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                                                                   EXHIBIT 10.12


                         WAIVER AND AMENDMENT AGREEMENT

     WAIVER AND AMENDMENT AGREEMENT (this "Amendment"), dated as of August 25,
1999, between General Electric Capital Corporation, a New York corporation (the
"Lender") and Polychem Corporation, a Pennsylvania corporation ("Polychem").
Unless otherwise stated or defined herein, capitalized terms used herein shall
have the meanings given to them in the Loan and Security Agreement.

     WHEREAS, the Lender and Polychem are parties to a Loan and Security
Agreement, dated as of September 30, 1998 (as amended by the Waiver and
Amendment Agreement thereto, dated as of December 8, 1998, and the Waiver and
Amendment to Loan and Security Agreement, dated as of April 22, 1999, as it may
be further amended or modified, the "Loan and Security Agreement"), pursuant to
which the Lender has agreed to make revolving credit advances and a term loan to
Polychem;

     WHEREAS, the Account from the APC-T&KJV project (the "APC Account") became
ineligible as of June 30, 1999, which has caused the Revolving Credit Loan to
exceed the Borrowing Availability (the "Overadvance") and to result in the
occurrence and continuance of an Event of Default under the Loan and Security
Agreement.

     WHEREAS, Polychem has requested that the APC Account continue to be deemed
to be an Eligible Account through October 1,1999 and that the Lender waive such
Event of Default;

     WHEREAS, Polychem wishes to refinance its real property with financing from
another lending institution, and, in connection therewith, to reduce the Term
Loan and obtain a release of the Mortgage from the Lender;

     WHEREAS, Polychem has requested that a portion of the Term Loan in the
amount of $412,000 remain outstanding and that the Maximum Amount of the
revolving credit facility be increased from $3,500,000 to $5,000,000; and

     WHEREAS, the Lender is willing to release the Mortgage, permit a portion of
the Term Note in the amount of $412,000 to remain outstanding and increase the
Maximum Amount of the revolving credit facility from $3,500,000 to $5,000,000 on
the terms and conditions set forth herein.

     NOW THEREFORE, intending to be legally bound hereby and in consideration of
the mutual covenants contained herein and for other good, valuable and
sufficient consideration, the receipt and sufficiency of which is hereby
acknowledged, it is hereby agreed as follows:

     1. Waiver. Effective as of the Effective Date (as hereinafter defined), the
Lender hereby waives any Default or Event of Default which existed on and prior
to the date hereof due to the failure of the APC Account to be an Eligible
Account in accordance with clause (m) of the definition of the term "Eligible
Accounts", it being understood and agreed that the Lender does not waive any
Default or Event of Default, if any, arising from the failure, if any, of the
APC Account to comply with any other clause of the definition of the term
"Eligible Accounts".


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     2. Amendments to Loan and Security Agreement. The Lender hereby agrees to
amend the Loan and Security Agreement as follows:

        (a) Section 1.2 is hereby amended to add a new clause (h) thereto, to
     read in its entirety as follows:

            "(h) After giving effect to the Waiver and Amendment Agreement,
     dated as of August 25, 1999, the original principal amount of the Term Loan
     shall be $412,000, payable in 25 monthly installments of $8,000, commencing
     on September 1, 1999, with a balloon payment of the remaining outstanding
     balance on the Commitment Termination Date."

        (b) Clause (m) of the definition of Eligible Account is hereby amended
     by adding two clauses to the end of such clause, to read in their entirety
     to as follows:

        ";except for the APC Account which shall be deemed to be an Eligible
        Account through October 1, 1999 provided it meets all of the other
        requirements set forth in this definition of Eligible Accounts other
        than the requirements of this clause (m); provided, further, that the
        maximum amount which may be included in the Borrowing Base with respect
        to the APC Account shall be $400,000."

        (c) The definition of "Maximum Amount" is hereby amended by changing the
     amount set forth therein from "$3,500,000" to "$5,000,000".

     3. Effectiveness. This Amendment shall become effective on the date (the
"Effective Date") on which each of the following conditions is satisfied:

        (a) The Lender shall have received an executed Amended and Restated Term
     Note made by Polychem in favor of the Lender (the "New Term Note"), in the
     form attached hereto as Exhibit A;

        (b) The Lender shall have received an executed Amended and Restated
     Revolving Credit Note made by Polychem in favor of the Lender (the "New
     Revolving Credit Note"), in the form attached hereto as Exhibit B;

        (c) The Lender shall have received a Mortgagee Waiver in the form
     attached hereto as Exhibit C;

        (d) The Lender shall have received the Reaffirmation Agreement of ConMat
     Technologies, Inc. in the form attached hereto as Exhibit D;

        (e) Polychem shall have reduced the outstanding indebtedness to the
     Lender under the Loan and Security Agreement by $1,800,000; and


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        (f) The Lender shall have received an amendment fee in the amount of
     $10,000.

     4. Representations and Warranties.

        4.1. Polychem hereby represents and warrants to the Lender that:

        (a) (i) it is a corporation duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation and has
     the corporate power and authority and the legal right to own and operate
     its property, to lease the property it operates and to conduct the business
     in which it is currently engaged, (ii) it has the power and authority and
     the legal right and capacity to execute and deliver, and to perform its
     obligations under this Amendment, the Agreement, as amended by this
     Amendment, and the New Term Note and the New Revolving Credit Note
     (collectively, the "New Notes"), and has taken all necessary action to
     authorize its execution, delivery and performance of this Amendment, the
     Agreement, as amended by this Amendment, and the New Notes.

        (b) this Amendment, the Agreement as amended by the Amendment and the
     New Notes constitute the legal, valid and binding obligations of Polychem,
     enforceable in accordance with their terms, except as affected by
     bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
     and other similar laws relating to or affecting the enforcement of
     creditors' rights generally, general equitable principles and an implied
     covenant of good faith and fair dealing;

        (c) the execution, delivery and performance of this Amendment, the
     Agreement, as amended by this Amendment, and the New Notes will not violate
     any provision of any Requirement of Law or Contractual Obligation of
     Polychem and will not result in or require the creation or imposition of
     any Lien on any of its properties or revenues pursuant to any Requirement
     of Law or any of its Contractual Obligations;

        (d) no consent or authorization of, filing with, or other act by or in
     respect of, any arbitrator or Governmental Authority and no consent of any
     other Person (including, any shareholder or creditor of Polychem) is
     required in connection with the execution, delivery, performance, validity
     or enforceability of this Amendment, the Agreement, as amended by this
     Amendment or the New Notes; and

        (e) no litigation, investigation or proceeding of or before any
     arbitrator or Governmental Authority is pending or, to the knowledge of
     Polychem threatened by or against it or against any of its properties or
     revenues (1) with respect to this Amendment, the Agreement, as amended by
     this Amendment, or the New Notes, or any of the transactions contemplated
     hereby, or (2) which could have a material adverse effect on the business,
     property, or financial or other condition of Polychem.

        4.2. Polychem hereby represents and warrants to the Lender that each of
     its representations and warranties contained in the Loan and Security
     Agreement is true and


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         correct and hereby restates each such representation and warranty and
         further represents and warrants that no Event of Default or Default has
         occurred or is continuing after giving effect to this Amendment.

     5. Miscellaneous Terms and Conditions.

        5.1. Loan and Security Agreement in Full Force and Effect. Except as
     amended or waived by this Amendment, all of the provisions of the Loan and
     Security Agreement shall remain in full force and effect from and after the
     date hereof.

        5.2. References to Loan and Security Agreement and to New Notes. From
     and after the effectiveness of this Amendment, (a) all references in the
     Loan and Security Agreement to "this Agreement," "hereof," "herein," or
     similar terms, all references to the Loan and Security Agreement in the
     Loan Documents, or any other documents or instruments executed or delivered
     in connection with the Loan and Security Agreement, and all references to
     the Loan and Security Agreement shall mean and refer to the Loan and
     Security Agreement as amended by this Amendment, (b) all references in the
     Loan and Security Agreement or in the other Loan Documents, or any other
     documents or instruments executed or delivered in connection with the Loan
     and Security Agreement to "the Term Note" shall mean and refer to the
     Amended and Restated Term Note attached hereto as Exhibit A. and (c) all
     references in the Loan and Security Agreement or in the other Loan
     Documents, or any other documents or instruments executed or delivered in
     connection with the Loan and Security Agreement to "the Revolving Credit
     Note" shall mean and refer to the Amended and Restated Revolving Credit
     Note attached hereto as Exhibit B.

        5.3. Further Assurances. At the request of either party, the other party
     shall deliver any further instruments and take all reasonable actions as
     may be necessary or appropriate to effectuate the transactions contemplated
     by this Amendment.

        5.4. GOVERNING LAW. THIS AMENDMENT WILL BE GOVERNED BY, AND CONSTRUED IN
     ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
     CONFLICTS OF LAW PRINCIPLES THEREOF.


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     IN WITNESS WHEREOF, the parties have executed this Waiver and Amendment
Agreement upon the date first written above.

                                            GENERAL ELECTRIC CAPITAL CORPORATION

                                            By:_________________________________
                                               Name:
                                               Title:

                                            POLYCHEM CORPORATION

                                            By: /s/ Paul A. DeJuliis
                                               ---------------------------------
                                                Name:  Paul A. DeJuliis
                                                Title: Chairman and CEO



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