that certain
Indenture, dated as of April 3, 2003 (the "Indenture"), relating to the
Company's 8% Senior Subordinated Secured Notes due 2008 (the "2008 Notes").

      WHEREAS, Section 8.02 of the Indenture provides that the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may, with
the written consent of the holders of at least a majority in aggregate principal
amount of the 2008 Notes outstanding, amend or supplement the Indenture, subject
to certain exceptions;

      WHEREAS, Section 11.03(g)(i) of the Indenture provides that the Company,
when authorized by a resolution of its Board of Directors, may request the
release of all of the Collateral from the Liens of the Security Agreement or any
other Liens created under the Indenture or related documents, with the written
consent of the holders of 66 2/3% in aggregate principal amount of the 2008
Notes outstanding;

      WHEREAS, Section 8.02(7) of the Indenture provides that the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may, with
the written consent of the holders of 66 2/3% in aggregate principal amount of
the 2008 Notes outstanding, amend or waive the provisions of clause (g)(i) of
Section 11.03 of the Indenture;

      WHEREAS, the Company has solicited and obtained consents from holders of
approximately 79% of the outstanding 2008 Notes (the "Consents") with respect to
certain amendments to the Indenture and the release of all Collateral under the
Indenture and the Security Agreement (the "Proposed Amendments") pursuant to the
terms and conditions of eleven certain letter agreements (the "Letter
Agreements") (copies of which have been delivered to the Trustee) and as
contemplated hereby;

      WHEREAS, each Letter Agreement provides that the respective Consent to the
Proposed Amendments becomes operative upon payment by the Company of an amount
sufficient to pay the purchase price for the subject 2008 Notes; and

      WHEREAS, the Company has been authorized by a resolution of its Board of
Directors to enter into this First Supplemental Indenture and implement the
Proposed Amendments.



      NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows
for the benefit of each other party and for the equal and ratable benefit of the
Holders of the 2008 Notes, the Company and the Trustee hereby agree as follows:

                                    ARTICLE 1

                                   AMENDMENTS

      Section 1.01. Amendments to Covenants. Upon delivery of a notice in the
form of Exhibit A hereto (the "Notice") by the Company to the Trustee that all
the Consents are operative (the "Notification Time"), the Indenture shall
thereupon automatically be amended as set forth below. The Notice may be
delivered via facsimile or email. Upon the Notification Time, the Indenture
shall automatically be amended to delete the following Articles and Sections in
their entirety (unless otherwise noted) and any and all references to such
Articles and Sections and any and all obligations thereunder shall be deleted
throughout the Indenture, and such references, Articles and Sections shall
thereafter be of no further force or effect:

      (a)   Section 3.03;

      (b)   Section 3.04;

      (c)   Section 3.05;

      (d)   Section 3.06;

      (e)   The first and third paragraphs of Section 3.07;

      (f)   Section 4.01; and

      (g)   Article 11.

      Section 1.02. Amendments to Events of Default. Upon the Notification Time,
the Indenture shall thereupon automatically be amended to delete the following
Sections in their entirety and any and all references to such Sections and any
and all obligations thereunder shall be deleted throughout the Indenture, and
such references and Sections shall thereafter be of no further force or effect:

      (a)   Section 5.01(a) (3);

      (b)   Section 5.01(a) (4);

      (c)   Section 5.01(a) (7); and

      (d)   Section 5.01(a) (8).

                                                                               2



      Section 1.03. Release of all Liens on the Collateral. Upon the
Notification Time, the Indenture shall thereupon automatically be amended to
release the Collateral from the Liens of the Security Agreement and any other
Liens created under the Indenture and any related documents, including, without
limitation, termination of the Security Agreement and release of the Company
from all obligations thereunder. Exhibit B, the Security Agreement, shall be
deleted in its entirety.

      Section 1.04. Definition of Senior Debt. Upon the Notification Time, the
term "Senior Debt" as defined in the Indenture shall be amended to be defined as
follows:

      "Senior Debt" means all present and future Obligations of the Company for
borrowed money or evidenced by notes, debentures, bonds or other similar
instruments and Obligations of the Company under and in connection with one or
more working capital loan facilities now or hereafter in existence, including
without limitation principal, interest (including without limitation interest
accruing after the commencement of a case under the Bankruptcy Code, regardless
of whether such interest is paid), fees, costs and expenses (including without
limitation fees, costs and expenses incurred in enforcing the rights of the
holders thereof) and all other amounts payable in connection therewith, so long
as such indebtedness does not explicitly provide that it is on a parity with or
subordinated in right of payment to the Subordinated Debt, and any refinancing,
refunding, renewal, replacement or recreation thereof.

      Section 1.05 Default on Senior Debt. Upon the Notification Time, Section
10.03(a) of the Indenture shall be amended as follows:

      "The Company may not directly or indirectly make any payment or
distribution to the Trustee or any Holder in respect of any Obligations with
respect to the Subordinated Debt and may not directly or indirectly acquire from
the Trustee or any Holder any Subordinated Debt for cash or property (other than
(A) Permitted Junior Securities and (B) payments and other distributions made
from any discharge of this Indenture pursuant to Article 7 hereof) until all
Principal and other Obligations with respect to, and included in, the Senior
Debt have been paid in full in cash or cash equivalents if:

            (i)  any default with respect to the Senior Debt (including any
      default in the payment of any principal or other Obligations with respect
      to, and included in, Senior Debt) occurs and is continuing;

            (ii) a default, other than a payment default, on Senior Debts occurs
      and is continuing that then permits holders of the Senior Debt to
      accelerate its maturity and the Trustee receives a notice of the default
      (a "Payment Blockage Notice") from a Person who may give it pursuant to
      Section 10.11 hereof. If the Trustee receives any such Payment Blockage
      Notice, no subsequent Payment Blockage Notice shall be effective for
      purposes of this Section unless and until at least 360 days shall have
      elapsed since the first date upon which the immediately prior Payment
      Blockage Notice was effective. No nonpayment default that existed or was
      continuing on the date of delivery of any Payment Blockage Notice to the

                                                                               3



      Trustee shall be, or be made, the basis for a subsequent Payment Blockage
      Notice unless such default shall have been waived for a period of not less
      than 60 days."

      Section 1.06 Removal of Certain Definitions. Upon the Notification Time,
the following defined terms shall be deleted in their entirety and any and all
references to such defined terms shall be deleted throughout the Indenture:

            i.    Lien;

            ii.   Offer to Purchase (Section 11.03);

            iii.  Purchase Amount (Section 11.03); and

            iv.   Security Agreement (Exhibit B).

                                    ARTICLE 2

                          EFFECTIVENESS; OPERATIVENESS

      This First Supplemental Indenture will become operative upon but only upon
the Notification Time. Upon the Notification Time, the Indenture shall be
modified and amended in accordance with this First Supplemental Indenture, and
all the terms and conditions of both shall be read together as though they
constitute one instrument, except that, in case of conflict, the provisions of
this First Supplemental Indenture will control. The Indenture, as modified and
amended by this First Supplemental Indenture, is hereby ratified and confirmed
in all respects and shall bind every holder of 2008 Notes. In case of conflict
between the terms and conditions contained in the 2008 Notes and those contained
in the Indenture, as modified and amended by this First Supplemental Indenture,
the provisions of the Indenture, as modified and amended by this First
Supplemental Indenture, shall control.

                                    ARTICLE 3

                      CONFLICT WITH THE TRUST INDENTURE ACT

      If any provision of this First Supplemental Indenture limits, qualifies or
conflicts with any provision of the Trust Indenture Act of 1939 (the "TIA") that
is required under the TIA to be part of and govern any provision of this First
Supplemental Indenture, the provision of the TIA shall control. If any provision
of this First Supplemental Indenture modifies or excludes any provision of the
TIA that may be so modified or excluded, the provision of the TIA shall be
deemed to apply to the Indenture as so modified or to be excluded by this First
Supplemental Indenture.

                                                                               4



                                    ARTICLE 4

                                  SEVERABILITY

      In case any provision in this First Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

                                    ARTICLE 5

                                    HEADINGS

      The Article and Section headings of this First Supplemental Indenture have
been inserted for convenience of reference only, are not to be considered a part
of this First Supplemental Indenture and shall in no way modify or restrict any
of the terms or provisions hereof.

                                    ARTICLE 6

                 BENEFITS UNDER THE FIRST SUPPLEMENTAL INDENTURE

      Nothing in this First Supplemental Indenture or the 2008 Notes, express or
implied, shall give to any Person, other than the parties hereto and thereto and
their successors hereunder and thereunder and the holders of the 2008 Notes, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this First Supplemental Indenture or the 2008 Notes.

                                    ARTICLE 7

                                   SUCCESSORS

      All agreements of the Company and the Trustee in this First Supplemental
Indenture shall bind their respective successors.

                                    ARTICLE 8

                                   THE TRUSTEE

      The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this First Supplemental Indenture or
for or in respect of the recitals contained herein, all of which are made solely
by the Company.

                                    ARTICLE 9

               CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE

      In entering into this First Supplemental Indenture, the Trustee shall be
entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the

                                                                               5



liability or affording protection to the Trustee, whether or not elsewhere
herein so provided.

                                   ARTICLE 10

                                  GOVERNING LAW

      THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this First Supplemental Indenture.

                                   ARTICLE 11

                              COUNTERPART ORIGINALS

      The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent one and the same agreement.

                                     * * * *

                                                                               6



      IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the date first above written.

                             VISKASE COMPANIES, INC.

                                 /s/ Gordon S. Donovan
                             ---------------------------------------------------

                             Name: Gordon S. Donovan

                             Title: Vice President and Chief Financial Officer

WELLS FARGO BANK, N.A., as Trustee.

   /s/ Jane Y. Schweiger
- -----------------------------

Name: Jane Y. Schweiger

Title: Vice President

                                                                               7


                                    EXHIBIT A

                             VISKASE COMPANIES, INC.
                         625 WILLOWBROOK CENTRE PARKWAY
                           WILLOWBROOK, ILLINOIS 60527

June 29, 2004

Wells Fargo Bank, N.A.
Corporate Trust Services
Sixth and Marquette
Minneapolis, MN 55479

Ladies and Gentlemen:

Reference is made to that certain Indenture dated as of April 3, 2003 (the
"Indenture") between Viskase Companies, Inc., a Delaware corporation (the
"Company"), and Wells Fargo Bank, N.A. (successor by merger to Wells Fargo Bank
Minnesota, N.A.) as trustee (the "Trustee"), as amended by that certain First
Supplemental Indenture, dated as of June 29, 2004 (the "First Supplemental
Indenture"), between the Company and the Trustee. Capitalized terms not herein
defined shall have the meaning given in the First Supplemental Indenture. The
Company has solicited and obtained consents from outstanding holders of
approximately 79% of the 2008 Notes (the "Consents") with respect to certain
amendments to the Indenture and the release of all Collateral under the
Indenture and the Security Agreement (the "Proposed Amendments") pursuant to the
terms and conditions of certain letter agreements, (the "Letter Agreements").

On the date hereof (the "Payoff Date"), the Company is obtaining new financing
from Wells Fargo Foothill, Inc. ("Lender") and pursuant to the issuance of
certain 11.5 % Senior Secured Notes due 2011 ("Notes"), which sources are being
used to pay the respective purchase prices for the 2008 Notes for those holders
that have executed a Letter Agreement. This letter is intended to serve as
notice to the Trustee ("Notice") of deposit of funds by the Company with Chicago
Title Insurance Company in an amount sufficient to pay the respective purchase
prices for the 2008 Notes for those holders that have executed a Consent. The
Consents are now operative. Pursuant to the terms of the First Supplemental
Indenture, the First Supplemental Indenture is now effective and the Indenture
is automatically amended in accordance with the terms of the First Supplemental
Indenture.



                             Very truly yours,

                             Viskase Companies, Inc.

                             By:  /s/ Gordon S. Donovan
                                  ----------------------------------------------
                             Name:  Gordon S. Donovan
                             Title:  Vice President and Chief Financial Officer

EX-10.9

                                                                    EXHIBIT 10.9

                             VISKASE COMPANIES, INC.

                 Management Incentive Plan for Fiscal Year 2004

I.    PURPOSE

      The Viskase Companies, Inc. Management Incentive Plan has been established
      for Fiscal Year 2004 for those Participants defined under Section III
      below.

      The purpose of this Plan is to provide additional compensation to
      Participants for their contribution to the achievement of the objectives
      of the Company, encouraging and stimulating superior performance by such
      personnel, and assisting in attracting and retaining highly qualified key
      employees.

II.   DEFINITIONS

      A. Base Salary equals the salary earnings for the portion of the Fiscal
      Year during which the Participant was an active employee at the level of
      management for which the computation is made. Salary earnings do not
      include Plan awards, long-term incentive awards, and imputed income from
      such programs as executive life insurance, auto allowance, or
      non-recurring earnings such as moving expenses. Salary earnings are
      determined before reductions for contributions under Section 401(K) of the
      Internal Revenue Code of 1986 as amended.

      B. Company means Viskase Companies, Inc. and its subsidiaries and its
      successors and assigns.

      C. Fiscal Year means the Company's Fiscal Year beginning January 1 and
      ending the last day of December.

      D. Plan means the Viskase Companies, Inc. Management Incentive Plan, as
      from time to time amended.

      E. Chief Executive Officer means the Chief Executive Officer of Viskase
      Companies, Inc.

      F. Financial Targets are the financial goal(s) of the Company for the
      Fiscal Year identified in Exhibit B as applied to Participants in Exhibit
      C.

      G. Personal Goals refer to the personal goals and objectives set by each
      Participant and his/her supervisor at the beginning of each Fiscal Year
      against which performance is measured under Section V below.

III.  EMPLOYEES COVERED BY THIS PLAN

      Those employees listed on Exhibit C (each a "Participant") shall be
      eligible to participate in this Plan.



IV.   FINANCIAL AWARD

      A Participant in the Plan shall be entitled to a Financial Award computed
      as the product of:

                                                                     
                                                    Company              Individual
Participant's Base          Bonus as a %         Performance as          Performance          Participant's
      Salary           X      of Salary     X    a % of Target     X       Rating        =   Financial Award



      A. "Participant's Base Salary" shall be the salary as defined in Section
      II A in effect during applicable period.

      B. "Bonus as % of Salary" shall be as set forth in Exhibit A, Table I
      based upon Management Level of each Participant.

      C. "Company Performance as a % of Target" shall be determined in
      accordance with the schedule set forth in Exhibit A, Table II based on the
      attainment of the Company's financial target for the applicable period.

      D. "Individual Performance Rating" shall be based on an individual
      performance evaluation in accordance with Section V below

      If a Participant was in more than one management level during a Fiscal
      Year, a separate computation shall be made for each level applicable to
      the Participant during such Fiscal Year; the sum of the separate
      computations shall be the Participant's Financial Award.

V.    PERSONAL PERFORMANCE RATING

      Personal goals for each Participant are to be developed jointly by the
      Participant and his/her supervisor for the Fiscal Year. Attainment of such
      goals and other performance criteria, both quantifiable and
      non-quantifiable, may be used to arrive at an overall individual
      performance rating. Such criteria shall be applied consistently to
      Participants with similar duties pursuant to an evaluation process to be
      reviewed and approved by the Vice President, Administration. Criteria that
      may be weighed in arriving at an individual performance rating include,
      without limitation:

      -     Achievement of income goals

      -     Development of subordinates

      -     Successful completion or progress toward completion of projects

      -     Successful development of new accounts/products

      -     Improvement in product programs

      -     Attainment of self development objectives

      -     Control or reduction of operating expenses

                                       2


      The supervisor will assign a Personal Performance Rating, reflecting the
      Participant's performance during such Fiscal Year. The Personal
      Performance Rating recommendation of the supervisor shall be reviewed by
      the appropriate member of the Management Committee, who shall recommend an
      appropriate Personal Performance Rating to the Chief Executive Officer who
      shall approve the final Personal Performance Rating for each Participant.
      The Chief Executive Officer reserves the right, in his sole discretion, to
      accept the Personal Performance Rating recommendation for each Participant
      or to modify any Personal Performance Rating for any Participant to
      achieve such dispersion of performance ratings as the Chief Executive
      Officer deems appropriate.

VI.   PERFORMANCE MEASURES, TARGETS AND PAYOUT RANGES

      The financial performance measures, targets and payout ranges used for
      incentive purposes shall be established by the Board of Directors based on
      the annual business plan. Those measures, targets and payout ranges, as
      appropriate, shall be approved by the Chief Executive Officer and the
      Board of Directors. The performance measures, targets and payout ranges
      are defined in Exhibit B.

VII.  PARTICIPANT BONUS COMPOSITION

      The composition of the bonuses are established by Management Level and
      communicated individually to each Participant.

VIII. COMPUTATION AND DISBURSEMENT OF FUNDS

      As soon as practicable after the close of the Fiscal Year, the members of
      the Management Committee will recommend a Personal Performance Rating for
      each Participant in his department to the Chief Executive Officer and the
      Board of Directors. The Chief Financial Officer of the Company shall
      calculate the financial performance measure. A Personal Performance
      Percentage (%) shall be determined by the Chief Executive Officer, which
      will be applied uniformly to each Personal Performance Rating. The
      proposed payout shall be presented to the Board of Directors for final
      approval. Once approved, payment of the Financial Awards shall be made as
      soon as practicable after the completion of the annual audit.

      If the Participant dies before receiving his/her award, the amount due
      will be paid to the designated beneficiaries on file with the Company and,
      in the absence of such designation, to the Participant's estate.

      All payment awards shall be reduced by amounts required to be withheld for
      taxes at the time payments are made.

IX.   CHANGES TO TARGET

      The Chairman of the Board of Directors, at any time prior to the final
      determination of awards and in consultation with the Board of Directors,
      may consider changes to the performance measures, targets, and payout
      ranges used for incentive purposes, such that if, in the judgment of the
      Chairman of the Board of Directors, such change(s) is/are desirable

                                       3


      in the interests of equitable treatment of the Participants and the
      Company as a result of extraordinary or non-recurring events, changes in
      applicable accounting rules or principles, changes in the Company's
      methods of accounting, changes in applicable law, changes due to
      consolidation, acquisitions, or reorganization. The Chief Executive
      Officer shall implement such change(s) for immediate incorporation into
      the Plan.

X.    PARTIAL AWARDS

      A Participant shall be entitled to payment of a partial Financial Award
      if, prior to the end of such Fiscal Year, a Participant:

      -     Dies;

      -     Retires (is eligible to immediately receive retirement benefits
            under a Company sponsored retirement plan);

      -     Becomes permanently disabled;

      -     Transfers to a position with a salary grade not eligible for
            participation in the Plan;

      -     Enters military service;

      -     Takes an approved leave of absence;

      -     Is appointed or elected to public office; or

      -     Is terminated due to position elimination.

      provided that the Participant was an active employee for a minimum of 30
      consecutive calendar days during such Fiscal Year. Such partial awards
      shall be paid at the time when payments of awards for such Fiscal Year are
      made to active Participants.

      Participants hired, or who otherwise become eligible to participate
      hereunder, during the course of a Fiscal Year and who are employed through
      the end of such Fiscal Year shall be eligible for a pro-rated award based
      on their Base Salary during such Fiscal Year and length of eligible
      service prior to the end of the Fiscal Year.

XI.   FORFEITURE OF BONUS

      Except as provided in Section X, no Participant who ceases to be an
      employee of the Company prior to the end of a Fiscal Year shall be
      entitled to any Financial Award under this Plan for such Fiscal Year
      unless the Chief Executive Officer determines otherwise.

      Except as provided in Section X, Participants who cease to be an employee
      of the Company between the end of a prior Fiscal Year and the payment date
      of awards for such prior Fiscal Year shall not be entitled to awards
      earned during such prior Fiscal Year unless the Chief Executive Officer
      determines otherwise.


                                       4


XII.  ADMINISTRATION

      This Plan shall be administered by the Vice President, Administration of
      Viskase Companies, Inc., subject to the control and supervision of the
      Chief Executive Officer and the Board of Directors of Viskase Companies,
      Inc.

      In the event of a claim or dispute brought forth by a Participant, the
      decision of the Chief Executive Officer as to the facts in the case and
      the meaning and intent of any provision of the Plan, or its application,
      shall be final and conclusive.

XIII. NO EMPLOYMENT CONTRACT; FUTURE PLANS

      Participation in this Plan shall not confer upon any Participant any right
      to continue in the employ of the Company nor interfere in any way with the
      right of the Company to terminate any Participant's employment at any
      time. The Company is under no obligation to continue the Plan in future
      Fiscal Years.

XIV.  AMENDMENT OR TERMINATION

      The Board of Directors of the Company may at any time, or from time to
      time, (a) amend, alter or modify the provisions of this Plan, (b)
      terminate this Plan, or (c) terminate the participation of an employee or
      group of employees in this Plan; provided, however, that in the event of
      the termination of this Plan or a termination of participation, the
      Company shall provide the partial awards to the affected Participant(s)
      for the portion of the Fiscal Year during which such employee(s) were
      Participants in this Plan, in a manner in which the Company, in its sole
      judgment, determines to be equitable to such Participants and the Board of
      Directors of the Company.

XV.   GENERAL PROVISIONS

      A. No right under the Plan shall be assignable, either voluntarily or
      involuntarily by way of encumbrance, pledge, attachment, level or charge
      of any nature (except as may be required by state or federal law).

      B. Nothing in the Plan shall require the Company to segregate or set aside
      any funds or other property for the purpose of paying any portion of an
      award. No Participant, beneficiary or other person shall have any right,
      title or interest in any amount awarded under the Plan prior to the close
      of the Fiscal Year, or in any property of the Company or its subsidiaries.

   ________________________________         ____________________________________
      Final Approval Date                         Chief  Executive Officer

                                       5


                                                                    EXHIBIT 10.9

                                                                       EXHIBIT A
                                                                     PAGE 1 OF 2

                             VISKASE COMPANIES, INC.
                         2004 Management Incentive Plan

                           Computation of MIP Amounts

The management level shall determine the potential target bonus. Table I below
provides the target bonus potential award for each management level.

      TABLE I



                               Bonus as a % of
                                Salary Target
                            
Management Level IP                45.00%
Management Level I                 40.00%
Management Level II                24.00%
Management Level III               18.00%
Management Level IV                12.00%


      Payout Ranges for Company Performance Awards

      A payout range has been established for the payment of the company
financial performance awards. (See Table II).

      -     Below the 95% of the target point in the payout range, no company
            financial award is earned.

      -     At or above the target point, the target financial award is earned
            as a percentage of the target up to a maximum of 150% of target.

      -     Target value in the payout range is attained when the company meets
            its objective for each financial measure as stated in Exhibit B.



                                                                       EXHIBIT A
                                                                     PAGE 2 OF 2

C. TABLE II



                                        % of Financial Targets Achieved
          --------------------------------------------------------------------------------------------------
                                        Company                                                    Company
                                      Performance                                                Performance
          EBITDA                         Award                        EBITDA                        Award
          Target                        Earned                        Target                       Earned
          ------                        ------                        ------                       ------
                                                                                     
Target      95%                           50%                          123%                         123%
            96%                           60%                          124%                         124%
            97%                           70%                          125%                         125%
            98%                           80%                          126%                         126%
            99%                           90%                          127%                         127%
           100%                          100%                          128%                         128%
           101%                          101%                          129%                         129%
           102%                          102%                          130%                         130%
           103%                          103%                          131%                         131%
           104%                          104%                          132%                         132%
           105%                          105%                          133%                         133%
           106%                          106%                          134%                         134%
           107%                          107%                          135%                         135%
           108%                          108%                          136%                         136%
           109%                          109%                          137%                         137%
           110%                          110%                          138%                         138%
           111%                          111%                          139%                         139%
           112%                          112%                          140%                         140%
           113%                          113%                          141%                         141%
           114%                          114%                          142%                         142%
           115%                          115%                          143%                         143%
           116%                          116%                          144%                         144%
           117%                          117%                          145%                         145%
           118%                          118%                          146%                         146%
           119%                          119%                          147%                         147%
           120%                          120%                          148%                         148%
           121%                          121%                          149%                         149%
           122%                          122%                      150% or more                     150%




                                                                       EXHIBIT B
                                                                     PAGE 1 OF 1

                             VISKASE COMPANIES, INC.
                         2004 Management Incentive Plan

      The financial target for 2004 shall be attainment of EBITDA of $22.2
      million.

      EBITDA = Operating income before interest, taxes, depreciation and
      amortization excluding restructuring charges.

EX-10.14

                                                                   EXHIBIT 10.14

                             VISKASE COMPANIES, INC.

                                 SEVERANCE PLAN

      Viskase Companies, Inc. (the "Company") hereby adopts the Viskase
Companies, Inc. Severance Plan (this "Plan"), effective as of July 22, 2003. The
purpose of this Plan is to provide severance benefits to certain Participants of
the Company whose employment with the Company is involuntarily terminated by the
Company. This Plan supersedes any severance benefit, plan or practice previously
maintained by the Company, including without limitation, the Viskase Companies,
Inc. Severance Pay Policy, Viskase Corporation Severance Pay Policy, Severance
Allowance Plan (Salaried), Layoff Allowance Plan (Hourly) and Termination Pay
Policy (Hourly).

A.    Eligibility

      All full-time employees of Viskase Companies, Inc. who work in the United
      States or who participate in the Management Incentive Plan ("MIP") are
      eligible to participate in this Plan, provided such employee has been
      employed by the Company for at least three (3) months. Notwithstanding
      anything contained herein to the contrary, an employee, the terms of whose
      employment are subject to a collective bargaining agreement, is not
      eligible to participate in this Plan.

B.    Participation

      (1) Qualifying Termination

      An employee shall be deemed to have incurred a "Qualifying Termination"
      and shall become a participant and be entitled to receive benefits under
      this Plan if such employee's employment with the Company is terminated for
      any reason other than the following:

            (a) voluntary termination of employment by the employee including,
      without limitation, by resignation or retirement;

            (b) involuntary termination of employment in connection with a
      reduction in force if (i) the employee is offered a position in the same
      or higher salary grade level, regardless of the location, (ii) the
      employee is offered a position at the next lower salary grade level at the
      same location where the employee is located at the time of the reduction
      in force, or (iii) the employee continues providing services as a leased
      employee or independent contractor;

            (c) termination of employment for "Cause;"

            (d) termination of employment due to death, disability or
      retirement.

      For purpose of this Plan, Cause shall mean (i) failure by the employee to
      perform consistently the duties of the position held by such employee
      after such employee has been provided with written notice of performance
      deficiencies and a reasonable opportunity to correct those deficiencies,
      (ii) commission by the employee of an act of



      fraud, theft, misappropriation of funds, dishonesty, bad faith or
      disloyalty; or (iii) willful misconduct by the employee which is injurious
      to the Company.

      (2) Participant Definition

      An employee will be considered a "Participant" under this Plan when he or
      she has incurred a Qualifying Termination.

C.    Amount of Severance Pay

      A Participant eligible for severance pay under Section B shall receive the
      following:

      (1)   Cash Payment

            (a)   Management Committee Members

                  An amount equivalent to two weeks of salary (at the highest
                  annual rate in effect during the one-year period prior to
                  termination) for each year of Company service up to a maximum
                  of six (6) months salary.

            (b)   Salaried Participants Other Than Management Committee Members

                  An amount equal to one week of salary (at the highest annual
                  rate in effect during the one-year period prior to
                  termination) for each year of Company service up to a maximum
                  of six (6) months salary.

            (c)   Hourly Participants

                  An amount that corresponds to the years of service as set
                  forth in Attachment A. For purposes of this Plan, the amount
                  payable shall be calculated as follows:

                        (1) Straight Day Worker - at the straight time hourly
                        rate for the regularly scheduled workweek in effect at
                        the time of the termination of employment, excluding
                        overtime premium.

                        (2) Shift Worker - at the straight time hourly rate plus
                        the employee's shift bonus in effect at the time of the
                        layoff, provided the employee being placed on lay off
                        worked the fixed shift. If the employee was working the
                        rotating shift, his/her straight time hourly rate is
                        used plus the average shift bonus.

            (d)   Form of Payment

                  Participants will receive their cash severance payment in
                  semi-monthly installment payments consistent with the
                  Company's established payroll procedures for the duration of
                  the severance period except that the cash payment equal to the
                  Participant's prorated bonus earned under the MIP or another
                  comparable plan shall be paid at the time such bonuses are
                  paid to other participants in the MIP or comparable plan;
                  provided, however that the Company shall be under no
                  obligation to pay bonuses to Participants based on performance
                  or eligibility criteria more favorable than that for
                  continuing employees. All cash severance payments will be net
                  of all applicable federal and state withholding taxes.

                                       2


      (4)   Group Insurance

            Medical, life and dental insurance benefits, if any, shall be
            extended at the levels provided for current employees to the earlier
            of when the Participant is eligible under another employer's plan or
            the end of the installment payment period. All other insurance
            coverage (LTD, travel/accident) will cease effectiveness as of the
            conclusion of the Participant's last day of active employment with
            the Company.

      (5)   Viskase Corporation Retirement Savings Plan

            Participation in the Viskase Corporation Retirement Savings Plan
            ("SAVE Plan") will cease as of the Participant's last day of active
            employment with the Company. Company contributions to the Plan on
            behalf of such Participant will also cease as of the Participant's
            last day of active employment with the Company.

      (6)   Vacation and Other Accrued Compensation

            If an employee's employment with the Company is terminated for any
            reason, the Company shall pay to the employee promptly but in no
            event later than ten (10) days following termination of employment,
            all amounts earned or accrued by the employee as of the last active
            date of employment, including (i) base salary, (ii) accrued and/or
            any unpaid vacation pay, (iii) any earned or awarded and vested, but
            unpaid bonus for any fiscal year ending prior to the year in which
            such termination occurs.

      (7)   Outplacement

            At the discretion of the Company, outplacement services may be
            provided for Participants in the manner determined by the Company.
            No payment shall be made to a Participant in lieu of outplacement
            services.

      (8)   Death, Disability and Retirement

            If an Participant's employment terminated by reason of the
            Participant's death, disability or retirement, then the Participant
            shall not be entitled to receive severance or other benefits under
            this Plan and shall be entitled only to those benefits (if any) as
            may be available under the Company's then existing benefit plans and
            policies in effect at the time of such Participant's death,
            disability or retirement.

D.    Severance Plan Integration and Reemployment

      Notwithstanding any provision of this Plan to the contrary, the severance
      benefits and accrued vacation payable under this Plan shall be reduced by
      the severance benefits and accrued vacation then payable to a Participant
      under any statute or regulation or any other agreement, understanding,
      plan, policy, program, statute, regulation or arrangement of the Company.
      If the Company rehires a Participant during the period during which such
      Participant is receiving severance or other benefits hereunder, such
      severance and benefits shall immediately cease upon such reemployment.
      Credit for any unpaid portion will be returned for use with any subsequent
      termination of employment for which

                                       3


      severance and benefits are payable hereunder and additional entitlement
      hereunder will only be based on Company service credit accrued by the
      employee from the date of rehire.

E.    Other Company Payments

      In addition to any severance benefits payable to a Participant under this
      Plan, such Participant shall be entitled to receive all benefits payable
      under any other plan or agreement of the Company unrelated to severance
      benefits.

F.    General Release

      Notwithstanding Section B or any other provision of this Plan to the
      contrary, in order to be a Participant in the Plan and receive any
      severance pay or other benefits under this Plan, an employee must sign a
      statement, in such form as reasonably determined by the Company, which
      releases Viskase Companies, Inc., its affiliates and their respective
      subsidiaries, shareholders, directors, officers, fiduciaries, employees,
      successors and assigns from any existing and future claims except with
      respect to the payment of any benefits set forth under this Plan which are
      conditioned upon this release.

G.    No Alienation of Severance Benefits

      No interest of a Participant or his spouse or any other beneficiary under
      this Plan, or any right to receive any payments or distribution hereunder,
      shall be subject in any manner to sale, transfer, assignment, pledge,
      attachment, garnishment, or other alienation or encumbrance of any kind,
      nor may such interest or right to receive a payment or distribution be
      taken voluntarily or involuntarily, for the satisfaction of the
      obligations or debts of, or other claims against, a Participant or his
      spouse or other beneficiary, including claims for alimony, support,
      separate maintenance, and claims of bankruptcy proceedings.

H.    Administration

      The President (or such other person as designated by the Board of
      Directors of the Company) (the "Plan Administrator") shall administer and
      be responsible for carrying out the provisions of this Plan and shall be
      the "named fiduciary" for purposes of the Employee Retirement Income
      Security Act of 1974, as amended ("ERISA"). The Plan Administrator shall
      have all such powers and discretionary authority as may be necessary to
      carry out the provisions of this Plan, including the power to determine
      all questions relating to eligibility for and the amount of severance or
      other benefits under this Plan and all other questions pertaining to
      claims for severance or other benefits under this Plan. The Plan
      Administrator may delegate any of its powers, authorities or
      responsibilities for the operation and administration of this Plan. All
      actions taken and the decisions made by the Plan Administrator hereunder
      shall be final and binding upon

                                       4


      all interested parties and benefits shall be payable to a person hereunder
      only if the Plan Administrator, in its sole discretion, determines that
      such person is entitled to benefits.

I.    Method of Funding

      Nothing in the Plan shall be interpreted as requiring the Company to set
      aside any of its assets for the purpose of funding its obligations under
      the Plan. No person entitled to benefits under the Plan shall have any
      right, title or claim in or to any specific assets of the Company, but
      shall have the right only as a general creditor of the Company to receive
      benefits from the Company on the terms and conditions provided in the
      Plan.

J.    Claims Procedure

      Any Participant, employee or former employee of the Company who believes
      that he is entitled to receive severance pay or other benefits under the
      Plan, including severance pay or benefits other than those initially
      determined by the Plan Administrator, may file a claim with the Plan
      Administrator. Such a claim shall be in writing and state the nature of
      the claim, the facts supporting the claim, the amount claimed and the
      address of the claimant. No later than 90 days after the receipt of the
      claim, unless special circumstances require an extension of time, the Plan
      Administrator shall either allow or deny the claim in writing. If special
      circumstances require an extension of time, the claimant shall be so
      advised in writing within the initial 90-day period and in no event shall
      such an extension exceed 90 days. The extension notice shall indicate the
      special circumstances requiring an extension of time and the date by which
      the Plan Administrator expects to render the benefit determination.

      Notice of an adverse benefit decision shall be delivered to the claimant,
      either in writing by registered or certified mail or in an electronic
      notification. Any electronic notice delivered to the claimant shall comply
      with applicable law. The notice of the Plan Administrator's determination
      shall be written in a manner calculated to be understood by the claimant
      and, if the claim is wholly or partially denied, the notice shall include:
      (a) the specific reason or reasons for the determination; (b) specific
      reference to pertinent Plan provisions on which the determination is
      based; (c) a description of any additional material or information
      necessary for the claimant to perfect the claim and an explanation of why
      such material or information is necessary; and (d) an explanation of the
      claim review procedure under the Plan and the time periods applicable to
      such procedure, including a statement of the claimant's right to bring a
      civil action under Section 502 of ERISA following an adverse benefit
      determination upon review.

      If a claim is denied, within 60 days after receipt of such denial a
      claimant (or his duly authorized representative) may request a review upon
      written application to an officer designated by the Company and specified
      in the claim denial. The claimant shall be informed, within the same
      60-day period, that he: (a) may be provided, upon request and free of
      charge, reasonable access to, and copies of, all documents, records and
      other information relevant to the claimant's claims for benefits; and (b)
      may submit written comments, documents, records and other information
      relating to the claim for benefits to the designated officer.

                                       5


      The designated officer's review shall take into account all comments,
      documents, records and other information submitted by the claimant
      relating to the claim, without regard to whether such information was
      submitted or considered in the initial benefit determination.

      The designated officer shall notify the claimant of his decision on review
      within 60 days after receipt of a request for review, unless special
      circumstances require an extension of time for processing, in which case a
      decision shall be rendered as soon as possible, but not later than 120
      days after receipt of a request for review. The extension notice shall
      indicate the special circumstances requiring an extension of time and the
      date by which the designated officer expects to render the determination
      on review. Notice of the determination on review shall be in writing, in a
      manner calculated to be understood by the claimant, and shall include
      specific reasons for the decision and specific references to the pertinent
      Plan provisions on which the determination is based. The officer's
      determination on review shall be final and binding on any claimant or any
      successor in interest.

K.    Headings

      Headings of sections in this instrument are for convenience only, and do
      not constitute any part of the Plan.

L.    Severability

      If any provision of this Plan or the rules and regulations made pursuant
      to the Plan are held to be invalid or illegal for any reason, such
      illegality or invalidity shall not affect the remaining portions of this
      Plan.

M.    Governing Law

      The Plan shall be construed and enforced in accordance with ERISA, and the
      laws of the State of Illinois to the extent such laws are not preempted by
      ERISA.

N.    Successors and Assigns

      This Plan shall be binding upon and inure to the benefit of the Company
      and its successors and assigns and shall be binding upon and inure to the
      benefit of a Participant and his legal representatives, heirs and assigns.
      No rights, obligations or liabilities of a Participant hereunder shall be
      assignable without the prior written consent of the Company. If a
      Participant dies after he has signed the release described in Paragraph F,
      but prior to receipt of severance pay or benefits to which he is entitled
      hereunder, the severance pay described in Paragraph C, if applicable,
      shall be paid to his estate.

                                       6


O.    Duration of Plan - Amendment/Termination

      The Company may, by action of its Board of Directors, amend, terminate or
      modify this Plan at any time in its sole discretion.

      IN WITNESS WHEREOF, Viskase Companies, Inc. has caused this Plan to be
executed by its duly authorized officer on July ___, 2003.

                                       VISKASE COMPANIES, INC.

                                       By: _____________________________________
                                           Jon F. Weber

                                           President and Chief Executive Officer

                                       7


                                  ATTACHMENT A
                    HOURLY PAYROLL TERMINATION ALLOWANCE AND
                           LAYOFF ALLOWANCE SCHEDULES



     SERVICE (YEARS)                               ALLOWANCE (WEEKS)
                                                
Minimum 3 months - 2 years                                 1
            3                                            1-1/2
            4                                            1-1/2
            5                                              2
            6                                              2
            7                                              3
            8                                              3
            9                                              3
            10                                             4
            11                                           4-1/2
            12                                             5
            13                                           5-1/2
            14                                             6
            15                                           6-1/2
            16                                             7
            17                                           7-1/2
            18                                             8
            19                                           8-1/2
            20                                             9
            21                                           9-1/2
            22                                             10
            23                                           10-1/2
            24                                             11
            25                                           11-1/2
            26                                             12
            27                                           12-1/2
            28                                             13
            29                                           13-1/2
            30                                             14
            31                                           14-1/2
            32                                             15
            33                                           15-1/2
            34                                             16
            35                                           16-1/2
            36                                             17
            37                                           17-1/2
            38                                             18
            39                                           18-1/2
            40                                             19
            41                                           19-1/2
            42                                             20
            43                                           20-1/2
            44                                             21
           45+                                           21-1/2

EX-10.15

                                                                   EXHIBIT 10.15

                                                         EXECUTION VERSION

                             RESTRUCTURING AGREEMENT

                            dated as of July 15, 2002

                                  by and among

                         HIGH RIVER LIMITED PARTNERSHIP
                           DEBT STRATEGIES FUND, INC.
                            NORTHEAST INVESTORS TRUST

                                       and

                             VISKASE COMPANIES, INC.



                                TABLE OF CONTENTS

             This Table of Contents is not part of the Agreement to which it is
           attached but is inserted for convenience only.



                                                                                     Page
                                                                                      No.
                                                                                  
                               ARTICLE I THE OFFER

 1.01  The Offer...................................................................    1
 1.02  Holder Actions..............................................................    3
 1.03  Company Board Representation; Section 14(f).................................    3
 1.04  Conditions to Holders' Obligations..........................................    4

            ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 2.01  Organization and Qualification..............................................    5
 2.02  Capital Stock...............................................................    5
 2.03  Authority Relative to This Agreement........................................    6
 2.04  Non-Contravention; Approvals and Consents...................................    6
 2.05  Legal Proceedings...........................................................    7
 2.06  Information Supplied........................................................    7
 2.07  Company Rights Agreement....................................................    8
 2.08  Section 203 of the DGCL Not Applicable......................................    8

            ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

 3.01  Organization and Qualification..............................................    8
 3.02  Authority Relative to This Agreement........................................    8
 3.03  Non-Contravention; Approvals and Consents...................................    9
 3.04  Legal Proceedings...........................................................    9
 3.05  Information Supplied........................................................    9
 3.06  Ownership of Old Notes......................................................   10
 3.07  Confidentiality Agreements..................................................   10

                       ARTICLE IV COVENANTS OF THE COMPANY

 4.01  Merger......................................................................   10
 4.02  Company Rights Agreement....................................................   10
 4.03  Subordination Agreement.....................................................   10
 4.04  Plan of Reorganization......................................................   10
 4.05  Conduct of Business.........................................................   11
 4.06  Issuance of Securities......................................................   11

                       ARTICLE V ADDITIONAL AGREEMENTS




                                                                                   
 5.01  Charter Amendment...........................................................   11
 5.02  Regulatory and Other Approvals..............................................   12
 5.03  Transfer Restrictions; Termination of Transfer Restrictions.................   12
 5.04  Restricted Stock Plan.......................................................   13
 5.05  No Solicitations............................................................   13
 5.06  Expenses ...................................................................   14
 5.07  Brokers or Finders..........................................................   14
 5.08  Notice of Developments......................................................   14
 5.09  Notice and Cure.............................................................   14
 5.10  Fulfillment of Conditions...................................................   14
 5.11  Registration Rights Agreement...............................................   15
 5.12  Employment Agreements.......................................................   15

                       ARTICLE VI COVENANTS OF THE HOLDERS

 6.01  Forbearance.................................................................   15

                  ARTICLE VII TERMINATION, AMENDMENT AND WAIVER

 7.01  Termination.................................................................   16
 7.02  Effect of Termination.......................................................   18
 7.03  Amendment and Waiver; Holder Requests and Consents..........................   18
 7.04  Notice of Termination by Holders............................................   19

                         ARTICLE VIII GENERAL PROVISIONS

 8.01  Non-Survival of Representations, Warranties, Covenants and Agreements.......   19
 8.02  Notices.....................................................................   19
 8.03  Entire Agreement; Incorporation of Exhibits.................................   21
 8.04  Public Announcements........................................................   21
 8.05  No Third Party Beneficiary..................................................   21
 8.06  No Assignment; Binding Effect...............................................   21
 8.07  Headings....................................................................   21
 8.08  Invalid Provisions..........................................................   21
 8.09  Governing Law...............................................................   22
 8.10  Enforcement of Agreement....................................................   22
 8.11  Certain Definitions.........................................................   22
 8.12  [intentionally omitted.]....................................................   23
 8.13  Counterparts................................................................   23



Annex A              FORM OF INDENTURE
Annex B              CERTIFICATE OF DESIGNATIONS
Annex C              CONDITIONS TO THE OFFER
Annex D              PLAN OF REORGANIZATION
Annex E              RESTRICTED STOCK PLAN
Annex F              REGISTRATION RIGHTS AGREEMENT
Annex G              AMENDED AND RESTATED BYLAWS

                                       ii



                            GLOSSARY OF DEFINED TERMS

      The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:

                                                    
"affiliate"                                     --        Section 8.11(a)
"Alternative Proposal"                          --        Section 5.05
"Bankruptcy Law"                                --        Section 8.11(b)
"beneficially"                                  --        Section 8.11(c)
"Board of Directors"                            --        Section 1.01(a)
"business day"                                  --        Section 8.11(d)
"Company"                                       --        Preamble
"Company Common Stock"                          --        Section 2.02
"Company Preferred Stock"                       --        Section 2.02
"Company Rights"                                --        Section 1.04(d)
"Company Rights Agreement"                      --        Section 1.04(d)
"Company SEC Reports"                           --        Section 8.11(e)
"Restricted Stock Plan"                         --        Section 5.04
"Confidentiality Agreement"                     --        Section 8.03
"Consummation Date"                             --        Section 4.01
"Contracts"                                     --        Section 2.04(a)
"control," "controlling," "controlled
   by" and "under common control with"          --        Section 8.11(a)
"Converted Common Stock"                        --        Section 5.03
"Custodian"                                     --        Section 8.11(f)
"DGCL"                                          --        Section 2.08
"Disclosure Schedule"                           --        Section 8.11(g)
"Employment Agreements"                         --        Section 5.12
"Exchange Act"                                  --        Section 1.01(a)
"Final Expiration Date"                         --        Section 1.01(a)
"Governmental or Regulatory Authority"          --        Section 2.04(a)
"group"                                         --        Section 8.11(k)
"Holders"                                       --        Preamble
"Indemnification Agreements"                    --        Section 5.12
"Independent Director"                          --        Section 1.03(a)
"knowledge"                                     --        Section 8.11(h)
"laws"                                          --        Section 2.04(a)
"Lien"                                          --        Section 8.11(i)
"material", "material adverse
   effect" and "materially adverse"             --        Section 8.11(j)
"Minimum Condition"                             --        Annex C
"New Notes"                                     --        Section 1.01(a)
"New Preferred Stock                            --        Section 1.01(a)
"Offer"                                         --        Section 1.01(a)



                                      iii



                                                    
"Offer Documents"                               --        Section 1.01(b)
"Old Notes"                                     --        Preamble
"Options"                                       --        Section 2.02
"orders"                                        --        Section 2.04(a)
"Per Note Amount"                               --        Section 1.01(a)
"person"                                        --        Section 8.11(k)
"Plan of Reorganization"                        --        Section 1.01(d)
"Public Offering"                               --        Section 8.11(l)
"Representatives"                               --        Section 8.11(m)
"SEC"                                           --        Section 1.01(a)
"Significant Subsidiaries"                      --        Section 8.11(n)
"Subsidiary"                                    --        Section 8.11(o)
"Superior Proposal"                             --        Section 7.01(d)
"this Agreement"                                --        Preamble
"TIA"                                           --        Section 1.04(f)



                                       iv



                  This RESTRUCTURING AGREEMENT dated as of July 15, 2002 ("this
Agreement") is made and entered into by and among HIGH RIVER LIMITED
PARTNERSHIP, a Delaware limited partnership, DEBT STRATEGIES FUND, INC., a
Maryland corporation, NORTHEAST INVESTORS TRUST, a Massachusetts trust
(collectively, the "Holders") and VISKASE COMPANIES, INC., a Delaware
corporation (the "Company").

                  WHEREAS, the Holders and the Company have each determined that
it is advisable and in their respective best interests to consummate, and have
approved, the transaction provided for herein in which the Company would make an
offer to acquire all of the issued and outstanding 10 1/4% Senior Notes due
2001, of the Company ("Old Notes") in exchange for new notes and preferred stock
upon the terms and subject to the conditions of this Agreement; and

                  WHEREAS, the Holders and the Company desire to make certain
representations, warranties and agreements in connection with the transactions
contemplated by this Agreement and also to prescribe various conditions to the
consummation of such transactions;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                    ARTICLE I

                                    THE OFFER

                  1.01 The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 7.01 and none of the events set
forth in Annex C hereto shall have occurred and be continuing, as promptly as
practicable, but in no event later than 15 business days, after the date hereof,
the Company shall commence (within the meaning of applicable rules under the
Securities Exchange Act of 1934, as amended (such Act and the rules and
regulations promulgated thereunder being referred to herein as the "Exchange
Act")) and will in good faith pursue an exchange offer (the "Offer") to acquire
all of the issued and outstanding Old Notes in exchange for $367.96271 principal
amount of the Company's 8% Senior Subordinated Secured Notes Due 2008 (the "New
Notes") to be issued under an indenture in the form of Annex A hereto, and
126.82448 shares of the Company's Series A Convertible Preferred Stock having
the designations set forth in Annex B hereto (the "New Preferred Stock"), per
$1,000 of principal amount of Old Note (such amount, or any greater amount per
Old Notes paid pursuant to the Offer, the "Per Note Amount"). Subject to the
Company's and the Holders' right of termination set forth in Section 7.01, the
obligation of the Company to consummate the Offer and to accept for exchange Old
Notes tendered pursuant to the Offer shall be subject only to the conditions set
forth in Annex C hereto. The Company shall not waive any such condition or make
any changes in the terms and conditions of the Offer without the consent of the
Holders; provided, however, the Company may waive any condition or amend the
terms and conditions of the Offer to the extent such waiver or amendment relates
to matters ministerial or administrative in nature with respect to the Offer,
and the Offer may be extended by the Company (1) for any period to the



extent required by law or by any rule, regulation, interpretation or position of
the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer, and (2) to any date not exceeding the 75th day
following the date on which the Offer is commenced (the "Final Expiration Date")
if (x) immediately prior to the expiration of the Offer any condition to the
Offer shall not be satisfied and (y) the board of directors of the Company (the
"Board of Directors") determines there is a reasonable basis to believe that
such condition could be satisfied within such period; provided further that the
Company shall extend the Offer pursuant to clause (2) at the request of the
Holders to a date not later than the Final Expiration Date. Assuming the prior
satisfaction or waiver of the conditions of the Offer and subject to the
foregoing right to extend the Offer, the Company shall issue the New Notes and
the New Preferred Stock, rounded down to the nearest whole dollar and whole
share, respectively, in exchange for Old Notes tendered pursuant to the Offer as
soon as practicable after the Consummation Date. The Offer shall be conducted in
a manner that will make it exempt from registration under Section 3(a)(9) of the
Securities Act of 1933, as amended (the "Securities Act").

                  (b) As soon as practicable on the date of commencement of the
Offer, the Company shall take such steps as are reasonably necessary to cause an
Offer to Exchange and a related Letter of Transmittal, each in a form customary
for a transaction of the type contemplated hereunder, to be disseminated to the
holders of Old Notes as and to the extent required by applicable federal
securities laws (the Offer to Exchange, Letter of Transmittal and any related
summary advertisement, together with all amendments and supplements thereto, the
"Offer Documents"), which Offer Documents shall incorporate the material terms
of the Restructuring Agreement and other customary terms. The Holders and the
Company shall correct promptly any information provided by any of them for use
in the Offer Documents which shall have become false or misleading, and the
Company shall take all steps necessary to cause the Offer Documents as so
corrected to be disseminated to holders of Old Notes, in each case as and to the
extent required by applicable federal securities laws. The Holders and their
counsel shall be given an opportunity to review and comment on the Offer
Documents, and edit information solely pertaining to the Holders, prior to their
being disseminated. The Company and the Holders shall cooperate with each other
in the preparation of the Offer Documents.

                  (c) The Company shall use commercially reasonable efforts to
complete the Offer in accordance with the terms hereof. Upon satisfaction of all
conditions to the Offer, the Company shall complete the Offer and accept the Old
Notes for exchange of New Notes and New Preferred Stock in accordance with the
terms of the Offer as soon as reasonably practical following the expiration of
the Offer. The Holders shall cooperate with the Company as it reasonably
requests in connection with the completion of the Offer and other transactions
contemplated hereby.

                  (d) The Offer Documents shall include a solicitation of
acceptances of the plan of reorganization attached as Annex D hereto (the "Plan
of Reorganization"), in compliance with applicable requirements under the
Bankruptcy Code.

                  (e) Simultaneously with the execution of this Agreement, the
Company shall deliver to the Holders a certificate of the secretary or an
assistant secretary of the Company

                                       2



certifying that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors authorizing the execution, delivery and
performance of this Agreement and the transactions contemplated hereby and that
all such resolutions are still in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement.

                  1.02 Holder Actions. (a) Each Holder hereby approves and
consents to the Offer. Each Holder shall tender or cause to be tendered all Old
Notes beneficially owned by it or its affiliates pursuant to the Offer and shall
vote or cause to be voted all such Old Notes in favor of the approval and
adoption of the Plan of Reorganization, and will not vote in favor of any other
plan of reorganization or any action that is intended or could reasonably be
expected to adversely affect the Plan of Reorganization.

                  (b) In connection with the Offer, each Holder will furnish the
Company with such information (which will be treated and held in confidence by
the Company except as required by law) and assistance as the Company or its
Representatives (as defined in Section 8.11) may reasonably request in
connection with the preparation and consummation of the Offer, provided that the
provision of any such information does not violate (i) any confidentiality
agreement by which such Holder is bound as of the date of this Agreement and of
which such Holder has advised the Company no later than the date hereof or (ii)
any provision of applicable law.

                  1.03 Company Board Representation; Section 14(f). (a) Upon the
consummation of the Offer, or the effective date of the Plan, as applicable, the
Company and the Holders shall promptly use their commercially reasonable efforts
to (i) cause each of the directors (except the Company's chief executive
officer) to resign from the Board of Directors and (ii) take all actions
necessary to cause the Board of Directors to consist of five persons, one of
whom is the Company's chief executive officer and four of whom are designees of
the Holders, with one of such designees being a person who would qualify as an
independent director under the Marketplace Rules of the Nasdaq Stock Market
excluding the financial statement knowledge requirements applicable to the
composition of audit committees, who shall be independent (as defined under such
rules) both with respect to the Company and with respect to each holder of more
than 5% of (i) the New Preferred Stock, upon consummation of the Offer, or (ii)
the Common Stock, upon the effective date of the Plan, as the case may be (the
"Independent Director"), including accepting the resignations of those incumbent
directors designated by the Company or increasing the size of the Board of
Directors and causing the Holders' designees to be elected.

                  (b) The Company's obligations to appoint the Holders'
designees to the Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, if applicable. The Company
shall promptly take all actions required pursuant to such Section and Rule in
order to fulfill its obligations under this Section, and shall include in the
Offering Documents, and otherwise disseminate to the holder of the Company's
common stock, such information with respect to the Company and its officers and
directors as is required under such Exchange Act Section and Rule to fulfill
such obligations. Each Holder shall supply to the

                                       3



Company and be solely responsible for any information with respect to such
Holder and its officers, directors and affiliates required by such Section 14(f)
and Rule 14f-1.

                  (c) If at any time there is no Independent Director, the other
directors shall designate a person to fill such vacancy who satisfies the
requirements of paragraph (a) of this Section, and such person shall be deemed
to be the Independent Director for purposes of this Agreement.

                  1.04 Conditions to Holders' Obligations. The obligation of
each Holder to tender the Old Notes owned beneficially and of record by it in
the Offer is subject to the fulfillment, on or before the Consummation Date, of
each of the following conditions (all or any of which may be waived in whole or
in part by such Holder in its sole discretion):

                  (a) The representations and warranties made by the Company in
this Agreement shall be true and correct in all material respects on and as of
the Consummation Date as though such representation or warranty was made on and
as of the Consummation Date; provided that any representation or warranty made
as of a specified date earlier than the Consummation Date shall have been true
and correct in all respects material to the validity and enforceability of this
Agreement on and as of such earlier date.

                  (b) The Company shall have merged into itself its subsidiary
Viskase Corporation, with the Company being the surviving corporation.

                  (c) The Board of Directors as of the time of the consummation
of the Offer shall consist of five persons, one of whom is the Company's chief
executive officer and four of whom are designees of a majority of the shares of
New Preferred Stock held by the Holders, with one of such designees being a
person that would qualify as an Independent Director.

                  (d) The Company shall have redeemed or terminated the rights
(the "Company Rights") issued pursuant to, or shall have terminated, the Rights
Agreement dated as of June 26, 1996, as amended, by and between the Company and
Harris Trust & Savings Bank, as Rights Agent (the "Company Rights Agreement").

                  (e) All Old Notes, excluding all Old Notes held by the Holders
and their affiliates, shall have been tendered in the Offer.

                  (f) The indenture under which the New Notes are to be issued
shall have been qualified under the Trust Indenture Act of 1939 ( the "TIA").

                  (g) The Company shall have delivered to each Holder a
certificate, dated the Consummation Date and executed in the name and on behalf
of the Company by the Chairman of the Board, the President or any Vice President
of the Company, certifying to the effect that (i) each of the conditions in
paragraphs (a) through (f) above have been satisfied or, if not satisfied,
waived by each Holder in writing, (ii) the Company has duly performed or
complied with each of the agreements, covenants and obligations required by this
Agreement in all material respects and (iii) the Offer Documents do not contain
any untrue statement of a material fact or omit to

                                       4



state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, the Company shall make no such representation as to information
concerning the Holders supplied in writing by the Holders.

                  (h) The Company shall have delivered to the Holders a
certificate of the secretary or an assistant secretary of the Company certifying
that attached thereto is a true and complete copy of resolutions duly adopted by
the Board of Directors authorizing the execution, delivery and performance of
this Agreement and the transactions contemplated hereby and that all such
resolutions are still in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by this Agreement.

                  (i) The Company shall have adopted bylaws in the form attached
to this Agreement as Annex G.

                                   ARTICLE II

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company represents and warrants to the Holders:

                  2.01 Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now conducted and to own,
use and lease its assets and properties, except for such failures to be so
incorporated, existing and in good standing or to have such power and authority
which, individually or in the aggregate, are not having and could not be
reasonably expected to have a material adverse effect (as defined in Section
8.11) on the Company and its Subsidiaries taken as a whole. The Company has
previously delivered to the Holders correct and complete copies of its
Certificate of Incorporation and Bylaws.

                  2.02 Capital Stock. The authorized capital stock of the
Company consists solely of 50,000,000 shares of common stock, par value $0.01
per share ("Company Common Stock"), and 25,000,000 shares of preferred stock,
par value $0.01 per share ("Company Preferred Stock"). As of July 10, 2002,
15,316,062 shares (including restricted stock issued to employees of the Company
but which shares have not been issued in certificated form) of Company Common
Stock were issued and outstanding; no shares were held in the treasury of the
Company. Since such date, there has been no change in the number of issued and
outstanding shares of Company Common Stock or shares of Company Common Stock
held in treasury and 413,398 and 775,644 shares were reserved for issuance under
the Company's 1993 Stock Option Plan and Parallel Non-Qualified Savings Plan,
respectively. As of the date hereof, no shares of Company Preferred Stock are
issued and outstanding. All of the issued and outstanding shares of Company
Common Stock are, and all shares reserved for issuance (including the shares of
New Preferred Stock issuable in the Offer and the shares of Company Common Stock
issuable on conversion thereof) will be, upon issuance in accordance with the
terms specified in the

                                       5



instruments or agreements pursuant to which they are issuable, duly authorized,
validly issued, fully paid and nonassessable. Except pursuant to this Agreement
and the Company Rights Agreement, and except as disclosed in the Disclosure
Schedule (as defined in Section 8.11), there are no outstanding subscriptions,
options, warrants, rights (including "phantom" stock rights), preemptive rights
or other contracts, commitments, understandings or arrangements, including any
right of conversion or exchange under any outstanding security, instrument or
agreement (together, "Options"), obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock of the Company or to
grant, extend or enter into any Option with respect thereto or "phantom" stock
rights or otherwise provide any payment or compensation based on "phantom" stock
or measured by the value of the Company's stock, assets, revenues or other
similar measure.

                  2.03 Authority Relative to This Agreement. The Company has
full corporate power and authority to enter into this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors, and except as provided
in Article IV and Sections 5.01 and 5.04 hereof, no other corporate proceedings
on the part of the Company or its stockholders are necessary to authorize the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

                  2.04 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of the Company under, any of the terms, conditions or provisions of
(i) the Certificate of Incorporation or Bylaws (or other comparable charter
documents) of the Company or (ii) subject to the taking of the actions described
in paragraph (b) of this Section, (x) any statute, law, rule, regulation or
ordinance (together, "laws"), or any judgment, decree, order, writ, permit or
license (together, "orders"), of any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision (a "Governmental or Regulatory Authority") applicable to
the Company or any of its assets or properties, or (y) any note, bond, mortgage,
security agreement, indenture, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind (together,
"Contracts") to which the Company is a party or by which the Company or any of
its assets or properties is bound, which conflict, violation, breach, default,
termination, modification,

                                       6



acceleration or creation and imposition of Liens would be material to a
reasonable investor in light of all the circumstances known to such investor.

                  (b) Except for qualification of the indenture under which the
New Notes are to be issued and as may be required under state securities laws
and as otherwise previously disclosed in the Disclosure Schedule, no consent,
approval or action of, filing with or notice to any Governmental or Regulatory
Authority or other public or private third party is necessary, or required under
any of the terms, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which the Company is a
party or by which the Company or any of its assets or properties is bound, for
the execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder or the consummation of the transactions
contemplated hereby, the failure of which consent or approval to be obtained, or
action, filing or notice to be made, would be material to a reasonable investor
in light of all the circumstances known to such investor.

                  2.05 Legal Proceedings. Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, as of the date hereof (i)
there are no actions, suits, arbitrations or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting, nor to
the knowledge of the Company are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its assets and properties with respect to the
transactions contemplated by this Agreement which would be material to a
reasonable investor in light of all the circumstances known to such investor and
(ii) none of the Company nor any Significant Subsidiary is subject to any order
of any Governmental or Regulatory Authority with respect to the transactions
contemplated by this Agreement which would be material to a reasonable investor
in light of all the circumstances known to such investor.

                  2.06 Information Supplied. (a) The Offering Documents and any
other documents to be filed by the Company with the SEC or any other
Governmental or Regulatory Authority in connection with the Offer and the other
transactions contemplated hereby will not, on the date of its filing or, with
respect to the Offering Documents, at the date they are first published, sent or
given to holders of the Old Notes, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by the Company with respect to information supplied in writing by or on behalf
of any Holder expressly for inclusion therein and information incorporated by
reference therein from documents filed by any Holder with the SEC. Any such
other documents filed by the Company with the SEC under the Exchange Act or the
TIA will comply as to form in all material respects with the requirements of the
Exchange Act and/or the TIA.

                  (b) Neither the information supplied or to be supplied in
writing by or on behalf of the Company for inclusion, nor the information
incorporated by reference from documents filed by the Company with the SEC, in
any documents to be filed by a Holder with the SEC or any other Governmental or
Regulatory Authority in connection with the Offer and the other transactions
contemplated hereby will on the date of its filing contain any untrue statement
of a

                                       7



material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

                  2.07 Company Rights Agreement. As of the date hereof and after
giving effect to the execution and delivery of this Agreement, each Company
Right is represented by the certificate representing the associated share of
Company Common Stock and is not exercisable or transferable apart from the
associated share of Company Common Stock, and the Company has (i) taken all
necessary actions so that the execution and delivery of this Agreement and the
consummation of the Offer and the other transactions contemplated hereby will
not result in a "Distribution Date", a "Triggering Event" or a "Business
Combination" (as defined in the Company Rights Agreement) and (ii) amended the
Company Rights Agreement to render it inapplicable to this Agreement, the Offer
and the other transactions contemplated hereby.

                  2.08 Section 203 of the DGCL Not Applicable. Section 203 of
the General Corporation Law of the State of Delaware (the "DGCL") does not,
before the termination of this Agreement, apply to this Agreement, the Offer or
the other transactions contemplated hereby.

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE HOLDERS

                  Each Holder represents and warrants to the Company with
respect to such Holder as follows:

                  3.01 Organization and Qualification. It is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has full power and authority to conduct its
business as and to the extent now conducted and to own, use and lease its assets
and properties, except for such failures to be so organized, existing and in
good standing or to have such power and authority which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
material adverse effect on it.

                  3.02 Authority Relative to This Agreement. It has full power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by it and the consummation of the transactions
contemplated hereby have been duly and validly approved by it, and no other
proceedings on its part or the part of its stockholders, partners, members or
other similar constituents, as the case may be, are necessary to authorize the
execution, delivery and performance of this Agreement by it and the consummation
by it of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by it and constitutes its legal, valid and
binding obligation enforceable against it in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

                                       8



                  3.03 Non-Contravention; Approvals and Consents. (a) The
execution and delivery of this Agreement by it does not, and the performance by
it of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of its assets or properties under,
any of the terms, conditions or provisions of (i) its certificate or articles of
incorporation or bylaws (or other comparable charter documents), or (ii) subject
to the taking of the actions described in paragraph (b) of this Section, (x) any
laws or orders of any Governmental or Regulatory Authority applicable to it or
any of its assets or properties, or (y) any Contracts to which it is a party or
by which it or any of its assets or properties is bound, excluding from the
foregoing clauses (x) and (y) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a material adverse effect on its ability to consummate the transactions
contemplated by this Agreement.

                  (b) No consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority or other public or private third
party is necessary or required under any of the terms, conditions or provisions
of any law or order of any Governmental or Regulatory Authority or any Contract
to which it is a party or by which it or any of its assets or properties is
bound for its execution and delivery of this Agreement, the performance of its
obligations hereunder or the consummation of the transactions contemplated
hereby, other than such consents, approvals, actions, filings and notices which
the failure to make or obtain, as the case may be, individually or in the
aggregate, could not be reasonably expected to have a material adverse effect on
its ability to consummate the transactions contemplated by this Agreement.

                  3.04 Legal Proceedings. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of the Holder
threatened against, relating to or affecting, nor to its knowledge are there any
Governmental or Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, it or any of its assets and
properties which, individually or in the aggregate, could be reasonably expected
to have a material adverse effect on its ability to consummate the transactions
contemplated by this Agreement, and such Holder is not subject to any order of
any Governmental or Regulatory Authority which, individually or in the
aggregate, could be reasonably expected to have a material adverse effect on its
ability to consummate the transactions contemplated by this Agreement.

                  3.05 Information Supplied. (a) Any documents to be filed by
the Holder with the SEC or any other Governmental or Regulatory Authority in
connection with the Offer and the other transactions contemplated hereby will
not, on the date of its filing contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation is made with
respect to information supplied in writing by or on behalf of the Company
expressly for inclusion therein and information incorporated by reference
therein from documents filed by the Company with the

                                       9



SEC. Any such documents filed by it with the SEC under the Exchange Act will
comply as to form in all material respects with the requirements of the Exchange
Act.

                  (b) Neither the information supplied or to be supplied in
writing by or on behalf of the Holder expressly for inclusion, nor the
information incorporated by reference from documents filed by it with the SEC,
in other documents to be filed by it or the Company with any other Governmental
or Regulatory Authority in connection with the Offer and the other transactions
contemplated hereby will on the date of its filing or, with respect to the
Offering Documents, on the date they are first published, sent or given to
holders of the Old Notes, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.

                  3.06 Ownership of Old Notes. The Holders and their respective
affiliates will tender all Old Notes they own, directly or indirectly, as of the
Consummation Date free and clear of all Liens. Each Holder has previously
disclosed to the Company in writing the principal amount of Old Notes owned by
each of such Holder and its affiliates and such Holder hereby represents that
such writing is true and correct.

                  3.07 Confidentiality Agreements. Except as disclosed on
Schedule 3.07 attached hereto, such Holder is not a party to any confidentiality
agreement or similar agreement which would prevent the Holder from disclosing
information in connection with the preparation and consummation of the Offer.

                                   ARTICLE IV

                            COVENANTS OF THE COMPANY

                  4.01 Merger. Immediately prior to the time when it accepts Old
Notes for exchange under the Offer (the "Consummation Date"), the Company shall
merge into itself its subsidiary Viskase Corporation, with the Company being the
surviving corporation.

                  4.02 Company Rights Agreement. Prior to the Consummation Date,
the Company will redeem the Company Rights in accordance with the terms of the
Company Rights Agreement or terminate the Company Rights Agreement.

                  4.03 Subordination Agreement. The Company shall take all
commercially reasonable actions necessary to enforce, to the fullest extent
permitted under applicable law, the provisions of Section 20(b) of the Security
Agreement dated as of July 28, 2000 between it, certain of its Subsidiaries and
other parties and General Electric Capital Corporation with respect to the New
Notes, including, but not limited to, by seeking injunctions to prevent breaches
of such agreement and to enforce specifically the terms and provisions thereof
in any court having jurisdiction.

                  4.04 Plan of Reorganization. If all conditions to the Offer
have not been satisfied (after extension of the Offer if applicable) and the
Offer shall have terminated or expired in

                                       10



accordance with its terms, no later than the third business day following the
Final Expiration Date, the Company shall file the Plan of Reorganization with a
bankruptcy court if the Company shall have obtained from holders of the Old
Notes the requisite consents under the Bankruptcy Code. The Company shall use
commercially reasonable efforts to have the Plan of Reorganization confirmed by
such bankruptcy court.

                  4.05 Conduct of Business. Between the date hereof and the
Consummation Date or the effective date of the Plan, whichever is later, the
Company and its Subsidiaries shall conduct business only in the ordinary course.

                  4.06 Issuance of Securities. Except as provided in Section
5.04 hereof, between the date hereof and the Consummation Date or the effective
date of the Plan, as applicable, the Company shall not issue or agree to issue
any securities of the Company other than shares of Common Stock issued pursuant
to Company stock options or similar rights outstanding as of the date hereof
under the Parallel Non-Qualified Savings Plan referred to in Section 2.02 and
the Company Rights Agreement.

                  4.07 GECC Agreements. Between the date hereof and the
Consummation Date or the effective date of the Plan, as applicable, the Company
and its Subsidiaries will not enter into any modification, supplement or
amendment of or to any provisions of the GECC Participation Agreement, Lease,
Ground Lease, Ground Sublease, Facility Support Agreement, Guaranty,
Subordination Agreement or Security Agreement (true and complete copies of
which, including all amendments and waivers, have been delivered by the Company
to the Holders before the date of this Agreement) without the consent of the
Holders, or enter into any other arrangements or agreements with GECC or any of
its subsidiaries with respect to the assets, liabilities or other matters
covered by the aforesaid agreements or otherwise, provided, that this provision
shall not apply to such matters as (i) releases of security interests or
property, (ii) waivers of defaults or duties of the Company or its Subsidiaries
or rights of another party to the document, (iii) consents to sales of property
or (iv) forbearances or extensions of time for performance by the Company or its
Subsidiaries, in the case of clauses (i) through (iv) above where the
undertakings of the Company and its Subsidiaries in connection with such
modification, supplement or amendment are limited to such matters as (A)
updating of representations, (B) provision of documents relating to internal
corporate proceedings, (C) execution of UCC filings, (D) agreements to pay
transaction costs and (E) furnishing of opinions. Any requisite consent will be
deemed given if the Holders shall not have objected in writing within five
business days after receipt of written notice of the proposed modification,
supplement or waiver.

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

                  5.01 Charter Amendment. The Company shall, through the Board
of Directors, duly call, give notice of, convene and hold a meeting of its
stockholders for the purpose of voting on an amendment to its certificate of
incorporation to increase the number of authorized shares

                                       11



of Company Common Stock to 1,000,000,000 as soon as reasonably practicable after
the Consummation Date so as to permit conversion of the New Preferred Stock.

                  5.02 Regulatory and Other Approvals. (a) Subject to the terms
and conditions of this Agreement and without limiting the provisions of Annex C,
the Company will proceed diligently and in good faith to, as promptly as
practicable, (i) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities (including
state securities commissions) or any other public or private third parties
required of the Company or any of its Subsidiaries to consummate the Offer and
the other matters contemplated hereby, and (ii) provide such other information
and communications to such Governmental or Regulatory Authorities or other
public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may reasonably
request in connection therewith. The Holders shall cooperate with the Company as
it may reasonably request in connection with the Company's satisfaction of its
obligations under this paragraph (a).

                  (b) Subject to the terms and conditions of this Agreement and
without limiting the provisions of Annex C, each Holder will proceed diligently
and in good faith to, as promptly as practicable, (i) obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities (including state securities commissions)
or any other public or private third parties required of such Holder or any of
its Subsidiaries to consummate the Offer and the other matters contemplated
hereby, and (ii) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private third parties
as the other party or such Governmental or Regulatory Authorities or other
public or private third parties may reasonably request in connection therewith.
The Company shall cooperate with each Holder as it may reasonably request in
connection with such Holder's satisfaction of its obligations under this
paragraph (b).

                  5.03 Transfer Restrictions; Termination of Transfer
Restrictions. (a) From the date hereof until the Consummation Date or the
effective date of the Plan, as the case may be, no Holder may transfer and no
Holder shall permit any affiliate to transfer (other than to another Holder or
to an affiliate of a Holder that agrees to be bound by the terms of this
Agreement as a Holder) any Old Notes.

                  (b) From the date hereof until three years after the
Consummation Date or the effective date of the Plan, as the case may be, no
Holder may transfer (other than to another Holder or to an affiliate of a Holder
that agrees to be bound by the terms of this Agreement as a Holder) any shares
of New Preferred Stock or Company Common Stock into which the New Preferred
Stock is converted ("Converted Common Stock"). For this purpose, "transfer"
means any mode (direct or indirect, absolute or conditional, voluntary or
involuntary) of disposing of or parting with property or an interest therein.
Notwithstanding the foregoing, and other than transfers to another Holder or to
an affiliate of another Holder that agrees to be bound by the provisions of this
paragraph (b), beginning on the second anniversary of the Consummation Date, a
Holder may transfer New Preferred Stock or Converted Common Stock for cash,
provided that, until and including the third anniversary of the Consummation
Date, (i) at least 20 business days before such transfer such Holder shall have
furnished to the Company with respect

                                       12



to the transferee the information that would be required in a Schedule 13D filed
by the transferee with respect to the transfer and (ii) the Company shall not
have notified the Holder within that period that it or a person it designates
will purchase the securities to be transferred on the same terms as the proposed
transferee (in which case such Holder shall transfer them to the Company or its
designee on such terms). If the Company does not so notify the Holder, the
Holder shall be free for a period of 90 days to transfer the securities to the
proposed transferee on terms no more favorable to the transferee than the terms
described to the Company, after which the transfer will again be subject to the
terms of this Section. The New Preferred Stock and Converted Common Stock held
by each Holder will be appropriately legended to reflect the provisions of this
Section.

                  5.04 Restricted Stock Plan. Immediately prior to the
Consummation Date, the Company shall issue 640,000 shares of New Preferred Stock
to Company personnel designated by the Company's Chief Executive Officer under
the plan attached to this Agreement as Annex E (the "Restricted Stock Plan");
provided, however, the Company shall have the right to issue instead of such
shares options exercisable for New Preferred Stock.

                  As soon as practicable after the Consummation Date or the
effective date of the Plan, as the case may be, the Company shall file a
registration statement on Form S-8 promulgated by the SEC under the Securities
Act (or any successor or other appropriate form) with respect to the New
Preferred Stock (or shares subject to such options, as the case may be) and
shall use its commercially reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
New Preferred Stock or options remain outstanding. With respect to those
individuals who will be subject to the reporting requirements under Section
16(a) of the Exchange Act, where applicable, the Company shall administer the
Restricted Stock Plan in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act.

                  5.05 No Solicitations. Prior to the Consummation Date or the
effective date of the Plan, as the case may be, the Company agrees that neither
it nor any of its Subsidiaries or other affiliates shall, and it shall use its
best efforts to cause their respective Representatives (as defined in Section
8.11) not to, initiate or solicit, directly or indirectly, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
consolidation or other business combination including the Company or any of its
Significant Subsidiaries or any acquisition or similar transaction (including,
without limitation, a tender or exchange offer) involving (A) the purchase of
(i) all or any significant portion of the assets of the Company and its
Subsidiaries taken as a whole, (ii) 50% or more of the outstanding shares of
Company Common Stock or (iii) 50% of the outstanding shares of the capital stock
of any Significant Subsidiary of the Company or (B) the refinancing,
replacement, defeasance or refunding of the Old Notes (any such proposal or
offer being hereinafter referred to as an "Alternative Proposal"); provided,
however, that prior to the Consummation Date, nothing contained in this Section
5.05 shall prohibit the Board of Directors from (i) furnishing information to or
entering into discussions or negotiations with any person or group that makes an
unsolicited bona fide Alternative Proposal; provided that, with the advice of
counsel, the Board of Directors in good faith determines that such action is
required for

                                       13



the Board of Directors to comply with its fiduciary obligations; and (ii) to the
extent required, complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Alternative Proposal.

                  5.06 Expenses. Except for the reasonable out-of-pocket
expenses incurred by the Holders in connection with the negotiation, execution
and implementation of this Agreement, including the reasonable fees, expenses
and disbursements of one counsel for Holders, which the Company agrees to
reimburse to the Holders, whether or not the Offer is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such cost or expense.

                  5.07 Brokers or Finders. Each of the Holders and the Company
represents, as to itself and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement and each of the
Holders and the Company shall indemnify and hold the others harmless from and
against any and all claims, liabilities or obligations with respect to any other
such fee or commission or expenses related thereto asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
affiliate.

                  5.08 Notice of Developments. The Company will promptly notify
the Holders of any development that is likely to result in a major effect on the
business, assets, operations or financial condition of the Company and its
Subsidiaries taken as a whole or the Company's ability to perform its
obligations under this Agreement.

                  5.09 Notice and Cure. Each of the Holders and the Company will
notify the other of, and will use all commercially reasonable efforts to cure,
any event, transaction or circumstance, as soon as practicable after it becomes
known to such party, that causes or will cause any covenant or agreement of the
Holders or the Company under this Agreement to be breached or any of the
conditions to the Offer not to be satisfied or that renders or will render
untrue any representation or warranty of the Holders or the Company contained in
this Agreement. Each of the Holders and the Company also will notify the other
in writing of, and will use all commercially reasonable efforts to cure, before
the Closing, any violation or breach, as soon as practicable after it becomes
known to such party, of any representation, warranty, covenant or agreement made
by the Holders or the Company. No notice given pursuant to this Section shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein.

                  5.10 Fulfillment of Conditions. Subject to the terms and
conditions of this Agreement, each of the Holders and the Company will take or
cause to be taken all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each condition to the other's
obligations contained in this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and neither the Holders nor the
Company will take or fail to take any action that could be reasonably expected
to result in the nonfulfillment of any such condition.

                                       14



                  5.11 Registration Rights Agreement. Immediately prior to
consummation of the Offer, the parties hereto will execute a registration rights
agreement in the form of Annex F hereto.

                  5.12 Employment Agreements. (a) Each Holder acknowledges and
agrees that to the best of its knowledge there is no reason why (i) the
Employment Agreements are not valid and binding obligations of the Company and
Viskase Corporation and (ii) upon execution in accordance with the terms of this
Agreement, the Indemnification Agreements (as defined in Section 5.12(b) below)
will not be valid and binding obligations of the Company.

                  (b) For as long as this Agreement remains in effect, each
Holder covenants and agrees that (y) it will, and after the Consummation Date,
and for as long as such Holder or its affiliates owns any voting securities of
the Company it will, take no action, and will not support the action of any of
their affiliates or any other third party to or to cause the Company to breach,
challenge, reject or question the validity or binding status of, including
without limitation in any bankruptcy proceeding, (i) the Amended and Restated
Employment Agreement dated March 27, 1996, as amended, between F. Edward
Gustafson and the Company, (ii) the Employment Agreement dated August 30, 2001,
as amended, and the Letter of Credit Agreement dated April 9, 2002 among F.
Edward Gustafson, the Company and Viskase Corporation, (iii) the Employment
Agreement dated November 29, 2001 among Gordon S. Donovan, the Company and
Viskase Corporation, (iv) the Employment Agreement dated November 29, 2001 among
Kimberly K. Duttlinger, the Company and Viskase Corporation (collectively, the
"Employment Agreements") and (v) the indemnification agreements, each dated the
date hereof, by and between the Company and each director and officer listed in
Schedule 5.12 attached hereto (collectively, the "Indemnification Agreements"),
or to have the Employment Agreements or the Indemnification Agreements declared
invalid, and (z) it will support and not oppose the assumption by the Company of
the Employment Agreements and the Indemnification Agreements in a plan of
reorganization.

                                   ARTICLE VI

                            COVENANTS OF THE HOLDERS

                  6.01 Forbearance. For as long as this Agreement remains in
effect, each Holder agrees that it shall (i) not commence, including the
issuance or employment of process, judicial, administrative or other action or
proceeding against the Company, or take any other act to collect, assess or
recover any claim with respect to the Old Notes, (ii) not join or participate
with any person in taking any action specified in clause (i) above and (iii) to
the extent provided for in the indenture, veto any instructions to take any of
the actions specified in clause (i) above given by any holder of Old Notes to
the trustee under the indenture pursuant to which the Old Notes were issued.

                                       15



                                   ARTICLE VII

                        TERMINATION, AMENDMENT AND WAIVER

                  7.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:

                  (a) By mutual written agreement of the parties hereto;

                  (b) By either the Company or the Holders upon notification to
the non-terminating party by the terminating party:

                        (i)   at any time after the Final Expiration Date if
            neither the exchange of the Old Notes pursuant to the Offer shall
            have occurred nor sufficient acceptances approving the Plan of
            Reorganization shall have been received on or prior to such date and
            such failure is not caused by a breach of this Agreement by the
            terminating party;

                        (ii)  at any time following January 31, 2003 if both (x)
            the Offer is not consummated and (y) the Plan of Reorganization, if
            filed by the Company, has not been confirmed by such date;

                        (iii) if any court of competent jurisdiction or other
            competent Governmental or Regulatory Authority shall have issued an
            order making illegal or otherwise restricting, preventing or
            prohibiting the Offer and such order shall have become final and
            non-appealable; or

                        (iv)  if any plan of reorganization, other than the Plan
            of Reorganization, is approved by any bankruptcy court; provided
            that the terminating party is not the person that submitted such
            plan and does not support or endorse any such plan.

                  (c) By the Holders upon notification to the Company:

                        (i)   if the Company fails to commence the Offer within
            15 business days of the date hereof and such failure is not as a
            result of any breach of this Agreement by any Holder;

                        (ii)  if the Company fails to use commercially
            reasonable efforts to complete the Offer in accordance with its
            terms and (x) such failure is not as a result of any breach of this
            Agreement by any Holder and (y) the Company does not cure such
            failure within 10 business days of the date of notice to the
            Company;

                        (iii) at any time after the third business day following
            the Final Expiration Date if the Company has not filed the Plan of
            Reorganization pursuant to Section 4.04 and the Company fails to
            file such Plan of Reorganization within three business days of the
            date of notice to the Company;

                                       16



                        (iv)  in the event the Plan of Reorganization is filed
            with a bankruptcy court, if the Company files or supports another
            plan of reorganization or fails to use commercially reasonable
            efforts to have the Plan of Reorganization confirmed by the
            bankruptcy court in accordance with the terms of such plan and (x)
            such failure is not as a result of any breach of this Agreement by
            any Holder and (y) the Company does not cure such failure within 10
            business days of the date of notice to the Company;

                        (v)   prior to the consummation of the Offer or the
            confirmation of the Plan of Reorganization, as the case may be, if
            there has been a breach of the representations, warranties,
            covenants or agreements on the part of the Company set forth in this
            Agreement, which breach (x) is material in the context of the Offer
            and other transactions contemplated hereby and (y) is not curable
            or, if curable and the Company proceeds in good faith to cure the
            breach, has not been cured within 30 days of the date of notice of
            such breach to the Company;

                        (vi)  prior to the consummation of the Offer, if the
            outstanding Company Rights are triggered other than by action of any
            Holder or affiliate and additional shares of Company Common Stock
            are issued or become issuable upon the exercise of the Rights;
            provided, however, that such termination shall not be effective for
            the 10 business days following notice of termination pursuant to
            this clause (vi) and that during such 10 business day period the
            Company and the Holders shall use their good faith efforts to amend
            and modify the terms hereof to preserve the economic result of the
            original transaction contemplated hereunder in light of the Company
            Rights being exercisable, such amendment to be mutually agreeable to
            the Holders and the Company; or

                        (vii) prior to the consummation of the Offer or the
            confirmation of the Plan of Reorganization, as the case may be, if
            F. Edward Gustafson shall have resigned from the Company at the
            request of the Board of Directors (other than for Cause as defined
            in his employment agreement with the Company) without the consent of
            the Holders, given as provided in Section 7.03.

                  (d) By the Company upon notification to the Holders:

                        (i)   if any Holder (x) prior to the Final Expiration
            Date fails to tender its Old Notes and vote in favor of the approval
            or adoption of the Plan of Reorganization in accordance with Section
            1.02 or (y) files an involuntary petition for reorganization or
            liquidation of the Company or similar petition under Bankruptcy Law
            or votes in favor of, or supports, any such filing or any other plan
            of reorganization other than the Plan of Reorganization;

                        (ii)  if the Board of Directors determines in good
            faith, based upon the advice of outside counsel, that termination of
            the Agreement is required for the Board of Directors to comply with
            its fiduciary duties imposed by law by reason of a bona fide
            Superior Proposal and notifies the Holders promptly of its intention
            to terminate this Agreement or enter into a definitive agreement
            with respect to such Superior Proposal;

                                       17



            provided, however, that in no event shall such notice be given less
            than 48 hours prior to the public announcement of the Company's
            termination of this Agreement and the Company shall, within such
            48-hour period, permit the Holders to submit a new proposal, which
            the Board of Directors shall consider in good faith. For purposes of
            this paragraph, "Superior Proposal" means any Alternative Proposal
            as to which (A) the Board of Directors with the advice of outside
            counsel determines in good faith that such action is required for
            the Board of Directors to comply with its fiduciary duties imposed
            by law, (B) the Board of Directors concludes in good faith that such
            Alternative Proposal is more favorable to the Company than the
            Offer, and (C) prior to entering into discussions or negotiations
            with such person or group, the Company provides written notice to
            the Holders to the effect that it is entering into discussions or
            negotiations with such person or group;

                        (iii) prior to the consummation of the Offer or the
            confirmation of the Plan of Reorganization, as the case may be,
            there has been a breach of the representations, warranties or
            agreements of a Holder set forth in this Agreement, which breach (x)
            is material in the context of the Offer and other transactions
            contemplated hereby and (y) is not curable, or if curable and the
            Holder proceeds in good faith to cure the breach, has not been cured
            within 30 day of the date of notice of such breach to the breaching
            Holder; or

                        (iv)  if any Holder fails to comply with its obligations
            under Section 1.02(b); provided, however, such termination shall be
            effective only if the Company shall have delivered to the Holders a
            written notice of breach describing the breach and stating it is a
            notice of breach and the breaching Holder fails to cure such breach
            within 10 business days of the date such notice is received by the
            Company.

                  7.02 Effect of Termination. If this Agreement is validly
terminated by either the Company or Holders pursuant to Section 7.01, this
Agreement will forthwith become null and void and there will be no liability or
obligation on the part of either the Company or the Holders (or any of their
respective Representatives or affiliates), except that the provisions of
Sections 5.06 and 5.07 and this Section 7.02 will continue to apply following
any such termination.

                  7.03 Amendment and Waiver; Holder Requests and Consents. (a)
This Agreement may be amended, supplemented or modified at any time in a written
agreement signed by the Company and each of the Holders. In addition, until the
completion of the Offer, or confirmation of the Plan of Reorganization, as the
case may be, this Agreement (including but not limited to the Offer and Plan of
Reorganization referred to herein) may be amended, supplemented or modified, and
any of the covenants, agreements, or conditions contained herein may be waived,
by written agreement signed by the Company and by both (i) Holders representing
a majority of the aggregate principal amount of the Old Notes held by the
Holders, measured as of the date of this Agreement and (ii) at least two of the
Holders; except that no amendment, supplement, modification or waiver that
amends or changes the terms of the New Notes, Preferred Stock or Common Stock,
increases the obligations or liabilities of any of the Holders, or otherwise
amends or changes the terms and conditions of the Offer in any manner adverse to
any of the Holders may be effected without the unanimous written consent of all
of

                                       18



the Holders. No amendment, supplement, modification or waiver by any party of
any term, provision, agreement or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as an amendment, supplement,
modification or waiver of the same or any other term, provision, agreement or
condition of this Agreement on any future occasion.

                  (b) In addition, any requests or consents by the Holders as
contemplated in this Agreement shall be effective upon delivery to the Company
of a notice thereof signed by both (i) Holders representing a majority of the
aggregate principal amount of the Old Notes held by the Holders, measured as of
the date of this Agreement and (ii) at least two of the Holders.

                  7.04 Notice of Termination by Holders. Termination of this
Agreement by the Holders in accordance with provisions of Section 7.01 hereof
shall be effective upon delivery to the Company of a notice thereof signed by
both (i) Holders representing a majority of the aggregate principal amount of
the Old Notes held by the Holders, measured as of the date of this Agreement and
(ii) at least two of the Holders.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

                  8.01 Non-Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the consummation of the Offer, except for the
agreements contained in Sections 1.03(c), 4.03, 5.01, 5.03, 5.04, 5.06, 5.07,
5.08 and 5.12 and this Article VIII, which shall survive the Consummation Date.

                  8.02 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:

                  If to the Holders, to:

                  High River Limited Partnership
                  c/o Icahn Associates Corp.
                  767 Fifth Avenue
                  New York, New York 10153
                  Facsimile No.: (212) 750-5815
                  Attn.:  Vincent J. Intrieri

                                       19



                  Debt Strategies Fund Inc.
                  c/o Merrill Lynch Investment Managers, L.P.
                  800 Scudders Mill Road
                  Plainsboro, New Jersey 08536
                  Facsimile No.: (609) 282-2756
                  Attn.:  Michael A. Brown

                  Northeast Investors Trust
                  c/o Northeast Investors
                  50 Congress Street, Suite 1000
                  Boston, Massachusetts 02109
                  Facsimile No.: (617) 523-5412
                  Attn.:  Bruce Monrad

                  with copies to:

                  Brown Rudnick Berlack Israels LLP
                  120 West 45th Street
                  New York, New York 10036
                  Facsimile No.: (212) 704-0196
                  Attn.:  Steven E. Greenbaum, Esq.

                  If to the Company, to:

                  Viskase Companies, Inc.
                  625 Willowbrook Centre Parkway
                  Willowbrook, IL  60527
                  Facsimile No.:  (630) 455-2152
                  Attn:  President

                  with a copy to:

                  Milbank, Tweed, Hadley & McCloy LLP
                  1 Chase Manhattan Plaza
                  New York, NY  10005-1413
                  Facsimile No.:  (212) 530-5219
                  Attn:  Allan Brilliant, Esq.

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time

                                       20



may change its address, facsimile number or other information for the purpose of
notices to that party by giving notice specifying such change to the other
parties hereto.

                  8.03 Entire Agreement; Incorporation of Exhibits. (a) Except
with respect to the Confidentiality Agreement between the parties hereto (the
"Confidentiality Agreement"), which the parties hereto expressly acknowledge
shall continue in full force and effect following execution of this Agreement,
this Agreement supersedes all prior discussions and agreements among the parties
hereto with respect to the subject matter hereof and contains the sole and
entire agreement among the parties hereto with respect to the subject matter
hereof.

                  (b) Any Exhibit attached to this Agreement and referred to
herein is hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.

                  8.04 Public Announcements. Except as otherwise required by law
or the rules of any applicable securities exchange or national market system, so
long as this Agreement is in effect, the parties will not, and will not permit
any of their respective Representatives to, issue or cause the publication of
any press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
parties, which consent shall not be unreasonably withheld. The parties will
cooperate with each other in the development and distribution of all press
releases and other public announcements with respect to this Agreement and the
transactions contemplated hereby, and will furnish the others with drafts of any
such releases and announcements as far in advance as practicable.

                  8.05 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Sections 5.04 and 5.12 (which are intended to be for the benefit of the persons
entitled to therein, and may be enforced by any of such persons), it is not the
intention of the parties to confer third-party beneficiary rights upon any other
person.

                  8.06 No Assignment; Binding Effect. Except as provided in
Section 5.03, neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior written consent
of the other parties hereto and any attempt to do so will be void. Subject to
the preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective successors and
assigns.

                  8.07 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit
the provisions hereof.

                  8.08 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law or
order, and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (i) such provision will
be fully severable, (ii) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (iii) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

                                       21



                  8.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.

                  8.10 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of competent
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.

                  8.11 Certain Definitions. As used in this Agreement:

                  (a) the term "affiliate," as applied to any person, shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise;

                  (b) the term "Bankruptcy Law" means Title 11 of the United
States Code or any similar federal or state law for the relief of debtors.

                  (c) a person will be deemed to "beneficially" own securities
if such person would be the beneficial owner of such securities under Rule 13d-3
under the Exchange Act, including securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time);

                  (d) the term "business day" means a day other than Saturday,
Sunday or any day on which banks located in the State of Illinois are authorized
or obligated to close;

                  (e) the term "Company SEC Reports" means each form, report,
schedule, registration statement, definitive proxy statement and other document
(together with all amendments thereof and supplements thereto) required to be
filed by the Company or any of its Subsidiaries with the SEC under Sections
13(a), 14(a), 14(c) and 15(d) of the Exchange Act (as such documents have since
the time of their filing been amended or supplemented).

                  (f) [intentionally omitted.]

                  (g) the term "Disclosure Schedule" shall mean the record
delivered to the Holders by the Company herewith and dated as of the date
hereof, containing all lists, descriptions, exceptions and other information and
materials as are required to be included therein by the Company pursuant to this
Agreement.

                                       22



                  (h) the term "knowledge" or any similar formulation of
"knowledge" shall mean, with respect to the Company, the knowledge of the
Company's executive officers;

                  (i) the term "Lien" means a lien, claim, mortgage, charge,
encumbrance, security interest, pledge or equity of any kind.

                  (j) any reference to any event, change or effect being
"material" or "materially adverse" or having a "material adverse effect" on or
with respect to an entity (or group of entities taken as a whole) means such
event, change or effect is material or materially adverse, as the case may be,
to the business, condition or results of operations of such entity (or of such
group entities taken as a whole);

                  (k) the term "person" shall include individuals, corporations,
partnerships, limited liability companies, trusts, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act);

                  (l) the term "Public Offering" means an offering by the
Company or its successor of securities registered pursuant to a registration
statement filed with the SEC.

                  (m) the "Representatives" of any entity means such entity's
directors, officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives;

                  (n) the term "Significant Subsidiaries" means, with respect to
any party, the Subsidiaries of such party which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the Securities Act;
and

                  (o) the term "Subsidiary" means, with respect to any party,
any corporation or other organization, whether incorporated or unincorporated,
of which more than 50% of either the equity interests in, or the voting control
of, such corporation or other organization is, directly or indirectly through
Subsidiaries or otherwise, beneficially owned by such party.

                  8.12 [intentionally omitted.]

                  8.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.

                                       23



                  IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized as of the date
first above written.

                                          HIGH RIVER LIMITED PARTNERSHIP

                                          By: _________________________,
                                                as general partner

                                                    By: ________________________
                                                         Name:
                                                         Title:

                                          DEBT STRATEGIES FUND, INC.

                                          By: __________________________
                                               Name:
                                               Title:

                                          NORTHEAST INVESTORS TRUST

                                          By: __________________________
                                               Name:
                                               Title:

                                          VISKASE COMPANIES, INC.

                                          By: __________________________
                                               Name:
                                               Title:

                                       24



                            Disclosure Schedule 2.02

                       Outstanding Options of the Company

- -     871,930 employee and non-employee stock options.

- -     775, 644 shares of Company Common Stock reserved for issuance under the
      Parallel Non-Qualified Savings Plan.



                            Disclosure Schedule 2.04

                  Governmental / Regulatory Authority Consents

- -     None.



                            Disclosure Schedule 5.12

                           Indemnification Agreements

1.    F. Edward Gustafson

2.    Robert N. Dangremond

3.    Gregory R. Page

4.    Gordon S. Donovan

5.    Kimberly K. Duttlinger

6.    Stephen E. Foli

7.    Frank R. Fryer

8.    M. E. (Lon) McAllister

9.    Cees M. Meijer

10.   Maury J. Ryan

11.   Lisa A. Constance

12.   Jean-Luc Tillon



                                  Schedule 3.07

                           Confidentiality Agreements

1.    High River Limited Partnership - None

2.    Debt Strategies Fund, Inc. - None

3.    Northeast Investors Trust - None

EX-10.16

                                                                   EXHIBIT 10.16

                               SECURITY AGREEMENT

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

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

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

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

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

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

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



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

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

1. DEFINITIONS AND CONSTRUCTION.

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

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

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

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

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

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

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

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

            (a) all of its Accounts,

            (b) all of its Books,

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

                                       2


            (d) all of its Deposit Accounts,

            (e) all of its Equipment,

            (f) all of its General Intangibles,

            (g) all of its Inventory,

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

            (i) all of its Negotiable Collateral,

            (j) all of its Supporting Obligations,

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

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

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

                                       3


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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       4


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

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

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

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

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

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

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

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

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

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

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

                                       5


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

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

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

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

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

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

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

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

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

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

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

                                       6


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

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

            "United States" means the United States of America.

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

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

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

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

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

2. CREATION OF SECURITY INTEREST.

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

                                       7


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

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

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

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

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

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

                                       8


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

                                       9


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

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

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

                                       10


3. REPRESENTATIONS AND WARRANTIES.

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

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

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

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

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

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

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

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

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

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

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

                                       11


      3.7 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

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

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

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

      3.8 DUE AUTHORIZATION; NO CONFLICT.

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

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

                                       12


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

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

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

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

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

4. AFFIRMATIVE COVENANTS.

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

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

                                       13


      4.2 INSURANCE.

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

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

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

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

                                       14


5. NEGATIVE COVENANTS.

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

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

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

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

6. COLLATERAL AGENT'S RIGHTS AND REMEDIES.

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

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

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

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

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

                                       15


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

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

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

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

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

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

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

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

                                       16


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

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

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

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

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

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

7. TAXES AND EXPENSES.

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

                                       17


8. WAIVERS; INDEMNIFICATION.

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

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

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

                                       18


9. NOTICES.

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

10. CHOICE OF LAW; JURY TRIAL WAIVER.

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

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

11. AMENDMENTS; WAIVERS.

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

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

                                       19


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

12. GENERAL PROVISIONS.

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

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

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

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

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

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

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

                                       20


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

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

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

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

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

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

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

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

                                       21


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

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

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

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

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

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

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

      12.14 INTERCREDITOR AGREEMENT.

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

                                       22


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

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

                          [Signature pages to follow.]

                                       23


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

                                              VISKASE COMPANIES, INC.,
                                                  a Delaware corporation

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

                                              LASALLE BANK NATIONAL ASSOCIATION,
                                                  as Collateral Agent

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

                                       24



                                  SCHEDULE 3.4

                       LOCATION OF INVENTORY AND EQUIPMENT

625 Willowbrook Centre Parkway
Willowbrook, Illinois 60527 (Du Page County)

280 Shore Drive
Burr Ridge, Illinois 60521 (Du Page County)

106 Blair Bend Drive
Loudon, Tennessee 37774 (Loudon County)

222 East State Highway 198
Osceola, Arkansas 72370-9704 (Mississippi County)

102 East Bailie Street
Kentland, Indiana 47951 (Newton County)

1100 Westlake Parkway
       Atlanta, GA 30336 (Fulton)

176 Dingens Street
       Buffalo, NY 14206 (Erie)

3146 South Chestnut
       Fresno, CA 93725 (Fresno)

3507 West U.S. Highway 24
       Remington, IN 47977 (Jasper)

1502 Quebec Avenue
Saskatoon, Saskatchewan S7K 3P4
Canada

150 Colborne Street East
Lindsay, Ontario K9V 6K4
Canada

Inland Star Distribution
3146 South Chestnut
Fresno, CA 93745
(Public Warehouse)

Smith Transport
3507 W. U.S. Highway 24
Remington, IN 47977
(Public Warehouse)

Warehouse Basics
1100 Westlake Parkway
Atlanta, GA 30336
(Public Warehouse)

Burnham (Canada) Ltd.
1502 Quebec Avenue
Saskatoon, SK S7K1V7
(Public Warehouse)



Niagara Tying Service
176 Dingens St
Buffalo, NY 14206
(Converter)

Casing Tying Service, Inc.
39 Atlantic Street
Garfield, NJ 07026
(Converter)

Hutchinson Tie Service, Inc.
6514 S. Lavergne Street
Bedford Park, IL 60638
(Converter)

Scotnet
801 William Lane
Reading, PA 19604
(Converter)

Murray's Warehousing
1011 Floral Ln
Davenport, IA 52808
(Customer's Public Warehouse)

Love Box Co.
2500 N. Stadium Blvd, Bldg 4
Columbia, MO 65202
(Customer's Public Warehouse)

Vienna Sausage Mfg. Co.
2501 N. Damen Ave.
Chicago, IL 60647
(Customer)

Cumberland Gap Provision Co.
South 23rd Street
Middlesboro, KY 40965
(Customer)

Dakota Pork Industries
915 East Havens Street
Mitchell, SD 57301
(Customer)

Kunzler & Co. Inc.
648-652 Manor Street
Lancaster, PA 17604
(Customer)

Gwaltney of Smithfield LTD
2175 Elmhurst Lane
Portsmouth, VA 23701
(Customer)




Bar-S-Foods Co.
211 South Locust Street
Clinton, OK 73601
(Customer)

Best Kosher Foods Corp.
3944 S. Morgan Street
Chicago, IL 60609
(Customer)

John Morrell & Company
1400 N. Weber Avenue
Sioux Falls, SD 57117
(Customer)

The Dial Corporation
Route US 61 South
Fort Madison, IA 52627
(Customer)

Hillshire Farms & Kahn's Co.
3241 Spring Grove
Cincinnati, OH 45225
(Customer)

IBP Foods Inc.
2000 Oak Industrial Drive NE
Grand Rapids, MI 49505
(Customer)

St. Joseph Foods
5807 Mitchell Avenue
Saint Joseph, MO 64507
(Customer)

Berks Packing Company, Inc.
319 Bingaman Street
Reading, PA 19610
(Customer)

Conagra Broiler Company
1350 Bloomingdale Road
Queenstown, MD 21658
(Customer)



                                 SCHEDULE 3.6(a)

                             STATES OF ORGANIZATION



     NAME OF DEBTOR               STATE OF ORGANIZATION
- -----------------------           ---------------------
                               
Viskase Companies, Inc.           Delaware




                                 SCHEDULE 3.6(b)

                             CHIEF EXECUTIVE OFFICE



    NAME OF DEBTOR                           CHIEF EXECUTIVE OFFICE
- ----------------------            --------------------------------------------
                               
Viskase Companies, Inc.           625 Willowbrook Centre Parkway
                                  Willowbrook, Illinois 60527 (Du Page County)




                                 SCHEDULE 3.6(c)

                      ORGANIZATIONAL IDENTIFICATION NUMBERS



     NAME OF DEBTOR                      ORGANIZATIONAL I.D. NUMBER
- -----------------------                  --------------------------
                                      
Viskase Companies, Inc.                  0757401




                                 SCHEDULE 3.6(d)

                             COMMERCIAL TORT CLAIMS

None.



                                 SCHEDULE 3.7(b)

                     CAPITALIZATION OF DEBTOR'S SUBSIDIARIES



                                                                                                        NUMBER &
                                                                                                     PERCENTAGE OF
                                                                       NUMBER OF                      OUTSTANDING
             NAME OF                                                     SHARES                      SHARES OWNED BY
             ENTITY                 JURISDICTION                       AUTHORIZED                      BORROWER
- ---------------------------------  --------------                 --------------------           ------------------------
                                                                                        
Viskase Films, Inc.
[Dormant]                          Delaware                       100                            100

                                                                                                 (100%)

WSC Corp. d/b/a Wisconsin Steel
Company                            Delaware                       1,000                          1,000

                                                                                                 (100%)

Viskase Europe Limited             United Kingdom                 30,000,000                     30,000,000
                                                                                                 (100%)

Viskase Brasil Embalagens Ltda.    Brazil                         33,956,830                     27,335,248
                                                                                                 (81%)

Viskase Canada Inc.                Canada                         Common: Unlimited              20 Common
                                                                  Preferred: Unlimited           (100%)
                                                                                                 480,000 Preferred (100%)

Viskase S.A.S.                     France                         429,543                        429,543
(owned by Viskase Europe Limited)                                                                (100%)

Viskase GMBH                       Germany                        1                              1
(owned by Viskase S.A.S.)                                                                        (100%)




                                                                                        
Viskase SpA                        Italy                          45,000                         45,000
(owned by Viskase S.A.S.)                                                                        (100%)

Viskase Polska SP.Z0.0             Poland                         300                            300
(owned by Viskase S.A.S.)                                                                        (100%)

Viskase Holdings Limited           United Kingdom                 1,900,100                      20
(owned by Viskase S.A.S.)                                                                        (100%)

Viskase International Limited      United Kingdom                 6,895,895                      6,895,895
(Dormant to be dissolved by 2005)                                                                (100%)
(owned by Viskase Holdings
Limited)

Viskase Limited                    United Kingdom                 16,895,620                     16,895,620
(owned by Viskase Holdings                                                                       (100%)
Limited)

Viskase (UK) Limited               United Kingdom                 6,308,114                      6,308,114
(Dormant to be dissolved by 2005)                                                                (100%)
(owned by Viskase (UK) Limited)





                                  SCHEDULE 3.9

                              INTELLECTUAL PROPERTY

Patents:

See attached list.

Trademarks and Servicemarks:

See attached list.

Copyrights:



                                               If Foreign
                                              Registration,
Description       Application No.                Country       Issue Dates
- -----------       ---------------             -------------    -----------
                                                      
NONE
- -----------       --------------------------------------------------------
- -----------       --------------------------------------------------------
- -----------       --------------------------------------------------------
- -----------       --------------------------------------------------------


License Agreement:

Nucel(R) Agreement, a license to use certain casing manufacturing technology
from Courtaulds Fibres (Holdings) Limited. Technology not currently being used
by Viskase.



                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
010831      8   US    01/13/1989  09/19/1989       298277     4867204  Granted    IMPROVED TUBULAR CELLULOSIC FOOD
012325          CA    02/18/1983  04/30/1985     421966-0     1188173  Granted    CONTROLLABLY MOISTURIZED MOLD RE
012540          CA    09/02/1983  01/13/1987     436014-1     1216459  Granted    PACKAGE ARTICLE FOR AUTOMATICALL
012541          CA    09/02/1983  11/12/1986     436015-0     1213775  Granted    METHOD AND APPARATUS FOR AUTOMA
012542          CA    09/02/1983  06/03/1986     436013-3     1205321  Granted    ARTICLE FOR USE IN AUTOMATICALLY A
012574      4   CA    10/01/1982  10/29/1985     41264303     1195872  Granted    TAR DEPLETED LIQUID SMOKE AND TREA
012678      1   US    02/13/1985  07/07/1987       701233        H304  Granted    PRINTING INK FOR USE ON FLEXIBLE FIL
012834          CA    08/18/1983  06/10/1986     434846-0     1205669  Granted    COMPOSITE SHIRRED CASING ARTICLE A
012896      1   CA    10/01/1982  05/21/1985     412676-9     1187324  Granted    TAR-DEPLETED LIQUID SMOKE TREATME
012896'     2   US    11/30/1983  09/02/1986       556443     4609559  Granted    TAR-DEPLETED LIQUID SMOKE TREATME
012982      1   CA    09/27/1984  06/21/1988     464185-0     1238230  Granted    FOOD CASING AND METHOD OF PREPARI
012982      1   US    01/26/1984  06/24/1986       573367     4596727  Granted    FOOD CASING AND METHOD OF PREPARI
012984      1   CA   10/01;/1982  05/07/1985     412653-0     1186555  Granted    TAR-DEPLETED LIQUID SMOKE TREATME
012986          CA    04/23/1982  04/23/1985     401525-8     1185838  Granted    LIQUID COATING METHOD AND APPARAT
013154      A   CA    11/21/1985  05/31/1988     495950-7     1237324  Granted    STUFFING METHOD AND APPARATUS.
013154          CA    04/23/1982  02/11/1986     401524-0     1200420  Granted    STUFFING METHOD AND APPARATUS.
013155      2   CA    04/23/1982  10/22/1985     401523-1     1195544  Granted    CORED HIGH DENSITY SHIRRED CASINGS
013155      2   DE    04/29/1982  07/29/1993   P3216011.9   3216011.9  Granted    CORED HIGH DENSITY SHIRRED CASINGS
013155      2   MX    04/30/1982  01/09/1990       192526      160224  Granted    CORED HIGH DENSITY SHIRRED CASINGS
013155      4   US    08/02/1985  08/13/1991       761675     5038832  Granted    CORED HIGH DENSITY SHIRRED CASINGS
013217      2   US    07/13/1989  08/28/1990       380709     4951715  Granted    TENSION SLEEVE SUPPORTED CASING A
013217          CA    05/21/1982  03/05/1985     403499-6     1183396  Granted    TENSION SLEEVE SUPPORTED CASING A
013218          MX    07/16/1982  12/12/1989       193630      160148  Granted    HIGH COHERENCY SHIRRED CASINGS.
013218          US    07/17/1981  03/17/1987       283244     4649961  Granted    HIGH COHERENCY SHIRRED CASINGS.
013218          CA    06/30/1982  06/10/1986     406366-0     1205670  Granted    HIGH COHERENCY SHIRRED CASINGS.
013218      1   US    09/05/1986  07/12/1988       903919     4756057  Granted    HIGH COHERENCY SHIRRED CASINGS.
013308      1   US    09/08/1982  02/25/1986       415862     4572098  Granted    LIQUID SMOKE IMPREGNATION OF FIBRO
013309          IT    09/10/1982  12/31/1986    23205A/82     1152388  Granted    LIQUID SMOKE-IMPREGNATED FIBROUS
013309          BE    09/10/1982  03/10/1983       208994      894373  Granted    LIQUID SMOKE-IMPREGNATED FIBROUS
013309          CA    08/13/1982  09/04/1984     409414-0     1173695  Granted    LIQUID SMOKE-IMPREGNATED FIBROUS
013309          FI    09/08/1982  10/27/1986      82-3104       70776  Granted    LIQUID SMOKE-IMPREGNATED FIBROUS
013309          FR    09/10/1982  02/17/1986     82-15366    82-15366  Granted    LIQUID SMOKE-IMPREGNATED FIBROUS




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
013521          CA    02/09/1984  11/12/1986     447123-7     1213770  Granted    TAR-DEPLETED, CONCENTRATED, LIQUID
013646          B3    02/13/1984  09/17/1986   84101439.2     0118784  Granted    INHIBITION OF DISCOLORATION ON CELL
013646          CA    01/25/1984  10/14/1986     445988-1     1212570  Granted    INHIBITION OF DISCOLORATION ON CELL
013646          FI    02/13/1984  03/10/1988      84-0563       74593  Granted    INHIBITION OF DISCOLORATION ON CELL
013646          FR    02/13/1984  09/17/1986   84101439.2     0118784  Granted    INHIBITION OF DISCOLORATION ON CELL
013646          DE    02/13/1984  09/17/1986   84101439.2  P3460726.9  Granted    INHIBITION OF DISCOLORATION ON CELL
013646          GB    02/13/1984  09/17/1986   84101439.2     0118784  Granted    INHIBITION OF DISCOLORATION ON CELL
013687          SE    12/30/1986  09/02/1987   03110536.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013687          MX    10/21/1983  01/27/1989       199173      158374  Granted    METHOD AND APPARATUS FOR COMPAC
013687      1   MX    07/30/1985  08/27/1986       206149      182493  Granted    METHOD AND APPARATUS FOR COMPAC
013687          NO    10/21/1983   12/071988      83-1861      159132  Granted    METHOD AND APPARATUS FOR COMPAC
013687          ES    10/21/1983  06/25/1984       526637      526637  Granted    METHOD AND APPARATUS FOR COMPAC
013687          NL    10/21/1983  09/02/1987   83110536.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013687      B   ES    06/01/1984  02/13/1986       279639      279639  Granted    METHOD AND APPARATUS FOR COMPAC
013687          OK    10/21/1983  05/11/1992      4851/83      162568  Granted    METHOD AND APPARATUS FOR COMPAC
013687          CH    10/21/1983  09/02/1987   83110536.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013687          GB    10/21/1983  09/02/1987   83110538.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013687          US    10/22/1982  04/01/1986       436057     4578842  Granted    METHOD AND APPARATUS FOR COMPAC
013387      A   ES    06/01/1984  12/14/1984       533048      533048  Granted    METHOD AND APPARATUS FOR COMPAC
013687          DE    10/21/1983  09/02/1987   83110538.6  P3373259.0  Granted    METHOD AND APPARATUS FOR COMPAC
013687          FI    10/20/1983  08/08/1988      83-3840       75723  Granted    METHOD AND APPARATUS FOR COMPAC
013687      A   GA    04/20/1988  10/06/1992       564579     1308296  Granted    METHOD AND APPARATUS FOR COMPAC
013687      1   ES    07/03/1985  04/15/1991       533048      533048  Granted    METHOD AND APPARATUS FOR COMPAC
013687          GA    09/30/1983  08/23/1988     438092-4     1240878  Granted    METHOD AND APPARATUS FOR COMPAC
013687          BE    10/21/1983  09/02/1987   83110536.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013687      1   AU    10/11/1985  12/09/1987     48580/85      563259  Granted    METHOD AND APPARATUS FOR COMPAC
013687      1   US    02/13/1985  09/01/1987       701309     4690173  Granted    METHOD AND APPARATUS FOR COMPAC
013687          FR    10/21/1983  09/02/1987   83110536.6     0107190  Granted    METHOD AND APPARATUS FOR COMPAC
013774          ES    03/30/1984  09/30/1988       291992      291992  Granted    SHIRRED CASING STICK ARTICLE WITH E
013774      B   ES    07/01/1985  11/14/1986       544762      544762  Granted    SHIRRED CASING STICK ARTICLE WITH E
013774          BE    03/30/1984  09/07/1988   84103560.3     0123933  Granted    SHIRRED CASING STICK ARTICLE WITH E
013774      A   ES    07/01/1985  11/14/1986       544761      544761  Granted    SHIRRED CASING STICK ARTICLE WITH E




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
013775          CA    03/30/1984  02/16/1988     451038-1     1232788  Granted    ARTICLE, METHOD FOR CONTROLLING C
013786          CA    11/23/1984  09/20/1986     468577-8     1242060  Granted    TUBULAR CORE FOR SHIRRED CASING A
013836          CA    06/18/1985  01/17/1989     484358-4     1248813  Granted    COMPOSITE SHIRRED CASING ARTICLE
013836      1   US    04/04/1984  06/10/1986       595601     4594251  Granted    PREPARATION OF TAR-DEPLETED LIQUID
013836      1   CA    04/13/1984  10/06/1987     451996-1     1227690  Granted    PREPARATION OF TAR-DEPLETED LIQUID
013924      A   CA    08/18/1988  09/26/1989       575299     1260757  Granted    STUFFING METHOD AND APPARATUS.
013924          CA    05/18/1984  11/15/1988       454756     1244709  Granted    STUFFING METHOD AND APPARATUS.
013924      2   US    07/22/1956  03/17/1987       885753    46496602  Granted    STUFFING METHOD AND APPARATUS
014328          CA    02/08/1985  09/08/1987     473968-0     1226473  Granted    METHOD AND APPARTUS FOR CONTRO
014571          CA    06/18/1985  09/26/1989     484361-4     1261196  Granted    CELLULOSIC FOOD CASINGS.
014848          CA    09/08/1987  05/25/1993       546302     1318175  Granted    FLAT STOCK FIBROUS CELLULOSIC FOO
014995          CA    04/09/1986  05/23/1989       506169     1254439  Granted    DISPOSABLE TENSION SLEEVE FOR A ST
015221          CH    08/03/1989  10/05/1994   89114385.1     0354482  Granted    BURNISHED END SHIRRED CASING STICK
015221          US    08/08/1988  10/17/1989       229661     4873748  Granted    BURNISHED END SHIRRED CASING STICK
015221          FR    08/03/1989  10/05/1994   89114385.1     0354483  Granted    BURNISHED END SHIRRED CASING STICK
015221          BE    08/03/1989  10/05/1994   89114385.1     0354483  Granted    BURNISHED END SHIRRED CASING STICK
015221          GB    08/03/1989  10/05/1984   89114385.1     0354482  Granted    BURNISHED END SHIRRED CASING STICK
015221          CA    08/04/1989  12/27/1994       607604     1333673  Granted    BURNISHED END SHIRRED CASING STICK
015221          DE    08/03/1989  10/05/1994   89114385.1  P68918654.  Granted    BURNISHED END SHIRRED CASING STICK
015221          JP    08/02/1989  08/02/1986    199521/89     2087593  Granted    BURNISHED END SHIRRED CASING STICK
015221          AT    08/03/1989  10/05/1994   89114385.1     0354483  Granted    BURNISHED END SHIRRED CASING STICK
015347          CA    03/19/1987  01/28/1992       532525     1294818  Granted    END CLOSURE FOR SHIRRED CASING STI
015347      1   US    06/16/1987  07/26/1988       062750     4759100  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          GB    03/20/1987  09/19/1990   87104129.9     0239029  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          DE    03/20/1987  09/19/1990   87104129.8  P3764984.1  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          JP    03/23/1987  02/17/1993    065921/87     1732797  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          BE    03/20/1987  09/19/1990   87104129.9     0239029  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          ES    03/20/1987  09/19/1990   87104129.9     0239029  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          US    03/21/1986  09/15/1987       842225     4693280  Granted    END CLOSURE FOR SHIRRED CASING STI
015347          FR    03/20/1987  09/19/1990   87104129.9     0239029  Granted    END CLOSURE FOR SHIRRED CASING STI
020002      1   US    04/19/1988  04/04/1989       183214     4818551  Granted    LIQUID SMOKE IMPREGNATED SHIRRED
020003          CA    10/07/1987  01/23/1990       548610     1264599  Granted    CLAMP MEANS FOR STUFFING MACHINE




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020005          CA    07/28/1987  07/11/1989       543180     1257134  Granted    DISPOSABLE TENSION SLEEVE FOR A ST
020006      1   US    01/19/1988  10/18/1980       145083     4778639  Granted    CARAMEL-CONTAINING CELLULOSIC ART
020006      2   US    01/19/1988  11/01/1988       144984     4781931  Granted    CARAMEL-CONTAINING CELLULOSIC ART
020006          US    10/20/1986  07/12/1988       920381     4756914  Granted    CARAMEL-CONTAINING CELLULOSIC ART
020006          MX    10/19/1987  10/19/1987         8897      168651  Granted    CARAMEL-CONTAINING CELLULOSIC ART
020006          CA    10/15/1987  05/25/1993       549353     1318176  Granted    CARAMEL-CONTAINING CELLULOSIC ART
020016          US    04/16/1987  08/30/1988       039197     4766645  Granted    SIZE CONTROL SYSTEM FOR STUFFING
020026          US    08/31/1987  03/27/1990       091172     4911963  Granted    MULTILAYER FILM CONTAINING AMORPH
020026      1   US    03/26/1990  12/31/1991       498876     5077109  Granted    MULTILAYER FILM CONTAINING AMORPH
020027          US    01/06/1988  07/25/1989       141226     4851290  Granted    MULTILAYER FILM CONTAINING AMORPH
020027          CA    01/05/1989  10/18/1994       587614     1332581  Granted    MULTILAYER FILM CONTAINING AMORPH
020028          CA    09/08/1988  01/28/1992       576768     1294748  Granted    METHOD AND APPARATUS FOR SHIRRIN
020028          BE    09/14/1988  01/08/1992   88114998.3     0314905  Granted    METHOD AND APPARATUS FOR SHIRRIN
020028          US    11/02/1987  09/27/1988       115721     4773127  Granted    METHOD AND APPARATUS FOR SHIRRIN
020028          ES    09/14/1988  01/08/1992   88114998.3     2027745  Granted    METHOD AND APPARATUS FOR SHIRRIN
020030          BE    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030      1   US    04/16/1991  09/06/1994       685950     5344679  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          IT    08/22/1989  05/10/1995   89115458.5  26401BE/95  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          GB    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          US    08/23/1988  10/01/1991       235258     5053259  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          NL    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          FR    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          SE    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          AT    08/22/1989  05/10/1995   89115458.5     0358038  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          CA    08/17/1989                   608589              PENDING    AMORPHOUS NYLON COPOLYMER & COP
020030      2   US    06/30/1994  01/02/1996       268359     5480945  Granted    AMORPHOUS NYLON COPOLYMER & COP
020030          DE    08/22/1989  05/10/1995   89115458.5  P68922554.  Granted    AMORPHOUS NYLON COPOLYMER & COP
020031          SE    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          BE    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031      1   US    09/07/1989  07/09/1991       403964     5030464  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          US    11/09/1987  12/26/1989       117863     4889751  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          FR    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE




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                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020031          JP    11/09/1988  02/26/1986    283504/88     2022878  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          DE    11/09/1988  03/11/1992   88118642.3  P3869063.2  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          GB    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          CA    11/08/1988  05/24/1994       582677     1329721  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          IT    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          AT    11/09/1988  03/11/1992   88118642.3     0315965  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020031          FI    11/08/1988  04/11/1994      88/5134       90817  Granted    LIQUID SMOKE IMPREGNATED PEELABLE
020035          US    04/18/1988  06/13/1989       182531     4837897  Granted    MEAT PRODUCT PACKAGE CONTAINING
020057          US    05/06/1988  01/28/1992       191100     5084283  Granted    FOOD CASING FOR MAKING INDICIA BEA
020057          CA    05/05/1989  04/11/1995       598838     1335184  Granted    FOOD CASING FOR MAKING INDICIA BEA
020068          US    10/13/1989  04/28/1992       420854     5108804  Granted    BUFFERED ACID-TREATED FOOD CASING.
020068      2   US    03/12/1992  05/04/1993       851383     5207609  Granted    BUFFERED ACID-TREATED FOOD CASING.
020068      1   US    03/12/1992  05/04/1993       851385     5207608  Granted    BUFFERED ACID-TREATED FOOD CASING.
020073          BE    07/31/1989  05/18/1994   89114135.0     0353697  Granted    METHOD & APPARATUS FOR SEVERING S
020073          FR    07/31/1989  04/18/1994   89114135.0     0353697  Granted    METHOD & APPARATUS FOR SEVERING S
020073          DE    07/31/1989  04/18/1994   89114135.0  P68915360.  Granted    METHOD & APPARATUS FOR SEVERING S
020073          GB    07/31/1989  04/18/1994   89114135.0     0353697  Granted    METHOD & APPARATUS FOR SEVERING S
020073          JP    07/31/1989  09/19/1996    197031/89     2562969  Granted    METHOD & APPARATUS FOR SEVERING S
020073          US    08/01/1988  12/12/1989       226635     4885821  Granted    METHOD & APPARATUS FOR SEVERING S
020073          CA    07/31/1989  10/26/1993       607050     1323476  Granted    METHOD & APPARATUS FOR SEVERING S
020079      2   US    02/01/1990  06/04/1991       473550     5021252  Granted    FOOD BODY WITH SURFACE COLOR INDI
020079      3   US    02/01/1990  09/17/1991       473553     5049399  Granted    FOOD BODY WITH SURFACE COLOR INDI
020079      1   US    02/01/1990  07/09/1991       473549     5030486  Granted    FOOD BODY WITH SURFACE COLOR INDI
020079          US    12/16/1988  04/17/1990       285454     4917924  Granted    FOOD BODY WITH SURFACE COLOR INDI
020079          CA    05/05/1989  01/31/1995       598839     1334141  Granted    FOOD BODY WITH SURFACE COLOR INDI
020085      1G  EP    11/13/2000               00124260.1              PENDING    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   FR    02/16/1990  04/28/1990  90-103033.8     0384319  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   JP    02/21/1990  06/26/1998    90-038541     2794318  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   FI    02/20/1990  09/15/2000      90-0844      105525  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   DE    02/16/1990  04/28/1999  90-103033.8  6903307070  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   AT    02/16/1990  04/28/1999  90-103033.8     0384319  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   CA   '02/14/1990  11/16/1999    2009990-9     2009998  Granted    ANTIMICROBIAL FILM & METHOD FOR SU




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020085      1   AU    02/20/1990  06/23/1994     53023/94      646797  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   BE    02/16/1990  04/28/1999  90-103033.8     0384319  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  GB    08/08/1996  08/16/2001   96112759.4     0750853  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  FR    08/08/1996  08/16/2001   96112759.4     0750853  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   NZ    02/13/1990  02/21/1994       244737      244737  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   ES    02/16/1990  04/28/1999  90-103033.8  ES2132059T  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      6   US    04/23/1993  11/12/1998       051260     5573801  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  NZ    10/14/1992  02/17/1994       244737      244737  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  AU    01/05/1994  04/30/1995     94-53023      665646  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   IT    02/16/1990  04/28/1999  90-103033.8     0384319  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  DE    08/08/1996  04/30/2001   96112759.4  6903377850  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      5   US    04/23/1993  11/12/1996       051259     5573800  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      7   US    04/23/1993  11/12/1995       051258     5573797  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1A  BE    08/08/1996  08/16/2001   98112759.4     0750853  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020085      1   GB    02/16/1990  04/28/1999  90-103033.8     0384319  Granted    ANTIMICROBIAL FILM & METHOD FOR SU
020087      1   JP    01/10/1980  07/10/1996    90-001854     2068753  Granted    STUFFING METHOD AND APPARATUS.
020087      1   US    10/26/1989  10/06/1992       425435     5152712  Granted    STUFFING METHOD AND APPARATUS
020087      2   US    12/01/1989  02/12/1991       442469     4991260  Granted    STUFFING METHOD AND APPARATUS
020087      1   CA    12/18/1989  01/17/1995    2005808-1     2005808  Granted    STUFFING METHOD AND APPARATUS
020093      1   US    08/30/1990  02/04/1992       574850     5085890  Granted    FOOD BODY WITH SURFACE COLOR INDI
020093      2   US    08/30/1990  07/16/1991       574971     5032416  Granted    FOOD BODY WITH SURFACE COLOR INDI
020093      2   CA    05/05/1989  01/31/1995       596836     1334140  Granted    FOOD BODY WITH SURFACE COLOR INDI
020093      1   CA    05/05/1989  01/31/1995       598840     1334142  Granted    FOOD BODY WITH SURFACE COLOR INDI
020097          US    07/11/1990  07/27/1993       551225     5230933  Granted    ACID RESISTANT PEELABLE CASING.
020104          US    01/12/1990  11/20/1990       463768     4970758  Granted    STUFFING METHOD AND APPARATUS.
020111          JP    08/07/1991  10/09/1998    91-221190     2836042  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          MX    08/07/1991  04/05/1995     91/00573      177547  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          BR    08/06/1991  02/23/1999  P19103380-2 P19103380-2  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          CA    07/19/1991  04/21/1998      2047477     2047477  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          IT    08/06/1991  04/26/1995   91113147.6  28148BE/95  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          FR    08/06/1991  04/26/1995   91113174.6     0473952  Granted    COLORED CELLULOSIC CASING WITH CL.
020111      A   MX    08/07/1991               1995000317              Pending    COLORED CELLULOSIC CASING WITH CL.




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                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020111      2   US    12/21/1992  04/04/2000    07/993551     6045848  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          AU    08/07/1991  12/06/1994     81693/91      652167  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          ES    08/06/1991  04/26/1995   91113174.6  ES2071874T  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          ZA    07/24/1991 04/29/19982      91/5812     91/5812  Granted    COLORED CELLULOSIC CASING WITH CL.
020111      1   US    06/09/1992  02/06/2001    07/898373   618382681  Granted    COLORED CELLULOSIC CASING WITH CL.
020111          DE    08/06/1991  04/26/1995   91113174.6 691212.5-08  Granted    COLORED CELLULOSIC CASING WITH CL.
020115          PT    09/17/1991  11/12/1997        98993       98993  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          BE    09/14/1991  05/08/1996   91115622.2     0476553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          DK    09/14/1991  05/08/1998   91115622.2     0476553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          FR    09/14/1991  05/08/1998   81115622.2     0476553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          US    09/18/1990  10/26/1993       584563     5256458  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          NZ    09/04/1991  09/01/1993       239662      239662  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115      1   US    06/15/1992  04/19/1994       076888     5304385  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          MX    09/17/1991  08/01/1994     09/01115      175499  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          DE    09/14/1991  05/08/1996   91115622.2  69119334.7  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          GB    09/14/1991  05/08/1996   91115622.2     0476553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          CA    08/30/1991  10/10/1995      2050453     2050453  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          BR    09/18/1991  05/16/2000  P19103999-1   P19103999  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          AU    09/17/1991  11/29/1994     84502/91      651994  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          NL    09/14/1991  05/08/1996   91115622.2     0476553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          AT    09/14/1991  05/08/1996   91115822.2     0478553  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          ES    09/14/1991  05/08/1996   91115622.2  ES 2088448  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115          ZA    09/03/1991  05/27/1992      91/6887     91/6887  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020115      1   US    06/15/1993  04/19/1994       076688     5304385  Granted    SHIRRED THERMOPLASTIC CASING HAVI
020120      1   CA    03/03/1993  10/16/2001      2090684     2090884  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   MX    03/04/1993                 93-01216              Pending    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   US    02/10/1993  10/25/1994       015751     5358765  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   BR    03/04/1993  07/11/2000  P19300746-9 P19300746-9  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   JP    03/04/1993  06/26/1998    93-069438     2794377  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   GB    03/03/1993  09/25/1996   93301625.5     0559456  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      1   DE    03/03/1993  09/25/1996   93301625.5  69304956.1  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120      2   US    07/26/1994  11/26/1995       280744     5470519  Granted    CELLULOSIC ARTICLE CONTAINING AN O




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020120      1   FI    03/03/1993  05/15/2001       930930      106913  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020120          DE    03/03/1993  09/25/1996   93301625.5  69304956.1  Granted    CELLULOSIC ARTICLE CONTAINING AN O
020122          US    07/01/1991  07/27/1993       724058     5230651  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   FR    08/05/1992  11/15/1995   92113356.7     0537435  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   ES    08/05/1992  11/15/1995   92113356.7  ES2079754T  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   BR    07/15/1992  04/29/1997 PI-9202691-5  PI 9202691  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   DE    08/05/1992  11/15/1995   92113356.7  69206101.0  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   CA    06/12/1992  04/22/1997      2071184     2071184  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      2   BE    08/05/1992  11/15/1995   92113356.7     0537435  Granted    METHOD AND APPARATUS FOR SEVERIN
020127          US    10/15/1991  09/08/1992       775861     5145449  Granted    METHOD AND APPARATUS FOR SEVERIN
020127      1   US    04/15/1992  12/22/1992       668431     5173074  Granted    METHOD AND APPARATUS FOR SEVERIN
020130          JP    12/21/1992  10/03/1996    05-512450     2568156  Granted    CELLULOSE FOOD CASING METHOD AND
020130          AT    12/21/1992  01/29/1997   93901268.6     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          CH    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          GB    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          BE    12/21/1992  01/29/1997   93901238.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          FR    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          DE    12/21/1992  01/29/1997   93901268.8  69217211.4  Granted    CELLULOSE FOOD CASING METHOD AND
020130          BR    12/21/1992              P19205562-1              Pending    CELLULOSE FOOD CASING METHOD AND
020130          FI    12/21/1992                  93/4067              Pending    CELLULOSE FOOD CASING METHOD AND
020130      2   US    01/10/1994  09/19/1995    08/179418     5451364  Granted    CELLULOSE FOOD CASING METHOD AND
020130          NL    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          LU    12/21/1992  01/29/1997  3939012268.     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130      C   EP    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130      3   GB    12/23/1994  10/16/2002   94309829.3     0692194  Granted    CELLULOSE FOOD CASING METHOD AND
020130      3   FR    12/23/1994  10/16/2002   94309829.3     0692194  Granted    CELLULOSE FOOD CASING METHOD AND
020130      3   BE    12/23/1994  10/16/2002   94309829.3     0592194  Granted    CELLULOSE FOOD CASING METHOD AND
020130      2   DE    12/05/1994  08/02/2000   84309828.5   69425240T  Granted    CELLULOSE FOOD CASING METHOD AND
020130      2   FR    12/05/1994  07/12/2000   94309828.5     0662283  Granted    CELLULOSE FOOD CASING METHOD AND
020130      A   EP    12/21/1992  01/29/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130      2   AT    12/05/1994  07/12/2000   94309828.5     0862283  Granted    CELLULOSE FOOD CASING METHOD AND
020130      B   EP    12/21/1992  01/28/1997   93901268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020130      5   US    05/04/1995  08/19/1997    08/434709     5658524  Granted    CELLULOSE FOOD CASING METHOD AND
020130      6   US    08/16/1995  12/30/1997    08/515880     5702783  Granted    CELLULOSE FOOD CASING METHOD AND
020130      3   EP    12/23/1994  10/16/2002   94309829.3     0692194  Granted    CELLULOSE FOOD CASING METHOD AND
020130      2   EP    12/23/1994  07/12/2000   94309828.5     0662283  Granted    CELLULOSE FOOD CASING METHOD AND
020130          US    01/17/1992  01/11/1994       822506     5277857  Granted    CELLULOSE FOOD CASING METHOD AND
020130          AU    12/21/1992  02/15/1995     33219/93      654080  Granted    CELLULOSE FOOD CASING METHOD AND
020130          DK    12/21/1992  01/29/1997   93801268.8     0577790  Granted    CELLULOSE FOOD CASING METHOD AND
020130          MX    01/15/1993  12/09/1997       930227      187388  Granted    CELLULOSE FOOD CASING METHOD AND
020130      3   US    07/15/1994  09/03/1996       275669       H1592  Granted    CELLULOSE FOOD CASING METHOD AND
020130          CA    12/21/1992  07/06/1999      2096143     2906143  Granted    CELLULOSE FOOD CASING METHOD AND
020130      4   US    03/28/1995  01/28/1997     08412677     5597587  Granted    CELLULOSE FOOD CASING METHOD AND
020130      2   BE    12/05/1994  07/12/2000   94309828.5     0662283  Granted    CELLULOSE FOOD CASING METHOD AND
020133          JP    03/24/1993  02/13/1997    93-087876    20606781  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          IT    03/26/1993  06/12/1996   93302345.9      056282  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          DE    03/26/1993  06/12/1996   93392345.9  69303103.4  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          AT    03/26/1993  06/12/1996   93302345.9     0565282  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          MX    03/29/1993  12/06/1996     93-01758      183481  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          CA    03/24/1993  07/09/1996      2092326     2092326  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          US    03/30/1993  07/12/1996       859763     5326733  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133      1   US    02/15/1994  03/21/1995       196722     5399213  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020133          FR    03/26/1993  06/12/1996   93302345.9     0565282  Granted    SHIRRED FIBROUS CASING ARTICLE AND
020137          US    09/23/1992  12/16/1997       949228     5698279  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          DE    09/22/1993  06/17/1998   93115271.4   6931915.3  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          NL    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          MX    09/22/1993  10/18/1999      93058.8      193728  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          IT    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          CH    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          IE    09/22/1993  06/17/1998   93114271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          AU    09/22/1993  06/27/1996     47501/93      669926  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          AR    09/21/1993  07/31/1997       325055      250834  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          BR    09/20/1993  09/05/2000 PI-9303833-0 PI9303833-0  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          CA    08/19/1993  05/11/1999      2104444     2104444  Granted    HEAT SHRINKABLE NYLON FOOD CASIN




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020137          GB    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          SE    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          ES    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          PT    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          LU    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          GR    09/22/1993  06/17/1998   93115271.4   980401755  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          BE    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          AT    09/22/1993  06/17/1998   93115271.4    E167 430  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          DK    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020137          FR    09/22/1993  06/17/1998   93115271.4     0589431  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          BR    09/20/1993  09/05/2000 PI 9303834-8 PI9303834-8  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138      A   EP    09/22/1993  07/16/1997   93115288.8     0589436  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          US    09/23/1993  08/27/1996       948552     5549943  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          IT    09/22/1993  07/16/1997   93115288.8     0589436  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          MX    09/22/1993  12/10/1997       935617      197424  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          NZ    08/31/1993                   248545      248545  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138      B   EP    09/22/1993  07/16/1997   93115288.8     0589435  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          AR    11/02/1993  06/25/1999       326470     253.391  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          CA    08/19/1993  03/30/1999      2104442     2104442  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          ES    09/22/1993  07/16/1997   93115288.8     2105028  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          GB    09/22/1993  07/16/1997   93115288.8     0566436  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          AU    09/22/1993  11/09/1995      4749993      664308  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          DE    09/22/1993  07/16/1997   93115288.8  69312195.5  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          FR    09/22/1993  07/16/1997   93115288.8     0589436  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020138          BE    09/22/1993  07/16/1997   93115288.8     0589436  Granted    HEAT SHRINKABLE NYLON FOOD CASIN
020143          MX    08/19/1993  12/17/1996     93-05050      183597  Granted    END CLOSURES FOR SHIRRED CASING S
020143          JP    06/10/1993  05/09/1997    93-163809     2646326  Granted    END CLOSURES FOR SHIRRED CASING S
020143          US    08/20/1992  08/24/1993       932530     5238443  Granted    END CLOSURES FOR SHIRRED CASING S
020143          FR    08/18/1993  05/29/1996   93113221.1     0583790  Granted    END CLOSURES FOR SHIRRED CASING S
020143          BE    08/18/1993  05/29/1996   93113221.1     0583780  Granted    END CLOSURES FOR SHIRRED CASING S
020143          CA    04/14/1993  01/16/1996      2093980     2093980  Granted    END CLOSURES FOR SHIRRED CASING S
020143          BR    08/12/1993  09/29/1998  PI9303366-4 PI9303366-4  Granted    END CLOSURES FOR SHIRRED CASING S




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020143          ES    08/18/1993  05/29/1996   93113221.1  ES2087624T  Granted    END CLOSURES FOR SHIRRED CASING S
020143          DE    08/18/1993  05/29/1996   93113221.1    69302868  Granted    END CLOSURES FOR SHIRRED CASING S
020149          GB    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          DE    11/17/1995  10/10/2001   95118159.3  6952311540  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          CA    08/23/1995                  2156765              Pending    A COMPOUND FIBROUS DOPE COMPOSITI
020149          JP    11/16/1995  08/25/2000    07-321271     3103756  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          BE    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          DK    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          FR    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          BR    10/05/1995             PI 9504780-6              Pending    A COMPOUND FIBROUS DOPE COMPOSITI
020149          MX    11/16/1995 07/27/19999       954797      192773  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          IT    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          NL    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149      1   US    04/15/1996  04/28/1996       632051     5744251  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          CH    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          AT    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          LI    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          AU    11/17/1995  11/17/1995     95-37924      699226  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          FI    11/17/1995                   955573              Pending    A COMPOUND FIBROUS DOPE COMPOSITI
020149          SE    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          LU    11/17/1995  10/10/2001   95118159.3     0712889  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020149          US    11/18/1994  02/18/1997       342287     5603884  Granted    A COMPOUND FIBROUS DOPE COMPOSITI
020151          MX    03/11/1994  11/07/1997       941819      186934  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          BR    03/11/1994  11/24/1994  PI9401134-6 PI9401134-6  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020193          IT    08/13/1999               99306405-4              Pending    METHOD FOR REMOVING CELLULOSIC C
020193          FR    08/13/1999               99306405-4              Pending    METHOD FOR REMOVING CELLULOSIC C
020193          ES    08/13/1999               99306405-4              Pending    METHOD FOR REMOVING CELLULOSIC C
020193          NL    08/13/1999               99306405-4              Pending    METHOD FOR REMOVING CELLULOSIC C
020195          CA    04/28/1999                  2270297              Pending    METHOD FOR THE NON CONTACT PRINTI
020195          US    10/13/1998  03/13/2001    09/169990  6200510.81  Granted    METHOD FOR THE NON CONTACT PRINTI
020197          US    04/22/1999  07/24/2001    09/296288     6264874  Granted    METHOD FOR CONTROLLING THE DIAMET
020197          CA    09/21/9999                  2282927              Pending    METHOD FOR CONTROLLING THE DIAMET




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020201          CA    02/21/2000                  2299191              Pending    Method for extruding tubular film
020201          GB    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020201          US    08/27/1999  11/20/2001    09/384106     6319457  Granted    Method for extruding tubular film
020201          AT    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020201          DE    04/18/2000  09/04/2002   00303270.3  6000039810  Granted    Method for extruding tubular film
020201          BE    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020201          FR    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020201          FI    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020201          ES    04/18/2000  09/04/2002   00303270.3     1078730  Granted    Method for extruding tubular film
020202          CA    05/16/2000                  2308906              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          GB    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          BE    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          FI    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          FR    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          US    10/18/1999               09/419.933              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          DE    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020202          ES    07/14/2000                003059623              Pending    CELLULOSE FOOD CASING, CELLULOSE
020203          CA    06/07/2000                  2310948              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          ES    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          US    11/17/1999                09/441517              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          AT    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          MX    09/21/2000                  0009263              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          BE    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          FI    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          GB    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          DE    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020203          FR    07/14/2000               00306019.1              Pending    METHOD FOR IMPROVING THE REWET SHR
020206          GB    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          PL    05/09/2001                  P347449              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          LT    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          FI    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          DE    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020206          FR    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          BE    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          AT    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020151          JP    03/10/1994  04/05/2002    06-065457     3295219  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151      1   US    03/11/1994  01/17/1995       209128     5382190  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          GB    02/25/1994  07/22/1998   94301356.5      614610  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          NL    02/25/1994  07/22/1998   94301356.5      614610  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          FR    02/25/1994  07/22/1998   94301356.5      614610  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          ES    02/25/1994  07/22/1998   94301356.5      614610  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          BE    02/25/1994  07/22/1998   94301356.5      614610  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          US    03/12/1993  01/17/1995       030923     5381643  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          PH    03/11/1994  09/16/1997        47912       30652  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151      1   CA    05/16/1994  02/21/1997      2123655     2123655  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          DE    02/25/1994  07/22/1998   94301356.5    69411785  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020151          CA    02/22/1994  09/23/1997      2116189     2116189  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020154      1   US    02/22/1999  11/07/2000   09/255.006     6143344  Granted    SELF-COLORING CASING WITH A BETTER
020154          ES    09/21/1994  06/19/1996     P9401993     2076904  Granted    SELF-COLORING CASING WITH A BETTER
020154          US    09/21/1993  09/21/1999    08/124063     5955126  Granted    SELF-COLORING CASING WITH A BETTER
020154          BR    09/20/1994              PI9403792-2              Pending    SELF-COLORING CASING WITH A BETTER
020154          CL    09/20/1994  12/21/1998     94-01360      39.828  Granted    SELF-COLORING CASING WITH A BETTER
020156          DE    08/15/1994  10/21/1998   94306008.7    69414059  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          BE    08/15/1994  10/21/1998   94306008.7     0641725  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          ES    08/15/1994  10/21/1998   9430600837     0641725  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          FR    08/15/1994  10/21/1998   94306008.7     0641725  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          GB    08/15/1994  10/21/1998   94306008.7     0641725  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          US    08/27/1993  10/18/1994       112527     6356007  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          JP    08/18/1994                94-215244              Pending    PACKAGE OF SHIRRED FOOD CASING AN
020156          CA    07/13/1994  11/16/1999      2127955     2127955  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          MX    08/26/1994  12/15/1997       946527      187485  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          NL    08/15/1994  10/21/1998   94306008.7     0641725  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020156          BR    08/26/1994  11/24/1998  PI9403342-0 PI9403342-0  Granted    PACKAGE OF SHIRRED FOOD CASING AN
020162          DE    01/10/1995  03/25/1998   95100261.7    69501843  Granted    METHOD AND APPARATUS FOR PACKAGI




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020162          ES    01/10/1995  03/25/1998   95100261.7   2114233T3  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          GB    01/10/1995  03/25/1998   95100261.7     0675043  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          AU    01/09/1995  08/14/1997     10098/95      677469  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          BR    03/10/1995  08/08/2000  PI9500060-7 PI9500060-7  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          MX    01/10/1995  10/08/1997     95-00394      186322  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          CA    11/16/1994  11/24/1998      2135943     2135943  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          FR    01/10/1995  03/25/1998   95100261.7     0675043  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          US    03/29/1994  02/21/1998       219564     5391108  Granted    METHOD AND APPARATUS FOR PACKAGI
020162          BE    01/10/1995  03/25/1998   95100261.7     0675043  Granted    METHOD AND APPARATUS FOR PACKAGI
020163          FR    08/07/1995  11/04/1998   95112413.0     0696542  Granted    PERFORATED PACKAGING FOR FOOD CA
020163          CA    07/12/1995  10/17/2000      2153713     2153713  Granted    PERFORATED PACKAGING FOR FOOD CA
020163          ES    08/07/1995  11/04/1998   95112413.0  ES2125534T  Granted    PERFORATED PACKAGING FOR FOOD CA
020163          DE    08/07/1995  11/04/1998   95112413.0  69505751.0  Granted    PERFORATED PACKAGING FOR FOOD CA
020163          BE    08/07/1995  11/04/1998   95112413.0     0696542  Granted    PERFORATED PACKAGING FOR FOOD CA
020206          MX    07/18/2001               2001005024              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          CA    04/26/2001                  2345193              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          AU    05/18/2001                  4611001              Pending    MANDREL STRUCTURE FOR USE IN MAN
020206          US    05/19/2000  09/03/2002    09/574209     6444161  Granted    MANDREL STRUCTURE FOR USE IN MAN
020206          ES    05/02/2001               01304018.3              Pending    MANDREL STRUCTURE FOR USE IN MAN
020213          US    05/26/2002                60/383107              Pending    FOOD PROCESSING AND PACKAGING FIL
020214          MX    10/03/2001              2001/009994              Pending    METHOD AND APPARATUS FOR USE IN M
020214          IE    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          ES    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          AU    10/01/2001                  7731801              Pending    METHOD AND APPARATUS FOR USE IN M
020214          DE    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          FR    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          AT    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          US    10/04/2001                09/971245              Pending    METHOD AND APPARATUS FOR USE IN M
020214          CA    10/02/2001                  2358016              Pending    METHOD AND APPARATUS FOR USE IN M
020214          GB    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020214          BE    10/02/2001               01308396.9              Pending    METHOD AND APPARATUS FOR USE IN M
020215          US    10/16/2001                09/688556              Pending    FOOD CASING




                               SCHEDULE OF PATENTS

                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER SUB COUN    FILDATE     ISSDATE     APPLNUMBER  PATNUMBER   STATUS                 TITLE
- ---------- --- ----    -------     -------     ----------  ---------   ------                 -----
                                                          
020216          CA    04/05/2002                  2380778              Pending    SELF-COLORING RED SMOKED CASING
020216          US    03/22/2002                10/102724              Pending    SELF-COLORING RED SMOKED CASING
020218          CA    03/21/2002                  2378040              Pending    PROCESSING WRAP CONTAINING COLOR
020218          US    03/06/2002                10/090833              Pending    PROCESSING WRAP CONTAINING COLOR
020219          US    05/10/2002                10/142160              Pending    NYLON FOOD CASING HAVING A BARRIE
020219          CA    05.39.2992                  2388087              Pending    NYLON FOOD CASING HAVING A BARRIE
020219          MX    06/16/2003               2002006052              Pending    NYLON FOOD CASING HAVING A BARRIE
020220          US    05/06/2003                60/377655              Pending    PROCESS FOR IMPROVING SMOKY COLO


* = Licensed to third party(ies).



                             SCHEDULE OF TRADEMARKS

                                   TRADE NAMES


   TRADEMARK           COUNTRY     STATUS   APPLICATION NUMBER    REGISTRATION NUMBER             NEXT RENEWAL DATE
   ---------           -------     ------   ------------------    -------------------             -----------------
                                                                                   
NOJAX (STYLIZED)          UY    REGISTERED         220964                314146                        03-Jul-09
NOJAX (STYLIZED)          YU    REGISTERED        2412/54                 13316                        21-Mar-05
NOJAX (STYLIZED)          EC    REGISTERED            43B                141/56                        23-Apr-01
NOJAX (STYLIZED)          PH    REGISTERED           4317                 R1699                        11-Jun-16
NOJAX (STYLIZED)          PT    REGISTERED          81507                 81507                        15-Mar-05
NOJAX (STYLIZED)          HB    REGISTERED       Z950811N               Z950811                        21-Mar-05
NOJAX (STYLIZED)          MK    REGISTERED       PZ200/95                 06376                        21-Mar-05
NOJAX (STYLIZED)          TN    REGISTERED                             EE991274                        05-Aug-14
NOJAX (STYLIZED)          PO    REGISTERED          17713                 17713                        23-Aug-02
NOJAX (STYLIZED)          ES    REGISTERED         263469                263469                        25-Jun-04
NOJAX (STYLIZED)          CZ    REGISTERED           4209                151691                        07-Jan-05
NOJAX (STYLIZED)          BX    REGISTERED         020375                 64599                        02-Dec-11
NOJAX (STYLIZED)          AU    REGISTERED         121443               A121443                        21-Dec-06
NOJAX (STYLIZED)          SK    REGISTERED                               151691                        07-Jan-05
NOJAX (STYLIZED)          CA    REGISTERED         202631           N533024/129                        28-Mar-09
NOJAX (STYLIZED)          DO    REGISTERED           9033                  9033                        10-Mar-05
NOJAX (STYLIZED)          AR    REGISTERED         427935                354602                        13-Mar-08
NOJAX (STYLIZED)          FI    REGISTERED          32/53                 26721                        26-Jun-03
NOJAX (STYLIZED)          BR    REGISTERED         177595             002489562                        16-Oct-10
NOJAX (STYLIZED)          SE    REGISTERED        1245/46                 61647                        30-Aug-05
NOJAX (STYLIZED)          MX    REGISTERED          54801                 71166                        18-Jun-02
NOJAX (STYLIZED)          IT    REGISTERED         28/123                638959                        10-Jan-02
NOJAX (STYLIZED)          HN    REGISTERED                                 7504                        04-Dec-06
NOJAX (STYLIZED)          SI    REGISTERED       Z9570767               9570767                        20-Jun-05
NOJAX (STYLIZED)          AT    REGISTERED        2462/54                 32013                        05-Mar-05
NOJAX AL                  US    UNIFIED
NOJAX (STYLIZED)          HK    REGISTERED                             415/1955                        30-Dec-10
NUCEL                     US    REGISTERED     74/453.651               2132918                        27-Jan-07
NUCEL                     EU    REGISTERED      001516582             001516562                        14-Jun-10
OPTIMER                   US    SEARCH
PAL-PAC                   US    SEARCH






   TRADEMARK           COUNTRY     STATUS   APPLICATION NUMBER    REGISTRATION NUMBER             NEXT RENEWAL DATE
   ---------           -------     ------   ------------------    -------------------             -----------------
                                                                                   
PAUL'S VALLEY             US    SEARCH
PORKGUARD                 US    SEARCH
PRECISION SIZER           US    SEARCH
PROGUARD                  US    SEARCH
REELKASE                  US    REGISTERED      74/403524               1827476                        22-Mar-04
REELSMOKE                 US    REGISTERED      74/403525               1827479                        22-Mar-04
ROLLMATIC                 US    REGISTERED         566197               1414997                        26-Oct-06
ROLLMATIC                 CA    REGISTERED         559006                352466                        03-Mar-04
SANGOFLEX                 WO    REGISTERED                              6372282                        02-Oct-10
SANGOFLEX                 CH    REGISTERED                               381917                        17-Apr-10
SENTINEL                  MX    REGISTERED         205560                477742                        16-Jul-04
SENTINEL                  US    REGISTERED      74/096561               1653667                        13-Aug-11
SENTRY                    US    SEARCH
SEPRA-CEL                 US    REGISTERED      74/616345               1946715                        09-Jan-06
SHIRMATIC                 IE    REGISTERED        1088/83                109349                        20-Apr-04
SHIRMATIC                 MX    REGISTERED         114309                417650                        03-Jun-11
SHIRMATIC                 NZ    REGISTERED         119115                119115                        18-Apr-12
SHIRMATIC                 NZ    REGISTERED         119116                119116                        18-Apr-12
SHIRMATIC                 NO    REGISTERED        8313033                117653                        19-Jul-04
SHIRMATIC                 PA    REGISTERED          32925                 32925                        27-Jun-04
SHIRMATIC                 GB    REGISTERED        1077271               1077271                        20-Apr-08
SHIRMATIC                 HK    REGISTERED        1248/83               2456/83                        05-May-04
SHIRMATIC                 PH    UNFILED      NOT-RECEIVED
SHIRMATIC                 MX    REGISTERED         114308                417649                        03-Jun-11
SHIRMATIC                 IE    REGISTERED        1087/83                109348                        20-Apr-04
SHIRMATIC                 FI    REGISTERED        1926/77                 75788                        23-Dec-10
SHIRMATIC                 CA    REGISTERED         408422                233990                        29-Jun-09
SHIRMATIC                 CA    REGISTERED         408751                229477                        04-Aug-08
SHIRMATIC                 CO    REGISTERED         337666                144506                        16-Nov-03
SHIRMATIC                 CO    REGISTERED         337667                161088                        30-May-04
SHIRMATIC                 DK    REGISTERED        2107/83               3872/84                        09-Nov-04
SHIRMATIC                 AR    REGISTERED        1608609               1721037                        11-Feb-09
SHIRMATIC                 WO    REGISTERED                               432852                        19-Aug-17
SHIRMATIC                 AU    REGISTERED         306240               A306240                        13-Apr-08
SHIRMATIC                 AU    REGISTERED         306241               A306241                        13-Apr-08
SHIRMATIC                 BR    REGISTERED       16956-77             006760155                        10-Sep-08
SHIRMATIC                 HK    REGISTERED       1248A/83               1249/84                        05-May-04






   TRADEMARK           COUNTRY     STATUS   APPLICATION NUMBER    REGISTRATION NUMBER             NEXT RENEWAL DATE
   ---------           -------     ------   ------------------    -------------------             -----------------
                                                                                   
SHIRMATIC                 CH    REGISTERED           1416                288875                        24-Mar-07
SHIRMATIC                 VE    REGISTERED           3667                 92311                        17-Oct-04
SHIRMATIC                 PE    REGISTERED                                79909                        12-May-04
SHIRMATIC                 AR    REGISTERED        1608610               1721038                        11-Feb-09
SHIRMATIC                 BR    REGISTERED       16955-77             006760147                        10-Sep-08
SHIRMATIC                 US    REGISTERED          11300               1076298                        01-Nov-07
SHIRMATIC                 US    REGISTERED         108846               1086943                        07-Mar-08
SHIRMATIC                 FL    REGISTERED        Z-B1235                 60042                        13-Jun-03
SHIRMATIC                 GB    REGISTERED        0177272               0177272                        20-Apr-08
SHIRMATIC                 SE    REGISTERED        77-1941                160758                        16-Sep-07
SHIRMATIC                 VE    REGISTERED           3668               91984-F                        13-Sep-04
SHIRMATIC & KATAKANA      JP    REGISTERED         560/94               3303038                        09-May-07
SMOKE MASTER              US    SEARCH          78/189030
SOUP SAC                  US    SEARCH
STC                       US    SEARCH
STRIPPER                  US    SEARCH
SUPARAP                   US    SEARCH
TEGRA                     US    SEARCH
TENDRJAX                  CH    REGISTERED                               399894                        07-Jan-12
TENDRJAN                  WO    REGISTERED                              R389793                        06-Jul-12
TITECADDIE                CA    REGISTERED         381593                214820                        16-Jul-06
TITECADDIE                GH    REGISTERED           1696                407446                        25-Mar-13
V-VAC                     US    REGISTERED      74/459357               1865580                        06-Dec-04
VISCORA (LOGO)            IS    REGISTERED        93/1988              395/1988                        09-Sep-98
VISCORA (LOGO)            NO    REGISTERED         880776                137130                        22-Jun-99
VISCORA (LOGO)            WO    REGISTERED                               523837                        17-Feb-08
VISCORA (LOGO)            FR    REGISTERED         873394               1423936                        21-Aug-97
VISI-CASE                 JP    REGISTERED    103376/1986               2078008                        30-Sep-08
VISKASE                   DK    REGISTERED                             00211995                        13-Jan-05
VISKASE                   IE    REGISTERED                                74268                        08-Jul-03
VISKASE                   WO    REGISTERED                               589658                        13-Apr-12
VISKASE                   KE    REGISTERED           9117                  9117                        10-Apr-94
VISKASE                   FI    REGISTERED                               140021                        20-Sep-05
VISKASE                   SE    REGISTERED        9308475                262395                        23-Dec-04
VISKASE                   NO    REGISTERED                               168076                        08-Jun-05
VISKASE                   FR    REGISTERED                              1604356                        05-Jul-98
VISKASE                   NZ    REGISTERED          55963                 55983                        17-Jan-04






   TRADEMARK           COUNTRY     STATUS   APPLICATION NUMBER    REGISTRATION NUMBER             NEXT RENEWAL DATE
   ---------           -------     ------   ------------------    -------------------             -----------------
                                                                                   
VISKASE                   AR    REGISTERED        1892042               1521918                        31-May-04
VISKASE                   GB    REGISTERED                               725640                        11-Jan-03
VISKASE                   PE    REGISTERED         015337                 29534                        24-Sep-06
VISKASE                   TY    REGISTERED           6066                  6066                        12-May-08
VISKASE                   AR    REGISTERED        1872778               1506872                        28-Feb-04
VISKASE                   CA    REGISTERED         559007                379431                        08-Feb-06
VISKASE                   AU    REGISTERED         569819               A569819                        23-Dec-08
VISKASE                   AU    REGISTERED         121619               A121619                        13-Jan-07
VISKASE                   US    REGISTERED         586212               1444069                        23-Jun-07
VISKASE                   GB    REGISTERED                              1326547                        11-Nov-04
VISKASE AND DESIGN        CO    REGISTERED         279616                132101                        28-Dec-05
VISKASE AND DESIGN        ZA    REGISTERED        67/6666               67/6666                        10-Sep-07
VISKASE AND DESIGN        TH    REGISTERED         348692               TM65790                        22-Oct-07
VISKASE AND DESIGN        GB    REGISTERED        1326547               1326547                        11-Nov-04
VISKASE AND DESIGN        KR    REGISTERED     17258/1987                168758                        02-Mar-09
VISKASE AND DESIGN        JP    REGISTERED    100380/1987               2722016                        06-Jun-07
VISKASE AND DESIGN        HK    REGISTERED         518/88               1261/89                        30-Jan-09
VISKASE AND DESIGN        CO    REGISTERED         279565                132098                        28-Dec-05
VISKASE AND DESIGN        CN    REGISTERED          32386                383899                        09-Aug-08
VISKASE AND DESIGN        CA    REGISTERED         559012                379432                        08-Feb-06
VISKASE AND DESIGN        PH    REGISTERED          63175                 46153                        25-Aug-09
VISKASE AND DESIGN        VE    REGISTERED       14671-87                143456                        05-Mar-06
VISKASE AND DESIGN        AR    REGISTERED        1618687               1322027                        09-Feb-09
VISKASE AND DESIGN        HK    REGISTERED        518A/88               1261/89                        30-Jan-09
VISKASE AND DESIGN        BR    REGISTERED      814235654             814235654                        13-Apr-10
VISKASE AND DESIGN        MX    REGISTERED          49413                366524                        28-Sep-03
VISKASE AND DESIGN        UY    REGISTERED         268054                268054                        06-Mar-06
VISKASE AND DESIGN        CL    REGISTERED         263725                435136                        30-Nov-04
VISKASE AND DESIGN        FY    REGISTERED         437-94                171868                        12-Oct-04
VISKASE AND DESIGN        UY    REGISTERED         268053                268053                        06-Mar-06
VISKASE AND DESIGN        PY    REGISTERED         437-94                173611                        14-Dec-04
VISKASE AND DESIGN        PT    REGISTERED         306285                306285                        07-Dec-05
VISKASE AND DESIGN        AR    REGISTERED        1892043               1521919                        31-May-04
VISKASE AND DESIGN        BR    REGISTERED      814235646             814235646                        03-Apr-10
VISKASE AND DESIGN        BR    REGISTERED      814235638             814235638                        03-Apr-10
VISKASE AND DESIGN        VE    REGISTERED       14672-67                143457                        05-Mar-06
VISKASE AND DESIGN        CN    REGISTERED          32386                320856                        10-Aug-08





                                                APPLICATION    REGISTRATION
     TRADEMARK          COUNTRY    STATUS         NUMBER          NUMBER       NEXT RENEWAL DATE
     ---------          -------    ------         ------          ------       -----------------
                                                                
VISKASE AND DESIGN         AF      UNFILED
VISKASE AND DESIGN         IE      REGISTERED     67/02972       124836             02-Sep-08
VISKASE AND DESIGN         MX      REGISTERED     479880         479880             12-Apr-04
VISKASE AND DESIGN         FR      UNFILED                       105681
VISKASE AND DESIGN         US      REGISTERED     586196         1444068            23-Jun-07
VISKASE POLYFILM AND       BR      REGISTERED     816840296      816840296          16-Feb-04
VISKASE POLYFILM AND       BR      REGISTERED     816840300      816840300          08-Mar-04
VISKING                    YU      REGISTERED     Z356/53        12930              19-Feb-11
VISKING                    HR      REGISTERED     Z940422        Z940422            14-Feb-04
VISKING                    MK      PENDING        PZ-1323/94
VISKING                    VD      PENDING        4259/54
VISKING                    MK      PENDING        PZ-1323/94                        19-Feb-04
VISKING                    CH      REGISTERED     7091           391192             25-Jun-11
VISKING RIBBON & CRO       AU      REGISTERED     100196         A100196            26-Sep-05
VISKING RIBBON & CRO       SE      REGISTERED     1836/49        67632              20-Jan-10
VISKING RIBBON & CRO       GB      REGISTERED     705237         705237             26-Feb-11
VISKING RIBBON & CRO       CH      REGISTERED     7091           378199             26-Sep-09
VISKASE & DEVICE           US      REGISTERED
VISKASE & DEVICE           DE      REGISTERED                    666911
VISKING & KATAKANA C       JP      REGISTERED     56033/88       2297491            31-Jan-11
VISKING (LOWE CASE LE      IT      REGISTERED     35441C/83      483860             10-Nov-03
VISKING (LOWER CASE L      IR      REGISTERED     16679          13394              22-Dec-04
VISKING (LOWER CASE L      NZ      REGISTERED     32374          32374              03-Oct-03
VISKING (LOWER CASE L      GB      REGISTERED     544621         544621             19-Sep-03
VISKING (LOWER CASE L      AU      REGISTERED     62654          A62654             10-Oct-03
VISKING CASING & KING      BR      REGISTERED     177597         002832356          30-Jun-03
VISKING CASING & KING      SE      REGISTERED     62560          62560              22-Feb-07
VISKING CASING & KING      CH      REGISTERED     3076           363143             02-May-08
VISKING RIBBON & CRO       NZ      REGISTERED     48166          48168              16-Aug-12
VISKING LOWER CASE LE      HK      REGISTERED     977/54         416/1955           30-Dec-10
VISKING(LOWER CASE LE      AT      REGISTERED     AM2021/53      29863              04-Feb-04
VISKIT                     CA      REGISTERED     271291         130547             11-Apr-08
VISLEX                     US      REGISTERED     75/392.120     2225539            23-Feb-09
VISLON                     US      REGISTERED     75/392128      2209002            08-Dec-08
VISMAX                     US      PENDING        76/259177
VISNAT                     WO      REGISTERED                    478307             27-Jul-03
VISNAT                     FR      REGISTERED                    1233599            19-Apr-03






                                                APPLICATION    REGISTRATION
    TRADEMARK           COUNTRY    STATUS         NUMBER          NUMBER       NEXT RENEWAL DATE
    ---------           -------    ------         ------          ------       -----------------
                                                                
VISREX                     WO      REGISTERED     200763         R280670            05-Mar-04
VISTAKON LOGO              US      SEARCH
VISTEN                     CA      REGISTERED     202630         129/33025          28-Mar-09
VISTEN                     US      REGISTERED     521546         502256             21-Sep-08
VISTEN                     MX      REGISTERED     47805          65297              04-Sep-10
VISTEN                     US      REGISTERED     71521545       525848             06-Jun-10
VIZPAK                     US      SEARCH
ZEPHYR                     CA      REGISTERED     202629         129/33023          28-Mar-09
ZEPHYR                     US      REGISTERED     428452         379873             30-Jul-10
ZEPHYR                     US      UNFILED
ZEPHYR (STYLIZED)          FR      REGISTERED     65453          1685751            08-Aug-11
ZEPHYR (STYLIZED)          IT      REGISTERED     28/171         756925             22-May-06
ZEPHYR (STYLIZED)          BR      REGISTERED     177598         002523078          18-Dec-10




                               ADDENDUM TO ANNEX 2

                                   TRADE NAMES



                                                       Registration           Filing or
    Trademark           Country      Status                 No.               Reg. Date
    ---------           -------      ------                 ---               ---------
                                                                  
Crustpak                   US       Registered           1,501.289            08/23/1988
EZ Smoke                   US       Registered           1,308,994            06/28/1993
EZ Smoke                   US       Registered           1,243,660            06/28/1983
EZ Peel                    US       Registered           1,671,120            01/07/1992
EZ Load                    US       Registered           1,775,218            06/08/1993
MP and Design              US       Registered           843,472              02/06/1968
NOJAX (Stylized)           US       Registered           417,447              10/30/1945
Visflex                    US       Registered           2,610,085            08/20/2002

EX-10.17

                                                                   EXHIBIT 10.17

                    INTELLECTUAL PROPERTY SECURITY AGREEMENT

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

                              W I T N E S S E T H:

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

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

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

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

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

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



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

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

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

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

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

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

                                     - 2 -


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

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

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

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

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

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

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

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

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

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

                                     - 3 -


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

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

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

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

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

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

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

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

                                     - 4 -


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

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

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

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

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

                                     - 5 -


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

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

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

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

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

                                     - 6 -


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

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

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

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

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

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

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

                                     - 7 -


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

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

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

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

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

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

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

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

                                     - 8 -


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

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

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

            26. Intercreditor Agreement.

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

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

                            [Signature Page Follows]

                                     - 9 -


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

                                                GRANTOR:
                                                VISKASE COMPANIES, INC.

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

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

GRANTEE:
LASALLE BANK NATIONAL ASSOCIATION,
  as Collateral Agent

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


                                    EXHIBIT A

                                     PATENTS

                               SCHEDULE OF PATENTS



                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
010831        8    US    01/13/1989    09/19/1989     298277          4867204       Granted   IMPROVED TUBULAR CELLULOSIC FOOD
012325             CA    02/18/1983    04/30/1985     421966-0        1188173       Granted   CONTROLLABLY MOISTURIZED MOLD RE
012540             CA    09/02/1983    01/13/1987     436014-1        1216459       Granted   PACKAGE ARTICLE FOR AUTOMATICALL
012541             CA    09/02/1983    11/12/1986     436015-0        1213775       Granted   METHOD AND APPARATUS FOR AUTOMA
012542             CA    09/02/1983    06/03/1986     436013-3        1205321       Granted   ARTICLE FOR USE IN AUTOMATICALLY A
012574        4    CA    10/01/1982    10/29/1985     41264303        1195872       Granted   TAR DEPLETED LIQUID SMOKE AND TREA
012678        1    US    02/13/1985    07/07/1987     701233          H304          Granted   PRINTING INK FOR USE ON FLEXIBLE FIL
012834             CA    08/18/1983    06/10/1986     434846-0        1205669       Granted   COMPOSITE SHIRRED CASING ARTICLE A
012896        1    CA    10/01/1982    05/21/1985     412676-9        1187324       Granted   TAR-DEPLETED LIQUID SMOKE TREATME
012896`       2    US    11/30/1983    09/02/1986     556443          4609559       Granted   TAR-DEPLETED LIQUID SMOKE TREATME
012982        1    CA    09/27/1984    06/21/1988     464185-0        1238230       Granted   FOOD CASING AND METHOD OF PREPARI
012982        1    US    01/26/1984    06/24/1986     573367          4596727       Granted   FOOD CASING AND METHOD OF PREPARI
012984        1    CA    10/01/1982   05/07/1985      412653-0        1186555       Granted   TAR-DEPLETED LIQUID SMOKE TREATME
012986             CA    04/23/1982    04/23/1985     401525-8        1185838       Granted   LIQUID COATING METHOD AND APPARAT
013154        A    CA    11/21/1985    05/31/1988     495950-7        1237324       Granted   STUFFING METHOD AND APPARATUS.
013154             CA    04/23/1982    02/11/1986     401524-0        1200420       Granted   STUFFING METHOD AND APPARATUS.
013155        2    CA    04/23/1982    10/22/1985     401523-1        1195544       Granted   CORED HIGH DENSITY SHIRRED CASINGS
013155        2    DE    04/29/1982    07/29/1993     P3216011.9      3216011.9     Granted   CORED HIGH DENSITY SHIRRED CASINGS
013155        2    MX    04/30/1982    01/09/1990     192526          160224        Granted   CORED HIGH DENSITY SHIRRED CASINGS
013155        4    US    08/02/1985    08/13/1991     761675          5038832       Granted   CORED HIGH DENSITY SHIRRED CASINGS
013217        2    US    07/13/1989    08/28/1990     380709          4951715       Granted   TENSION SLEEVE SUPPORTED CASING A
013217             CA    05/21/1982    03/05/1985     403499-6        1183396       Granted   TENSION SLEEVE SUPPORTED CASING A
013218             MX    07/16/1982    12/12/1989     193630          160148        Granted   HIGH COHERENCY SHIRRED CASINGS.
013218             US    07/17/1981    03/17/1987     283244          4649961       Granted   HIGH COHERENCY SHIRRED CASINGS.
013218             CA    06/30/1982    06/10/1986     406366-0        1205670       Granted   HIGH COHERENCY SHIRRED CASINGS.
013218        1    US    09/05/1986    07/12/1988     903919          4756057       Granted   HIGH COHERENCY SHIRRED CASINGS.
013308        1    US    09/08/1982    02/25/1986     415862          4572098       Granted   LIQUID SMOKE IMPREGNATION OF FIBRO
013309             IT    09/10/1982    12/31/1986     23205A/82       1152388       Granted   LIQUID SMOKE-IMPREGNATED FIBROUS
013309             BE    09/10/1982    03/10/1983     208994          894373        Granted   LIQUID SMOKE-IMPREGNATED FIBROUS
013309             CA    08/13/1982    09/04/1984     409414-0        1173695       Granted   LIQUID SMOKE-IMPREGNATED FIBROUS
013309             FI    09/08/1982    10/27/1986     82-3104         70776         Granted   LIQUID SMOKE-IMPREGNATED FIBROUS
013309             FR    09/10/1982    02/17/1986     82-15366        82-15366      Granted   LIQUID SMOKE-IMPREGNATED FIBROUS
013521             CA    02/09/1984    11/12/1986     447123-7        1213770       Granted   TAR-DEPLETED, CONCENTRATED, LIQUID
013646             B3    02/13/1984    09/17/1986     84101439.2      0118784       Granted   INHIBITION OF DISCOLORATION ON CELL
013646             CA    01/25/1984    10/14/1986     445988-1        1212570       Granted   INHIBITION OF DISCOLORATION ON CELL




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
013646             FI    02/13/1984    03/10/1988     84-0563         74593         Granted   INHIBITION OF DISCOLORATION ON CELL
013646             FR    02/13/1984    09/17/1986     84101439.2      0118784       Granted   INHIBITION OF DISCOLORATION ON CELL
013646             DE    02/13/1984    09/17/1986     84101439.2      P3460726.9    Granted   INHIBITION OF DISCOLORATION ON CELL
013646             GB    02/13/1984    09/17/1986     84101439.2      0118784       Granted   INHIBITION OF DISCOLORATION ON CELL
013687             SE    12/30/1986    09/02/1987     03110536.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013687             MX    10/21/1983    01/27/1989     199173          158374        Granted   METHOD AND APPARATUS FOR COMPAC
013687        1    MX    07/30/1985    08/27/1986     206149          182493        Granted   METHOD AND APPARATUS FOR COMPAC
013687             NO    10/21/1983    12/07/1988     83-1861         159132        Granted   METHOD AND APPARATUS FOR COMPAC
013687             ES    10/21/1983    06/25/1984     526637          526637        Granted   METHOD AND APPARATUS FOR COMPAC
013687             NL    10/21/1983    09/02/1987     83110536.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013687        B    ES    06/01/1984    02/13/1986     279639          279639        Granted   METHOD AND APPARATUS FOR COMPAC
013687             OK    10/21/1983    05/11/1992     4851/83         162568        Granted   METHOD AND APPARATUS FOR COMPAC
013687             CH    10/21/1983    09/02/1987     83110536.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013687             GB    10/21/1983    09/02/1987     83110538.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013687             US    10/22/1982    04/01/1986     436057          4578842       Granted   METHOD AND APPARATUS FOR COMPAC
013387        A    ES    06/01/1984    12/14/1984     533048          533048        Granted   METHOD AND APPARATUS FOR COMPAC
013687             DE    10/21/1983    09/02/1987     83110538.6      P3373259.0    Granted   METHOD AND APPARATUS FOR COMPAC
013687             FI    10/20/1983    08/08/1988     83-3840         75723         Granted   METHOD AND APPARATUS FOR COMPAC
013687        A    GA    04/20/1988    10/06/1992     564579          1308296       Granted   METHOD AND APPARATUS FOR COMPAC
013687        1    ES    07/03/1985    04/15/1991     533048          533048        Granted   METHOD AND APPARATUS FOR COMPAC
013687             GA    09/30/1983    08/23/1988     438092-4        1240878       Granted   METHOD AND APPARATUS FOR COMPAC
013687             BE    10/21/1983    09/02/1987     83110536.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013687        1    AU    10/11/1985    12/09/1987     48580/85        563259        Granted   METHOD AND APPARATUS FOR COMPAC
013687        1    US    02/13/1985    09/01/1987     701309          4690173       Granted   METHOD AND APPARATUS FOR COMPAC
013687             FR    10/21/1983    09/02/1987     83110536.6      0107190       Granted   METHOD AND APPARATUS FOR COMPAC
013774             ES    03/30/1984    09/30/1988     291992          291992        Granted   SHIRRED CASING STICK ARTICLE WITH E
013774        B    ES    07/01/1985    11/14/1986     544762          544762        Granted   SHIRRED CASING STICK ARTICLE WITH E
013774             BE    03/30/1984    09/07/1988     84103560.3      0123933       Granted   SHIRRED CASING STICK ARTICLE WITH E
013774        A    ES    07/01/1985    11/14/1986     544761          544761        Granted   SHIRRED CASING STICK ARTICLE WITH E
013775             CA    03/30/1984    02/16/1988     451038-1        1232788       Granted   ARTICLE, METHOD FOR CONTROLLING C
013786             CA    11/23/1984    09/20/1986     468577-8        1242060       Granted   TUBULAR CORE FOR SHIRRED CASING A
013836             CA    06/18/1985    01/17/1989     484358-4        1248813       Granted   COMPOSITE SHIRRED CASING ARTICLE
013836        1    US    04/04/1984    06/10/1986     595601          4594251       Granted   PREPARATION OF TAR-DEPLETED LIQUID
013836        1    CA    04/13/1984    10/06/1987     451996-1        1227690       Granted   PREPARATION OF TAR-DEPLETED LIQUID
013924        A    CA    08/18/1988    09/26/1989     575299          1260757       Granted   STUFFING METHOD AND APPARATUS.




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
013924             CA    05/18/1984    11/15/1988     454756          1244709       Granted   STUFFING METHOD AND APPARATUS.
013924        2    US    07/22/1956    03/17/1987     885753          46496602      Granted   STUFFING METHOD AND APPARATUS
014328             CA    02/08/1985    09/08/1987     473968-0        1226473       Granted   METHOD AND APPARTUS FOR CONTRO
014571             CA    06/18/1985    09/26/1989     484361-4        1261196       Granted   CELLULOSIC FOOD CASINGS.
014848             CA    09/08/1987    05/25/1993     546302          1318175       Granted   FLAT STOCK FIBROUS CELLULOSIC FOO
014995             CA    04/09/1986    05/23/1989     506169          1254439       Granted   DISPOSABLE TENSION SLEEVE FOR A ST
015221             CH    08/03/1989    10/05/1994     89114385.1      0354482       Granted   BURNISHED END SHIRRED CASING STICK
015221             US    08/08/1988    10/17/1989     229661          4873748       Granted   BURNISHED END SHIRRED CASING STICK
015221             FR    08/03/1989    10/05/1994     89114385.1      0354483       Granted   BURNISHED END SHIRRED CASING STICK
015221             BE    08/03/1989    10/05/1994     89114385.1      0354483       Granted   BURNISHED END SHIRRED CASING STICK
015221             GB    08/03/1989    10/05/1984     89114385.1      0354482       Granted   BURNISHED END SHIRRED CASING STICK
015221             CA    08/04/1989    12/27/1994     607604          1333673       Granted   BURNISHED END SHIRRED CASING STICK
015221             DE    08/03/1989    10/05/1994     89114385.1      P68918654.    Granted   BURNISHED END SHIRRED CASING STICK
015221             JP    08/02/1989    08/02/1986     199521/89       2087593       Granted   BURNISHED END SHIRRED CASING STICK
015221             AT    08/03/1989    10/05/1994     89114385.1      0354483       Granted   BURNISHED END SHIRRED CASING STICK
015347             CA    03/19/1987    01/28/1992     532525          1294818       Granted   END CLOSURE FOR SHIRRED CASING STI
015347        1    US    06/16/1987    07/26/1988     062750          4759100       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             GB    03/20/1987    09/19/1990     87104129.9      0239029       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             DE    03/20/1987    09/19/1990     87104129.8      P3764984.1    Granted   END CLOSURE FOR SHIRRED CASING STI
015347             JP    03/23/1987    02/17/1993     065921/87       1732797       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             BE    03/20/1987    09/19/1990     87104129.9      0239029       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             ES    03/20/1987    09/19/1990     87104129.9      0239029       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             US    03/21/1986    09/15/1987     842225          4693280       Granted   END CLOSURE FOR SHIRRED CASING STI
015347             FR    03/20/1987    09/19/1990     87104129.9      0239029       Granted   END CLOSURE FOR SHIRRED CASING STI
020002        1    US    04/19/1988    04/04/1989     183214          4818551       Granted   LIQUID SMOKE IMPREGNATED SHIRRED
020003             CA    10/07/1987    01/23/1990     548610          1264599       Granted   CLAMP MEANS FOR STUFFING MACHINE
020005             CA    07/28/1987    07/11/1989     543180          1257134       Granted   DISPOSABLE TENSION SLEEVE FOR A ST
020006        1    US    01/19/1988    10/18/1980     145083          4778639       Granted   CARAMEL-CONTAINING CELLULOSIC ART
020006        2    US    01/19/1988    11/01/1988     144984          4781931       Granted   CARAMEL-CONTAINING CELLULOSIC ART
020006             US    10/20/1986    07/12/1988     920381          4756914       Granted   CARAMEL-CONTAINING CELLULOSIC ART
020006             MX    10/19/1987    10/19/1987     8897            168651        Granted   CARAMEL-CONTAINING CELLULOSIC ART
020006             CA    10/15/1987    05/25/1993     549353          1318176       Granted   CARAMEL-CONTAINING CELLULOSIC ART
020016             US    04/16/1987    08/30/1988     039197          4766645       Granted   SIZE CONTROL SYSTEM FOR STUFFING
020026             US    08/31/1987    03/27/1990     091172          4911963       Granted   MULTILAYER FILM CONTAINING AMORPH
020026        1    US    03/26/1990    12/31/1991     498876          5077109       Granted   MULTILAYER FILM CONTAINING AMORPH




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020027             US    01/06/1988    07/25/1989     141226          4851290       Granted   MULTILAYER FILM CONTAINING AMORPH
020027             CA    01/05/1989    10/18/1994     587614          1332581       Granted   MULTILAYER FILM CONTAINING AMORPH
020028             CA    09/08/1988    01/28/1992     576768          1294748       Granted   METHOD AND APPARATUS FOR SHIRRIN
020028             BE    09/14/1988    01/08/1992     88114998.3      0314905       Granted   METHOD AND APPARATUS FOR SHIRRIN
020028             US    11/02/1987    09/27/1988     115721          4773127       Granted   METHOD AND APPARATUS FOR SHIRRIN
020028             ES    09/14/1988    01/08/1992     88114998.3      2027745       Granted   METHOD AND APPARATUS FOR SHIRRIN
020030             BE    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030        1    US    04/16/1991    09/06/1994     685950          5344679       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             IT    08/22/1989    05/10/1995     89115458.5      26401BE/95    Granted   AMORPHOUS NYLON COPOLYMER & cop
020030             GB    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             US    08/23/1988    10/01/1991     235258          5053259       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             NL    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             FR    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             SE    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             AT    08/22/1989    05/10/1995     89115458.5      0358038       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             CA    08/17/1989                   608589                        Pending   AMORPHOUS NYLON COPOLYMER & COP
020030        2    US    06/30/1994    01/02/1996     268359          5480945       Granted   AMORPHOUS NYLON COPOLYMER & COP
020030             DE    08/22/1989    05/10/1995     89115458.5      P68922554.    Granted   AMORPHOUS NYLON COPOLYMER & COP
020031             SE    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             BE    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031        1    US    09/07/1989    07/09/1991     403964          5030464       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             US    11/09/1987    12/26/1989     117863          4889751       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             FR    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             JP    11/09/1988    02/26/1986     283504/88       2022878       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             DE    11/09/1988    03/11/1992     88118642.3      P3869063.2    Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             GB    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             CA    11/08/1988    05/24/1994     582677          1329721       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             IT    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             AT    11/09/1988    03/11/1992     88118642.3      0315965       Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020031             FI    11/08/1988    04/11/1994     88/5134         90817         Granted   LIQUID SMOKE IMPREGNATED PEELABLE
020035             US    04/18/1988    06/13/1989     182531          4837897       Granted   MEAT PRODUCT PACKAGE CONTAINING
020057             US    05/06/1988    01/28/1992     191100          5084283       Granted   FOOD CASING FOR MAKING INDICIA BEA
020057             CA    05/05/1989    04/11/1995     598838          1335184       Granted   FOOD CASING FOR MAKING INDICIA BEA
020068             US    10/13/1989    04/28/1992     420854          5108804       Granted   BUFFERED ACID-TREATED FOOD CASING.
020068        2    US    03/12/1992    05/04/1993     851383          5207609       Granted   BUFFERED ACID-TREATED FOOD CASING.




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020068        1    US    03/12/1992    05/04/1993     851385          5207608       Granted   BUFFERED ACID-TREATED FOOD CASING.
020073             BE    07/31/1989    05/18/1994     89114135.0      0353697       Granted   METHOD & APPARATUS FOR SEVERING S
020073             FR    07/31/1989    04/18/1994     89114135.0      0353697       Granted   METHOD & APPARATUS FOR SEVERING S
020073             DE    07/31/1989    04/18/1994     89114135.0      P68915360.    Granted   METHOD & APPARATUS FOR SEVERING S
020073             GB    07/31/1989    04/18/1994     89114135.0      0353697       Granted   METHOD & APPARATUS FOR SEVERING S
020073             JP    07/31/1989    09/19/1996     197031/89       2562969       Granted   METHOD & APPARATUS FOR SEVERING S
020073             US    08/01/1988    12/12/1989     226635          4885821       Granted   METHOD & APPARATUS FOR SEVERING S
020073             CA    07/31/1989    10/26/1993     607050          1323476       Granted   METHOD & APPARATUS FOR SEVERING S
020079        2    US    02/01/1990    06/04/1991     473550          5021252       Granted   FOOD BODY WITH SURFACE COLOR INDI
020079        3    US    02/01/1990    09/17/1991     473553          5049399       Granted   FOOD BODY WITH SURFACE COLOR INDI
020079        1    US    02/01/1990    07/09/1991     473549          5030486       Granted   FOOD BODY WITH SURFACE COLOR INDI
020079             US    12/16/1988    04/17/1990     285454          4917924       Granted   FOOD BODY WITH SURFACE COLOR INDI
020079             CA    05/05/1989    01/31/1995     598839          1334141       Granted   FOOD BODY WITH SURFACE COLOR INDI
020085        1G   EP    11/13/2000                   00124260.1                    PENDING   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    FR    02/16/1990    04/28/1990     90-103033.8     0384319       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    JP    02/21/1990    06/26/1998     90-038541       2794318       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    FI    02/20/1990    09/15/2000     90-0844         105525        Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    DE    02/16/1990    04/28/1999     90-103033.8     6903307070    Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    AT    02/16/1990    04/28/1999     90-103033.8     0384319       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    CA    02/14/1990    11/16/1999     2009990-9       2009998       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    AU    02/20/1990    06/23/1994     53023/94        646797        Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    BE    02/16/1990    04/28/1999     90-103033.8     0384319       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   GB    08/08/1996    08/16/2001     96112759.4      0750853       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   FR    08/08/1996    08/16/2001     96112759.4      0750853       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    NZ    02/13/1990    02/21/1994     244737          244737        Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    ES    02/16/1990    04/28/1999     90-103033.8     ES2132059T    Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        6    US    04/23/1993    11/12/1998     051260          5573801       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   NZ    10/14/1992    02/17/1994     244737          244737        Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   AU    01/05/1994    04/30/1995     94-53023        665646        Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    IT    02/16/1990    04/28/1999     90-103033.8     0384319       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   DE    08/08/1996    04/30/2001     96112759.4      6903377850    Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        5    US    04/23/1993    11/12/1996     051259          5573800       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        7    US    04/23/1993    11/12/1995     051258          5573797       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1A   BE    08/08/1996    08/16/2001     98112759.4      0750853       Granted   ANTIMICROBIAL FILM & METHOD FOR SU
020085        1    GB    02/16/1990    04/28/1999     90-103033.8     0384319       Granted   ANTIMICROBIAL FILM & METHOD FOR SU





                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020087        1    JP    01/10/1980    07/10/1996     90-001854       2068753       Granted   STUFFING METHOD AND APPARATUS.
020087        1    US    10/26/1989    10/06/1992     425435          5152712       Granted   STUFFING METHOD AND APPARATUS
020087        2    US    12/01/1989    02/12/1991     442469          4991260       Granted   STUFFING METHOD AND APPARATUS
020087        1    CA    12/18/1989    01/17/1995     2005808-1       2005808       Granted   STUFFING METHOD AND APPARATUS
020093        1    US    08/30/1990    02/04/1992     574850          5085890       Granted   FOOD BODY WITH SURFACE COLOR INDI
020093        2    US    08/30/1990    07/16/1991     574971          5032416       Granted   FOOD BODY WITH SURFACE COLOR INDI
020093        2    CA    05/05/1989    01/31/1995     596836          1334140       Granted   FOOD BODY WITH SURFACE COLOR INDI
020093        1    CA    05/05/1989    01/31/1995     598840          1334142       Granted   FOOD BODY WITH SURFACE COLOR INDI
020097             US    07/11/1990    07/27/1993     551225          5230933       Granted   ACID RESISTANT PEELABLE CASING.
020104             US    01/12/1990    11/20/1990     463768          4970758       Granted   STUFFING METHOD AND APPARATUS.
020111             JP    08/07/1991    10/09/1998     91-221190       2836042       Granted   COLORED CELLULOSIC CASING WITH CL.
020111             MX    08/07/1991    04/05/1995     91/00573        177547        Granted   COLORED CELLULOSIC CASING WITH CL.
020111             BR    08/06/1991    02/23/1999     P19103380-2     P19103380-2   Granted   COLORED CELLULOSIC CASING WITH CL.
020111             CA    07/19/1991    04/21/1998     2047477         2047477       Granted   COLORED CELLULOSIC CASING WITH CL.
020111             IT    08/06/1991    04/26/1995     91113147.6      28148BE/95    Granted   COLORED CELLULOSIC CASING WITH CL.
020111             FR    08/06/1991    04/26/1995     91113174.6      0473952       Granted   COLORED CELLULOSIC CASING WITH CL.
020111        A    MX    08/07/1991                   1995000317                    Pending   COLORED CELLULOSIC CASING WITH CL.
020111        2    US    12/21/1992    04/04/2000     07/993551       6045848       Granted   COLORED CELLULOSIC CASING WITH CL.
020111             AU    08/07/1991    12/06/1994     81693/91        652167        Granted   COLORED CELLULOSIC CASING WITH CL.
020111             ES    08/06/1991    04/26/1995     91113174.6      ES2071874T    Granted   COLORED CELLULOSIC CASING WITH CL.
020111             ZA    07/24/1991    04/29/19982    91/5812         91/5812       Granted   COLORED CELLULOSIC CASING WITH CL.
020111        1    US    06/09/1992    02/06/2001     07/898373       618382681     Granted   COLORED CELLULOSIC CASING WITH CL.
020111             DE    08/06/1991    04/26/1995     91113174.6      691212.5-08   Granted   COLORED CELLULOSIC CASING WITH CL.
020115             PT    09/17/1991    11/12/1997     98993           98993         Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             BE    09/14/1991    05/08/1996     91115622.2      0476553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             DK    09/14/1991    05/08/1998     91115622.2      0476553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             FR    09/14/1991    05/08/1998     81115622.2      0476553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             US    09/18/1990    10/26/1993     584563          5256458       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             NZ    09/04/1991    09/01/1993     239662          239662        Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115        1    US    06/15/1992    04/19/1994     076888          5304385       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             MX    09/17/1991    08/01/1994     09/01115        175499        Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             DE    09/14/1991    05/08/1996     91115622.2      69119334.7    Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             GB    09/14/1991    05/08/1996     91115622.2      0476553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             CA    08/30/1991    10/10/1995     2050453         2050453       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             BR    09/18/1991    05/16/2000     P19103999-1     P19103999     Granted   SHIRRED THERMOPLASTIC CASING HAVI




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020115             AU    09/17/1991    11/29/1994     84502/91        651994        Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             NL    09/14/1991    05/08/1996     91115622.2      0476553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             AT    09/14/1991    05/08/1996     91115822.2      0478553       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             ES    09/14/1991    05/08/1996     91115622.2      ES 2088448    Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115             ZA    09/03/1991    05/27/1992     91/6887         91/6887       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020115        1    US    06/15/1993    04/19/1994     076688          5304385       Granted   SHIRRED THERMOPLASTIC CASING HAVI
020120        1    CA    03/03/1993    10/16/2001     2090684         2090884       Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    MX    03/04/1993                   93-01216                      Pending   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    US    02/10/1993    10/25/1994     015751          5358765       Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    BR    03/04/1993    07/11/2000     P19300746-9     P19300746-9   Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    JP    03/04/1993    06/26/1998     93-069438       2794377       Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    GB    03/03/1993    09/25/1996     93301625.5      0559456       Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    DE    03/03/1993    09/25/1996     93301625.5      69304956.1    Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        2    US    07/26/1994    11/26/1995     280744          5470519       Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120        1    FI    03/03/1993    05/15/2001     930930          106913        Granted   CELLULOSIC ARTICLE CONTAINING AN O
020120             DE    03/03/1993    09/25/1996     93301625.5      69304956.1    Granted   CELLULOSIC ARTICLE CONTAINING AN O
020122             US    07/01/1991    07/27/1993     724058          5230651       Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    FR    08/05/1992    11/15/1995     92113356.7      0537435       Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    ES    08/05/1992    11/15/1995     92113356.7      ES2079754T    Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    BR    07/15/1992    04/29/1997     PI-9202691-5    PI 9202691    Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    DE    08/05/1992    11/15/1995     92113356.7      69206101.0    Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    CA    06/12/1992    04/22/1997     2071184         2071184       Granted   METHOD AND APPARATUS FOR SEVERIN
020127        2    BE    08/05/1992    11/15/1995     92113356.7      0537435       Granted   METHOD AND APPARATUS FOR SEVERIN
020127             US    10/15/1991    09/08/1992     775861          5145449       Granted   METHOD AND APPARATUS FOR SEVERIN
020127        1    US    04/15/1992    12/22/1992     668431          5173074       Granted   METHOD AND APPARATUS FOR SEVERIN
020130             JP    12/21/1992    10/03/1996     05-512450       2568156       Granted   CELLULOSE FOOD CASING METHOD AND
020130             AT    12/21/1992    01/29/1997     93901268.6      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             CH    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             GB    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             BE    12/21/1992    01/29/1997     93901238.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             FR    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             DE    12/21/1992    01/29/1997     93901268.8      69217211.4    Granted   CELLULOSE FOOD CASING METHOD AND
020130             BR    12/21/1992                   P19205562-1                   Pending   CELLULOSE FOOD CASING METHOD AND
020130             FI    12/21/1992                   93/4067                       Pending   CELLULOSE FOOD CASING METHOD AND
020130        2    US    01/10/1994    09/19/1995     08/179418       5451364       Granted   CELLULOSE FOOD CASING METHOD AND




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020130             NL    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             LU    12/21/1992    01/29/1997     3939012268.     0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130        C    EP    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130        3    GB    12/23/1994    10/16/2002     94309829.3      0692194       Granted   CELLULOSE FOOD CASING METHOD AND
020130        3    FR    12/23/1994    10/16/2002     94309829.3      0692194       Granted   CELLULOSE FOOD CASING METHOD AND
020130        3    BE    12/23/1994    10/16/2002     94309829.3      0592194       Granted   CELLULOSE FOOD CASING METHOD AND
020130        2    DE    12/05/1994    08/02/2000     84309828.5      69425240T     Granted   CELLULOSE FOOD CASING METHOD AND
020130        2    FR    12/05/1994    07/12/2000     94309828.5      0662283       Granted   CELLULOSE FOOD CASING METHOD AND
020130        A    EP    12/21/1992    01/29/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130        2    AT    12/05/1994    07/12/2000     94309828.5      0862283       Granted   CELLULOSE FOOD CASING METHOD AND
020130        B    EP    12/21/1992    01/28/1997     93901268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130        5    US    05/04/1995    08/19/1997     08/434709       5658524       Granted   CELLULOSE FOOD CASING METHOD AND
020130        6    US    08/16/1995    12/30/1997     08/515880       5702783       Granted   CELLULOSE FOOD CASING METHOD AND
020130        3    EP    12/23/1994    10/16/2002     94309829.3      0692194       Granted   CELLULOSE FOOD CASING METHOD AND
020130        2    EP    12/23/1994    07/12/2000     94309828.5      0662283       Granted   CELLULOSE FOOD CASING METHOD AND
020130             US    01/17/1992    01/11/1994     822506          5277857       Granted   CELLULOSE FOOD CASING METHOD AND
020130             AU    12/21/1992    02/15/1995     33219/93        654080        Granted   CELLULOSE FOOD CASING METHOD AND
020130             DK    12/21/1992    01/29/1997     93801268.8      0577790       Granted   CELLULOSE FOOD CASING METHOD AND
020130             MX    01/15/1993    12/09/1997     930227          187388        Granted   CELLULOSE FOOD CASING METHOD AND
020130        3    US    07/15/1994    09/03/1996     275669          H1592         Granted   CELLULOSE FOOD CASING METHOD AND
020130             CA    12/21/1992    07/06/1999     2096143         2906143       Granted   CELLULOSE FOOD CASING METHOD AND
020130        4    US    03/28/1995    01/28/1997     08412677        5597587       Granted   CELLULOSE FOOD CASING METHOD AND
020130        2    BE    12/05/1994    07/12/2000     94309828.5      0662283       Granted   CELLULOSE FOOD CASING METHOD AND
020133             JP    03/24/1993    02/13/1997     93-087876       20606781      Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             IT    03/26/1993    06/12/1996     93302345.9      056282        Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             DE    03/26/1993    06/12/1996     93392345.9      69303103.4    Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             AT    03/26/1993    06/12/1996     93302345.9      0565282       Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             MX    03/29/1993    12/06/1996     93-01758        183481        Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             CA    03/24/1993    07/09/1996     2092326         2092326       Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             US    03/30/1993    07/12/1996     859763          5326733       Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133        1    US    02/15/1994    03/21/1995     196722          5399213       Granted   SHIRRED FIBROUS CASING ARTICLE AND
020133             FR    03/26/1993    06/12/1996     93302345.9      0565282       Granted   SHIRRED FIBROUS CASING ARTICLE AND
020137             US    09/23/1992    12/16/1997     949228          5698279       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             DE    09/22/1993    06/17/1998     93115271.4      6931915.3     Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             NL    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020137             MX    09/22/1993    10/18/1999     93058.8         193728        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             IT    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             CH    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             IE    09/22/1993    06/17/1998     93114271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             AU    09/22/1993    06/27/1996     47501/93        669926        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             AR    09/21/1993    07/31/1997     325055          250834        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             BR    09/20/1993    09/05/2000     PI-9303833-0    PI9303833-0   Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             CA    08/19/1993    05/11/1999     2104444         2104444       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             GB    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             SE    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             ES    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             PT    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             LU    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             GR    09/22/1993    06/17/1998     93115271.4      980401755     Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             BE    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             AT    09/22/1993    06/17/1998     93115271.4      E167 430      Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             DK    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020137             FR    09/22/1993    06/17/1998     93115271.4      0589431       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             BR    09/20/1993    09/05/2000     PI 9303834-8    PI9303834-8   Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138        A    EP    09/22/1993    07/16/1997     93115288.8      0589436       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             US    09/23/1993    08/27/1996     948552          5549943       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             IT    09/22/1993    07/16/1997     93115288.8      0589436       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             MX    09/22/1993    12/10/1997     935617          197424        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             NZ    08/31/1993                   248545          248545        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138        B    EP    09/22/1993    07/16/1997     93115288.8      0589435       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             AR    11/02/1993    06/25/1999     326470          253.391       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             CA    08/19/1993    03/30/1999     2104442         2104442       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             ES    09/22/1993    07/16/1997     93115288.8      2105028       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             GB    09/22/1993    07/16/1997     93115288.8      0566436       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             AU    09/22/1993    11/09/1995     4749993         664308        Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             DE    09/22/1993    07/16/1997     93115288.8      69312195.5    Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             FR    09/22/1993    07/16/1997     93115288.8      0589436       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020138             BE    09/22/1993    07/16/1997     93115288.8      0589436       Granted   HEAT SHRINKABLE NYLON FOOD CASIN
020143             MX    08/19/1993    12/17/1996     93-05050        183597        Granted   END CLOSURES FOR SHIRRED CASING S
020143             JP    06/10/1993    05/09/1997     93-163809       2646326       Granted   END CLOSURES FOR SHIRRED CASING S





                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020143             US    08/20/1992    08/24/1993     932530          5238443       Granted   END CLOSURES FOR SHIRRED CASING S
020143             FR    08/18/1993    05/29/1996     93113221.1      0583790       Granted   END CLOSURES FOR SHIRRED CASING S
020143             BE    08/18/1993    05/29/1996     93113221.1      0583780       Granted   END CLOSURES FOR SHIRRED CASING S
020143             CA    04/14/1993    01/16/1996     2093980         2093980       Granted   END CLOSURES FOR SHIRRED CASING S
020143             BR    08/12/1993    09/29/1998     PI9303366-4     PI9303366-4   Granted   END CLOSURES FOR SHIRRED CASING S
020143             ES    08/18/1993    05/29/1996     93113221.1      ES2087624T    Granted   END CLOSURES FOR SHIRRED CASING S
020143             DE    08/18/1993    05/29/1996     93113221.1      69302868      Granted   END CLOSURES FOR SHIRRED CASING S
020149             GB    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             DE    11/17/1995    10/10/2001     95118159.3      6952311540    Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             CA    08/23/1995                   2156765                       Pending   A COMPOUND FIBROUS DOPE COMPOSITI
020149             JP    11/16/1995    08/25/2000     07-321271       3103756       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             BE    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             DK    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             FR    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             BR    10/05/1995                   PI 9504780-6                  Pending   A COMPOUND FIBROUS DOPE COMPOSITI
020149             MX    11/16/1995    07/27/19999    954797          192773        Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             IT    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             NL    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149        1    US    04/15/1996    04/28/1996     632051          5744251       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             CH    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             AT    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             LI    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             AU    11/17/1995    11/17/1995     95-37924        699226        Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             FI    11/17/1995                   955573                        Pending   A COMPOUND FIBROUS DOPE COMPOSITI
020149             SE    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             LU    11/17/1995    10/10/2001     95118159.3      0712889       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020149             US    11/18/1994    02/18/1997     342287          5603884       Granted   A COMPOUND FIBROUS DOPE COMPOSITI
020151             MX    03/11/1994    11/07/1997     941819          186934        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             BR    03/11/1994    11/24/1994     PI9401134-6     PI9401134-6   Granted   PACKAGE OF SHIRRED FOOD CASING AN
020193             IT    08/13/1999                   99306405-4                    Pending   METHOD FOR REMOVING CELLULOSIC C
020193             FR    08/13/1999                   99306405-4                    Pending   METHOD FOR REMOVING CELLULOSIC C
020193             ES    08/13/1999                   99306405-4                    Pending   METHOD FOR REMOVING CELLULOSIC C
020193             NL    08/13/1999                   99306405-4                    Pending   METHOD FOR REMOVING CELLULOSIC C
020195             CA    04/28/1999                   2270297                       Pending   METHOD FOR THE NON CONTACT PRINTI
020195             US    10/13/1998    03/13/2001     09/169990       6200510.81    Granted   METHOD FOR THE NON CONTACT PRINTI




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020197             US    04/22/1999    07/24/2001     09/296288       6264874       Granted   METHOD FOR CONTROLLING THE DIAMET
020197             CA    09/21/9999                   2282927                       Pending   METHOD FOR CONTROLLING THE DIAMET
020201             CA    02/21/2000                   2299191                       Pending   Method for extruding tubular film
020201             GB    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020201             US    08/27/1999    11/20/2001     09/384106       6319457       Granted   Method for extruding tubular film
020201             AT    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020201             DE    04/18/2000    09/04/2002     00303270.3      6000039810    Granted   Method for extruding tubular film
020201             BE    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020201             FR    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020201             FI    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020201             ES    04/18/2000    09/04/2002     00303270.3      1078730       Granted   Method for extruding tubular film
020202             CA    05/16/2000                   2308906                       Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             GB    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             BE    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             FI    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             FR    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             US    10/18/1999                   09/419.933                    Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             DE    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020202             ES    07/14/2000                   003059623                     Pending   CELLULOSE FOOD CASING, CELLULOSE
020203             CA    06/07/2000                   2310948                       Pending   METHOD FOR IMPROVING THE REWET SHR
020203             ES    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             US    11/17/1999                   09/441517                     Pending   METHOD FOR IMPROVING THE REWET SHR
020203             AT    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             MX    09/21/2000                   0009263                       Pending   METHOD FOR IMPROVING THE REWET SHR
020203             BE    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             FI    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             GB    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             DE    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020203             FR    07/14/2000                   00306019.1                    Pending   METHOD FOR IMPROVING THE REWET SHR
020206             GB    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             PL    05/09/2001                   P347449                       Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             LT    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             FI    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             DE    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             FR    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020206             BE    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             AT    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020151             JP    03/10/1994    04/05/2002     06-065457       3295219       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151        1    US    03/11/1994    01/17/1995     209128          5382190       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             GB    02/25/1994    07/22/1998     94301356.5      614610        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             NL    02/25/1994    07/22/1998     94301356.5      614610        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             FR    02/25/1994    07/22/1998     94301356.5      614610        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             ES    02/25/1994    07/22/1998     94301356.5      614610        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             BE    02/25/1994    07/22/1998     94301356.5      614610        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             US    03/12/1993    01/17/1995     030923          5381643       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             PH    03/11/1994    09/16/1997     47912           30652         Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151        1    CA    05/16/1994    02/21/1997     2123655         2123655       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             DE    02/25/1994    07/22/1998     94301356.5      69411785      Granted   PACKAGE OF SHIRRED FOOD CASING AN
020151             CA    02/22/1994    09/23/1997     2116189         2116189       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020154        1    US    02/22/1999    11/07/2000     09/255.006      6143344       Granted   SELF-COLORING CASING WITH A BETTER
020154             ES    09/21/1994    06/19/1996     P9401993        2076904       Granted   SELF-COLORING CASING WITH A BETTER
020154             US    09/21/1993    09/21/1999     08/124063       5955126       Granted   SELF-COLORING CASING WITH A BETTER
020154             BR    09/20/1994                   PI9403792-2                   Pending   SELF-COLORING CASING WITH A BETTER
020154             CL    09/20/1994    12/21/1998     94-01360        39.828        Granted   SELF-COLORING CASING WITH A BETTER
020156             DE    08/15/1994    10/21/1998     94306008.7      69414059      Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             BE    08/15/1994    10/21/1998     94306008.7      0641725       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             ES    08/15/1994    10/21/1998     9430600837      0641725       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             FR    08/15/1994    10/21/1998     94306008.7      0641725       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             GB    08/15/1994    10/21/1998     94306008.7      0641725       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             US    08/27/1993    10/18/1994     112527          6356007       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             JP    08/18/1994                   94-215244                     Pending   PACKAGE OF SHIRRED FOOD CASING AN
020156             CA    07/13/1994    11/16/1999     2127955         2127955       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             MX    08/26/1994    12/15/1997     946527          187485        Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             NL    08/15/1994    10/21/1998     94306008.7      0641725       Granted   PACKAGE OF SHIRRED FOOD CASING AN
020156             BR    08/26/1994    11/24/1998     PI9403342-0     PI9403342-0   Granted   PACKAGE OF SHIRRED FOOD CASING AN
020162             DE    01/10/1995    03/25/1998     95100261.7      69501843      Granted   METHOD AND APPARATUS FOR PACKAGI
020162             ES    01/10/1995    03/25/1998     95100261.7      2114233T3     Granted   METHOD AND APPARATUS FOR PACKAGI
020162             GB    01/10/1995    03/25/1998     95100261.7      0675043       Granted   METHOD AND APPARATUS FOR PACKAGI
020162             AU    01/09/1995    08/14/1997     10098/95        677469        Granted   METHOD AND APPARATUS FOR PACKAGI
020162             BR    03/10/1995    08/08/2000     PI9500060-7     PI9500060-7   Granted   METHOD AND APPARATUS FOR PACKAGI




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020162             MX    01/10/1995    10/08/1997     95-00394        186322        Granted   METHOD AND APPARATUS FOR PACKAGI
020162             CA    11/16/1994    11/24/1998     2135943         2135943       Granted   METHOD AND APPARATUS FOR PACKAGI
020162             FR    01/10/1995    03/25/1998     95100261.7      0675043       Granted   METHOD AND APPARATUS FOR PACKAGI
020162             US    03/29/1994    02/21/1998     219564          5391108       Granted   METHOD AND APPARATUS FOR PACKAGI
020162             BE    01/10/1995    03/25/1998     95100261.7      0675043       Granted   METHOD AND APPARATUS FOR PACKAGI
020163             FR    08/07/1995    11/04/1998     95112413.0      0696542       Granted   PERFORATED PACKAGING FOR FOOD CA
020163             CA    07/12/1995    10/17/2000     2153713         2153713       Granted   PERFORATED PACKAGING FOR FOOD CA
020163             ES    08/07/1995    11/04/1998     95112413.0      ES2125534T    Granted   PERFORATED PACKAGING FOR FOOD CA
020163             DE    08/07/1995    11/04/1998     95112413.0      69505751.0    Granted   PERFORATED PACKAGING FOR FOOD CA
020163             BE    08/07/1995    11/04/1998     95112413.0      0696542       Granted   PERFORATED PACKAGING FOR FOOD CA
020206             MX    07/18/2001                   2001005024                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             CA    04/26/2001                   2345193                       Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             AU    05/18/2001                   4611001                       Pending   MANDREL STRUCTURE FOR USE IN MAN
020206             US    05/19/2000    09/03/2002     09/574209       6444161       Granted   MANDREL STRUCTURE FOR USE IN MAN
020206             ES    05/02/2001                   01304018.3                    Pending   MANDREL STRUCTURE FOR USE IN MAN
020213             US    05/26/2002                   60/383107                     Pending   FOOD PROCESSING AND PACKAGING FIL
020214             MX    10/03/2001                   2001/009994                   Pending   METHOD AND APPARATUS FOR USE IN M
020214             IE    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             ES    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             AU    10/01/2001                   7731801                       Pending   METHOD AND APPARATUS FOR USE IN M
020214             DE    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             FR    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             AT    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             US    10/04/2001                   09/971245                     Pending   METHOD AND APPARATUS FOR USE IN M
020214             CA    10/02/2001                   2358016                       Pending   METHOD AND APPARATUS FOR USE IN M
020214             GB    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020214             BE    10/02/2001                   01308396.9                    Pending   METHOD AND APPARATUS FOR USE IN M
020215             US    10/16/2001                   09/688556                     Pending   FOOD CASING
020216             CA    04/05/2002                   2380778                       Pending   SELF-COLORING RED SMOKED CASING
020216             US    03/22/2002                   10/102724                     Pending   SELF-COLORING RED SMOKED CASING
020218             CA    03/21/2002                   2378040                       Pending   PROCESSING WRAP CONTAINING COLOR
020218             US    03/06/2002                   10/090833                     Pending   PROCESSING WRAP CONTAINING COLOR
020219             US    05/10/2002                   10/142160                     Pending   NYLON FOOD CASING HAVING A BARRIE
020219             CA    05.39.2992                   2388087                       Pending   NYLON FOOD CASING HAVING A BARRIE
020219             MX    06/16/2003                   2002006052                    Pending   NYLON FOOD CASING HAVING A BARRIE




                           VISKASE PROPRIETARY RIGHTS
                            (PATENTS / APPLICATIONS)



CASENUMBER   SUB  COUN    FILDATE       ISSDATE     APPLNUMBER       PATNUMBER      STATUS                   TITLE
- ----------   ---  ----    -------       -------     ----------       ---------      ------                   -----
                                                                      
020220             US    05/06/2003                   60/377655                     PENDING   PROCESS FOR IMPROVING SMOKY COLO


* = Licensed to third party(ies).


                                    EXHIBIT B

                                   TRADEMARKS

                             SCHEDULE OF TRADEMARKS

                                   TRADE NAMES



                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
NOJAX (STYLIZED)           UY    REGISTERED        220964        314146       03-Jul-09
NOJAX (STYLIZED)           YU    REGISTERED       2412/54         13316       21-Mar-05
NOJAX (STYLIZED)           EC    REGISTERED           43B        141/56       23-Apr-01
NOJAX (STYLIZED)           PH    REGISTERED          4317         R1699       11-Jun-16
NOJAX (STYLIZED)           PT    REGISTERED         81507         81507       15-Mar-05
NOJAX (STYLIZED)           HB    REGISTERED      Z950811N       Z950811       21-Mar-05
NOJAX (STYLIZED)           MK    REGISTERED      PZ200/95         06376       21-Mar-05
NOJAX (STYLIZED)           TN    REGISTERED                    EE991274       05-Aug-14
NOJAX (STYLIZED)           PO    REGISTERED         17713         17713       23-Aug-02
NOJAX (STYLIZED)           ES    REGISTERED        263469        263469       25-Jun-04
NOJAX (STYLIZED)           CZ    REGISTERED          4209        151691       07-Jan-05
NOJAX (STYLIZED)           BX    REGISTERED        020375         64599       02-Dec-11
NOJAX (STYLIZED)           AU    REGISTERED        121443       a121443       21-Dec-06
NOJAX (STYLIZED)           SK    REGISTERED                      151691       07-Jan-05
NOJAX (STYLIZED)           CA    REGISTERED        202631   N533024/129       28-Mar-09
NOJAX (STYLIZED)           DO    REGISTERED          9033          9033       10-Mar-05
NOJAX (STYLIZED)           AR    REGISTERED        427935        354602       13-Mar-08
NOJAX (STYLIZED)           FI    REGISTERED         32/53         26721       26-Jun-03
NOJAX (STYLIZED)           BR    REGISTERED        177595     002489562       16-Oct-10
NOJAX (STYLIZED)           SE    REGISTERED       1245/46         61647       30-Aug-05
NOJAX (STYLIZED)           MX    REGISTERED         54801         71166       18-Jun-02
NOJAX (STYLIZED)           IT    REGISTERED        28/123        638959       10-Jan-02
NOJAX (STYLIZED)           HN    REGISTERED                        7504       04-Dec-06
NOJAX (STYLIZED)           SI    REGISTERED      Z9570767       9570767       20-Jun-05
NOJAX (STYLIZED)           AT    REGISTERED       2462/54         32013       05-Mar-05
NOJAX AL                   US    UNIFIED
NOJAX (STYLIZED)           HK    REGISTERED                    415/1955       30-Dec-10






                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
NUCEL                      US    REGISTERED    74/453.651       2132918       27-Jan-07
NUCEL                      EU    REGISTERED     001516582     001516562       14-Jun-10
OPTIMER                    US    SEARCH
PAL-PAC                    US    SEARCH
PAUL'S VALLEY              US    SEARCH
PORKGUARD                  US    SEARCH
PRECISION SIZER            US    SEARCH
PROGUARD                   US    SEARCH
REELKASE                   US    REGISTERED     74/403524       1827476       22-Mar-04
REELSMOKE                  US    REGISTERED     74/403525       1827479       22-Mar-04
ROLLMATIC                  US    REGISTERED        566197       1414997       26-Oct-06
ROLLMATIC                  CA    REGISTERED        559006        352466       03-Mar-04
SANGOFLEX                  WO    REGISTERED                     6372282       02-Oct-10
SANGOFLEX                  CH    REGISTERED                      381917       17-Apr-10
SENTINEL                   MX    REGISTERED        205560        477742       16-Jul-04
SENTINEL                   US    REGISTERED     74/096561       1653667       13-Aug-11
SENTRY                     US    SEARCH
SEPRA-CEL                  US    REGISTERED     74/616345       1946715       09-Jan-06
SHIRMATIC                  IE    REGISTERED       1088/83        109349       20-Apr-04
SHIRMATIC                  MX    REGISTERED        114309        417650       03-Jun-11
SHIRMATIC                  NZ    REGISTERED        119115        119115       18-Apr-12
SHIRMATIC                  NZ    REGISTERED        119116        119116       18-Apr-12
SHIRMATIC                  NO    REGISTERED       8313033        117653       19-Jul-04
SHIRMATIC                  PA    REGISTERED         32925         32925       27-Jun-04
SHIRMATIC                  GB    REGISTERED       1077271       1077271       20-Apr-08
SHIRMATIC                  HK    REGISTERED       1248/83       2456/83       05-May-04
SHIRMATIC                  PH    UNFILED     NOT-RECEIVED
SHIRMATIC                  MX    REGISTERED        114308        417649       03-Jun-11
SHIRMATIC                  IE    REGISTERED       1087/83        109348       20-Apr-04
SHIRMATIC                  FI    REGISTERED       1926/77         75788       23-Dec-10
SHIRMATIC                  CA    REGISTERED        408422        233990       29-Jun-09
SHIRMATIC                  CA    REGISTERED        408751        229477       04-Aug-08
SHIRMATIC                  CO    REGISTERED        337666        144506       16-Nov-03
SHIRMATIC                  CO    REGISTERED        337667        161088       30-May-04
SHIRMATIC                  DK    REGISTERED       2107/83       3872/84       09-Nov-04
SHIRMATIC                  AR    REGISTERED       1608609       1721037       11-Feb-09
SHIRMATIC                  WO    REGISTERED                      432852       19-Aug-17






                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
SHIRMATIC                  AU    REGISTERED        306240       A306240       13-Apr-08
SHIRMATIC                  AU    REGISTERED        306241       A306241       13-Apr-08
SHIRMATIC                  BR    REGISTERED      16956-77     006760155       10-Sep-08
SHIRMATIC                  HK    REGISTERED      1248A/83       1249/84       05-May-04
SHIRMATIC                  CH    REGISTERED          1416        288875       24-Mar-07
SHIRMATIC                  VE    REGISTERED          3667         92311       17-Oct-04
SHIRMATIC                  PE    REGISTERED                       79909       12-May-04
SHIRMATIC                  AR    REGISTERED       1608610       1721038       11-Feb-09
SHIRMATIC                  BR    REGISTERED      16955-77     006760147       10-Sep-08
SHIRMATIC                  US    REGISTERED         11300       1076298       01-Nov-07
SHIRMATIC                  US    REGISTERED        108846       1086943       07-Mar-08
SHIRMATIC                  FL    REGISTERED       Z-B1235         60042       13-Jun-03
SHIRMATIC                  GB    REGISTERED       0177272       0177272       20-Apr-08
SHIRMATIC                  SE    REGISTERED       77-1941        160758       16-Sep-07
SHIRMATIC                  VE    REGISTERED          3668       91984-F       13-Sep-04
SHIRMATIC & KATAKANA       JP    REGISTERED        560/94       3303038       09-May-07
SMOKE MASTER               US    SEARCH         78/189030
SOUP SAC                   US    SEARCH
STC                        US    SEARCH
STRIPPER                   US    SEARCH
SUPARAP                    US    SEARCH
TEGRA                      US    SEARCH
TENDRJAX                   CH    REGISTERED                      399894       07-Jan-12
TENDRJAN                   WO    REGISTERED                     R389793       06-Jul-12
TITECADDIE                 CA    REGISTERED        381593        214820       16-Jul-06
TITECADDIE                 GH    REGISTERED          1696        407446       25-Mar-13
V-VAC                      US    REGISTERED     74/459357       1865580       06-Dec-04
VISCORA (LOGO)             IS    REGISTERED       93/1988      395/1988       09-Sep-98
VISCORA (LOGO)             NO    REGISTERED        880776        137130       22-Jun-99
VISCORA (LOGO)             WO    REGISTERED                      523837       17-Feb-08
VISCORA (LOGO)             FR    REGISTERED        873394       1423936       21-Aug-97
VISI-CASE                  JP    REGISTERED   103376/1986       2078008       30-Sep-08
VISKASE                    DK    REGISTERED                    00211995       13-Jan-05
VISKASE                    IE    REGISTERED                       74268       08-Jul-03
VISKASE                    WO    REGISTERED                      589658       13-Apr-12
VISKASE                    KE    REGISTERED          9117          9117       10-Apr-94
VISKASE                    FI    REGISTERED                      140021       20-Sep-05






                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
VISKASE                    SE    REGISTERED       9308475        262395       23-Dec-04
VISKASE                    NO    REGISTERED                      168076       08-Jun-05
VISKASE                    FR    REGISTERED                     1604356       05-Jul-98
VISKASE                    NZ    REGISTERED         55963         55983       17-Jan-04
VISKASE                    AR    REGISTERED       1892042       1521918       31-May-04
VISKASE                    GB    REGISTERED                      725640       11-Jan-03
VISKASE                    PE    REGISTERED        015337         29534       24-Sep-06
VISKASE                    TY    REGISTERED          6066          6066       12-May-08
VISKASE                    AR    REGISTERED       1872778       1506872       28-Feb-04
VISKASE                    CA    REGISTERED        559007        379431       08-Feb-06
VISKASE                    AU    REGISTERED        569819       A569819       23-Dec-08
VISKASE                    AU    REGISTERED        121619       A121619       13-Jan-07
VISKASE                    US    REGISTERED        586212       1444069       23-Jun-07
VISKASE                    GB    REGISTERED                     1326547       11-Nov-04
VISKASE AND DESIGN         CO    REGISTERED        279616        132101       28-Dec-05
VISKASE AND DESIGN         ZA    REGISTERED       67/6666       67/6666       10-Sep-07
VISKASE AND DESIGN         TH    REGISTERED        348692       TM65790       22-Oct-07
VISKASE AND DESIGN         GB    REGISTERED       1326547       1326547       11-Nov-04
VISKASE AND DESIGN         KR    REGISTERED    17258/1987        168758       02-Mar-09
VISKASE AND DESIGN         JP    REGISTERED   100380/1987       2722016       06-Jun-07
VISKASE AND DESIGN         HK    REGISTERED        518/88       1261/89       30-Jan-09
VISKASE AND DESIGN         CO    REGISTERED        279565        132098       28-Dec-05
VISKASE AND DESIGN         CN    REGISTERED         32386        383899       09-Aug-08
VISKASE AND DESIGN         CA    REGISTERED        559012        379432       08-Feb-06
VISKASE AND DESIGN         PH    REGISTERED         63175         46153       25-Aug-09
VISKASE AND DESIGN         VE    REGISTERED      14671-87        143456       05-Mar-06
VISKASE AND DESIGN         AR    REGISTERED       1618687       1322027       09-Feb-09
VISKASE AND DESIGN         HK    REGISTERED       518A/88       1261/89       30-Jan-09
VISKASE AND DESIGN         BR    REGISTERED     814235654     814235654       13-Apr-10
VISKASE AND DESIGN         MX    REGISTERED         49413        366524       28-Sep-03
VISKASE AND DESIGN         UY    REGISTERED        268054        268054       06-Mar-06
VISKASE AND DESIGN         CL    REGISTERED        263725        435136       30-Nov-04
VISKASE AND DESIGN         FY    REGISTERED        437-94        171868       12-Oct-04
VISKASE AND DESIGN         UY    REGISTERED        268053        268053       06-Mar-06
VISKASE AND DESIGN         PY    REGISTERED        437-94        173611       14-Dec-04
VISKASE AND DESIGN         PT    REGISTERED        306285        306285       07-Dec-05
VISKASE AND DESIGN         AR    REGISTERED       1892043       1521919       31-May-04






                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
VISKASE AND DESIGN         BR    REGISTERED     814235646     814235646       03-Apr-10
VISKASE AND DESIGN         BR    REGISTERED     814235638     814235638       03-Apr-10
VISKASE AND DESIGN         VE    REGISTERED      14672-67        143457       05-Mar-06
VISKASE AND DESIGN         CN    REGISTERED         32386        320856       10-Aug-08
VISKASE AND DESIGN         AF    UNFILED
VISKASE AND DESIGN         IE    REGISTERED      67/02972        124836       02-Sep-08
VISKASE AND DESIGN         MX    REGISTERED        479880        479880       12-Apr-04
VISKASE AND DESIGN         FR    UNFILED                         105681
VISKASE AND DESIGN         US    REGISTERED        586196       1444068       23-Jun-07
VISKASE POLYFILM AND       BR    REGISTERED     816840296     816840296       16-Feb-04
VISKASE POLYFILM AND       BR    REGISTERED     816840300     816840300       08-Mar-04
VISKING                    YU    REGISTERED       Z356/53         12930       19-Feb-11
VISKING                    HR    REGISTERED       Z940422       Z940422       14-Feb-04
VISKING                    MK    PENDING       PZ-1323/94
VISKING                    VD    PENDING          4259/54
VISKING                    MK    PENDING       PZ-1323/94                     19-Feb-04
VISKING                    CH    REGISTERED          7091        391192       25-Jun-11
VISKING RIBBON & CRO       AU    REGISTERED        100196       A100196       26-Sep-05
VISKING RIBBON & CRO       SE    REGISTERED       1836/49         67632       20-Jan-10
VISKING RIBBON & CRO       GB    REGISTERED        705237        705237       26-Feb-11
VISKING RIBBON & CRO       CH    REGISTERED          7091        378199       26-Sep-09
VISKASE & DEVICE           US    REGISTERED
VISKASE & DEVICE           DE    REGISTERED                      666911
VISKING & KATAKANA C       JP    REGISTERED      56033/88       2297491       31-Jan-11
VISKING (LOWE CASE LE      IT    REGISTERED     35441C/83        483860       10-Nov-03
VISKING (LOWER CASE L      IR    REGISTERED         16679         13394       22-Dec-04
VISKING (LOWER CASE L      NZ    REGISTERED         32374         32374       03-Oct-03
VISKING (LOWER CASE L      GB    REGISTERED        544621        544621       19-Sep-03
VISKING (LOWER CASE L      AU    REGISTERED         62654        A62654       10-Oct-03
VISKING CASING & KING      BR    REGISTERED        177597     002832356       30-Jun-03
VISKING CASING & KING      SE    REGISTERED         62560         62560       22-Feb-07
VISKING CASING & KING      CH    REGISTERED          3076        363143       02-May-08
VISKING RIBBON & CRO       NZ    REGISTERED         48166         48168       16-Aug-12
VISKING LOWER CASE LE      HK    REGISTERED        977/54      416/1955       30-Dec-10
VISKING(LOWER CASE LE      AT    REGISTERED     AM2021/53         29863       04-Feb-04
VISKIT                     CA    REGISTERED        271291        130547       11-Apr-08
VISLEX                     US    REGISTERED    75/392.120       2225539       23-Feb-09






                                              APPLICATION   REGISTRATION
     TRADEMARK          COUNTRY    STATUS       NUMBER         NUMBER     NEXT RENEWAL DATE
- --------------------    -------  ----------  ------------   ------------  -----------------
                                                           
VISLON                     US    REGISTERED     75/392128       2209002       08-Dec-08
VISMAX                     US    PENDING        76/259177
VISNAT                     WO    REGISTERED                      478307       27-Jul-03
VISNAT                     FR    REGISTERED                     1233599       19-Apr-03
VISREX                     WO    REGISTERED        200763       R280670       05-Mar-04
VISTAKON LOGO              US    SEARCH
VISTEN                     CA    REGISTERED        202630     129/33025       28-Mar-09
VISTEN                     US    REGISTERED        521546        502256       21-Sep-08
VISTEN                     MX    REGISTERED         47805         65297       04-Sep-10
VISTEN                     US    REGISTERED      71521545        525848       06-Jun-10
VIZPAK                     US    SEARCH
ZEPHYR                     CA    REGISTERED        202629     129/33023       28-Mar-09
ZEPHYR                     US    REGISTERED        428452        379873       30-Jul-10
ZEPHYR                     US    UNFILED
ZEPHYR (STYLIZED)          FR    REGISTERED         65453       1685751       08-Aug-11
ZEPHYR (STYLIZED)          IT    REGISTERED        28/171        756925       22-May-06
ZEPHYR (STYLIZED)          BR    REGISTERED        177598     002523078       18-Dec-10




                                    EXHIBIT C

                               LICENSE AGREEMENTS

Nucel(R) Agreement: A license to use certain casing manufacturing technology
from Courtaulds Fibres (Holdings) Limited.



                                    EXHIBIT D

                                   COPYRIGHTS

                                      None.



                                    ADDRESSES

          GRANTOR                                         GRANTEE

Viskase Companies, Inc.                      LaSalle Bank National Association
625 Willowbrook Center                       135 S. LaSalle, Suite 1960
Willowbrook, IL 60527                        Chicago, IL 60603
Attn: Chief Financial Officer                Attn: Victoria Douyon, CCTS
                                                     First Vice President

EX-10.18

                                                                   EXHIBIT 10.18

                                PLEDGE AGREEMENT

      THIS PLEDGE AGREEMENT (this "Agreement"), dated as of June 29, 2004, is
made by VISKASE COMPANIES, INC., a Delaware corporation (the "Company"), and
each of its Domestic Restricted Subsidiaries (such capitalized term and other
capitalized terms used but not defined herein having the meanings respectively
ascribed thereto in the Security Agreement (as defined below)) hereafter party
hereto (such Subsidiaries, together with Company, each, a "Pledgor" and,
collectively, the "Pledgors"), in favor of LASALLE BANK NATIONAL ASSOCIATION
("LaSalle"), as collateral agent (together with its successor(s) thereto in such
capacity, "Pledgee") for the Trustee and Holders, in light of the following:

                                    RECITALS:

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

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

      C. The Pledgors and the Pledgee have entered into that certain Security
Agreement, dated as of June 29, 2004 (as amended, restated, supplemented or
otherwise modified from time to time, the "Security Agreement"), pursuant to
which the Pledgors have granted security interests in certain of their assets
(including the Collateral) as more fully described therein.

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

      E. The Pledgors and Foothill have entered into one or more pledge
agreements, dated as of June 29, 2004 (such pledge agreement(s), together with
any others entered into after the date hereof, the "Credit Agreement Pledge
Agreement"), pursuant to which the Pledgors have granted a security interest in
the Collateral in favor of the Administrative Agent.

      F. The Pledgee, the Administrative Agent and the Company have entered into
that certain Intercreditor and Lien Subordination Agreement, dated as of June
29, 2004 (as amended,



restated, supplemented, replaced or otherwise modified from time to time, the
"Intercreditor Agreement"), which agreement, among other things, sets forth, as
between the Pledgee and the Administrative Agent, the relative priority of their
respective Liens in the Collateral and their rights with respect thereto.

      G. The Company desires to secure its Obligations under the Notes, the
Indenture and each other Indenture Document to which it becomes a party and each
other Pledgor that becomes a party hereto desires to secure its Guarantee, the
Indenture and each other Indenture Document to which it becomes a party by
granting to the Pledgee, for the benefit of itself and the other Secured
Parties, security interests in the Collateral as set forth herein.

      H. To induce the Initial Purchaser to purchase the Units and the
underlying Notes, each Holder to hold the Units and the underlying Notes to be
held by it and LaSalle to act in its capacities as trustee and collateral agent,
each Pledgor desires to pledge, grant, transfer, and assign to the Pledgee, for
the benefit of itself and the other Secured Parties, a security interest in the
Collateral to secure the Obligations, as provided herein.

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

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

      2. DEFINITION OF ISSUERS; DESIGNATED NUMBER; CAPITAL STOCK; PLEDGED
INTERESTS; PLEDGED COLLATERAL. As used herein, (A) the term "Issuers" shall
mean, with respect to each Pledgor, each of the Persons identified as an Issuer
on Annex A attached hereto of such Pledgor (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 that is (1) a
Domestic Subsidiary of a Pledgor, all of the Capital Stock of such Issuer held
by such Pledgor and (2) a Foreign Subsidiary of a Pledgor, with respect to its
Capital Stock that is (x) not Voting Stock, all of such Capital Stock of such
Issuer held by such Pledgor and (y) Voting Stock, the largest whole number of
shares or units, as the case may be, of Voting Stock of such Issuer held by such
Pledgor representing not greater than sixty- five percent (65%) of all of the
fully diluted issued and outstanding Voting Stock of such Issuer (whether or not
owned by such Pledgor); (C) the term "Pledged Interest" means, with respect to
each Issuer, the Designated Number of Capital Stock identified as Pledged
Interests of such Issuer on Annex A attached hereto of the Pledgor that is a
holder of the Capital Stock of such Issuer (or any addendum or supplement
thereto); (D) the term "Pledged Collateral" means the "Pledged Interests" and
the "Future Rights" as defined in and acquired pursuant to Section 3.2 below,
collectively, and (E) "Excluded Capital Stock" means, with respect to any Issuer
that is a

                                     - 2 -


Subsidiary of the Company, that portion of such Issuer's Capital Stock that
would otherwise constitute Collateral to the extent the greater of the par
value, book value as carried by the Pledgor that is the holder thereof or the
market value of any such Capital Stock is equal to or greater than 20% of the
aggregate principal amount of the Notes then outstanding. Notwithstanding
anything to the contrary in the immediately preceding sentence, neither the
Pledged Collateral nor the Future Interests relating to any Issuer shall include
any Excluded Capital Stock. Annex A of any Pledgor may be supplemented from time
to time pursuant to Section 3.2 below. Each Pledgor represents and warrants to
the Pledgee for the benefit of the Pledgee and the other Secured Parties that on
the date hereof (a) Annex A attached hereto of such Pledgor correctly identifies
the Pledged Interests and the Pledged Collateral owned by such Pledgor with
respect to Issuers; and (b) such 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. (i) To secure the Obligations and for the purposes set forth
in Section 1 hereof, each 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 other Secured Parties, all of such 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 (i) the number of shares or units, as
the case may be, of Capital Stock pledged under this Agreement to exceed, with
respect to such Issuer, the Designated Number or (ii) such Pledged Collateral to
constitute Excluded Capital Stock, in each case, after giving effect to such
issuances), (D) such 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 such Pledgor (collectively,
the "Collateral"). Notwithstanding the foregoing, the term Collateral shall in
no event include the Excluded Capital Stock of any Issuer.

      (ii) If the Pledged Collateral is evidenced by certificates, then such
Pledgor shall concurrently herewith deposit with the Pledgee, for the benefit of
itself, the other Secured Parties and the Administrative Agent, in accordance
with the terms of the Intercreditor Agreement, the Pledged Collateral owned by
such Pledgor on the date hereof and the certificates representing the Pledged
Collateral endorsed in blank by such Pledgor or accompanied by undated stock
powers or instruments of transfer, in each case, duly executed in blank by such
Pledgor. If any Capital Stock does not constitute Pledged Collateral but instead
constitutes Excluded Capital Stock that is evidenced by certificates, then such
Pledgor shall concurrently herewith deposit with the Pledgee, (x) for the
benefit of the Administrative Agent (and not any Secured Party), in accordance
with the terms of the Intercreditor Agreement and (y) on behalf of such Pledgor,
such

                                     - 3 -


Excluded Capital Stock owned by such Pledgor on the date hereof and the
certificates representing such Excluded Capital Stock endorsed in blank by such
Pledgor or accompanied by undated stock powers or instruments of transfer, in
each case, duly executed in blank by such Pledgor. For the avoidance of doubt,
if any certificate or instrument representing any Pledged Collateral also
represents any Excluded Capital Stock, the Lien created hereunder shall only
attach to the Capital Stock evidenced thereby to the extent such Capital Stock
does not constitute Excluded Capital Stock.

      (iii) Whether or not the Pledged Collateral is evidenced by certificates,
such Pledgor shall, and hereby authorizes the Pledgee to, file a Code Financing
Statement naming such Pledgor as debtor and the Pledgee as secured party with
respect to the Collateral in the applicable filing office and in such form and
containing such substance as may be necessary to perfect the security interest
of the Pledgee in the Pledged Collateral by the filing of a Code Financing
Statement; provided, however, that no such authorization shall obligate the
Pledgee to make any such filing. 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 such Pledgor in
such Pledgor's capacity as a holder of any Capital Stock of any Issuer, and the
Pledgee shall not be deemed to have assumed any of such obligations or
liabilities.

      3.2 Subsequently Acquired Pledged Collateral. (i) If at any time or from
time to time after the date hereof during the term of this Agreement, any
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 this clause shall exclude any
Future Rights to the extent and only to the extent that (i) their inclusion
would cause the number of shares or units, as the case may be, of Capital Stock
pledged hereunder to exceed the Designated Number or (ii) such Future Rights
would constitute Excluded Capital Stock, in each case, after giving effect to
the issuance of such Future Rights and any related issuances).

      (ii) Such Pledgor will forthwith pledge and, if applicable, deposit such
additional Pledged Collateral with the Pledgee, for the benefit of itself, the
other Secured Parties and the Administrative Agent in accordance with the terms
of the Intercreditor Agreement and deliver to the Pledgee, for the benefit of
itself, the other Secured Parties and the Administrative Agent in accordance
with the terms of the Intercreditor Agreement, certificates or instruments
therefor, endorsed in blank by such Pledgor or accompanied by undated stock
powers or instruments of transfer, in each case, duly executed in blank by such
Pledgor, and will promptly thereafter deliver to the Pledgee, for the benefit of
itself, the other Secured Parties and the Administrative Agent in accordance
with the terms of the Intercreditor Agreement, a certificate (which shall be
deemed to supplement Annex A attached hereto of such Pledgor) executed by such
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 any Capital Stock does not constitute any such
additional Pledged Collateral but instead constitutes Excluded Capital Stock
that is evidenced by certificates, then such Pledgor shall concurrently promptly
thereafter deposit with the Pledgee, (x) for the benefit of the Administrative
Agent (and not any

                                     - 4 -


Secured Party), in accordance with the terms of the Intercreditor Agreement and
(y) on behalf of such Pledgor, such Excluded Capital Stock owned by such Pledgor
on the date hereof and the certificates representing such Excluded Capital Stock
endorsed in blank by such Pledgor or accompanied by undated stock powers or
instruments of transfer, in each case, duly executed in blank by such Pledgor.
For the avoidance of doubt, if any certificate or instrument representing any
such additional Pledged Collateral also represents any Excluded Capital Stock,
the Lien created hereunder shall only attach to the Capital Stock evidenced
thereby to the extent such Capital Stock does not constitute Excluded Capital
Stock.

      (iii) Whether or not such additional Pledged Collateral is evidenced by
certificates, such Pledgor shall, and hereby authorizes the Pledgee to, file a
Code Financing Statement naming such Pledgor as debtor and the Pledgee as
secured party with respect to the additional Collateral in the applicable filing
office and in such form and containing such substance as may be necessary to
perfect the security interest of the Pledgee in the additional Collateral by the
filing of a Code Financing Statement; provided, however, that no such
authorization shall obligate the Pledgee to make any such filing.

      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 applicable Pledgor shall promptly notify the Pledgee thereof and shall
promptly take all actions required to perfect or improve the perfection of 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). Such Pledgor further agrees to take such actions as may
be necessary 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, each Pledgor shall be entitled to vote any and all of the Pledged
Collateral and the Excluded Capital Stock; provided, however, that no vote shall
be cast or any action taken by such Pledgor with respect to any Pledged
Collateral or Excluded Capital Stock which would violate or be materially
inconsistent with any of the terms of this Agreement, the Indenture, any other
Indenture 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 Indenture or any Indenture Document. All such
rights of such Pledgor to vote any Pledged Collateral shall cease upon the
occurrence and during the continuance of an Event of Default, if the Pledgee so
directs and provides notice to such 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. Upon the giving of any
such notice by the Pledgee, such Pledgor shall retain the right to exercise all
voting and other consensual rights relating to all Excluded Capital Stock
applicable to it so long as it exercises any such voting or other consensual
right in a manner identical to the exercise by the Pledgee of any such voting or
other consensual right of the Capital Stock (of the Issuer of such Excluded
Capital Stock) constituting Pledged Collateral applicable to such Pledgor.

                                     - 5 -


      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 Indenture) shall be paid to the applicable 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 such Pledgor to that effect (it being
understood and agreed that such Pledgor shall retain the right, whether an Event
of Default is outstanding, to receive all cash, dividends or distributions
payable in respect of the Excluded Capital Stock so long as the cash, dividends
or distributions payable in respect of the Excluded Capital Stock are made on a
pro rata basis with the Capital Stock (of the Issuer of such Excluded Capital
Stock) that constitute Pledged Collateral applicable to such Pledgor); 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 such 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 (i) the number of shares or units, as the case
      may be, of such other or additional securities or investment property
      pledged hereunder to exceed the Designated Number or (ii) such other or
      additional securities or investment property to constitute Excluded
      Capital Stock, in each case, 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 (i) the
      number of shares or units, as the case may be, of Capital Stock pledged
      hereunder to exceed the Designated Number or (ii) such other or additional
      securities or investment property to constitute Excluded Capital Stock, in
      each case, after giving effect to such issuances).

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

      6. REMEDIES IN CASE OF AN EVENT OF DEFAULT. (i) 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 Indenture, any
other Indenture Documents, and/or in equity or by law,

                                     - 6 -


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 each Pledgor hereby agrees to be
commercially reasonable:

            (a) to receive all amounts payable to such 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 other Secured Parties;

            (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 such
      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. Such Pledgor agrees that to the extent that notice
      of sale shall be required by law that at least ten (10) calendar days'
      notice to such 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. Such 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
      other Secured Parties 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 other Secured Parties be under any
      obligation to take any action whatsoever with regard thereto;

                                     - 7 -


            (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 such Pledgor for the purposes aforesaid and in any proceedings arising
      therefrom.

      (ii) During the continuance of any Event of Default, each Pledgor shall
retain the right to exercise all voting and other consensual rights relating to
all Excluded Capital Stock applicable to it so long as it exercises any such
voting or other consensual right in a manner identical to the exercise by the
Pledgee of any such voting or other consensual right of the Capital Stock (of
the Issuer of such Excluded Capital Stock) constituting Pledged Collateral
applicable to such Pledgor and (ii) receive and retain all cash, dividends and
distributions that it would otherwise be entitled to exercise or receive and
retain in respect of the Excluded Capital Stock applicable to it to the extent,
and solely to the extent, that such cash, dividends and distributions are made
on a pro rata basis with the Capital Stock (of the Issuer of such Excluded
Capital Stock) that constitute Pledged Collateral applicable to such Pledgor.

      7. REMEDIES, ETC., CUMULATIVE. (a) Each right, power and remedy of the
Pledgee (for the benefit of the Pledgee and the other Secured Parties) provided
for in this Agreement, the Indenture, any Indenture Document 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 other Secured
Parties) of any one or more of the rights, powers or remedies provided for in
this Agreement, the Indenture, or any other Indenture 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.

      (b) Each Pledgor authorizes the Pledgee to sell all or any portion of the
Excluded Capital Stock together with all of the Pledged Interests of the Issuer
of such Excluded Capital Stock to the same extent as it is permitted to
authorize the sale of the Pledged Interests hereunder

                                     - 8 -


without any liability thereto or any duty owed thereby other than as otherwise
expressly required hereunder with respect to such Pledged Interests in the same
sale and on the same terms and for the same consideration as provided in such
sale of the Pledged Interests and at the same price per share or unit of Pledged
Interest as the Excluded Capital Stock; provided that the Pledgee shall promptly
upon receipt of such consideration turn over to such Pledgor (after deducting a
pro rata portion of the costs and expenses incurred in connection with such
sale) the proceeds of such sale relating to the Excluded Capital Stock so sold,
together with a copy of any instruments or other documentation evidencing such
share and an accounting of the costs and expenses applied thereto. Each Pledgor
agrees that the foregoing provisions of this Section 9 shall apply to such
Excluded Capital Stock as if such Excluded Capital Stock were Pledged Interests,
subject to the immediately preceding sentence, the last sentence of Section 4
and Section 6(ii).

      8. APPLICATION OF PROCEEDS. Subject to any mandatory requirements of
applicable law and the terms of the Indenture and the Intercreditor Agreement,
all moneys collected by the Pledgee (for the benefit of the Pledgee and the
other Secured Parties) upon sale or other disposition of the Collateral,
together with all other moneys received by the Pledgee hereunder, shall be
turned over to the Trustee for distribution in accordance with Section 6.10 of
the Indenture.

      9. INDEMNITY. Without duplication of any amounts payable under any other
similar indemnity provision set forth in the Indenture or any other Indenture
Documents, each Pledgor shall, jointly and severally: (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 other Secured Parties 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 other Secured Parties 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 other Secured Parties, 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 to the contrary, such Pledgor shall
not be responsible to the Pledgee or any other Secured Party 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 other Secured Party.
Each Pledgor's obligations under this Section shall survive any termination of
this Agreement.

                                     - 9 -


      10. FURTHER ASSURANCES. (a) Each Pledgor agrees that, at any time and from
time to time, such Pledgor will join with the Pledgee in executing and, at such
Pledgor's own expense, will file and refile under the Code such financing
statements, continuation statements and other documents in such offices as may
be necessary 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 (provided, however, that no such
authorization shall obligate the Pledgee to make any such filing), 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
may be required to carry into effect the purpose of this Agreement or to further
assure and confirm unto the Pledgee its rights, powers and remedies hereunder.

      (b) In addition, Pledgee shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral and
Excluded Capital Stock for certificates or instruments of smaller or larger
denominations or for certificates or instruments separately evidencing Capital
Stock constituting Pledged Collateral and Capital Stock constituting Excluded
Capital Stock.

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

      12. TRANSFER BY EACH PLEDGOR. Except as otherwise permitted under the
Indenture, if at all, the Pledgor shall not Dispose of, grant any option with
respect to, or pledge or otherwise encumber any of the Collateral, any Excluded
Capital Stock or any interest therein.

      13. REPRESENTATIONS AND WARRANTIES OF EACH PLEDGOR. Each Pledgor hereby
represents and warrants to the Pledgee for the benefit of the Pledgee and the
other Secured Parties, which representations and warranties shall survive the
execution and delivery of this Agreement, as follows:

      13.1 Validity, Perfection and Priority. (a) The pledge and security
interests in the Pledged Collateral granted to the Pledgee constitute valid and
continuing security interests in the Pledged Collateral.

      (b) Subject to the Intercreditor Agreement, the security interests in the
Collateral granted to the Pledgee for the benefit of itself, the other Secured
Parties and the Administrative Agent hereunder and under the Credit Agreement
Pledge Agreement 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.

                                     - 10 -


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

      (b) Except for any filing made by the Administrative 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.

      (a) The Pledged Collateral described in Annex A attached hereto of such
Pledgor is, and all other Pledged Collateral in which such 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 the Credit Agreement
Pledge Agreement in favor of the Administrative 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 of such Pledgor
constitutes all of the issued and outstanding securities and investment property
legally and beneficially owned by such Pledgor on the date hereof in or relating
to each of the Issuers.

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

      13.5 Article 8 Securities. The Pledged Interests that are Capital Stock in
general partnerships, limited partnerships or limited liability companies (i)
are not dealt in or traded on securities exchanges or in securities markets,
(ii) do not have terms expressly providing that they are securities governed by
Article 8 of the Code, and (iii) are not investment company securities, and are
not, therefore, "securities" governed by Article 8 of the Code.

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

      13.7 State of Organization. Such Pledgor's state of organization is
specified on Annex A of such Pledgor.

      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.

      13.9 Neither the pledge of the Pledged Collateral pursuant to this
Agreement nor the extensions of credit represented by the Obligations violates
Regulation T, U or X of the Board of Governors of the Federal Reserve System.

                                     - 11 -


      13.10 Each direct Subsidiary of such Pledgor is an Issuer of Pledged
Interests that have been pledged hereunder.

      14. COVENANTS OF EACH PLEDGOR. Each 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) or the Defeasance thereof shall have been consummated and this
Agreement terminates in accordance with its terms:

      14.1 Collateral. (a) Such 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) such
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) such Pledgor will not, 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, other than any shareholder type agreements, voting
agreements, voting trusts, trust deeds, irrevocable proxies or any other similar
agreements or instruments which would not (x) be inconsistent with the terms of
this Agreement, (y) materially and adversely affect the Pledgee's interest in
any of the Pledged Collateral or (z) have a Material Adverse Effect.

      14.2 Right of Inspection. To the extent permitted in Section 2.6 of the
Security Agreement, the Pledgee and its representatives shall have access to all
the books, correspondence and records of such 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. Such 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 have a Material
Adverse Effect.

      14.4 Non-Pro Rata Dividends. To the extent it may lawfully do so, such
Pledgor shall use its best efforts to prevent the Issuers from issuing Future
Rights, cash, dividends and any other distributions unless made on a pro rata
basis between Capital Stock of such Issuers constituting Pledged Interests and
Excluded Capital Stock.

      14.5 No Impairment. Such Pledgor will not take or permit to be taken any
action which could materially impair the Pledgee's rights in the Pledged
Collateral. Such 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 Administrative 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.

                                     - 12 -


      14.6 Performance by Pledgee of Such Pledgor's Obligations. If such 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 such 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. Such 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. No Pledgor will change its name,
organizational identification number, state of organization or organizational
identity unless such Pledgor shall within ten Business Days of any such change
provide written notice to the Pledgee of such change and file any financing
statements or amendments thereto necessary to continue the perfection of the
Liens of the Pledgee on the Collateral.

      14.9 Stay or Extension Laws. Such 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 such Pledgor hereby expressly
waives (to the extent not prohibited by applicable law), on behalf of such
Pledgor and each and every person or entity claiming by, through and under such
Pledgor, all benefit and advantage of any such law or laws, and covenants that
such 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. Such 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. EACH PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of each
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 Indenture or
any other Indenture Document, 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 Indenture, or any other Indenture Document,
or any other

                                     - 13 -


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 other
Secured Parties; 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 such 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 such 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, such 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
Indenture.

      17. POWER OF ATTORNEY. Each Pledgor hereby absolutely and irrevocably
constitutes and appoints the Pledgee for the benefit of the Pledgee and the
other Secured Parties as such Pledgor's true and lawful agent and
attorney-in-fact with full power of substitution, in the name of such 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 such Pledgor ought to
do but has failed to do under the covenants and provisions contained in this
Agreement; (b) to take any and all such action as may be necessary 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 such 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 may be proper in or for the purpose
of exercising any of such powers, authorities or discretions. Such 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 such
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 negligence, bad faith or willful misconduct of such
Person.

      18. MISCELLANEOUS. Each Pledgor agrees with the Pledgee that each of the
obligations and liabilities of such Pledgor to the Pledgee under this Agreement
may be enforced against such Pledgor without the necessity of joining any other
Person 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 such

                                     - 14 -


Pledgor, as applicable, and shall inure to the benefit of and be enforceable by
the Pledgee and its successors and assigns; provided, however, that no party may
assign this Agreement or any rights or duties hereunder other than pursuant to
the terms of the Indenture. 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. No Pledgor shall have any right of subrogation as to any of the Pledged
Collateral until full and complete performance and payment of the Obligations
(other than contingent indemnification obligations) or the Defeasance thereof. 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)
or the Defeasance thereof. Upon the termination of this Agreement, or as
otherwise provided in the Indenture, the Pledgee, at the request of any
applicable Pledgor and at the cost and expense of such Pledgor, will promptly
execute and deliver to such 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 such
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 and Excluded Capital Stock 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 other Secured Parties at any time for recovery of
any amount received by the Pledgee or any or all of the other Secured Parties in
payment of the Obligations (whether received such Pledgor or otherwise) and
should the Pledgee or any or all of the other Secured Parties 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
other Secured Parties 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 other Secured Parties with the claimant (including, without limitation,
such Pledgor), this Agreement and the security interests granted to the Pledgee
for the benefit of the Pledgee and the other Secured Parties 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 other Secured Parties, notwithstanding any prior termination of this
Agreement, the return of this Agreement to such Pledgor, or the cancellation of
any note or other instrument evidencing the Obligations.

      20. AMENDMENTS; MARSHALLING, ETC. (a) None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by such Pledgor and the Pledgee.
Notwithstanding the foregoing, the parties hereto agree that in the event that
Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or
interpreted by the SEC to require (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted, which would
require)

                                     - 15 -


the filing with the SEC of separate financial statements of any Issuer whose
Capital Stock constitute Pledged Collateral, the term "Excluded Capital Stock"
shall be deemed amended (without further action or consent by any Pledgor, the
Pledgee, the Trustee or any Noteholder) to the extent, and only to the extent,
necessary to avoid the requirement of filing with the SEC of such separate
audited financial statements of such Issuer, and for the avoidance of doubt,
Pledged Interests shall not include any Excluded Capital Stock as amended.

      (b) The Pledgee shall be under no obligation to marshal any assets or
collateral in favor of such 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 or the Defeasance thereof. The Secured Parties
(other than the Pledgee) are the intended third party beneficiaries of this
Agreement.

      21. REVIEW OF AGREEMENT BY EACH PLEDGOR. Each Pledgor acknowledges that
such Pledgor has thoroughly read and reviewed the terms and provisions of this
Agreement, and that such terms and provisions are clearly understood by such
Pledgor, and has been fully and unconditionally consented to by such Pledgor
with the full benefit and advice of counsel chosen by such Pledgor, and that
such 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, EACH 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 SUCH PLEDGOR WOULD
OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF
ANY STATE, and each 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 such
Pledgor or any other person or entity; and (d) all rights of redemption,
appraisement, valuation, diligence, stay, extension or moratorium now or
hereafter in force under any applicable law in order to delay the enforcement of
this Agreement.

      23. REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or payment
of the Obligations by any Pledgor or the transfer by any Pledgor to the Pledgee
of any property of such Pledgor should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to

                                     - 16 -


fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Pledgee is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Pledgee
is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Pledgee related thereto, the liability of
such Pledgor automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.

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

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

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

      27. Intercreditor Agreement.

      (a) The Liens granted hereunder in favor of the Pledgee for the benefit of
itself and the other Secured Parties 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.

                                     - 17 -


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

                                            PLEDGOR
                                            VISKASE COMPANIES, INC., a Delaware
                                              corporation

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

                                            PLEDGEE:
                                            LASALLE BANK NATIONAL
                                              ASSOCIATION, as Collateral Agent

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


                           Annex to Pledge Agreement
               (Viskase Companies, Inc., a Delaware corporation)



                   NO. OF                 CERT.         %
    ISSUER         SHARES       CLASS      NO.      OWNERSHIP     JURISDICTION   CERT./UNCERT.
    ------         ------       -----      ---      ---------     ------------   -------------
                                                               
Viskase Films,
     Inc.           100        Common       3          100%            DE            Cert.

   WSC Corp.       1,000       Common       6          100%            DE            Cert.

                                                       81%
                                                      81% of
                                                     which is
                                                     pledged
                 27,335,248                        hereunder -
                  of which                         representing
  Viskase        22,071,940                         65% of the
  Brasil            are                               total
Embalagens        pledged                          outstanding
   Ltda.         hereunder     Common      N/A        shares         Brazil         Uncert.

                 30,00,000                             100%
                  of which                            65% of
                 19,500,000                          which is
  Viskase           are                              pledged
  Europe          pledged                          pursuant to
  Limited        hereunder    Ordinary      6     certificate #6    England          Cert.

                                                       100%
                                                      65% of
                     20                              which is
                  of which                           pledged
                   13 are                          pursuant to
  Viskase         pledged                          certificate
Canada Inc.      hereunder     Common      C-7         C-7           Canada          Cert.

                                                       100%
                  480,000                             65% of
                  of which                           which is
                  312,000                            pledged
                    are                            pursuant to
  Viskase         pledged                          certificate
Canada Inc       hereunder    Preferred    P-6         P-6           Canada          Cert.

EX-21.1

                                                                    EXHIBIT 21.1

                              LIST OF SUBSIDIARIES

WSC Corp. (Delaware)

Viskase Films, Inc. (Delaware)

Viskase Canada Inc. (Ontario, Canada)

Viskase Brasil Embalagens Ltda. (Brazil)

Viskase Europe Limited (United Kingdom)

         Viskase S.A.S. (France)

                  Viskase GMBH (Germany)

                  Viskase SpA (Italy)

                  Viskase Polska SP.ZO.O (Poland)

         Viskase (Holdings) Limited (United Kingdom)

                  Viskase International Limited (United Kingdom)

                  Viskase Limited (United Kingdom)

                             Viskase UK Limited (United Kingdom)

EX-23.1

                                                                    EXHIBIT 23.1


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We hereby consent to the use in Amendment No. 1 to the Registration Statement on
Form S-4 of Viskase Companies, Inc. of our report dated March 14, 2003 relating
to the financial statements and financial statement schedule of Viskase
Companies, Inc., which appears in such Registration Statement.  We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.



PricewaterhouseCoopers LLP
Chicago, Illinois
December 20, 2004

EX-23.2

                                                                    Exhibit 23.2


            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated April 4, 2004, accompanying the financial
statements and schedules of Viskase Companies, Inc. contained in the
Registration Statement and Prospectus. We consent to the use of the
aforementioned reports in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts."


GRANT THORNTON LLP


Chicago, IL
December 20, 2004

EX-99.1

EXHIBIT 99.1

LETTER OF TRANSMITTAL

FOR

OFFER TO EXCHANGE

$90,000,000 11½% SENIOR SECURED NOTES DUE 2011
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933

FOR

ANY AND ALL OUTSTANDING
$90,000,000 11½% SENIOR SECURED NOTES DUE 2011,

OF

VISKASE COMPANIES, INC.

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON • 2004 UNLESS EXTENDED

The Exchange Agent for the Exchange Offer is:

LaSalle Bank N.A.
Corporate Trust Services
135 South LaSalle Street
Suite 1960
Chicago, Illinois 60603
Facsimile: (312) 904-2236

For information or to confirm transmission by facsimile, call:
(312) 904- 5619

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSIONS VIA FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL, AND THE PROSPECTUS CAREFULLY
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL.

The undersigned hereby acknowledges receipt of the Prospectus dated _______ __, 2004 (the “Prospectus”) of Viskase Companies, Inc. (the “Company”) and this Letter of Transmittal (the “Letter of Transmittal”), which together describe the Company’s offer (the “Exchange Offer”) to exchange $90 million in principal amount of the Company’s 11½% Senior Secured Notes due 2011 (the “Exchange Notes”) that have been registered under the Securities Act of 1933, as amended, (the “Securities Act”) for $90 million in principal amount of the Company’s 11½% Senior Secured Notes due 2011 (the “Outstanding Notes” and, together with the Exchange Notes, the “Notes”).

The terms of the Exchange Notes are substantially identical to the forms and terms of the Outstanding Notes for which they may be exchanged pursuant to the Exchange Offer, except that the Exchange Notes are registered under the Securities Act and do not bear legends restricting their transfer. The Exchange Notes evidence the same debt as the Outstanding Notes, and are issued under and

entitled to the benefits of the same Indenture that authorized the issuance of the Outstanding Notes. Consequently, both series will be treated as a single class of debt securities under the Indenture.

The undersigned has checked the appropriate boxes below and signed this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer.

YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS LETTER OF TRANSMITTAL. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.

List below the Outstanding Notes to which this Letter of Transmittal relates. If the space provided below is inadequate, the Certificate Numbers and Principal Amounts should be listed on a separate signed schedule affixed hereto.

DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREWITH

	Certificate(s) and Outstanding Note(s) Tendered (Attach additional list, if necessary)
		Aggregate Principal
		Amount
		Represented by	Principal Amount
Name(s) and Address(es) of Registered Holder(s)	Certificate Number	Outstanding Notes*	Tendered**
	Total:

*	Need not be completed by book-entry holders.
**	Unless otherwise indicated, the holder will be deemed to have tendered the full aggregate principal amount represented by such Outstanding Notes. See Instruction 2.

This Letter of Transmittal is to be used either if certificates representing Outstanding Notes are to be forwarded herewith or if delivery of Outstanding Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at The Depository Trust Company (“DTC”), pursuant to the procedures set forth in “The Exchange Offer — Procedures for Tendering” and “The Exchange Offer — Book- Entry Transfers” in the Prospectus. Delivery of documents to the book-entry facility does not constitute delivery to the Exchange Agent.

This Letter of Transmittal does not need to be used if book- entry transfer is to be made by complying with the Automated Tender Offer Program (“ATOP”), pursuant to the procedures set forth in “The Exchange Offer — Procedures for Tendering.” By such compliance, the holder agrees to be bound by this Letter of Transmittal.

Unless the context requires otherwise, the term “holder” for purposes of this Letter of Transmittal means any person in whose name Outstanding Notes are registered or any other person who has obtained a properly completed bond power from the registered holder or any person whose Outstanding Notes are held of record by DTC.

Holders whose Outstanding Notes are not immediately available or who cannot deliver their Outstanding Notes, the Letter of Transmittal and/or any other required documents to the Exchange Agent, or who cannot complete the procedures for book-entry transfer or comply with the applicable procedures under ATOP, on or prior to 5:00 p.m., New York City time, •, 2004 (the

“Expiration Date”) must tender their Outstanding Notes according to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer — Guaranteed Delivery Procedures.”

[ ] CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s): 

Date of Execution of Notice of Guaranteed Delivery:

Name of Eligible Guarantor Institution Which Guaranteed Delivery:

Name of Tendering Institution:

Account Number:

Transaction Code Number:

[ ] CHECK HERE IF EXCHANGE NOTES ARE TO BE DELIVERED TO PERSONS OTHER THAN PERSON SIGNING THE LETTER OF TRANSMITTAL:

Name:

Address: 

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:

Address: 

The undersigned represents that any Exchange Notes it receives will be acquired in the ordinary course of business. Additionally, the undersigned represents that it has no arrangement or understanding with any person or entity to participate in the distribution of Exchange Notes.

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus, as required by law, in connection with the resale of such Exchange Notes. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit it is an “underwriter” within the meaning of the Securities Act.

The undersigned represents that it is not an affiliate (as defined in Rule 405 promulgated under the Securities Act) of the Company.

Ladies and Gentlemen:

Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of Outstanding Notes indicated above. Subject to, and effective upon, the acceptance for exchange of all or any portion of the Outstanding Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Outstanding Notes. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its true and lawful agent and attorney-in-fact (with full knowledge that said Exchange Agent also acts as the agent of the Company in connection with the Exchange Offer) to cause the Outstanding Notes to be assigned, transferred and exchanged.

The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Outstanding Notes and to acquire Exchange Notes issuable upon the exchange of such tendered Outstanding Notes, and that, when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any other adverse claim. The undersigned also warrants that it will, upon request, execute and deliver additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of the tendered Outstanding Notes or to transfer ownership of such Outstanding Notes on the account books maintained by the book-entry transfer facility. The undersigned further agrees that acceptance of any and all validly tendered Outstanding Notes by the Company and issuance of Exchange Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement dated June 29, 2004, among the Company and Jefferies & Company, Inc. (the “Registration Rights Agreement”) and that the Company shall have no further obligation or liability thereunder except as provided in Section 8 of said Registration Rights Agreement. The undersigned will comply with its obligations under the Registration Rights Agreement.

The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption “The Exchange Offer — Conditions to the Exchange Offer.” The undersigned recognizes that as a result of these conditions, as more particularly set forth in the Prospectus, the Company may not be required to exchange any of the Outstanding Notes tendered hereby and, in such event, the Outstanding Notes not exchanged will be returned to the undersigned at the address shown above.

The undersigned understands that tenders of Outstanding Notes pursuant to any one of the procedures described in the Prospectus and in the instructions attached hereto will, upon the Company’s acceptance for exchange of such tendered Outstanding Notes, constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer.

By tendering shares of Outstanding Notes and executing this Letter of Transmittal, the undersigned represents to the Company that, among other things: (a) any Exchange Notes the holder receives pursuant to the Exchange Offer will be acquired in the ordinary course of its business; (b) the holder has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes; (c) if the holder is not a broker-dealer, that it is not engaged in and does not intend to engage in the distribution of the Exchange Notes; (d) if the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes acquired as a result of market-making activities or other trading activities, that it will deliver a Prospectus, as required by law, in connection with any resale of such Exchange Notes; and (e) the holder is not an “affiliate” of the Company as defined by Rule 405 promulgated under the Securities Act, or if the holder is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. However, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an underwriter within the meaning of the Securities Act.

Any holder of the Outstanding Notes using the Exchange Offer to participate in a distribution of the Exchange Notes (i) cannot rely on the position of the staff of the Securities and Exchange Commission enunciated in its no-action letters with respect to Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5, 1991) or similar no-action letters; and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, legal representatives, successors, assigns, executors and administrators of the undersigned. Except as otherwise provided in the Prospectus, tendered Outstanding Notes may be withdrawn at any time prior to the Expiration Date, in accordance with the terms set forth in this Letter of Transmittal (see Instruction 2) and in the Prospectus under “The Exchange Offer — Withdrawal Rights.”

Certificates for all Exchange Notes delivered in exchange for tendered Outstanding Notes and any Outstanding Notes delivered herewith but not exchanged, and in each case registered in the name of the undersigned, shall be delivered to the undersigned at the address shown below the signature of the undersigned.

The undersigned, by completing the box entitled “Description of Outstanding Notes Tendered Herewith” above and signing this Letter of Transmittal, will be deemed to have tendered the Outstanding Notes as set forth in such box.

TENDERING HOLDER(S) SIGN HERE
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 AT THE END OF THIS DOCUMENT)

(Must be signed by registered holder(s) exactly as name(s) appear(s) on certificate(s) for Outstanding Notes hereby tendered or in whose name Outstanding Notes are registered on the books of DTC or one of its participants, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth the full title of such person.) See Instruction 3.

	(SIGNATURE(S) OF HOLDER(S))
Dated
Name(s)
	(PLEASE PRINT)
Capacity (full title)
Address
Area Code and Telephone Number
Taxpayer Identification No.
	GUARANTEE OF SIGNATURE(S) (IF REQUIRED — SEE INSTRUCTION 3)
Authorized Signature
Name
Title
Address
(include zip code)
Name of Firm
Area Code and Telephone Number
Dated

SPECIAL ISSUANCE INSTRUCTION
(SEE INSTRUCTIONS 3 AND 4)

To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to be issued in the name of someone other than the registered holder(s) of the Outstanding Notes whose name(s) appear(s) above.

Issue

o Outstanding Notes not tendered to:

o Exchange Notes to:

Name(s)

Address (include ZIP code)

Daytime Area Code and Telephone Number

Tax Identification No.

SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)

To be completed ONLY if Exchange Notes or Outstanding Notes not tendered are to be sent to someone other than the registered holder(s) of the Outstanding Notes whose name(s) appear(s) above, or such registered holder(s) at an address other than that shown above.

Mail

o Outstanding Notes not tendered to:

o Exchange Notes to:

Name(s)

Address (include ZIP code)

Daytime Area Code and Telephone Number

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES.

A holder of Outstanding Notes may tender the same by:

(i) properly completing, signing, and delivering this Letter of Transmittal, or a facsimile hereof (all references in the Prospectus or this Letter of Transmittal to the Letter of Transmittal shall be deemed to include a facsimile thereof) together with the certificates representing the Outstanding Notes being tendered and all signature guarantees and documents required by this Letter of Transmittal, to the Exchange Agent at its address set forth above on or prior to the Expiration Date.

(ii) effecting a book-entry transfer of the Outstanding Notes by crediting such notes to the Exchange Agent’s account at DTC in accordance with DTC’s ATOP and by complying with applicable ATOP procedures with respect to the Exchange Offer. Holder will be considered to have properly effected a book- entry transfer if, as a DTC participant accepting the Exchange Offer, it electronically transmits its acceptance to DTC, which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will then send a computer-generated message (an “Agent’s Message”) to the Exchange Agent for its acceptance, forming a part of the book-entry confirmation. In the Agent’s Message, the participant expressly acknowledges it is tendering the Outstanding Notes that are subject of such book- entry confirmation, it has received and is agreeing to be bound by the terms of this Letter of Transmittal, including representations and warranties contained herein, and that such agreement may be enforced against it. The DTC participant confirms on behalf of itself and the beneficial owners of such Outstanding Notes all provisions of this Letter of Transmittal as fully as if it had completed the information required herein and executed and transmitted this Letter of Transmittal to the Exchange Agent in actual form. Delivery of the Agent’s Message by DTC will satisfy the terms of the Exchange Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent’s Message. DTC participants may also accept the Exchange Offer by submitting a Notice of Guaranteed Delivery through ATOP.

(iii) complying with the guaranteed delivery procedures if the Outstanding Notes to be tendered are not immediately available or the holder cannot deliver such Notes, this Letter of Transmittal and/or any other required documents to the Exchange Agent or comply with all applicable ATOP procedures prior to or on the Expiration Date. The holder will be considered to have properly tendered under guaranteed delivery procedure if (1) the tender is made through an eligible guarantor institution which is a member of a firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another eligible guarantor institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (an “Eligible Guarantor Institution”) and (2) prior to the Expiration Date, the Exchange Agent receives from such Eligible Guarantor Institution either a properly completed and duly executed notice of guaranteed delivery, by mail, hand delivery, or facsimile transmission (receipt confirmed by telephone and an original delivered by guaranteed overnight courier) or a properly transmitted Agent’s Message and notice of guaranteed delivery. The notice of guaranteed delivery must (a) set forth the name and address of the holder, the registered numbers of such Outstanding Notes, and the principal amount of Outstanding Notes tendered, (b) state that the tender is made thereby, and (c) guarantee that this Letter of Transmittal, together with all tendered Outstanding Notes or a book-entry confirmation, and all other documents required by this Letter of Transmittal will be deposited by the Eligible Guarantor Institution with the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date.

No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of the Outstanding Notes for exchange.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. RATHER THAN MAIL THESE ITEMS, THE COMPANY RECOMMENDS THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO PERMIT TIMELY DELIVERY. NO OUTSTANDING NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO THE COMPANY.

2. PARTIAL TENDERS; WITHDRAWALS.

If less than the entire principal amount of Outstanding Notes evidenced by a submitted certificate is tendered, the tendering holder should fill in the principal amount it is tendering in the box entitled “Description of Outstanding Notes Tendered Herewith.” A newly issued certificate representing the balance of the Outstanding Notes submitted but not tendered will be sent to such holder as soon as practicable after the Expiration Date. The entire principal amount of Outstanding Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise clearly indicated.

Except as otherwise provided in the Prospectus, tenders of Outstanding Notes may be withdrawn at any time prior to the Expiration Date.

For a withdrawal to be effective, the holder seeking to withdraw tendered Outstanding Notes must, prior to the Expiration Date, either send, by mail, hand delivery or facsimile transmission, a written notice to the Exchange Agent at the addresses set forth above or comply with DTC’s ATOP procedures as appropriate. Any such notice of withdrawal must (i) specify the name of the person having tendered the Outstanding Notes to be withdrawn, (ii) identify the Outstanding Notes to be withdrawn (including the certificate numbers and principal amount of each such Outstanding Note), and (iii) if certificates for Outstanding Notes have been transmitted and the name in which such notes were registered is different from the withdrawing holder, specify the name in which such Outstanding Notes were registered. If certificates for Outstanding Notes have been delivered or otherwise identified to the Exchange Agent, then prior to the release of such certificates, the withdrawing holder must also submit the serial numbers of the particular certificates to be withdrawn and a signed notice of withdrawal with signatures guaranteed by an Eligible Guarantor Institution unless such holder is an Eligible Guarantor Institution. If Outstanding Notes have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Outstanding Notes and otherwise comply with such facility’s procedures. The Company will determine all questions as to the validity, form and eligibility of notices of withdrawals, including time of receipt. The Company’s determination will be final and binding on all parties.

Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Outstanding Notes which have been tendered for exchange but which are not exchanged for any reason will be promptly returned to the holder thereof without cost to such holder or, in the case of Outstanding Notes tendered by book-entry transfer into the Exchange Agent’s account at DTC, such Outstanding Notes will be credited to an account with DTC promptly after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Outstanding Notes may be re-tendered by following one of the procedures described under the caption “The Exchange Offer — Procedures for Tendering” in the Prospectus at any time on or before the Expiration Date.

3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES.

If this Letter of Transmittal is signed by the registered holder(s) of the Outstanding Notes tendered hereby, the signature must correspond exactly, without alteration, enlargement or any change whatsoever, with the name as written on the face of the certificates or on DTC’s security position listing as the holder of such Original Notes.

If any Outstanding Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.

If any Outstanding Notes tendered hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of those Outstanding Notes.

If this Letter of Transmittal is signed by the registered holder or holders (which term, for the purposes described herein, shall include the book-entry transfer facility whose name appears on a security listing as the owner of the Outstanding Notes) of the Outstanding Notes listed and tendered hereby, no endorsements of certificates or separate written instruments of transfer or exchange are required.

If this Letter of Transmittal is signed by a person other than the registered holder or holders of the Outstanding Notes listed, such Outstanding Notes must be endorsed or accompanied by a duly executed bond power. In either case, the holder’s or holders’ signature(s) should correspond exactly with the name or names on the face of the certificate(s) and the signature(s) must be guaranteed by an Eligible Guarantor Institution.

If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted.

Endorsements on certificates or signatures on separate written instruments of transfer or exchange required by this Instruction 3 must be guaranteed by an Eligible Guarantor Institution.

Signatures on this Letter of Transmittal do not need to be guaranteed by an Eligible Guarantor Institution, provided the Original Notes are tendered: (i) by a registered holder of Original Notes, including the book-entry transfer facility whose name appears on a security listing as the owner of the Outstanding Notes, who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on this Letter of Transmittal, or (ii) for the account an Eligible Guarantor Institution. In all other circumstances, signatures on this Letter of Transmittal are required to be guaranteed by an Eligible Guarantor Institution.

4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.

Tendering holders should indicate, as applicable, the name and address to which the Exchange Notes or certificates for Outstanding Notes not tendered are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the tax identification number of the person named must also be indicated. Holders tendering Outstanding Notes by book-entry transfer may request that Outstanding Notes not tendered be credited to such account maintained at the book-entry transfer facility as such holder may designate. If no special issuance or delivery instructions are given, Exchange Notes or certificates for Outstanding Notes not tendered will be returned to the name and address of the person signing this Letter of Transmittal.

5. TRANSFER TAXES.

The Company shall pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes for Exchange Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes or Outstanding Notes not tendered or accepted for exchange are to be delivered to or be issued in the name of any person other than the registered holder of the Outstanding Notes tendered, or if tendered Outstanding Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of, or exemption from, such taxes is not submitted herewith, the amount of such transfer taxes will be billed to such tendering holder.

Except as provided in this Instruction 5, it will not be necessary for transfer tax stamps to be affixed to the Outstanding Notes listed in this Letter of Transmittal.

6. WAIVER OF CONDITIONS.

The Company reserves the absolute right to waive, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. If the Company exercises the right to waive any condition relating to the Exchange Offer, such waiver will apply to all holders of the Outstanding Notes. The Company will announce any such waiver in a manner reasonably calculated to inform the holders of the Outstanding Notes of the waiver, which may consist of the issuance of a press release.

7. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES.

Any holder whose Outstanding Notes have been mutilated, lost, stolen or destroyed, should contact the Exchange Agent at the address indicated above for further instructions.

8. BACKUP WITHHOLDING; TAX IDENTIFICATION NUMBER; FORM W-9.

Each holder of Outstanding Notes whose Outstanding Notes are accepted for exchange (or other payee) is required to provide a correct taxpayer identification number (“TIN”), generally the holder’s Social Security or federal employer identification number, and certain other information by completing the substitute Internal Revenue Service (“IRS”) Form W-9 (“Substitute Form W-9”) attached to this Letter of Transmittal under “Important Tax Information” and to certify that the holder (or other payee) is not subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the holder (or other payee) to a $50 penalty imposed by the IRS and up to 29% federal income tax backup withholding on payments made in connection with the Outstanding

Notes. The box in Part 3 of the Substitute Form W-9 may be checked if the holder (or other payee) has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and a TIN is not provided by the time any payment is made in connection with the Outstanding Notes, up to 29% of all such payments will be withheld until a TIN is provided.

9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.

Questions relating to this Exchange Offer, the procedure for tendering, as well as requests for assistance or additional copies of the Prospectus and/or this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number provided above.

IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH CERTIFICATES FOR OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.

IMPORTANT TAX INFORMATION

Under U.S. Federal income tax law, a holder of Outstanding Notes whose Outstanding Notes are accepted for exchange may be subject to backup withholding unless the holder provides the Exchange Agent with either: (i) such holder’s correct TIN on Substitute Form W-9 attached hereto, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder of Outstanding Notes is awaiting a TIN) and that the holder of Outstanding Notes (A) has not been notified by the Internal Revenue Service that it is subject to backup withholding as a result of a failure to report all interest or dividends or (B) has been notified by the Internal Revenue Service that it is no longer subject to backup withholding; or (ii) an adequate basis for exemption from backup withholding. If such holder of Outstanding Notes is an individual, the TIN is such holder’s social security number. If the Exchange Agent is not provided with the correct TIN, the holder of Outstanding Notes may be subject to certain penalties imposed by the Internal Revenue Service.

Certain holders of Outstanding Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. However, to avoid possible erroneous backup withholding, exempt holders of Outstanding Notes should complete and return the Substitute Form W-9, indicating their exempt status.

In order for a foreign individual to qualify as an exempt recipient, the holder must submit an IRS Form W-8BEN, signed under penalties of perjury, attesting to that individual’s exempt status. A Form W-8BEN can be obtained from the Exchange Agent. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for more instructions.

If backup withholding applies, the Exchange Agent is required to withhold up to 29% of any such payments made to the holder of Outstanding Notes or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the IRS.

The box in Part 3 of Substitute Form W-9 may be checked if the holder of Outstanding Notes has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the holder of Outstanding Notes or other payee must also complete the “Certificate of Awaiting Taxpayer Identification Number” below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold up to 29% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent.

The holder of Outstanding Notes is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the record owner of the Outstanding Notes. If the Outstanding Notes are in more than one name or are not in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional guidance on which number to report.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU) TO GIVE THE PAYER. Social security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. All section references are to the Internal Revenue Code of 1986, as amended. IRS is the Internal Revenue Service.

	FOR THIS TYPE OF ACCOUNT		GIVE THE SOCIAL SECURITY NUMBER OF
1.	Individual		The individual
2.	Two or more individuals (joint account)		The actual owner of the account, or if combined funds, the first individual on the account1
3.	Custodian account of a minor (Uniform Gift to Minors Act)		The minor2
4.	a.	The usual revocable savings trust account (grantor is also trustee)	a.	The grantor-trustee
	b.	The so-called trust account that is not a legal or valid trust under state law	b.	The actual owner
5.	Sole proprietorship		The owner3
6.	A valid trust, estate, or pension trust		The legal entity4
7.	Corporate		The corporation
8.	Association, club, religious, charitable, educational or other tax- exempt organization account		The organization
9.	Partnership		The partnership
10.	A broker or registered nominee		The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments		The public entity

1	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person’s number must be furnished.
2	Circle the minor’s name and furnish the minor’s social security number.
3	You must show your individual name, but you may also enter your business or doing business as name. You may use either your social security number or your employer identification number (if you have one).
4	List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.

OBTAINING A NUMBER

If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security Card, at the local Social Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.

PAYEES EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from withholding include:

• An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2).

• The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or agency or instrumentality of any one or more of the foregoing.

• An international organization or any agency or instrumentality thereof.

• A foreign government and any political subdivision, agency or instrumentality thereof.

Payees that may be exempt from backup withholding include:

• A corporation.

• A financial institution.

• A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States.

• A real estate investment trust.

• A common trust fund operated by a bank under Section 584(a).

• An entity registered at all times during the tax year under the Investment Company Act of 1940.

• A middleman known in the investment community as a nominee or custodian.

• A futures commission merchant registered with the Commodity Futures Trading Commission.

• A foreign central bank of issue.

• A trust exempt from tax under Section 664 or described in Section 4947.

Payments of dividends and patronage dividends generally exempt from backup withholding include:

• Payments to nonresident aliens subject to withholding under Section 1441.

• Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner.

• Payments of patronage dividends not paid in money.

• Payments made by certain foreign organizations.

• Section 404(k) payments made by an ESOP.

Payments of interest generally exempt from backup withholding include:

• Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer.

• Payments of tax-exempt interest (including exempt-interest dividends under Section 852).

• Payments described in Section 6049(b)(5) to nonresident aliens.

• Payments on tax-free covenant bonds under Section 1451.

• Payments made by certain foreign organizations.

• Mortgage or student loan interest paid to you.

Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see the regulations under sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N of the Internal Revenue Code.

EXEMPT PAYEES, DESCRIBED ABOVE OR OTHERWISE, SHOULD FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE EXEMPT IN PART 2 OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.

PRIVACY ACT NOTICE. Section 6109 requires you to provide your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold up to 29% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to payer. Certain penalties may also apply.

PENALTIES

1.	FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER — If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.
2.	CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING — If you make a false statement with no reasonable basis that results in no backup withholding, you may be subject to a $500 penalty.
3.	CRIMINAL PENALTY FOR FALSIFYING INFORMATION — Willfully falsifying certificates or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE INSTRUCTION 8)

PAYER'S NAME: LaSalle Bank N.A., as Exchange Agent

SUBSTITUTE W-9	Part 1: PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW		Social security number(s) or Employer Identification Number(s):
Department of the Treasury Internal Revenue Service	Part 2: Certification Under penalties of perjury, I certify that:		Part 3: Awaiting TIN o
	1.	The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me)
	2.	I am not subject to backup withholding because: (a) I am exempt from backup withholding; (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends; or (c) the IRS has notified me that I am no longer subject to backup withholding.
Payer’s Request for Taxpayer Identification Number (“TIN”)	CERTIFICATION INSTRUCTIONS: You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you are subject to backup withholding, you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2).
	Signature
	Date

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A BACKUP WITHHOLDING OF UP TO 29% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, up to 29% of all reportable payments made to me will be withheld.

Signature  Date

CORRESP

December 21, 2004	Jenner & Block LLP	Chicago
	One IBM Plaza	Dallas
	Chicago, IL 60611	Washington, DC
	Tel 312-222-9350
	www.jenner.com
	Edward G. Quinlisk
	Tel 312 840-8679
	Fax 312 840-8779
	equinlisk@jenner.com

VIA EDGAR AND FACSIMILE TO (202) 942-9627

United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, DC 20549-0306

Attention:	Edward M. Kelly
	Nudrat S. Salik

Re:	Viskase Companies, Inc.
	Registration Statement on Form S-4
	Filed October 27, 2004
	File 333-120002

Ladies and Gentlemen:

     On behalf of Viskase Companies, Inc. (“Viskase” or the “Company”), we are responding to your comment letter of November 26, 2004 regarding the above-referenced registration statement.

     Viskase is filing this correspondence via the EDGAR system and simultaneously delivering a copy by facsimile. Copies of this correspondence, the amended registration statement and the supplemental materials referred to in this letter are being separately delivered by overnight courier. Set forth below are the responses of Viskase to the comments in your letter, with the numbers of such responses corresponding to the numbers of your comments.

General

Ÿ	Comment 1:	Provide in a letter on the letterhead of Viskase Companies, Inc. or Viskase signed by an officer before the S-4’s effectiveness the statements and representations for the exchange offer specified in our relevant no action letters on Exxon Capital type exchanges.
	Response:	Viskase has supplementally provided the requested letter.

Ÿ	Comment 2:	Provide written confirmation that the exchange offer will be open for a full 20 business days. It appears from disclosure on the prospectus’ outside front cover page and throughout the registration statement, including exhibits 99.1 and 99.2, that the exchange offer could be open for less than the required 20 business days because the exchange offer expires at 5:00 P.M. instead of midnight on what may be the twentieth business day after it begins. See Q&A 8 in Release No. 34-16623.
	Response:	Viskase intends to comply with the 20 business day requirement of Rule 14e-1 under the Securities Exchange Act of 1934 by holding the exchange offer open until 5:00 p.m., Eastern time, on the twenty-first business day of the exchange offer.
Ÿ	Comment 3:	You cannot use a typeface smaller than the one you use elsewhere for, for example, Additional Information. Please revise.
	Response:	The prospectus was submitted in HTML format, and we believe that certain Web browsers may compress the typeface in certain sections of the document. Viskase intends to typeset the prospectus, which should ensure the proper use of typeface throughout the document.

Prospectus’ Outside Front Cover Page

Ÿ	Comment 4:	Remove all information not required to be included on the prospectus’ outside front cover page so that it follows the summary and risk factors sections. For example, refer to the two paragraphs at the bottom of the page.
	Response:	The requested changes have been made.

Table of Contents

Ÿ	Comment 5:	Move all information except that required by Item 2 of Form S-4 after “Table of Contents” on pages i and ii so that it follows the summary and risk factors sections. See Item 502 and 503(c) of Regulation S-K.
	Response:	The section captioned “Industry Data” has been deleted and the section captioned “Forward-Looking Statements” has been moved to the back of the prospectus on pages 134 and 135.

Additional Information, page i

Ÿ Comment 6: Delete the qualification of the description by reference to documents outside of the prospectus. The qualification is permitted under Rule 411(a) of Regulation C under the Securities

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	Act only where a summary of a particular document is required or where contemplated by the form.
Response:	The fourth sentence under “Additional Information” from page i has been deleted.

Industry Data, page i

Ÿ	Comment 7:	Amend this paragraph’s language to remove the implication that you are disclaiming responsibility for information that you have chosen to include in the prospectus.
	Response:	The section captioned “Industry Data” has been deleted. In the section captioned “Forward-Looking Statements” on page 134, the third bullet point has been revised and an additional bullet point has been added to reflect that certain market and industry disclosures are forward-looking in nature.

Prospectus Summary, page 1

Ÿ	Comment 8:	You cannot qualify in its entirety the disclosure in the Summary; please revise.
	Response:	The third sentence of the first paragraph under “Prospectus Summary” on page 1 has been deleted.
Ÿ	Comment 9:	The summary is very detailed and includes information about Viskase and its business that is repeated word for word elsewhere in the prospectus. We note particularly the subsections on Viskase’s competitive strengths and business strategy. The emphasis on those subsections without a discussion of corresponding risks also leaves the summary somewhat unbalanced. Reduce the information in the summary so that it gives a brief and balanced overview of the key aspects of Viskase’s offering and business, eliminating the two subsections mentioned. See Item 503(a) of Regulation S-K.
	Response:	The requested changes have been made.
Ÿ	Comment 10:	Disclosure on pages 6, 31, 33, and 124 and in the letter of transmittal gives the impression that Viskase’s affiliates may participate in the exchange offer, but they would have to comply with applicable registration and prospectus delivery requirements. For example, disclosure on page 124 states that if you are an affiliate wishing to exchange outstanding notes for exchange notes, you will be required to represent that you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Note that affiliates are ineligible to

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		participate in the exchange offer. Revise to delete this and similar statements throughout the document.
	Response:	The disclosure on pages 4, 29, 32 and 127 and in the letter of transmittal has been revised to delete references to exchanging holders that are affiliates of Viskase. The fourth sentence under “Resales of the Exchange Notes” on page 32 has been revised to clarify that Viskase has not sought no-action relief from the staff with respect to the exchange offer, with similar revisions where appropriate. In addition, the word “not” has been inserted on page 129 where it had been inadvertently omitted.
Ÿ	Comment 11:	Revise “U.S. Federal Income Tax Considerations” on page 7 to remove any uncertainty about the exchange offer’s tax treatment. Alternatively, summarize here and describe in detail in the “United States Federal Income Tax Considerations” section the basis for any uncertainty of the United States federal income tax consequences for United States holders of the notes.
	Response:	The disclosure under “U.S. Federal Income Tax Considerations” on page 5 has been revised to remove possible uncertainty about the exchange offer’s tax treatment.
Ÿ	Comment 12:	Under “Ranking” on page 8, state the amounts of outstanding debt that rank equally or subordinate to the notes. Disclose also the maximum amounts of additional debt that Viskase may issue that rank equally or subordinate to the notes as of the latest balance sheet data in the prospectus.
	Response:	The disclosure under “Ranking” on page 6 has been revised to include information regarding Viskase’s indebtedness and ability to borrow as of September 30, 2004.
Ÿ	Comment 13:	Under “Change of Control Offer” on page 9, revise to disclose if there is a change of control, Viskase may have insufficient financial resources or may be unable to arrange financing to repurchase the notes.
	Response:	The section captioned “Change of Control Offer” on page 7 has been revised to add disclosure about the possibility of Viskase’s inability to repurchase the notes.
Ÿ	Comment 14:	Provide disclosure under a discrete caption in the “Summary Description of the Notes” subsection that Viskase does not intend to list the notes on any securities exchange or seek approval for quotation through any automated trading system. Further, disclose

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whether the initial purchaser or any other registered broker dealer intends to make a market in the notes.

Response:

Viskase has added a section entitled “Trading” under “Summary Description of the Notes” on page 8 to disclose that it does not intend to list the exchange notes on any national securities exchange or seek approval for quotation of the exchange notes through any automated trading system. The disclosure also indicates that the initial purchaser has advised Viskase that it intends to make a market in the exchange notes.

Summary Consolidated Historical and Pro Forma Financial Data, page 11

Ÿ	Comment 15:	Please tell us how you determined that a pro forma statement of operations for the year ended December 31, 2003 that assumes you emerged from bankruptcy on January 1, 2003 was not necessary. Otherwise, please include one. Please also ensure that this pro forma statement of operations and an interim one for the period ended September 30, 2004 reflect the transactions you discuss in the third paragraph on page 11 and any other material ones. Please ensure that you clearly explain each pro forma adjustment you are giving effect to and show precisely how you computed it for each period presented. Refer to Rules 11-01(a)(8) and (b)(6) of Regulation S-X.
	Response:	The Company respectfully believes that pro forma data assuming emergence as of January 1, 2003 is not necessary because there is sufficient actual results over the past 18 months and other pro forma financial information available to the reader to evaluate the Company’s current financial position and results.
Ÿ	Comment 16:	In your pro forma statement of operations, please disclose how you arrived at a pro forma interest expense of $5,564 for the six months ended June 30, 2004 from historical interest expense of $6,338. You should separately present the effect of the original offering of the Notes, the repayment of the capital lease obligations, and the purchase of the 8% Senior Notes. For debt that incurs interest at a variable rate, you should use the average variable rate that this debt would have incurred over the appropriate historical period for which you are giving pro forma effect. Please also disclose the average interest rate used for each period and the indexed rate (LIBOR+x% or prime+x%) of the new debt.
	Response:	A footnote has been added to page 10 to provide additional detail regarding interest expense. None of the relevant indebtedness has variable rate interest.

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Ÿ	Comment 17:	In the pro forma statement of operations, please disclose why pro forma adjustment number 7 on page 12 assumes you repurchased all of your 8% Senior Notes given that you have only purchased approximately $55.5 million in the aggregate principal amount. Otherwise, please revise your computations.
	Response:	The pro forma adjustment on page 10 has been revised to reflect the repurchase of $55.5 million principal amount of 8% Senior Notes at a price equal to 90% of the aggregate principal amount thereof.
Ÿ	Comment 18:	It does not appear that the net debt amount presented under the heading pro forma data is calculated using pro forma cash and cash equivalents and pro forma debt at June 30, 2004. Please advise.
	Response:	Net debt is defined as total debt less cash and cash equivalents as of September 30, 2004.

Risk Factors, page 13

Ÿ	Comment 19:	Some risk factors’ captions or headings state merely a fact or describe an event that may occur in the future or are too vague to describe adequately the risk that follows. For example, refer to the second, fifth, sixth, eighth, tenth, eleventh, thirteenth, fifteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-second, twenty-third, twenty-fourth, twenty-fifth, twenty-sixth, twenty-seventh, twenty-eighth, thirtieth, thirty-first, thirty-second, thirty-third, thirty-fourth, thirty-fifth, thirty-sixth, thirty-seventh, and thirty-eighth factors. State succinctly the risk that flows from the fact or uncertainty.
	Response:	We have revised the vast majority of the captions identified above; in some instances, however, it was not feasible to do so as the potential risk that flows from the fact or uncertainty is amorphous.
Ÿ	Comment 20:	Avoid generic conclusions in the risk factor captions and discussions like Viskase’s business, results of operations, financial condition, financial position, cash flows, or liquidity would or could be “materially and adversely affected.” For example, refer to the fifth, fifteenth, and twenty-fourth risk factors. Rather, explain specifically what the risk’s consequences or effects are for Viskase and its securityholders.
	Response:	We have revised the captions.
Ÿ	Comment 21:	The actual risks you are trying to convey do not stand out from the extensive detail that you provide in some risk factors. For

6

		example, refer to the fifth, tenth, eleventh, and thirty-fifth risk factors. Revise so that you are stating the risk in at least the second or third sentence. Provide just enough detail to place the risk in context.
	Response:	We have revised fifth, tenth and eleventh risk factors to state the risk earlier and to eliminate any extraneous detail not necessary to place the risk in context. The eleventh and thirty-fifth risk factors, dealing with bankruptcy laws and compliance with environmental regulations, respectively, require additional detail to properly frame the potential risk, and as a result, have undergone only minimal revisions.
Ÿ	Comment 22:	Some risk factors contain multiple bullet points. For example, refer to the second, fifth, eleventh, fifteenth, and thirty-second risk factors. Revise to eliminate generic or vague bullet points and to include only the most significant bullet points.
	Response:	The second, fifth, eleventh, fifteenth, and thirty-second risk factors have been revised to avoid generic or vague bullet points.
Ÿ	Comment 23:	Some risk factors include language like “we cannot assure,” “there can be no assurance,” “we can offer no assurances,” “we make no assurances,” and “we can provide no assurances.” For example, refer to the fifth, tenth, eleventh, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, twenty-second, thirty-fifth, thirty-sixth, thirty-seventh, and thirty-eighth risk factors. Since the risk is the situation described and not Viskase’s inability to assure, revise.
	Response:	We have revised the risk factors accordingly.
Ÿ	Comment 24:	Please delete the first risk factor. It is coercive and does not describe a risk of participating in the transaction.
	Response:	Viskase respectfully disagrees with this comment. Viskase anticipates that most of the noteholders will participate in the exchange offer in order to receive registered notes. As a result, there is likely to be a relatively small amount of old notes outstanding after completion of the exchange offer. We believe that in future market transactions the registered exchange notes will be more attractive to potential holders in comparison with unregistered old notes, and that the trading characteristics of the old notes could be adversely affected as a result. Viskase believes that this is a factual matter with respect to which the noteholders should be made aware. Since, the outstanding notes and the exchange notes represent the same obligation to Viskase, Viskase

7

		will not treat holders differently as a result of their failure to exchange their old notes and Viskase is making the exchange offer pursuant to contractual requirements and is indifferent as to whether or not holders participate in the exchange offer, we do not believe that the risk factor is coercive. Accordingly, the risk factor has not been deleted.
Ÿ	Comment 25:	Please delete the first risk factor on page 14 for the same reasons.
	Response:	While we do not believe that the risk factor was coercive, we have chosen to delete the risk factor as it amounts to nothing more than a statement of fact.
Ÿ	Comment 26:	You disclose on page 18 that capital stock securing the Notes will automatically be released from collateral if separate financial statements are required to be filed for any of your subsidiaries. Please disclose the significance level of any entity whose collateral currently exceeds 10% of the principal amount of the secured class of securities. Please also disclose this information as of each balance sheet date, including interim ones, subsequent to the original issuance of the Notes. Please continue disclosing this information in both a footnote to your financial statements and in the forepart of the document in your ongoing filings under the Exchange Act.
	Response:	The disclosure on page 16 has been revised, and Viskase intends to disclose such information in future periods in the manner requested.
Ÿ	Comment 27:	Please supplementally provide us with the computations you performed in reaching the conclusion that separate financial statements are not required under Rule 3-16 of Regulation S-X.
	Response:	The computations have been supplementally provided.
Ÿ	Comment 28:	Please delete the first risk factor on page 20 since it is not a risk to noteholders.
	Response:	The first risk factor from page 20 has been deleted.

The Exchange Offer, page 28

Ÿ	Comment 29:	Identify the notes’ initial purchaser in this section’s first paragraph.
	Response:	The initial purchaser has been identified as Jefferies & Company, Inc.

8

Ÿ	Comment 30:	Revise the third paragraph’s last sentence under “Terms of the Exchange Offer” to clarify that any outstanding notes not accepted for exchange will be returned to the tendering holder “promptly” after the exchange offer’s expiration or termination. Revise similarly the last sentence on page 30 and the first and fourth paragraphs under subsection 2 of “Instructions” in exhibit 99.1.
	Response:	The prospectus has been revised to insert the word “promptly” in the sections captioned “Terms of the Exchange Offer” on page 27 and “Procedures for Tendering” on page 29. Subsection 2 of “Instructions” in exhibit 99.1 has been similarly revised.
Ÿ	Comment 31:	Refer to the second full paragraph on page 29. Provide written confirmation that Viskase will disclose the approximate number of notes tendered to date with its public announcement of an extension as required by Rule 14e-1(d).
	Response:	Viskase will disclose the approximate number of notes tendered to date with any public announcement of an extension.
Ÿ	Comment 32:	Disclosure in the last paragraph on page 30 states “The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes.” Revise here and in the second paragraph under “Conditions to the Exchange Offer” on page 33 and under subsection 6 of “Instructions” in exhibit 99.1 to indicate that if Viskase waives any condition of the exchange offer, Viskase will waive the condition to all holders.
	Response:	The first paragraph on page 29, the first full paragraph on page 32 and subsection 6 of “Instructions” in exhibit 99.1 have been revised to indicate that if Viskase waives any condition of the exchange offer, Viskase will waive the condition with respect to all holders.
Ÿ	Comment 33:	It is unclear why you have included conditions of tender as conditions of the exchange offer in the second bullet point under “Conditions to the Exchange Offer” on page 33. It appears that you should delete the second bullet point or revise it to clarify what events might trigger the condition. Also, we note from the last sentence of this subsection that you may waive these conditions. Tell us why you believe that it would be appropriate for you to waive the conditions of tender such as the condition that no tendering noteholder is an affiliate.
	Response:	The second bullet point under “Conditions to the Exchange Offer” is intended to mean that if no outstanding notes are tendered, there

9

		will be no obligation to complete the exchange offer. Viskase does not intend to waive the condition that exchanging holders not be affiliates.
Ÿ	Comment 34:	The bidder may not condition the offer on factors within its control. Thus, you should delete the third bullet point under “Conditions to the Exchange Offer” on page 33.
	Response:	The third bullet point under “Conditions to the Exchange Offer” on page 32 has been revised to insert the words “in the event no Outstanding Notes are tendered.”
Ÿ	Comment 35:	Revise “Conditions to the Exchange Offer” on page 33 to make clear that all conditions to the exchange offer other than those dependent upon receipt of necessary government approvals must be satisfied or waived before the exchange offer’s expiration and that Viskase may only terminate or amend the exchange offer if any of the specified conditions occur before the exchange offer’s expiration.
	Response:	The disclosure under “Conditions to the Exchange Offer” on page 32 has been revised to add detail regarding the timing considerations that relate to the exchange offer’s conditions.
Ÿ	Comment 36:	We do not object to the imposition of conditions in a tender offer, provided that they are not within the direct or indirect control of the offeror and are specific and capable of objective verification when satisfied. Thus, we suggest that you revise the second paragraph under “Conditions to the Exchange Offer” on page 33 to clarify that Viskase will make its determination whether a condition has been fulfilled in its “reasonable discretion” or “reasonable judgment.”
	Response:	The disclosure under “Conditions to the Exchange Offer” on page 32 has been revised to change the word “sole” to “reasonable.”
Ÿ	Comment 37:	Refer to the second paragraph under “Conditions to the Exchange Offer” on page 33. Disclosure indicates that Viskase’s failure at any time to exercise any of the specified rights “will not be deemed a waiver of any right.” Viskase may not waive implicitly an offer condition by failing to assert it. If Viskase decides to waive a condition, Viskase must announce expressly the decision in a manner reasonably calculated to inform noteholders of the waiver. Revise here and under subsection 6 of “Instructions” in exhibit 99.1.

10

Response: The disclosure under “Conditions to the Exchange Offer” on page 32 and under subsection 6 of “Instructions” in exhibit 99.1 have been revised to indicate that Viskase will announce any waiver in a manner reasonably calculated to inform the holders of the outstanding notes of the waiver.

Selected Consolidated Historical Financial Data, page 37

Ÿ	Comment 38:	Please show us how you determined you did not have to present a pro forma ratio of earnings to fixed charges in accordance with Item 503(d) of Regulation S-K, or please provide the required disclosures.
	Response:	Viskase will supplementally provide calculations showing that the change in the ratio of earning to fixed charges is less than ten percent.

Management’s Discussion and Analysis of Financial Condition and Results of Operations General

Ÿ	Comment 39:	Please quantify the impact of each factor when multiple factors contribute to material fluctuations. For example, the increase in sales for the six months ended June 30, 2004 was due to stronger volumes in the small diameter cellulosic casings market in the U.S. domestic and export markets, stronger volumes in the fibrous casing market in the U.S. offset by the selling prices in the U.S., and the benefit of the strengthened Euro against the U.S. dollar. Refer to Items 303(a)(3)(i) and (iii) of Regulation S-K and Financial Reporting Codification 501.04.
	Response:	The disclosure has been revised to provide additional detail on sales, depreciation and interest expense.

Results of Operations — Second Quarter 2004 — Debt Extinguishment, page 42

Ÿ	Comment 40:	The loss on debt extinguishment consists of the losses on the early retirement of $55.5 million of the 8% Senior Notes at a discount and of the early termination of your capital lease with GECC. Given the guidance of FIN No. 26, tell us how you determined it was appropriate to record a loss related to the early termination of your capital lease with GECC. In addition, tell us how you accounted for the amendments to the GECC capital lease agreements upon emergence from bankruptcy and in April 2004.
	Response:	The April 3, 2003 valuation of the GECC lease was established using the $9,500,000 negotiated repurchase amount. The lease was renegotiated in April 2004, at which point the Company recorded

11

$9,500,000 increase in the capital lease obligation and a $9,500,000 increase in the equipment account. In addition, the Company evaluated the recoverability of this long-term asset; no adjustment to carrying value was required. The loss on the GECC lease obligation resulting from the difference in carrying value and purchase price at the time of the early termination was zero. The loss on the GECC early termination resulted from the write-off of deferred financing fees and prepaid interest.

Comparison of Results of Operations for Fiscal Years Ended December 31, 2001, 2002, and 2003, page 44

2003 Versus 2002, page 45

Ÿ	Comment 41:	Please tell us why you believe it is appropriate to present and discuss the combined results of the predecessor and reorganized entity for the year ended December 31, 2003.
	Response:	The Company believes it is appropriate to present and discuss the combined results of the predecessor and reorganized entity for the year ended December 31, 2003 because with the exception of depreciation, interest expense and gain on early extinguishment of debt, all of which are adequately discussed, the restructuring had an immaterial effect on the Company’s results of operations.
Ÿ	Comment 42:	Please discuss with quantification in your MD&A the differences between periods in each line item that results from the bankruptcy, such as the elimination of various liabilities, changes in the basis of your net assets, and other related items. Your discussion should be quite detailed as to the types of additional expenses, including the related amounts, that were present in each line item during each period presented prior to your emergence from bankruptcy. This will help readers in better understanding the fundamental differences in your cost structure before and after your emergence from bankruptcy. You should also quantify the extent to which any other business reasons further contributed to a change in each line item between periods being discussed. Please similarly revise your 2002 versus 2001 discussions and your interim period discussions as well.
	Response:	The disclosure has been revised to provide additional detail on depreciation and interest expense, which were the principal expense categories affected by the Company’s emergence from bankruptcy.

2002 Versus 2001, page 46

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Ÿ	Comment 43:	In your discussion of operating income, you refer to an “Adjusted Operating Income (Loss) as defined in the table above.” It does not appear that there is an amount described as Adjusted Operating Income (Loss) in any tables. We remind you that the presentation of operating income adjusted for amounts which are included in operating income as calculated in accordance with GAAP and presented on your statements of operations would constitute a non-GAAP financial measure. Correspondingly, you would need to provide the additional disclosures required by Item 10(e) of Regulation S-K. Please advise.
	Response:	The sentence containing the non-GAAP financial measure has been deleted.

Liquidity and Capital Resources, page 47

Ÿ	Comment 44:	State what the limits of all material financial ratios and tests are under Viskase’s outstanding debt instruments. Further, indicate whether Viskase is in compliance with the ratios and tests.
	Response:	The disclosure on page 48 has been revised to provide the requested information.
Ÿ	Comment 45:	Discuss Viskase’s liquidity on a long term and a short term basis. See Item 303(a) of Regulation S-K and instruction 5 to Item 303(a). We note the disclosure under “Liquidity” on page F-14.
	Response:	We have revised the disclosure by including a section captioned “Liquidity” on page 53.

Critical Accounting Policies, page 51

General

Ÿ Comment 46: Please expand your discussion of critical accounting policies to address the following:

Ÿ	Types of assumptions underlying the most significant and subjective estimates;
Ÿ	Any known trends, demands, commitments, events or uncertainties that are reasonably likely to occur and materially affect the methodology or the assumptions described;
Ÿ	A quantitative discussion of changes in overall financial performance if you were to assume that the accounting estimate were changed, either by using reasonably possible near-term changes in the most material assumptions underlying the

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	accounting estimate or by using the reasonably possible range of the accounting estimate; and
Ÿ	A quantitative and qualitative discussion of any material changes made to the accounting estimate in the past three years, the reasons for the changes, and the effect on your overall financial performance.

	Refer to SEC Releases 33-8098 and 33-8350.
Response:	The Company has reviewed its critical accounting policies and has supplemented its disclosures on page 51 and page F-9 related to (i) allowance for obsolete and slow moving inventory and (ii) pension plans. The Company has also revised the disclosure on page 51 to disclose the absence of trends affecting critical accounting policies and changes to accounting estimates.

Contractual Obligations Related to Debt, Leases and Related Risk Disclosure, page 53

Ÿ Comment 47: Please provide a table of contractual obligations as of December 31, 2003. In addition to the types of items specifically mentioned in Item 303(a)(5) of Regulation S-K, please also include the following:

(a)	Estimated interest payments on your debt;
(b)	Estimated payments under interest rate swap agreements; and
(c)	Planned funding of pension and other postretirement benefit obligations.
Because the table is aimed at increasing transparency of cash flow, we believe these payments should be included in the table. Please also disclose any assumptions you made to derive these amounts. In addition, disclose any material changes to the contractual obligations during the subsequent interim period. Refer to Instruction 7 to Item 303(b) of Regulation S-K.

Response: A table of contractual obligations as of December 31, 2003 has been provided on page 53. There are no interest rate swap agreements.

Business

International Operations, page 57

Ÿ Comment 48: Please also provide financial information for the period from April 3, 2003 through June 30, 2003.

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Response: The financial information presented on page 59 has been revised to disclose the relevant information for the period from April 3, 2003 through December 31, 2003. The Company believes that this information is useful by providing easily understandable disclosure for the full year 2003 period.

Trademarks and Patents, page 60

Ÿ	Comment 49:	State the duration or term of all material patents. See Item 101(c)(iv) of Regulation S-K.
	Response:	While the Company believes its market leadership is derived, in part, from its patent portfolio, there is no single material patent or group of material patents. The disclosure on page 62 has been revised accordingly.

Certain Relationships and Related Transactions, page 71

Ÿ	Comment 50:	State whether Viskase believes that each transaction described in this section’s second and third paragraphs is on terms at least as favorable to Viskase as those Viskase would expect to negotiate with an unaffiliated party.
	Response:	The disclosure in the second and third paragraphs under “Certain Relationships and Related Transactions” on page 73 has been revised to reflect Viskase’s belief that, with respect to each transaction, the terms were at least as favorable as those Viskase would expect to negotiate with an unaffiliated party.

Use of Proceeds, page 72

Ÿ	Comment 51:	Please include information similar to that required by Item 504 of Regulation S-K for the Outstanding Notes.
	Response:	The disclosure under “Use of Proceeds” on page 74 has been revised to add detail on the use of proceeds from the issuance of the outstanding notes.

Description of Certain Indebtedness, page 73

Ÿ Comment 52: Delete in this section’s first paragraph the qualification of the description by reference to documents outside of the prospectus. The qualification is permitted under Rule 411(a) of Regulation C under the Securities Act only where a summary of a particular document is required or where contemplated by the form.

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	Response:	The first sentence under “Description of Certain Indebtedness” on page 75 has been revised to remove the qualification by reference to the underlying documents.
Ÿ	Comment 53:	Describe in detail the revolving credit facility’s covenants. Alternatively, cross reference to disclosure in MD&A.
	Response:	A sentence has been added to the fourth paragraph under “Revolving Credit Facility” on page 75 to cross reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of the revolving credit facility’s covenants.

Description of the Notes, page 75

Ÿ	Comment 54:	Revise language in this section’s fifth paragraph that can be read to imply that investors do not have rights under the United States federal securities laws about the notes’ description in the prospectus.
	Response:	The second sentence in the fifth paragraph from page 75 has been deleted.
Ÿ	Comment 55:	Refer to “Certain Covenants — Merger, Consolidation and Sale of Assets” on page 91. Quantify the words “substantially all” as used here and elsewhere for Viskase’s assets. Alternatively, provide disclosure of the words’ established meaning under applicable state law. If an established meaning is unavailable, provide disclosures of the consequences or effects of the uncertainty on noteholders’ ability to determine whether a sale of substantially all of Viskase’s assets has occurred.
	Response:	The last paragraph on page 94 has been revised to add disclosure with respect to uncertainty regarding the interpretation of “substantially all” when used in reference to a sale of Viskase’s assets.
Ÿ	Comment 56:	Refer to the first full paragraph on page 100. Disclosure states that investors waive and release all liability for any obligations of Viskase or the guarantors under the notes against any past, present, or future director, officer, employee, incorporator, or stockholder of Viskase or a guarantor. Clarify that this waiver does not affect liabilities of any party under the United States federal securities laws.

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	Response:	The penultimate paragraph under “Events of Default” on page 103 has been revised to insert the word “payment” before the word “obligations” in the second line.
Ÿ	Comment 57:	Refer to “Certain Definitions” on page 104. This subsection defines some terms whose meanings are readily understood or are apparent from the context. Revise this subsection to eliminate unnecessarily defined terms. Examples include terms like “Bankruptcy Code,” “Board of Directors,” “Common Stock,” “Exchange Act,” “GAAP,” “Holder,” “Issue Date,” “Person,” and “Securities Act.”
	Response:	Viskase respectfully disagrees with this comment. Viskase believes that while many of the terms have meanings that are readily understood, many of the terms are defined pursuant to the definitive agreement with a high degree of specificity and that the defined terms should be used in order to ensure a thorough understanding of the terms of the notes. Accordingly, the defined terms have not been revised.
Ÿ	Comment 58:	Refer to the paragraph on page 126. Delete the language qualifying the registration rights agreement’s description. Since you are not required by the form to describe the agreement, you may not qualify your description of the agreement.
	Response:	The last sentence under “Exchange Offer; Registration Rights” on page 129 has been revised to delete the qualification language.

United States Federal Income Tax Considerations, page 127

Ÿ	Comment 59:	Delete the word “certain” in this section’s first sentence. Further, revise the sentence to clarify that the discussion includes a summary of the material United States federal income tax consequences.
	Response:	The first sentence in the section “United States Federal Income Tax Considerations” on page 130 has been revised as requested.
Ÿ	Comment 60:	Remove the statement that “This discussion is for general information only” in this section’s second paragraph. This statement may imply that investors cannot rely on the disclosure.
	Response:	The first sentence of the second paragraph under “United States Federal Income Tax Consequences on page 130 has been revised to delete this phrase.

Legal Matters, page 130

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Ÿ	Comment 61:	Rather than referring to “Certain legal matters,” clarify that counsel will opine on the enforceability of Viskase’s obligations under the notes.
	Response:	The disclosure under “Legal Matters” on page 133 has been revised to clarify that counsel will pass on the enforceability of the exchange notes.

Experts, page 130

Ÿ	Comment 62:	Please address your reliance on Grant Thornton’s report and identify Grant Thornton as being experts in auditing and accounting.
	Response:	The requested revision has been made.

Consolidated Financial Statements

General

Ÿ	Comment 63:	Please update the financial statements and corresponding financial information included to comply with Rule 3-12 of Regulation S-X.
	Response:	We have included the September 30, 2004 interim financial statements.

Report of Independent Registered Public Accounting Firm — Grant Thornton LLP, page F-2

Ÿ	Comment 64:	Please make arrangements with Grant Thornton to have them revise their report to indicate their audit was conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) as required by PCAOB Auditing Standard No. 1. See also SEC Release 33-8422.
	Response:	The report has been revised in the manner requested.

Note 1. Summary of Significant Accounting Policies, page F-8

General

Ÿ Comment 65: Please disclose the types of expenses that you include in the cost of sales line item and the types of expenses that you include in the selling, general and administrative expenses line item. Please also tell us whether you include inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and the other costs of your distribution network in the cost of sales line item. With the exception of warehousing

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costs, if you currently exclude a portion of these costs from cost of sales, please disclose:

Ÿ	in a footnote the line items that these excluded costs are included in and the amounts included in each line item for each period presented, and
Ÿ	in MD&A that your gross margins may not be comparable to those of other entities, since some entities include all of the costs related to their distribution network in cost of sales and others like you exclude a portion of them from gross margin, including them instead of a line item, such as selling, general and administrative expenses.

Response: The “Cost of sales” disclosure was included within the Revenue Recognition policies in Note 1. The Company revised the disclosure to be more expansive. The Company includes all costs of distribution as a component of “Cost of sales.” The revised disclosure is shown in the Company’s response to Comment 66.

Revenue Recognition, page F-10

Ÿ	Comment 66:	You state that generally revenues are recognized at the time the products are shipped to customers. Expand your disclosure to state what you mean by “generally.” Please also disclose in your revenue recognition policy whether your shipping terms are FOB shipping point or FOB destination. Even if your shipping terms are FOB shipping point, revenue recognition may not be appropriate if your agreements have customer acceptance provisions or you have a history of replacing goods lost in transit. See the Interpretive Response to Question 3 of SAB Topic 13:A.3.b. For those sales that you do not record at the time of shipment, state when you record these sales.
	Response:	The Company revised the disclosure under “Revenue Recognition” on page 51 and page F-10 as follows. “Substantially all of the Company’s revenues are recognized at the time products are shipped to the customer under F.O.B. Shipping Point terms or under F.O.B. Shipping Port terms. Revenues are net of any discounts, rebates and allowances. The Company records all related labor, raw materials, in-bound freight, plant receiving and purchasing, warehousing, handling and distribution costs as a component of cost of goods sold.”

Futures Contracts, page F-10

Ÿ Comment 67: As noted on page 54, please tell us how you considered the guidance in paragraph 18.a. of SFAS 133 in reaching the

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conclusion that gains on the change in fair value of futures contracts are not recorded in other income, whereas losses are recognized. Please disclose your accounting policy in a footnote, along with the amounts of gains and losses recorded in each period presented.

Response:

The Company does not designate its gas future contracts as a hedging instrument. Losses are recognized when incurred, and gains are deferred until the contract is closed. The deferral of gain is conservative and the effect is de minimis based upon the immateriality of gains, small number of contracts and short duration of period (normally three to six months). The deferral of a gain at December 31, 2003 was only $41,000. Accordingly, the section captioned “Futures Contracts” from page F-10 has been deleted as contracts and dollar amounts involved are and have been immaterial.

Note 3. Fresh-Start Accounting, page F-14

Ÿ	Comment 68:	The reorganization value was based on the consideration of many factors and various valuation methods, including discounted cash flow analysis using projected cash flow information, selected publicly traded company market multiples of certain companies operating businesses viewed to be similar to yours, and other applicable ratios and valuation techniques believed to be representative of your business and industry. Though your reorganization value was based on consideration of many factors and various valuation methods, it is not clear which method was ultimately used and how you specifically arrived at your reorganization value. Please expand your disclosure to clarify your reorganization value as well as how you arrived at this reorganization value including a discussion of your significant assumptions. Refer to paragraph 39 of SOP 90-7.
	Response:	The disclosure under “Fresh-Start Accounting” on page F-15 has been revised to reflect that the reorganization value of the Company was based upon the compilation of many factors and various valuation methods, including: (i) discounted cash flow analysis using five-year projected financial information applying discount rates between 16% and 18% and terminal cash flow multiples of 5.0X to 6.0X based upon review of selected publicly traded company market multiples of certain companies operating businesses viewed to be similar to that of the Company; and (ii) other applicable ratios and valuation techniques believed by the Company and its financial advisors to be representative of the Company’s business and industry.

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Ÿ	Comment 69:	Please disclose how you determined you qualified for fresh-start reporting based on paragraph 36 of SOP 90-7 which should include a breakdown of your total postpetition liabilities, allowed claims, and reorganization value. Refer to paragraphs 36 and B-1 of SOP 90-7.
	Response:	Fresh-start accounting applied because the reorganized value of the Company’s assets immediately before emergence from bankruptcy was less than all post-petition liabilities, and the Company’s pre-petition stockholders received less than 50% of the voting shares upon emergence from bankruptcy. Disclosure to this effect has been added to Note 3 on page F-15 and Note 2 on page F-51. Additionally, the breakdown of the postpetition liabilities and reorganization value have been included.
Ÿ	Comment 70:	Please disclose what the general liability due to emergence for $3,150,000 consists of. Given the guidance of paragraph 14 of SFAS 5, also tell us how you determined it was appropriate to record this accrual.
	Response:	We have revised the disclosure on page F-20 to reflect that the liability consisted of severance obligations to the former chief executive officer and president of the Company resulting from a change of control upon emergence from bankruptcy and recognition of reserves for legal services related to specific loss contingencies.

Note 8. Accrued Liabilities Not Subject to Compromise, page F-18

Ÿ	Comment 71:	Please tell us the nature of the amounts included as “Accrued volume and sales discounts.” Please also tell us what the other side of this journal entry is.
	Response:	The Company has changed the title of the account to “Accrued volume and sales rebates.” These accrued volume and sales rebates represent the amounts due for periodic rebate obligations to the Company’s customers. The debit side of the entry is recorded as a reduction of sales, and results in net sales.

Note 10. Operating Leases, page F-22

Ÿ Comment 72: Please disclose how you account for (a) step rent provisions and escalation clauses and (b) capital improvement funding and other lease concessions, which may be present in your leases. If, as we assume, they are taken into account in computing your minimum lease payments and the minimum lease payments are recognized on a straight-line basis over the minimum lease term, the note

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should so state. If our assumption is incorrect, please tell us how your accounting complies with SFAS 13 and FTB 88-1. Paragraph 5.n. of SFAS 13, as amended by SFAS 29, discusses how lease payments that depend on an existing index or rate, such as the consumer price index or the prime interest rate, should be included in your minimum lease payments.

Response:

The Company’s minimum lease obligations in any period are fixed and specified in the lease. The Company doesn’t have any leases that are indexed, have rent free periods, require capital improvement funding or include lease concessions. The contractual payments per lease are expensed in the respective period. The future minimum operating lease payments are aggregated and disclosed by respective period.

Note 11. Retirement Plans, page F-22

Ÿ	Comment 73:	Please tell us what benchmark(s) you use to determine the discount rates used for your pension benefits and your other benefits. Please tell us how you determined the benchmark rate you are using is appropriate under SFAS 132. Please tell us the benchmark rate(s) for each date your discount rates are presented and explain the reasons for any differences between the benchmark rate(s) and the discount rates you used as of each date.
	Response:	A discussion of the benchmark rate has been added to Note 1 on page F-9 and Note 11 on page F-26.
Ÿ	Comment 74:	Please tell us where you have included the disclosures required by paragraphs 5 and 9 of SFAS 132®, or revise your footnotes to include them.
	Response:	The Company has included the disclosures required by Paragraph 5 of SFAS 132® within the Pension Benefits and Other benefits disclosures in Footnote 11 beginning on page F-26. The Company has included additional disclosure of the one-time recognition of unrecognized gains and losses within the footnote.
		The disclosure required by Paragraph 9 of SFAS 132® is included under “Savings Plans” on page F-30.

Note 15. Contingencies, page F-29

Ÿ Comment 75: We assume that you are an agent in the sales tax collection process in Quebec, Canada. If our understanding is incorrect, please let us know. Typically, sales tax is collected from the customer at the same time the customer pays for the merchandise or service

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rendered. Due to the passage of time, collection of the sales tax directly from the customer may not be probable. Thus, recording sales tax receivables from your customers may not be an option. Please tell us whether this is the case or not. Please also tell us how you determined no liability needed to be recorded related to the sales taxes you failed to collect and remit. Please explain to us, if true, why you continue to believe that no sales tax was ever required to be collected and why you have not reflected these amounts in your balance sheet. Please refer to SFAS 5 in explaining your position. Please also address what your payment responsibilities are under state law in the event you fail to perform your duties as an agent in the collection process.

Response:

Viskase Canada Inc. is an Agent for the collection of Quebec sales tax. The Company has provided for a reserve of $0.3 million for interest and penalties, if any, but has not provided for a reserve for the underlying sales tax. This amount is based on our ongoing negotiations and is consistent with SFAS 5 in that the Company has determined a range of loss and has recorded the minimum amount of the range because there is no better estimate. Although the ultimate liability for the Quebec sales tax lies with the customers of Viskase Canada during the relevant period, Viskase Canada could be required to pay the amount of the underlying sales tax prior to receiving reimbursement for such tax from its customers, and there is no guarantee that customers will fully reimburse Viskase Canada for such tax; however, the Company believes that the consolidated financial statements provide adequate provision for the Quebec sales tax situation. The Company has revised Footnote 15 on page F-36 and Footnote 6 on page F-62 to provide additional detail.

Note 16. Capital Stock and Paid-In Capital, page F-30

Ÿ	Comment 76:	Disclose how you determined the fair value of the restricted stock you granted during the year ended December 31, 2003 to arrive at the amount of compensation expense to be recorded.
	Response:	We have revised the disclosure on page F-37 to reflect that the value of the restricted stock was calculated based upon the fair market value of the Company’s common stock upon emergence from bankruptcy using a multiple of cash flow calculation to determine enterprise value and the related equity value.
Ÿ	Comment 77:	Your employment agreement with Robert L. Weisman on page 66 says he will receive 500,000 stock options at an exercise price of $2.40 per share. Please disclose in your financial statements the issuance of these options and their terms, along with the amount of

23

	compensation expense recorded. Please tell us how you accounted for them. In addition, please provide similar disclosures for each of your other issuances of options and warrants, if any.
Response:	Mr. Weisman’s date of hire was October 4, 2004, and as such the issuance of the 500,000 stock options occurred subsequent to the September 30, 2004 financial statement date. The compensation expense will be recorded in the fourth quarter of 2004 and will be valued using Black-Scholes.

Note 17. Earnings Per Share, page F-31

Ÿ	Comment 78:	Please disclose how you are treating the restricted shares you discuss in Note 16 in computing both your basic and diluted earnings per share. See paragraphs 10 and 13 of SFAS 128.
	Response:	We have revised the disclosure on page F-38 to reflect that the 330,070 issued shares of restricted stock are included in the weighted-average shares outstanding for basic earnings per share.
Ÿ	Comment 79:	Please disclose, by type of potentially dilutive security, the number of additional shares that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS, because to do so would have been antidilutive for the periods presented. See paragraph 40.c. of SFAS 128.
	Response:	We have revised the disclosure on page F-38 to provide additional information on antidilutive securities.

Note 22. Business Segment Information, page F-32

Ÿ	Comment 80:	Please disclose the amounts of your revenues and long-lived assets that are domestic and foreign in the format required by paragraph 38 of SFAS 131. This may be accomplished by dividing up the North America portion of your geographic region information, on page F-33 into US and other parts of North America.
	Response:	The disclosure on page F-41 has been revised.

Unaudited Financial Statements

General

Ÿ	Comment 81:	Please address the comments above in your interim financial statements as well.
	Response:	Corresponding changes have been made, as applicable, in the interim financial statements.

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Ÿ	Comment 82:	Please include the segment disclosures required by paragraph 33 of SFAS 131.
	Response:	The interim financial statements contain a new Footnote 13 on page F-66 containing this information.

Exhibit 5.1

Ÿ	Comment 83:	Provide written confirmation as correspondence on the EDGAR system that counsel concurs with our understanding that the reference and limitation to the Delaware General Corporation Law includes the statutory provisions and all applicable provisions of the Delaware constitution, including reported judicial decisions interpreting these laws.
	Response:	Counsel has supplementally provided the requested letter.
Ÿ	Comment 84:	Because debt is a contractual obligation and the legality opinion must opine on whether the contract is a legally binding contract, counsel must opine on the laws of the state governing the indenture, that is, New York. Revise.
	Response:	The opinion has been revised to include New York law.

Exhibits 10.1, 10.2, 10.3, 10.4, 10.6, 10.7, 10.9, 10.14, 10.15, 10.16, 10.17, and 10.18

Ÿ	Comment 85:	Absent an order granting confidential treatment, Item 601(b)(10) of Regulation S-K requires the filing of material contracts, including attachments, in their entirety. Attachments include, for example, annexes, appendices, exhibits, and schedules. Since Viskase did not file all of the exhibits’ attachments, revise or advise.
	Response:	We will either file the requisite exhibits, schedules, etc. in a subsequent amendment or submit a request for confidential treatment.

Exhibit 21.1

Ÿ	Comment 86:	List the state or other jurisdiction of incorporation or organization of each subsidiary. See Item 601(b)(21)(i) of Regulation S-K.
	Response:	The state or other jurisdiction of incorporation of each subsidiary has been added to Exhibit 21.1.

Exhibit 23.2

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Ÿ	Comment 87:	Please make arrangements with Grant Thornton to have them assure that the report date referred to in their consent is the same as their actual report date.
	Response:	The report date on the Grant Thornton consent has been corrected.

Exhibit 99.1

Ÿ	Comment 88:	Refer to the second paragraph’s last sentence under “Ladies and Gentlemen.” While we do not object if an offeror asks noteholders to confirm that they have received a copy of the prospectus, we believe that it is inappropriate to require a representation that they have read and agree to the terms of the exchange offer because this may suggest to investors that they have waived rights under the United States federal securities laws. Delete.
	Response:	The last sentence of the second paragraph under “Ladies and Gentlemen” in exhibit 99.1 has been deleted.

     Please call the undersigned at (312) 840-8679 or Thomas A. Monson at (312) 840-8611 regarding any questions or comments you may have.

		Sincerely,
		/s/ Edward G. Quinlisk
		Edward G. Quinlisk
cc:	Gordon S. Donovan
	Thomas A. Monson

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CORRESP

December 20, 2004	Jenner & Block LLP	Chicago
	One IBM Plaza	Dallas
	Chicago, IL 60611	Washington, DC
	Tel 312-222-9350
	www.jenner.com
	Thomas A. Monson
	Tel 312 840-8611
	Fax 312 840-8711
	tmonson@jenner.com

Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Pamela A. Long

Re: Viskase Companies, Inc.
Registration Statement on Form S-4 (“Registration Statement”)
Filed October 27, 2004
File 333-120002

Dear Ms. Long:

     Jenner & Block LLP is providing an opinion in connection with the above-referenced Registration Statement regarding the enforceability of the notes to be registered pursuant to the Registration Statement. We concur with the Staff’s understanding that the reference and limitation to the Delaware General Corporation Law includes the statutory provisions and all applicable provisions of the Delaware constitution, including reported judicial decisions interpreting these laws.

     Please feel free to contact the undersigned at (312) 840-8611 with any questions or comments you may have.

Very truly yours,
 

/s/ Thomas A. Monson  

Thomas A. Monson 

cc: Edward M. Kelly
Gordon S. Donovan
Edward G. Quinlisk