FINANCING AGREEMENT



                       The CIT Group/Business Credit, Inc.

                              (as Agent and Lender)

                                       And

                       HydroChem Industrial Services, Inc.

                                  (as Borrower)

                                       And

             HydroChem Holding, Inc., HydroChem International, Inc.,
                     and HydroChem Industrial Cleaning, Inc.

                                 (as Guarantors)







                                October 25, 2001
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

<S>           <C>                                                                       <C>
                                                                                        Page
SECTION 1     Definitions...............................................................1
SECTION 2     Conditions Precedent......................................................3
SECTION 3     Revolving Loans...........................................................3
SECTION 4     Term Loans................................................................3
SECTION 5     Letters of Credit.........................................................3
SECTION 6     Collateral................................................................3
SECTION 7     Representations, Warranties and Covenants.................................3
SECTION 8     Interest, Fees and Expenses...............................................3
SECTION 9     Powers....................................................................3
SECTION 10    Events of Default and Remedies............................................3
SECTION 11    Termination...............................................................3
SECTION 12    Miscellaneous.............................................................3
SECTION 13    Agreement between the Lenders.............................................3
SECTION 14    Agency....................................................................3
</TABLE>

EXHIBIT

        Exhibit A - Form of Promissory Note for Machinery and Equipment Loan
        Exhibit B - Form of Promissory Note for Real Estate Loan
        Exhibit C - Form of Revolving Loan Promissory Note
        Exhibit D - Form of Assignment and Transfer Agreement

SCHEDULES

Schedule 1 - Collateral and Other Information
Schedule 2 - Pricing Grid

                i
<PAGE>

                               FINANCING AGREEMENT

THE CIT  GROUP/BUSINESS  CREDIT INC. with offices located at Two Lincoln Center,
5420 LBJ Freeway, Suite 200, Dallas, Texas 75240 (hereinafter "CIT"), and CIT as
agent for the lenders (the "Agent"),  and any other party which now or hereafter
becomes  a lender  hereunder  pursuant  to  Section  13 hereof  (individually  a
"Lender" and  collectively  the  "Lenders") are pleased to confirm the terms and
conditions  under which the Agent  shall make  revolving  loans,  term loans and
other  financial  accommodations  to,  HydroChem  Industrial  Services,  Inc., a
Delaware  corporation  with a principal place of business at 900 Georgia Avenue,
Deer Park,  Texas 77536  (herein the  "Company"),  HydroChem  Holding,  Inc.,  a
Delaware  corporation  ("Holding"),  HydroChem  International,  Inc., a Delaware
corporation  ("International"),  and  HydroChem  Industrial  Cleaning,  Inc.,  a
Delaware corporation ("Cleaning").

SECTION 1.     Definitions

Accounts shall mean all of each Grantor's now existing and future:  (a) accounts
(as  defined  in the UCC),  and any and all other  receivables  (whether  or not
specifically  listed on schedules  furnished to the Agent),  including,  without
limitation,  all  accounts  created by, or arising  from,  all of the  Company's
sales,  leases,  rentals of goods or  renditions  of services to its  customers,
including but not limited to, those accounts  arising under any Grantor's  trade
names  or  styles,  or  through  any  Grantor's  divisions;   (b)  any  and  all
instruments,  documents, chattel paper (including electronic chattel paper) (all
as defined in the UCC);  (c)  unpaid  seller's  or  lessor's  rights  (including
rescission,  replevin,  reclamation,   repossession  and  stoppage  in  transit)
relating  to the  foregoing  or  arising  therefrom;  (d)  rights  to any  goods
represented by any of the foregoing,  including rights to returned, reclaimed or
repossessed  goods;  (e) reserves and credit balances arising in connection with
or pursuant hereto; (f) guarantees,  supporting obligations, payment intangibles
and letter of credit rights (all as defined in the UCC); (g) insurance  policies
or rights relating to any of the foregoing;  (h) general intangibles  pertaining
to any and all of the  foregoing  (including  all rights to  payment,  including
those arising in connection with bank and non-bank credit cards),  and including
books and records and any  electronic  media and  software  thereto;  (i) notes,
deposits or property of account  debtors  securing the  obligations  of any such
account debtors to any Grantor;  and (j) cash and non-cash  proceeds (as defined
in the UCC) of any and all of the foregoing.

Adjustment  Date shall mean,  with respect to any  calculation of the Applicable
Margin  following  each Fiscal Year, the earlier of (i) the date which is ninety
(90) days after the end of such  Fiscal  Year and (ii) the date which is two (2)
Business Days after the Company has delivered the audited  financial  statements
to  Agent  with  respect  to such  Fiscal  Year as  required  by this  Financing
Agreement.

Administrative Management Fee shall mean the administrative management fee which
shall be paid to the Agent in accordance with Section 8, paragraph 8.8 hereof to
offset the  expenses  and costs  (excluding  Out-of-Pocket  Expenses and auditor
fees) of the Agent in connection with administration,  record keeping, analyzing
and evaluating the Collateral.

                                       1
<PAGE>

Affiliate  shall mean,  as to any  Person,  each other  Person that  directly or
indirectly  (through  one or more  intermediaries  or  otherwise)  controls,  is
controlled  by, or is under common  control with,  such Person.  As used in this
definition,  "controlled by" shall mean the power, directly or indirectly either
(a) to vote 20% or more of the  securities  (on a fully  diluted  basis)  having
ordinary voting power for the election of directors or managing general partners
(or Persons  performing  similar  functions  of such Person) or (b) to direct or
cause the  direction of the  management  and policies of such Person  whether by
contract or otherwise.

Agreement or Financing  Agreement shall mean this Financing  Agreement,  as from
time to time amended or supplemented.

Anniversary  Date shall mean the date  occurring five (5) years from the Closing
Date and the same date in every year thereafter.

Applicable  Margin  shall mean the margin to be added to the Chase Bank Rate and
LIBOR which is equal to the  applicable  percentage  rate per annum set forth in
the Pricing Grid for the applicable  type of Loan (i.e.,  Revolving  Loan,  Real
Estate Loan,  and/or  Machinery  and  Equipment  Loan).  On the Closing Date and
continuing  through  and  including  the day  immediately  preceding  the  first
Adjustment Date occurring after the Closing Date, the Applicable Margin shall be
the  Applicable  Margin for the  applicable  type of Loan when the Debt Ratio is
greater  than or equal to 1.00 to 1.00 but less  than  1.50 to l.00 and for each
period  thereafter  beginning  on an  Adjustment  Date  and  ending  on the  day
immediately preceding the next succeeding Adjustment Date, the Applicable Margin
for the applicable  type of Loan set forth opposite the Debt Ratio as determined
at the end of the most  recently  ended  Fiscal  Year  prior  to the  applicable
Adjustment Date.

Assignment  and  Transfer  Agreement  shall  mean the  Assignment  and  Transfer
Agreement in the form of Exhibit D hereto.

Availability  shall mean at any time the amount by which: (a) the Borrowing Base
exceeds  (b) the  outstanding  aggregate  amount of all  Obligations,  including
without  limitation,  all  Obligations  with  respect to  Revolving  Loans,  but
excluding the Letters of Credit and Term Loans.

Availability  Reserve  shall mean the sum of:  (a) (i) three (3)  months  rental
payments or similar  charges for any of the Company's  leased  premises or other
Collateral  locations  for which the  Company has not  delivered  to the Agent a
landlord's  waiver in form and substance  reasonably  satisfactory to the Agent,
plus (ii) three (3)  months  estimated  payments  plus any other fees or charges
owing by the Company to any applicable warehousemen or third party processor (as
determined by the Agent in its reasonable business judgement), provided that any
of the foregoing  amounts shall be adjusted from time to time hereafter upon (x)
delivery to the Agent of any such acceptable  waiver, (y) the opening or closing
of a Collateral location and/or (z) any change in the amount of rental,  storage
or processor payments or similar charges; (b) if Excess Availability (calculated
without  giving  effect to this  clause (b) of the  definition  of  Availability
Reserve)  is less than  $15,000,000  (as  determined  by  reference  to the most
recently delivered Borrowing Base certificate  required to be delivered pursuant
to Section  7.8) or at any time when an Event of  Default  has  occurred  and is
continuing,  an amount equal to  $7,270,800,  minus an amount equal to the total
amount of principal

                                       2
<PAGE>

which has been  repaid on the Term  Loans as of such date;  and (c) any  reserve
which the Agent  may  reasonably  require  from  time to time  pursuant  to this
Financing  Agreement,  the  Commitment  Letter,  or  any  other  Loan  Document,
including without  limitation,  for the Letter of Credit Indemnity Agreement and
for Letters of Credit obtained pursuant to Paragraph 5.1 of Section 5 hereof.

Borrowing  Base  shall  mean,  as of any time of  calculation,  (a)  eighty-five
percent  (85%)  of  the  Company's  aggregate   outstanding   Eligible  Accounts
Receivable, provided, however, that if at the time of determination the Dilution
Percentage  is greater  than five  percent  (5%),  then such 85% rate of advance
shall be reduced by an amount equal to the difference  between (x) the amount of
such Dilution  Percentage  and (y) five percent (5%),  minus (b) any  applicable
Availability Reserves; provided, further, that the amount available with respect
to Eligible  Accounts  Receivable  which have not been  billed  shall not exceed
$4,000,000 at any time. In no event shall the Borrowing Base exceed $32,500,000.

Business Day shall mean any day on which the Agent and The Chase  Manhattan Bank
are open for business.

Capital  Expenditures shall mean, for any period, the aggregate  expenditures of
the Company, on a consolidated basis during such period on account of, property,
plant,  equipment or similar  fixed assets that, in  conformity  with GAAP,  are
required to be reflected in the Consolidated Balance Sheet.

Change of Control shall mean the  occurrence of any one or more of the following
events: (a) Holding shall cease to own 100% of the issued and outstanding voting
securities of the Company; (b) the Company shall cease to own 100% of the issued
and  outstanding  voting  securities  of Cleaning,  International,  or any other
subsidiary  (excluding  failure  to own  100% of  such  voting  securities  of a
subsidiary due to a merger, liquidation, or dissolution of such subsidiary which
is permitted under Section 7.9(d) of this Financing Agreement); (c) any "person"
or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934,  as amended (the  "Exchange  Act"),  excluding the Holding
Owners,  shall become, or obtain rights (whether by means of warrants,  options,
or  otherwise)  to become a  "beneficial  owner" as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act,  directly or  indirectly,  of 30% or more of the
outstanding  common stock of Holding on a fully diluted  basis;  (d) the Holding
Owners cease to have  "beneficial  ownership" of 50% or more of the  outstanding
common stock of Holding; or (e) the first day on which a majority of the members
of the Board of Directors of Holding are not Continuing Directors.

Chase Bank Rate shall mean the rate of interest per annum announced by The Chase
Manhattan  Bank from time to time as its prime  rate in effect at its  principal
office in New York City.  (The prime rate is not  intended to be the lowest rate
of interest charged by The Chase Manhattan Bank to its borrowers).

Chase  Bank  Rate  Loans  shall  mean any  Loans or  advances  pursuant  to this
Financing  Agreement  made or  maintained  at a rate of interest  based upon the
Chase Bank Rate.

Closing Appraisals is defined in Section 2.1(v).

                                       3
<PAGE>

Closing  Date shall mean the date that this  Financing  Agreement  has been duly
executed by the parties  hereto and delivered to the Agent and all conditions to
the making of Loans hereunder have been satisfied in full.

Collateral  shall mean all present and future  Accounts,  Equipment,  Inventory,
Documents  of Title,  General  Intangibles,  Real Estate,  pledged  stock of any
Grantor's subsidiaries and Other Collateral.

Commitment shall mean each Lender's commitment in accordance with this Financing
Agreement to make Revolving Loans (the "Revolving  Credit  Commitment")  and the
Term  Loan  funding  (the  "Term  Loan  Commitment"),  in the  amount  of  their
respective  pro rata share set forth in  schedules  prepared by the Agent or the
Assignment and Transfer Agreement executed by each such Lender.

Commitment  Letter  shall mean the  Commitment  Letter,  dated  October 1, 2001,
issued by the Agent to, and accepted by, the Company, as amended.

Concentration Account is defined in Section 3.4.

Condemnation  Proceeds shall mean all awards,  proceeds, or payments received by
any Restricted  Person relating to condemnation of any Real Property  (including
improvements thereon).

Consolidated Balance Sheet shall mean a consolidated or compiled, as applicable,
balance sheet for the Company and the  consolidated  subsidiaries of the Company
showing all  eliminations  of all  inter-company  transactions  and  prepared in
accordance with GAAP.

Continuing Directors shall mean, as of any date of determination,  the directors
of Holding on the Closing Date and each other  director,  if, in each case, such
other  director was  nominated  or elected by a majority of the then  Continuing
Directors.

Copyrights shall mean all present and hereafter acquired  copyrights,  copyright
registrations,  recordings,  applications,  designs,  styles,  licenses,  marks,
prints and labels  bearing any of the foregoing,  goodwill,  any and all general
intangibles,  intellectual  property and rights pertaining thereto, and all cash
and non-cash proceeds thereof.

Debt Ratio shall mean, on any date, the ratio determined by dividing (a) the sum
of all of the Indebtedness of Restricted  Persons on such date,  determined on a
consolidated basis in accordance with GAAP (other than Subordinated Debt) by (b)
EBITDA for the immediately preceding four Fiscal Quarter period.

Default shall mean any event specified in Section 10 hereof,  whether or not any
requirement  for the giving of notice,  the lapse of time, or both, or any other
condition, event or act, has been satisfied.

Default  Rate  of  Interest  shall  mean a rate of  interest  per  annum  on any
Obligations  hereunder,  equal to the sum of: (a) two percent (2%), plus (b) the
Chase Bank Rate or LIBOR , as the case may be,  plus (c) the  Applicable  Margin
for the  applicable  type of Loan,  which rate of  interest  the Agent  shall be
entitled to charge Restricted Persons on all Obligations due the Agent on behalf
of the Lenders by the Company, as further set forth in Paragraph 10.2 of Section
10 of this Financing Agreement.

                                       4
<PAGE>

Depository  Accounts  shall  mean the  Lockbox  Accounts  and the  Concentration
Account,  which  are  subject  to the  Agent's  instructions,  as  specified  in
Paragraph 3.4 of Section 3 of this Financing Agreement.

Dilution  Percentage shall mean, as of any time of calculation,  the then sum of
the Restricted Persons' returns,  credits,  allowances,  discounts,  write-offs,
contras,  off-sets,  and deductions (excluding any non-dilutive credits given by
any Restricted  Person in connection with a re-bill by such Restricted Person no
later than ten (10) Business Days from the date of the original invoice) divided
by the then sum of Trade Accounts Receivable, all calculated on a rolling ninety
(90) day average, as determined by Agent from time to time.

Documentation  Fee shall mean the Agent's  standard fees relating to any and all
modifications,  waivers,  releases,  amendments  or additional  collateral  with
respect to this Financing Agreement, the Collateral and/or the Obligations.

Documents  of Title shall mean all present and future  documents  (as defined in
the  UCC),  and  any and all  warehouse  receipts,  bills  of  lading,  shipping
documents,  chattel  paper,  instruments  and  similar  documents,  all  whether
negotiable or not and all goods and Inventory  relating thereto and all cash and
non-cash proceeds of the foregoing.

Early  Termination  Date  shall  mean the date,  if any,  on which  the  Company
terminates  this Financing  Agreement or the Revolving Line of Credit which date
is prior to an Anniversary Date.

Early Termination Fee shall: (a) mean the fee the Agent on behalf of the Lenders
is  entitled  to charge the  Company  in the event the  Company  terminates  the
Revolving  Line of  Credit or this  Financing  Agreement  on a date  prior to an
Anniversary  Date;  and (b) be determined by  multiplying  the Revolving Line of
Credit by (x) one and  one-half  percent  (1.5%) if the Early  Termination  Date
occurs on or before one (1) year from the Closing Date,  (y) one percent (1%) if
the Early  Termination  Date occurs after one (1) year from the Closing Date but
on or before two (2) years from the Closing Date; and (z) one-half percent (.5%)
if the Early  Termination  Date occurs after two (2) years from the Closing Date
but prior to any Anniversary Date.

EBIT shall mean, in any period, all earnings of the Company and its subsidiaries
for said period  before all interest and income tax  obligations  of the Company
and its  subsidiaries  for said period,  determined on a  consolidated  basis in
accordance  with GAAP on a consistent  basis with the latest  audited  financial
statements  of the  Company,  but  excluding  the  effect  of  extraordinary  or
non-reoccurring gains or losses for such period.

EBITDA  shall  mean,  in any  period,  all  earnings  of  the  Company  and  its
subsidiaries   before  all  (i)  interest  and  income  tax  obligations,   (ii)
depreciation  and  (iii)  amortization  for said  period,  all  determined  on a
consolidated basis in accordance with GAAP on a consistent basis with the latest
audited  financial  statements  of the  Company,  but  excluding  the  effect of
extraordinary and/or non-reoccurring gains or losses for such period.

                                       5
<PAGE>

Eligible  Accounts  Receivable shall mean the gross amount of the Trade Accounts
Receivable  of the  Grantors  that  are  subject  to a valid,  exclusive,  first
priority and fully perfected  security interest in favor of the Agent, on behalf
of the Lenders,  which conform to the warranties  contained herein and which, at
all  times,  continue  to be  acceptable  to the  Agent in the  exercise  of its
reasonable  business judgment,  less, without  duplication,  the sum of: (a) any
returns, discounts, credits and allowances of any nature (whether issued, owing,
granted or outstanding), and (b) reserves for any such Trade Accounts Receivable
that arise from or are subject to or include:  (i) sales to the United States of
America, any state or other governmental entity or to any agency,  department or
division  thereof,  except  for any  such  sales as to which  such  Grantor  has
complied  with the  Assignment  of Claims  Act of 1940 or any  other  applicable
statute, rules or regulation, to the Agent's satisfaction in the exercise of its
reasonable business judgment; (ii) foreign sales, other than sales which (A) are
approved  in writing by Agent,  or (B)  otherwise  comply  with all of the other
criteria for eligibility  hereunder and are (x) secured by letters of credit (in
form and  substance  satisfactory  to the  Agent)  issued or  confirmed  by, and
payable at, banks having a place of business in the United States of America, or
(y) to  customers  residing  in Canada  provided  such  Accounts  do not  exceed
$2,500,000 in the aggregate at any one time;  (iii)  Accounts that remain unpaid
more than ninety (90) days from invoice date; (iv) contra accounts; (v) sales to
any other Restricted Person,  any subsidiary,  or to any company affiliated with
any  Restricted  Person in any way;  (vi) bill and hold  (deferred  shipment) or
consignment  sales;  (vii) all sales to any customer if fifty  percent  (50%) or
more of the aggregate dollar amount of all outstanding invoices to such customer
are unpaid more than  ninety  (90) days from  invoice  date;  (viii)  pre-billed
receivables  and  receivables  arising  from  progress  billing;  (ix) sales not
payable in United  States  currency,  unless the same are approved in writing by
Agent; and (x) any other reasons deemed necessary by the Agent in its reasonable
judgment,  and which are customary either in the commercial  finance industry or
in the lending  practices  of the Agent and/or the  Lenders,  including  but not
limited to sales to any customer which is: (A) insolvent,  (B) the debtor in any
bankruptcy,  insolvency,  arrangement,  reorganization,  receivership or similar
proceedings  under any federal or state law,  (C)  negotiating,  or has called a
meeting of its creditors for purposes of negotiating, a compromise of its debts,
or (D) financially unacceptable to the Agent or has a credit rating unacceptable
to the Agent.

Equipment shall mean all present and hereafter acquired equipment (as defined in
the UCC) including,  without limitation, all machinery,  equipment,  furnishings
and  fixtures,  and  all  additions,  substitutions  and  replacements  thereof,
wherever located,  together with all attachments,  components,  parts, equipment
and accessories installed thereon or affixed thereto and all proceeds thereof of
whatever sort.

ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
from time to time and the rules and regulations promulgated thereunder from time
to time.

Eurocurrency Reserve Requirements for any day, as applied to a LIBOR Loan, shall
mean the  aggregate  (without  duplication)  of the  maximum  rates  of  reserve
requirements  (expressed  as a decimal  fraction)  in effect with respect to the
Agent and/or any present or future Lender or participant on such day (including,
without limitation,  basic, supplemental,  marginal and emergency reserves under
Regulation D or any other  applicable  regulations  of the Board of Governors of
the Federal Reserve System or other governmental  authority having  jurisdiction
with respect thereto, as

                                       6
<PAGE>

now and  from  time  to  time  in  effect,  dealing  with  reserve  requirements
prescribed for  Eurocurrency  funding  (currently  referred to as  "Eurocurrency
Liabilities"  in Regulation D of such Board)  maintained by the Agent and/or any
such  Lenders or  participants  (such rate to be  adjusted  to the  nearest  one
hundredth  of one  percent  (1/100  of 1%) or,  if  there is not a  nearest  one
hundredth of one percent  (1/100 of 1%), to the next higher one hundredth of one
percent (1/100 of 1%)).

Excess Availability means, at any time of determination and without duplication,
the amount which is equal to (a) the then  applicable  Borrowing  Base minus (b)
the  aggregate  outstanding  principal  balance of the  Revolving  Loans and the
aggregate  face  amount  of all  Letters  of Credit  plus (c) the  amount of any
Availability Reserve (as adjusted from time to time pursuant to the terms of the
definition thereof).

Existing  Letters  of Credit  means  the  letters  of  credit  issued by Bank of
America, N.A. for the Company or its subsidiaries more particularly described on
Schedule 1 attached hereto.

Event(s) of Default  shall have the meaning  provided  for in Section 10 of this
Financing Agreement.

Fee Letter shall mean that certain fee letter  agreement  between  Agent and the
Company dated October 1, 2001, as amended.

Fiscal  Quarter  shall mean,  with respect to the Company,  each three (3) month
period ending on March, June, September, and December of each Fiscal Year.

Fiscal Year shall mean each twelve (12) month period  commencing on January 1 of
each year and ending on the following December 31.

Fixed Charge  Coverage Ratio shall mean, on any date, the ratio of (a) EBITDA of
the Company and its subsidiaries for the most recently ended four Fiscal Quarter
period,  minus the sum of (i) all Capital  Expenditures  of  Restricted  Persons
during such period, plus (ii) all federal, state, and local income Taxes paid by
the Restricted  Persons during such period,  to (b) the sum of (i) the amount of
all principal  scheduled to be paid on  Indebtedness  of the Restricted  Persons
during such period,  including but not limited to the Loans and the Subordinated
Debt (but  excluding the final  principal  payment due on November 19, 2001 with
respect  to the  Seller  Subordinated  Notes not to  exceed  an amount  equal to
$2,000,000,  provided, that all Seller Subordinated Notes have been paid in full
on such date) plus (ii) all cash interest expense paid by the Restricted Persons
during such period,  including but not limited to cash interest paid or required
to be paid on the  Subordinated  Debt (other than the  interest  payable for the
period from  October 1, 2001 to November 19, 2001 in  connection  with the final
principal payment on the Seller Subordinated Notes).

GAAP shall mean generally accepted accounting principles in the United States of
America  as in  effect  from time to time and for the  period  as to which  such
accounting  principles  are to apply,  provided  that in the  event the  Company
modifies its  accounting  principles and procedures as applied as of the Closing
Date, the Company shall provide to the Agent and the Lenders such  statements of
reconciliation as shall be in form and substance acceptable to the Agent.

                                       7
<PAGE>

General  Intangibles  shall mean all  present  and  hereafter  acquired  general
intangibles (as defined in the UCC), and shall include, without limitation,  all
present and future  right,  title and  interest  in and to: (a) all  Trademarks,
tradenames,  corporate  names,  business  names,  logos and any other designs or
sources of business identities,  (b) Patents,  together with any improvements on
said Patents,  utility models,  industrial models, and designs,  (c) Copyrights,
(d) trade secrets,  (e) licenses,  permits and franchises,  (f) all applications
with respect to the foregoing,  (g) all right,  title and interest in and to any
and all  extensions  and  renewals,  (h)  goodwill  with  respect  to any of the
foregoing,  (i) any  other  forms  of  similar  intellectual  property,  (j) all
customer  lists,   distribution  agreements,   supply  agreements,   blueprints,
indemnification rights and tax refunds,  together with all monies and claims for
monies now or hereafter due and payable in connection  with any of the foregoing
or otherwise,  and all cash and non-cash  proceeds thereof,  including,  without
limitation,  the proceeds or royalties of any licensing  agreements  between any
Grantor and any licensee of any Grantor's General Intangibles.

Grantors shall mean (i) the Company,  (ii)  International,  (iii) Cleaning,  and
(iv) and each other subsidiary of the Company, whether now existing or hereafter
created.

Guaranties  shall mean the  guaranty  documents  executed  and  delivered by the
Guarantors guaranteeing the Obligations.

Guarantors shall mean (i) Holding, (ii) International,  (iii) Cleaning, and (iv)
and each other  subsidiary  of the  Company,  whether now  existing or hereafter
created.

Holding Junior Subordinated Notes shall mean (i) Holding's 12-1/2%  Subordinated
Notes due  August  4, 2008 and (ii)  Holding's  12-3/4%  Subordinated  Notes due
August 4, 2009.

Holding Owner shall mean, individually,  each of : LKCM Venture Partners I Ltd.,
Citicorp Venture Capital Ltd., and HES Management,  Inc., and in each case, such
Person's Affiliates.

Indebtedness shall mean,  without  duplication,  all liabilities,  contingent or
otherwise, which are any of the following:

        (a)    liabilities for borrowed money,

        (b)    liabilities  constituting  an  obligation  to  pay  the  deferred
purchase  price of  property  or  services,

        (c)    liabilities  evidenced  by  a  bond,  debenture,  note or similar
instrument,

        (d)    liabilities  which   would under GAAP be shown on the  applicable
Person's  balance sheet as a liability,  and are payable more than one year from
the date of  creation  thereof  (other than  reserves  for taxes,  reserves  for
contingent  obligations,  and accruals for awards under the  Company's  deferred
bonus plans,  discretionary bonus plans, and profit sharing  contributions under
the Company's  Discretionary Profit Sharing Plan and 401(k) Plan as in effect on
the Closing Date),

        (e)    liabilities arising under hedging contracts,

                                       8
<PAGE>

        (f)    liabilities  constituting  principal  under leases capitalized in
accordance with GAAP,

        (g)    liabilities  arising  under  conditional  sales  or  other  title
retention agreements,

        (h)    liabilities  (for example,  repurchase  agreements,   mandatorily
redeemable  preferred  stock and  sale/leaseback  agreements)  consisting  of an
obligation  to  purchase  or  redeem  securities  or  other  property,  if  such
liabilities arises out of or in connection with the sale or issuance of the same
or similar  securities  or property  (other than those  permitted  under Section
7.9(g)),

        (i)    liabilities  with  respect to  letters of credit or  applications
or reimbursement agreements therefor, or

        (j)    liabilities with respect to other obligations to deliver goods or
services in consideration  of advance payments  therefor (other than prepayments
or deposits from customers received in the ordinary course of business);

provided,  however,  that the  "Indebtedness"  of any Person  shall not  include
accrued expenses,  accounts payable,  or other liabilities that were incurred by
such Person on ordinary  trade terms to  vendors,  suppliers,  or other  Persons
providing  goods and services  for use by such Person in the ordinary  course of
its business,  unless and until such  liabilities are  outstanding  more than 90
days past the original invoice or billing date therefor.

Insurance  Proceeds  shall mean proceeds or payments  from an insurance  carrier
with respect to any loss, casualty or damage to Collateral.

Interest Period shall mean:

(a) with  respect to any initial  request by the Company for a LIBOR Loan, a one
month, two month,  three month, or six month period  commencing on the borrowing
or conversion  date with respect to a LIBOR Loan and ending one, two,  three, or
six months thereafter, as applicable; and

(b) thereafter  with respect to any  continuation  of, or conversion to, a LIBOR
Loan, at the option of the Company,  any one month,  two month,  three month, or
six  month  period  commencing  on the  last  day of the  immediately  preceding
Interest Period applicable to such LIBOR Loan and ending one, two, three, or six
months thereafter, as applicable;

provided that, the foregoing provisions relating to Interest Periods are subject
to the following:

(i) if any Interest  Period would  otherwise end on a day which is not a Working
Day, that Interest Period shall be extended to the next succeeding  Working Day,
unless the result of such  extension  would  extend such  payment  into  another
calendar month in which event such Interest  Period shall end on the immediately
preceding Working Day;

                                       9
<PAGE>

(ii) any Interest Period that begins on the last Working 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) shall end on the last Working Day of
a calendar month; and

(iii) for purposes of determining  the  availability of Interest  Periods,  such
Interest Periods shall be deemed available if (x) Chase Manhattan Bank quotes an
applicable rate or the Agent determines  LIBOR, as provided in the definition of
LIBOR,  (y) the LIBOR  determined  by Chase  Manhattan  Bank or the  Agent  will
adequately  and fairly  reflect  the cost of  maintaining  or funding  its Loans
bearing  interest at LIBOR,  for such  Interest  Period,  and (z) such  Interest
Period will end on or before the earlier of Anniversary  Date or the last day of
the then  current  term of this  Financing  Agreement.  If a requested  Interest
Period shall be  unavailable  in  accordance  with the foregoing  sentence,  the
Company shall continue to pay interest on the  Obligations at the applicable per
annum rate based upon the Chase Bank Rate.

Inventory  shall  mean  all of any  Grantor's  present  and  hereafter  acquired
inventory  (as  defined  in the  UCC) and  including,  without  limitation,  all
merchandise,   inventory  and  goods,  and  all  additions,   substitutions  and
replacements  thereof,  wherever located,  together with all goods and materials
used or usable in manufacturing,  processing,  packaging or shipping same in all
stages of production  from raw  materials  through  work-in-process  to finished
goods - and all proceeds thereof of whatever sort.

Investment  Property shall mean all now owned and hereafter acquired  investment
property (as defined in the UCC) and all proceeds thereof.

Issuing  Bank shall mean the bank issuing  Letters of Credit for the  Restricted
Persons.

Letters  of Credit  shall  mean (a) all  Existing  Letters of Credit and (b) all
letters of credit  issued  with the  assistance  of the Agent,  on behalf of the
Lenders,  in  accordance  with  Section 5 hereof by the  Issuing  Bank for or on
behalf of any Restricted Person.

Letter of Credit  Guaranty  shall mean any guaranty  delivered by the Agent,  on
behalf  of  the  Lenders,   to  the  Issuing  Bank  of  a  Restricted   Person's
reimbursement  obligations  under the Issuing  Bank's  reimbursement  agreement,
application  for  Letter of Credit or other  like  document,  including  but not
limited to the Letter of Credit Indemnity Agreement.

Letter of Credit  Guaranty  Fee shall mean the fee the  Agent,  on behalf of the
Lenders,  may  charge  the  Company  under  Paragraph  8.3 of  Section 8 of this
Financing  Agreement  for: (a) issuing a Letter of Credit  Guaranty,  and/or (b)
otherwise  aiding any  Restricted  Person in  obtaining  Letters of Credit,  all
pursuant to Section 5 hereof.

Letter of Credit  Indemnity  Agreement shall mean that certain letter  agreement
dated October 25, 2001 among the Company,  Agent, and Bank of America, N.A. with
respect to the Existing Letters of Credit.

     Letter of Credit  Sub-Line  shall  mean the  commitment  of the  Lenders to
assist Restricted Persons in obtaining Letters of Credit,  pursuant to Section 5
hereof, and to indemnify Bank of America, N.A.

                                       10
<PAGE>

for  Existing  Letters of Credit as provided  in the Letter of Credit  Indemnity
Agreement, in an aggregate amount of $5,000,000.

LIBOR shall mean, at any time of determination, and subject to availability, for
each applicable  Interest  Period, a variable rate of interest equal to: (i) the
rate of interest  determined by the Agent at which deposits in U.S.  dollars are
offered for the  relevant  Interest  Period  based on  information  presented on
Telerate Systems at Page 3750 as of 11:00 A.M. (London time) on the day which is
two (2) Business Days prior to the first day of such Interest  Period,  provided
that, if at least two such offered  rates appear on the Telerate  System at Page
3750 in respect of such Interest  Period,  the arithmetic mean of all such rates
(as  determined  by the Agent)  will be the rate used or (ii) if such rate is no
longer  published,  the  applicable  LIBOR  quoted  to the  Agent  by the  Chase
Manhattan  Bank (or  successor  thereto);  divided by (b) a number  equal to 1.0
minus the  aggregate  (but without  duplication)  of the rates  (expressed  as a
decimal  fraction) of  Eurocurrency  Reserve  Requirements  in effect on the day
which is two (2) Business Days prior to the beginning of such Interest Period.

LIBOR  Lending  Office with  respect to the Agent,  shall mean the office of The
Chase Manhattan Bank, or any successor  thereof,  maintained at 270 Park Avenue,
New York, NY 10017.

LIBOR Loan shall mean any Loans made pursuant to this Financing  Agreement which
are made or maintained at a rate of interest based upon LIBOR, provided that (i)
no Default or Event of Default has occurred hereunder, which has not been waived
in writing by the Required Lenders, and (ii) no LIBOR Loan shall be made with an
Interest  Period that ends  subsequent to an Anniversary  Date or any applicable
Early Termination Date.

Lien shall mean,  with respect to any property or assets,  any right or interest
therein of a creditor to secure  liabilities owed to it or any other arrangement
with such creditor  which  provides for the payment of such  liabilities  out of
such property or assets or which allows such  creditor to have such  liabilities
satisfied out of such  property or assets prior to the general  creditors of any
owner thereof, including any Lien, mortgage, security interest, pledge, deposit,
production payment,  rights of a vendor under any title retention or conditional
sale agreement or lease substantially  equivalent thereto, tax Lien,  mechanic's
or materialman's Lien, or any other charge or encumbrance for security purposes,
whether  arising by law or agreement or  otherwise,  but  excluding any right of
offset which arises without agreement in the ordinary course of business. "Lien"
also means any filed financing statement,  any registration of a pledge (such as
with an issuer of uncertificated securities), or any other arrangement or action
which  would  serve to  perfect  a Lien  described  in the  preceding  sentence,
regardless of whether such financing  statement is filed,  such  registration is
made,  or such  arrangement  or action is  undertaken  before or after such Lien
exists.

Line of Credit shall mean the  aggregate  commitment  of the Lenders to (a) make
Revolving Loans pursuant to Section 3 of this Financing Agreement (b) assist the
Restricted Persons in opening Letters of Credit pursuant to the Letter of Credit
Indemnity  Agreement and Section 5 of this Financing Agreement and (c) make Term
Loans pursuant to Section 4 of this Financing Agreement, in the aggregate amount
equal to  $62,500,000;  provided that nothing herein shall be deemed to increase
any Lender's  commitment  hereunder,  and which commitment shall be set forth in

                                       11
<PAGE>

the applicable  schedules maintained by the Agent or the Assignment and Transfer
Agreements executed by such Lender.

Line of  Credit  Fee  shall:  (a) mean the fee due the  Agent at the end of each
month  for the  Line  of  Credit,  and  (b) be  determined  by  multiplying  the
difference  between (i) the Revolving Line of Credit, and (ii) the sum, for said
month,  of (x) the average daily balance of Revolving Loans plus (y) the average
daily balance of Letters of Credit  outstanding for said month, by three-eighths
of one percent (.375%) per annum for the number of days in said month.

Loan Documents shall mean this Financing  Agreement,  the Promissory  Notes, the
Letter of Credit Indemnity  Agreement,  the mortgages and/or deeds of trust, the
stock pledge agreements,  the guaranties,  other closing documents and any other
ancillary loan and security  agreements executed from time to time in connection
with  this  Financing  Agreement,  all  as may be  renewed,  amended,  extended,
increased or supplemented from time to time.

Loan  Facility  Fee shall mean the fee  payable to the Agent and the Lenders (as
applicable) in accordance with, and pursuant to, the provisions of Paragraph 8.7
of Section 8 of this Financing Agreement.

Loans shall mean all principal  amounts  outstanding  under the Promissory Notes
with respect to the Revolving  Loans, the Machinery and Equipment Loans, and the
Real Estate Loans.

Lockbox  Agreements shall mean the deposit account  agreements,  blocked account
agreements,   restricted  account  agreements,  lockbox  agreements  or  similar
agreements,  executed by and among Restricted Persons,  Agent, and the financial
institutions  at which the  Lockbox  Accounts  are  maintained,  which  shall be
satisfactory to Agent in form and substance,  as such agreements may be amended,
supplemented, amended and restated, or otherwise modified from time to time.

Machinery and Equipment Loan is defined in the definition of Term Loan.

Machinery  and  Equipment  Note  shall mean the  promissory  note in the form of
Exhibit A hereto executed by the Company to evidence the Machinery and Equipment
Loan made by the Agent under Section 4 hereof.

Mandatory Prepayment shall: (a) mean the amount by which the Company must prepay
the Term Loans on or before the 100th day after the end of each  Fiscal  Year of
the Company; and (b) be determined as set forth in Paragraph 4.9 of Section 4 of
this Financing Agreement.

Obligations  shall mean all loans,  advances and extensions of credit made or to
be made by the Agent  and/or the  Lenders to the  Company,  or to others for the
Company's account (including, without limitation, all Revolving Loans, Letter of
Credit  Guaranties and Term Loans);  any and all  indebtedness  and  obligations
which may at any time be owing by any Restricted  Person to the Agent and/or the
Lenders  howsoever  arising,  whether  now  in  existence  or  incurred  by  any
Restricted  Person from time to time hereafter under any Loan Document;  whether
principal,  interest,  fees,  costs,  expenses or otherwise;  whether secured by
pledge, Lien upon or security interest in any Restricted

                                       12
<PAGE>

Person's  Collateral,  assets or property or the assets or property of any other
Person,  firm,  entity or corporation;  whether such indebtedness is absolute or
contingent,  joint or several,  matured or  unmatured,  direct or  indirect  and
whether any Restricted Person is liable to the Agent and/or the Lenders for such
indebtedness  as  principal,   surety,  endorser,   guarantor,   indemnitor,  or
otherwise. Obligations shall also include indebtedness owing to the Agent and/or
the Lenders by any Restricted  Person under any Loan Document or under any other
agreement or  arrangement  now or hereafter  entered into between any Restricted
Person and the Agent  and/or the  Lenders  relating to the Line of Credit or the
Loan  Documents;  indebtedness  or  obligations  incurred by, or imposed on, the
Agent and/or the Lenders as a result of environmental  claims arising out of any
Restricted Person's operations, premises or waste disposal practices or sites in
accordance with paragraph 7.6 hereof;  any Restricted  Person's liability to the
Agent  and/or the Lenders as maker or endorser of any  promissory  note or other
instrument for the payment of money required to be made or endorsed  pursuant to
any Loan Document;  any Guarantor's liability to the Agent and the Lenders under
any Loan Document,  or arising under any guaranty,  endorsement,  or undertaking
which  the  Agent  and/or  the  Lenders  may  make or issue  to  others  for any
Restricted Person's account pursuant to the Loan Documents, including any Letter
of Credit  Guaranty or other  accommodation  extended  by Agent with  respect to
applications for Letters of Credit,  the Agent's and/or the Lender's  acceptance
of drafts or the  Agent's  and/or  the  Lender's  endorsement  of notes or other
instruments for the Company's account and benefit.

Ohio Real Property  shall mean all of  Restricted  Persons' fee interests in the
real property located in Canal Fulton, Ohio and Youngstown, Ohio which are as of
the Closing Date under contract for sale.

Other  Collateral  shall  mean all now owned  and  hereafter  acquired  lockbox,
blocked  account  and any other  deposit  accounts  maintained  with any bank or
financial  institutions  into which the  proceeds  of  Collateral  are or may be
deposited;   all  other  deposit  accounts  and  all  Investment  Property;  all
commercial  tort  claims;  all  payment  intangibles;  all letters of credit and
rights to payment or  performance  under any letter of credit whether or not the
beneficiary  has  demanded  or is at the time  entitled  to  demand  payment  or
performance thereof; all cash and other monies and property in the possession or
control of the Agent  and/or any of the  Lenders;  all  books,  records,  ledger
cards,  disks and related data  processing  software at any time  evidencing  or
containing  information  relating to any of the Collateral  described  herein or
otherwise necessary or helpful in the collection thereof or realization thereon;
and all cash and non-cash proceeds of the foregoing.

Out-of-Pocket  Expenses  shall mean all of the  Agent's  (and the Lenders on and
after the  occurrence of an Event of Default which is not waived by the Required
Lenders)  present  and  future  expenses  incurred  relative  to this  Financing
Agreement or any other Loan Documents, whether incurred heretofore or hereafter,
which  expenses  shall  include,  without  being  limited to: the cost of record
searches, all costs and expenses incurred by the Agent in opening bank accounts,
depositing checks,  receiving and transferring funds, and wire transfer charges,
any charges imposed on the Agent due to returned items and "insufficient  funds"
of deposited checks and the Agent's standard fees relating thereto,  any amounts
paid by,  incurred by or charged to, the Agent and/or the Lenders by the Issuing
Bank under a Letter of Credit Guaranty or the Company's reimbursement agreement,
application  for Letters of Credit or other like document  which pertain  either
directly or indirectly to such Letters of

                                       13
<PAGE>

Credit,  and the Agent's standard fees relating to the Letters of Credit and any
drafts thereunder, travel, lodging and similar expenses of the Agent's personnel
in connection  with  inspecting and monitoring the Collateral  from time to time
hereunder,  any  applicable  counsel  fees and  disbursements,  fees  and  taxes
relative to the filing of financing statements, all expenses, costs and fees set
forth in Paragraph  10.3 of Section 10 of this  Financing  Agreement,  and title
insurance  premiums,  real estate survey costs, costs of preparing and recording
mortgages/deeds of trust against the Real Estate.

Overadvance  Rate shall mean a rate equal to one-half of one percent  (1/2%) per
annum in  excess of the  applicable  contract  rate of  interest  determined  in
accordance with Section 8, Paragraph 8.1(a) of this Financing Agreement.

Overadvances  shall  mean the  amount  by which  (a) the sum of all  outstanding
Revolving Loans, Letters of Credit and advances made under the Revolving Line of
Credit exceed (b) the Borrowing Base.

Patents shall mean all of any Grantor's present and hereafter  acquired patents,
patent applications,  registrations, any reissues or renewals thereof, licenses,
any inventions and improvements claimed thereunder,  and all general intangible,
intellectual property and patent rights with respect thereto of any Grantor, and
all income, royalties, cash and non-cash proceeds thereof.

Permitted  Encumbrances  shall  mean:  (a) Liens  existing on the date hereof on
specific items of Equipment and other Liens expressly permitted, or consented to
in writing by the Agent and/or the Required  Lenders;  (b) Purchase Money Liens;
(c)  statutory  Liens and  contractual  Liens (in effect on the Closing Date) of
landlords and Liens of carriers,  warehousemen,  bailees, mechanics, materialmen
and other like Liens imposed by law,  created in the ordinary course of business
and for amounts  not yet due (or which are being  contested  in good  faith,  by
appropriate  proceedings  or other  appropriate  actions which are sufficient to
prevent  imminent  foreclosure of such Liens) and with respect to which adequate
reserves or other  appropriate  provisions  are being  maintained by Grantors in
accordance  with GAAP; (d) deposits made (and the Liens thereon) in the ordinary
course of business of Grantors (including, without limitation, security deposits
for leases,  indemnity bonds,  surety bonds and appeal bonds) in connection with
workers' compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders,  bids,  contracts  (other than
for the repayment or guarantee of borrowed money or purchase money obligations),
statutory  obligations  and other  similar  obligations  arising  as a result of
progress payments under government contracts; (e) easements (including,  without
limitation,    reciprocal   easement   agreements   and   utility   agreements),
encroachments,  minor defects or  irregularities  in title,  variation and other
restrictions,  charges or encumbrances  (whether or not recorded)  affecting the
Real Estate,  if  applicable,  and which in the aggregate (A) do not  materially
interfere with the  occupation,  use or enjoyment by any Grantor of its business
or property so encumbered  and (B) in the  reasonable  business  judgment of the
Agent do not materially and adversely affect the value of such Real Estate;  and
(f)  Liens  granted  the Agent by  Grantors;  (g)  Liens of  judgment  creditors
provided such Liens do not exceed, in the aggregate, at any time, $50,000 (other
than Liens bonded or insured to the reasonable  satisfaction of the Agent);  and
(h)  Liens  for  Taxes  which  are not yet due and  payable  or which  are being
diligently contested in good faith by Grantors by appropriate  proceedings,  and
which Liens are not

                                       14
<PAGE>

(x) filed on any public  records,  (y) other than with  respect to Real  Estate,
senior  to the Liens of the  Agent or (z) for  Taxes  due the  United  States of
America or any state thereof having similar  priority  statutes,  as further set
forth in paragraph 7.6 hereof.

Permitted  Indebtedness  shall mean: (a) current  Indebtedness  maturing in less
than one year and incurred in the ordinary course of business for raw materials,
supplies, services, Taxes or labor; (b) Indebtedness incurred in connection with
the  purchase of  Equipment  acquired  after the date hereof in an amount not to
exceed  $5,000,000 in the aggregate at any time outstanding  which is secured by
Purchase Money Liens; (c) Subordinated Debt; (d) Indebtedness  arising under the
Letters of Credit and this  Financing  Agreement  and  guaranties  thereof;  (e)
deferred Taxes and other expenses  incurred in the ordinary  course of business;
(f) other  Indebtedness  existing  on the date of  execution  of this  Financing
Agreement and listed in Schedule 1 hereto; (g) Indebtedness owed by a Grantor to
any other Grantor provided that the Agent and the Lenders have a first priority,
perfected Lien on and in such  Indebtedness  which secures the Obligations;  (h)
Indebtedness  consisting of obligations  under bid or performance  bonds entered
into in the  ordinary  course of  business;  (i)  unsecured  Indebtedness  under
insurance  premium  finance  agreements  not to  exceed  $1,500,000  at any time
outstanding; (j) Indebtedness owed by Holding to another Restricted Person which
is permitted under Section  7.9(g)(i);  (k)  Indebtedness of Restricted  Persons
under interest rate protection  agreements or currency hedging  agreements which
are  non-speculative  in nature and are entered  into with a Person  approved by
Agent to protect the Restricted  Persons against  fluctuations in interest rates
or currency  exchange  rates,  and any such interest rate  protection  agreement
relates to  Indebtedness  outstanding at the time that the  respective  interest
rate protection  agreements are entered into which is otherwise  permitted to be
incurred under this Financing Agreement; and (l) other unsecured Indebtedness in
an aggregate amount outstanding at any time that does not exceed $1,000,000.

Person shall mean an individual,  partnership,  corporation,  limited  liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.

Pricing Grid shall mean the pricing grid containing the Applicable  Margin to be
added to the LIBOR and Chase Bank Rate set forth in Schedule 2 hereto.

Promissory  Notes  shall  mean the  notes,  in the form of  Exhibits  A, B and C
attached hereto, delivered by the Company to the Agent to evidence the Revolving
Loans and the Term Loans  pursuant to, and  repayable in  accordance  with,  the
provisions of Sections 3 and 4 of this Financing Agreement.

Purchase  Money Liens shall mean Liens  securing  the  Indebtedness  of the type
described in clause (b) of the definition of Permitted Indebtedness on Equipment
acquired after the date of this Financing  Agreement provided that (a) each such
Lien shall attach only to the Equipment so acquired,  (b) a  description  of the
Equipment  so  acquired  is  furnished  to the Agent,  and (c) the  Indebtedness
incurred  in  connection  with  such  acquisitions  shall  not  exceed,  in  the
aggregate, $5,000,000 at any time.

                                       15
<PAGE>

Real  Estate  shall  mean the  Restricted  Persons'  fee  interests  in the real
property,  including  any  such  real  property  which  has  been,  or will  be,
encumbered, mortgaged, pledged or assigned to the Agent or its designee.

Real Estate Loan is defined in the definition of Term Loan.

Real Estate Note shall mean the promissory  note in the form of Exhibit B hereto
executed by the Company to evidence the Real Estate Loan made by the Agent under
Section 4 hereof.

Required Lenders shall mean Lenders which hold 66 2/3% or more of the sum of (i)
the aggregate unpaid principal balance of the Term Loans plus (ii) the Revolving
Commitments then in effect or, if the Revolving Commitments have been terminated
or suspended, the aggregate unpaid principal balance of the Revolving Loans.

Restricted Persons shall mean the Company and each Guarantor.

Revolving  Commitment  shall mean the  percentage  designated  as each  Lender's
"Revolving  Commitment"  on the signature  pages hereto or in an Assignment  and
Transfer Agreement.

Revolving  Line of Credit shall mean the aggregate  commitment of the Lenders to
make  Revolving  Loans and  advances  pursuant  to  Section 3 of this  Financing
Agreement and issue Letters of Credit Guaranties pursuant to Section 5 hereof to
the Company, in the aggregate amount of $32,500,000.

Revolving  Loan  Account  shall mean the  account on the Agent's  books,  in the
Company's name, in which the Company will be charged with all Obligations  under
this Financing Agreement.

Revolving Loans shall mean the loans and advances made, from time to time, to or
for the account of the Company by the Agent, on behalf of the Lenders,  pursuant
to Section 3 of this Financing Agreement.

Sales Report is defined in Section 6.4.

Seller   Subordinated   Notes  shall  mean  the  Company's  eight  percent  (8%)
subordinated notes due November 19, 2001.

Settlement  Date  shall  mean the  date,  weekly,  and more  frequently,  at the
discretion  of the  Agent,  upon the  occurrence  of an Event  of  Default  or a
continuing  decline or  increase of the  Revolving  Loans that the Agent and the
Lenders shall settle amongst themselves so that (a) the Agent shall not have, as
the Agent,  any money at risk and (b) on such  Settlement Date the Lenders shall
have a pro rata amount of all outstanding Revolving Loans and Letters of Credit,
provided that each Settlement Date for a Lender shall be a Business Day on which
such Lender and its bank are open for business.

Senior  Subordinated Notes shall mean the Company's 10-3/8% senior  subordinated
notes due August 1, 2007 issued under that certain  Indenture dated as of August
1, 1997 by and among the Company, Holding, and Norwest Bank, Minnesota, N.A., as
Trustee.

                                       16
<PAGE>

Subordinated Debt shall mean (i) the Senior  Subordinated Notes, (ii) the Seller
Subordinated  Notes, (iii) the Holding Junior  Subordinated  Notes, and (iv) any
other debt due a Subordinating  Creditor (and the note(s) evidencing such) which
has been subordinated,  by a Subordination  Agreement,  to the prior payment and
satisfaction  of the Obligations of the Company to the Agent and the Lenders (in
form and substance satisfactory to the Agent and/or the Required Lenders).

Subordinating  Creditor  shall mean (i) the  holders of the Senior  Subordinated
Notes, (ii) the holders of the Seller  Subordinated  Notes, (iii) the holders of
the  Holding  Junior  Subordinated  Notes,  and (iv) any other  party  hereafter
executing a Subordination Agreement.

Subordination  Agreement  shall  mean  the  agreement  (in  form  and  substance
satisfactory  to  the  Agent)  among  the  applicable   Restricted   Person,   a
Subordinating Creditor and the Agent, pursuant to which any Subordinated Debt of
the type described in clause (iv) of the definition  thereof is  subordinated to
the prior payment and  satisfaction of such Restricted  Person's  Obligations to
the Agent and the Lenders (in form and substance satisfactory to the Agent).

Surplus  Cash  shall  mean for any  Fiscal  Year (a) the sum of (i)  EBIT,  (ii)
depreciation,  (iii) other non-cash charges,  and (iv) the decrease,  if any, in
Working  Capital as of the last day of such Fiscal Year from that as of the last
day of the  previous  Fiscal  Year,  in  each  case  for  the  Company  and  its
subsidiaries  on a  consolidated  basis,  less  (b) the sum of (i) all  interest
obligations  paid in cash by the Company and its  subsidiaries on a consolidated
basis,  during such period, (ii) the amount of all principal paid to the Lenders
on the Term Loans during such period, (iii) Capital  Expenditures  actually paid
for by the Company and its subsidiaries,  on a consolidated  basis,  during such
period,  (iv) all federal,  state,  and local  income  Taxes paid by  Restricted
Persons during such period,  (v) the increase,  if any, in Working Capital as of
the last day of such  Fiscal  Year from that as of the last day of the  previous
Fiscal Year,  and (vi) any remaining  payments  under the  consulting  agreement
dated as of November  19, 1999 as in effect on the date hereof  entered  into in
connection  with the  acquisition  of Landry  Services  Co.,  Inc. not to exceed
$156,250.

Taxes shall mean all federal,  state,  municipal,  local, and other governmental
taxes,  levies,  charges,  claims  and  assessments  which  are or may be due by
Restricted  Persons  with respect to its  business,  operations,  Collateral  or
otherwise.

Term  Loans  shall mean the term loans in the  respective  principal  amounts of
$24,250,000  (herein the "Machinery and Equipment Loan") and $5,750,000  (herein
the "Real Estate Loan") made by the Agent on behalf of the Lenders  pursuant to,
and repayable in accordance  with, the provisions of Section 4 of this Financing
Agreement.

Total Assets shall mean total assets  determined in  accordance  with GAAP, on a
basis consistent with the latest audited  consolidated  financial  statements of
the Company.

Total  Liabilities  shall mean total  liabilities  determined in accordance with
GAAP,  on a basis  consistent  with the latest  audited  consolidated  financial
statements of the Company.

                                       17
<PAGE>

Trade  Accounts  Receivable  shall mean that portion of the  Grantors'  Accounts
which  arises from the sale of  Inventory  or the  rendition  of services in the
ordinary course of Grantors' business.

Trademarks shall mean all present and hereafter acquired  trademarks,  trademark
registrations,  recordings,  applications,  tradenames,  trade  styles,  service
marks,  prints and labels (on which any of the foregoing may appear),  licenses,
reissues,  renewals,  and any other  intellectual  property and trademark rights
pertaining  to any of the  foregoing,  together  with  the  goodwill  associated
therewith, and all cash and non-cash proceeds thereof.

UCC shall mean the  Uniform  Commercial  Code as the same may be amended  and in
effect from time to time in the State of New York.

Unencumbered  Machinery  and  Equipment  means  all  of  the  Equipment  of  the
Restricted Persons more specifically described and set forth on pages 11 through
227 of the appraisal  dated August 30, 2001 by Rosen  Systems,  Inc., a true and
complete copy of which has been delivered to Agent.

Working  Capital  shall mean,  as of the date of  determination,  the changes in
"Operating  Assets and  Liabilities" as set forth in the Company's most recently
delivered audited Consolidated Statement of Cash Flows.

Working Day shall mean any Business Day on which dealings in foreign  currencies
and exchanges between banks may be transacted.

SECTION 2. Conditions Precedent.  The obligation of the Agent and the Lenders to
make the initial Loans hereunder is subject to the satisfaction of, extension of
or waiver of (in writing) of the following conditions precedent:

     (a) Lien  Searches - The Agent shall have  received  tax,  judgment and UCC
searches  satisfactory to the Agent for all locations presently occupied or used
by Grantors.

     (b)  Casualty  Insurance  -  Grantors  shall  have  delivered  to the Agent
evidence  satisfactory to the Agent that casualty insurance policies listing the
Agent as additional insured, loss payee or mortgagee, as the case may be, are in
full force and effect,  all as set forth in  Paragraph  7.5 of Section 7 of this
Financing Agreement.

     (c) UCC Filings - Any financing statements required to be filed in order to
create,  in favor of the  Agent,  on behalf of the  Lenders,  a first  perfected
security interest in the Collateral, subject only to the Permitted Encumbrances,
shall have been properly filed in each office in each  jurisdiction  required in
order to create in favor of the Agent for the benefit of the Lenders a perfected
Lien on the Collateral.  The Agent shall have received  acknowledgment copies of
all such  filings  (or, in lieu  thereof,  the Agent shall have  received  other
evidence satisfactory to the Agent that all such filings have been made) and the
Agent shall have received  evidence that all necessary filing fees and all taxes
or other expenses related to such filings have been paid in full.

     (d)  Board  Resolution  - The  Agent  shall  have  received  a copy  of the
resolutions  of the Board of Directors of each of the Company and the Guarantors
(as the case may be) authorizing the

                                       18
<PAGE>

execution,  delivery and performance of (i) this Financing  Agreement,  (ii) the
Guaranties,  and (iii) any related  agreements,  in each case  certified  by the
Secretary or Assistant  Secretary of the Company and the Guarantors (as the case
may be) as of the date hereof,  together with a certificate  of the Secretary or
Assistant Secretary of the Company and the Guarantors (as the case may be) as to
the  incumbency  and  signature  of the  officers  of  the  Company  and/or  the
Guarantors  executing such Loan Documents and any certificate or other documents
to be  delivered  by  them  pursuant  hereto,  together  with  evidence  of  the
incumbency of such Secretary or Assistant Secretary.

     (e)  Corporate  Organization  - The Agent shall have received (i) a copy of
the Certificate of Incorporation of the Company and the Guarantors  certified by
the Secretary of State of the state of its incorporation, and (ii) a copy of the
By-Laws  of the  Company  certified  by the  Secretary  or  Assistant  Secretary
thereof, all as amended through the date hereof.

     (f)  Officer's  Certificate  - The Agent  shall have  received  an executed
Officer's Certificate of the Company,  satisfactory in form and substance to the
Agent,  certifying that (i) the representations and warranties  contained herein
are true and correct in all  material  respects  on and as of the Closing  Date;
(ii)  each  Restricted  Person  is in  compliance  with  all  of the  terms  and
provisions  set forth  herein;  and (iii) no  Default  or Event of  Default  has
occurred

     (g)  Opinions  - Counsel  for the  Company  and the  Guarantors  shall have
delivered  to the Agent on behalf of the Lenders  opinions  satisfactory  to the
Agent  opining,  inter  alia,  that,  subject to the (i)  filing,  priority  and
remedies  provisions of the Uniform  Commercial Code, (ii) the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, (iii) the equity powers
of a court of law and (iv) such  other  matters  as may be agreed  upon with the
Agent:  this Financing  Agreement,  the Guaranty and all other Loan Documents of
the Company and the Guarantors are (A) valid, binding and enforceable  according
to their terms,  (B) are duly  authorized,  executed and  delivered,  (C) do not
violate any terms,  provisions,  representations  or covenants in the charter or
by-laws  of the  Company or the  Guarantors  or, to the best  knowledge  of such
counsel,  of any loan  agreement,  mortgage,  deed of trust,  note,  security or
pledge  agreement,  indenture or other material contract to which the Company or
the  Guarantors  are  signatories  or by which the Company or the  Guarantors or
their  assets  are  bound,  (D) are  "Senior  Debt" for  purposes  of the Senior
Subordinated  Notes and the Seller  Subordinated  Notes and "Superior  Debt" for
purposes of the Holding Junior Subordinated Notes, and (E) such other matters as
may be required by counsel to Agent.

     (h) Absence of Default - No Default or Event of Default shall have occurred
and no material  adverse change shall have occurred in the financial  condition,
business,  prospects,  profits, operations or assets of any Restricted Person or
its subsidiaries.

     (i) Legal  Restraints/Litigation  - As of the Closing Date,  there shall be
no: (x) litigation,  investigation  or proceeding  (judicial or  administrative)
pending or  threatened  against  any  Restricted  Person or its  assets,  by any
agency,  division or department of any county, city, state or federal government
arising out of this Financing  Agreement;  (y)  injunction,  writ or restraining
order restraining or prohibiting the financing  arrangements  contemplated under
this  Financing  Agreement;  or (z) suit,  action,  investigation  or proceeding
(judicial or administrative) pending against any

                                       19
<PAGE>

Restricted Person or its assets,  which, if adversely  determined,  could have a
material adverse effect on the business,  operation, assets, financial condition
or Collateral of any Restricted Person.

     (j)  Guaranties - The  Guarantors  shall have executed and delivered to the
Agent guaranties,  in form acceptable to the Agent, guaranteeing all present and
future Obligations of the Company.

     (k) Cash Budget  Projections - The Agent shall have received,  reviewed and
been satisfied with a twelve (12) month cash budget  projection  prepared by the
Company in a form acceptable to the Agent.

     (l) Pledge  Agreement - Each of Holding  and the Company  shall (i) execute
and  deliver  to the Agent,  on behalf of the  Lenders,  a pledge  and  security
agreement  pledging  to the  Agent,  on behalf  of the  Lenders,  as  additional
collateral  for  the  Obligations  not  less  than  100%  of  the  stock  of all
subsidiaries  of such Person and,  (ii)  deliver to the Agent,  on behalf of the
Lenders,  the  stock  certificates  evidencing  such  stock  together  with duly
executed stock powers (undated and in-blank) with respect  thereto,  all in form
and substance satisfactory to Agent.

     (m)  Additional  Documents -  Restricted  Persons  shall have  executed and
delivered to the Agent all Loan  Documents  necessary to consummate  the lending
arrangement contemplated between the Company, the Agent and the Lenders.

     (n)  Disbursement  Authorization  - The Company shall have delivered to the
Agent all  information  necessary  for the Agent and the  Lenders  to issue wire
transfer  instructions  on behalf of the Company for the initial and  subsequent
Loans and/or advances to be made under this Financing Agreement  including,  but
not limited to, disbursement authorizations in form acceptable to the Agent.

     (o)  Examination &  Verification  - The Agent and each of the Lenders shall
have  completed,   to  their   respective   satisfaction,   an  examination  and
verification of the Accounts, Inventory, financial statements, books and records
of the Restricted  Persons which  examination  shall indicate that, after giving
effect to all Revolving  Loans,  advances and extensions of credit to be made at
closing, the Company shall have an opening Availability of at least $10,000,000,
as evidenced  by a Borrowing  Base  certificate  delivered by the Company to the
Agent,  acceptable  to the Agent in Agent's sole  discretion,  prepared on a pro
forma basis after giving effect to all Loans, advances, and extensions of credit
to be made on the Closing Date and based on the financial  information set forth
in the most recent month end Consolidated Balance Sheet available on the Closing
Date. It is understood  that such  requirement  contemplates  that all debts and
obligations  are current,  and that all payables are being handled in the normal
course of the Company's business and consistent with its past practice.

     (p) Existing  Revolving  Credit  Agreement  and other Loan  Agreement - The
Company's  existing credit  agreements with Bank of America,  N.A. and Bank One,
N.A. (collectively,  the "Existing Lenders") shall be: (i) terminated;  (ii) all
loans and obligations of the Company and/or the Guarantors  thereunder  shall be
paid or satisfied in full, including through

                                       20
<PAGE>

utilization of the proceeds of the initial  Revolving Loans and Term Loans to be
made under this Financing  Agreement;  and (iii) all Liens or security interests
in favor of the Existing  Lenders on the  Collateral and otherwise in connection
therewith  shall be either  assigned  to Agent for the benefit of the Lenders or
terminated and/or released upon such payment.

     (q)  Mortgages/Deeds  of  Trust  - The  Company  shall  have  executed  and
delivered to the Agent,  an agent of the Agent or to a title  insurance  company
acceptable to the Agent,  such  mortgages  and/or deeds of trust as the Agent on
behalf of the Lenders may  reasonably  require to obtain first Liens on the Real
Estate.

     (r) Title Insurance Policies - The Agent shall have received, in respect of
the mortgage or deed of trust to be delivered on the Closing Date, a mortgagee's
title policy or marked-up  unconditional  binder for such insurance with respect
to the Company's  property  located at 900 Georgia  Avenue in Deer Park,  Texas.
Such policy  shall (i) be in an amount  satisfactory  to the Agent;  (ii) insure
that the mortgage or deed of trust insured thereby creates a valid first Lien on
the Company's property located at 900 Georgia Avenue in Deer Park, Texas covered
by  such  mortgage  or  deed  of  trust,  free  and  clear  of all  defects  and
encumbrances  except  those  acceptable  to the  Agent;  (iii) name the Agent on
behalf  of  the  Lenders  as the  insured  thereunder;  and  (iv)  contain  such
endorsements  and  effective  coverage  as the  Agent  may  reasonably  request,
including,  without limitation,  the revolving line of credit  endorsement.  The
Agent shall also have  received  evidence  that all  premiums in respect of such
policy have been paid and that all charges for mortgage recording taxes, if any,
shall have been paid.

     (s) Surveys - The Agent and the title insurance  company issuing the policy
referred to in the immediately  preceding  paragraph  (each, a "Title  Insurance
Company")  shall have  received  maps or plats of a perimeter or boundary of the
Company's  property located at 900 Georgia Avenue in Deer Park, Texas covered by
the mortgage or deed of trust,  dated a date  satisfactory  to the Agent and the
relevant  Title  Insurance  Company  prepared  by  an  independent  professional
licensed  land  surveyor  satisfactory  to the  Agent  and  the  relevant  Title
Insurance  Company,  which maps or plats and the surveys on which they are based
shall be made in accordance with the Minimum  Standard Detail  Requirements  for
Land Title Surveys  jointly  established  and adopted by the American Land Title
Association  and the American  Congress on Surveying and Mapping;  and,  without
limiting the generality of the  foregoing,  there shall be surveyed and shown on
the maps or plats or surveys the  following:  (i) the  locations on such site of
all the  buildings,  structures  and  other  improvements  and  the  established
building setback lines insofar as the foregoing affect the perimeter or boundary
of such property; (ii) the lines of streets abutting the site and width thereof;
(iii) all access and other  easements  appurtenant  to the site or  necessary or
desirable  to use the site;  (iv) all  roadways,  paths,  driveways,  easements,
encroachments and overhanging projections and similar encumbrances affecting the
site,  whether  recorded,  apparent  from a physical  inspection  of the site or
otherwise known to the surveyor; (v) any encroachments on any adjoining property
by the building,  structures and  improvements on the site; and (vi) if the site
is designated as being on a filed map, a legend relating the survey to said map.
Further,  the survey shall (x) be certified to the Agent and the Title Insurance
Company  and (y)  contain a legend  reciting  as to  whether  or not the site is
located in a flood zone.

                                       21
<PAGE>

     (t) Appraisals - The Agent shall have received appraisals,  satisfactory to
the Agent in its sole discretion,  on the  Unencumbered  Machinery and Equipment
and the Real Estate owned by the Company  located at 900 Georgia  Avenue in Deer
Park, Texas (the "Closing Appraisals").

     (u)  Environmental  Report - The Agent  shall have  received  environmental
audit reports on (i) all of the Company's property located at 900 Georgia Avenue
in Deer Park,  Texas,  and (ii) the  Company's  waste  disposal  practices.  The
reports must (x) be  satisfactory  to the Agent and (y) not disclose or indicate
any material liability (real or potential) stemming from the Company's premises,
its  operations,  its waste  disposal  practices or waste disposal sites used by
Company.

     (v) Schedules - In addition to the other  information  requested under this
Agreement to be disclosed in Schedule 1 hereto, Restricted Persons shall provide
the Agent with the following additional  information to be set forth in Schedule
1 hereto: (a) any of Restricted Person's (i) Trademarks, (ii) Patents, and (iii)
Copyrights,  as  applicable  and all in such  detail as to  provide  appropriate
recording information with respect thereto, (b) any tradenames,  and (c) monthly
rental  payments  for any  leased  premises  or any  other  premises  where  any
Collateral  may be  stored  or  processed,  all of the  foregoing  in  form  and
substance satisfactory to the Agent.

     (w) The Agent Commitment Letter - The Company shall have fully complied, to
the reasonable  satisfaction of the Agent,  with all of the terms and conditions
of the Agent Commitment Letter.

     (x)  Bank of  America  Landlord  Waivers  - A copy of each of the  Landlord
Waivers and Consents  which have been executed and delivered to Bank of America,
N.A. and assigned to the Agent on behalf of itself and each other Lender.

Upon the execution of this Financing  Agreement and the initial  disbursement of
Loans hereunder,  all of the above  Conditions  Precedent shall have been deemed
satisfied  except as otherwise set forth  hereinabove  or as the Company and the
Agent shall otherwise agree in writing.

     2.2 Conditions to Each Extension of Credit

     Subject  to the  terms  of  this  Financing  Agreement,  including  without
limitation the Agent's  rights  pursuant to paragraph 10.2 of Section 10 hereof,
the  agreement  of the Agent on behalf of the Lenders to make any  extension  of
credit requested to be made by it to the Company on any date (including  without
limitation,  the initial  extension of credit) is subject to the satisfaction of
the following conditions precedent:

     (a)  Representations  and  Warranties  - Each  of the  representations  and
warranties made by Restricted Persons in or pursuant to this Financing Agreement
shall be true and correct in all material  respects on and as of such date as if
made on and as of such date.

     (b) No Default - No Default or Event of Default  shall have occurred and be
continuing  on such  date or after  giving  effect  to the  extension  of credit
requested to be made on such date.

                                       22
<PAGE>

     (c) Borrowing Base - Except as may be otherwise agreed to from time to time
by the Agent and the Company in writing, after giving effect to the extension of
credit  requested  to be  made  by the  Company  on  such  date,  the  aggregate
outstanding  balance of the Revolving  Loans and  outstanding  Letters of Credit
owing by the  Company  will not exceed the lesser of (i) the  Revolving  Line of
Credit or (ii) the Borrowing Base as set forth in the most recent Borrowing Base
certificate  delivered or which should have been delivered to the Agent pursuant
to Section 7.8(c).

Each borrowing by the Company  hereunder shall constitute a  representation  and
warranty by the Company as of the date of such Loan or advance  that each of the
representations,  warranties and covenants  contained in the Financing Agreement
have been  satisfied  and are true and  correct,  except as the  Company and the
Agent and/or the Required  Lenders shall otherwise agree herein or in a separate
writing.

SECTION 3.     Revolving Loans

     3.1 (a) The Agent and the Lenders severally agree, subject to the terms and
conditions of this  Financing  Agreement,  from time to time (but subject to the
Agent's  and the  Lenders'  right to make  "Overadvances"),  to make  loans  and
advances to the Company on a revolving  basis (i.e.  subject to the  limitations
set forth herein, the Company may borrow,  repay and re-borrow  Revolving Loans)
in  accordance  with each  Lender's  Revolving  Commitment.  Such  requests  for
Revolving Loans and advances shall be in amounts not to exceed the lesser of (a)
the Availability or (b) the Revolving Line of Credit. All requests for Revolving
Loans and advances must be received by an officer of the Agent no later than (i)
1:00 p.m.,  New York time, of the Business Day on which any such Chase Bank Rate
Loans and  advances  are  required  or (ii)  three  Business  Days  prior to any
requested  LIBOR  Loan.  Should  the Agent for any  reason  honor  requests  for
Overadvances, any such Overadvances shall be made in the Agent's sole discretion
and subject to any additional  terms the Agent and/or the Required  Lenders deem
necessary.

     (b) (i) Whenever the Company  requests the Agent, on behalf of the Lenders,
to make a Revolving  Loan  pursuant  to this  Section 3, it shall give the Agent
notice in  writing  or  irrevocable  telephonic  notice  confirmed  promptly  in
writing,  specifying  (A) the  amount  to be  borrowed,  and  (B) the  requested
borrowing  date  (which  shall be a  business  day and  shall be prior  to:  the
applicable  Anniversary Date, and if applicable,  any Early Termination Date, or
prior to any effective  termination  date of this  Financing  Agreement,  all as
further set forth herein),  and (C) specify whether the requested Revolving Loan
shall  bear  interest  at the Chase  Bank Rate or at an  interest  rate based on
LIBOR,  as further  set forth  herein.  All  requests  for  Revolving  Loans and
advances must be received by an officer of the Agent no later than 1:00 P.M. New
York time on any borrowing date. The procedure for Revolving Loans to be made on
a  requested  borrowing  date  may  be  such  other  procedure  as  is  mutually
satisfactory  to the  Company,  the Agent  and/or  the  Lenders.  Subject to the
provisions of Section 3.4, the Agent shall make Revolving  Loans and advances to
an account designated by the Company and acceptable to the Agent.

     (ii) Subject to paragraph 14.10 hereof,  should the Agent, on behalf of the
Lenders, for any reason honor requests for Overadvances,  such Overadvance shall
be made in the Agent's  sole  discretion,  subject to any  additional  terms the
Agent and/or the Required Lenders deem necessary.

                                       23
<PAGE>

Requests for  Revolving  Loans and advances  shall be made solely by the Company
and shall be directed solely to the Agent.

     (c) The Agent shall on any  Settlement  Date,  and upon notice given by the
Agent no later than 2:00 P.M. New York time,  request  each Lender to make,  and
each Lender hereby  agrees to make, a Revolving  Loan in an amount equal to such
Lender's Revolving Credit Commitment percentage  (calculated with respect to the
aggregate Revolving Credit Commitments then outstanding) of the aggregate amount
of the Revolving  Loans made by the Agent from the preceding  Settlement Date to
the date of such notice.  Each Lender's  obligation to make the Revolving  Loans
referred  to in  subsection  (a) and to make the  settlements  pursuant  to this
subsection (c) shall be absolute and  unconditional and shall not be affected by
any circumstance,  including without  limitation (i) any set-off,  counterclaim,
recoupment, defense or other right which any such Lender or the Company may have
against the Agent, the Company,  any other Restricted  Person, any Lender or any
other Person for any reason whatsoever;  (ii) the occurrence or continuance of a
Default  or an Event of  Default;  (iii) any  adverse  change  in the  condition
(financial  or  otherwise)  of any  Restricted  Person;  (iv) any breach of this
Financing  Agreement or any other loan document by any Restricted  Person or any
other  Lender;  or (v) any other  circumstance,  happening or event  whatsoever,
whether or not similar to any of the foregoing.  Without  limiting the liability
and obligation of each Lender to make such advances,  the Company authorizes the
Agent to charge  the  Company's  Revolving  Loan  Account  with the Agent to the
extent amounts received from the Lenders are not sufficient to repay in full the
amount of any such deficiency.

     (d) The Company's  Revolving Loan Obligations  hereunder shall be evidenced
by the Promissory Note in the form of Exhibit C attached hereto.

     3.2 In furtherance of the  continuing  assignment and security  interest in
Grantors'  Accounts  and  Inventory,  each  Grantor  will,  with  respect to the
creation of Accounts  and  purchase or  acquisition  of  Inventory,  execute and
deliver  to the  Agent in such  form and  manner  as the  Agent  may  reasonably
require,   solely  for  the  Agent's   convenience  in  maintaining  records  of
Collateral,  such confirmatory  schedules of Accounts and Inventory as the Agent
may reasonably  request,  including,  without  limitation,  weekly  schedules of
Accounts  and  monthly  schedules  of  Inventory,  all  in  form  and  substance
satisfactory  to the Agent,  and such  other  appropriate  reports  designating,
identifying  and  describing  the  Accounts  and  Inventory  as  the  Agent  may
reasonably  request,  and  provided  further that the Agent may request any such
information  more  frequently,  from  time to time,  upon its  reasonable  prior
request.   In   addition,   upon  the   Agent's   request  and  subject  to  any
confidentiality  provisions or other  restrictions on disclosure under licensing
or other  agreements  and  applicable  law, each Grantor shall provide the Agent
with  copies of  agreements  with,  or  purchase  orders  from,  each  Grantor's
customers,  and copies of invoices to customers,  proof of shipment or delivery,
access to its computers,  computer data,  electronic media and software programs
associated   therewith   (including  any  electronic   records,   contracts  and
signatures)  and such  other  documentation  and  information  relating  to said
Accounts and other  Collateral as the Agent may reasonably  require.  Failure to
provide the Agent with any of the  foregoing  shall in no way affect,  diminish,
modify or otherwise limit the security  interests  granted herein.  Each Grantor
hereby  authorizes  the Agent to regard such  Grantor's  printed  name or rubber
stamp  signature  on  assignment  schedules or invoices as the  equivalent  of a
manual signature by one of such Grantor's authorized officers or agents.

                                       24
<PAGE>

     3.3 Each Grantor hereby  represents  and warrants that:  each Trade Account
Receivable is based on an actual and bona fide sale and delivery of Inventory or
rendition  of services to its  customers,  made by such  Grantor in the ordinary
course of its business; the Trade Accounts Receivable created, are the exclusive
property  of such  Grantor  and are not and  shall not be  subject  to any Lien,
consignment arrangement,  encumbrance,  security interest or financing statement
whatsoever, other than the Permitted Encumbrances;  the invoices evidencing such
Trade Accounts Receivable are in the name of such Grantor;  and the customers of
such Grantor have accepted the  Inventory or services,  owe and are obligated to
pay the full amounts  stated in the invoices  according to their terms,  without
material dispute,  offset, defense,  counterclaim or contra, except for disputes
and other  matters  arising in the ordinary  course of business  with respect to
which such Grantor has complied with the notification  requirements of Paragraph
3.5 of this Section 3. Each Grantor confirms to the Agent that any and all Taxes
or fees relating to its business,  its sales, the Accounts or Inventory relating
thereto,  are its sole responsibility and that same will be paid by such Grantor
when due, subject to Paragraph 7.6 of Section 7 of this Financing Agreement, and
that  none of said  Taxes  or fees  represent  a Lien on or  claim  against  the
Accounts.  Each Grantor hereby further represents and warrants that it shall not
acquire any Inventory on a consignment  basis,  nor co-mingle its Inventory with
any of its  customers or any other  Person,  including  pursuant to any bill and
hold sale or otherwise, and that its Inventory is marketable to its customers in
the  ordinary  course of business of such  Grantor,  except as it may  otherwise
report in writing to the Agent  pursuant  to  Paragraph  3.5 hereof from time to
time.  Each Grantor also warrants and  represents  that it is a duly and validly
existing  corporation  and is  qualified  in all states  where the failure to so
qualify  would have an adverse  effect on the  business  of such  Grantor or the
ability of such Grantor to enforce  collection  of Accounts  due from  customers
residing in that state.  Each Grantor  agrees to maintain such books and records
regarding  Accounts and Inventory as the Agent may reasonably require and agrees
that the books and records of such Grantor will reflect the Agent's  interest in
the Accounts and Inventory. All of the books and records of each Grantor will be
available to the Agent at normal business  hours,  including any records handled
or maintained for such Grantor by any other company or entity.

     3.4 (a) Until the Agent has advised the Company to the  contrary  after the
occurrence of an Event of Default,  each Grantor, at its expense,  will enforce,
collect and receive all amounts owing on the Accounts in the ordinary  course of
its  business  and any  proceeds  it so  receives  shall be subject to the terms
hereof,  and held on  behalf  of and in trust  for the  Agent on  behalf  of the
Lenders.  Such privilege shall terminate at the election of the Agent,  upon the
occurrence  of an Event of  Default,  until  such  Event of Default is waived in
writing by the Required Lenders or cured to the Required Lenders'  satisfaction.
Any checks, cash, credit card sales and receipts,  notes or other instruments or
property  received  by any Grantor  with  respect to any  Collateral,  including
Accounts, shall be held by such Grantor in trust for the Agent, on behalf of the
Lenders,  separate  from such  Grantor's  own property  and funds,  and promptly
turned over to the Agent with proper  assignments or  endorsements by deposit to
the Lockbox  Accounts.  Each Grantor shall:  (i) indicate on all of its invoices
that funds  should be  delivered to and  deposited  in a Lockbox  Account;  (ii)
direct all of its  account  debtors  and other  Persons  to deposit  any and all
proceeds of Collateral into a Lockbox Account;  (iii) irrevocably  authorize and
direct any banks which maintain such Grantor's  initial receipt of cash,  checks
and other items to  promptly  wire  transfer  all  available  funds to a Lockbox
Account; and (iv) advise all

                                       25
<PAGE>

such banks of the Agent's  security  interest in such funds.  Each Grantor shall
provide  the Agent with prior  written  notice of any and all  deposit  accounts
opened or to be opened subsequent to the Closing Date.

     (b) Restricted  Persons shall  establish and maintain at their expense with
banks acceptable to the Agent deposit accounts (the "Lockbox Accounts"),  styled
with names  acceptable  to the Agent to indicate  the  interests  therein of the
Agent and the Lenders,  and subject to such changes of depositories as the Agent
may, in its sole discretion, approve in advance. Restricted Persons shall ensure
that all collections  and/or payments in respect of Accounts or other Collateral
and all other  proceeds  whatsoever of or from any  Collateral are paid directly
from the relevant account debtors,  purchasers, or other Persons, as applicable,
into the Lockbox  Accounts or otherwise,  immediately  deposited  into a Lockbox
Account, in each case in accordance with procedures and arrangements  acceptable
to the Agent and subject  only to such  changes as may be approved in advance by
the Agent. Restricted Persons shall also ensure that all collections,  payments,
proceeds  and/or  funds  deposited  and/or  paid into the Lockbox  Accounts  are
transferred  directly  or  indirectly  (in  accordance  with the  aforementioned
procedures and  arrangements),  on each Business Day, in  immediately  available
funds,  into a deposit  account  maintained  by the Agent at a  commercial  bank
selected by the Agent in its sole discretion and  communicated to the Restricted
Persons (the "Concentration Account").  Restricted Persons acknowledge that they
waive and shall have no right to object to or seek to delay any such transfer or
to cause any  other  application  of any such  collections,  payments,  proceeds
and/or funds.

     (c) Prior to the initial funding hereunder,  Restricted Persons shall cause
the banks at which the Lockbox  Accounts  are  maintained  to enter into Lockbox
Agreements  providing for these daily  transfers,  acknowledging  that the items
paid into,  received or deposited in the Lockbox  Accounts  maintained with them
are  subject  to the Lien of the  Agent,  for the  benefit  of the Agent and the
Lenders,  that such bank has no Lien upon or right of setoff against any Lockbox
Account  maintained  with it or any of the items received for deposit therein or
the funds deposited from time to time therein, and that, upon the request of the
Agent,  such bank will wire or  otherwise  transfer,  in  immediately  available
funds, on each Business Day, all  collections,  payments,  proceeds and/or funds
paid into,  received or deposited in all Lockbox Accounts  maintained with it to
the Concentration Account.

     (d)  Restricted  Persons  acknowledge  that  the  Agent at all  times  will
maintain the  Concentration  Account in its own name and that the  Concentration
Account  and the  Lockbox  Accounts  will be  subject to the sole  dominion  and
control of the Agent pursuant to this Agreement and the Lockbox Agreements,  and
Restricted  Persons,  agree that  Restricted  Persons  shall at no time have any
right to make any  withdrawal  from or give any  instructions  to the depositary
with respect to the Lockbox Accounts or the Concentration Account.

     (e) Except as  provided  in Section  6.4,  at all times when no amounts are
outstanding  under the  Revolving  Line of  Credit  and no  Default  or Event of
Default is continuing, the Agent shall automatically cause the funds transferred
to the Concentration Account pursuant to this Section and

                                       26
<PAGE>

the Lockbox  Agreements to be released as promptly as  practicable to Restricted
Persons,  to such account as may be designated by notice from the Company to the
Agent.  At all times when any Revolving  Loans are  outstanding  hereunder,  the
Agent  shall  apply,  on  a  daily  basis,   all  funds   transferred  into  the
Concentration  Account  pursuant to this  section  and the  Lockbox  Agreements,
first, to reduce the outstanding  principal  amount of all Revolving Loans until
all outstanding  Revolving Loans have been paid in full, and second,  to satisfy
the  Restricted  Persons'  other  Obligations  then due and  payable  under this
Agreement and, third,  provided no Default or Event of Default then exists,  any
remaining  amounts  will be  delivered  to the  Company by wire  transfer  to an
account  designated  by the  Company.  Notwithstanding  anything to the contrary
contained  herein,  when a Default or Event of Default exists and is continuing,
for so long as any of the Obligations then due and payable are outstanding,  any
remaining  funds  shall  continue  to be held by the Agent as  security  for the
Obligations  pursuant to the terms hereof and the other Loan  Documents.  To the
extent that any  collections  and/or  payments with respect to Accounts or other
Collateral or any other  proceeds  whatsoever of or from any  Collateral are not
sent  directly  to the  appropriate  Lockbox  Account  but are  received  by any
Restricted Person,  such collections,  payments and/or proceeds shall be held in
trust for the benefit of the Agent and the Lenders and  immediately  remitted by
the Restricted Person who received the relevant funds, in the form received,  to
the appropriate Lockbox Account for transfer to the Concentration  Account. Each
Restricted Person  acknowledges and agrees that its compliance with the terms of
this section is essential.

     (f) All amounts  received by the Agent in payment of Accounts,  proceeds of
Collateral or otherwise under this Section 3.4 will be credited to the Revolving
Loan Account when the Agent is advised by its bank of its receipt of  "collected
funds" at the Agent's bank account in New York,  New York on the Business Day of
such  advise if advised not later than 1:00 p.m.  EST or on the next  succeeding
Business Day if so advised after 1:00 p.m.  EST.  However,  the  Revolving  Loan
Account will be charged monthly with the cost of one (1) additional Business Day
on all such  payments,  collections,  and proceeds at the interest rate plus the
Applicable  Margin applicable to Revolving Loans that are Chase Bank Rate Loans.
No checks,  drafts, or other instrument received by Agent shall constitute final
payment to the Agent and/or the Lenders unless and until such  instruments  have
actually  been  collected.  Except  as  otherwise  expressly  provided  in  this
Agreement,  the  Agent  shall,  for  value at the time  specified  above in this
provision,  apply the funds credited to the Concentration Account, first, to any
expenses,  indemnification's  or fees owing  pursuant to this  Agreement  or any
other Loan Document,  second,  to interest on the Loans being repaid and, third,
to reduce the outstanding balance of the Loans being repaid.

Notwithstanding  anything to the contrary  contained  herein,  the provisions of
Sections 3.3 and 3.4 shall not apply to Trade Accounts Receivable or other funds
payable to Grantors generated by Grantors'  operations in the ordinary course of
business in Singapore.

     3.5  Grantors  agree to notify the  Agent:  (a) of any  matters  materially
affecting the value,  enforceability or collectibility of any Account and of all
material  customer  disputes,   offsets,   defenses,   counterclaims,   returns,
rejections  and all reclaimed or  repossessed  merchandise or goods with respect
thereto,  in its weekly collateral  reports provided to the Agent hereunder,  in
such detail and format as the Agent may reasonably require from time to time and
(b)  promptly  of any such  matters  which  are  material,  as a  whole,  to the
Accounts. Grantors agree to issue credit memoranda

                                       27
<PAGE>

promptly  (with  duplicates to the Agent upon request after the occurrence of an
Event of  Default)  upon  accepting  returns or  granting  allowances.  Upon the
occurrence  of an Event of  Default  (which  is not  waived  in  writing  by the
Required  Lenders)  and on  notice  from  the  Agent,  Grantors  agree  that all
returned,  reclaimed or  repossessed  merchandise or goods shall be set aside by
Grantors,  marked with the Agent's name (as secured  party) and held by Grantors
for the Agent's account.

     3.6 The Agent shall maintain a Revolving Loan Account on its books in which
the Company will be charged with all Loans and advances  made by the Agent to it
or for its account, and with any other Obligations, including any and all costs,
expenses and reasonable  attorney's fees which the Agent may incur in connection
with the  exercise  by or for the Agent of any of the  rights  or powers  herein
conferred  upon the  Agent,  or in the  prosecution  or defense of any action or
proceeding to enforce or protect any rights of the Agent in connection with this
Financing  Agreement,  the  other  Loan  Documents  or the  Collateral  assigned
hereunder,  or any Obligations owing by Restricted Persons.  The Company will be
credited  with all  amounts  received by the Agent  and/or the Lenders  from the
Company or from others for the Company's account, including, as above set forth,
all amounts received by the Agent in payment of Accounts,  and such amounts will
be applied to payment of the Obligations as set forth herein.  In no event shall
prior  recourse to any Accounts or other  security  granted to or by  Restricted
Persons  be a  prerequisite  to the  Agent's  right  to  demand  payment  of any
Obligation.  Further,  it is understood  that the Agent and/or the Lenders shall
have no obligation  whatsoever to perform in any respect any Restricted Person's
contracts or obligations relating to the Accounts.

     3.7 After the end of each month,  the Agent shall promptly send the Company
a statement  showing the accounting for the charges,  Loans,  advances and other
transactions  occurring between the Agent and the Company during that month. The
monthly  statements  shall be deemed  correct and  binding  upon the Company and
shall  constitute an account stated between the Company and the Agent unless the
Agent receives a written  statement of the exceptions within thirty (30) days of
the date of the monthly statement.

     3.8 In the event that any requested  advance  exceeds  Availability or that
(a)  the  sum of (i)  the  outstanding  balance  of  Revolving  Loans  and  (ii)
outstanding  balance of Letters of Credit  exceeds  (b)(x) the Borrowing Base or
(y) the Revolving Line of Credit,  any such  nonconsensual  Overadvance shall be
due and  payable  to the  Agent on behalf of the  Lenders  immediately  upon the
Agent's demand therefor.

     3.9 (a) In order to utilize the collective  borrowing  powers of Restricted
Persons in the most efficient and economical  manner, and in order to facilitate
the handling of the accounts of Restricted Persons on Agent's books,  Restricted
Persons  have  requested,  and the  Agent  has  agreed  to  handle  accounts  of
Restricted  Persons on the Agent's books on a combined basis,  all in accordance
with the following  provisions:  (i) In lieu of maintaining separate accounts on
the Agent's books in the name of each of the Restricted Persons, the Agent shall
maintain  (A)  one  account  under  the  name  of the  Company  (the  "Revolving
Obligations Account"),  (B) one other account under the name of the Company (the
"Real Estate Obligations Account"),  and (C) one other account under the name of
the  Company  (the  "M&E  Obligations  Account"),  together  with the  Revolving
Obligations  Account and the Real Estate  Obligations  Account,  the "Obligation
Accounts"). Credit extensions made by the

                                       28
<PAGE>

Lenders to any of the  Restricted  Persons  will be  charged  to the  applicable
Obligation Account, along with any and all fees, charges, expenses,  indemnities
or any other  monies  due under any Loan  Document.  The  applicable  Obligation
Account will be credited with all amounts  received by the Agent from any of the
Restricted  Persons or from  others for their  account,  including  all  amounts
received by the Agent in payment of the applicable Obligations.  (ii) Each month
the Agent will render to the Restricted  Persons one extract of each  Obligation
Account,  which  shall  be  deemed  to be an  account  stated  as to each of the
Restricted  Persons and which will be deemed  correct and accepted by all of the
Restricted  Persons unless the Agent receives a written  statement of exceptions
from them within 30 days after such extract has been rendered by the Agent. Each
of the Restricted  Persons agrees that the Agent, and the Lenders as applicable,
shall have no obligation to account separately to any of the Restricted Persons.
(iii)  Requests for Loans may be made by the Company as agent for the Restricted
Persons and the Agent is hereby  authorized  and  directed to accept,  honor and
rely on such instructions and requests, subject to the limitation and provisions
set forth in this  Agreement.  Each of the  Restricted  Persons  agrees that the
Agent  shall have no  responsibility  to  inquire  into the  correctness  of the
apportionment,  allocation or disposition of (A) any credit  extensions  made to
any of the Restricted Persons or (B) any of the Agent's or Lender's expenses and
charges  relating  thereto.  All credit  extensions  are made for the applicable
Obligation  Account.  (iv) It is understood that the handling of the accounts of
the Restricted  Persons in a combined fashion is done solely as an accommodation
to the Restricted  Persons and at their request,  and that the Agent shall incur
no liability to the  Restricted  Persons as a result  hereof.  (v) The foregoing
request was made  because the  Restricted  Persons are engaged in an  integrated
operation  that requires  financing on a basis  permitting the  availability  of
credit from time to time to each of the  Restricted  Persons as required for the
continued  successful  operation of each of the Restricted Persons.  Each of the
Restricted Persons expects to derive benefit, directly or indirectly,  from such
availability since the successful operation of each of the Restricted Persons is
dependent  on the  continued  successful  performance  of the  functions  of the
integrated group.

     (b) Each of the Restricted  Persons  hereby  authorizes the Agent to charge
the  applicable  Obligation  Account  with the amount of any and all fees and/or
expenses due hereunder as such  Restricted  Person's fees and/or expenses become
due. Each of the  Restricted  Persons  confirms that any charges which the Agent
may so make to such Obligation  Account will be made as an  accommodation to the
Restricted Persons and solely at the Agent's discretion.

     (c) Without  limiting  any other  rights or remedies of the Agent or any of
the Lenders under any Loan Document,  all Loans  hereunder and Letters of Credit
otherwise  available to the Company  shall be subject to the Agent's  continuing
right, in its sole discretion, to establish an Availability Reserve.

     (d) Each  Restricted  Person  hereby  authorizes  the Agent to  charge  the
Obligation  Accounts  with the  amount of any and all  payments  due under  this
Agreement as such payments  become due. Each  Restricted  Person hereby confirms
that any  charges  which  the Agent may so make to the  Obligation  Accounts  as
herein  provided  may be made by the Agent  whether or not a Default or Event of
Default has occurred  and without  compliance  with any of the other  conditions
precedent  set  forth  herein  and  will  be  made  as an  accommodation  to the
Restricted Persons and solely at the Agent's discretion.

                                       29
<PAGE>

     3.10 If at any time the sum of (i) the outstanding principal amount of, and
accrued  and unpaid  interest  on,  the  Revolving  Loans plus (ii) the  maximum
amounts  which the  Issuing  Bank might  then or  thereafter  be called  upon to
advance under all Letters of Credit then outstanding  (including but not limited
to the  Existing  Letters of Credit)  plus (iii) all amounts paid by the Issuing
Bank on drafts or demands for  payment  drawn or made under or  purported  to be
made under any Letter of Credit  (including but not limited to Existing  Letters
of Credit) and all other  amounts  due and owing to Issuing  Bank or Agent under
any Letter of Credit Guaranty to the extent unpaid is in excess of the Borrowing
Base (such excess  being  herein  called a  "Borrowing  Base  Deficiency"),  the
Company shall  immediately make a payment on the Revolving Loans in an aggregate
amount at least equal to such Borrowing Base Deficiency.

SECTION 4.     Term Loans

     MACHINERY AND EQUIPMENT LOAN

     4.1 The  Company  hereby  agrees to execute  and  deliver to the Agent,  on
behalf of the  Lenders,  the  Machinery  and  Equipment  Note,  to evidence  the
Machinery and Equipment Loan to be extended by the Lenders.

     4.2 Upon receipt of such  Machinery and Equipment  Note, the Lenders hereby
agree to extend to the Company the Machinery  and Equipment  Loan on the Closing
Date as a one-time advance.  The original  principal amount of the Machinery and
Equipment Loan shall be equal to $24,250,000.

     4.3 The  principal  amount of the  Machinery  and  Equipment  Loan shall be
repaid  to  the  Agent,  on  behalf  of the  Lenders,  by the  Company  by:  (i)
twenty-seven  (27) equal  quarterly  principal  installments  of $866,071  each,
followed  by (ii) one (1)  installment  which  shall  be equal to the  remaining
outstanding  principal balance of the Machinery and Equipment Loan,  whereof the
first installment shall be due and payable on January 2, 2002 and the subsequent
installments  shall be due and payable on the first  Business Day of each Fiscal
Quarter thereafter until paid in full.

     REAL ESTATE LOAN

     4.4 The  Company  hereby  agrees to execute  and  deliver to the Agent,  on
behalf of the Lenders, the Real Estate Note, to evidence the Real Estate Loan to
be extended by the Lenders.

     4.5 Upon  receipt of such Real Estate  Note,  the Lenders  hereby  agree to
extend to the Company  the Real  Estate  Loan on the Closing  Date as a one-time
advance. The original principal amount of the Real Estate Loan shall be equal to
$5,750,000.

     4.6 The principal amount of the Real Estate Loan shall be repaid the Agent,
on behalf of the  Lenders,  by the  Company  by:  (i)  twenty-seven  (27)  equal
quarterly  principal  installments  $205,357  each,  followed  by  (ii)  one (1)
installment which shall be equal to the remaining  outstanding principal balance
of the Real Estate Loan,  whereof the first installment shall be due and payable
on January 2, 2002 and the subsequent  installments  shall be due and payable on
the first Business Day of each Fiscal Quarter thereafter until paid in full.

                                       30
<PAGE>

     ADDITIONAL PROVISIONS FOR TERM LOANS

     4.7 In the  event  this  Financing  Agreement  or the  Line  of  Credit  is
terminated  by either the Agent or the  Company for any reason  whatsoever,  the
Term  Loans  shall  become  due  and  payable  on the  effective  date  of  such
termination  notwithstanding  any  provision to the  contrary in the  Promissory
Notes or this Financing Agreement.

     4.8 The Company may prepay at any time, at its option, in whole or in part,
the Term Loans, provided that on each such prepayment, the Company shall pay all
accrued interest on the principal so prepaid to the date of such prepayment.

     4.9 In the event the Company has Surplus Cash in any Fiscal Year  beginning
with the Fiscal Year  ending on  December  31,  2002,  the  Company  must make a
Mandatory  Prepayment of the Machinery and Equipment  Loan by an amount equal to
twenty-five  percent  (25%) of said  Surplus  Cash on or before  April 10 of the
immediately following Fiscal Year.

     4.10 Each  prepayment of either Term Loan (whether  voluntary or mandatory)
shall be applied to the then last  maturing  installments  of  principal of such
Term  Loan;  provided,  however,  that  each  prepayment  of the  Machinery  and
Equipment Loan made in accordance  with Section 4.9 shall be applied to the next
principal installment due on the Machinery and Equipment Loan, together with any
accrued and unpaid interest then due and payable thereon.

     4.11 The Company  hereby  authorizes the Agent to charge its Revolving Loan
Account  with the amount of all  obligations  owing under this Section 4 as such
amounts become due. The Company confirms that any charges which the Agent may so
make  to its  Revolving  Loan  Account  as  herein  provided  will be made as an
accommodation to the Company and solely at the Agent's discretion.

SECTION 5.     Letters of Credit

     In order to assist the Company in  providing  for the  continuation  of the
Existing  Letters of Credit and  establishing  or opening  new Letters of Credit
with an Issuing  Bank,  the Company has  requested  the Agent,  on behalf of the
Lenders,  to join  in the  applications  for  such  Letters  of  Credit,  and/or
guarantee  payment or performance of such Letters of Credit and Existing Letters
of Credit and any drafts or acceptances  thereunder  through the issuance of the
Letters  of Credit  Guaranty  and to  execute  the  Letter  of Credit  Indemnity
Agreement,  thereby  lending the Agent's credit to the Company and the Agent has
agreed to do so. These arrangements shall be handled by the Agent subject to the
terms and conditions set forth below.

     5.1 Within the  Revolving  Line of Credit  and  Availability,  the Agent on
behalf of the Lenders shall assist the Company in obtaining  Letter(s) of Credit
in an  amount  not to exceed  the  outstanding  amount  of the  Letter of Credit
Sub-Line.  The Agent's  assistance  for amounts in excess of the  limitation set
forth  herein  shall at all times and in all  respects  be in the  Agent's  sole
discretion.  It is understood  that the term, form and purpose of each Letter of
Credit  and all  documentation  in  connection  therewith,  and any  amendments,
modifications or extensions thereof, must be mutually

                                       31
<PAGE>

acceptable to the Agent, the Issuing Bank and the Company, provided that Letters
of Credit shall not be used for the purchase of domestic  Inventory or to secure
present or future debt of domestic Inventory suppliers.  Any and all outstanding
Letters of Credit shall be reserved  dollar for dollar from  Availability  as an
Availability Reserve.

     5.2 The Agent  shall  have the right,  without  notice to the  Company,  to
charge  the  Company's  Revolving  Loan  Account  with the amount of any and all
indebtedness,  liability or  obligation of any kind incurred by the Agent and/or
the Lenders  under the Letters of Credit  Guaranty at the earlier of (a) payment
by the Agent under the Letters of Credit  Guaranty;  or (b) the occurrence of an
Event of Default  which has not been waived in writing by the Required  Lenders.
Any  amount  charged  to  Company's  Revolving  Loan  Account  shall be deemed a
Revolving  Loan  hereunder  and shall  incur  interest  at the rate  provided in
Paragraph 8.1 of Section 8 of this Financing Agreement.

     5.3 The Company  unconditionally  indemnifies the Agent and the Lenders and
holds  the  Agent  and the  Lenders  harmless  from any and all  loss,  claim or
liability  incurred by the Agent arising from any  transactions  or  occurrences
relating to Letters of Credit  established or opened for the Company's  account,
the collateral  relating thereto and any drafts or acceptances  thereunder,  and
all Obligations thereunder,  including any such loss or claim due to any errors,
omissions,  negligence,  misconduct or action taken by any Issuing Bank, WHETHER
OR NOT SUCH LOSSES, CLAIMS, OR LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT OWED,
IN WHOLE OR IN PART,  UNDER ANY CLAIM OR  THEORY  OF  STRICT  LIABILITY,  OR ARE
CAUSED BY OR ARISE OUT OF AGENT'S OR ANY LENDER'S OWN NEGLIGENCE,  except to the
extent such  losses,  claims,  or  liabilities  are  proximately  caused by such
indemnified  party's  individual gross negligence or willful  misconduct,  other
than for any such loss,  claim or liability  arising out of the gross negligence
or willful  misconduct  by the Agent  and/or the  Lenders  under the  Letters of
Credit  Guaranty.  This  indemnity  shall survive  termination of this Financing
Agreement.  The Company agrees that any charges incurred by the Agent and/or the
Lenders for the Company  account by the Issuing Bank shall be  conclusive on the
Agent and may be charged to the Company's Revolving Loan Account.

     5.4 The Agent shall not be responsible  for: (a) the existence,  character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be  represented  by any  documents;  (b) any  difference  or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from  that  expressed  in  the  documents;  (c)  the  validity,  sufficiency  or
genuineness  of any  documents  or of any  endorsements  thereon,  even  if such
documents  should  in  fact  prove  to  be  in  any  or  all  respects  invalid,
insufficient,  fraudulent  or forged;  (d) the time,  place,  manner or order in
which  shipment  is made;  (e)  partial or  incomplete  shipment,  or failure or
omission to ship any or all of the goods referred to in the Letters of Credit or
documents; (f) any deviation from instructions;  (g) delay, default, or fraud by
the shipper  and/or  anyone else in  connection  with the goods or the  shipping
thereof;  or (h) any breach of  contract  between the shipper or vendors and the
Company.

     5.5 The  Company  agrees  that any  action  taken by the Agent  and/or  the
Lenders,  if taken in good faith, or any action taken by any Issuing Bank, under
or in connection  with the Letters of Credit,  the Letter of Credit  Guarantees,
the drafts or acceptances, or the Collateral, shall be binding

                                       32
<PAGE>

on the Company and shall not result in any  liability  whatsoever  of CIT to the
Company.  In  furtherance  thereof,  the  Agent  shall  have the full  right and
authority  to:  (a)  clear  and  resolve  any  questions  of  non-compliance  of
documents;  (b) give any  instructions  as to  acceptance  or  rejection  of any
documents or goods; (c) execute any and all steamship or airways guaranties (and
applications   therefore),   indemnities  or  delivery  orders;  (d)  grant  any
extensions of the maturity of, time of payment for, or time of presentation  of,
any  drafts,  acceptances,  or  documents;  and  (e)  agree  to any  amendments,
renewals,  extensions,  modifications,  changes or  cancellations  of any of the
terms or conditions  of any of the  applications,  Letters of Credit,  drafts or
acceptances; all in the Agent's sole name. The Issuing Bank shall be entitled to
comply with and honor any and all such documents or  instruments  executed by or
received  solely from the Agent,  all without any notice to or any consent  from
the Company. Notwithstanding any prior course of conduct or dealing with respect
to the foregoing  including  amendments and non-compliance with documents and/or
the  Company's  instructions  with respect  thereto,  the Agent may exercise its
rights hereunder in its sole and reasonable judgement. In addition,  without the
Agent's express consent and endorsement in writing,  the Company agrees: (a) not
to execute or to agree to any amendments,  renewals, extensions,  modifications,
changes  or  cancellations  of any  of the  terms  or  conditions  of any of the
applications,  Letters  of  Credit,  drafts  or  acceptances;  and (b) after the
occurrence of an Event of Default which is not cured within any applicable grace
period,  if any,  or waived by the  Agent,  not to (i)  clear  and  resolve  any
questions of  non-compliance  of documents,  or (ii) give any instructions as to
acceptances or rejection of any documents or goods.

     5.6 The Company  agrees that:  (a) any  necessary  import,  export or other
licenses or certificates  for the import or handling of the Collateral will have
been  promptly  procured;  (b) all foreign and  domestic  governmental  laws and
regulations in regard to the shipment and importation of the Collateral,  or the
financing  thereof will have been  promptly  and  complied  with in all material
respects; and (c) any certificates in that regard that the Agent may at any time
request will be promptly furnished. In connection herewith, the Company warrants
and  represents  that all shipments made under any such Letters of Credit are in
accordance  in all  material  respects  with  the laws  and  regulations  of the
countries in which the shipments originate and terminate, and are not prohibited
by any such laws and  regulations.  The Company assumes all risk,  liability and
responsibility  for,  and agrees to pay and  discharge,  all  present and future
local,  state,  federal or  foreign  Taxes,  duties,  or  levies.  Any  embargo,
restriction,  laws, customs or regulations of any country, state, city, or other
political  subdivision,  where the  Collateral is or may be located,  or wherein
payments are to be made, or wherein drafts may be drawn,  negotiated,  accepted,
or paid, shall be solely the Company's risk, liability and responsibility.

     5.7 Upon any  payments  made to the Issuing Bank under the Letter of Credit
Guaranty,  the Agent on behalf of the Lenders shall acquire by subrogation,  any
rights, remedies,  duties or obligations granted or undertaken by the Company to
the  Issuing  Bank in any  application  for  Letters  of  Credit,  any  standing
agreement  relating  to Letters of Credit or  otherwise,  all of which  shall be
deemed to have been  granted to the Agent on behalf of the  Lenders and apply in
all  respects to the Agent and shall be in  addition  to any  rights,  remedies,
duties or obligations contained herein.

                                       33
<PAGE>

SECTION 6.     Collateral

     6.1 As security  for the prompt  payment in full of all  Obligations,  each
Grantor  hereby  pledges and grants to the Agent,  on behalf of the  Lenders,  a
continuing general Lien upon, and security interest in, all of its:

     (a) Accounts;

     (b) Inventory;

     (c) General Intangibles;

     (d) Documents of Title;

     (e) Other Collateral;

     (f) Equipment; and

     (g) Real Estate.

     6.2 The security interests granted hereunder shall extend and attach to:

     (a) All  Collateral  which is owned by each Grantor or in which any Grantor
has any interest, whether held by any Grantor or others for its account, and, if
any Collateral is Equipment, whether any Grantor's interest in such Equipment is
as owner, finance lessee or conditional vendee;

     (b) All  Equipment,  whether  the same  constitutes  personal  property  or
fixtures,  including,  but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables,  accretions,  component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and

     (c) All Inventory and any portion thereof which may be returned,  rejected,
reclaimed or  repossessed  by either the Agent or any Grantor from any Grantor's
customers, as well as to all supplies, goods, incidentals,  packaging materials,
labels and any other items which  contribute  to the finished  goods or products
manufactured or processed by any Grantor, or to the sale,  promotion or shipment
thereof.

     6.3 Each Grantor  agrees to  safeguard,  protect and hold all Inventory for
the  Agent's  account and make no  disposition  thereof  except in the  ordinary
course of its business, or as otherwise herein provided. Each Grantor represents
and warrants that Inventory will be sold and shipped by it to its customers only
in the  ordinary  course of its  business,  and then only on open account and on
terms currently being extended by it to its customers, provided that, absent the
prior  written  consent of the  Agent,  no Grantor  shall  sell  Inventory  on a
consignment  basis  nor  retain  any  Lien  or  security  interest  in any  sold
Inventory. Upon the sale, exchange, or other disposition of Inventory, as herein
provided,  the security  interest in the  Inventory  provided for herein  shall,
without break in continuity and without further  formality or act,  continue in,
and attach to, all proceeds, including any instruments

                                       34
<PAGE>

for the  payment  of  money,  Trade  Accounts  Receivable,  documents  of title,
shipping  documents,  chattel paper and all other cash and non-cash  proceeds of
such sale,  exchange  or  disposition.  As to any such sale,  exchange  or other
disposition  after the  occurrence  and  during the  continuance  of an Event of
Default,  the Agent shall have all of the rights of an unpaid seller,  including
stoppage in transit, replevin,  rescission and reclamation.  Each Grantor hereby
agrees  to  immediately  forward  any  and all  proceeds  of  Collateral  to the
Depository  Account,  and to hold any such  proceeds  (including  any  notes and
instruments), in trust for the Agent, on behalf of the Lenders, pending delivery
to the Agent.  Irrespective of the Agent's  perfection  status in any and all of
the  General  Intangibles,   including,   without   limitations,   any  Patents,
Trademarks,  Copyrights or licenses with respect  thereto,  each Grantor  hereby
irrevocably  grants  the Agent a royalty  free  license  to sell,  or  otherwise
dispose or transfer,  in accordance  with  Paragraph  10.3 of Section 10 of this
Financing  Agreement,  and the applicable terms hereof,  of any of the Inventory
upon the  occurrence of an Event of Default which has not been waived in writing
by the Agent.

     6.4 Each Grantor  agrees at its own cost and expense to keep the  Equipment
in as good and  substantial  repair and  condition  as the same is now or at the
time the  Lien and  security  interest  granted  herein  shall  attach  thereto,
reasonable wear and tear excepted,  making any and all repairs and  replacements
when and where  necessary.  Each Grantor also agrees to  safeguard,  protect and
hold all  Equipment  in  accordance  with the terms  hereof  and  subject to the
Agent's security interest.  Absent the Agent's prior written consent,  any sale,
exchange or other  disposition of any Equipment shall be made by Grantors in the
ordinary  course of business and as set forth  herein.  Each Grantor may, in the
ordinary course of its business, sell, exchange or otherwise dispose of obsolete
or  surplus  Equipment  provided,  however,  that:  (a) the  then  value  of the
Equipment  so disposed of in any Fiscal Year does not exceed  $3,000,000  in the
aggregate;  and (b) on the date each Sales Report is required to be delivered to
the Agent as provided in this  Section  6.4,  the Company  pays to the Agent (by
deposit to the Concentration Account) an amount equal to the difference, if any,
between  (1)  the  amount  of  proceeds  received  by the  Grantors  for  sales,
exchanges,  or other dispositions of Equipment made during the Fiscal Quarter to
which such Sales  Report  relates  and (2) the  Notification  Amount (as defined
below) set forth in such Sales Report, such amount to be applied by the Agent to
the then  outstanding  Obligations in such order as the Agent may elect. So long
as no Default or Event of Default  then exists and is  continuing,  the Grantors
may retain and use proceeds from such sales,  exchanges or other dispositions of
Equipment as permitted above.  Concurrently  with the delivery of each Borrowing
Base  certificate  to be  delivered  pursuant  to Section  7.8 for the months of
March,  June,  September  and  December of each Fiscal Year,  the Company  shall
deliver to the Agent a written report (each a "Sales Report")  setting forth (x)
the value of all Equipment of Grantors sold, exchanged, or otherwise disposed of
during the preceding fiscal quarter,  (y) the amount of the proceeds received by
Grantors for such sales,  exchanges, or other dispositions and (z) the amount of
such proceeds which the Company reasonably expects to use during the next fiscal
quarter to replace such Equipment (the "Notification  Amount").  Notwithstanding
anything to the contrary  contained herein,  the Company shall pay to the Agent,
for application to the then  outstanding  Obligations in such order as the Agent
may elect, all or any portion of the Notification Amount which has not been used
to, or committed to be used to, replace Equipment which is permitted to be sold,
exchanged,  or otherwise  disposed of pursuant to this Section 6.4 by the end of
the  next  succeeding  fiscal  quarter.   Upon  the  sale,  exchange,  or  other
disposition of the Equipment,

                                       35
<PAGE>

as herein provided,  the security  interest  provided for herein shall,  without
break in  continuity  and without  further  formality  or act,  continue in, and
attach to, all  proceeds,  including any  instruments  for the payment of money,
Accounts,  documents of title,  shipping documents,  chattel paper and all other
cash and non-cash  proceeds of such sales,  exchange or  disposition.  As to any
such sale,  exchange or other  disposition  after the  occurrence and during the
continuance  of a Default or Event of Default,  the Agent and the Lenders  shall
have all of the  rights of an unpaid  seller,  including  stoppage  in  transit,
replevin, rescission and reclamation.

     6.5 The rights and security  interests granted to the Agent and the Lenders
hereunder  are to  continue  in  full  force  and  effect,  notwithstanding  the
termination  of this  Financing  Agreement or the fact that the  Revolving  Loan
Account may from time to time be  temporarily  in a credit  position,  until the
final payment in full to the Agent of all  Obligations  and the  termination  of
this Financing  Agreement.  Any delay,  or omission by the Agent to exercise any
right hereunder  shall not be deemed a waiver thereof,  or be deemed a waiver of
any other right, unless such waiver shall be in writing and signed by the Agent.
A waiver on any one  occasion  shall not be construed as a bar to, or waiver of,
any right or remedy on any future occasion.

     6.6  Notwithstanding the Agent's security interest in the Collateral and to
the extent that the  Obligations  are now or hereafter  secured by any assets or
property other than the Collateral or by the guarantee,  endorsement,  assets or
property  of any  other  Person,  the  Agent  shall  have the  right in its sole
discretion to determine which rights,  Liens, security interests or remedies the
Agent shall at any time pursue, foreclose upon, relinquish,  subordinate, modify
or take any other  action  with  respect  to,  without in any way  modifying  or
affecting  any of  them,  or  any of the  Agent's  and/or  the  Lenders'  rights
hereunder.

     6.7 Any  balances  to the  credit of any  Restricted  Person  and any other
property or assets of Grantors in the  possession or control of the Agent and/or
the Lenders may be held by the Agent as security for any Obligations and applied
in whole or partial  satisfaction  of such  Obligations  when due. The Liens and
security  interests granted herein,  and any other Lien or security interest the
Agent and/or the Lenders may have in any other assets of Grantors,  shall secure
payment and  performance of all now existing and future  Obligations.  The Agent
may, in its  discretion,  charge any or all of the  Obligations to the Revolving
Loan Account when due.

     6.8 Each  Grantor  possesses  all General  Intangibles  and rights  thereto
necessary  to conduct its  business as conducted as of the Closing Date and each
Grantor  shall  maintain  its rights in, and the value of, the  foregoing in the
ordinary course of its business, including, without limitation, by making timely
payment with respect to any applicable  licensed rights.  Grantors shall deliver
to the Agent,  and/or shall cause the appropriate party to deliver to the Agent,
from time to time such pledge or  security  agreements  with  respect to General
Intangibles (now or hereafter  acquired) of each Grantor and its subsidiaries as
the Agent shall require to obtain valid first Liens  thereon.  In furtherance of
the  foregoing,  the Company  shall  provide  timely  notice to the Agent of any
additional Patents,  Trademarks,  tradenames,  service marks, Copyrights,  brand
names, trade names,  logos and other trade designations  acquired or applied for
subsequent to the Closing Date and the Company shall execute such  documentation
as the Agent may reasonably require to obtain and perfect its Lien thereon.  The
Company  hereby  confirms that it shall deliver,  or cause to be delivered,  any
pledged

                                       36
<PAGE>

stock issued  subsequent to the Closing Date to the Agent in accordance with the
applicable terms of the Pledge Agreement and prior to such delivery,  shall hold
any such stock in trust for the Agent. Each Grantor hereby irrevocably grants to
the Agent a  royalty-free,  non-exclusive  license in the  General  Intangibles,
including tradenames,  Trademarks,  Copyrights, Patents, licenses, and any other
proprietary and  intellectual  property rights and any and all right,  title and
interest in any of the foregoing,  for the sole purpose, upon the occurrence and
during the  continuance  of an Event of Default,  of the right to: (i) advertise
for  sale  and  sell  or  transfer  any  Inventory  bearing  any of the  General
Intangibles,  and (ii) make,  assemble,  prepare for sale or complete,  or cause
others to do so, any  applicable  raw materials or Inventory  bearing any of the
General  Intangibles,  including  use of the  Equipment  and Real Estate for the
purpose of completing  the  manufacture  of unfinished  goods,  raw materials or
work-in-process  comprising  Inventory,  and apply the  proceeds  thereof to the
Obligations hereunder,  all as further set forth in this Financing Agreement and
irrespective of the Agent's Lien and perfection in any General Intangibles. Each
Grantor  hereby agrees to maintain the  Copyrights,  Trademarks,  and Patents by
taking all  actions  and/or  filing all  documents  necessary  to  continue  the
prosecution  of,  maintain the  registration  of, and perfect title of the same,
except  where the  failure to do so could not  reasonably  be expected to have a
material  adverse effect on the value of the Collateral  taken as a whole.  Each
Grantor further agrees to enforce and protect the  intellectual  property rights
described in the immediately preceding sentence,  except where the failure to do
so could not  reasonably  be expected to have a material  adverse  effect on the
value of the Collateral taken as a whole.

     6.9 This Financing  Agreement and the  obligation of Restricted  Persons to
perform all of their covenants and obligations  hereunder are further secured by
mortgage(s), deed(s) of trust or assignment(s) on the Real Estate.

     6.10  The  Company  shall  give  to  the  Agent  from  time  to  time  such
mortgage(s), deed(s) of trust or assignment(s) on the Real Estate or real estate
acquired  after the date  hereof as the Agent  shall  require  to obtain a valid
first Lien  thereon  subject only to those  exceptions  of title as set forth in
future title insurance policies that are satisfactory to the Agent.

     6.11 Each  Grantor  agrees that all chattel  paper  created by such Grantor
will be marked:  "This chattel paper has been assigned to The CIT Group/Business
Credit, Inc. Further assignment of this chattel paper violates the rights of The
CIT Group/Business  Credit,  Inc." Each Grantor hereby consents to the filing by
Agent of one or more financing  statements without the signature of such Grantor
where  permitted by law describing the Collateral as "all assets" or using words
of similar import.

SECTION 7.     Representations, Warranties and Covenants

     7.1 Each Restricted Person hereby warrants,  represents and covenants that:
(a) the fair  value of the  Total  Assets  exceeds  the book  value of the Total
Liabilities;  (b) each  Restricted  Person is generally able to pay its debts as
they become due and payable; and (c) no Restricted Person has unreasonably small
capital  to  carry  on  its  business  as  it  is  currently   conducted  absent
extraordinary  and  unforeseen  circumstances.  Each  Restricted  Person further
warrants and  represents  that:  (i) Schedule 1 hereto  correctly and completely
sets forth each Restricted Person's (A) chief executive

                                       37
<PAGE>

office and state of organization,  (B) Collateral locations, (C) tradenames, and
(D) all the other  information  listed on said  Schedule;  (ii)  except  for the
Permitted  Encumbrances,  after filing of financing  statements  in the state of
organization  of  each  Grantor,  this  Financing  Agreement  creates  a  valid,
perfected and first priority  security  interest in the Collateral  which may be
perfected  by the filing of a financing  statement  and the  security  interests
granted herein  constitute and shall at all times  constitute the first and only
Liens on the  Collateral;  (iii)  except for the  Permitted  Encumbrances,  each
Grantor is, or will be, at the time additional Collateral is acquired by it, the
absolute  owner of the  Collateral  with full  right to pledge,  sell,  consign,
transfer and create a security interest  therein,  free and clear of any and all
claims or Liens in favor of others;  (iv) Grantor will, at its expense,  forever
warrant and, at the Agent's request, defend the same from any and all claims and
demands of any other Person other than a holder of a Permitted Encumbrance;  (v)
no Grantor  will grant,  create or permit to exist,  any Lien upon,  or security
interest  in, the  Collateral,  or any proceeds  thereof,  in favor of any other
Person  other  than the  holders  of the  Permitted  Encumbrances;  and that the
Equipment  does not comprise a part of the Inventory of any  Restricted  Person;
(vi) the  Equipment is and will only be used by each Grantor in its business and
will not be held for sale or lease,  or removed from its premises  except in the
ordinary course of its business,  or otherwise disposed of by any Grantor except
as  otherwise  permitted  in this  Financing  Agreement;  (vii) no  certificate,
statement,  or  other  information  delivered  herewith  or  heretofore  by  any
Restricted Person or any of its agents to Agent or any Lender in connection with
the  negotiation  of the Loan  Documents or in connection  with any  transaction
contemplated  thereby  contains any untrue statement of a material fact or omits
to  state  any  material  fact  known  to  any  Restricted  Person  (other  than
industry-wide risks normally  associated with the types of businesses  conducted
by Restricted  Persons)  necessary to make the statements  contained therein not
misleading  as of the date made or deemed made;  (viii) all of the  Unencumbered
Machinery  and Equipment is owned by a Grantor  (except for  Equipment  that has
been sold or otherwise disposed of as permitted under this Agreement) and is not
subject to any Lien (other than a Permitted Encumbrance or a Lien to be released
or assigned to the Agent on the Closing Date);  (ix) the Obligations  constitute
(1) "Superior  Debt" under the Holding Junior  Subordinated  Notes,  (2) "Senior
Debt"  under the Seller  Subordinated  Notes,  and (3)  "Senior  Debt" under the
Senior  Subordinated  Notes,  and (x) both before and after giving effect to any
borrowing hereunder, no default or event of default shall exist or be continuing
under any document evidencing or governing the Subordinated Debt.

     7.2 Each Restricted Person agrees to maintain books and records  pertaining
to the Collateral in accordance  with GAAP and in such additional  detail,  form
and scope as the Agent shall reasonably  require.  Each Restricted Person agrees
that the Agent or its agents,  and any of the Lenders who may wish to  accompany
the Agent at their own cost or expense,  may enter upon any Restricted  Person's
premises at any time during normal business hours,  and from time to time in its
reasonable business judgement,  for the purpose of inspecting the Collateral and
any and all records pertaining thereto.  Each Restricted Person agrees to afford
the  Agent  thirty  (30)  days  prior  written  notice  of  any  change  in  the
jurisdiction of its  organization or formation,  other than to  jurisdictions in
which the Agent has filed financing statements and otherwise fully perfected its
Liens thereon.  Each Grantor is also to advise the Agent promptly, in sufficient
detail, of any material adverse change relating to the type, quantity or quality
of the Collateral or on the security interests granted to the Agent therein.

                                       38
<PAGE>

     7.3 INTENTIONALLY DELETED.

     7.4 Each  Restricted  Person agrees to comply with the  requirements of all
state and federal laws in order to grant to the Agent valid and perfected  first
security   interests  in  the   Collateral,   subject  only  to  the   Permitted
Encumbrances.  The Agent is hereby  authorized by the Company to file (including
pursuant  to the  applicable  terms of the UCC) from time to time any  financing
statements,  continuations  or amendments  covering the Collateral.  The Company
hereby consents to and ratifies any and all execution and/or filing of financing
statements on or prior to the Closing Date by the Agent.  The Company  agrees to
do whatever the Agent may reasonably request,  from time to time, by way of: (a)
filing  notices  of  Liens,  financing  statements,   amendments,  renewals  and
continuations  thereof;  (b) cooperating  with the Agent's agents and employees;
(c) keeping Collateral records;  (d) transferring  proceeds of Collateral to the
Agent's possession; and (e) performing such further acts as the Agent and/or the
Lenders may reasonably require in order to effect the purposes of this Financing
Agreement,  including  but not  limited to  obtaining  control  agreements  with
respect to deposit accounts and/or Investment Property.

     7.5 (a) Each  Restricted  Person  agrees to maintain  insurance on its Real
Estate,  Equipment  and Inventory  under such  policies of insurance,  with such
insurance  companies,  in such  reasonable  amounts and covering such  insurable
risks as are at all times  reasonably  satisfactory  to the Agent.  All policies
covering the Real Estate,  Equipment and Inventory are, subject to the rights of
any holders of Permitted  Encumbrances holding claims senior to the Agent, to be
made payable to the Agent,  on behalf of the Lenders,  in case of loss,  under a
standard  non-contributory  "mortgagee",  "lender" or "secured party" clause and
are to contain such other  provisions  as the Agent may require to fully protect
the Agent's  interest in the Real Estate,  Inventory  and  Equipment  and to any
payments to be made under such  policies.  Certificates  of  insurance  for such
policies  are to be  delivered  to the Agent,  premium  prepaid  (subject to any
premium finance agreements  otherwise permitted under this Agreement),  with the
loss payable  endorsement in the Agent's  favor,  and shall provide for not less
than thirty (30) days prior  written  notice to the Agent of the exercise of any
right of cancellation.  At any Restricted Person's request, or if any Restricted
Person  fails to  maintain  such  insurance,  the  Agent  may  arrange  for such
insurance,  but at the applicable  Restricted  Person's  expense and without any
responsibility  on the Agent's part for: (i) obtaining the  insurance;  (ii) the
solvency of the insurance companies; (iii) the adequacy of the coverage; or (iv)
the  collection of claims.  Upon the  occurrence of an Event of Default which is
not waived in writing by the Required Lenders,  the Agent shall,  subject to the
rights of any holders of Permitted  Encumbrances  holding  claims  senior to the
Agent,  have the sole right, and at its option,  in the name of the Agent or the
applicable  Restricted Person, to file claims under any insurance  policies,  to
receive,  receipt  and give  acquittance  for any  payments  that may be payable
thereunder,  and to  execute  any  and  all  endorsements,  receipts,  releases,
assignments,  reassignments  or other  documents that may be necessary to effect
the collection,  compromise or settlement of any claims under any such insurance
policies.

     (b) (i) In the  event of any  loss or  damage  by fire or  other  casualty,
insurance  proceeds relating to Inventory shall be immediately paid to the Agent
and applied by the Agent (a) to reduce the  principal and all accrued and unpaid
interest  outstanding  under the  Revolving  Loans,  and (b) if the  outstanding
principal  balance of the Revolving  Loans is zero and all interest with respect
to the Revolving Loans has been paid, as specified in Section  3.4(e).  Upon the
occurrence of a Default or

                                       39
<PAGE>

Event of Default,  such Insurance  Proceeds may be applied to the Obligations in
such order as the Agent may elect;

     (ii)  In  the  event  any  part  of any  Restricted  Person's  Real  Estate
(including  any  improvements  thereon) or Equipment is damaged by fire or other
casualty or condemned and the Insurance  Proceeds or  Condemnation  Proceeds for
such  damage or other  casualty  or  condemnation  is  greater  than or equal to
$250,000  per  occurrence,  the Company  shall pay, or cause to be paid,  to the
Agent all of such Insurance  Proceeds or Condemnation  Proceeds to be applied by
the Agent,  (a),  to reduce  the  principal  and  accrued  and  unpaid  interest
outstanding   under  the  Real  Estate  Loan  (if  the  Insurance   Proceeds  or
Condemnation  Proceeds  relate to the Real Estate of the Company  located at 900
Georgia  Avenue in Deer Park,  Texas) or to reduce the principal and all accrued
and unpaid interest  outstanding  under the Machinery and Equipment Loan (if the
Insurance  Proceeds  relate  to  the  Equipment  of  Restricted   Persons),   as
applicable,  and (b), if such Insurance Proceeds or Condemnation Proceeds do not
relate to the Real Estate of the Company  located at 900 Georgia  Avenue in Deer
Park,  Texas or if the Machinery  and  Equipment  Loan has been paid in full, in
such order as the Agent may elect.  Upon the occurrence of a Default or Event of
Default,  such Insurance Proceeds or Condemnation Proceeds may be applied to the
Obligations in such order as the Agent may elect;

     (iii)  Absent the  occurrence  of an Event of  Default  (which has not been
waived in writing by the Required Lenders), and provided that (x) the applicable
Restricted Person has sufficient business interruption  insurance to replace the
lost  profits  of any of its  facilities,  and (y)  the  Insurance  Proceeds  or
Condemnation  Proceeds are less than  $250,000 per  occurrence,  the Company may
elect (by delivering written notice to the Agent) to replace,  repair or restore
such  Real  Estate   (including  any  improvements   thereon)  or  Equipment  to
substantially  the equivalent  condition prior to such fire or other casualty as
set forth herein.  If the Company does not (within ten (10) Business  Days),  or
cannot,  elect  in  writing  to the  Agent  to use  the  Insurance  Proceeds  or
Condemnation  Proceeds as set forth above,  the Agent may, subject to the rights
of any holders of Permitted  Encumbrances  holding  claims  senior to the Agent,
apply the  Insurance  Proceeds  or  Condemnation  Proceeds to the payment of the
Obligations in the manner set forth in Section 7.5(b)(ii); and

     (iv)  If  the  Company  elects  to  use  the  Insurance   Proceeds  or  the
Condemnation  Proceeds for the repair,  replacement  or  restoration of any Real
Estate (including any improvements thereon) and/or Equipment,  and there is then
no Event of Default,  (x) Insurance  Proceeds or  Condemnation  Proceeds for any
loss or  condemnation  less than $250,000 with respect to Equipment  and/or Real
Estate will be applied to reduce the outstanding  balance of the Revolving Loans
(and if the outstanding principal balance of the Revolving Loans is zero and all
interest with respect to the Revolving  Loans has been paid, such proceeds shall
be  applied as  specified  in  Section  3.4(e))  and (y) the Agent may set up an
Availability  Reserve  for  an  amount  equal  to  said  Insurance  Proceeds  or
Condemnation    Proceeds.    The   Availability    Reserve   will   be   reduced
dollar-for-dollar  upon  receipt of  non-cancelable  executed  purchase  orders,
delivery  receipts or contracts for the  replacement,  repair or  restoration of
Equipment  and/or the Real Estate and  disbursements  in  connection  therewith.
Prior to the commencement of any material restoration,  repair or replacement of
Real Estate,  the Company shall provide the Agent with a restoration  plan and a
total budget certified by an independent third party experienced in construction
costing. If there are insufficient Insurance Proceeds or

                                       40
<PAGE>

Condemnation  Proceeds to cover the cost of restoration  as so  determined,  the
Company shall be responsible for the amount of any such insufficiency,  prior to
the  commencement of restoration and shall  demonstrate  evidence of such before
the reserve will be reduced.  Completion of restoration  shall be evidenced by a
final,  unqualified  certification of the design architect employed,  if any; an
unconditional Certificate of Occupancy, if applicable;  such other certification
as may be required by law; or if none of the above is applicable, a written good
faith  determination  of  completion  by the Company  (herein  collectively  the
"Completion").  Upon Completion,  any remaining reserve as established hereunder
will be automatically released.

     (c) In the  event the  Company  fails to  provide  the  Agent  with  timely
evidence,  acceptable to the Agent,  of the  maintenance  of insurance  coverage
required  pursuant to paragraph  7.5(a) above,  the Agent may  purchase,  at the
Company's expense, insurance to protect the Agent's interests in the Collateral.
The  insurance  acquired  by the Agent  may,  but need not,  protect  Restricted
Persons'  interest in the  Collateral,  and therefore such insurance may not pay
claims which  Restricted  Persons may have with respect to the Collateral or pay
any claim which may be made against  Restricted  Persons in connection  with the
Collateral.  In the event the Agent  purchases,  obtains or  acquires  insurance
covering all or any portion of the Collateral,  the Company shall be responsible
for all of the applicable costs of such insurance,  including premiums, interest
(at the  applicable  Chase Bank Rate for Revolving  Loans set forth in paragraph
8.1 of Section 8 hereof), fees and any other charges with respect thereto, until
the effective date of the cancellation or the expiration of such insurance.  The
Agent may charge all of such premiums,  fees, costs,  interest and other charges
to the Company's  Revolving Loan Account.  The Company hereby  acknowledges that
the costs of the premiums of any insurance  acquired by the Agent may exceed the
costs of insurance  which the Company may be able to purchase on its own. In the
event that the Agent purchases such insurance, the Agent will notify the Company
of said  purchase  within  thirty  (30) days of the date of such  purchase.  If,
within thirty (30) days after the date of such notice,  the Company provides the
Agent with proof that the Company had the insurance  coverage  required pursuant
to 7.5(a) above (in form and substance satisfactory to the Agent) as of the date
on which the Agent purchased insurance and the Company continued at all times to
have such insurance,  then the Agent agrees to cancel the insurance purchased by
the Agent and credit the Company's Revolving Loan Account with the amount of all
costs, interest and other charges associated with any insurance purchased by the
Agent,  including  with any amounts  previously  charged to the  Revolving  Loan
Account.

     7.6 Each  Restricted  Person agrees to pay, when due, all Taxes,  including
sales taxes,  assessments,  claims and other charges lawfully levied or assessed
upon any  Restricted  Person  or the  Collateral  unless  such  Taxes  are being
diligently  contested  in good faith by  appropriate  proceedings  and  adequate
reserves are established in accordance with GAAP. Notwithstanding the foregoing,
if any Lien  shall be filed or claimed  thereunder  (a) for Taxes due the United
States of America,  or (b) which in the  Agent's  opinion  might  create a valid
obligation  having  priority  over  the  rights  granted  to  the  Agent  herein
(exclusive  of Real  Estate),  such Lien  shall not be deemed to be a  Permitted
Encumbrance  hereunder  and the  Company  shall  immediately  pay,  or cause the
payment of, such tax and remove the Lien of record.  If the Company  fails to do
so  promptly,  then  at the  Agent's  election,  the  Agent  may (i)  create  an
Availability  Reserve in such amount as it may deem  appropriate in its business
judgement,  or (ii)  upon the  occurrence  of a  Default  or  Event of  Default,
imminent risk of seizure,  filing of any priority Lien,  forfeiture,  or sale of
the Collateral, pay Taxes

                                       41
<PAGE>

on the Company's behalf,  and the amount thereof shall be an Obligation  secured
hereby and due on demand.

     7.7 Each  Restricted  Person:  (a) agrees to comply  with all acts,  rules,
regulations and orders of any  legislative,  administrative  or judicial body or
official,  which the  failure to comply  with would have a material  and adverse
impact on the  Collateral,  or any material part thereof,  or on the business or
operations of such Restricted  Person,  provided that each Restricted Person may
contest any acts,  rules,  regulations,  orders and directions of such bodies or
officials in any  reasonable  manner  which will not, in the Agent's  reasonable
opinion,  materially and adversely effect the Agent's and/or the Lender's rights
or  priority  in the  Collateral;  (b) agrees to comply  with all  environmental
statutes, acts, rules, regulations or orders as presently existing or as adopted
or amended in the future, applicable to the Collateral, the ownership and/or use
of its real property and operation of its business,  which the failure to comply
with would have a material and adverse impact on the Collateral, or any material
part thereof,  or on the operation of the business of any Restricted Person; and
(c) shall not be deemed to have breached any provision of this  Paragraph 7.7 if
(i) the failure to comply with the  requirements  of this Paragraph 7.7 resulted
from good faith error or innocent omission, (ii) such Restricted Person promptly
commences and diligently  pursues a cure of such breach,  and (iii) such failure
is cured within (30) days following such Restricted  Person's  receipt of notice
of such  failure,  or if such cannot in good faith be cured  within  thirty (30)
days,  then such breach is cured within a  reasonable  time frame based upon the
extent and nature of the breach and the necessary remediation, and in conformity
with any applicable consent order, consensual agreement and applicable law.

     7.8  Until  termination  of  this  Financing   Agreement  and  payment  and
satisfaction  of all Obligations  due hereunder,  each Restricted  Person agrees
that,  unless  the  Agent  shall  have  otherwise  consented  in  writing,  each
Restricted  Person will furnish to the Agent and each Lender:  (a) within ninety
(90)  days  after  the  end of  each  Fiscal  Year of the  Company,  an  audited
Consolidated  Balance  Sheet,  as at the close of such year,  and  statements of
profit and loss, cash flow and  reconciliation of surplus of the Company and all
subsidiaries  of the  Company  for such  year,  audited  by  independent  public
accountants  selected by the Company and  satisfactory to the Agent;  (b) within
sixty  (60) days after the end of each  Fiscal  Quarter a  Consolidated  Balance
Sheet as at the end of such period and statements of profit and loss,  cash flow
and surplus of the Company and all subsidiaries of the Company,  certified by an
authorized  financial or  accounting  officer of the Company;  (c) within thirty
(30) days after the end of each month (i) a Consolidated Balance Sheet as at the
end of such  period and  statements  of profit and loss of the  Company  and all
subsidiaries  of  the  Company  for  such  period,  certified  by an  authorized
financial  or  accounting  officer  of  the  Company,   (ii)  a  Borrowing  Base
certificate  in form and  substance  acceptable  to Agent  in  Agent's  sole and
absolute  discretion;  (iii) a written report describing all Insurance  Proceeds
and  Condemnation  Proceeds  received by  Restricted  Persons  during such month
together with a written  explanation  of the  disposition  of such proceeds (but
only at the end of each month specified in Section 6.4 for the report  described
therein to be delivered); and (iv) the report described in Section 6.4 (but only
at the end of each month  specified in Section 6.4),  and (d) from time to time,
such further information  regarding the business affairs and financial condition
of the  Company  and/or any  subsidiaries  thereof  as the Agent may  reasonably
request, including,  without limitation (i) the accountant's management practice
letter and (ii) annual cash flow projections in form  satisfactory to the Agent.
Each financial statement which

                                       42
<PAGE>

the Company is required to submit  hereunder must be accompanied by an officer's
certificate, signed by the President, Vice President,  Controller, or Treasurer,
pursuant to which any one such  officer  must certify  that:  (x) the  financial
statement(s)  fairly and accurately  represent(s)  Restricted Persons' financial
condition at the end of the particular  accounting period, as well as Restricted
Persons'  operating results during such accounting  period,  subject to year-end
audit  adjustments;  and (y) during the particular  accounting period: (A) there
has  been no  Default  or Event  of  Default  under  this  Financing  Agreement,
provided,  however, that if any such officer has knowledge that any such Default
or Event of Default,  has occurred  during such period,  the  existence of and a
detailed  description of same shall be set forth in such officer's  certificate;
(B) no Restricted Person has received any notice of cancellation with respect to
its  property  insurance  policies;  (C) no  Restricted  Person has received any
notice  that  could  result  in a  material  adverse  effect on the value of the
Collateral  taken as a whole;  and (D) the exhibits  attached to such  financial
statement(s)  constitute  detailed  calculations  showing  compliance  with  all
financial covenants contained in this Financing Agreement.

     7.9  Until   termination  of  the  Financing   Agreement  and  payment  and
satisfaction of all Obligations  hereunder,  each Restricted Person agrees that,
without  the prior  written  consent of the Agent,  except as  otherwise  herein
provided, no Restricted Person will:

     (a)  Mortgage,  assign,  pledge,  transfer  or  otherwise  permit any Lien,
charge,  security interest,  encumbrance or judgment,  (whether as a result of a
purchase money or title retention  transaction,  or other security interest,  or
otherwise) to exist on any of the  Collateral  or any other assets,  whether now
owned or hereafter acquired, except for the Permitted Encumbrances;

     (b) Incur or create any Indebtedness other than the Permitted Indebtedness;

     (c) Sell, lease,  assign,  transfer or otherwise dispose of (i) Collateral,
except as otherwise specifically permitted by this Financing Agreement,  or (ii)
either all or substantially all of any Restricted Person's assets,  which do not
constitute  Collateral  (except  in either  case for sales,  transfers  or other
dispositions from one Grantor to another Grantor);

     (d) Merge, consolidate,  liquidate,  dissolve, or otherwise alter or modify
its  corporate  name,  principal  place of business,  structure,  or  existence,
re-incorporate  or  re-organize,  or enter  into or engage in any  operation  or
activity materially  different from that presently being conducted by it, except
that (i) either or both of  International  or Cleaning may liquidate or dissolve
(provided  that after  giving  effect to such  liquidation  or  dissolution  the
Company  is the  owner of all of the  assets  of such  liquidated  or  dissolved
entity),  (ii) any  Grantor  may merge or  consolidate  with any  other  Grantor
(provided that if the Company is the subject of such a merger or  consolidation,
the Company is the surviving entity), and (iii) any Restricted Person may change
its corporate name or address, reorganize, or re-incorporate; provided that: (x)
it shall give the Agent thirty (30) days prior written notice thereof and (y) it
shall execute and deliver,  prior to any such action,  any and all documents and
agreements  requested by the Agent to confirm the  continuation and preservation
of all security interests and Liens granted to the Agent hereunder;

                                       43
<PAGE>

     (e)  Assume,  guarantee,  endorse,  or  otherwise  become  liable  upon the
obligations  of any  Person,  firm,  entity or  corporation,  except for (i) the
endorsement  of  negotiable  instruments  for deposit or  collection  or similar
transactions in the ordinary  course of business;  (ii) guaranties by Holding of
the  obligations  of  any  other  Restricted  Person  or by any  Grantor  of the
obligations  of any other Grantor,  in each case provided that such  obligations
are permitted hereunder;  (iii) any retained liability of a Restricted Person as
a lessee under  operating  leases  which have been  assigned or subleased in the
ordinary course of business; and (iv) guaranties of the obligations of officers,
directors,  and employees made in the ordinary course of business, the liability
under which when added  together  with the amount of all  outstanding  loans and
advances  made  pursuant  to clause  (vi) of  Section  7.9(g),  does not  exceed
$1,000,000 in the aggregate at any one time outstanding.

     (f)  Declare  or pay any  dividend  or  distributions  of any kind  on,  or
purchase,  acquire,  redeem  or  retire,  any of the  capital  stock  or  equity
interest,  of  any  class  whatsoever,  whether  now or  hereafter  outstanding;
provided,  however,  that (i) the subsidiaries of the Company may declare or pay
dividends or  distributions to the Company and (ii) provided no Default or Event
of Default  then  exists,  the Company may pay  dividends  or  distributions  to
Holding (x) in an amount which,  when aggregated with the amount of any loans or
advances to Holding made in accordance with clause (i) of Section  7.9(g),  does
not exceed the amount of federal  income taxes of Holding which are then due and
payable plus (y) an additional amount not to exceed $100,000 each Fiscal Year.

     (g) Make any advance or loan to, or any  investment  in, any firm,  entity,
Person or  corporation  or purchase or acquire all or  substantially  all of the
stock or assets of any  entity,  Person or  corporation  except for (i) loans or
advances to or  investments  in a Grantor or loans or advances to Holding which,
when  aggregated  with the  amount of any  dividends  or  distributions  made to
Holding in  accordance  with  clause (ii) of Section  7.9(f),  do not exceed the
amounts  permitted  to be  distributed  to Holding  pursuant  to clause  (ii) of
Section 7.9(f) and are made solely for the uses for which funds are permitted to
be distributed  by the Company to Holding under clause (ii) of Section  7.9(f));
(ii) existing loans,  advances and  investments  described on Schedule 1 hereto;
(iii) (A) securities  issued or directly and fully  guaranteed or insured by the
United States or any agency or  instrumentality  thereof (provided that the full
faith and credit of the United  States is  pledged  in support  thereof)  having
maturities  of not more than six (6) months  from the date of  acquisition,  (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 six (6) months 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 Services or Moody's  Investors  Service,  Inc.,
(C) dollar  denominated  time deposits and certificates of deposit of any Lender
or any commercial bank having, or which is the principal banking subsidiary of a
bank holding company having,  a long-term  unsecured debt rating of at least "A"
or the equivalent  thereof from Standard & Poor's Ratings Service or "A2" or the
equivalent thereof from Moody's Investors Service,  Inc., with maturities of not
more than six (6)  months  from the date of  acquisition  by such  Persons,  (D)
repurchase  obligations  with a  term  of not  more  than  seven  (7)  days  for
underlying  securities  of the types  described in clause (A) above entered into
with any bank  meeting the  qualifications  specified  in clause (C) above,  (E)
commercial paper issued by any Person incorporated in the United States rated at
least A-2 or the equivalent  thereof by Standard & Poor's Ratings Services or at
least P-1 or the equivalent  thereof by Moody's Investors  Service,  Inc. and in
each case maturing not more than six

                                       44
<PAGE>

(6) months after the date of acquisition by such Person,  and (F) investments in
money market funds substantially all of whose assets are comprised of securities
of the types  described  in clauses  (A)  through  (E) above;  (iv)  investments
(including  debt  obligations)  received in  connection  with the  bankruptcy or
reorganization  of  suppliers  and  customers  and in good faith  settlement  of
delinquent  obligations  of, and other  disputes  with  suppliers  and customers
arising in the ordinary  course of business;  (v) per diem advances to employees
for travel,  lodging,  and food  expenses,  and (vi) other loans and advances to
officers, directors and employees made in the ordinary course of business, which
when added together with the amount of liability under the guaranties  permitted
under clause (e)(iv) of Section 7.9, does not exceed $1,000,000 in the aggregate
at any one time  outstanding;  and (vi) other loans,  advances  and  investments
which do not exceed $1,000,000 per Fiscal Year.

     (h) Pay any  management,  consulting  or other  similar fees to any Person,
corporation  or other  entity  affiliated  with the Company  except  pursuant to
transactions  in the ordinary  course of business and upon terms not  materially
less favorable then it could obtain in an arm's length transaction with a Person
that was not affiliated with the Company;

     (i) Make any  payment in respect of any  principal  of or  interest  on, or
redeem,  retire,  purchase or otherwise  acquire,  directly or  indirectly,  any
Subordinated Debt; provided,  that so long as no Default or Event of Default has
occurred and is continuing or would result therefrom (i) the Company may pay the
final scheduled  principal  payments due on the Seller  Subordinated Notes in an
amount not to exceed  $2,000,000  together  with all accrued  interest  relating
thereto on the due date therefor,  (ii) the Company may prepay  principal on the
Senior  Subordinated  Notes if (A) at the end of the three most  recently  ended
calendar  months  for which a  Consolidated  Balance  Sheet  has been  delivered
pursuant to Section  7.8(c),  the Company  had Excess  Availability  of at least
$10,000,000,  and (B) the Company has made  principal  payments  aggregating  at
least $7,270,800 on the Real Estate Loans and the Machinery and Equipment Loans,
and (iii) the Company  may make  interest  payments  on the Senior  Subordinated
Notes  which  are then due and  payable  if at the end of the two most  recently
ended calendar months for which a Consolidated  Balance Sheet has been delivered
pursuant to Section  7.8(c),  the Company  had Excess  Availability  of at least
$5,000,000.

     (j) Issue any additional shares of capital stock or other securities or any
options,  warrants,  or other rights to acquire such additional  shares or other
securities  except  that  provided  that no Event of Default  has  occurred,  is
continuing,  or would  result  therefrom,  Holding may issue  stock  (other than
mandatorily redeemable stock), securities, options, or warrants if fifty percent
(50%) of the net proceeds  thereof are applied to the payment of all outstanding
Obligations  relating to the Revolving Loans (and if the  outstanding  principal
balance of the  Revolving  Loans is zero and all  interest  with  respect to the
Revolving  Loans has been paid,  such net proceeds shall be applied as specified
in Section  3.4(e)),  and fifty percent (50%) of the net proceeds  therefrom are
paid as a prepayment of the Machinery and Equipment  Loans (other than shares of
common stock of Holding issued  pursuant to outstanding  warrants on the Closing
Date and the grant of stock  options  to  employees  pursuant  to the  HydroChem
Holding,  Inc. 1994 Stock Option Plan (as in effect on the Closing Date) and any
stock issued in connection with any such option).

     (k) Create any new subsidiary other than  wholly-owned  subsidiaries  which
become Grantors and Guarantors hereunder;  provided,  however that no subsidiary
created after the Closing

                                       45
<PAGE>

Date  shall be deemed to be a  Grantor  for  purposes  of  calculating  Eligible
Accounts  Receivable,  unless the Company has received the prior written consent
of the Agent.

     7.10  Until  termination  of  the  Financing   Agreement  and  payment  and
satisfaction in full of all Obligations hereunder, the Company shall maintain as
of the last day of each Fiscal Quarter a Fixed Charge Coverage Ratio of not less
than (i) 1.00 to 1.00 for the Fiscal Quarter ending December 31, 2001; (ii) 1.05
to 1.00 for the Fiscal Quarter ending March 31, 2002; (iii) 1.10 to 1.00 for the
Fiscal  Quarter  ending  June 30,  2002;  and (iv) 1.15 to 1.00 for each  Fiscal
Quarter ending  thereafter.  Calculations shall be made on the last business day
of each  Fiscal  Quarter  and shall  include  financial  results  for the period
beginning  October 1, 2001 through the date any such  calculation is being made,
until the September 30, 2002  calculation,  at which point such  calculation and
all subsequent  quarterly  calculations  shall include  financial  results for a
period consisting of the four (4) consecutive quarters immediately prior to such
calculation.  Such  calculations  shall be made by the Company and  certified to
Agent and each Lender pursuant to a certificate  executed by the chief financial
officer of the Company to be  delivered  with the  financial  statements  of the
Company delivered  pursuant to Section 7.7.  Notwithstanding  the foregoing,  if
Excess  Availability is at least $15,000,000 at the time of determination of the
Fixed Charge Coverage  Ratio,  then the Fixed Charge Coverage Ratio shall not be
less than 1.00 to 1.00.

     7.11 The  Company  agrees  to  advise  the  Agent in  writing  of:  (a) all
expenditures  (actual or  anticipated)  in excess of $150,000  from the budgeted
amount  therefor  in any  Fiscal  Year  for  (i)  environmental  clean-up,  (ii)
environmental  compliance or (iii) environmental  testing and the impact of said
expenses on the Company's  Working  Capital;  and (b) any notices any Restricted
Person  receives  from any local,  state or federal  authority  advising  of any
environmental  liability  (real  or  potential)  stemming  from  any  Restricted
Person's  operations,  its  premises,  its waste  disposal  practices,  or waste
disposal sites used by any Restricted  Person which would reasonably be expected
to  have  a  material  adverse  effect  on the  business  or  operations  of the
Restricted Persons, taken as a whole and to provide the Agent with copies of all
such notices if so required.

     7.12 Each  Restricted  Person  hereby agrees to indemnify and hold harmless
the Agent and its officers, directors,  employees, attorneys and agents (each an
"Indemnified  Party") from, and holds each of them harmless against, any and all
losses, liabilities,  obligations,  claims, actions, damages, costs and expenses
(including  attorney's  fees) and any payments made by the Agent pursuant to any
indemnity  provided  by the Agent with  respect  to or to which any  Indemnified
Party could be subject insofar as such losses, liabilities, obligations, claims,
actions,  damages,  costs,  fees or expenses with respect to the Loan Documents,
including  without  limitation  those which may arise from or relate to: (a) the
Depository  Account,  the  Blocked  Accounts,   the  lockbox  and/or  any  other
depository account and/or the agreements executed in connection  therewith;  and
(b) any and all claims or expenses asserted against the Agent as a result of any
environmental  pollution,  hazardous material or environmental clean-up relating
to the Real  Estate;  or any claim or  expense  which  results  from  Restricted
Persons' operations (including, but not limited to, Restricted Persons' off-site
disposal  practices) and use of the Real Estate,  which the Agent may sustain or
incur  (other  than solely as a result of the  physical  actions of the Agent on
Restricted  Persons'  premises),   WHETHER  OR  NOT  SUCH  LOSSES,  LIABILITIES,
OBLIGATIONS,  CLAIMS, ACTIONS,  DAMAGES, COSTS, FEES, OR EXPENSES ARE IN ANY WAY
OR TO ANY EXTENT OWED, IN WHOLE OR

                                       46
<PAGE>

IN PART,  UNDER ANY CLAIM OR THEORY  OF STRICT  LIABILITY,  OR ARE  CAUSED BY OR
ARISE OUT OF ANY INDEMNIFIED  PARTY'S OWN NEGLIGENCE,  except to the extent such
losses,  liabilities,  obligations,  claims,  actions,  damages, costs, fees, or
expenses are proximately  caused by such  Indemnified  Party's  individual gross
negligence or willful misconduct. Each Restricted Person hereby agrees that this
indemnity  shall survive  termination  of this Financing  Agreement,  as well as
payments of Obligations  which may be due hereunder.  The Agent may, in its sole
business judgement, establish such Availability Reserves with respect thereto as
it may deem advisable under the circumstances and, upon any termination  hereof,
hold such reserves as cash reserves for any such contingent liabilities.

     7.13  Without  the  prior  written  consent  of the  Agent or as  otherwise
provided in this Financing Agreement, each Restricted Person agrees that it will
not enter into any transaction,  including,  without  limitation,  any purchase,
sale,  lease,  loan or exchange of property with any other Restricted  Person or
any subsidiary or Affiliate of any Restricted  Person,  provided that, except as
otherwise set forth in this  Financing  Agreement,  each  Restricted  Person may
enter into sale and service  transactions in the ordinary course of its business
and pursuant to the reasonable  requirements of such Restricted Person, and upon
standard terms and conditions and fair and reasonable  terms,  no less favorable
to such  Restricted  Person  than it could  obtain in a  comparable  arms length
transaction  with an unrelated third party,  provided further that no Default or
Event of Default exists or will occur hereunder prior to and after giving effect
to any such transaction.

     7.14 (a) On the last day of each of the  three  consecutive  full  calendar
months occurring  immediately  after any principal  payment made on Subordinated
Debt, the Company shall maintain Excess  Availability  of at least  $10,000,000.
(b) On the  last  day of  each  of the  two  consecutive  full  calendar  months
occurring  immediately  after any payment of interest on the Subordinated  Debt,
the Company shall maintain Excess Availability of at least $5,000,000

     7.15. Not more than once in any twelve calendar month period,  upon request
of the Agent the Company at the Company's expense shall deliver to the Agent and
each Lender (i) an updated  appraisal  of the  Equipment  in form and  substance
similar to the appraisal of the Unencumbered Machinery and Equipment included in
the Closing Appraisals which shall be reasonably acceptable to Agent and (ii) an
updated appraisal of the Real Estate located at 900 Georgia Avenue in Deer Park,
Texas in form  and  substance  similar  to the  appraisal  of such  Real  Estate
included  in the Closing  Appraisals  which shall be  reasonably  acceptable  to
Agent.  From and after the occurrence and during the  continuance of an Event of
Default the Agent shall have the right to request  additional updated appraisals
as deemed  necessary by the Agent and such appraisals  shall be conducted at the
expense of the Company.

     7.16 Restricted Persons hereby covenant and agree to use their commercially
reasonable  best efforts to obtain and deliver to the Agent waivers and consents
signed by each lessor of real property  where any  Collateral is located in form
and substance  satisfactory to the Agent including but not limited to waivers of
all such lessor's  liens in and to the  Equipment or fixtures of the  applicable
Restricted Person located on the leased premises.

                                       47
<PAGE>

SECTION 8.     Interest, Fees and Expenses

     8.1 (a) Interest on the Revolving  Loans shall be payable monthly as of the
end of each month. The interest rate on Chase Bank Rate Loans that are Revolving
Loans  shall be a rate per  annum  equal to the  Chase  Bank  Rate plus the then
Applicable  Margin for Chase Bank Rate  Loans  that are  Revolving  Loans on the
average of the net balances  owing by the Company to the Agent in the  Revolving
Loan  Account at the close of each day during  such  month.  In the event of any
change in said  Chase Bank Rate,  the rate  hereunder  for Chase Bank Rate Loans
shall  change,  as of the date of such  change,  so as to remain above the Chase
Bank Rate by an amount equal to the then appropriate Applicable Margin. The rate
hereunder for Chase Bank Rate Loans shall be calculated based on a 360-day year.
The Agent shall be entitled to charge the  Company's  Revolving  Loan Account at
the rate  provided for herein when due until all  Obligations  have been paid in
full.

     (b) Notwithstanding any provision to the contrary contained in this section
8, in the event that the sum of (i) the outstanding Revolving Loans and (ii) the
outstanding  Letters  of Credit  exceed  the  lesser of either  (x) the  maximum
aggregate amount available under Sections 3 and 5 of this Financing Agreement or
(y) the Revolving Line of Credit: (A) as a result of Revolving Loans advanced by
the Agent at the request of the Company (herein "Requested  Overadvances"),  for
any one (1) or more days in any month,  or (B) for any other  reason  whatsoever
(herein "Other  Overadvances") and such Other Overadvances continue for five (5)
or more days in any month , the average net balance of all  Revolving  Loans for
such month shall bear interest at the Overadvance Rate.

     (c) Upon and after the  occurrence of an Event of Default and the giving of
any required  notice by the Agent in accordance  with the  provisions of Section
10,  Paragraph 10.2 hereof,  all Obligations  shall bear interest at the Default
Rate of Interest.

     8.2 (a)  Interest  on the  Machinery  and  Equipment  Loan shall be payable
monthly as of the end of each month on the unpaid  balance or on payment in full
prior to maturity. The interest rate on Chase Bank Rate Loans that are Machinery
and Equipment  Loans shall be a rate per annum equal to the Chase Bank Rate plus
the then  appropriate  Applicable  Margin  for Chase  Bank Rate  Loans  that are
Machinery  and  Equipment  Loans.  In the event of any change in said Chase Bank
Rate the rate  hereunder for any such Chase Bank Rate Loans shall change,  as of
the date of such change,  so as to remain above the Chase Bank Rate by an amount
equal to the then  appropriate  Applicable  Margin.  The rate hereunder shall be
calculated  based on a 360 day year.  The Agent  shall be entitled to charge the
Revolving  Loan  Account  at the rate  provided  for  herein  when due until all
Obligations have been paid in full.

     (b) Interest on the Real Estate Loan shall be payable monthly as of the end
of each month on the unpaid balance or on payment in full prior to maturity. The
interest  rate on Chase Bank Rate Loans that are Real  Estate  Loans  shall be a
rate per annum equal to the Chase Bank Rate plus the then appropriate Applicable
Margin  for Chase Bank Loans  that are Real  Estate  Loans.  In the event of any
change in said Chase Bank Rate the rate  hereunder  for any such Chase Bank Rate
Loans shall  change,  as of the date of such  change,  so as to remain above the
Chase Bank Rate by an amount equal to the then  appropriate  Applicable  Margin.
The rate hereunder shall be calculated based on a

                                       48
<PAGE>

360 day year.  The Agent shall be entitled to charge the Revolving  Loan Account
at the rate provided for herein when due until all Obligations have been paid in
full.

     8.3 In  consideration  of the Letter of Credit  Guaranty of the Agent,  the
Company shall pay the Agent the Letter of Credit  Guaranty Fee which shall be an
amount equal to (a) one and one-half  percent (1.50%) on the face amount of each
documentary  Letter of Credit  payable  upon  issuance  thereof  and (b) one and
one-half percent (1.50%) per annum,  payable monthly, on the face amount of each
standby Letter of Credit less the amount of any and all amounts previously drawn
under such standby Letter of Credit.

     8.4 Any and all charges, fees,  commissions,  costs and expenses charged to
the Agent for the Company's  account by any Issuing Bank in connection  with, or
arising out of, Letters of Credit or out of transactions  relating  thereto will
be charged to the Revolving Loan Account in full when charged to, or paid by the
Agent, or as may be due upon any termination of this Financing Agreement hereof,
and when made by any such Issuing Bank shall be conclusive on the Agent.

     8.5 The Company shall  reimburse or pay the Agent, as the case may be, for:
(a) all Out-of-Pocket Expenses and (b) any applicable Documentation Fee.

     8.6 Upon the last  Business Day of each month,  commencing  on November 30,
2001,  the Company  shall pay to the Agent the Line of Credit Fee in  accordance
with the Fee Letter.

     8.7 To induce  the  Agent to enter  into this  Financing  Agreement  and to
extend to the Company the Revolving Loan,  Letters of Credit  Guaranties and the
Term Loans the Company has paid to the Agent a Loan  Facility Fee in  accordance
with the Fee Letter.

     8.8  On  the  Closing  Date  and  each  anniversary  of  the  Closing  Date
thereafter, the Company shall pay to the Agent the Administrative Management Fee
in accordance with the Fee Letter, which shall be deemed fully earned when paid.

     8.9 The  Company  shall pay the Agent's  standard  charges and fees for the
Agent's  personnel  used by the Agent for  reviewing  the books and  records  of
Restricted  Persons  and  for  verifying,  testing,  protecting,   safeguarding,
preserving or disposing of all or any part of the  Collateral  (which fees shall
be in  addition  to the  Administrative  Management  Fee and  any  Out-of-Pocket
Expenses).

     8.10 The Company  hereby  authorizes the Agent to charge the Revolving Loan
Account with the amount of all payments due  hereunder as such  payments  become
due. The Company  confirms  that any charges  which the Agent may so make to the
Revolving Loan Account as herein  provided will be made as an  accommodation  to
the Company and solely at the Agent's discretion.

     8.11 In the  event  that the  Agent or any  participant  hereunder  (or any
financial institution which may from time to time become a participant or lender
hereunder)  shall have  determined  in the exercise of its  reasonable  business
judgement  that,  subsequent to the Closing Date, any change in applicable  law,
rule,  regulation or guideline regarding capital adequacy,  or any change in the
interpretation  or  administration  thereof,  or compliance by the Agent or such
participant with any new

                                       49
<PAGE>

request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have  the  effect  of  reducing  the  rate  of  return  on the  Agent's  or such
participant's  capital as a consequence of its obligations  hereunder to a level
below that which the Agent or such participant  could have achieved but for such
adoption,  change or  compliance  (taking into  consideration  the Agent or such
participant's policies with respect to capital adequacy) by an amount reasonably
deemed by the Agent or such participant to be material, then, from time to time,
the Company shall pay no later than five (5) days following  demand to the Agent
or such  participant  such  additional  amount or amounts as will compensate the
Agent or such  participant  for such  reduction.  In determining  such amount or
amounts,  the Agent or such  participant  may use any  reasonable  averaging  or
attribution methods. The protection of this Paragraph 8.11 shall be available to
the  Agent  or  such  participant  regardless  of  any  possible  contention  of
invalidity or inapplicability  with respect to the applicable law, regulation or
condition.  A certificate  of the Agent or such  participant  setting forth such
amount  or  amounts  as shall  be  necessary  to  compensate  the  Agent or such
participant  with  respect to this  Section 8 and the  calculation  thereof when
delivered to the Company  shall be  conclusive  on the Company  absent  manifest
error.  Notwithstanding anything in this paragraph to the contrary, in the event
the  Agent  or such  participant  has  exercised  its  rights  pursuant  to this
paragraph, and subsequent thereto determines that the additional amounts paid by
the  Company  in whole or in part  exceed  the  amount  which  the Agent or such
participant  actually  required to be made whole,  the excess,  if any, shall be
returned to the Company by the Agent or such participant.

     8.12  In  the  event  that  any  applicable  law,  treaty  or  governmental
regulation,  or any  change  therein  or in the  interpretation  or  application
thereof,  or  compliance  by the Agent or such  participant  with any request or
directive  (whether  or not  having the force of law) from any  central  bank or
other financial, monetary or other authority, shall:

     (a) subject the Agent or such participant to any tax of any kind whatsoever
with  respect to this  Financing  Agreement  or change the basis of  taxation of
payments to the Agent or such  participant of principal,  fees,  interest or any
other amount payable  hereunder or under any other documents (except for changes
in the rate of tax on the overall net income of the Agent or such participant by
the federal  government or the  jurisdiction in which it maintains its principal
office);

     (b)  impose,  modify  or hold  applicable  any  reserve,  special  deposit,
assessment or similar  requirement against assets held by, or deposits in or for
the account of,  advances or loans by, or other credit  extended by the Agent or
such participant by reason of or in respect to this Financing  Agreement and the
Loan Documents,  including (without  limitation) pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or

     (c)  impose  on the Agent or such  participant  any  other  condition  with
respect to this Financing Agreement or any other document, and the result of any
of the  foregoing  is to increase the cost to the Agent or such  participant  of
making,  renewing or maintaining its Loans hereunder by an amount that the Agent
or such  participant  deems to be  material in the  exercise  of its  reasonable
business judgement or to reduce the amount of any payment (whether of principal,
interest  or  otherwise)  in respect  of any of the Loans by an amount  that the
Agent or such participant deems to be material in the exercise of its reasonable
business judgment, then, in any case the Company shall pay the

                                       50
<PAGE>

Agent or such  participant,  within five (5) days  following  its  demand,  such
additional  cost or such  reduction,  as the  case  may be.  The  Agent  or such
participant  shall certify the amount of such  additional cost or reduced amount
to the  Company and the  calculation  thereof  and such  certification  shall be
conclusive upon the Company absent manifest error.  Notwithstanding  anything in
this paragraph to the contrary,  in the event the Agent or such  participant has
exercised  its  rights  pursuant  to  this  paragraph,  and  subsequent  thereto
determine  that the  additional  amounts paid by the Company in whole or in part
exceed the amount which the Agent or such participant actually required pursuant
hereto,  the  excess,  if any,  shall be returned to the Company by the Agent or
such participant.

     8.13 The  Company  may  request  LIBOR  Loans on the  following  terms  and
conditions:

     (a) The Company may elect,  subsequent to the Closing Date and from time to
time  thereafter (i) to request any Loan made hereunder to be a LIBOR Loan as of
the date of such Loan or (ii) to convert  Chase Bank Rate Loans to LIBOR  Loans,
and may elect from time to time to convert  LIBOR Loans to Chase Bank Rate Loans
by giving the Agent at least three (3) Business Days' prior  irrevocable  notice
of such election, provided that any such conversion of LIBOR Loans to Chase Bank
Rate Loans shall only be made, subject to the second following sentence,  on the
last day of an Interest Period with respect thereto. Should the Company elect to
convert  Chase Bank Rate Loans to LIBOR Loans,  it shall give the Agent at least
three (3) Business Days' prior irrevocable notice of such election.  If the last
day of an Interest  Period with respect to a Loan that is to be converted is not
a Business Day or Working Day,  then such  conversion  shall be made on the next
succeeding  Business  Day or  Working  Day,  as the case may be,  and during the
period from such last day of an Interest Period to such succeeding Business Day,
as the case may be,  such Loan shall bear  interest  as if it were an Chase Bank
Rate Loan. All or any part of outstanding Chase Bank Rate Loans then outstanding
with respect to  Revolving  Loans and Term Loans may be converted to LIBOR Loans
as provided herein,  provided that partial  conversions shall be in an aggregate
principal  amount of  $200,000  or  integral  multiples  of  $100,000  in excess
thereof.  The Agent  shall be entitled to charge the Company a $500 fee upon the
first effective day of any such election for a LIBOR Loan.

     (b) Any LIBOR  Loans may be  continued  as such upon the  expiration  of an
Interest Period,  provided the Company so notifies the Agent, at least three (3)
Business  Days' prior to the  expiration of said Interest  Period,  and provided
further that no LIBOR Loan may be continued as such upon the  occurrence  of any
Default  or Event of  Default  under  this  Financing  Agreement,  but  shall be
automatically  converted  to a  Chase  Bank  Rate  Loan on the  last  day of the
Interest  Period during which occurred such Default or Event of Default.  Absent
such  notification,  LIBOR Rate Loans shall  convert to Chase Bank Rate Loans on
the last  day of the  applicable  Interest  Period.  Each  notice  of  election,
conversion  or  continuation  furnished  by the Company  pursuant  hereto  shall
specify whether such election,  conversion or continuation is for a one, two, or
three month period.  Notwithstanding  anything to the contrary contained herein,
the Agent (or any participant,  if applicable) shall not be required to purchase
United States Dollar deposits in the London  interbank  market or from any other
applicable  LIBOR Rate market or source or otherwise  "match fund" to fund LIBOR
Rate Loans, but any and all provisions hereof relating to LIBOR Rate Loans shall
be deemed to apply as if the Agent  (and any  participant,  if  applicable)  had
purchased such deposits to fund any LIBOR Rate Loans.

                                       51
<PAGE>

     (c) The Company may request a LIBOR Loan,  convert any Chase Bank Rate Loan
or continue any LIBOR Loan provided there is then no Default or Event of Default
in effect.

     8.14 (a) The LIBOR Loans shall bear interest for each Interest  Period with
respect hereto on the unpaid  principal amount thereof at a rate per annum equal
to the LIBOR  determined for each Interest  Period in accordance  with the terms
hereof plus the then appropriate Applicable Margin set forth on the Pricing Grid
for LIBOR Loans that are Revolving Loans, Machinery and Equipment Loans, or Real
Estate Loans, as applicable.

     (b)  If  all  or a  portion  of the  outstanding  principal  amount  of the
Obligations  shall not be paid when due  (whether  at the  stated  maturity,  by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Chase Bank Rate Loan at the end of the last day of
the Interest Period therefor.

     (c) The Company may not have more than five (5) LIBOR Loans  outstanding at
any given time.

     8.15 (a) Interest in respect of the LIBOR Loans shall be  calculated on the
basis of a 360 day year and shall be payable as of the end of each month.

     (b) The Agent shall, at the request of the Company,  deliver to the Company
a statement  showing the  quotations  given by The Chase  Manhattan Bank and the
computations used in determining any interest rate pursuant to Paragraph 8.14 of
Section 8 hereof.

     8.16 As further set forth in  paragraph  8.12 above,  in the event that the
Agent (or any financial  institution  which may become a participant  hereunder)
shall have  determined  in the  exercise of its  reasonable  business  judgement
(which  determination  shall be conclusive and binding upon the Company) that by
reason of  circumstances  affecting  the interbank  LIBOR  market,  adequate and
reasonable means do not exist for ascertaining LIBOR applicable for any Interest
Period with  respect to: (a) a proposed  Loan that the Company has  requested be
made as a LIBOR  Loan;  (b) a LIBOR  Loan that will  result  from the  requested
conversion of a Chase Bank Rate Loan into a LIBOR Loan; or (c) the  continuation
of LIBOR Loans beyond the  expiration of the then current  Interest  Period with
respect  thereto,  the  Agent  shall  forthwith  give  written  notice  of  such
determination  to the Company at least one day prior to, as the case may be, the
requested  borrowing date for such LIBOR Loan, the conversion date of such Chase
Bank Rate Loan or the last day of such Interest Period.  If such notice is given
(i) any requested  LIBOR Loan shall be made as a Chase Bank Rate Loan,  (ii) any
Chase  Bank Rate Loan that was to have been  converted  to a LIBOR Loan shall be
continued as a Chase Bank Rate Loan, and (iii) any outstanding  LIBOR Loan shall
be  converted,  on the last day of then  current  Interest  Period with  respect
thereto,  to a Chase Bank Rate Loan. Until such notice has been withdrawn by the
Agent,  no further LIBOR Loan shall be made nor shall the Company have the right
to convert a Chase Bank Rate Loan to a LIBOR Loan.

     8.17 If any payment on a LIBOR Loan  becomes due and payable on a day other
than a Business Day or Working Day,  the maturity  thereof  shall be extended to
the next  succeeding  Business  Day or  Working  Day  unless  the result of such
extension would be to extend such payment

                                       52
<PAGE>

into another  calendar  month in which event such  payment  shall be made on the
immediately preceding Business Day or Working Day.

     8.18  Notwithstanding any other provisions herein, if any law,  regulation,
treaty  or  directive  or  any  change  therein  or  in  the  interpretation  or
application  thereof,  shall make it unlawful  for the Agent to make or maintain
LIBOR Loans as contemplated  herein,  the then outstanding  LIBOR Loans, if any,
shall be converted  automatically to Chase Bank Rate Loans as of the end of such
month,  or within such  earlier  period as required by law.  The Company  hereby
agrees promptly to pay the Agent, upon demand,  any additional amounts necessary
to  compensate  the  Agent  for any costs  incurred  by the Agent in making  any
conversion in accordance with this Section 8 including,  but not limited to, any
interest or fees payable by the Agent to lenders of funds  obtained by the Agent
in order to make or maintain LIBOR Loans hereunder.

     8.19  Each  Restricted  Person  agrees to  indemnify  and to hold the Agent
(including any participant) harmless from any loss or expense which the Agent or
such  participant  may sustain or incur as a consequence  of: (a) Default by the
Company in payment of the principal amount of or interest on any LIBOR Loans, as
and when the same shall be due and payable in accordance  with the terms of this
Financing  Agreement,  including,  but not  limited to, any such loss or expense
arising  from  interest  or fees  payable  by the Agent or such  participant  to
lenders of funds obtained by either of them in order to maintain the LIBOR Loans
hereunder;  (b) default by the Company in making a borrowing or conversion after
the Company has given a notice in accordance  with  Paragraph  8.13 of Section 8
hereof;  (c) any prepayment of LIBOR Loans on a day which is not the last day of
the  Interest  Period  applicable   thereto,   including,   without  limitation,
prepayments arising as a result of the application of the proceeds of Collateral
to the Loans (provided that if the Company requests a borrowing on the same date
any such prepayment of a Loan that bears interest at a rate based on LIBOR is to
be made and such borrowing  request is made pursuant to the requirements of this
Agreement and the Lenders are  obligated to make the advance for such  borrowing
then the Agent and the Lenders agree that no prepayment  shall be deemed to have
been made on any Loan that bears interest at a rate based on LIBOR to the extent
of the amount borrowed); and (d) default by the Company in making any prepayment
after the Company had given notice to the Agent thereof.  The  determination  by
the Agent of the amount of any such loss or expense, when set forth in a written
notice to the Company, containing the Agent's calculations thereof in reasonable
detail,  shall be  conclusive  on the Company in the absence of manifest  error.
Calculation  of all amounts  payable under this  paragraph  with regard to LIBOR
Loans  shall be made as though the Agent had  actually  funded  the LIBOR  Loans
through the purchase of deposits in the  relevant  market and  currency,  as the
case may be, bearing  interest at the rate  applicable to such LIBOR Loans in an
amount  equal to the amount of the LIBOR Loans and having a maturity  comparable
to the relevant interest period; provided, however, that the Agent may fund each
of the LIBOR Loans in any manner the Agent sees fit and the foregoing assumption
shall be used only for calculation of amounts  payable under this paragraph.  In
addition,  notwithstanding  anything to the contrary contained herein, the Agent
shall apply all proceeds of Collateral and all other amounts received by it from
or on behalf of the Company (i)  initially to the Chase Bank Rate Loans and (ii)
subsequently to LIBOR Loans;  provided,  however,  (x) upon the occurrence of an
Event of Default or (y) in the event the aggregate  amount of outstanding  LIBOR
Rate Loans  exceeds  Availability  or the  applicable  maximum  levels set forth
therefor,  the Agent may apply all such amounts received by it to the payment of
Obligations in such

                                       53
<PAGE>

manner  and in such  order as the  Agent may  elect in its  reasonable  business
judgment.  In the event that any such  amounts  are applied to  Revolving  Loans
which are LIBOR Loans, such application shall be treated as a prepayment of such
Loans  and the  Agent  shall be  entitled  to  indemnification  hereunder.  This
covenant shall survive  termination  of this Financing  Agreement and payment of
the outstanding Obligations.

     8.20  Notwithstanding  anything to the contrary in this  Agreement,  in the
event that, by reason of any Regulatory Change (for purposes hereof  "Regulatory
Change" shall mean, with respect to the Agent, any change after the date of this
Financing  Agreement  in  United  States  federal,   state  or  foreign  law  or
regulations  (including,  without  limitation,  Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including the Agent of or under any United States federal,  state
or  foreign  law or  regulations  (whether  or not  having  the force of law and
whether or not failure to comply therewith would be unlawful),  the Agent either
(a) incurs any  material  additional  costs  based on or  measured by the excess
above a  specified  level of the  amount  of a  category  of  deposits  or other
liabilities  of such bank which  includes  deposits  by  reference  to which the
interest  rate on LIBOR  Loans  is  determined  as  provided  in this  Financing
Agreement  or a category of  extensions  of credit or other  assets of the Agent
which includes LIBOR Loans, or (b) becomes subject to any material  restrictions
on the amount of such a category  of  liabilities  or assets  which it may hold,
then,  if the Agent so elects by notice to the Company,  the  obligation  of the
Agent to make or continue,  or to convert Chase Bank Rate Loans into LIBOR Loans
hereunder  shall be  suspended  until  such  Regulatory  Change  ceases to be in
effect.

     8.21 For purposes of this  Financing  Agreement and Section 8 thereof,  any
reference to the Agent shall include any financial  institution which may become
a participant or co-lender subsequent to the Closing Date.

     8.22 Agent and each Lender (in this Section  8.22,  the "Lender  Parties"),
Restricted  Persons  and any  other  parties  to the Loan  Documents  intend  to
contract in strict  compliance  with  applicable  usury law from time to time in
effect. In furtherance thereof such Persons stipulate and agree that none of the
terms and provisions  contained in the Loan Documents shall ever be construed to
create a  contract  to pay,  for the use,  forbearance  or  detention  of money,
interest in excess of the maximum amount of interest  permitted to be charged by
applicable law from time to time in effect.  Neither any  Restricted  Person nor
any present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned  interest
thereon  or shall  ever be  required  to pay  interest  thereon in excess of the
maximum amount that may be lawfully  contracted for, charged,  or received under
applicable  law from time to time in effect,  and the provisions of this section
shall control over all other  provisions of the Loan  Documents  which may be in
conflict or apparent  conflict  herewith.  Lender Parties  expressly disavow any
intention to contract for, charge,  or collect  excessive  unearned  interest or
finance charges in the event the maturity of any Obligation is  accelerated.  If
the maturity of any Obligation is accelerated for any reason,  any Obligation is
prepaid and as a result any amounts held to constitute  interest are  determined
to be in excess of the legal  maximum,  or any Lender or any other holder of any
or all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the  Obligations  to an  amount in excess of that  permitted  to be  charged  by
applicable law then in effect, then all sums determined to constitute

                                       54
<PAGE>

interest  in excess of such legal  limit  shall,  without  penalty,  be promptly
applied to reduce the then outstanding  principal of the related Obligations or,
at such  Lender's or holder's  option,  promptly  returned to the Company or the
other payor thereof upon such  determination.  In determining whether or not the
interest paid or payable, under any specific  circumstance,  exceeds the maximum
amount  permitted under  applicable  law, Lender Parties and Restricted  Persons
(and any other payors  thereof)  shall to the greatest  extent  permitted  under
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium  rather than as  interest,  (b) exclude  voluntary  prepayments  and the
effects  thereof,  and (c)  amortize,  prorate,  allocate,  and spread the total
amount of interest  throughout the entire  contemplated  term of the instruments
evidencing the Obligations in accordance with the amounts  outstanding from time
to time  thereunder  and the maximum legal rate of interest from time to time in
effect  under  applicable  law in order to lawfully  contract  for,  charge,  or
receive the maximum amount of interest permitted under applicable law.

SECTION 9.     Powers

     Each Restricted Person hereby constitutes the Agent, or any Person or agent
the Agent may designate,  as its  attorney-in-fact,  at its cost and expense, to
exercise  all of the  following  powers,  which being  coupled with an interest,
shall be irrevocable until all Obligations to the Agent have been paid in full:

     (a) To receive, take, endorse, sign, assign and deliver, all in the name of
the Agent or such Restricted  Person,  any and all checks,  notes,  drafts,  and
other documents or instruments relating to the Collateral;

     (b) To receive,  open and dispose of all mail  addressed to any  Restricted
Person and to notify  postal  authorities  to change the  address  for  delivery
thereof to such address as the Agent may designate;

     (c) To request from customers indebted on Accounts at any time, in the name
of the Agent information concerning the amounts owing on the Accounts;

     (d) To request from customers indebted on Accounts at any time, in the name
of such  Restricted  Person,  in the name of Agent or in the name of the Agent's
designee, information concerning the amounts owing on the Accounts;

     (e) To transmit  to  customers  indebted on Accounts  notice of the Agent's
interest  therein and to notify  customers  indebted on Accounts to make payment
directly to the Agent for such Restricted Person's account; and

     (f) To take or bring, in the name of the Agent or such  Restricted  Person,
all  steps,  actions,  suits or  proceedings  deemed by the Agent  necessary  or
desirable to enforce or effect collection of the Accounts.

     Notwithstanding  anything hereinabove contained to the contrary, the powers
set  forth  above may only be  exercised  after  the  occurrence  of an Event of
Default and until such time as such Event of Default is waived in writing by the
Agent.

                                       55
<PAGE>

SECTION 10.    Events of Default and Remedies

     10.1 Notwithstanding  anything  hereinabove to the contrary,  the Agent may
terminate this Financing Agreement immediately upon the occurrence of any of the
following Events of Default:

     (a) cessation of the business of any Restricted  Person or the calling of a
meeting of the creditors of any Restricted  Person for purposes of  compromising
the debts and obligations of any Restricted Person;

     (b) the failure of any  Restricted  Person to  generally  meet its debts as
they mature;

     (c)  (i) the  commencement  by any  Restricted  Person  of any  bankruptcy,
insolvency,  arrangement,  reorganization,  receivership or similar  proceedings
under any federal or state law;  (ii) the  commencement  against any  Restricted
Person, of any bankruptcy, insolvency, arrangement, reorganization, receivership
or  similar  proceeding  under  any  federal  or state law by  creditors  of any
Restricted  Person,  provided  that such Default shall not be deemed an Event of
Default if such proceeding is controverted within thirty (30) days and dismissed
and vacated  within  forty five (45) days of  commencement,  except in the event
that  any of the  actions  sought  in any  such  proceeding  shall  occur or any
Restricted Person shall take action to authorize or effect any of the actions in
any such proceeding;  or (iii) the  commencement (x) by any Restricted  Person's
subsidiaries,  or any one of them, of any bankruptcy,  insolvency,  arrangement,
reorganization,  receivership or similar  proceeding  under any applicable state
law, or (y) against any Restricted Person's subsidiaries, or any one of them, of
any   involuntary   bankruptcy,   insolvency,    arrangement,    reorganization,
receivership or similar  proceeding  under  applicable  law,  provided that such
Default  shall  not be  deemed  an  Event  of  Default  if  such  proceeding  is
controverted  within thirty (30) days and dismissed or vacated within forty-five
(45) days of commencement, except in the event that any of the actions sought in
any such proceeding shall occur or the Restricted Person's subsidiaries,  or any
one of them,  shall take action to authorize or effect any of the actions in any
such proceeding;

     (d) any warranty or representation previously, presently, or hereafter made
by any  Restricted  Person herein or in any other Loan  Document  shall prove to
have been false or  incorrect  in any  material  respect on any date on or as of
which the same was made;

     (e) breach by any Restricted Person of any covenant contained herein (other
than those referred to in  sub-paragraph  (f) or (m) below) or in any other Loan
Document,  provided  that such  Default by any  Restricted  Person of any of the
covenants  referred  in this  clause  (e)  shall not be deemed to be an Event of
Default  unless and until such Default  shall remain  unremedied  to the Agent's
satisfaction for a period of thirty (30) days from the date of such breach;

     (f) breach by any  Restricted  Person of any  covenant  of  Paragraphs  6.3
(other than the first  sentence of Paragraph  6.3) and 6.4 (other than the first
two sentences of Paragraph 6.4) of Section 6 hereof;  and  Paragraphs  7.5, 7.6,
and 7.8 (other than clauses (a), (b) and (c)(ii) of Paragraph  7.8) through 7.16
(other than  clauses (a),  (b),  and (c)(i) of  Paragraph  7.8 and clause (a) of
Paragraph 7.11) hereof;

                                       56
<PAGE>

     (g) failure of any Restricted  Person to pay any of the Obligations  within
five (5) Business Days of the due date thereof,  provided that nothing contained
herein shall prohibit the Agent from charging such amounts to the Revolving Loan
Account on the due date thereof;

     (h) any Restricted Person shall (i) engage in any "prohibited  transaction"
as defined in ERISA, (ii) have any "accumulated  funding  deficiency" as defined
in ERISA,  (iii) have any "reportable event" as defined in ERISA, (iv) terminate
any "plan", as defined in ERISA or (v) be engaged in any proceeding in which the
Pension Benefit Guaranty Corporation shall seek appointment, or is appointed, as
trustee or administrator of any "plan", as defined in ERISA, and with respect to
this  sub-paragraph (g) such event or condition (x) remains uncured for a period
of thirty (30) days from date of  occurrence  and (y) could,  in the  reasonable
opinion of the Agent, subject any Restricted Person to any tax, penalty or other
liability  material to the business,  operations  or financial  condition of any
Restricted Person;

     (i) without the prior written consent of the Agent and, except as permitted
in any applicable  Subordination Agreement or as otherwise permitted herein, the
Company  shall (x)  amend or  modify  the  Subordinated  Debt in a manner  which
increases the principal  amount thereof or any fees payable  thereon or the rate
of interest thereon,  or accelerates the maturity of any payment due thereunder,
or modify  any  covenant  to be more  restrictive  on the  Company or modify the
subordination  provisions  thereof,  or (y) make any  payment  on account of any
Subordinated Debt;

     (j) the  occurrence of any default or event of default (after giving effect
to any  applicable  grace or cure  periods)  under any  instrument  or agreement
evidencing (x) Subordinated Debt or (y) any other Indebtedness of any Restricted
Person having a principal  amount in excess of $500,000 when aggregated with all
other Indebtedness in default;

     (k) the occurrence of any Change of Control;

     (l) the Company fails to execute and deliver to Agent deeds of trust and/or
mortgages in form and substance  acceptable to Agent in Agent's sole  discretion
with respect to all Real Property owned by the Company in the states of Florida,
Kansas,  Illinois,  and Ohio (other than the Ohio Real Property  unless the Ohio
Real  Property is not sold on or before the sixtieth  (60) day after the Closing
Date) on or before the sixtieth (60) day after the Closing Date;

     (m) the  failure of any  Restricted  Person to furnish any of the items set
forth in clauses  (a),  (b),  and (c)(i) of  Paragraph  7.8 within ten (10) days
after the due date thereof; or

     (n) the Company fails to establish on or before November 30, 2001, a system
of Lockbox Accounts and Concentration Accounts with respect to the collection of
Accounts and the deposit of proceeds of Collateral as shall be acceptable to the
Agent in all respects (such Lockbox Accounts and Concentration Accounts shall be
subject  to three  party  agreements  (between  the  Company,  the Agent and the
depository  bank)  which  shall be in form  and  substance  satisfactory  to the
Agent).

     10.2 Upon the occurrence of a Default and/or an Event of Default, the Agent
in its sole  discretion  may,  or upon the  written  direction  of the  Required
Lenders the Agent shall, declare that,

                                       57
<PAGE>

all Loans, advances and extensions of credit provided for in Sections 3, 4 and 5
of this Financing  Agreement  shall be thereafter in the Agent's or the Required
Lenders' sole discretion,  and the obligation of the Agent and/or the Lenders to
make  Revolving  Loans,  open  Letters of Credit and  provide  Letters of Credit
Guaranties  shall  cease  unless  such  Default or Event of Default is waived in
writing by the Required Lenders or cured to the Agent's or the Required Lenders'
satisfaction  in the  exercise  of  the  Agent's  and  the  Lenders'  reasonable
judgement.  Upon the  occurrence  of an Event of Default,  the Agent in its sole
discretion may, or upon the written  direction of the Required Lenders the Agent
shall,  declare  that:  (a) all  Obligations  shall become  immediately  due and
payable;  (b) the  Agent may  charge  Restricted  Persons  the  Default  Rate of
Interest on all then outstanding or thereafter  incurred  Obligations in lieu of
the interest  provided for in Section 8 of this  Financing  Agreement,  provided
that,  with respect to this clause "(b)" the Agent has given the Company written
notice of the Event of  Default,  provided  further  however,  that no notice is
required  if the Event of Default is the Event  listed in  Paragraph  10.1(c) of
this  Section 10; and (c) the Agent may  immediately  terminate  this  Financing
Agreement  upon  notice  to  the  Company;  provided,  however,  that  upon  the
occurrence  of an Event of Default  listed in Paragraph  10.1(c) of this Section
10, this Financing Agreement shall  automatically  terminate and all Obligations
shall become due and payable, without any action, declaration,  notice or demand
by the Agent.  The exercise of any option is not  exclusive of any other option,
which may be exercised at any time by the Agent.

     10.3  Immediately  upon the  occurrence of any Event of Default,  the Agent
may, to the extent permitted by law: (a) remove from any premises where same may
be  located  any and all  books and  records,  computers,  electronic  media and
software  programs  associated  with any  Collateral  (including  any electronic
records, contracts and signatures pertaining thereto),  documents,  instruments,
files and records,  and any receptacles or cabinets containing same, relating to
the Accounts, or the Agent may use, at the Company's expense, such of Restricted
Persons' personnel,  supplies or space at Restricted Persons' places of business
or  otherwise,  as may be  necessary  to  properly  administer  and  control the
Accounts or the handling of  collections  and  realizations  thereon;  (b) bring
suit, in the name of any  Restricted  Person or the Agent,  and generally  shall
have all other rights respecting said Accounts, including without limitation the
right to: accelerate or extend the time of payment, settle, compromise,  release
in whole or in part any amounts  owing on any Accounts and issue  credits in the
name of any  Restricted  Person or the Agent;  (c) sell,  assign and deliver the
Collateral and any returned, reclaimed or repossessed Inventory, with or without
advertisement,  at public or private sale, for cash, on credit or otherwise,  at
the  Agent's  sole  option  and  discretion,  and the  Agent may bid or become a
purchaser at any such sale,  free from any right of  redemption,  which right is
hereby  expressly  waived by  Restricted  Persons;  (d)  foreclose  the security
interests  in the  Collateral  created  herein or by the Loan  Documents  by any
available  judicial  procedure,  or to  take  possession  of  any  or all of the
Collateral,  including any Inventory,  Equipment and/or Other Collateral without
judicial  process,  and to enter any premises  where any Inventory and Equipment
and/or Other  Collateral may be located for the purpose of taking  possession of
or removing the same; and (e) exercise any other rights and remedies provided in
law, in equity,  by contract or otherwise.  To the extent  permitted by law, the
Agent shall have the right, without notice or advertisement,  to sell, lease, or
otherwise  dispose  of all or any part of the  Collateral,  whether  in its then
condition  or  after  further  preparation  or  processing,  in the  name of any
Restricted  Person or the Agent, or in the name of such other party as the Agent
may designate, either at public or private sale or at any broker's

                                       58
<PAGE>

board, in lots or in bulk, for cash or for credit, with or without warranties or
representations  (including but not limited to warranties of title,  possession,
quiet  enjoyment and the like),  and upon such other terms and conditions as the
Agent in its sole  discretion may deem  advisable,  and the Agent shall have the
right to purchase at any such sale. If any Inventory and Equipment shall require
rebuilding,  repairing,  maintenance  or  preparation,  the Agent shall have the
right,  at its option,  to do such of the  aforesaid  as is  necessary,  for the
purpose of putting the  Inventory  and  Equipment in such  saleable  form as the
Agent shall deem  appropriate  and any such costs shall be deemed an  Obligation
hereunder.  Any action taken by CIT pursuant to this paragraph  shall not effect
commercial  reasonableness  of the sale. Each Restricted  Person agrees,  at the
request of the Agent,  to assemble the  Inventory  and  Equipment and to make it
available  to the Agent at  premises  of the  Company or  elsewhere  and to make
available to the Agent the premises and facilities of Restricted Persons for the
purpose of the Agent's taking  possession of,  removing or putting the Inventory
and  Equipment  in  saleable  form.  If notice of  intended  disposition  of any
Collateral  is required  by law,  it is agreed  that ten (10) days notice  shall
constitute  reasonable  notification  and full  compliance with the law. The net
cash  proceeds  resulting  from the  Agent's  exercise  of any of the  foregoing
rights, (after deducting all charges,  costs and expenses,  including reasonable
attorneys'  fees)  shall  be  applied  by  the  Agent  to  the  payment  of  the
Obligations, whether due or to become due, in such order as the Agent may elect,
and  Restricted  Persons shall remain liable to the Agent for any  deficiencies,
and the  Agent in turn  agrees  to remit to the  Company  or its  successors  or
assigns,  any surplus  resulting  therefrom.  The  enumeration  of the foregoing
rights is not intended to be exhaustive  and the exercise of any right shall not
preclude the  exercise of any other  rights,  all of which shall be  cumulative.
Each Restricted Person hereby indemnifies the Agent and holds the Agent harmless
from any and all costs, expenses, claims, liabilities, Out-of-Pocket Expenses or
otherwise,  incurred or imposed on the Agent by reason of the exercise of any of
its rights,  remedies and interests  hereunder,  including,  without limitation,
from any sale or transfer of Collateral, preserving, maintaining or securing the
Collateral,  defending its interests in  Collateral  (including  pursuant to any
claims   brought  by  any   Restricted   Person,   any   Restricted   Person  as
debtor-in-possession,  any  secured or  unsecured  creditors  of any  Restricted
Person,  any trustee or receiver in bankruptcy,  or  otherwise),  WHETHER OR NOT
SUCH COSTS, EXPENSES, CLAIMS,  LIABILITIES, OR OUT-OF-POCKET EXPENSES ARE IN ANY
WAY OR TO ANY  EXTENT  OWED,  IN WHOLE OR IN PART,  UNDER ANY CLAIM OR THEORY OF
STRICT  LIABILITY,  OR ARE  CAUSED BY OR ARISE OUT OF  AGENT'S  OWN  NEGLIGENCE,
except to the extent such losses,  liabilities,  obligations,  claims,  actions,
damages,  costs,  fees, or expenses are proximately caused by Agent's individual
gross  negligence or willful  misconduct.  The foregoing  indemnification  shall
survive  termination  of  this  Financing  Agreement  until  such  time  as  all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full.  In  furtherance  thereof  the Agent,  may  establish  such  reserves  for
Obligations  hereunder  (including  any contingent  Obligations)  as it may deem
advisable in its reasonable  business  judgement.  Any  applicable  mortgage(s),
deed(s) of trust or  assignment(s)  issued to the Agent on the Real Estate shall
govern the rights and remedies of the Agent thereto.

SECTION 11.    Termination

     Except  as  otherwise  permitted  herein,  the  Agent  may  terminate  this
Financing  Agreement only as of the initial or any subsequent  Anniversary  Date
and then only by giving  the  Company at least  sixty  (60) days  prior  written
notice of termination. Notwithstanding the foregoing the Agent

                                       59
<PAGE>

may terminate  the Financing  Agreement  immediately  upon the  occurrence of an
Event of Default,  provided,  however,  that if the Event of Default is an event
listed in  Paragraph  10.1(c) of Section 10 of this  Financing  Agreement,  this
Financing Agreement shall terminate in accordance with paragraph 10.2 of Section
10. This  Financing  Agreement,  unless  terminated  as herein  provided,  shall
automatically  continue from Anniversary  Date to Anniversary  Date. The Company
may terminate this  Financing  Agreement at any time upon sixty (60) days' prior
written  notice  to the  Agent,  provided  that the  Company  pays to the  Agent
immediately on demand an Early Termination Fee and/or the Prepayment Premium, if
applicable.  All Obligations  shall become due and payable as of any termination
hereunder or under Section 10 hereof and, pending a final accounting,  the Agent
may withhold any balances in the  Company's  account  (unless  supplied  with an
indemnity  satisfactory to the Agent) to cover all of the  Obligations,  whether
absolute or  contingent,  including,  but not limited to, cash  reserves for any
contingent  Obligations,  including  an amount of 110% of the face amount of any
outstanding Letters of Credit with an expiry date on, or within thirty (30) days
of the effective date of termination  of this  Financing  Agreement.  All of the
Agent's  rights,   Liens  and  security   interests  shall  continue  after  any
termination until all Obligations have been paid and satisfied in full.

SECTION 12.    Miscellaneous

     12.1 Each  Restricted  Person hereby waives  diligence,  notice of default,
notice of intent to accelerate, notice of acceleration,  demand, presentment and
protest and any  notices  thereof as well as notice of  nonpayment.  No delay or
omission of the Agent or any  Restricted  Person to exercise any right or remedy
hereunder,  whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default.  No single or partial  exercise by the Agent of any right
or remedy  precludes  any other or further  exercise  thereof,  or precludes any
other right or remedy.

     12.2 This Financing Agreement and the Loan Documents executed and delivered
in connection  therewith  constitute  the entire  agreement  between  Restricted
Persons and the Agent; supersede any prior agreements;  can be changed only by a
writing signed by the applicable Restricted Person and the Agent; and shall bind
and benefit Restricted Persons and the Agent and their respective successors and
assigns.

     12.3 In no event shall any Restricted Person,  upon demand by the Agent for
payment of any  Indebtedness  relating  hereto,  by acceleration of the maturity
thereof,  or  otherwise,  be obligated to pay interest and fees in excess of the
amount permitted by law.  Regardless of any provision herein or in any agreement
made in  connection  herewith,  the Agent  shall  never be  entitled to receive,
charge or apply, as interest on any indebtedness  relating hereto, any amount in
excess of the maximum amount of interest  permissible  under  applicable law. If
the Agent ever receives, collects or applies any such excess, it shall be deemed
a partial  repayment of principal and treated as such;  and if principal is paid
in full, any remaining  excess shall be refunded to the Company.  This paragraph
shall control every other provision hereof,  the Loan Documents and of any other
agreement made in connection herewith.

     12.4 If any provision  hereof or of any other  agreement made in connection
herewith is held to be illegal or  unenforceable,  such provision shall be fully
severable, and the remaining provisions

                                       60
<PAGE>

of the applicable  agreement shall remain in full force and effect and shall not
be  affected by such  provision's  severance.  Furthermore,  in lieu of any such
provision,  there  shall  be  added  automatically  as a part of the  applicable
agreement a legal and  enforceable  provision as similar in terms to the severed
provision as may be possible.

     12.5 EACH  RESTRICTED  PERSON,  THE LENDERS AND THE AGENT EACH HEREBY WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS  CONTEMPLATED  THEREUNDER.  EACH RESTRICTED PERSON
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT  REQUESTED.  IN NO EVENT
WILL THE AGENT BE LIABLE  FOR LOST  PROFITS OR OTHER  SPECIAL  OR  CONSEQUENTIAL
DAMAGES.

     12.6 Except as otherwise herein provided, any notice or other communication
required   hereunder  shall  be  in  writing   (provided  that,  any  electronic
communications from any party hereto with respect to any request,  transmission,
notices,   document,   electronic   signature,   electronic  mail  or  facsimile
transmission  shall be deemed binding on the parties hereto for purposes of this
Financing  Agreement,  provided  further  that any such  transmission  shall not
relieve any Restricted Person from any other obligation hereunder to communicate
further in writing),  and shall be deemed to have been validly served,  given or
delivered when hand delivered or sent by facsimile,  or three days after deposit
in the United  States  mails,  with  proper  first  class  postage  prepaid  and
addressed  to the party to be  notified  or to such  other  address as any party
hereto may designate for itself by like notice, as follows:

        (A) if to CIT, at:

                The CIT Group/Business Credit, Inc.
                Two Lincoln Center
                5420 LBJ Freeway, Suite 200
                Dallas, Texas 75240
                Attn:  Regional Credit Manager
                Fax No.:  (972) 455-1690

        (B) if to any Restricted Person at:

                HydroChem Industrial Services, Inc.
                900 Georgia Avenue
                Deer Park, Texas 77536
                Attn:   Chief Financial Officer
                Fax No.:  (713) 393-5965

With a courtesy copy of any material notice to the Company's counsel at:

                Haynes and Boone L.L.P.

                                       61
<PAGE>

                1000 Louisiana Street
                Houston, Texas 77092
                Attn:  Joseph A. Vilardo
                Fax No.:  (713) 236-5591

provided,  however,  that the  failure  of the Agent to  provide  the  Company's
counsel with a copy of such notice shall not  invalidate any notice given to any
Restricted Person and shall not give any Restricted Person any rights, claims or
defenses due to the failure of the Agent to provide such additional notice.

     12.7  THE  VALIDITY,  INTERPRETATION  AND  ENFORCEMENT  OF  THIS  FINANCING
AGREEMENT  AND THE OTHER LOAN  DOCUMENTS  SHALL BE  GOVERNED  BY THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES AN
EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.

SECTION 13.          Agreement between the Lenders

     13.1 (a) The Agent,  for the account of the  Lenders,  shall  disburse  all
Loans and advances to the Company and shall handle all collections of Collateral
and repayment of Obligations.  It is understood that for purposes of advances to
the Company and for  purposes of this Section 13 the Agent is using the funds of
the Agent.

     (b) Unless  the Agent  shall  have been  notified  in writing by any Lender
prior to any  advance to the  Company  that such Lender will not make the amount
which would  constitute its share of the borrowing on such date available to the
Agent, the Agent may assume that such Lender shall make such amount available to
the  Agent on a  Settlement  Date,  and the Agent  may,  in  reliance  upon such
assumption,  make available to the Company a corresponding amount. A certificate
of the Agent submitted to any Lender with respect to any amount owing under this
subsection shall be conclusive, absent manifest error. If such Lender's share of
such  borrowing is not in fact made available to the Agent by such Lender on the
Settlement  Date,  the Agent  shall be  entitled  to recover  such  amount  with
interest  thereon at the rate per annum applicable to Revolving Loans hereunder,
on demand,  from the Company without prejudice to any rights which the Agent may
have against such Lender  hereunder.  Nothing contained in this subsection shall
relieve any Lender which has failed to make available its ratable portion of any
borrowing  hereunder from its  obligation to do so in accordance  with the terms
hereof.  Nothing  contained herein shall be deemed to obligate the Agent to make
available  to the Company the full amount of a requested  advance when the Agent
has any notice  (written or otherwise)  that any of the Lenders will not advance
its ratable portion thereof.

     13.2 On the Settlement  Date, the Agent and the Lenders shall each remit to
the other, in immediately available funds, all amounts necessary so as to ensure
that, as of the  Settlement  Date,  the Lenders  shall have their  proportionate
share of all outstanding Obligations.

     13.3 The Agent shall  forward to each Lender,  at the end of each month,  a
copy of the account statement rendered by the Agent to the Company.

                                       62
<PAGE>

     13.4 The Agent shall,  after  receipt of any interest and fees earned under
this  Financing  Agreement,  promptly  remit to the Lenders:  (a) their pro rata
portion of all fees, provided,  however, that the Lenders (other than CIT in its
role as the  Agent)  shall (i) not  share in the  Collateral  Management  Fee or
Documentation  Fees or the fees provided for in Section 8,  paragraph  8.12; and
(ii)  receive  their share of the Loan  Facility  Fee in  accordance  with their
respective  agreements with the Agent; (b) interest  computed at the rate and as
provided for in Section 8 of this Financing Agreement on all outstanding amounts
advanced by the Lenders on each Settlement Date,  prior to adjustment,  that are
subsequent  to the last  remittance by the Agent to the Lenders of the Company's
interest; (c) its pro rata portion of all principal repaid on the Term Loan; and
(d)  interest  on the Term  Loan  computed  at the rate and as  provided  for in
Section 8 of this Financing Agreement.

     13.5 (a)  Restricted  Persons  acknowledge  that the Lenders with the prior
written consent of the Agent may sell  participation in the Loans and extensions
of  credit  made  and to be made to  Restricted  Persons  hereunder.  Restricted
Persons  further  acknowledge  that in doing so, the  Lenders  may grant to such
participants  certain  rights which would require the  participant's  consent to
certain waivers,  amendments and other actions with respect to the provisions of
this  Financing  Agreement,  provided  that the consent of any such  participant
shall not be required  except for matters  requiring  the consent of all Lenders
hereunder as set forth in Section 14, paragraph 14.10 hereof.

     (b) Restricted Persons authorize each Lender to disclose to any participant
or purchasing lender (each, a "Transferee")  and any prospective  Transferee any
and all financial  information in such Lender's possession concerning Restricted
Persons and their  affiliates  which has been  delivered to such Lender by or on
behalf  of  Restricted  Persons  pursuant  to this  Agreement  or which has been
delivered  to such Lender by or on behalf of  Restricted  Persons in  connection
with such Lender's credit evaluation of Restricted  Persons and their affiliates
prior to entering into this Agreement,  provided that such Transferee  agrees to
hold such information in confidence in the ordinary course of its business.

     13.6 Restricted Persons hereby agree that each Lender is solely responsible
for its portion of the Line of Credit and that  neither the Agent nor any Lender
shall be  responsible  for,  nor assume any  obligations  for the failure of any
Lender to make available its portion of the Line of Credit.  Further, should any
Lender  refuse to make  available  its  portion of the Line of Credit,  then the
other Lenders may, but without obligation to do so, increase,  unilaterally, its
portion of the Line of Credit in which event Restricted Persons are so obligated
to such other Lenders.

     13.7 In the event that the Agent, the Lenders or any one of them is sued or
threatened  with  suit  by  Restricted  Persons  or any one of  them,  or by any
receiver,  trustee,  creditor or any  committee  of  creditors on account of any
preference,  voidable  transfer  or  lender  liability  issue,  alleged  to have
occurred  or  been  received  as  a  result  of,  or  during  the   transactions
contemplated under this Financing  Agreement,  then in such event any money paid
in  satisfaction  or  compromise of such suit,  action,  claim or demand and any
expenses,  costs and attorneys'  fees paid or incurred in connection  therewith,
whether  by  the  Agent,  the  Lenders  or any  one of  them,  shall  be  shared
proportionately  by the  Lenders.  In  addition,  any costs,  expenses,  fees or
disbursements incurred by outside agencies or attorneys retained by the Agent to
effect  collection or  enforcement  of any rights in the  Collateral,  including
enforcing, preserving or maintaining rights under this Financing Agreement shall
be shared

                                       63
<PAGE>

proportionately  between and among the Lenders to the extent not  reimbursed  by
Restricted  Persons or from the proceeds of  Collateral.  The provisions of this
paragraph shall not apply to any suits, actions,  proceedings or claims that (x)
predate the date of this Financing  Agreement or (y) are based on  transactions,
actions or omissions that predate the date of this Financing Agreement.

     13.8 Each of the Lenders  agrees  with each other  Lender that any money or
assets of any Restricted  Person held or received by such Lender,  no matter how
or when received,  shall be applied to the reduction of the  Obligations (to the
extent permitted  hereunder) after (x) the occurrence of an Event of Default and
(y) the election by the  Required  Lenders to  accelerate  the  Obligations.  In
addition,  Restricted Persons  authorize,  and the Lenders shall have the right,
without notice,  upon any amount becoming due and payable hereunder,  to set-off
and apply  against any and all property  held by, or in the  possession  of such
Lender the Obligations due such Lenders.

     13.9 The  Agent  shall  have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its  rights  and  obligations  under  this  Financing  Agreement
(including,  without limitation,  its obligations under the Line of Credit, Term
Loans,  the  Revolving  Loans and its rights  and  obligations  with  respect to
Letters of Credit). Upon execution of an Assignment and Transfer Agreement,  (a)
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,
have the rights and  obligations  of the Agent as the case may be hereunder  and
(b) the Agent shall,  to the extent that rights and  obligations  hereunder have
been assigned by it pursuant to such  assignment,  relinquish  its rights and be
released from its obligations under this Financing Agreement. The Company shall,
if  necessary,  execute any  documents  reasonably  required to  effectuate  the
assignments.  No other  Lender may assign its interest in the Loans and advances
and  extensions of credit  hereunder  without the prior  written  consent of the
Agent.  In the event that the Agent consents to any such assignment by any other
Lenders (i) the amount being  assigned shall in no event be less than the lesser
of (x) $5,000,000 or (y) the entire interest of such Lender hereunder, (ii) such
assignment  shall be of a  pro-rata  portion of all of such  assigning  Lender's
Loans and commitments  hereunder and (iii) the parties to such assignment  shall
execute and deliver to the Agent an Assignment and Transfer  Agreement,  and, at
the Agent's  election,  a processing  and recording fee of $1,000 payable by the
Company to the Agent for its own account.

SECTION 14.    Agency

     14.1 Each Lender  hereby  irrevocably  designates  and  appoints CIT as the
Agent for the Lenders under this  Financing  Agreement  and any  ancillary  loan
documents and irrevocably  authorizes CIT as the Agent for such Lender,  to take
such action on its behalf under the provisions of this  Financing  Agreement and
all  ancillary  documents and to exercise such powers and perform such duties as
are expressly  delegated to the Agent by the terms of this  Financing  Agreement
and all ancillary  documents  together with such other powers as are  reasonably
incidental  thereto.  Notwithstanding any provision to the contrary elsewhere in
this   Financing   Agreement,   the  Agent   shall   not  have  any   duties  or
responsibilities,  except those  expressly  set forth  herein,  or any fiduciary
relationship   with   any   Lender   and  no   implied   covenants,   functions,
responsibilities, duties,

                                       64
<PAGE>

obligations or liabilities  shall be read into this Financing  Agreement and the
ancillary documents or otherwise exist against the Agent.

     14.2 The Agent may execute any of its duties under this Financing Agreement
and all ancillary documents by or through agents or attorneys-in-fact  and shall
be entitled to the advice of counsel  concerning all matters  pertaining to such
duties.

     14.3  Neither  the Agent  nor any of its  officers,  directors,  employees,
agents,  or  attorneys-in-fact  shall be (i) liable to any Lender for any action
lawfully  taken  or  omitted  to be  taken  by it or  such  Person  under  or in
connection with this Financing Agreement and all ancillary documents (except for
its or such  Person's  own gross  negligence  or  willful  misconduct),  or (ii)
responsible  in any manner to any of the Lenders for any  recitals,  statements,
representations  or warranties made by Restricted Persons or any officer thereof
contained in this  Financing  Agreement  and all  ancillary  documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection  with, this Financing  Agreement
and  all  ancillary  documents  or  for  the  value,  validity,   effectiveness,
genuineness,  enforceability or sufficiency of this Financing  Agreement and all
ancillary  documents  or  for  any  failure  of the  Company  to  perform  their
obligations  thereunder.  The Agent  shall not be under  any  obligation  to any
Lender to ascertain or to inquire as to the  observance or performance of any of
the agreements  contained in, or conditions of, this Financing Agreement and all
ancillary documents or to inspect the properties, books or records of Restricted
Persons.

     14.4 The Agent shall be entitled to rely,  and shall be fully  protected in
relying,  upon any note,  writing,  resolution,  notice,  consent,  certificate,
affidavit,  letter,  cablegram,  telegram,  telecopy, telex or teletype message,
statement,  order or other document or conversation believed by it to be genuine
and  correct  and to have  been  signed,  sent or made by the  proper  Person or
Persons and upon advice and  statements  of legal  counsel  (including,  without
limitation,  counsel to the Company),  independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this  Financing  Agreement and all ancillary  documents
unless it shall first receive such advice or concurrence of the Lenders,  or the
Required Lenders,  as the case may be, as it deems appropriate or it shall first
be indemnified to its  satisfaction by the Lenders against any and all liability
and expense  which may be incurred  by it by reason of taking or  continuing  to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting,  under this Financing  Agreement and all ancillary
documents in accordance with a request of the Lenders,  or the Required Lenders,
as the case may be,  and such  request  and any  action  taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

     14.5 The  Agent  shall not be  deemed  to have  knowledge  or notice of the
occurrence  of any  Default or Event of Default  hereunder  unless the Agent has
received written notice from a Lender or the Company  describing such Default or
Event of Default.  In the event that the Agent receives such a notice, the Agent
shall  promptly  give notice  thereof to the Lenders.  The Agent shall take such
action with respect to such  Default or Event of Default as shall be  reasonably
directed by the Lenders,  or Required Lenders, as the case may be; provided that
unless and until the Agent shall have received such direction,  the Agent may in
the interim  (but shall not be obligated  to) take such action,  or refrain from
taking such action, with respect to such Default or Event of Default as it shall

                                       65
<PAGE>

deem advisable and in the best interests of the Lenders.  In the event the Agent
in its sole discretion, or at the request of the Required Lenders,  continues to
make  Revolving  Loans and  advances  under this  Financing  Agreement  upon the
occurrence  of a  Default  or Event of  Default,  any such  Revolving  Loans and
advances may be in such amounts  (subject to Paragraph 14.10 hereof) and on such
additional  terms and  conditions as the Agent or the Required  Lenders may deem
appropriate.

     14.6 Each Lender expressly  acknowledges  that neither the Agent nor any of
its officers,  directors,  employees,  agents or attorneys-in-fact  has made any
representations  or  warranties  to it and that no act by the Agent  hereinafter
taken, including any review of the affairs of Restricted Persons shall be deemed
to constitute any  representation  or warranty by the Agent to any Lender.  Each
Lender  represents to the Agent that it has,  independently and without reliance
upon the Agent or any other Lender and based on such  documents and  information
as it has deemed  appropriate,  made its own appraisal of and investigation into
the  business,   operations,   property,   financial  and  other  condition  and
creditworthiness  of Restricted  Persons and made its own decision to enter into
this  Financing   Agreement.   Each  Lender  also   represents   that  it  will,
independently  and without reliance upon the Agent or any other Lender and based
on such  documents and  information  as it shall deem  appropriate  at the time,
continue to make its own credit analysis,  appraisals and decisions in taking or
not taking action under the Financing  Agreement and to make such  investigation
as it deems necessary to inform itself as to the business, operations, property,
financial and other condition or  creditworthiness  of Restricted  Persons.  The
Agent,  however,  shall  provide  the  Lenders  with  copies  of  all  financial
statements, projections and business plans which come into the possession of the
Agent or any of its officers, employees, agents or attorneys-in-fact.

     14.7 (a) The Lenders  agree to indemnify  the Agent in its capacity as such
(to the extent not  reimbursed  by Restricted  Persons and without  limiting the
obligation  of  Restricted  Persons  to do so),  from  and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,   expenses  or  disbursements   (including,   without   limitation,   all
Out-of-Pocket Expenses) of any kind whatsoever (including negligence on the part
of the  Agent)  which may at any time be imposed  on,  incurred  by or  asserted
against  the  Agent in any way  relating  to or  arising  out of this  Financing
Agreement  or any  ancillary  documents  or  any  documents  contemplated  by or
referred to herein or the transactions  contemplated  hereby or any action taken
or  omitted  by the  Agent  under or in  connection  with any of the  foregoing;
provided  that no Lender  shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or  disbursements  resulting  solely  from the  Agent's  gross
negligence or willful misconduct. The agreements in this paragraph shall survive
the payment of the Obligations.

     (b) The Agent will use its  reasonable  business  judgement in handling the
collection of the Accounts,  enforcement of its rights hereunder and realization
upon the  Collateral but shall not be liable to the Lenders for any action taken
or omitted to be taken in good faith or on the written  advice of  counsel.  The
Lenders   expressly   release  the  Agent  from  any  and  all   liability   and
responsibility  (express or implied), for any loss,  depreciation of or delay in
collecting  or  failing to realize on any  Collateral,  the  Obligations  or any
guaranties  therefor  and for any  mistake,  omission  or error in  judgment  in
passing upon or accepting any Collateral or in making (or in failing to make)

                                       66
<PAGE>

examinations or audits or for granting indulgences or extensions to the Company,
any account debtor or any guarantor, other than resulting from the Agent's gross
negligence or willful misconduct.

     14.8 The  Agent  may make  loans to,  and  generally  engage in any kind of
business  with  Restricted  Persons  as  though  the  Agent  were not the  Agent
hereunder.  With respect to its Loans made or renewed by it or loan  obligations
hereunder as Lender, the Agent shall have the same rights and powers, duties and
liabilities  under this  Financing  Agreement as any Lender and may exercise the
same as though it was not the Agent and the terms  "Lender" and "Lenders"  shall
include the Agent in its individual capacity.

     14.9 The Agent may resign as the Agent upon 30 days'  notice to the Lenders
and such  resignation  shall be effective  upon the  appointment  of a successor
Agent.  If the Agent shall  resign as Agent,  then the Lenders  shall  appoint a
successor Agent for the Lenders  whereupon such successor Agent shall succeed to
the rights,  powers and duties of the Agent and the term "Agent" shall mean such
successor agent effective upon its  appointment,  and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Financing
Agreement.  After any retiring  Agent's  resignation  hereunder as the Agent the
provisions of this Section 14 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent.

     14.10 Notwithstanding anything contained in this Financing Agreement to the
contrary,  the Agent will not, without the prior written consent of all Lenders:
(a) amend the  Financing  Agreement  to (i)  increase  the Line of Credit;  (ii)
reduce  the  interest  rates;  (iii)  reduce  or waive (x) any fees in which the
Lenders  share  hereunder,  or (y)  the  repayment  of any  Obligations  due the
Lenders; (iv) extend the maturity of the Obligations;  or (v) alter or amend (x)
this Paragraph  14.10 or (y) the  definitions of Eligible  Accounts  Receivable,
Collateral or Required Lenders, or (vi) increase the advance percentages against
Eligible  Accounts  Receivable  or alter  or  amend  the  Agent's  criteria  for
determining  compliance with such definitions of Eligible Accounts Receivable if
the effect thereof is to increase Availability; (b) except as otherwise required
in this  Financing  Agreement,  release any guaranty or  Collateral in excess of
$500,000  during any year, or (c) knowingly make any Revolving Loan or assist in
opening any Letter of Credit  hereunder if after giving effect thereto the total
of Revolving Loans and Letters of Credit  hereunder for the Company would exceed
one hundred and ten percent  (110%) of the maximum amount  available  under this
Financing  Agreement  (the portion in excess of 100% of such  maximum  available
amount  shall be  referred  to herein as the  "Agent  Permitted  Overadvances"),
provided that the Agent shall not be entitled to continue to knowingly make such
Agent Permitted  Overadvances for a period in excess of ninety (90) days without
the Lenders' consent, and provided further that the foregoing  limitations shall
not  prohibit  or  restrict  advances  by the  Agent  to  preserve  and  protect
Collateral.  Subject to the  provisions  of Section 12,  Paragraph  12.2 and the
provisions of this Paragraph 14.10 of Section 14 of this Financing Agreement, in
all other  respects the Agent is  authorized by each of the Lenders to take such
actions or fail to take such  actions  under  this  Financing  Agreement  if the
Agent, in its reasonable discretion,  deems such to be advisable and in the best
interest of the Lenders. Notwithstanding any provision to the contrary contained
in this Financing  Agreement  (including the provisions of Section 12, Paragraph
12.2 and Section 14,  Paragraph  14.10  hereof) the Agent is  authorized to take
such actions or fail to take such actions in connection with (a) the exercise of
(i) any and all rights and remedies

                                       67
<PAGE>

under this  Financing  Agreement  (including  but not limited to the exercise of
rights  and  remedies  under  Section  10,  Paragraph  10.2  of  this  Financing
Agreement)  and (ii)  its  discretion  in (x)  determining  compliance  with the
eligibility   requirements  of  Eligible  Accounts  Receivable  and/or  Eligible
Inventory and establishing reserves against Availability in connection therewith
and/or (y) the making of Agent Permitted Overadvances, and/or (b) the release of
Collateral  not to exceed  $250,000  in the  aggregate  during any Fiscal  Year,
and/or (c) curing any ambiguity,  defect or  inconsistency  in the terms of this
Financing  Agreement;  provided that the Agent,  in its  reasonable  discretion,
deems such to be advisable  and in the best  interests  of the  Lenders.  In the
event  the Agent  terminates  this  Financing  Agreement  pursuant  to the terms
hereof,  the Agent will cease  making any Loans or advances  upon the  effective
date of termination  except for any Loans or advances which the Agent deems,  in
its sole  discretion,  are reasonably  required to maintain,  protect or realize
upon the Collateral.

     14.11 In the  event  any  Lender's  consent  is  required  pursuant  to the
provisions of this  Financing  Agreement and such Lender does not respond to any
request by the Agent for such consent  within 10 days after such request is made
to such Lender,  such failure to respond shall be deemed a consent. In addition,
in the event that any Lender  declines to give its consent to any such  request,
it is hereby  mutually  agreed that the Agent and/or any other Lender shall have
the right (but not the  obligation) to purchase such Lender's share of the Loans
for the full amount thereof  together with accrued  interest thereon to the date
of such purchase.

     14.12 Each Lender agrees that  notwithstanding the provisions of Section 11
of this Financing  Agreement any Lender may terminate  this Financing  Agreement
and the Line of Credit only as of the initial or any subsequent Anniversary Date
and then only by giving the Agent 90 days prior written notice  thereof.  Within
30 days after receipt of any such  termination  notice,  the Agent shall, at its
option,  either (i) give notice of termination to the Company  hereunder or (ii)
purchase,  or arrange for the purchase of, the Lender's share of the Obligations
hereunder for the full amount thereof plus accrued interest  thereon.  Unless so
terminated   this   Financing   Agreement  and  the  Line  of  Credit  shall  be
automatically extended from Anniversary Date to Anniversary Date. Termination of
this  Financing  Agreement  by any of the Lenders as herein  provided  shall not
affect the  Lenders'  respective  rights and  obligations  under this  Financing
Agreement  incurred  prior to the effective  date of termination as set forth in
the preceding sentence.

     14.13 If the Agent is  required  at any time to  return  to any  Restricted
Person  or to a  trustee,  receiver,  liquidator,  custodian  or  other  similar
official any portion of the payments made by any Restricted  Person to the Agent
as result of a bankruptcy or similar  proceeding  with respect to any Restricted
Person,  any  guarantor  or any other Person or entity or  otherwise,  then each
Lender shall, on demand of the Agent,  forthwith return to the Agent its ratable
share of any such payments  made to such Lender by the Agent,  together with its
ratable share of interest and/or penalties, if any, payable by the Lenders; this
provision shall survive the termination of this Financing Agreement.

     14.14 The Lenders agree to maintain the  confidentiality  of any non-public
information  provided by Restricted  Persons to them, in the ordinary  course of
their  business,  provided that the foregoing  confidentiality  provision  shall
terminate one (1) year after the termination  date of this Financing  Agreement,
and provided  further that any such Lenders may disclose such information (i)

                                       68
<PAGE>

to any  applicable  bank  regulatory  and  auditor  Personnel  and  (ii)  as may
otherwise be required under applicable law.

     14.15 This Financing Agreement  constitutes an amendment and restatement of
that  certain  Credit  Agreement  dated as of November 19, 1999 by and among the
Company,  Holding,  Bank of America,  N.A.,  as  administrative  agent,  and the
financial  institutions  from  time  to time  party  thereto,  in its  entirety;
provided,  however  that in no  event  shall  the  Liens  securing  such  Credit
Agreement and the obligations thereunder be deemed effected hereby, it being the
intent and agreement of the Restricted  Persons that the Liens on all collateral
granted to secure the  obligations of the  Restricted  Persons under such Credit
Agreement  shall  not be  extinguished  and shall  remain  valid,  binding,  and
enforceable  Liens  against  such  collateral  securing the  obligations  of the
Restricted  Persons under such Credit  Agreement as amended and restated hereby.
The  obligations  and  indebtedness  of Restricted  Persons under this Financing
Agreement  and the other Loan  Documents  shall be and be deemed to be senior in
right of payment to any obligations and  indebtedness of the Restricted  Persons
arising under the Holding Junior  Subordinated  Notes,  the Senior  Subordinated
Notes, and the Seller Subordinated Notes.

          [balance of page left intentionally blank; signatures follow]

                                       69
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Financing Agreement
to be effective,  executed,  accepted and delivered at Dallas,  Texas,  by their
proper and duly authorized officers as of the date set forth above.


HYDROCHEM INDUSTRIAL SERVICES, INC.          THE CIT GROUP/BUSINESS CREDIT, INC.
                                                 (as Agent and Lender)


By: /s/ Pelham H. A. Smith                      By: /s/ Mark Porter
    --------------------------                      -------------------
    Title: Executive Vice President                 Title:  Vice President
           and Chief Financial Officer              Revolving Commitment: 100%

HYDROCHEM HOLDING, INC.


By: /s/ Pelham H. A. Smith
    --------------------------
    Title: Executive Vice President
           and Chief Financial Officer

HYDROCHEM INTERNATIONAL, INC.



By: /s/ Pelham H. A. Smith
    --------------------------
    Title: Executive Vice President
           and Chief Financial Officer

HYDROCHEM INDUSTRIAL CLEANING, INC.



By: /s/ Pelham H. A. Smith
    --------------------------
    Title: Executive Vice President
           and Chief Financial Officer




                                       70