HYDROCHEM INTERNATIONAL INC
SECOND AMENDMENT TO FINANCE AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>ex10-20.txt
<DESCRIPTION>SECOND AMENDMENT TO FINANCE AGREEMENT
<TEXT>
                     SECOND AMENDMENT TO FINANCING AGREEMENT

     THIS SECOND AMENDMENT TO FINANCING AGREEMENT (this  "Amendment"),  dated as
of January 31, 2002, among HydroChem  Industrial  Services,  Inc.  ("Borrower"),
HydroChem   Holding,   Inc.   ("Holding"),    HydroChem   International,    Inc.
("International"),  HydroChem Industrial Cleaning,  Inc.  ("Cleaning";  Holding,
International,  and Cleaning are collectively referred to herein as "Guarantors"
and each individually as a "Guarantor"; Borrower and Guarantors are collectively
referred  to herein  as the  "Restricted  Persons"  and each  individually  as a
"Restricted  Person"),  the  several  Lenders  (as such term is  defined  in the
hereinafter  described Financing  Agreement) parties to this Amendment,  and The
CIT Group/Business  Credit, Inc. as Agent for the Lenders (in such capacity, the
"Agent").

                                R E C I T A L S:

A.   Borrower,  Guarantors,  the Agent,  and the several Lenders parties thereto
entered into that certain  Financing  Agreement dated as of October 25, 2001 (as
the same may be amended, modified,  restated,  supplemented,  renewed, extended,
increased,  rearranged  and/or  substituted  from time to time,  the  "Financing
Agreement").  Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Financing Agreement.

B.   Borrower  and  Guarantors  have requested that  the  Lenders agree to amend
the Financing Agreement as more fully described hereinbelow.

C.   The  several  Lenders parties to this Amendment  (which Lenders  constitute
the  Required  Lenders  required  under the  Financing  Agreement  to effect the
amendment  intended  hereby) are willing to agree to such amendment,  subject to
the  performance  and  observance  in full of each of the  covenants,  terms and
conditions,  and in reliance upon all of the  representations  and warranties of
the Borrower and the Guarantors, set forth herein.

     NOW, THEREFORE, in consideration of the premises and the covenants,  terms,
conditions,  representations and warranties herein contained, the parties hereto
agree hereby as follows:

     Section 1.  AMENDMENTS TO FINANCING  AGREEMENT.  Subject to the  covenants,
terms and conditions  set forth herein and in reliance upon the  representations
and  warranties  of the  Borrower  and  the  Guarantors  herein  contained,  the
Borrower,  the  Guarantors,  and the several  Lenders  parties to this Amendment
(which  Lenders  constitute  the Required  Lenders  required under the Financing
Agreement  to  effect  the  following  amendments)  hereby  agree to  amend  the
Financing   Agreement,   effective  as  of  the  Amendment  Effective  Date  (as
hereinafter defined) as follows:

     (a) Dilution Percentage. The definition of Dilution Percentage contained in
Section 1 of the Financing  Agreement is hereby  amended in its entirety to read
as follows:

     "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

<PAGE>

Restricted  Person  no later  than ten (10)  Business  Days from the date of the
original  invoice)  divided  by the then sum of (i) all  sales of the  Grantors'
Inventory  plus (ii) all sales of the  Grantors'  services,  in each case in the
ordinary  course of business  and all  calculated  on a rolling  ninety (90) day
average, as determined by Agent from time to time."

     (b) Excess Availability. The definition of Excess Availability contained in
Section 1 of the Financing  Agreement is hereby  amended in its entirety to read
as follows:

     "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."

     (c)  Representations,   Warranties,  and  Covenants.  Section  7.8  of  the
Financing  Agreement is hereby amended by adding thereto the following  sentence
at the end of such section:

     "In  addition and without  limitation  of the  foregoing,  the Company will
promptly,  and in any event within ten (10) Business Days after any officer of a
Restricted  Person obtains knowledge  thereof,  provide notice to the Lenders of
(i) any litigation or governmental  investigation or proceeding  pending against
any Restricted Person or (ii) any other event,  change or circumstance which has
had, or could  reasonably be expected to have, a material  adverse effect on the
Restricted  Persons'  financial  condition taken as a whole or on any Restricted
Person's ability to perform any of its obligations under the Loan Documents."

     (d) Line of Credit Fee.  Section 8.6 of the  Financing  Agreement is hereby
amended in its entirety to read as follows:

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

     (e) Loan  Facility Fee.  Section 8.7 of the  Financing  Agreement is hereby
amended in its entirety to read as follows:

     "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 for the  benefit of each Lender a Loan
Facility Fee in accordance with the Fee Letter."

     (f)  Confidentiality.  Section 14.14 of the  Financing  Agreement is hereby
amended in its entirety to read as follows:

     "14.14  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,

                                       2

<PAGE>

and provided  further that any such Lenders may disclose such information (i) to
any applicable bank regulatory and auditor  personnel,  (ii) to any Affiliate or
legal counsel of such Lender (provided that such Lender shall be responsible for
any breach of this Section 14.14 by such Lender,  its Affiliates,  and its legal
counsel), and (iii) as may otherwise be required under applicable law."

     Section  2.  CONDITIONS  PRECEDENT.  The  parties  hereto  agree  that this
Amendment and the amendments to the Financing  Agreement  contained herein shall
not be effective  until the  satisfaction  of each of the  following  conditions
precedent:

     (a) Execution and Delivery of this Amendment. The Agent shall have received
a copy  of this  Amendment  executed  and  delivered  by each of the  Restricted
Persons and by Lenders constituting Required Lenders.

     (b)  Representations  and  Warranties.  Each  of  the  representations  and
warranties  made in this  Amendment  shall be true and  correct on and as of the
Amendment  Effective  Date as if made on and as of such  date,  both  before and
after giving effect to this Amendment.

     Section  3.  REPRESENTATIONS  AND  WARRANTIES.  To induce the Agent and the
several  Lenders parties hereto to enter into this Amendment and to agree to the
amendments  contained herein, each of the Borrower and each Guarantor represents
and warrants to the Agent and the Lenders as follows:

     (a) No Contravention,  etc. The execution,  delivery and performance by the
Restricted  Persons of this Amendment have been duly authorized by all necessary
corporate action and do not and will not (i) contravene the terms of any charter
document of any Restricted Person, (ii) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing any
contractual  obligation to which any Restricted  Person is a party or any order,
injunction, writ or decree of any governmental authority to which any Restricted
Person is a party or its property is subject,  or (iii) violate any  requirement
of law.

     (b)   Governmental   Authorization.   No  approval,   consent,   exemption,
authorization  or other  action  by, or notice to, or filing  with or  approvals
required under state blue sky securities laws or by any  governmental  authority
is necessary or required in connection with the execution, delivery, performance
or enforcement of this Amendment.

     (c) Binding  Effect.  This  Amendment,  the Financing  Agreement as amended
hereby,  and the other Loan Documents  constitute  the legal,  valid and binding
obligation of the  Restricted  Persons,  enforceable  in  accordance  with their
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency,  or similar laws  affecting the  enforcement  of  creditors'  rights
generally or by equitable principles relating to enforceability.

     (d) No Default. No Default or Event of Default exists under any of the Loan
Documents.  As of the date hereof,  no Restricted  Person is in default under or
with  respect to (i) its  charter  documents  or (ii) any  material  contractual
obligation of such Restricted Person. The execution, delivery and performance of

                                       3

<PAGE>

this Amendment shall not result in any default under any contractual  obligation
of any Restricted Person in any respect.

     (e) Full Disclosure.  As of the date hereof,  all information that has been
made available to Agent or the Lenders by or on behalf of the Restricted Persons
in connection with the transactions  contemplated  herein is true and correct in
all material  respects  and does not contain any untrue  statement of a material
fact or omit to state a material fact  necessary in order to make the statements
maintained therein not materially misleading in light of the circumstances under
which such statements were made.

     (f) Representations and Warranties.  The representations and warranties set
forth in the  Financing  Agreement  and the other  Loan  Documents  are true and
correct on and as of the Amendment Effective Date, except to the extent that any
such  representation  or warranty  relates to a specific  date,  both before and
after giving effect to the amendments contemplated in this Amendment, as if such
representations  and  warranties  were  being  made  on and as of the  Amendment
Effective Date.

     Section 4. MISCELLANEOUS

     (a) Ratification  and  Confirmation of Loan Documents,  etc. Except for the
specific  amendments   expressly  set  forth  in  this  Amendment,   the  terms,
provisions,  conditions  and covenants of the Financing  Agreement and the other
Loan  Documents  remain in full force and effect  and are  hereby  ratified  and
confirmed,  and the execution,  delivery and performance of this Amendment shall
not in any manner  operate as a waiver of,  consent to or amendment of any other
term,  provision,  condition or covenant of the Financing Agreement or any other
Loan Document. Without limiting the generality of the foregoing, nothing in this
Amendment shall be deemed (i) to constitute a waiver of compliance or consent to
noncompliance  by any of the  Restricted  Persons with respect to any other term
provision,  condition  or  covenant  of the  Financing  Agreement  or other Loan
Documents;  (ii) to prejudice  any right or remedy that Agent or the Lenders may
now have or may have in the future  under or in  connection  with the  Financing
Agreement  or any  other  Loan  Document;  or (iii) to  constitute  a waiver  of
compliance or consent to  noncompliance  by any of the  Restricted  Persons with
respect to the terms,  provisions,  conditions  and  covenants of the  Financing
Agreement made the subject hereof. As a material inducement to Agent the Lenders
to execute this  Amendment,  the Restricted  Persons hereby (i)  acknowledge and
confirm  the  continuing  existence,  validity  and  effectiveness  of the Liens
granted under the Loan  Documents,  (ii) agree that the execution,  delivery and
performance of this Amendment  shall not in any way release,  diminish,  impair,
reduce or otherwise affect such Liens, and (iii)  acknowledge and agree that the
Liens granted  under the Loan  Documents  secure the payment of the  Obligations
under the Loan  Documents,  in the same  priority as on the date such Liens were
created and  perfected,  and the  performance  and  observance by the Restricted
Persons of the covenants, agreements and conditions to be performed and observed
by the  Restricted  Persons  under the  Financing  Agreement  and the other Loan
Documents, respectively.

     (b)  Fees  and  Expenses.  The  Borrower  and the  Guarantors  jointly  and
severally  agree  to pay on  demand  all  costs  and  expenses  of the  Agent in

                                       4

<PAGE>

connection with the preparation,  reproduction,  execution, and delivery of this
Amendment and any other documents  prepared in connection  herewith,  including,
without  limitation,  the reasonable fees and out-of-pocket  expenses of counsel
for the Agent.

     (c)  Headings.  Section  and  subsection  headings  in this  Amendment  are
included  herein for  convenience  of reference  only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

     (d)  APPLICABLE  LAW.  THIS  AMENDMENT  SHALL BE GOVERNED  BY, AND SHALL BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.

     (e)  Counterparts  and  Amendment  Effective  Date.  This  Amendment may be
executed  in any  number of  counterparts  and by  different  parties  hereto in
separate  counterparts,  each of which when so executed and  delivered  shall be
deemed an original,  but all such counterparts together shall constitute but one
and the same instrument;  signature pages may be detached from multiple separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Amendment  shall  become
effective  when (i) each of the  conditions  precedent set forth in Section 2 of
this Amendment have been satisfied and (ii) the Agent has received  counterparts
of this  Amendment  executed by the  Borrower,  each of the  Guarantors  and the
Lenders constituting Required Lenders (the "Amendment Effective Date").

     (f)  Affirmation  of Guarantees.  Notwithstanding  that such consent is not
required thereunder,  the undersigned Guarantors hereby consent to the execution
and delivery of this Amendment and reaffirm their respective  obligations  under
each of their respective Guaranties.

     (g)  Loan  Document.  This  Amendment  is a Loan  Document  and  all of the
provisions  of the  Financing  Agreement  which  apply to Loan  Documents  apply
hereto.

     (h) FINAL AGREEMENT. THIS AMENDMENT,  TOGETHER WITH THE FINANCING AGREEMENT
AND OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE  CONTRADICTED  BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS  BETWEEN
THE PARTIES.

     [The remainder of this page is  intentionally  left blank;  signature pages
follow.]

                                       5

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be
duly  executed  and  delivered  by their  proper  and duly  authorized  officers
effective as of the Amendment Effective Date.

                                   HYDROCHEM INDUSTRIAL SERVICES, INC.,
                                   as Borrower


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

                                   HYDROCHEM HOLDING, INC., as a Guarantor


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

                                   HYDROCHEM INTERNATIONAL, INC., as a Guarantor


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

                                   HYDROCHEM INDUSTRIAL CLEANING, INC., as a
                                   Guarantor


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

                                       6

<PAGE>


                                   THE CIT GROUP/BUSINESS CREDIT, INC., as
                                   Agent and a Lender


                                   By:  /s/ Mark Porter
                                        ---------------
                                   Name:    Mark Porter
                                   Title:   Vice President

                                   J.P. MORGAN CHASE BANK, as a Lender


                                   By:  /s/ Chad A. Ramsey
                                        ------------------
                                   Name:    Chad A. Ramsey
                                   Title:   Vice President

                                   GENERAL ELECTRIC CAPITAL CORPORATION


                                   By:  /s/ John Hanley
                                        ---------------
                                   Name:    John Hanley
                                   Title:   Duly Authorized Signatory




                                       7

</TEXT>
</DOCUMENT>
