(Local Currency--Single,. Jurisdiction)

                                     ISDA(R)
                  International Swap Dealers Association, Inc.

                                MASTER AGREEMENT

                           dated as of July 17, 1998


BANK ONE,  TEXAS,  N.A. and  HYDROCHEM  INDUSTRIAL  SERVICES,  INC. have entered
and/or anticipate  entering into one or more transactions (each a "Transaction")
that are or will be  governed  by this  Master  Agreement,  which  includes  the
schedule (the "Schedule"), and the documents and other confirming evidence (each
a "Confirmation" exchanged between the parties confirming those Transactions.

Accordingly, the parties agree as follows:--

1.      Interpretation

(a)  Definitions.  The terms defined in Section 12 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.

(b) Inconsistency.  In the event of any inconsistency  between the provisions of
the Schedule and the other  provisions  of this Master  Agreement,  the Schedule
will prevail.  In the event of any  inconsistency  between the provisions of any
Confirmation   and  this  Master  Agreement   (including  the  Schedule),   such
Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement.  All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the  parties  (collectively  referred to as this  "Agreement"),  and the parties
would not otherwise enter into any Transactions.

2.      Obligations

(a)     General Conditions.

        (i) Each party  will make each  payment or  delivery  specified  in each
        Confirmation  to be made by it, subject to the other  provisions of this
        Agreement.

        (ii)  Payments  under  this  Agreement  will be made on the due date for
        value on that date in the place of the account specified in the relevant
        Confirmation  or  otherwise  pursuant  to  this  Agreement,   in  freely
        transferable  funds and in the  manner  customary  for  payments  in the
        required currency.  Where settlement is by delivery (that is, other than
        by payment),  such  delivery will be made for receipt on the due date in
        the  manner  customary  for the  relevant  obligation  unless  otherwise
        specified in the relevant Confirmation or elsewhere in this Agreement.

        (iii) Each  obligation of each party under Section 2(a)(i) is subject to
        (1) the condition  precedent that no Event of Default or Potential Event
        of  Default  with  respect  to  the  other  party  has  occurred  and is
        continuing,  (2) the condition  precedent that no Early Termination Date
        in respect of the relevant  Transaction has occurred or been effectively
        designated and (3) each other applicable  condition  precedent specified
        in this Agreement.

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(b) Change of  Account.  Either  party may change its  account  for  receiving a
payment  or  delivery  by giving  notice to the other  party at least five Local
Business Days prior to the  scheduled  date for the payment or delivery to which
such change  applies unless such other party gives timely notice of a reasonable
objection to such change.
                                        
(c)     Netting. If on any date amounts would otherwise be payable:--

        (i)    in the same currency; and

        (ii)   in respect of the same Transaction,

by each party to the other,  then, on such date, each party's obligation to make
payment of any such amount will be  automatically  satisfied and discharged and,
if the  aggregate  amount that would  otherwise  have been  payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party,  replaced by an  obligation  upon the party by whom the larger  aggregate
amount  would  have been  payable  to pay to the Other  party the  excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more  Transactions  that a net amount
will be  determined  in respect of the  amounts  payable on the same date in the
same  currency  in  respect of such  Transactions,  regardless  of whether  such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation  by specifying  that  subparagraph  (ii) above
will not apply to the Transactions  identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such  Transactions from such date). This election may
be  made  separately  for  different  groups  of  Transactions  and  will  apply
separately to each pairing of branches or offices through which the parties make
and receive payments or deliveries.

(d) Default  Interest;  Other  Amounts.  Prior to the  occurrence  or  effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment  obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after  judgment) on the overdue  amount to the other party on
demand in the same  currency as such  overdue  amount,  for the period from (and
including)  the  original  due date for payment to (but  excluding)  the date of
actual  payment,  at the Default  Rate.  Such interest will be calculated on the
basis of daily  compounding and the actual number of days elapsed.  If, prior to
the occurrence or effective  designation of an Early Termination Date in respect
of  the  relevant  Transaction,  a  party  defaults  in the  performance  of any
obligation required to be settled b delivery, it will compensate the other party
on demand if and to the extent  provided  for in the  relevant  Confirmation  or
elsewhere in this Agreement.

3.      Representations

Each party represents to the other party (which  representations  will be deemed
to be  repeated  by each  party on each date on which a  Transaction  is entered
into) that:

(a)     Basic Representations.

        (i) Status.  It is duly organized and validly existing under the laws of
        the jurisdiction of its  Organization or incorporation  and, if relevant
        under such laws, in good standing;

        (ii) Powers.  It has the power to execute this  Agreement  and any other
        documentation  relating  to this  Agreement  to which it is a party,  to
        deliver  this  Agreement  and any other  documentation  relating to this
        Agreement  that it is  required  by this  Agreement  to  deliver  and to
        perform its obligations  under this Agreement end and any obligations it
        has under any Credit  Support  Document  to which it is a part,  and has
        taken all necessary  action to authorize  such  execution.  delivery and
        performance;

        (iii) No Violation or Conflict. Such execution, delivery and performance
        do not violate or conflict with any law  applicable to it, any provision
        of its constitutional  documents,  any order or judgment of any court or


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        other agency or government  applicable to it or any of its assets or any
        contractual restriction binding on or affecting it or any of its assets:

        (iv) Consents.  All governmental and other consents that are required to
        have been  obtained by it with  respect to this  Agreement or any Credit
        Support  Document to which it is a party have been  obtained  and are in
        full force and effect and all  conditions of any such consents have been
        complied with; and

        (v) Obligations  Binding.  Its obligations  under this Agreement and any
        Credit  Support  Document to which it is a party  constitute  its legal,
        valid and binding  obligations,  enforceable  in  accordance  with their
        respective  terms  (subject to  applicable  bankruptcy,  reorganization,
        insolvency,  or similar laws affecting  creditors'  rights generally and
        subject,  as to  enforceability,  to  equitable  principles  of  general
        application (regardless of whether enforcement is sought in a proceeding
        in equity or at law)).

(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge,  Termination  Event with respect to it has occurred and is
continuing  and no such  event or  circumstance  would  occur as a result of its
entering into or performing its  obligations  under this Agreement or any Credit
Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action,  suit or proceeding at law or in
equity or before any court,  tribunal,  governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this  Agreement  or any Credit  Support  Document to which it is a
party or its ability to perform its  obligations  under this  Agreement  or such
Credit Support Document.

(d)  Accuracy of  Specified  Information.  All  applicable  information  that is
furnished in writing by or on behalf of it to the other party and is  identified
for the purpose of this  Section  3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

4.      Agreements

Each party agrees with the other,  that, so long as either party has or may have
any  obligation  under this  Agreement or under any Credit  Support  Document to
which it is a party:

(a) Furnish Specified Information. It will deliver to the other party any forms,
documents or certificates  specified in the Schedule or any  Confirmation by the
date specified in the Schedule or such Confirmation or, if none is specified, as
soon as reasonably practicable.

(b) Maintain  Authorizations.  It will use all reasonable efforts to maintain in
full force and effect all consents of any  governmental  or other authority that
are required to be obtained by it with  respect to this  Agreement or any Credit
Support  Document to which it is a party and will use all reasonable  efforts to
obtain any that may become necessary in the future.

(c)  Comply  with  Laws.  It will  comply  in all  material  respects  with  all
applicable  laws and  orders to which it may be  subject if failure so to comply
would  materially  impair  its  ability to perform  its  obligations  under this
Agreement or any Credit Support Document to which it is a party.

5.      Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following  events  constitutes  an event of default (an
"Event of Default") with respect to such party:


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        (i) Failure to Pay or Deliver.  Failure by the party to make,  when due,
        any payment under this  Agreement or delivery  under Section  2(a)(i) or
        2(d)  required  to be made by it if such  failure is not  remedied on or
        before the third  Local  Business  Day after  notice of such  failure is
        given to the party;

        (ii) Breach of Agreement. Failure by the party to comply with or perform
        any  agreement  or  obligation  (other  than an  obligation  to make any
        payment under this Agreement or delivery  under Section  2(a)(i) or 2(d)
        or to  give  notice  of a  Termination  Event)  to be  complied  with or
        performed by the party in accordance with this Agreement if such failure
        is not  remedied  on or before the  thirtieth  day after  notice of such
        failure is given to the party;

        (iii)  Credit Support Default.

               (1) Failure by the party or any Credit  Support  Provider of such
               party to comply with or perform any agreement or obligation to be
               complied  with or performed by it in  accordance  with any Credit
               Support   Document  if  such  failure  is  continuing  after  any
               applicable grace period has elapsed;

               (2) the expiration or termination of such Credit Support Document
               or the failing or ceasing of such Credit  Support  Document to be
               in full force and effect for the  purpose of this  Agreement  (in
               either case other than in accordance with its terms) prior to the
               satisfaction   of  all  obligations  of  such  party  under  each
               Transaction to which such Credit Support Document relates without
               the written consent of the other party; or

               (3)  the  party  or  such  Credit  Support  Provider  disaffirms,
               disclaims,  repudiates  or  rejects,  in  whole  or in  part,  or
               challenges the validity of, such Credit Support Document;

        (iv)  Misrepresentation.  A representation made or repeated or deemed to
        have been made or repeated by the party or any Credit  Support  Provider
        of such party in this Agreement or any Credit Support Document proves to
        have been  incorrect or misleading in any material  respect when made or
        repeated or deemed to have been made or repeated;

        (v) Default under Specified  Transaction.  The party, any Credit Support
        Provider of such party or any applicable  Specified Entity of such party
        (1) defaults under a Specified  Transaction  and, after giving effect to
        any  applicable  notice  requirement  or grace  period,  there  occurs a
        liquidation  of,  an  acceleration  of  obligations  under,  or an early
        termination of, that Specified Transaction,  (2) defaults,  after giving
        effect to any applicable  notice  requirement or grace period, in making
        any payment or delivery  due on the last  payment,  delivery or exchange
        date of, or any payment on early termination of, a Specified Transaction
        (or such default  continues  for at least three Local  Business  Days if
        there  is no  applicable  notice  requirement  or grace  period)  or (3)
        disaffirms,  disclaims,  repudiates  or rejects,  in whole or in part, a
        Specified  Transaction  (or such action is taken by any person or entity
        appointed or empowered to operate it or act on its behalf);

        (vi) Cross Default.  If "Cross  Default" is specified in the Schedule as
        applying to the party,  the  occurrence  or  existence of (1) a default,
        event of default or other similar condition or event (however described)
        in respect of such party,  any Credit Support  Provider of such party or
        any  applicable  Specified  Entity  of  such  party  under  one or  more
        agreements or instruments  relating to Specified  Indebtedness of any of
        them  (individually  or collectively) in an aggregate amount of not less
        than the  applicable  Threshold  Amount (as  specified in the  Schedule)
        which has resulted in such Specified  Indebtedness becoming, or becoming
        capable  at such time of being  declared,  due and  payable  under  such
        agreements or  instruments,  before it would otherwise have been due and
        payable or (2) a default by such party,  such Credit Support Provider or
        such Specified  Entity  (individually  or collectively) in making one or
        more payments on the due date thereof in an aggregate amount of not less
        than  the  applicable   Threshold   Amount  under  such   agreements  or
        instruments (after giving effect to any applicable notice requirement or
        grace period);


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        (vii)  Bankruptcy.  The party, any Credit Support Provider of such party
        or any applicable Specified Entity of such party:

               (1)  is  dissolved  (other  than  pursuant  to  a  consolidation,
               amalgamation  or merger);  (2) becomes  insolvent or is unable to
               pay its  debts  or fails  or  admits  in  writing  its  inability
               generally  to pay its  debts  as they  become  due;  (3)  makes a
               general  assignment,  arrangement or composition  with or for the
               benefit  of its  creditors:  (4)  institutes  or  has  instituted
               against it a  proceeding  seeking a  judgment  of  insolvency  or
               bankruptcy or any other relief under any bankruptcy or insolvency
               law or  other  similar  law  affecting  creditors'  rights,  or a
               petition is presented for its winding-up or liquidation,  and, in
               the  case  of any  such  proceeding  or  petition  instituted  or
               presented  against it, such proceeding or petition (A) results in
               a judgment of  insolvency  or bankruptcy or the entry of an order
               for  relief  or the  making  of an order  for its  winding-up  or
               liquidation  or (B)  is  not  dismissed,  discharged,  stayed  or
               restrained  in each  case  within 30 days of the  institution  or
               presentation  thereof;  (5)  has  a  resolution  passed  for  its
               winding-up,   official  management  or  liquidation  (other  than
               pursuant to a consolidation,  amalgamation or merger);  (6) seeks
               or  becomes  subject  to  the  appointment  of an  administrator,
               provisional liquidator, conservator, receiver, trustee, custodian
               or other similar official for it or for all or substantially  all
               its assets;  (7) has a secured  party take  possession  of all or
               substantially  all  its  assets  or  has a  distress,  execution,
               attachment, sequestration or other legal process levied, enforced
               or sued on or  against  all or  substantially  all its assets and
               such secured party maintains  possession,  or any such process is
               not dismissed,  discharged,  stayed or  restrained,  in each case
               within 30 days thereafter;  (8) causes or is subject to any event
               with  respect  to it  which,  under  the  applicable  laws of any
               jurisdiction,  has an  analogous  effect  to  any  of the  events
               specified  in clauses  (1) to (7)  (inclusive);  or (9) takes any
               action in furtherance of, or indicating, its consent to, approval
               of, or acquiescence in, any of the foregoing acts; or

        (viii)  Merger  Without  Assumption.  The  party or any  Credit  Support
        Provider of such party  consolidates or amalgamates with, or merges with
        or into, or transfers all or  substantially  all its assets to,  another
        entity and, at the time of such consolidation,  amalgamation,  merger or
        transfer:--

        (1) the  resulting,  surviving or transferee  entity fails to assume all
        the obligations of such party or such Credit Support Provider under this
        Agreement or any Credit Support  Document to which it or its predecessor
        was a party by operation  of law or pursuant to an agreement  reasonably
        satisfactory to the other party to this Agreement; or

        (2) the benefits of any Credit Support  Document fail to extend (without
        the consent of the other party) to the  performance  by such  resulting,
        surviving or transferee entity of its obligations under this Agreement.

(b) Termination  Events.  The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event  specified  below  constitutes  an  Illegality if the
event is specified in i) below,  and, if  specified to be  applicable,  a Credit
Event  Upon  Merger  if the  event  is  specified  pursuant  to (i)  below or an
Additional Termination Event if the event is specified pursuant to (iii) below:

        (i) Illegality. Due to the adoption of, or any change in, any applicable
        law after the date on which a Transaction is entered into, or due to the
        promulgation  of, or any  change in,  the  interpretation  by any court,
        tribunal or regulatory  authority  with  competent  jurisdiction  of any
        applicable  law after such date,  it becomes  unlawful  (other than as a
        result of a breach by the party of Section  4(b)) for such party  (which
        will be the Affected Party):--

               (1) to perform any absolute or  contingent  obligation  to make a
               payment  or  delivery  or to  receive a payment  or  delivery  in
               respect of such  Transaction or to comply with any other material
               provision of this Agreement relating to such Transaction; or


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               (2) to perform,  or for any Credit Support Provider of such party
               to perform,  any contingent or other  obligation  which the party
               (or such Credit  Support  Provider) has under any Credit  Support
               Document relating to such Transaction;

        (ii)  Credit  Event  Upon  Merger.  If  "Credit  Event  Upon  Merger" is
        specified  in the  Schedule as applying to the party,  such party ("X"),
        any Credit Support Provider of X or any applicable Specified Entity of X
        consolidates  or amalgamates  with, or merges with or into, or transfers
        all or  substantially  all its assets to, another entity and such action
        does not  constitute an event  described in Section  5(a)(viii)  but the
        creditworthiness  of the  resulting,  surviving or transferee  entity is
        materially  weaker than that of X, such Credit Support  Provider or such
        Specified Entity,  as the case may be,  immediately prior to such action
        (and, in such event, X or its successor or transferee,  as  appropriate,
        will be the Affected Party); or

        (iii)  Additional  Termination  Event.  If any  "Additional  Termination
        Event" is specified in the Schedule or any Confirmation as applying, the
        occurrence  of such event (and,  in such event,  the  Affected  Party or
        Affected  Parties shall be as specified for such Additional  Termination
        Event in the Schedule or such Confirmation).

(c) Event of Default and  Illegality.  If an event or  circumstance  which would
otherwise  constitute  or give rise to an Event of Default also  constitutes  an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.

6.      Early Termination

(a) Right to Terminate  Following  Event of Default.  If at any time an Event of
Default  with  respect to a party (the  "Defaulting  Party") has occurred and is
then continuing,  the other party (the "Non-defaulting  Party") may, by not more
than 20 days notice to the  Defaulting  Party  specifying  the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions.  If, however,
"Automatic  Early  Termination"  is  specified  in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur  immediately  upon the  occurrence  with  respect to such party of an
Event of Default  specified in Section  5(a)(vii)(1),  (3),  (5), (6) or, to the
extent  analogous  thereto,  (8), and as of the time  immediately  preceding the
institution  of the  relevant  proceeding  or the  presentation  of the relevant
petition upon the  occurrence  with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)     Right to Terminate Following Termination Event.

        (i) Notice.  If a  Termination  Event  occurs,  an Affected  Party will,
        promptly upon becoming  aware of it, notify the other party,  specifying
        the nature of that Termination  Event and each Affected  Transaction and
        will also give such other  information  about that Termination  Event as
        the other party may reasonably require.

        (ii) Two Affected  Parties.  If an Illegality  under Section  5(b)(i)(1)
        occurs  and there are two  Affected  Parties,  each  party  will use all
        reasonable  efforts  to reach  agreement  within  30 days  after  notice
        thereof  is  given  under  Section  6(b)(i)  on  action  to  avoid  that
        Termination Event.

        (iii)  Right to Terminate. If:--

               (1) an agreement  under  Section  6(b)(ii) has not been  effected
               with respect to all Affected Transactions within 30 days after an
               Affected Party gives notice under Section 6(b)(i); or

               (2)  an  Illegality  other  than  that  referred  to  in  Section
               6(b)(ii), a Credit Event Upon Merger or an Additional Termination
               Event occurs,


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          either party in the case of an  Illegality,  any Affected Party in the
          case of an  Additional  Termination  Event if  there is more  than one
          Affected  Party,  or the party which is not the Affected  Party in the
          case of a Credit Event Upon Merger or an Additional  Termination Event
          if there is only one  Affected  Party  may,  by not more  than 20 days
          notice to the other party and provided  that the relevant  Termination
          Event is then  continuing,  designate a day not  earlier  than the day
          such notice is  effective as an Early  Termination  Date in respect of
          all Affected Transactions.

(c)     Effect of Designation.

        (i) If  notice  designating  an Early  Termination  Date is given  under
        Section 6(a) or (b), the Early  Termination  Date will occur on the date
        so  designated,  whether  or  not  the  relevant  Event  of  Default  or
        Termination Event is then continuing.

        (ii)  Upon  the   occurrence  or  effective   designation  of  an  Early
        Termination  Date,  no further  payments  or  deliveries  under  Section
        2(a)(i)  or 2(d)  in  respect  of the  Terminated  Transactions  will be
        required to be made,  but without  prejudice to the other  provisions of
        this  Agreement.  The  amount,  if any,  payable  in respect of an Early
        Termination Date shall be determined pursuant to Section 6(e).

(d)     Calculations.

        (i)  Statement.  On or as soon as reasonably  practicable  following the
        occurrence  of an Early  Termination  Date,  each  party  will  make the
        calculations on its part, if any,  contemplated by Section 6(e) and will
        provide  to the other  party a  statement  (1)  showing,  in  reasonable
        detail,  such  calculations   (including  all  relevant  quotations  and
        specifying any amount payable under Section 6(e)) and (2) giving details
        of the relevant account to which any amount payable to it is to be paid.
        In the  absence of written  confirmation  from the source of a quotation
        obtained in  determining  a Market  Quotation,  the records of the party
        obtaining such  quotation  will be conclusive  evidence of the existence
        and accuracy of such quotation.

        (ii) Payment Date.  An amount  calculated as being due in respect of any
        Early  Termination  Date under  Section  6(e) will be payable on the day
        that notice of the amount  payable is effective (in the case of an Early
        Termination  Date which is  designated or occurs as a result of an Event
        of Default)  and on the day which is two Local  Business  Days after the
        day on which notice of the amount  payable is effective  (in the case of
        an  Early  Termination  Date  which  is  designated  as  a  result  of a
        Termination  Event).  Such  amount  will be paid  together  with (to the
        extent  permitted under applicable law) interest thereon (before as well
        as after judgment),  from (and including) the relevant Early Termination
        Date to (but  excluding) the date such amount is paid, at the Applicable
        Rate. Such interest will be calculated on the basis of daily compounding
        and the actual number of days elapsed.

(e) Payments on Early  Termination.  If an Early  Termination  Date occurs,  the
following  provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the  "First  Method"  or the  "Second  Method".  If the  parties  fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The  amount,  if any,  payable  in  respect  of an  Early  Termination  Date and
determined pursuant to this Section will be subject to any Set-off.

        (i)   Events of Default.  If the Early  Termination Date results from an
        Event of Default:--

               (1) First  Method and Market  Quotation.  If the First Method and
               Market  Quotation  apply,  the  Defaulting  Party will pay to the
               Non-defaulting Party the excess, if a positive number, of (A) the
               sum of the Settlement  Amount  (determined by the  Non-defaulting
               Party) in respect of the Terminated  Transactions  and the Unpaid
               Amounts  owing to the  Non-defaulting  Party  over (B) the Unpaid
               Amounts owing to the Defaulting Party.


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               (2) First  Method and Loss.  If the First  Method and Loss apply,
               the Defaulting Party will pay to the  Non-defaulting  Party, if a
               positive number,  the  Non-defaulting  Party's Loss in respect of
               this Agreement.

               (3) Second Method and Market Quotation.  If the Second Method and
               Market  Quotation  apply,  an amount will be payable equal to (A)
               the   sum   of  the   Settlement   Amount   (determined   by  the
               Non-defaulting  Party) in respect of the Terminated  Transactions
               and the Unpaid Amounts owing to the Non-defaulting Party less (B)
               the Unpaid Amounts owing to the Defaulting  Party. If that amount
               is a positive  number,  the  Defaulting  Party will pay it to the
               Non-defaulting   Party;   if  it  is  a  negative   number,   the
               Non-defaulting  Party will pay the absolute  value of that amount
               to the Defaulting Party.

               (4) Second  Method and Loss. If the Second Method and Loss apply,
               an amount  will be payable  equal to the  Non-defaulting  Party's
               Loss in respect of this  Agreement.  If that amount is a positive
               number,  the Defaulting  Party will pay it to the  Non-defaulting
               Party; if it is a negative number, the Non-defaulting  Party will
               pay the absolute value of that amount to the Defaulting Party.

          (ii) Termination  Events. If the Early Termination Date results from a
          Termination Event:--

               (1) One  Affected  Party.  If there is one  Affected  Party,  the
               amount  payable will be  determined  in  accordance  with Section
               6(e)(i)(3),  if Market Quotation applies,  or Section 6(e)(i)(4),
               if Loss applies,  except that, in either case,  references to the
               Defaulting Party and to the  Non-defaulting  Party will be deemed
               to be references to the Affected Party and the party which is not
               the Affected Party, respectively,  and, if Loss applies and fewer
               than all the  Transactions  are being  terminated,  Loss shall be
               calculated in respect of all Terminated Transactions.

               (2) Two Affected Parties. If there are two Affected Parties:

                      (A) if Market Quotation applies, each party will determine
                      a   Settlement   Amount  in  respect  of  the   Terminated
                      Transactions,  and an amount will be payable  equal to (I)
                      the sum of (a)  one-half  of the  difference  between  the
                      Settlement  Amount of the party with the higher Settlement
                      Amount ("X") and the  Settlement  Amount of the party with
                      the  lower  Settlement  Amount  ("Y")  and (b) the  Unpaid
                      Amounts  owing to X less (II) the Unpaid  Amounts owing to
                      Y; and

                      (B) if Loss applies, each party will determine its Loss in
                      respect  of this  Agreement  (or,  if  fewer  than all the
                      Transactions  are  being  terminated,  in  respect  of all
                      Terminated  Transactions)  and an amount  will be  payable
                      equal to  one-half of the  difference  between the Loss of
                      the party with the  higher  Loss ("X") and the Loss of the
                      party with the lower Loss ("Y").

               If the amount payable is a positive  number,  Y will pay it to X;
               if it is a negative number, X will pay the absolute value of that
               amount to Y.

        (iii)  Adjustment  for  Bankruptcy.  In  circumstances  where  an  Early
        Termination Date occurs because "Automatic Early Termination" applies in
        respect of a party,  the amount  determined under this Section 6(e) will
        be subject to such  adjustments as are  appropriate and permitted by law
        to reflect  any  payments or  deliveries  made by one party to the other
        under this  Agreement  (and  retained  by such other  party)  during the
        period from the relevant Early  Termination Date to the date for payment
        determined under Section 6(d)(ii).

        (iv) Pre-Estimate. The parties agree that if Market Quotation applies an
        amount recoverable under this Section 6(e) is a reasonable  pre-estimate
        of loss  and not a  penalty.  Such  amount  is  payable  for the loss of


                                       8

<PAGE>



        bargain and the loss of  protection  against  future risks and except as
        otherwise  provided in this Agreement  neither party will be entitled to
        recover any additional damages as a consequence of such losses.

7.      Transfer

Neither this Agreement nor any interest or obligation in or under this Agreement
may be  transferred  (whether by way of security or  otherwise)  by either party
without the prior written consent of the other party, except that:--

(a)  a  party  may  make  such  a  transfer  of  this  Agreement  pursuant  to a
consolidation  or amalgamation  with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b) a party may make such a transfer  of all or any part of its  interest in any
amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8.      Miscellaneous

(a) Entire  Agreement.  This  Agreement  constitutes  the entire  agreement  and
understanding  of the parties with respect to its subject  matter and supersedes
all oral communication and prior writings with respect thereto.

(b)  Amendments.  No  amendment,  modification  or  waiver  in  respect  of this
Agreement will be effective unless in writing  (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic massaging system.

(c)  Survival  of  Obligations.  Without  prejudice  to Sections  2(a)(iii)  and
6(c)(ii),  the  obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)  Remedies  Cumulative.  Except as  provided in this  Agreement,  the rights,
powers,  remedies and  privileges  provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e)     Counterparts and Confirmations.

          (i) This Agreement  (and each  amendment,  modification  and waiver in
          respect  of  it)  may  be  executed  and  delivered  in   counterparts
          (including by facsimile transmission), each of which will be deemed an
          original.

          (ii) The parties  intend  that they are legally  bound by the terms of
          each  Transaction  from the moment they agree to those terms  (whether
          orally or otherwise).  A Confirmation shall be entered into as soon as
          practicable   and  may  be  executed  and  delivered  in  counterparts
          (including by facsimile  transmission) or be created by an exchange of
          telexes or by an exchange  of  electronic  messages  on an  electronic
          massaging  system,  which in each  case,  will be  sufficient  for all
          purposes  to  evidence a binding  supplement  to this  Agreement.  The
          parties will specify therein or through  another  effective means that
          any  such  counterpart,  telex or  electronic  message  constitutes  a
          Confirmation.

(f) No Waiver of Rights.  A failure or delay in exercising  any right,  power or
privilege  in respect of this  Agreement  will not be  presumed  to operate as a
waiver,  and a single or partial exercise of any right,  power or privilege will
not be presumed to preclude any subsequent or further  exercise,  of that right,
power or privilege or the exercise of any other right, power or privilege.


                                       9

<PAGE>



(g)  Headings.  The  headings  used in this  Agreement  are for  convenience  of
reference  only and are not to affect  the  construction  of or to be taken into
consideration in interpreting this Agreement.

9.      Expenses

A Defaulting Party will, on demand,  indemnify and hold harmless the other party
for and against all reasonable  out-of-pocket  expenses,  including  legal fees,
incurred by such other party by reason of the  enforcement and protection of its
rights  under  this  Agreement  or any  Credit  Support  Document  to which  the
Defaulting  Party  is a party  or by  reason  of the  early  termination  of any
Transaction, including, but not limited to, costs of collection.

10.     Notices

(a)  Effectiveness.  Any  notice  or  other  communication  in  respect  of this
Agreement  may be given in any manner set forth below  (except  that a notice or
other  communication  under  Section  5 or 6  may  not  be  given  by  facsimile
transmission  or  electronic  massaging  system) to the  address or number or in
accordance  with the  electronic  massaging  system  details  provided  (see the
Schedule) and will be deemed effective as indicated:--

          (i) if in writing and  delivered in person or by courier,  on the date
          it is delivered;

          (ii) if sent by  telex,  on the date  the  recipient's  answerback  is
          received;

          (iii) if sent by facsimile transmission, on the date that transmission
          is received by a responsible employee of the recipient in legible form
          (it being  agreed  that the burden of proving  receipt  will be on the
          sender and will not be met by a transmission  report  generated by the
          sender's facsimile machine);

          (iv) if sent by certified or registered mail (airmail, if overseas) or
          the equivalent  (return receipt  requested),  on the date that mail is
          delivered or its delivery is attempted; or

          (v)  if  sent  by  electronic  massaging  system,  on  the  date  that
          electronic  message is received,  unless the date of that delivery (or
          attempted  delivery) or that receipt,  as  applicable,  is not a Local
          Business Day or that  communication  is delivered  (or  attempted)  or
          received,  as  applicable,  after  the  close of  business  on a Local
          Business Day, in which case that  communication  shall be deemed given
          and effective on the first following day that is a Local Business Day.

(b)  Change of  Addresses.  Either  party may by notice to the other  change the
address,  telex or facsimile  number or electronic  massaging  system details at
which notices or other communications are to be given to it.

11.     Governing Law and Jurisdiction

(a)  Governing  Law.  This  Agreement  will  be  governed  by and  construed  in
accordance with the law specified in the Schedule.

(b) Jurisdiction.  With respect to any suit,  action or proceedings  relating to
this Agreement ("Proceedings"), each party irrevocably:-

        (i) submits to the jurisdiction of the English courts, if this Agreement
        is  expressed  to be  governed by English  law, or to the  non-exclusive
        jurisdiction  of the  courts  of the  State of New  York and the  United
        States  District  Court  located in the Borough of Manhattan in New York
        City,  if this  Agreement is expressed to be governed by the laws of the
        State of New York; and

        (ii) waives any objection which it may have at any time to the laying of
        venue of any  Proceedings  brought in any such  court,  waives any claim
        that such  Proceedings  have been brought in an  inconvenient  forum and


                                       10

<PAGE>



        further  waives the right to object,  with respect to such  Proceedings,
        that such court does not have any jurisdiction over such party.

Nothing in this Agreement  precludes  either party from bringing  Proceedings in
any other jurisdiction  (outside,  if this Agreement is expressed to be governed
by English law, the Contracting  States, as defined in Section 1(3) of the Civil
Jurisdiction  and  Judgments  Act  1982  or  any   modification,   extension  or
re-enactment  thereof  for the time  being in force)  nor will the  bringing  of
Proceedings in any one or more jurisdictions preclude the bringing of Proceeding
in any other jurisdiction.

(c) Waiver of Immunities.  Each party irrevocably  waives, to the fullest extent
permitted by applicable  law, with respect to itself and its revenues and assets
(irrespective  of their use or  intended  use),  all  immunity on the grounds of
sovereignty or other similar  grounds from (i) suit,  (ii)  jurisdiction  of any
court, (iii) relief by way of injunction,  order for specific performance or for
recovery of property,  (iv)  attachment of its assets  (whether  before or after
judgment)  and (v) execution or  enforcement  of any judgment to which it or its
revenues or assets might  otherwise be entitled in any Proceedings in the courts
of  any  jurisdiction  and  irrevocably  agrees,  to  the  extent  permitted  by
applicable law, that it will not claim any such immunity in any Proceedings.

12.     Definitions

As used in this Agreement:--

"Additional Termination Event" has the meaning specified in Section 5(b).

"Affected Party" has the meaning specified in Section 5(b).

"Affected  Transactions"  means  (a)  with  respect  to  any  Termination  Event
consisting of an Illegality, all Transactions affected by the occurrence of such
Termination  Event and (b) with  respect  to any other  Termination  Event,  all
Transactions.

"Affiliate"  means,  subject to the  Schedule,  in relation  to any person,  any
entity  controlled,  directly  or  indirectly,  by the  person,  any entity that
controls,  directly  or  indirectly,  the  person  or  any  entity  directly  or
indirectly under common control with the person. For this purpose,  "control" of
any entity or person  means  ownership  of a majority of the voting power of the
entity or person.

"Applicable Rate" means:--

(a) in respect of obligations  payable or deliverable  (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Race;

(b) in respect of an  obligation  to pay an amount under  Section 6(e) of either
party from and after the date  (determined in accordance with Section  6(d)(ii))
on which that amount is payable, the Default Rate;

(c) in respect of all other  obligations  payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting  Party, the Non-default
Rate; and

(d) in all other cases, the Termination Rate.

"consent"  includes  a  consent,  approval,  action,  authorization,  exemption,
notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).


                                       11

<PAGE>



"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default  Rate"  means a rate per  annum  equal to the  cost  (without  proof or
evidence of any actual  cost) to the relevant  payee (as  certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

"Defaulting Party" has the meaning specified in Section 6(a).

"Early  Termination  Date" means the date  determined in accordance with Section
6(a) or 6(b)(iii).

"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"law"  includes any treaty,  law, rule or regulation and "lawful" and "unlawful"
will be construed accordingly.

"Local Business Day" means,  subject to the Schedule,  a day on which commercial
banks are open for business  (including dealings in foreign exchange and foreign
currency  deposits) (a) in relation to any obligation under Section 2(a)(i),  in
the place(s) specified in the relevant Confirmation or, if not so specified,  as
otherwise agreed by the parties in writing or determined  pursuant to provisions
contained, or incorporated by reference,  in this Agreement,  (b) in relation to
any other payment,  in the place where the relevant  account is located,  (c) in
relation to any notice or other  communication,  including  notice  contemplated
under Section 5(a)(i),  in the city specified in the address for notice provided
by the recipient and, in the case of a notice  contemplated  by Section 2(b), in
the place where the relevant new account is to be located and (d) in relation to
Section  5(a)(v)(2),  in the relevant  locations for performance with respect to
such Specified Transaction.

"Loss"  means,  with  respect  to  this  Agreement  or  one or  more  Terminated
Transactions,  as the case may be, and a party, an amount that party  reasonably
determines  in good faith to be its total  losses  and costs (or gain,  in which
case expressed as a negative  number) in connection  with this Agreement or that
Terminated Transaction or group of Terminated Transactions,  as the case may be,
including any loss of bargain, cost of funding or, at the election of such party
but without  duplication,  loss or cost incurred as a result of its terminating,
liquidating,  obtaining or reestablishing  any hedge or related trading position
(or any gain  resulting  from any of them).  Loss includes  losses and costs (or
gains)  in  respect  of any  payment  or  delivery  required  to have  been made
(assuming  satisfaction of each applicable condition precedent) on or before the
relevant  Early  Termination  Date  and  not  made,   except,  so  as  to  avoid
duplication,  if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A)  applies. Loss does
not include a party's legal fees and  out-of-pocket  expenses  referred to under
Section 9. A party will determine its Loss as of the relevant Early  Termination
Date,  or,  if that  is not  reasonably  practicable,  as of the  earliest  date
thereafter as is reasonably  practicable.  A party may (but need not)  determine
its Loss by reference to quotations of relevant rates or prices from one or more
leading dealers in the relevant markets.

"Market  Quotation" means,  with respect to one or more Terminated  Transactions
and a party  making  the  determination,  an amount  determined  on the basis of
quotations from Reference  Market-makers.  Each quotation will be for an amount,
if any, that would be paid to such party  (expressed as a negative number) or by
such party  (expressed as a positive  number) in  consideration  of an agreement
between such party  (taking into account any existing  Credit  Support  Document
with  respect  to the  obligations  of such  party)  and the  quoting  Reference
Market-maker to enter into a transaction (the  "Replacement  Transaction")  that
would have the effect of  preserving  for such party the economic  equivalent of
any payment or delivery  (whether  the  underlying  obligation  was  absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such  Terminated  Transaction
or group of Terminated  Transactions  that would,  but for the occurrence of the
relevant Early  Termination  Date,  have been required after that date. For this
purpose,  Unpaid  Amounts in respect of the  Terminated  Transaction or group of
Terminated Transactions are to be excluded but, without limitation,  any payment
or delivery that would, but for the relevant Early  Termination  Date, have been
required (assuming satisfaction of each applicable condition

                                       12

<PAGE>



precedent) after that Early Termination Date is to be included.  The Replacement
Transaction  would  be  subject  to such  documentation  as such  party  and the
Reference  Market-maker  may,  in  good  faith,  agree.  The  party  making  the
determination (or its agent) will request each Reference Market-maker to provide
its quotation to the extent  reasonably  practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably practicable
after the relevant  Early  Termination  Date. The day and time as of which those
quotations  are to be  obtained  will be  selected  in good  faith by the  party
obliged to make a  determination  under Section  6(e),  and, if each party is so
obliged,  after  consultation  with the other. If more than three quotations are
provided,  the Market  Quotation will be the arithmetic  mean of the quotations,
without  regard to the  quotations  having the  highest  and lowest  values.  If
exactly three such  quotations  are provided,  the Market  Quotation will be the
quotation  remaining after disregarding the highest and lowest  quotations.  For
this  purpose,  if more than one  quotation has the same highest value or lowest
value,  then one of such quotations  shall be  disregarded.  If fewer than three
quotations are provided,  it will be deemed that the Market Quotation in respect
of such  Terminated  Transaction or group of Terminated  Transactions  cannot be
determined.

"Non-default  Rate" means a rate per annum equal to the cost  (without  proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"Reference  Market-makers"  means four leading  dealers in the  relevant  market
selected  by the party  determining  a Market  Quotation  in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an  extension  of credit  and (b) to the  extent  practicable,  from  among such
dealers having an office in the same city.

"Scheduled  Payment  Date"  means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off,  offset,  combination  accounts,  right of retention or
withholding  or  similar  right or  requirement  to which the payer of an amount
under Section 6 is entitled or subject  (whether  arising under this  Agreement,
another contract,  applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"Settlement  Amount"  means,  with respect to a party and any Early  Termination
Date, the sum of:--

(a) the Market  Quotations  (whether  positive or negative) for each  Terminated
Transaction or group of Terminated  Transactions for which a Market Quotation is
determined; and

(b) such party's Loss (whether positive or negative and without reference to any
Unpaid  Amounts)  for  each  Terminated   Transaction  or  group  of  Terminated
Transactions  for which a Market Quotation cannot be determined or would not (in
the  reasonable  belief  of  the  party  making  the  determination)  produce  a
commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"Specified  Transaction"  means,  subject to the Schedule,  (a) any  transaction
(including an agreement with respect thereto) now existing or hereafter  entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable  Specified  Entity of such party) and the other party to
this  Agreement  (or any Credit  Support  Provider  of such  other  party or any
applicable  Specified  Entity  of  such  other  party)  which  is  a  rate  swap
transaction,  basis swap,  forward rate transaction,  commodity swap,  commodity
option, equity or equity index swap, equity or equity index

                                       13

<PAGE>



option, bond option,  interest rate option,  foreign exchange  transaction,  cap
transaction, floor transaction,  collar transaction,  currency swap transaction,
cross-currency  rate swap  transaction,  currency  option  or any other  similar
transaction  (including  any option with respect to any of these  transactions),
(b)  any  combination  of  these  transactions  and (c)  any  other  transaction
identified  as a  Specified  Transaction  in  this  Agreement  or  the  relevant
confirmation.

"Terminated  Transactions"  means with respect to any Early Termination Date (a)
if resulting  from a Termination  Event,  all Affected  Transactions  and (b) if
resulting from an Event of Default,  all Transactions (in either case) in effect
immediately  before  the  effectiveness  of the  notice  designating  that Early
Termination  Date (or, if "Automatic  Early  Termination"  applies,  immediately
before that Early Termination Date).

"Termination  Event" means an Illegality  or, if specified to be  applicable,  a
Credit Event Upon Merger or an Additional Termination Event.

"Termination  Rate" means a rate per annum equal to the  arithmetic  mean of the
cost (without  proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"Unpaid Amounts" owing to any party means,  with respect to an Early Termination
Date,  the  aggregate  of (a) in respect  of all  Terminated  Transactions,  the
amounts that became  payable (or that would have become  payable but for Section
2(a)(iii))  to such  party  under  Section  2(a)(i)  on or prior  to such  Early
Termination  Date and which remain unpaid as at such Early  Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii))  required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market  value of that which was (or would have been)  required to be
delivered  as of the  originally  scheduled  date  for  delivery,  in each  case
together with (to the extent  permitted under  applicable law) interest,  in the
currency  of such  amounts,  from  (and  including)  the date  such  amounts  or
obligations  were or would have been  required to have been paid or performed to
(but excluding) such
Early Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated  on the  basis of daily  compounding  and the  actual  number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably  determined  by the party obliged to make the  determination
under  Section 6(e) or, if each party is so obliged,  it shall be the average of
the fair market values reasonably determined by both parties.

IN WITNESS  WHEREOF the parties have executed  this  document on the  respective
dates  specified  below with effect from the date specified on the first page of
this document.

BANK ONE, TEXAS, N.A.                       HYDROCHEM INDUSTRIAL SERVICES, INC.
---------------------                       -----------------------------------
    (Name of Party)                             a Delaware corporation
                                                   (Name of Party)


By: /s/ DAVID R. KING               By:/s/ SELBY F. LITTLE, III
---------------------               ---------------------------
Name:   David R. King               Name:  Selby F. Little, III
Title:  Vice President              Title: Executive Vice President &
Date:   July 17, 1998                      Chief Financial Officer
                                    Date:  July 17, 1998


                                       14

<PAGE>





        (Local Currency-Single Jurisdiction)

                                      ISDA
              International Swaps and Derivatives Association, Inc.

                                    SCHEDULE

                                     to the

                                MASTER AGREEMENT

                            dated as of JULY 17, 1998

                                     between

                             BANK ONE, TEXAS, N.A.,
                         a national banking association
                 with its main office located in Houston, Texas
                                   ("Party A")

                                       and

                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                             a Delaware corporation
             with its principal place of business in Houston, Texas
                                   ("Party B")

Part 1. Termination Provisions and Certain Other Matters

In this Agreement:

(a) "Specified  Entity" will not apply to Party A and for Party B will mean, for
purposes of Sections  5(a)(v),  5(a)(vi) and  5(a)(vii) of this  Agreement,  any
Affiliate of Party B.

(b)  "Specified   Transaction"   includes  for  Party  B,  in  addition  to  the
transactions specified in Section 12 of this Agreement,  any transaction between
Party A (or any  Affiliate  of Party A),  on the one  hand,  and Party B (or any
Affiliate of Party B), on the other.

(c) The "Cross  Default"  provisions of Section  5(a)(vi) of this Agreement will
not  apply to Party A and will  apply  to  Party B and,  with  respect  thereto,
"Specified  Indebtedness" will have for Party B the meaning specified in Section
12 of this  Agreement  and  "Threshold  Amount" will mean for Party B $1,000,000
(including the United States Dollar  equivalent on the date of any Cross Default
of any obligation stated in any other currency).

(d) The "Credit Event upon Merger" provisions of Section 5(b)(ii) will not apply
to Party A and will apply to Party B.

(e) The "Automatic Early  Termination"  provision of Section 6(a) will not apply
to Party A or to Party B.

(f) Payments on Early Termination. For the purpose of Section 6(e):



                                      S-1
<PAGE>



        (i)    Market Quotation will apply.

        (ii) The Second Method will apply.

(g) Additional Termination Event will not apply.

Part 2. Agreement to Deliver Documents

Party B agrees to deliver to Party A, upon  execution of this Agreement and upon
consummation of any Transaction, such evidence as Party A may reasonably require
(including,  without  limitation,  an opinion reasonably  acceptable in form and
substance to Party A of legal  counsel  reasonably  acceptable  to Party A) that
Party  B  is  duly  authorized  to  enter  into  this  Agreement  or  into  such
Transaction, and that the person(s) executing this Agreement or any Confirmation
on Party B's behalf is duly  authorized by Party B to do so. Party A also agrees
to deliver to Party B evidence that the person(s)  executing  this  Agreement or
any Confirmation on Party A's behalf is duly authorized by Party A to do so.

Part 3. Miscellaneous

(a) Addresses for Notices. For the purpose of Section 10(a) of this Agreement:

        Address for notices or communications to Party A:

        Address:             150 East Gay Street 23rd
                             Columbus, Ohio 43215

        Attention:           Tonya Melsop

        Facsimile No.:       614/217-0056          Telephone No.:614/217-1619

        Address for notices or communications to Party B:

        Address:             6210 Rothway, Suite 150
                             Houston, Texas 77040

        Attention:           Chris Conrad

        Facsimile No.:       713/329-2444          Telephone No.: 713/329-2351

(b)  Calculation  Agent.  The  Calculation  Agent is Party A,  unless  otherwise
specified in a Confirmation in relation to the relevant Transaction.

(c) Credit  Support  Document.  Does not apply to Party A and,  with  respect to
Party B, means each contract, agreement, instrument and other document listed in
Annex A hereto, each of which is intended by both Parties to secure the full and
timely  performance of Party B's obligations  under this  Agreement.  Annex A is
hereby incorporated herein in its entirety.

(d) Credit  Support  Provider.  Does not apply to Party A and,  with  respect to
Party B, means each party to any Credit  Support  Document of Party B other than
Party A or Party B, any  Affiliate of Party A, and any other secured party under
any such Credit Support Document.

(e)  Governing  Law.  This  Agreement  will  be  governed  by and  construed  in
accordance  with the laws of the State of New York (without  reference to choice
of law  doctrine).


                                      S-2
<PAGE>



(f) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to any
Transaction unless otherwise provided in the Confirmation for such Transaction.

(g) "Affiliate" means, with respect to each Party, any entity that,  directly or
indirectly,  each Party controls.  For this purpose, a person shall be deemed to
"control" any entity if such person,  directly or  indirectly or acting  through
one or more other  persons,  (a) owns,  controls or has the power to vote 50% or
more of any class of voting securities of such entity,  (b) is a general partner
of such  entity,  (c)  controls in any manner the  election of a majority of the
directors,  trustees or other similar officials of such entity, or (d) otherwise
exercises  a  controlling  influence  over the  management  or  policies of such
entity.

(h) "Party" means Party A and/or Party B, as the context may require.

Part 4. Other Provisions

(a) Additional Representations. Each Party hereby represents and warrants to the
other Party (which  representations  will be deemed to be repeated by each Party
on each date on which a Transaction is entered into) as follows:

        (i)    The   necessary   action  to   authorize   referred   to  in  the
               representation in Section 3(a)(ii)  includes all  authorizations,
               if  any,  required  by  such  Party  under  the  Federal  Deposit
               Insurance Act, as amended,  including  amendments effected by the
               Financial  Institutions Reform,  Recovery, and Enforcement Act of
               1989, and under any  agreement,  writ,  decree,  or order entered
               into with such party's supervisory authorities;

        (ii)   This Agreement is a "qualified  financial contract" as defined in
               Section 11 (e)(8)(D)(i) of the Federal Deposit  Insurance Act, 12
               U.S.C.  ss.1821(e)(8)(D)(i);  a "swap  agreement"  as  defined in
               Section  11(e)(8)(D)(vi) of the Federal Deposit Insurance Act, 12
               U.S.C. ss.1821(e)(8)(D)(vi); and a "swap agreement" as defined in
               Section 101(53B) of the Bankruptcy Code, 11 U.S.C.
               ss.101(53B);

        (iii)  It is not relying (for purposes of making any investment decision
               or  otherwise)  upon  any  advice,   counsel  or  representations
               (whether  written or oral) of the other party to this  Agreement,
               other  than  the  representations  expressly  set  forth  in this
               Agreement, each Credit Support Document and in any Confirmation;

        (iv)   It has consulted with its own legal,  regulatory,  tax, business,
               investment,  financial and  accounting  advisors to the extent it
               has deemed  necessary,  and has made its own investment,  hedging
               and  trading  decisions   (including   decisions   regarding  the
               suitability of any Transaction  pursuant to this Agreement) based
               upon its own judgment  and upon any advice from such  advisors as
               it has deemed  necessary  and not upon any view  expressed by the
               other party to this Agreement;

        (v)    It has a full  understanding  of all the  terms,  conditions  and
               risks  (economic and  otherwise) of this  Agreement,  each Credit
               Support Document and each Transaction, and is capable of assuming
               and willing to assume (financially and otherwise) such risks;

        (vi)   It is entering into this Agreement,  each Credit Support Document
               and each  Transaction for the purposes of managing its borrowings
               or investments,  hedging its underlying  assets or liabilities or
               in  connection  with a line of business,  and not for purposes of
               speculation; and

        (vii)  It is  entering  into  this  Agreement  and will  enter  into all
               Transactions  as principal and in connection with its business or
               the management of its business,  and not as agent or in any other
               capacity, fiduciary or otherwise.


                                      S-3

<PAGE>



(b) Exchange of  Confirmations.  On or promptly  following the execution of each
Transaction,  Party A will send to Party B a  Confirmation.  Party B will within
five (5)  calendar  days  thereafter  confirm  the  accuracy  of, or request the
correction of, such Confirmation (in the latter case, indicating how it believes
the terms of such  Confirmation  should be correctly stated and such other terms
which should be added to or deleted from such  Confirmation to make it correct).
The  failure  by  Party  B to  confirm  the  accuracy  of,  or to  correct,  the
Confirmation  within five (5) calendar days shall be deemed  Confirmation of the
terms of the Confirmation by Party B.

(c) Right of Set-Off.  If an Early  Termination Date occurs as the result of (i)
an Event of Default or (ii) a  Termination  Event with respect to which there is
only one Affected Party, the  Non-Defaulting  or Non-Affected  Party may Set-off
(x)  against  any  amount  due and  payable  by it  under  Section  6(e) of this
Agreement,  any Other  Obligations of the Defaulting or Affected Party;  and (y)
against  any of its Other  Obligations,  any amount due and  payable to it under
Section 6(e) of this Agreement. A Party may exercise such Set-off rights without
prior notice to the other Party, but shall notify the other Party promptly after
any exercise of such rights.  If the amount of any Other  Obligation  Set-off is
unascertained,  the  Non-Defaulting  or  Non-Affected  Party  may in good  faith
estimate  such  amount  and  Set-off  based  on  such  estimate,  subject  to an
accounting  to  the  other  Party  when  such  amount  is  ascertained,  and  to
appropriate  adjustment.  The Set-off rights of each Party hereunder shall be in
addition  to, and not in lieu of,  such  other  remedies,  including  such other
set-off rights, as such Party may have by contract,  operation of law, in equity
or otherwise.  As used herein, the term "Other  Obligations" means, with respect
to either Party,  any amount payable by it or any of its Affiliates to the other
Party,  whether such amount is payable under this Agreement,  another  contract,
applicable  law or  otherwise,  and  whether  such  amount is due at the time in
question, in the future or subject to a contingency.

(d) Events of  Default/Termination  Event/Designation of Early Termination Date.
Notwithstanding the terms of Sections 5 and 6 of this Agreement,  if at any time
and so long as one of the Parties to this  Agreement  ("X") shall have satisfied
in full all its payment and delivery  obligations  under Section 2(a)(i) of this
Agreement and shall at such time have no future payment or delivery  obligations
thereunder, whether absolute or contingent, then unless the other Party ("Y") is
required pursuant to appropriate proceedings to return to X or otherwise returns
to X upon  demand of X any  portion  of any such  payment or  delivery,  (i) the
occurrence of an event  described in Section 5(a) of this Agreement with respect
to X, any Credit  Support  Provider of X or any Specified  Entity of X shall not
constitute  an Event of Default  with respect to X as the  Defaulting  Party and
(ii) Y shall be entitled to  designate  an Early  Termination  Date  pursuant to
Section 6 of this  Agreement only as a result of the occurrence of a Termination
Event set forth in Section 5(b)(i) with respect to Y as the Affected Party.

(e) Condition to Payments.  The condition precedent in Section 2(a)(iii)(1) does
not apply to a payment  and  delivery  owing by a Party if the other Party shall
have  satisfied in full all its payment or delivery  obligations  under  Section
2(a)(i) of this  Agreement and shall at the relevant time have no future payment
or delivery obligations, whether absolute or contingent, under Section 2(a)(i).

                                       S-4

<PAGE>



ACCEPTED AND AGREED:

BANK ONE, TEXAS, N.A.               HYDROCHEM INDUSTRIAL SERVICES, INC.


By: /s/ DAVID R. KING               By:/s/ SELBY F. LITTLE, III
---------------------               ---------------------------
Name:   David R. King               Name:  Selby F. Little, III
Title:  Vice President              Title: Executive Vice President &
                                           Chief Financial Officer



                                       S-5

<PAGE>



                                     ANNEX A

                            Credit Support Documents

Each of the  following is a Credit  Support  Document of Party B for purposes of
this  Agreement,  and is intended by both  Parties to secure the full and timely
performance of Party B's obligations under this Agreement:

1. Loan Agreement dated as of July 17, 1998, by and between Party B and Party A;

2. Promissory Note dated as of July 17, 1998, by Party B payable to Party A;

3. Guaranty dated as of July 17, 1998, by Party B to Party A;

4. Deed of Trust (With  Security  Agreement and  Assignment of Rents and Leases)
   dated as of July 17, 1998 by Party B to Christopher T. Klimko ("Trustee");

5. Collateral  Assignment of Borrower's  Interest in Permits and Contracts dated
   as of July 17, 1998, by Party B to Party A;

6. Financing Statement (Harris County);

7. Financing Statement (State of Texas).


Additional Provision:

Provided,  however,  should the loan evidenced by the Promissory Note in (2) two
above be repaid;  Party B shall have the right to  substitute a Letter of Credit
or other  collateral  of a  sufficient  type  and  value to Party A, in its sole
discretion,  pursuant to the terms of a mutually acceptable Credit Support Annex
on the ISDA form.

                                       S-6