<PAGE>   1
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                   SECURITIES AND EXCHANGE COMMISSION
                        Washington, D. C.  20549

                                FORM 10-Q
                            QUARTERLY REPORT

                   Pursuant to Section 13 or 15 (d) of
                   the Securities Exchange Act of 1934


For the quarter ended September 30, 1998   Commission file number 1-11013


                   SPECIALTY CHEMICAL RESOURCES, INC.
                   ----------------------------------
          Exact name of registrant as specified in its charter


                 Delaware                   34-1366838
          ----------------------     ------------------------
          State of incorporation     I.R.S. Employer I.D. No.


             9055 S. Freeway Drive;  Macedonia, Ohio 44056
             ---------------------------------------------
          Address of principal executive offices and zip code


                                  (330)468-1380
                                  --------------
          Registrant's telephone number, including area code



     Indicate by a check mark whether the Registrant(1)has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past ninety(90) days. Yes X   No     .
                                                          ---    -----
     The number of outstanding shares of the Registrant's common stock as of
October 16, 1998 was 3,882,260.

------------------------------------------------------------------------------

---------------------------------Page 1 of 15--------------------------------

<PAGE>   2

                       Specialty Chemical Resources, Inc.

                                Form 10-Q


                    For the quarter ended September 30, 1998

                                  Index



Part I    Financial Information                                  Page


  Item 1. Financial Statements......................................3

          Condensed Balance Sheets..................................3

          Condensed Statements of Operations, 3 months..............5

          Condensed Statements of Operations, 9 months..............6

          Condensed Statements of Cash Flows, 3 months..............7

          Condensed Statements of Cash Flows, 9 months..............8

          Notes to Financial Statements.............................9


  Item 2. Management's Discussion and Analysis of
          Financial Condition and Results of Operations............10


Part II.  Other Information

  Item 1. Legal Proceedings........................................14

  Item 6. Exhibits and Reports on Form 8-K




                                  Page 2 of 15


<PAGE>   3


                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements


                       Specialty Chemical Resources, Inc.

                            Condensed Balance Sheets

<TABLE>
<CAPTION>

                                           September 30, 1998    December 31, 1997
                                               (Unaudited)           (Audited)
                                           ------------------    -----------------

<S>                                           <C>                  <C>         
Current assets
  Cash and cash equivalents                   $      3,100         $      3,100
  Accounts receivables                           4,604,941            5,338,168
  Receivable - Other                               459,706              343,657
  Inventories - LIFO                             7,362,040            8,944,905
  Prepaid expenses                                 437,015              360,196
                                              ------------         ------------
         Total current assets                   12,866,802           14,990,026


Property, plant and equipment
 At cost                                        18,214,557           17,740,267
   Less accumulated depreciation
     and amortization                           (6,517,278)          (5,536,789)
                                              ------------         ------------
                                                11,697,279           12,203,478

Other assets
   Goodwill                                      1,790,081            2,091,103
   Other                                           243,698              233,271
                                              ------------         ------------
                                                 2,033,779            2,324,374
                                              ------------         ------------


       Total assets                           $ 26,597,860         $ 29,517,878
                                              ============         ============
</TABLE>



See accompanying Notes to Financial Statements.


                           Page  3 of 15
<PAGE>   4




                    Specialty Chemical Resources, Inc.

                        Condensed Balance Sheets
                               (continued)
<TABLE>
<CAPTION>

                                           September 30, 1998     December 31, 1997
                                               (Unaudited)          (Audited)
                                               ------------        ------------
Current liabilities

<S>                                            <C>                 <C>         
  Current maturities                           $  1,153,355        $  1,057,497
  Accounts payable                                3,765,637           6,893,119
  Accrued expenses                                  401,742             624,759
                                               ------------        ------------
      Total current liabilities                   5,320,734           8,575,375


Long-term obligations                            16,789,312          15,445,820




Stockholders' equity
  Preferred stock - $.01 par value;
    authorized 1,996,500 shares
  Common stock - $.10 par value;
    authorized 13,000,000 shares;
    issued and outstanding 3,947,760
    and 3,947,760                                   394,777             394,777
  Additional paid in capital                     41,935,125          41,935,125
  Less common stock in treasury,
     At cost; 65,500 shares                        (118,722)           (118,722)
  Accumulated deficit                           (37,723,366)        (36,714,497)
                                               ------------        ------------

                                                  4,487,814           5,496,683
                                               ------------        ------------


                                               $ 26,597,860        $ 29,517,878
                                               ============        ============
</TABLE>



See accompanying Notes to Financial Statements.


                             Page 4 of 15

<PAGE>   5

                    Specialty Chemical Resources, Inc.

                    Condensed Statements of Operations
                               (Unaudited)

                      For the 3 month periods ended:

<TABLE>
<CAPTION>

                                          September 30, 1998      September 30, 1997
                                          ------------------      ------------------

<S>                                            <C>                 <C>         
Net sales                                      $  8,611,291        $ 10,554,727

Cost of goods sold                                6,958,350           8,685,176
                                               ------------        ------------
Gross profit                                      1,652,941           1,869,551

Selling, general and administrative
   expenses                                       1,548,668           1,794,787
Amortization of intangibles                         106,584             257,361
                                               ------------        ------------
     Operating profit (loss)                         (2,311)           (182,597)


Other (income) expense
  Interest expense                                  439,363             415,029
  Other                                                 -0-             (16,562)
                                               ------------        ------------
                                                    439,363             398,467
                                               ------------        ------------
     Earnings (loss) before income
     taxes                                         (441,674)           (581,064)

Income taxes                                            -0-                 -0-
                                               ------------        ------------
     Earnings (loss)                               (441,674)           (581,064)
                                               ============        ============



Earnings (loss) per common share:              $       (.11)       $       (.15)


Weighted average shares outstanding               3,882,260           3,882,264
</TABLE>


See accompanying Notes to Financial Statements.


                            Page 5 of 15
<PAGE>   6


                    Specialty Chemical Resources, Inc.

                    Condensed Statements of Operations
                               (Unaudited)

                      For the 9 month periods ended:

<TABLE>
<CAPTION>

                                             September 30, 1998   September 30, 1997
                                             ------------------   ------------------

<S>                                            <C>                 <C>         
Net sales                                      $ 27,997,442        $ 30,107,509

Cost of goods sold                               22,443,297          24,386,515
                                               ------------        ------------

     Gross profit                                 5,554,145           5,720,994

Selling, general and administrative
   expenses                                       5,002,429           4,786,326
Amortization of intangibles                         319,718             772,683
                                               ------------        ------------

    Operating profit                                231,998             161,985

Other (income) expense
  Interest expense                                1,240,867           1,014,206
  Other                                                 -0-             (66,139)
                                               ------------        ------------
                                                  1,240,867             948,067
     Earnings (loss) before income
     taxes                                       (1,008,869)           (786,082)

Income taxes (benefit)                                  -0-                 -0-
                                               ------------        ------------
     Earnings (loss)                             (1,008,869)           (786,082)



Earnings (loss) per common share:              $       (.26)       $       (.20)


Weighted average shares outstanding               3,882,261           3,882,264
</TABLE>



See accompanying Notes to Financial Statements.



                               Page 6 of 15
<PAGE>   7


                   Specialty Chemical Resources, Inc.

                    Condensed Statements of Cash Flows
                               (Unaudited)

                      For the 3 month periods ended:

<TABLE>
<CAPTION>

                                             September 30, 1998   September 30, 1997
                                             ------------------   ------------------


<S>                                             <C>                <C>         
Net cash provided (used) by operating
  activities                                    $    620,959       $    911,182

Cash flows from investing activities:
 Capital expenditures, other                         (21,538)          (109,496)
 Purchase of assets from Hysan Corp.                     -0-           (224,437)
                                                ------------       ------------
      Net cash (used) by investing
       activities                                    (21,538)          (333,933)

Cash flows from financing activities:
  Payments on revolver                            (9,558,009)       (12,001,221)
  Proceeds on revolver                             8,958,588         11,384,463
                                                ------------       ------------

       Net cash provided (used) by
         financing activities                       (599,421)          (616,758)
                                                ------------       ------------

       Net increase (decrease) in cash
         and cash equivalents                            -0-            (39,509)

Cash and cash equivalents at beginning
  of period                                            3,100             42,609
                                                ------------       ------------

Cash and cash equivalents at end
  of period                                     $      3,100       $      3,100
                                                ============       ============
</TABLE>



See accompanying Notes to Financial Statements.


                              Page 7 of 15

<PAGE>   8


                    Specialty Chemical Resources, Inc.

                    Condensed Statements of Cash Flows
                               (Unaudited)

                      For the 9 month periods ended:

<TABLE>
<CAPTION>

                                            September 30, 1998   September 30, 1997
                                            ------------------   ------------------


<S>                                             <C>                <C>         
Net cash provided (used) by operating
  activities                                    $   (709,514)      $  3,364,362

Cash flows from investing activities:

  Capital expenditures, other                       (507,986)          (685,293)
  Purchase of assets from Hysan Corp.                    -0-         (7,009,437)
                                                ------------       ------------

       Net cash (used) by investing
         activities                                 (507,986)        (7,694,730)

Cash flows from financing activities:
  Proceeds from notes                              1,500,000                -0-
  Payments on revolver                           (31,329,938)       (34,690,721)
  Proceeds on revolver                            31,047,438         38,855,548
                                                ------------       ------------

       Net cash provided (used) by
        financing activities                       1,217,500          4,164,827
                                                ------------       ------------

       Net increase (decrease) in cash
         and cash equivalents                            -0-           (165,541)
Cash and cash equivalents at beginning
  of period                                            3,100            168,641
                                                ------------       ------------

Cash and cash equivalents at end
  of period                                     $      3,100       $      3,100
                                                ============       ============
</TABLE>


See accompanying Notes to Financial Statements.



                                  Page 8 of 15


<PAGE>   9



                     Specialty Chemical Resources, Inc.

                         Notes to Financial Statements

Note A - Summary of Significant Accounting Policies

     The accompanying audited and unaudited financial statements have been
prepared in conformity with generally accepted accounting principles and all
adjustments are of a normal recurring nature and are, in the opinion of
management, necessary to present fairly the financial position of Specialty
Chemical Resources, Inc. (the "Company") at December 31, 1997 and September 30,
1998 and the results of operations and cash flows for the interim periods ended
September 30, 1998 and 1997.

     Any significant accounting policies employed in the preparation of the
financial statements are included in the Company's most recent Form 10-K.

Note B - Inventories

     Inventories are stated at the lower of cost or market determined by the
last-in, first-out (LIFO) method for raw materials and the first-in, first-out
(FIFO) method for finished goods.

     The Company's inventories consisted of the following at:

<TABLE>
<CAPTION>
                                      September 30,     December 3l,
                                           1998            1997
                                      -------------     ------------

<S>                                     <C>             <C>       
       Raw materials                    $4,385,036      $5,416,048
       Finished goods                    3,672,561       4,224,414
                                        ----------      ----------
         Total FIFO cost                 8,057,597       9,640,462

       Less: Excess of FIFO cost over
             LIFO                          695,557         695,557
                                        ----------      ----------
         Total LIFO cost                $7,362,040      $8,944,905
                                        ----------      ----------
</TABLE>

Note C - Legal Proceedings

     There have been no material changes in the status of legal proceedings
pending against the Company from that which was reported on the Company's
most recent Form 10-K, except as follows:

1.      9150 GROUP V. AEROSOL SYSTEMS, INC., A DIVISION OF SPECIALTY CHEMICAL
RESOURCES, INC., Case No. 297562, now pending in the Cuyahoga County Court of
Common Pleas. Since discovery was not completed, the May 19, 1998 trial date
for the case was continued. No new trial date has been set.

2.      HYSAN ASSET PURCHASE TRANSACTION CLAIMS:

        In August, 1998, Hysan Corporation filed a demand for arbitration
before the American Arbitration Association in Chicago in connection with its
asset purchase agreement with the Company. In its demand, Hysan Corporation
seeks compensatory damages from the Company (from a post-closing escrow account)
in the amount of $251,000. The Company has denied the material allegations in
the arbitration demand and has asserted a counterclaim against Hysan
Corporation seeking $542,863.96 from the post-closing escrow account and, to
the extent that the amount sought exceeds the escrow account, from Hysan
Corporation.

3.      MACEDONIA PLANT ISSUES:

        A. With regard to the closure plan which the Company submitted to the
Ohio Environmental Protection Agency ("the Ohio EPA") to address contamination  
identified at the Macedonia Plant, the Company believes that, as of September
23, 1998, the total costs of necessary closure activities are consistent with
previously disclosed cost estimates which range from $1,526,300 to $2,000,000.
Based on a recent risk assessment performed by one of the Company's
environmental consultants, the Company believes that necessary remedial
activities have been substantially completed.

        B.  The Company is currently negotiating with the Attorney General
regarding the Company's alleged violations of the 1990 Consent Order.

        C.  On May, 21, 1998, the Company received a letter from the Ohio EPA
alleging that odors from the Macedonia Plant and dust from its unpaved parking
lot constitute a nuisance. Further, the Ohio EPA contends that the Company must
submit revised permit applications for its can filling and gassing lines, which
according to the Ohio EPA have been erroneously granted permits to allow the
filling part of each line to be a separate emissions unit. The Company does not
believe that odors from its Macedonia Plant or dust from its parking lot
constitute a nuisance as defined by applicable law. However, the Ohio EPA's
request for the Company to re-evaluate and re-submit its existing air permits
ultimately may require the addition of supplemental air pollution control
technology at the Macedonia Plant or lead to litigation regarding such permit
issues.




                              Page 9 of 15


<PAGE>   10


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations

Results of Operations

         The following table sets forth, for the periods indicated, the
percentage relationship to net sales of certain items included in the Company's
Statement of Operations.
<TABLE>
<CAPTION>
                                             Nine Months Ended   Three Months Ended
                                               September 30,        September 30,
                                               -------------        -------------
                                               1998      1997       1998     1997
                                               ----      ----       ----     ----

<S>                                           <C>       <C>        <C>       <C>   
Net sales...................................  100.0%    100.0%     100.0%    100.0%

Cost of goods sold..........................   80.2%     81.0%      80.8%     82.3%

  Gross profit..............................   19.8%     19.0%      19.2%     17.7%

Selling, general and administrative expenses   17.9%     15.9%      18.0%     17.0%

  Operating profit.(loss)....................    .8%       .5%       0.0%     (1.7%)

Interest expense............................    4.4%      3.4%       5.1%      3.9%
</TABLE>


         Net sales of $27,997,000 for the nine months ended September 30, 1998
were $2,111,000, or 7.0% below the comparable period in the prior year. The
decrease is due to reduced unit volume of the Company's Janitorial/Sanitation
and Automotive Products.

         For the third quarter ended September 30, 1998, net sales of $8,611,000
were $1,944,000, or 18.4% below the comparable period in the prior year. The
decrease in net sales is due to the same reasons discussed above with respect to
the nine-month period.

         Cost of goods sold for the nine-month period ended September 30, 1998,
decreased by $1,944,000 as compared to the same period in the prior year. This
decrease was due principally to reduced unit volume discussed above and cost
reduction efforts initiated earlier this year. Cost of goods sold decreased as a
percentage of net sales from 81.0% to 80.2% for the nine-month periods ended
September 30, 1997 and 1998, respectively, due to cost reduction efforts that
include improved labor productivity, as well as improved material utilization
efficiencies.





                                  Page 10 of 15

<PAGE>   11


     Cost of goods sold decreased by $1,727,000 for the three-months ended
September 30, 1998 as compared to the same period in the prior year. This
decrease was due principally to the reduced unit volume discussed above and cost
reduction efforts. Cost of goods sold decreased as a percentage of net sales
from 82.3% to 80.8% for the three-months ended September 30, 1998 as compared to
the same period in the prior year. The decrease as a percentage of net sales was
due to cost reduction efforts that include improved labor productivity, as well
as improved material utilization efficiencies.

     Selling, general and administrative expenses were $5,002,000 for the
nine-month period September 30, 1998, or 17.9% of net sales. Selling, general
and administrative expenses were $4,786,000 or 15.9% of net sales for the
nine-month period ended September 30, 1997. The increase in selling, general and
administrative expense dollars is due to increased staffing and compensation
costs which were the result of the acquisition of the Hysan assets in May, 1997.
See "Liquidity and Capital Resources". The increased percentage is due to the
increased costs and the decrease in sales.

     Selling, general and administrative expenses were $1,549,000 for the
quarter ended September 30, 1998, or 18.0% of net sales. Selling, general and
administrative expenses were $1,795,000, or 17.0% of net sales for the
three-month period ended September 30, 1997. The decrease in selling, general
and administrative expense is due to cost reduction initiatives undertaken by
the Company and a reduction of volume-related selling expenses. The increased
percentage is due to the decrease in sales.

     Interest expense for the nine-months ended September 30, 1998, was 4.4% of
net sales versus 3.4% for the comparable period in the prior year. Interest
expense was $1,241,000 for the nine-months ended September 30, 1998 as compared
to $1,014,000 for the nine-months ended September 30, 1997. The increase in
interest expense is due to increased borrowing under the Company's senior credit
facility which was due to the acquisition of the Hysan assets in May, 1997. See
"Liquidity and Capital Resources".

     Interest expense for the quarter ended, September 30, 1998, was 5.1% of net
sales versus 3.9% for the comparable period in the prior year. Interest expense
was $439,000 for the quarter ended September 30, 1998 as compared to $415,000
for the same period in 1997. The increase in interest expense is due to
increased borrowings under the Company's senior credit facility. See "Liquidity
and Capital Resources".

                                  Page 11 of 15


<PAGE>   12


     The Company recorded a net loss for the nine-months ended September 30,
1998 of $1,008,869, or $.26 per share on weighted average shares outstanding of
3,882,261. This compared to a net loss of $786,082, or $.20 per share on
weighted average shares outstanding of 3,882,264 for the same period in the
prior year.

     For the quarter ended September 30, 1998, the Company had a net loss of
$441,674, or $.11 per share on weighted average shares outstanding of 3,882,260
as compared to a net loss of $581,064, or $.15 per share on weighted average
shares outstanding of 3,882,264 for the same period in the prior year.

Liquidity and Capital Resources

     As of September 30, 1998, the Company's ratio of current assets to current
liabilities was 2.42 to 1 and the quick ratio (cash, cash equivalents, and
accounts receivable, divided by current liabilities) was .97 to 1.

     During the nine-months ended September 30, 1998, the Company incurred
$1,241,000 in interest expense and made interest payments totaling $1,013,000.
Accrued interest at September 30, 1998 was $100,000. Most of the Company's
interest expense is related to the Company's credit agreement with a bank, the
$4,000,000 of 6% subordinated convertible debt, issued October, 1996 and the
$1,500,000 12% subordinated notes, issued June 15, 1998.

     On May 22, 1997 the Company, in connection with the acquisition of the
Hysan Assets, executed an amendment to its current credit agreement (the "Credit
Agreement") with its senior lender Star Bank, N.A. The amended Credit Agreement
provides for a $15,000,000 facility which expires on December 31, 2000,
comprised of a revolving line of credit and three term loans, one of which has
been repaid. Borrowings on the revolving line of credit and one of the remaining
term loans bears interest at the prime rate plus 1.5%, subject to decrease if
certain ratios and financial test are met, while the other term loan bears
interest at the prime rate plus 4.5%. Under the terms of the Credit Agreement,
the Company is required to comply with various covenants, the most restrictive
of which relates to the maintenance of certain financial ratios, levels of
tangible net worth, limits on capital expenditures and restrictions on
distributions from the Company to its stockholders. On April 14, 1998, the
Company and the senior lender executed a Second Amendment to the Credit
Agreement whereby the senior lender revised the various financial covenants and
required that the Company provide an acceptable plan to the bank to provide
additional capital for the Company. On May 20, 1998 the Company and its senior
lender executed a third amendment to the Credit Agreement related to the
implementation of the Company's recapitalization plan. On November 12, 1998, the
Company and its senior lender executed a Fourth

                                  Page 12 of 15
<PAGE>   13


Amendment to the Credit Agreement, to allow the Company to issue $1,800,000 of
new Subordinated Convertible Notes, to reduce the total credit facility from $15
million to $14 million, to revise repayment schedules for the two continuing
term loans and to revise certain financial covenants. The revised term loan
repayment schedule does not alter the monthly amount of repayment, but
restructures the application of repayment to pay off the higher interest bearing
(prime +4.5%) term loan first and then commence repayment of the lower interest
(prime +1.5%) term loan. The Company is currently in compliance with all
covenants set by the Fourth Amendment to the Credit Agreement.

     As of September 30, 1998, approximately $204,000 was unused and available
under the Credit Agreement.

     During January, 1998, the Company refinanced the mortgage on its
distribution center and corporate offices with a $1,125,000 note with a new
bank. The note, which bears interest at 8.75%, requires twelve monthly interest
only payments until February 1, 1999. Commencing on February 1, 1999, the note
requires 167 monthly principal and interest payments of $11,790, the final
payment being due on November 1, 2012. The borrowing is collateralized by a
facility which serves as the Company's distribution center and corporate
offices.

     On May 20, 1998, the Company issued three $150,000 principal amount
subordinated promissory notes to Martin Trust, CEW Partners and Edwin M. Roth,
respectively (the "Investors"). Such notes were due June 22, 1998. On June 15,
1998, the Company issued three $500,000 principal amount promissory notes
subordinated to the bank (the "Subordinated Notes") to such Investors in part to
refinance the original notes issued on May 20, 1998. Such Subordinated Notes are
due December 15, 1998. The Investors and the Company agreed at the time these
loans were made that the Bridge Notes would be refinanced with the net proceeds
of a pro rata rights offering of Company debt to its stockholders and its
holders of Original Notes. On November 3, 1998, the Company filed a registration
statement for an offering of subscription rights to purchase an aggregate
principal amount of $1,800,000 of 6% Convertible Subordinated Notes due in
ten years (the "New Notes") to stockholders and holders of the 6% Convertible
Subordinated Notes due 2006 (the "Original Notes"). The net proceeds available
to the Company from the Rights Offering are anticipated to be approximately
$1,600,000. Such net proceeds will be used to repay certain indebtedness, along
with accrued interest, to the Investors. The Investors may cancel all or a
portion of the indebtedness represented by the Bridge Notes as payment of the
Subscription Price. In this case, the net proceeds available to the Company will
be less than $1,600,000 and the indebtedness to be repaid with such net proceeds
will be reduced by the same amount.

                                  Page 13 of 15
<PAGE>   14


     The Company spent $508,000 on capital improvements and other investing
activities during the nine-month period ended September 30, 1998. In addition,
the Company expects to spend up to $50,000 on capital improvements during the
balance of the current fiscal year, which are to be funded from operating cash
flows and borrowings under the credit agreement. Subject to the Company's
ability to refinance the Subordinated Convertible Notes through the rights
offering referred to above, or otherwise, the Company believes it has funds
available to it under its Credit Agreement and from operations that will enable
it to satisfy its operating needs and capital improvements for the current
fiscal year.

Year 2000

     The Company has reviewed its computer systems and software products for
Year 2000 problems and has determined that its operational systems and products
should not have Year 2000 problems but certain financial systems and products
should be upgraded or replaced. The Company intends to begin the upgrade and
replacement of its computer systems and software products in early 1999 and is
confident that new systems and products will be in place by the middle of 1999.
The Company has had conversations with its material suppliers and vendors and
does not believe that they have Year 2000 problems that would have a material
adverse effect on the Company. However, if the Company's upgrade and replacement
plan is not successful, or the Company's material suppliers or vendors develop
Year 2000 problems, then the Company may suffer significant losses which would
have a material adverse effect on the Company's business.

Forward-Looking Statements

     Certain statements contained herein that are not statements of historical
facts are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are thus prospective. Such
forward-looking statements include, without limitation, statements regarding
expected financial performance, ongoing business strategies and possible future
action that the Company intends to pursue in order to achieve strategic
objectives. Such forward-looking statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from
future results expressed or implied by such forward-looking statements.
Important factors that could cause actual results to differ materially from the
results expressed or implied by any forward-looking statements ("Cautionary
Statements") include general economic conditions, conditions in the Company's
industry, the uncertainty of availability of net operating loss carryovers, the
outcomes of certain environmental and legal proceedings and the adequacy of Year
2000 compliance measures. All subsequent written and oral forward-looking
statements relating to the matters described herein and attributable to the
Company or to persons acting on behalf of the Company are expressly qualified in
their entirety by the Cautionary Statements.

Part II - Other Information

Item 1.   Legal Proceedings

     There have been no material changes in the status of legal proceedings
pending against the Company, except as follows:

1.      9150 GROUP V. AEROSOL SYSTEMS, INC., A DIVISION OF SPECIALTY CHEMICAL
RESOURCES, INC., Case No. 297562, now pending in the Cuyahoga County Court of
Common Pleas. Since discovery was not completed, the May 19, 1998 trial date
for the case was continued. No new trial date has been set.

2.      HYSAN ASSET PURCHASE TRANSACTION CLAIMS:

        In August, 1998, Hysan Corporation filed a demand for arbitration
before the American Arbitration Association in Chicago in connection with its
asset purchase agreement with the Company. In its demand, Hysan Corporation
seeks compensatory damages from the Company (from a post-closing escrow account)
in the amount of $251,000. The Company has denied the material allegations in
the arbitration demand and has asserted a counterclaim against Hysan
Corporation seeking $542,863.96 from the post-closing escrow account and, to
the extent that the amount sought exceeds the escrow account, from Hysan
Corporation.

3.      MACEDONIA PLANT ISSUES:

        A. With regard to the closure plan which the Company submitted to the
Ohio Environmental Protection Agency ("the Ohio EPA") to address contamination  
identified at the Macedonia Plant, the Company believes that, as of September
23, 1998, the total costs of necessary closure activities are consistent with
previously disclosed cost estimates which range from $1,526,300 to $2,000,000.
Based on a recent risk assessment performed by one of the Company's
environmental consultants, the Company believes that necessary remedial
activities have been substantially completed.

        B.  The Company is currently negotiating with the Attorney General
regarding the Company's alleged violations of the 1990 Consent Order.

        C.  On May, 21, 1998, the Company received a letter from the Ohio EPA
alleging that odors from the Macedonia Plant and dust from its unpaved parking
lot constitute a nuisance. Further, the Ohio EPA contends that the Company must
submit revised permit applications for its can filling and gassing lines, which
according to the Ohio EPA have been erroneously granted permits to allow the
filling part of each line to be a separate emissions unit. The Company does not
believe that odors from its Macedonia Plant or dust from its parking lot
constitute a nuisance as defined by applicable law. However, the Ohio EPA's
request for the Company to re-evaluate and re-submit its existing air permits
ultimately may require the addition of supplemental air pollution control
technology at the Macedonia Plant or lead to litigation regarding such permit
issues.

Item 6. Exhibits and Reports on Form 8-K

     (a) Exhibits

         4.1 - Amendment to the Credit Agreement to allow the Company to issue 
               new subordinated notes, reduce the total credit facility, revise 
               repayment schedules and revise certain financial covenants....



                                  Page 14 of 15
<PAGE>   15






    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


     Specialty Chemical Resources, Inc.











     By:/s/ DAVID F. SPINK                                    November 13, 1998
        -------------------------------
        David F. Spink
        Vice President, Chief Financial
        Officer




















                                  Page 15 of 15

<PAGE>   16
                                FOURTH AMENDMENT
                                ----------------
                                       TO
                                       --
                              FINANCING AGREEMENT
                              -------------------



     This Fourth Amendment to Financing Agreement (the "Amendment") is made as
of the 12th day of November, 1998 (the "Effective Date"), by and between
SPECIALTY CHEMICAL RESOURCES, INC., a Delaware corporation ("Borrower") and STAR
BANK, NATIONAL ASSOCIATION, a national banking association ("Bank").

                                  WITNESSETH:
                                  -----------

     WHEREAS, Borrower and Bank have entered into that certain Financing
Agreement, dated as of September 18, 1996, as amended by that First Amendment to
Financing Agreement, dated as of May 22, 1997, as amended by that Second
Amendment to Financing Agreement, dated as of April 14, 1998, as amended by that
Third Amendment to Financing Agreement, dated as of May 20, 1998 (as so amended,
the "Financing Agreement"), pursuant to which Bank has made certain financial
accommodations available to Borrower;

     WHEREAS, Borrower hereby acknowledges that it has discussed with Bank
Borrower's need for additional capitalization in the form of subordinated debt,
the purpose of which is to repay certain outstanding shareholder indebtedness
and for working capital purposes;

     WHEREAS, Borrower has obtained from certain of its shareholders unsecured
loans in the aggregate principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000) and is in the process of issuing its 6% Convertible
Subordinated Notes in the total principal amount of One Million Eight Hundred
Thousand Dollars ($1,800,000), the net proceeds of which the Borrower will use
to repay the afore-described shareholder loans and for working capital purposes;
and

     WHEREAS, Borrower and Bank desire to amend the Financing Agreement to
provide, among other things, for the reduction of the principal amount of the
Total Facility, to reestablish certain financial covenants, to restructure the
principal amortization of Term Loan A and Term Loan B, to provide for the
above-described subordinated debt and as otherwise hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Bank and Borrower do hereby agree as
follows: 



                                       1
<PAGE>   17

                           SECTION 1. DEFINED TERMS.
                           -------------------------

         SECTION 1.1, DEFINED TERMS, of the Financing Agreement shall be amended
by adding the new defined terms, or by modifying existing defined terms, as
applicable, as follows:

         1.1. "6% CONVERTIBLE SUBORDINATED NOTE INDENTURE" shall mean that
certain Indenture between Borrower and Bank One, N.A., as trustee, with respect
to the 6% Convertible Subordinated Notes, in substantially the form attached
hereto as EXHIBIT AJ. The term "6% Convertible Subordinated Note Indenture"
shall not include any amendments, supplements or other modifications made to, or
replacements of, such 6% Convertible Subordinated Note Indenture other than
those permitted under this Agreement.


         1.2. "6% CONVERTIBLE SUBORDINATED NOTES" shall mean those certain
Specialty Chemical Resources, Inc. 6% Convertible Subordinated Notes Due 2008
(or 2009, in the event of a closing and funding of such Notes in January 1999)
issued by Borrower and authenticated by the trustee under the 6% Convertible
Subordinated Note Indenture from time to time, each in substantially the form
attached hereto as EXHIBIT AK. The term "6% Convertible Subordinated Notes"
shall not include any amendments, supplements or other modifications made to, or
replacements of, such 6% Convertible Subordinated Notes other than those
permitted under this Agreement.

         1.3. The definition of "REVOLVING LOAN AVAILABILITY" shall be deleted
in its entirety and the following is substituted in place thereof:

                  "REVOLVING LOAN AVAILABILITY" shall mean, as at any date, an
         amount equal to the difference of:

                  (i) THE LESSER OF (a) the difference of Fourteen Million
         Dollars ($14,000,000) LESS (W) the then aggregate outstanding principal
         amount of Term Loan A LESS (X) the then aggregate outstanding principal
         amount of Term Loan B LESS (Y) the then aggregate outstanding principal
         amount of the Acquisition Special Advance LESS (Z) the Reserve Amount
         then in effect OR (b) an amount equal to the then Borrowing Base;

        LESS

                  (ii) the then aggregate outstanding principal amount of all
         Revolving Loans.

         1.4. "SHAREHOLDER NOTES" shall mean the three (3) unsecured
subordinated promissory notes, dated June 15, 1998, and due December 15, 1998
(or any later date but not beyond January 31, 1999), each in the original
principal sum of Five Hundred Thousand ($500,000), entered into by and between
the Borrower and Edwin M. Roth, Martin Trust and CEW Partners.


                                       2
<PAGE>   18

         Each defined term used herein and not otherwise defined herein shall
have the meaning ascribed to such term in the Financing Agreement.

         SECTION 2. AMENDMENT TO SECTION 2 OF THE FINANCING AGREEMENT.
         -------------------------------------------------------------

         2.1. SECTION 2.1, TOTAL FACILITY, shall be hereby amended by deleting
the words and figure "Fifteen Million Dollar ($15,000,000)" wherever the same
appears in said Section and inserting in its place the words and figure
"Fourteen Million Dollar ($14,000,000)".

         2.2. SECTION 2.3, TERM LOAN A FACILITY, shall be hereby amended by
deleting the existing SECTION 2.3 in its entirety and by substituting in place
thereof the following SECTION 2.3:

                  2.3 TERM LOAN A FACILITY. The Term Loan A under the Term Loan
         A Facility has been made by Bank to Borrower with respect to Borrower's
         eligible machinery and equipment. The unpaid principal balance of Term
         Loan A as of the Effective Date is Two Million Six Hundred Twenty-Four
         Thousand One Hundred Sixty-Seven Dollars ($2,624,167.00) (the "Current
         Principal Amount"). The principal of Term Loan A shall be payable (i)
         in one (1) installment of Thirty-Four Thousand Seven Hundred Ten
         Dollars ($34,710) on April 1, 1999; (ii) in four (4) consecutive
         monthly installments of One Hundred Eleven Thousand Three Hundred
         Eighty-Eight Dollars ($111,388) each, commencing May 1, 1999, (iii) in
         one (1) installment of Seventy-Eight Thousand Sixty-Eight Dollars
         ($78,068) on September 1, 1999, and (iv) thereafter, in consecutive
         monthly installments, on the first day of each month, in the amount of
         Fifty-five Thousand Eight Hundred Thirty-Three Dollars ($55,833) each;
         PROVIDED, HOWEVER, that in the event the Current Principal Amount
         exceeds seventy-five percent (75%) of the orderly liquidation value of
         Borrower's owned machinery and equipment as determined pursuant to the
         appraisal thereof referred to at SECTION 8.4 of the Fourth Amendment to
         Financing Agreement, dated November 12, 1998, by and between Bank and
         Borrower, (the "Appraised Amount"), Borrower shall pay to Bank on or
         before ten (10) days after receipt by Bank of said appraisal report an
         amount equal to the Current Principal Amount less the amount equal to
         seventy five percent (75%) of the Appraised Amount (the "Excess Payment
         Amount"), which Excess Payment Amount shall be applied to the monthly
         Term Loan A payments of principal in inverse order of maturity;
         PROVIDED, FURTHER, that notwithstanding the foregoing amortization
         schedule for Term Loan A, upon the effective date of any termination of
         this Agreement pursuant to SECTION 11 and/or SECTION 13 hereof, all
         amounts then outstanding under Term Loan A shall become immediately due
         and payable without notice or demand. No repayment or prepayment of
         Term Loan A shall be reason for any relending or additional lending of
         Term Loan A proceeds to Borrower. At Bank's option, the principal of
         Term Loan A shall be payable in accordance with the payment terms set
         forth above in this SECTION 2.3 by charging or increasing the Revolving
         Loan balance of Borrower. 


                                       3
<PAGE>   19

         2.3. SECTION 2.5, TERM LOAN B FACILITY, shall be amended by deleting
existing SECTION 2.5 in its entirety and by substituting the following SECTION
2.5 in place thereof:

                  2.5 TERM LOAN B FACILITY. The Term Loan B under the Term Loan
         B Facility has been made by Bank to Borrower in the amount of One
         Million Dollars ($1,000,000) on May 22, 1997. The unpaid principal
         balance of Term Loan B on the Effective Date is Five Hundred Twenty-Two
         Thousand Two Hundred Thirty Dollars ($522,230). The principal of Term
         Loan B shall be payable in four (4) consecutive equal monthly
         installments of One Hundred Eleven Thousand Three Hundred Eighty-Eight
         Dollars ($111,388) each, commencing on the first day of December, 1998,
         with the last payment of principal being due and payable on April 1,
         1999, in the amount of Seventy-Six Thousand Six Hundred Seventy-Eight
         ($76,678); PROVIDED, HOWEVER, that notwithstanding the foregoing
         amortization schedule for Term Loan B, upon the effective date of any
         termination of this Agreement pursuant to SECTION 11 and/or SECTION 13
         hereof, all amounts outstanding under Term Loan B shall become
         immediately due and payable without notice or demand. No repayment or
         prepayment of Term Loan B shall be reason for any relending or
         additional lending of Term Loan B proceeds to Borrower. At Bank's
         option, the principal of Term Loan B shall be payable in accordance
         with the payment terms set forth in this SECTION 2.5 by charging or
         increasing the Revolving Loan balance of Borrower. The Term Loan B may
         be prepaid at any time by Borrower to Bank without penalty.

         SECTION 3. AMENDMENT TO SECTION 8 OF THE FINANCING AGREEMENT.
         ------------------------------------------------------------

         3.1. SECTION 8.4, REPORTING REGARDING INVENTORY, is hereby amended by
deleting the words "twenty-five (25) days" wherever the same appear in
subsections (a) and (c) of said SECTION 8.4 and inserting the words "fifteen
(15) days" in place thereof.

         SECTION 4. AMENDMENT TO SECTION 9 OF THE FINANCING AGREEMENT.
         -------------------------------------------------------------

         4.1. SECTION 9, WARRANTIES, REPRESENTATIONS AND COVENANTS, is hereby
amended by adding the following new Section 9.29:

         9.29 6% CONVERTIBLE SUBORDINATED NOTE DOCUMENTS SECURITY. The 6%
         Convertible Subordinated Note Indenture, when executed and delivered by
         all parties thereto, shall be in substantially the form of EXHIBIT AJ
         attached hereto. Each 6% Convertible Subordinated Note when issued by
         Borrower and authenticated by the trustee under the 6% Convertible
         Subordinated Note Indenture shall be in substantially the form attached
         hereto as EXHIBIT AK and shall be due and payable on the tenth
         anniversary of the issuance thereof. The Indebtedness under the 6%
         Convertible Subordinated Note Indenture and the 6% Convertible
         Subordinated Notes is not and shall not be secured by any rights,
         liens, mortgages or security interests of any Person in any assets of
         the Borrower.


                                       4
<PAGE>   20

         The Borrower shall have received One Million Eight Hundred Thousand
         Dollars ($1,800,000) as the proceeds of the 6% Convertible Subordinated
         Notes no later than January 31, 1999.

         SECTION 5. AMENDMENTS TO SECTION 10 OF THE FINANCING AGREEMENT.
         ---------------------------------------------------------------

              SECTION 10, COVENANTS, is hereby amended as follows;
              ----------------------------------------------------

              5.1 SECTION 10.11 INDEBTEDNESS; GUARANTIES, is hereby amended by
deleting CLAUSE (vii) thereof and inserting the following in lieu thereof:

                           (vii) the Shareholder Notes, the 6% Convertible
                           Subordinated Notes and other Indebtedness (in
                           addition to that Indebtedness described in CLAUSE
                           (vi) of this SECTION 10.11) which is subordinated to
                           the prior payment and performance of the Obligations
                           pursuant to a subordination agreement in form and
                           substance satisfactory to Bank, in its sole
                           discretion,

              5.2 SECTION 10.11 INDEBTEDNESS; GUARANTIES, is hereby further
amended by deleting the period where the same appears at the end of said Section
and inserting the following:

                  ; PROVIDED, FURTHER, that the Indebtedness described in CLAUSE
                  (vii) of this SECTION 10.11 evidenced by the 6% Convertible
                  Subordinated Notes shall be permitted under this Agreement
                  only if (w) the terms and provisions of the final version of
                  6% Convertible Subordinated Note Indenture and the final
                  version of the 6% Convertible Subordinated Notes shall be in
                  substantially the forms of EXHIBIT AJ and EXHIBIT AK,
                  respectively, (x) Borrower shall have delivered to Bank a copy
                  of the 6% Convertible Subordinated Note Indenture and a copy
                  of each executed and authenticated 6% Convertible Subordinated
                  Note as and when issued by Borrower, each certified by a duly
                  authorized officer of Borrower as being true, correct and
                  complete, (y) Borrower has not issued more than $1,800,000
                  original aggregate principal amount of such Indebtedness, and
                  (z) all of the proceeds of the issuance (net of expenses) of
                  the 6% Convertible Subordinated Notes shall have been used,
                  first, to pay the amounts due under the Shareholder Notes and,
                  second, for working capital purposes; and, PROVIDED, FURTHER,
                  that the Indebtedness described in CLAUSE (vii) of this
                  SECTION 10.11 evidenced by the Shareholder Notes may only be
                  paid by the Borrower with proceeds received by the Borrower as
                  consideration for the issuance of the 6% Convertible
                  Subordinated Notes.

              5.3 SECTION 10.22, REDEMPTION OF STOCK, is hereby amended by
deleting the period where the same appears at the end of said Section and by
inserting a comma and the word "and" in place thereof and by adding new
subsection (c) as follows:

                  (c) Borrower may redeem the 6% Convertible Subordinated Notes
                  in accordance with the terms thereof, but only so long as


                                       5
<PAGE>   21

                           (i) both immediately before and after giving effect
                           thereto, no Event of Default has occurred or shall
                           occur,

                           (ii) at least five (5) Business Days prior to the
                           date on which such redemption is proposed to be made,
                           Borrower shall have delivered a certificate executed
                           by a duly authorized officer of Borrower certifying
                           (A) the date and amount of the proposed redemption,
                           (B) the identity of the holders of the 6% Convertible
                           Subordinated Notes subject to such redemption, and
                           (C) that immediately before and after giving effect
                           to such redemption, no Event of Default has occurred
                           or shall occur,

                           (iii) the amount of the proposed redemption does not
                           exceed the amount set forth in the certificate
                           required to be delivered under CLAUSE (c)(ii) above,
                           and

                           (iv) the amount of such redemption does not exceed
                           the maximum amount that may be paid under applicable
                           law.

              5.4 SECTION 10 is hereby further amended by adding the following
new SECTION 10.42, SECTION 10.43 and SECTION 10.44:

              10.42  AMENDMENTS TO 6% CONVERTIBLE SUBORDINATED NOTE INDENTURE
                     AND 6% CONVERTIBLE SUBORDINATED NOTES. Borrower will not,
                     and will not permit any other Person to, (i) replace any of
                     the 6% Convertible Subordinated Notes after the issuance
                     and authentication thereof unless the 6% Convertible
                     Subordinated Note(s) issued in replacement thereof is in
                     substantially the form attached hereto as EXHIBIT AK, (ii)
                     replace the 6% Convertible Subordinated Note Indenture
                     after the execution, delivery and effectiveness thereof
                     unless the 6% Convertible Subordinated Note Indenture (or
                     similar document) that replaces the 6% Convertible
                     Subordinated Note Indenture is in substantially the form
                     attached hereto as EXHIBIT AJ, (iii) waive compliance with
                     any of the terms of the 6% Convertible Subordinated Note
                     Indenture or any of the 6% Convertible Subordinated Notes
                     to the extent such waiver adversely affects the Bank, (iv)
                     replace, amend, supplement or otherwise modify any of the
                     following terms or provisions of the 6% Convertible
                     Subordinated Note Indenture or the 6% Convertible
                     Subordinated Notes: (a) any of the subordination terms or
                     provisions contained in the 6% Convertible Subordinated
                     Note Indenture or any of the 6% Convertible Subordinated
                     Notes; (b) any of the terms or provisions contained in the
                     6% Convertible Subordinated Note Indenture or any of the 6%
                     Convertible Subordinated Notes relating to the principal
                     amount of or the interest charged under the 6% Convertible
                     Subordinated Note Indenture or any of the 6% Convertible
                     Subordinated Notes; (c) the amortization terms or the
                     payment or repayment terms contained in the 6% Convertible
                     Subordinated Note Indenture or any of the 6% Convertible
                     Subordinated Notes; (d) the maturity date of the



                                       6
<PAGE>   22

                     Indebtedness under the 6% Convertible Subordinated Note
                     Indenture or any of the 6% Convertible Subordinated Notes;
                     (e) any redemption terms or provisions contained in the 6%
                     Convertible Subordinated Note Indenture or any of the 6%
                     Convertible Subordinated Notes; (f) any terms or provisions
                     contained in the 6% Convertible Subordinated Note Indenture
                     or any of the 6% Convertible Subordinated Notes relating to
                     conversion rights to the extent that such amendment,
                     supplement or other modification would allow any holder of
                     any of the 6% Convertible Subordinated Notes to convert
                     such notes into any security of Borrower other than the
                     Common Stock; (g) any of the default or event of default
                     provisions contained in the 6% Convertible Subordinated
                     Note Indenture or any of the 6% Convertible Subordinated
                     Notes; or (h) any of the terms or provisions contained in
                     the 6% Convertible Subordinated Note Indenture or any of
                     the 6% Convertible Subordinated Notes relating to the
                     exercise of rights or remedies by any Person thereunder, or
                     (v) enter into any other amendment or supplement to or
                     other modification of the 6% Convertible Subordinated Note
                     Indenture or any of the 6% Convertible Subordinated Notes
                     which adversely affects the Bank or the Bank's rights and
                     remedies with respect to the Collateral or the Premises.
                     Not less than three (3) Business Days prior to the
                     execution and delivery thereof, Borrower shall deliver to
                     Bank each amendment, supplement or other modification to
                     the 6% Convertible Subordinated Note Indenture or any 6%
                     Convertible Subordinated Note proposed to be entered into
                     by any Person, and each waiver proposed to be granted by
                     any Person under the 6% Convertible Subordinated Note
                     Indenture or any of the 6% Convertible Subordinated Notes.
                     Simultaneously with the execution and delivery thereof,
                     Borrower shall deliver to Bank a copy of each amendment,
                     supplement or other modification to the 6% Convertible
                     Subordinated Note Indenture or any 6% Convertible
                     Subordinated Note and each waiver granted by any Person
                     under the 6% Convertible Subordinated Note Indenture or any
                     6% Convertible Subordinated Note, each certified by a duly
                     authorized officer of Borrower as being true, correct and
                     complete as of the date of such delivery. Borrower will not
                     permit the Indebtedness under the 6% Convertible
                     Subordinated Note Indenture and the 6% Convertible
                     Subordinated Notes to be secured by any rights, liens,
                     mortgages or security interests of any Person in any assets
                     of Borrower.

              10.43  PAYMENTS TO VARIOUS PARTIES UNDER THE SUBORDINATED NOTE
                     INDENTURE. Borrower will not make any payments to, or
                     deposit any cash or cash equivalents with, the Trustee, the
                     Paying Agent, the Registrar, any Holder, the Conversion
                     Agent (as each such term is defined in the 6% Convertible
                     Subordinated Note Indenture) or any other Person pursuant
                     to or in connection with the terms of the 6% Convertible
                     Subordinated Note Indenture or the 6% Convertible
                     Subordinated Notes, other than permitted 


                                       7
<PAGE>   23

                     payments in respect of the transactions permitted under
                     SECTION 10.22 hereof.

              10.44  DELIVERIES UNDER THE 6% CONVERTIBLE SUBORDINATED NOTE
                     INDENTURE. Promptly after receipt thereof by Borrower,
                     Borrower will deliver to Bank copies of all notices and
                     other items delivered by it or to it under or in connection
                     with the 6% Convertible Subordinated Note Indenture or any
                     of the 6% Convertible Subordinated Notes.

       SECTION 6. MODIFICATIONS OF EXHIBITS AND SCHEDULES.
       ---------------------------------------------------

       The following Exhibits and Schedules to the Financing Agreement shall be
added or amended, as applicable, as set forth in this SECTION 6 to the
Amendment:

       6.1. ADDENDUM TO EXHIBIT L. EXHIBIT L shall be amended by adding thereto
ADDENDUM TO EXHIBIT L, FINANCIAL COVENANTS, attached hereto and incorporated by
reference herein. 

       6.2. New EXHIBIT AJ, 6% CONVERTIBLE SUBORDINATED NOTE INDENTURE, attached
hereto and incorporated by reference herein, shall be added to the Financing
Agreement.

       6.3. NEW EXHIBIT AK, 6% CONVERTIBLE SUBORDINATED NOTE, attached hereto
and incorporated by reference herein, shall be added to the Financing Agreement.

       SECTION 7. SECTION 10 REPRESENTATIONS AND WARRANTIES.
       ----------------------------------------------------

       In order to induce Bank to enter into this Amendment and in addition to
all of the representations, warranties and covenants made by Borrower under the
Financing Agreement and Loan Documents, Borrower hereby represents, warrants and
covenants that, as of the date hereof, any date upon which a Loan is made
hereunder, and until the Obligations are fully paid, performed and satisfied,
the representations, warranties and covenants set forth in the Financing
Agreement and herein are and shall remain true. The Borrower further hereby
represents and warrants to Bank as follows:

       7.1. THE AMENDMENT. This Amendment has been duly and validly executed by
an authorized executive officer of Borrower and constitutes the legal, valid and
binding obligation of Borrower enforceable against Borrower in accordance with
its terms.

       7.2. FINANCING AGREEMENT. The Financing Agreement, as amended by this
Amendment, remains in full force and effect and remains the valid and binding
obligation of Borrower enforceable against Borrower in accordance with its
terms. Borrower hereby ratifies and confirms the Financing Agreement as amended
by this Amendment.

       7.3. NONWAIVER. Except as specifically set forth in this Amendment, the
execution, delivery, performance and effectiveness of this Amendment shall not
operate nor be deemed to be nor construed as a waiver (i) of any right, power or
remedy of Bank under the Financing Agreement, nor (ii) of any term, provision,
representation, warranty or covenant 


                                       8
<PAGE>   24

contained in the Financing Agreement or any other documentation executed in
connection therewith. Further, except as specifically set forth in this
Amendment, none of the provisions of this Amendment shall constitute, be deemed
to be or construed as, a waiver of any Event of Default under the Financing
Agreement as amended by this Amendment.

       7.4. REAFFIRMATION OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower
hereby reaffirms and agrees to be bound by all representations, warranties and
covenants made or entered into by it under the Financing Agreement and under any
and all Loan Documents. Borrower hereby represents and warrants to Bank that no
Default or Event of Default shall exist as of the date of this Amendment after
giving effect to this Amendment and none shall be caused to exist as a result of
the execution, delivery and performance by Borrower of this Amendment.

       7.5. REFERENCE TO AND EFFECT ON THE FINANCING AGREEMENT. Upon the
effectiveness of this Amendment, each reference in the Financing Agreement to
"this Agreement", "hereunder", "hereof", "herein", or words of like import
shall mean and be a reference to the Financing Agreement, as amended hereby, and
each reference to the Financing Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Financing Agreement
shall mean and be a reference to the Financing Agreement, as amended hereby.

       SECTION 8. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT.
       ------------------------------------------------------------------

       In addition to all of the other conditions and agreements set forth
herein, the effectiveness of this Amendment is subject to each of the following
conditions precedent:

       8.1. AMENDMENT TO FINANCING AGREEMENT. Bank shall have received an
original counterpart of this Fourth Amendment to Financing Agreement executed
and delivered by a duly authorized officer of Borrower.

       8.2. RESOLUTIONS. Bank shall have received certified resolutions of
Borrower authorizing Borrower to execute, deliver and perform this Amendment.

       8.3. NO MATERIAL ADVERSE CHANGE. There shall have occurred no material
and adverse change in the Borrower's assets, liabilities or financial condition
since the date of the last Financials delivered by Borrower to Bank nor shall
there have been any material damage to or loss of any of Borrower's assets or
properties since such date.

       8.4. APPRAISAL. Borrower shall deliver to Bank, no later than thirty (30)
days from the Effective Date, a copy of all machinery and equipment appraisals
(on an orderly liquidation value basis) in form and substance satisfactory to
Bank.

       8.5. CLOSING FEE. Borrower shall pay to Bank a fee in the amount of Five
Thousand Dollars ($5,000) no later than December 31, 1998, and shall reimburse
Bank for all of its costs and expenses incurred by Bank in the negotiation and
preparation of this Amendment, including, but not limited to, Attorney's Fees.


                                       9
<PAGE>   25


       SECTION 9. RETROACTIVE APPLICATION OF SECTION 6.1
       -------------------------------------------------

       The Borrower and Bank agree that, at such time as this Amendment shall
have become effective in accordance with the terms of SECTION 8 hereof, SECTION
6.1 of this Amendment shall be considered effective retroactive to September 30,
1998.

       SECTION 10. MISCELLANEOUS.
       --------------------------

       10.1. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio, without regard to principles of
conflict of law.

       10.2. SEVERABILITY. In the event any provision of this Amendment should
be invalid, the validity of the other provisions hereof and of the Financing
Agreement shall not be affected thereby.

       10.3. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when taken together, shall constitute but one and
the same agreement.

       10.4. CONFESSION OF JUDGMENT. Borrower hereby irrevocably authorizes and
empowers any attorney-at-law to appear for Borrower in any action upon or in
connection with this Amendment or the Financing Agreement, as amended hereby, at
any time after the Loans and/or other Obligations become due, as herein
provided, in any court in or of the State of Ohio or elsewhere, and waives the
issuance and service of process with respect thereto, and irrevocably authorizes
and empowers any such attorney-at-law to confess judgment in favor of Bank
against Borrower, the amount due thereon or hereon, plus interest as herein
provided, and all costs of collection, and waives and releases all errors in
said proceedings and judgments and all rights of appeal from the judgment
rendered. The Borrower agrees and consents that the attorney confessing judgment
on behalf of the Borrower may also be counsel to Bank or any of Bank's
Affiliates, waives any conflict of interest which might otherwise arise, and
consents to Bank paying such confessing attorney a reasonable legal fee or
allowing such attorney's reasonable fees to be paid from the proceeds of
Collateral, the Premises or any other security for the Loans and the other
Obligations. 



                                       10
<PAGE>   26

       IN WITNESS WHEREOF, Borrower has caused this Fourth Amendment to
Financing Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.

WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.

       Signed in Cleveland, Ohio, on November 12, 1998. 


Signed and acknowledged                           SPECIALTY CHEMICAL RESOURCES, 
in the presence of:                               INC. 



/s/ Ronald J. Teplitzky                           By:   /s/ David F. Spink
-------------------------                            --------------------------
Name: Ronald J. Teplitzky                         Its:       CFO
      -------------------                             -------------------------
/s/ Brian A. McMahan
-------------------------
Name:  Brian A. McMahan
     --------------------





                                       11
<PAGE>   27


STATE OF OHIO             ) 
                          )ss:
COUNTY OF CUYAHOGA        )


       The foregoing instrument was acknowledged before me this 12th day
November, 1998, by David F. Spink, Chief Financial Officer of Specialty Chemical
Resources, Inc., a Delaware corporation, on behalf of the corporation. 

                                                      
                                         /s/ James L. Miller
                                      -----------------------------
                                      Notary Public

                                            JAMES L. MILLER, ATTORNEY AT LAW
Accepted at Cincinnati, Ohio                NOTARY PUBLIC, State of Ohio
as of November 12, 1998.                    My Commission has no Expiration Date
                                                  Section 147.03 R.C.


STAR BANK, NATIONAL ASSOCIATION


By:  /s/ Steven L. Fields
     --------------------
Its: Vice President
     --------------------



                                       12
<PAGE>   28

                             ADDENDUM TO EXHIBIT L
                             ---------------------

                              Financial Covenants
                              -------------------


Financial Covenants. Borrower agrees that it shall:
-------------------

(A)    CAPITAL EXPENDITURES. Not make capital expenditures (including, but not
       by way of limitation, expenditures for fixed assets or leases capitalized
       or required to be capitalized on Borrower's books by purchase,
       lease-purchase agreement, option or otherwise) in an aggregate amount
       exceeding (i) One Million Dollars ($1,000,000) for the fiscal year ending
       December 31, 1997, (ii) Nine Hundred Thousand Dollars ($900,000) for the
       fiscal year ending December 31, 1998, and (iii) One Million Dollars
       ($1,000,000) for each fiscal year, thereafter.

(B)    EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA).
       Not permit Borrower's Earnings Before Interest, Taxes, Depreciation, and
       Amortization ("EBITDA") to be less than the following amounts for the
       following periods: 

<TABLE>
<CAPTION>

                         EBITDA                         Periods 
                         ------                         ------- 


               <S>                               <C>
                        $740,000                  04/01/98 to 06/30/98
                      $1,500,000                  01/01/98 to 09/30/98 
                      $1,985,000                  01/01/98 to 12/31/98
</TABLE>

(C)    FIXED CHARGE COVERAGE RATIO. Not permit Borrower's ratio of EBITDA to its
       Fixed Charges ("Fixed Charge Coverage Ratio") (excluding (i) any amounts
       previously relent by Bank to Borrower under SECTION 2.5 hereof and (ii)
       the Capitalization Cash actually received by Borrower) to be less than
       the following:
<TABLE>
<CAPTION>

                        Fixed Charge Coverage Ratio          Period
                        ---------------------------          ------

<S>                     <C>                          <C>
                        1.00 to 1.00                 04/01/98 to 06/30/98
                        1.00 to 1.00                 01/01/98 to 09/30/98
                        .94 to 1.00                  01/01/98 to 12/31/98
</TABLE>


(D)    TANGIBLE NET WORTH. Not permit Borrower's tangible net worth to be less
       than the following amounts at any time by and after the following
       periods: 
<TABLE>
<CAPTION>

                        Tangible Net Worth                    Date 
                        ------------------                    ---- 

<S>                           <C>                           <C>   
                              $8,000,000                    06/30/98 
                              $8,650,000                    09/30/98
                              $8,500,000                    12/31/98 
</TABLE>

                                      
<PAGE>   29

(E)    RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH. Not permit Borrower's
       ratio of Total Liabilities to Tangible Net Worth to exceed the following
       ratios on or after the following dates:

<TABLE>
<CAPTION>
                        Ratio of Total Liabilities To
                        -----------------------------
                        Tangible Net Worth                          Date
                        ------------------                          ----
                        <S>                                        <C>
                        2.69 to 1.00                               06/30/98
                        2.32 to 1.00                               09/30/98
                        2.01 to 1.00                               12/31/98

</TABLE>



                                      
<PAGE>   30

                     II. Definitions to Financial Covenants
                     --------------------------------------


(A)    The term "EARNINGS BEFORE INTEREST. TAXES. DEPRECIATION, AND
       AMORTIZATION" or "EBITDA" for purposes of this EXHIBIT L shall mean
       Borrower's earnings from operations before income taxes, and interest or
       expense, PLUS depreciation, PLUS amortization of all non-cash charges,
       all as determined in accordance with generally accepted accounting
       principles on a FIFO basis, and shall not include any gains from the sale
       of assets outside the normal course of business or any other gains from
       extraordinary accounting adjustments or non-recurring items.

(B)    The term "FIXED CHARGE" for purposes of this EXHIBIT L shall mean
       Borrower's cash interest expense, scheduled principal payments on debt
       (including, but not limited to, the amount of principal payments on (i)
       Term Loan A actually deferred for the months of May, June and July 1998
       and (ii) Term Loan B actually deferred for the months of May, June and
       July 1998), dividends, capitalized lease payments, capital expenditures,
       prepayments or redemption of principal on subordinated debt, preferred
       stock or common stock, tax, cash taxes paid.

(C)    The term "TANGIBLE NET WORTH" for purposes of this EXHIBIT L, shall mean
       the total of Borrower's book net worth, as determined in accordance with
       generally accepted accounting principles, consistently applied, PLUS any
       debt subordinate to Borrower's debt to Bank, PLUS any preferred stock
       LESS any assets considered intangible.

(D)    The term "TOTAL LIABILITIES" for purposes of this EXHIBIT L, shall
       include any contingent liabilities and shall have the meaning and be
       determined in accordance with generally accepted accounting principles
       consistently applied in accordance with past practice. The portion of any
       debt subordinate to Borrower's debt to Bank shall be excluded from Total
       Liabilities.

(E)    The term "EXCESS CASH FLOW" shall mean EBITDA LESS Fixed Charge.


Upon receipt of fiscal 1999 and 2000 projections as required at SECTION 8.6
hereof, Financial Covenants set forth herein will be established, upon terms
satisfactory to Bank 



                                      
<PAGE>   31

III. Interest Rate Reduction Tests
----------------------------------


                                                            Applicable Interest 
1) Fixed Charge Coverage for previous four fiscal           Rate
   quarter period  
2) Total Liabilities/Tangible Net Worth 
3) Tangible Net Worth 


1) 1.30-1.59 
   and                                            P + 1.00% 
2) 1.86-2.00
   and 
3) $8,000,000 - $8,499,000 


1) 1.60-1.79
   and                                            P + 0.50% 
2) 1.71 - 1.85
   and 
3) $8,500,000 - $8,999,000 


1) 1.80 and greater
   and                                            P + 0.00% 
2) Less than 1.70
   and 
3) $9,000,000 and greater