AMENDMENT NO.  1


        This  Amendment  No. 1 dated as of September 30, 1998  ("Agreement")  is
among HydroChem Industrial Services, Inc., a Delaware corporation  ("Borrower"),
the  banks  party  to  the  Credit  Agreement  described  below  ("Banks"),  and
NationsBank,  N.A.  (successor  in interest by merger to  NationsBank  of Texas,
N.A.), as Agent for the Banks ("Agent").

                                     INTRODUCTION

        A. The  Borrower,  the Agent and the Banks  are  parties  to the  Credit
Agreement  dated as of December  31,  1997,  as amended by the Letter  Agreement
dated as of March 6, 1998 and the Letter  Agreement  dated as of August 14, 1998
(as so amended, the "Credit Agreement").

        B. The  Borrower  has  requested  that the Banks  agree to make  certain
amendments to the Credit Agreement.

        THEREFORE,  the  Borrower,  the  Agent  and the  Banks  hereby  agree as
follows:

        Section 1.  Definitions;  References.  Unless otherwise  defined in this
Agreement,  terms  used  in this  Agreement  which  are  defined  in the  Credit
Agreement  shall  have  the  meanings  assigned  to  such  terms  in the  Credit
Agreement.

        Section 2.  Amendments.

               (a)  Section  1.1.  Section  1.1 is amended by (i)  deleting  the
definition of "EBIT", (ii) adding the new definition "Currency Hedge Agreement",
and  (iii)  deleting  the  definitions  of  "Applicable  Margin",  "EBITDA"  and
"Permitted   Debt"   replacing  them  with  the  following  new  definitions  in
alphabetical order:

        "Applicable  Margin" means,  with respect to interest rates,  commitment
fees,  and  letter of credit  fees and as of any date of its  determination,  an
amount  equal to the  percentage  amount per annum set forth in the table  below
opposite the applicable ratio of (a) the consolidated  EBITDA of the Borrower as
of the end of the fiscal  quarter then most  recently  ended for the four fiscal
quarters then most recently ended to (b) the  consolidated  Interest  Charges of
the Borrower as of the end of the fiscal  quarter then most  recently  ended for
the four fiscal quarters then most recently ended, as determined below:






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<PAGE>

<TABLE>

<CAPTION>


EBITDA to           Applicable      Applicable    Applicable      Applicable
Interest            Margin for      Margin for    Letter of       Margin for
Charges             LIBOR Tranches  Prime Rate    Credit Fees     Commitment
Ratio               --------------  Tranches      -----------     Fees
-----                               --------                      ----
<S>                 <C>              <C>            <C>             <C>

<=1.75              2.50%             .75%          2.25%           .50%
<=2.00 but >1.75    2.00%             .25%          1.75%           .375%
<=2.50 but >2.00    1.75%            0.00%          1.50%           .30%
 >2.50              1.50%            0.00%          1.25%           .25%
</TABLE>


The Agent shall periodically determine the Applicable Margin based upon the most
recent  financial  statements  of the  Borrower  dated as of the end of a fiscal
quarter (including the fourth fiscal quarter) delivered to the Agent pursuant to
Section 5.2(b) (and in the case of the fourth fiscal quarter of each fiscal year
of the  Borrower,  subject  to  additional  adjustment  in  accordance  with the
following paragraph based upon audited financial  statements  delivered pursuant
to Section 5.2(a)).  In addition,  the Applicable Margins for LIBOR Tranches and
Prime Rate  Tranches set forth above for periods in which the EBITDA to Interest
Charges  Ratio is less  than or equal to 1.75  shall be  reduced  by .25% if the
Covenant Reduction Date shall have occurred.

Any such adjustments to the Applicable Margin (other than adjustments  resulting
from the occurrence of the Covenant  Reduction Date, which  adjustments shall be
effective concurrent with the Covenant Reduction Date) shall become effective on
the 45th day following the last day of each fiscal quarter (including the fourth
fiscal  quarter);  provided that;  any additional  adjustments to the Applicable
Margin shall be made on the 90th day following the last day of the fourth fiscal
quarter of the Borrower;  provided,  further,  that if such financial statements
are not delivered when required hereunder,  the Applicable Margin shall increase
to the maximum percentage amount set forth in the table above from such 45th day
following the last day of the applicable quarter until such financial statements
are received by the Agent. Upon any change in the Applicable  Margin,  the Agent
shall promptly notify the Borrower and the Banks of the new Applicable Margin.

        "Covenant Reduction Date" means the date that is the earlier to occur of
(a) the date that the Valley Systems Acquisition is consummated and (b) June 30,
1999.

        "Currency Hedge  Agreements"  means any swap,  hedge,  cap,  collar,  or
similar  arrangement  between the Borrower and any Bank (or any Affiliate of any
Bank or such other Person that has been approved by the Agent) providing for the
exchange of risks related to price changes in the foreign  currency  exposure or
liabilities.






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<PAGE>



        "EBITDA"  means,  with  respect  to any Person and for any period of its
determination, (a) the sum of (i) the consolidated net income of such Person for
such period plus (ii) the consolidated  interest expense of such Person for such
period  plus (iii) the income  taxes of such Person  accrued  during such period
plus (iv) the consolidated depreciation and amortization of such Person for such
period minus (b) any interest income and extraordinary  gains of such Person for
such period and included in the calculation of consolidated net income; provided
that,  EBITDA for periods  occurring  prior to December  31, 1998 shall  exclude
certain  non-recurring  expenditures  in  an  aggregate  amount  not  to  exceed
$1,000,000.

        "Permitted Debt" means all of the following Debt:

        (a)    Debt in the form of the Credit Obligations;

        (b) Debt existing at the date of this Agreement as set forth on Schedule
II;

        (c) the  Senior  Subordinated  Notes  (and  guaranties  executed  by the
Borrower's Subsidiaries with respect to such Senior Subordinated Notes);

        (d) intercompany Debt between the Borrower and (i) any of the Guarantors
or (ii) any  Subsidiary  that  has had at least  66-2/3%  of its  capital  stock
pledged to the Agent for the benefit of the Banks  pursuant to Section  5.19, in
each case subordinated on terms acceptable to the Agent and Majority Banks;

        (e) Debt  constituting  purchase money debt incurred with respect to the
purchase and construction of real property in an aggregate outstanding principal
amount not to exceed $8,500,000; and

        (f) Debt  constituting  purchase money debt incurred with respect to the
purchase of  equipment  and  obligations  under  Capital  Leases in an aggregate
outstanding  principal  amount for all such Debt  under  this  clause (e) not to
exceed $5,000,000.

        (g) Debt under any Interest Hedge Agreement or Currency Hedge Agreement.

     "Valley Systems  Acquisition"  means the acquisition by the Borrower or any
of its wholly- owned  Subsidiaries of either (a) all or substantially all of the
assets of Valley  Systems,  Inc. and Valley Systems of Ohio,  Inc. or (b) all of
the capital stock of Valley Systems,  Inc. and Valley Systems of Ohio,  Inc., in
either case on terms and conditions, and subject to documentation, acceptable to
the Agent and the Majority Banks in their sole reasonable discretion.






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<PAGE>



               (b)  Section  2.3.   Section  2.3  is  amended  by  deleting  the
percentage  .25% and  replacing  it with the phrase "the  Applicable  Margin for
Commitment Fees".

               (c)  Section  5.5.  Clauses  (a),  (b) and (d) of Section 5.5 are
hereby  deleted and replaced in their  entirety  with the  following new clauses
(a), (b) and (d):

                             (a) Net Worth.  The  Borrower  shall not permit the
               consolidated Net Worth of the Borrower as of the last day of each
               fiscal quarter to be less than the sum of (i)  $13,500,000,  plus
               (ii) 50% of the cumulative  quarterly  consolidated net income of
               the  Borrower  since  December  31, 1998 for each fiscal  quarter
               ending  after that date during  which the  Borrower  has positive
               consolidated  net  income  plus  (iii)  80% of the  net  proceeds
               resulting  from any sale or issuance of any stock of the Borrower
               or its Subsidiaries since December 31, 1998.

                             (b) Maximum  Funded Debt to Proforma  EBITDA Ratio.
               As of the last day of each fiscal  quarter of the  Borrower,  the
               Borrower  shall  not  permit  the  ratio of (i) the  consolidated
               Funded Debt of the Borrower as of the end of such fiscal  quarter
               to (ii) the consolidated EBITDA of the Borrower for the preceding
               four fiscal  quarters then ended,  to be greater than the minimum
               ratio set forth in the table below for the applicable quarter end
               period set forth in the table below (provided that in calculating
               the foregoing, the financial results and balance sheet effects of
               any  Acquisitions  may, if requested by the Borrower and approved
               by the  Majority  Banks  (including  approval  of any  pro  forma
               financial  statements),  be  included in such  calculations  on a
               proforma basis for the full period and on the relevant dates.
<TABLE>
<CAPTION>

                      Period                       Maximum Ratio
                      ------                       -------------
                      <S>                          <C>    
                      Prior to and including
                      December 31, 1998            6.50 to 1.00
                      March 31, 1999               6.25 to 1.00
                      June 30, 1999                6.00 to 1.00
                      September 30, 1999
                      and thereafter               5.50 to 1.00
</TABLE>

Notwithstanding the foregoing, if the Covenant Reduction Date shall occur before
June 30, 1999,  the Maximum Ratio shall be 6.00 to 1.00 until the quarter period
ending September 30, 1999, at





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<PAGE>



which time (and all subsequent  quarter end periods) the Maximum Ratio in effect
shall be 5.50 to 1.00

                             (c) Minimum  Interest  Charge Coverage Ratio. As of
               the last day of each  fiscal  quarter,  the  Borrower  shall  not
               permit the ratio of (i) the  consolidated  EBITDA of the Borrower
               for  the  preceding  four  fiscal  quarters  then  ended  to (ii)
               Interest  Charges for the  preceding  four fiscal  quarters  then
               ended to be less  than the  minimum  ratio set forth in the table
               below for the  applicable  quarter  end  periods set forth in the
               table below.
<TABLE>
<CAPTION>
                      Period                       Minimum Ratio
                      ------                       -------------
                      <S>                          <C>    
                      Prior to and including
                      June 30, 1999                1.50 to 1.00
                      September 30, 1999           1.75 to 1.00
                      Thereafter                   2.00 to 1.00

</TABLE>

               (d)  Section  5.9.  The  phrases  currently  contained  in clause
(ii)(B) of Section 5.9 are hereby  deleted and replaced in their  entirety  with
the phrase "the Agent and Majority  Banks have granted prior approval in writing
for such Acquisition;".

               (e)  Exhibits.  Exhibit A to the Credit  Agreement is deleted and
replaced with Exhibit A hereto.

        Section 3.  Representations and Warranties.  The Borrower represents and
warrants to the Agent and the Banks that:

               (a) The  representations  and  warranties set forth in the Credit
Agreement and in the other Credit Documents are true and correct in all material
respects as of the date of this Agreement;

               (b) The execution, delivery and performance of this Agreement are
within the  corporate  power and  authority  of the  Borrower and have been duly
authorized by  appropriate  proceedings  and (ii) this  Agreement  constitutes a
legal,  valid, and binding obligation of the Borrower  enforceable in accordance
with  its  terms,  except  as  limited  by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium,  or similar laws  affecting the rights of creditors
generally and general principles of equity;

               (c) As of the  effectiveness  of this  Agreement,  no  Default or
Event of Default has occurred and is continuing; and





                                        -5-

<PAGE>



               (d) The Borrower  estimates that the  non-recurring  expenditures
deducted in calculating its EBITDA shall consist of (i)  approximately  $200,000
in  costs  and  expenses  incurred  by the  Borrower  and  its  Subsidiaries  in
connection  with the  relocation  of its  corporate  headquarters  to Deer Park,
Texas,  (ii)  approximately  $350,000  in costs  and  expenses  incurred  by the
Borrower  and its  Subsidiaries  as a result of the due  diligence  performed in
connection with certain acquisitions that did not close, and (iii) approximately
$450,000 in severance costs and expenses accrued prior to December 31, 1998 as a
result of personnel reductions.

        Section 4.  Effectiveness. This Agreement shall become effective and the
Credit  Agreement  shall  be  amended  as  provided  in  this Agreement upon the
occurrence of the following conditions precedent:

               (a) The Borrower,  the Agent,  and the Banks shall have delivered
duly and validly executed originals of this Agreement to the Agent;

               (b) the representations and warranties in this Agreement shall be
true and correct in all material respects;

               (c) the  Borrower  shall  have  delivered  a  certificate  of its
Secretary or Assistant  Secretary  certifying its certificate of  incorporation,
bylaws, resolutions and incumbency and in form and substance satisfactory to the
Agent and the Banks; and

               (d) the  Borrower  shall  have paid (i) an  amendment  fee to the
Banks in an aggregate  amount equal to $15,000 and (ii) all amounts and expenses
required  to be  paid in  connection  with  this  Agreement  and the  amendments
evidenced hereby.

        Section 5. Consent of Guarantor.  The Guarantor  hereby  consents to the
amendments and  modifications  contained in this Amendment (and the consummation
of the transactions  contemplated  thereby) and confirms that the Guaranty shall
continue to guarantee  the  "Guaranteed  Debt" (as defined in such  Guaranty) as
modified hereby.

        Section 6. Valley Systems, Inc. Each of the Agent and the Majority Banks
hereby  consents to the  acquisition by the Borrower or any of its  wholly-owned
Subsidiaries  of either  (a) all or  substantially  all of the  assets of Valley
Systems,  Inc. and Valley Systems of Ohio,  Inc. or (b) all of the capital stock
of Valley Systems,  Inc. and Valley Systems of Ohio,  Inc.;  provided that, such
consent is only effective if, in either case,  such  acquisition is on terms and
conditions,  and  subject  to  documentation,  acceptable  to the  Agent and the
Majority Banks in their sole reasonable discretion.






                                        -6-

<PAGE>



        Section 7. Choice of Law.  This  Agreement  shall  be  governed  by  and
construed and enforced in accordance with the laws of the State of Texas.

        Section 8.  Counterparts.  This Agreement may be signed in any number of
counterparts, each of which shall be an original.

        PURSUANT TO SECTION  26.02 OF THE TEXAS  BUSINESS AND  COMMERCE  CODE, A
LOAN  AGREEMENT  IN WHICH THE  AMOUNT  INVOLVED  IN THE LOAN  AGREEMENT  EXCEEDS
$50,000 IN VALUE IS NOT ENFORCEABLE  UNLESS THE LOAN AGREEMENT IS IN WRITING AND
SIGNED BY THE PARTY TO BE BOUND OR THAT PARTY'S AUTHORIZED REPRESENTATIVE.

        THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO THE
PRECEDING  PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN AGREEMENT,
AND ANY PRIOR ORAL  AGREEMENTS  BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO THE LOAN AGREEMENT.  THIS WRITTEN  AGREEMENT AND THE CREDIT  DOCUMENTS,  AS
DEFINED IN THE CREDIT AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG 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 AMONG THE PARTIES.

        EXECUTED as of the 30th day of September, 1998.

                                            BORROWER:

                                            HYDROCHEM INDUSTRIAL SERVICES, INC.


                                            By: /s/ Selby F. Little, III        
                                               Name:Selby F. Little, III        
                                               Title:Executive Vice President & 
                                                       Chief Financial Officer






                                        -7-

<PAGE>


                                            AGENT:

                                            NATIONSBANK, N.A.


                                            By: /s/ William T. Griffin        
                                               Name:William T. Griffin          
                                               Title:Vice President             

                                            BANKS:

                                            NATIONSBANK, N.A.


                                            By: /s/ William T. Griffin         
                                               Name:William T. Griffin          
                                               Title:Vice President            


Agreed to and Accepted as of the
30th day of September, 1998



HYDROCHEM INTERNATIONAL, INC.



By: /s/ Selby F. Little, III                                                  
   Name:Selby F. Little, III                                          
   Title:Executive Vice President &
          Chief Financial Officer                                             








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