DEFERRED BONUS PLAN
                                       OF
                       HYDROCHEM INDUSTRIAL SERVICES, INC.

                           PURPOSE AND EFFECTIVE DATE

        The  purpose of the Plan is to provide  specified  benefits  to a select
group of management and highly compensated  employees who contribute  materially
to the continued growth, development and future business success of the Company.
It is the intention of the Company that the Plan be  administered as an unfunded
plan for such select highly  compensated,  key  management  employees who become
Participants. The effective date of this Plan is May 1, 1999.

                                    ARTICLE I
                          DEFINITIONS AND CONSTRUCTION

1.1     Definitions.  For purposes of the Plan,  the following  phrases or terms
        shall have the indicated meanings unless otherwise clearly apparent from
        the context:

        (a)    "Acceleration  Event" shall mean either the  termination  without
               Cause of a Participant's  employment with the Company at any time
               within one year after the effective  date of a Change in Control,
               the  death  of  a  Participant,  or  the  Participant's  becoming
               Disabled.

        (b)    "Accumulated   Base   Interest   Rate   Balance"   shall  mean  a
               Participant's  Deferred  Bonus plus interest  thereon at the Base
               Interest  Rate  compounded  annually  from the Credit  Date.  The
               Accumulated  Base  Interest  Rate Balance as of each  Anniversary
               Date from the first  Anniversary  Date to the fourth  Anniversary
               Date  shall be set  forth  in each  Participation  Agreement  for
               illustrative purposes only.

        (c)    "Accumulated   Bonus   Interest  Rate   Balance"   shall  mean  a
               Participant's  Deferred Bonus plus interest  thereon at the Bonus
               Interest  Rate  compounded  annually  from the Credit  Date.  The
               Accumulated  Bonus  Interest Rate Balance as of each  Anniversary
               Date from the first  Anniversary Date to the seventh  Anniversary
               Date  shall be set  forth  in each  Participation  Agreement  for
               illustrative purposes only.

        (d)    "Anniversary  Date"  shall  mean  the same  month  and day as the
               Credit  Date in each  calendar  year  following  the  year of the
               Credit Date.

        (e)    "Base  Interest  Rate" shall mean for a given  Deferred  Bonus an
               annual  interest rate as set solely by the Board of Directors and
               as reflected in the  Participation  Agreement  for such  Deferred
               Bonus.
<PAGE>

        (f)    "Beneficiary"  shall  mean the  person,  persons,  or estate of a
               Participant   entitled   to   receive   any   benefits   under  a
               Participation Agreement subsequent to the death of a Participant.

        (g)    "Beneficiary   Designation"   shall  mean  the  form  of  written
               agreement  attached  hereto as Annex II, by which the Participant
               names the Beneficiary(ies).

        (h)    "Board  of  Directors"  shall mean the Board of  Directors of the
               Company.

        (i)    "Bonus  Interest  Rate" shall mean for a given  Deferred Bonus an
               annual  interest  rate higher than the Base  Interest Rate as set
               solely  by  the  Board  of  Directors  and  as  reflected  in the
               Participation Agreement for such Deferred Bonus.

        (j)    "Cause"  shall  mean (i)  failure  by a  Participant  to  perform
               assigned  duties in a manner which is satisfactory to the Company
               after  appropriate  notice by the Company to the  Participant  of
               such unsatisfactory performance, (ii) any fraud, misappropriation
               or  embezzlement  by the  Participant  which  is  related  to the
               business or assets of the Company or any  customer or supplier of
               the Company,  or conviction  for any felony,  or (iii) any act or
               action involving moral turpitude or reflecting  negatively on the
               Company.

        (k)    "Change In Control" shall mean any situation where (i) any person
               other than the  current  stockholders  of Holding or the  Company
               becomes  the  beneficial  owner of  securities  of Holding or the
               Company representing fifty percent or more of the combined voting
               power of the then outstanding securities of either Holding or the
               Company,  (ii)  there  is a  merger  or  consolidation  involving
               Holding or the Company in which  neither of them is the surviving
               entity,   or  (iii)   either   Holding  or  the   Company   sells
               substantially  all  of its  assets  to a  person  other  than  an
               associate  or  affiliate  of  either  of them.  For the  purposes
               hereof,  the term "person" or "persons"  shall mean  individuals,
               groups, corporations, partnerships, or other entities.

        (l)    "Company" shall mean HydroChem Industrial Services, Inc.

        (m)    "Credit Date" shall mean the  effective  date of  declaring  each
               Deferred Bonus.

        (n)    "Deferred  Bonus" shall mean (i) for any awards in calendar  year
               1999, an amount to be determined by the Board of Directors in its
               sole discretion for each Participant,  and (ii) in all subsequent
               calendar  years,  an  amount  equal  to  at  least  one  half  of
               Participant's  bonus for the  previous  calendar  year  under the
               Participant's  applicable  bonus plan. The amount of any Deferred
               Bonus  awarded  to any  Participant  shall  be set  forth in such
               Participant's Participation Agreement for that Deferred Bonus.

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<PAGE>

        (o)    "Disabled"  shall  mean  that a  Participant  is, on the basis of
               medical  evidence  satisfactory  to  the  Company,   totally  and
               permanently  unable, as a result of bodily injury or disease,  to
               engage in any further employment whatsoever.

        (p)    "Employee"  shall mean any person who is in the regular full time
               employment of the Company as  determined  by the personnel  rules
               and practices of the Company.  The term does not include  persons
               who are retained by the Company as  consultants  or through labor
               service companies.

        (q)    "Extended  Deferral  Election"  shall mean,  with  respect to any
               Deferred  Bonus,  the  decision  of a  Participant,  made  within
               thirty-six (36) months of the Credit Date of such Deferred Bonus,
               to defer  distribution  thereof from the Short Term  Distribution
               Date to the Long Term Distribution Date.

        (r)    "Holding"   shall  mean  HydroChem  Holding,  Inc.,   the  parent
               corporation of the Company.

        (s)    "Long Term Distribution Date" shall mean the seventh  Anniversary
               Date.

        (t)    "Participant"  shall mean an Employee  who is selected and elects
               to   participate   in  the  Plan  through  the   execution  of  a
               Participation  Agreement in  accordance  with the  provisions  of
               Article II.

        (u)    "Participation   Agreement"   shall  mean  the  form  of  written
               agreement, attached hereto as Annex I, which is entered into from
               time to time  between the  Company  and an  Employee  selected to
               become a Participant as a condition to participation in the Plan.
               There  shall  be a  separate  Participation  Agreement  for  each
               Deferred Bonus that may be awarded to a given Participant.

        (v)    "Plan" shall mean the Deferred Bonus Plan of HydroChem Industrial
               Service, Inc. as amended from time to time.

        (w)    "Short Term Distribution Date" shall mean the fourth  Anniversary
               Date from the Credit Date.

1.2     Construction.  The masculine  gender when used herein shall be deemed to
        include the  feminine  gender,  and the  singular may include the plural
        unless the context clearly indicates to the contrary.


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<PAGE>



                                   ARTICLE II
                          ELIGIBILITY AND PARTICIPATION

2.1     Term.  The  initial  term of this Plan shall be from  January 1, 1999 to
        December 31, 2000.  Thereafter it may be extended in the sole discretion
        of the  Board  of  Directors.  Notwithstanding  anything  herein  to the
        contrary,   after  the  expiration  or  termination  of  the  Plan,  all
        obligations  with respect to any then existing  Participation  Agreement
        shall continue in full force and effect.

2.2     Eligibility.  In order to be a Participant in the Plan, an Employee must
        be selected by the Board of Directors.  The Board of  Directors,  in its
        sole and absolute discretion, shall determine the Employees who shall be
        Participants  subject to section 2.4  herein,  and the  applicable  Base
        Interest  Rate and Bonus  Interest Rate for each  Deferred  Bonus.  Only
        Employees who are highly compensated,  key management employees shall be
        eligible for consideration by the Board of Directors to be Participants.

2.3     Participation  Agreement.   There  shall  be  a  separate  Participation
        Agreement for each Deferred Bonus granted to any  Participant in a given
        calendar year.  Each such  Participation  Agreement  shall set forth the
        amount of the Deferred  Bonus,  the Credit Date, the Base Interest Rate,
        the Bonus Interest Rate, and the Short and Long Term Distribution  Dates
        applicable to such Deferred Bonus. As a condition  precedent to becoming
        a Participant  with respect to each Deferred  Bonus that an Employee may
        be  awarded,  he shall  sign and return to the  Company a  Participation
        Agreement agreeing to be bound by the terms thereof and of this Plan.

2.4     Initial  Participants.  Any  Employee  selected to be a  Participant  in
        calendar year 1999 shall be awarded a Deferred  Bonus at that time,  and
        subject to  continuing  as an  Employee  of the  Company,  shall also be
        awarded a  Deferred  Bonus in  calendar  year 2000 equal to at least one
        half of the Participant's  annual performance bonus for 1999. Other than
        as set forth in this section  2.4, the awarding of a Deferred  Bonus for
        any  given  calendar  year  of the  Plan  shall  not  mean  that a given
        Participant  will be awarded a Deferred Bonus in any subsequent years of
        the Plan. If the Plan is continued  past December 31, 2000, the awarding
        of any  further  Deferred  Bonuses  shall be in the  sole  and  absolute
        discretion of the Board of Directors.


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<PAGE>



                                   ARTICLE III
                                     VESTING

3.1     Vesting of the Deferred Bonus. For as long as any Participant remains an
        Employee,  each Deferred  Bonus that may be awarded to him shall vest in
        accordance with the following schedule:

               Date                             Percentage Vested
               ----                             -----------------

               First Anniversary Date              25%

               Second Anniversary Date             50%

               Third Anniversary Date              75%

               Fourth Anniversary Date             100%


        Upon termination of a Participant's  employment with the Company for any
        reason  whatsoever,  he shall at such time be  vested  in each  Deferred
        Bonus  that may be  awarded  to him based  upon the  applicable  vesting
        percentage on the  Anniversary  Date  immediately  preceding the date of
        such termination of employment.  If there is a termination of employment
        prior to the first  Anniversary  Date of any Deferred  Bonus that may be
        awarded  to him,  then  there  shall be no  vesting  whatsoever  in that
        Deferred Bonus. If there is a termination of employment  after the first
        Anniversary  Date and  before  the  fourth  Anniversary  Date,  then any
        unvested portion of the applicable Deferred Bonus shall be forfeited.


3.2     Accelerated Vesting.  Notwithstanding anything herein to the contrary, a
        Participant  shall  become one  hundred  percent  (100%)  vested in Each
        Deferred  Bonus  that may be awarded  to him upon the  occurrence  of an
        Acceleration Event which occurs while the Participant is an Employee.



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<PAGE>



                                   ARTICLE IV
                           EXTENDED DEFERRAL ELECTION
                          AND PAYMENT OF DEFERRED BONUS

4.1     Extended Deferral  Election.  Within the first thirty-six (36) months of
        the Credit Date, but in no event later than the third  Anniversary  Date
        of the Credit Date, a Participant may make an Extended Deferral Election
        with respect to any  particular  Deferred  Bonus.  Such election must be
        made in writing, addressed to the General Counsel of the Company. If the
        Participant  does not make such  election  before the third  Anniversary
        Date, he will be deemed to have elected to receive his Accumulated  Base
        Interest Rate Balance on the Short Term Distribution Date. A Participant
        who elects to make an  Extended  Deferred  Election  shall  receive  his
        Accumulated  Bonus Interest  RateBalance  on the Long Term  Distribution
        Date,  or, in the event an  Acceleration  Event occurs prior to the Long
        Term  Distribution  Date, upon the occurrence of an Acceleration  Event.
        The actual payment of any Deferred Bonus on the Short Term  Distribution
        Date,  the Long Term  Distribution  Date or at any other  time  shall be
        subject to all other terms and conditions of this Plan.

4.2     Payment of Deferred  Bonus.  The vested  portion of each Deferred  Bonus
        that any  Participant may be awarded shall be paid by the Company to the
        Participant as follows:

        (i) General - No Extended  Deferral  Election.  If a Participant (a) has
        not made an Extended  Deferral Election and (b) remains employed through
        the  Short  Term  Distribution  Date,  then the  Company  shall  pay the
        Participant at such time the  Accumulated  Base Interest Rate Balance as
        of the  fourth  Anniversary  Date,  which  amount  shall  represent  the
        Deferred  Bonus plus interest  thereon  compounded  annually at the Base
        Interest Rate.

        (ii) General - Extended Deferral Election. If a Participant (a) has made
        an Extended  Deferral Election and (b) remains employed through the Long
        Term  Distribution  Date,  then the Company shall pay the Participant at
        such time the Accumulated  Bonus Interest Rate Balance as of the seventh
        Anniversary  Date,  which amount shall represent the Deferred Bonus plus
        interest thereon compounded annually at the Bonus Interest Rate.

        (iii)  Acceleration  Event.   Notwithstanding  anything  herein  to  the
        contrary,  if there is an Acceleration Event while the Participant is an
        Employee,  then, within a reasonable time thereafter,  the Company shall
        pay to the Participant or his Beneficiary,  as the case may be, the full
        amount of the Deferred Bonus plus interest  thereon  through the date of
        payment at the Bonus Interest Rate.

        (iv) Termination of Employment.  Notwithstanding  anything herein to the
        contrary, if a Participant's  employment with the Company terminates for
        any reason  whatsoever other than for an Acceleration  Event, then for a
        Participant who has not made an Extended Deferral Election,  the Company
        shall pay to the Participant on the Short Term Distribution Date without
        interest  the  portion of his  Deferred  Bonus that was vested as of the
        date of such termination of employment.  If such Participant has made an
        Extended


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<PAGE>

        Deferral Election,  then  the  portion of  his  Deferred  Bonus that was
        vested  as  of the  date of  such  termination  of  employment  shall be
        payable on the Long Term Distribution  Date without interest,  except in
        the case where the Company has terminated the  Participant's  employment
        without Cause in which event such vested portion shall be payable on the
        Long Term Distribution Date with interest at the Bonus Interest Rate.

        4.3 Right of Offset.  Notwithstanding  anything  herein to the contrary,
        the Company  shall have a right of offset with  respect to any  payments
        due to a Participant under the Plan or any  Participation  Agreement for
        any amounts which may be owed by the  Participant  to the Company at the
        time of such payment.


                                    ARTICLE V
                                   BENEFICIARY

     A  Participant   shall   designate  his   Beneficiary(ies)   to  receive  a
distribution  under a  Participation  Agreement by  completing  the  Beneficiary
Designation.  Such designation must be made in writing, addressed to the General
Counsel of the Company, using the Beneficiary Designation form. If more than one
Beneficiary is named, the shares and/or  precedence of each Beneficiary shall be
indicated.  A  Participant  shall  have the right to change the  Beneficiary  by
submitting to the Company a new  Beneficiary  Designation.  If a Participant has
failed to name a Beneficiary,  or if a Beneficiary to whom all or a share of any
benefit  would be payable has died,  then all or the  applicable  portion of any
benefits shall be paid to the Participant's estate. If the Company has any doubt
as to the proper Beneficiary or estate to receive payments  hereunder,  it shall
have  the  right  to  withhold  such  payments   until  the  matter  is  finally
adjudicated.  Any payment  made by the  Company in good faith and in  accordance
with the provisions of this Plan and a Participant's Participation Agreement and
Beneficiary  Designation  shall fully  discharge  the  Company  from all further
obligations with respect to such payment.



                                   ARTICLE VI
                               SOURCE OF BENEFITS

6.1     Benefits Payable from General Assets. Amounts payable hereunder shall be
        paid exclusively  from the general assets of the Company,  and no person
        entitled  to payment  hereunder  shall have any claim,  right,  security
        interest,  or other interest in any fund, trust, account, or other asset
        of the Company  that may be looked to for such  payment.  The  Company's
        liability for the payment of benefits  hereunder shall be evidenced only
        by the Plan and each Participation Agreement.

6.2     Investments to Facilitate  Payment of Benefits.  Although the Company is
        not obligated to purchase any insurance policy or invest in any specific
        asset or fund in order to  provide  the  means  for the  payment  of any
        liabilities under this Plan, the Company may elect to do so and, in such
        event,  no  Participant  shall have any  interest  whatever  in any such


                                       7
<PAGE>

        insurance  policy,   asset  or  fund.  By  executing  and  delivering  a
        Participation  Agreement, a Participant  understands and agrees that (i)
        he will  cooperate  with the  Company in any  attempts by the Company to
        obtain any such insurance  policy,  and (ii) his  participation,  in any
        way,  in the  acquisition  of any such  insurance  policy  or any  other
        specific   asset  or  fund  by  the  Company  shall  not   constitute  a
        representation  to the  Participant or his  Beneficiary,  his designated
        recipient,  or any person claiming through the Employee that any of them
        has a  special  or  beneficial  interest  in such  insurance  policy  or
        specific asset or fund.

6.3     Company  Obligation.  The Company shall have no obligation of any nature
        whatsoever  to  a  Participant   under  this  Plan  or  a  Participant's
        Participation  Agreement,  except as otherwise expressly provided herein
        and in such Participation Agreement.

                                   ARTICLE VII
                         NO EMPLOYMENT CONTRACT CREATED

        Neither this Plan nor a Participant's Participation Agreement(s), either
singularly  or  collectively,  in any way,  shall (i)  obligate  the  Company to
continue the  employment  of a Participant  with the Company,  or (ii) limit the
right  of  the  Company  at any  time  and  for  any  reason  to  terminate  the
Participant's  employment.  In no event  shall  this  Plan or any  Participation
Agreement(s),  either singularly or collectively, by their terms or implications
constitute an employment  contract of any nature whatsoever  between the Company
and a Participant.


                                  ARTICLE VIII
                          OTHER BENEFITS AND AGREEMENTS

        The benefits  provided for a Participant and his  Beneficiary  hereunder
and under such Participant's  Participation  Agreement(s) are in addition to any
other benefits  available to such Participant under any other program or plan of
the  Company  for its  employees,  and,  except as may  otherwise  be  expressly
provided  for, this Plan and  Participation  Agreements  entered into  hereunder
shall supplement and shall not supersede,  modify, or amend any other program or
plan of the  Company.  Moreover,  benefits  under  this  Plan and  Participation
Agreements  entered into hereunder shall not be considered  compensation for the
purpose of computing  deferrals  or benefits  under any plan  maintained  by the
Company that is qualified under Section 401 (a) of the Internal  Revenue Code of
1986, as amended.


                                   ARTICLE IX
                     RESTRICTIONS ON ALIENATION OF BENEFITS

        No right or benefit under this Plan or a  Participation  Agreement shall
be subject to anticipation,  alienation, sale, assignment,  pledge, encumbrance,
or charge  and any  attempt  to  anticipate,  alienate,  sell,  assign,  pledge,
encumber,  or charge the same shall be void.  No right or benefit  hereunder  or
under any  Participation  Agreement shall in any manner be liable for or


                                       8
<PAGE>

subject to the debts, contract,  liabilities, or torts of the person entitled to
such  benefit.   If  any  Participant  or  Beneficiary  under  this  Plan  or  a
Participation  Agreement  should  become  bankrupt  or  attempt  to  anticipate,
alienate,  sell,  assign,  pledge,  encumber,  or charge  any right to a benefit
hereunder or under any Participant Agreement,  then such right or benefit shall,
in the  discretion of the Company,  terminate,  and, in such event,  the Company
shall  hold or apply  the  same or any  part  thereof  for the  benefit  of such
Participant or Beneficiary,  his spouse, children, or other dependents or any of
them,  in such  manner  and in such  portion  as the  Company,  in its  sole and
absolute discretion, may deem proper.


                                    ARTICLE X
                                  MISCELLANEOUS

10.1    Execution of Receipts and Releases.  Any payment to any  Participant,  a
        Participant's legal representative or Beneficiary in accordance with the
        provisions of this Plan or Participation  Agreement  executed  hereunder
        shall,  to the extent  thereof,  be in full  satisfaction  of all claims
        hereunder against the Company. The Company may require such Participant,
        legal representative,  or Beneficiary,  as a condition precedent to such
        payment,  to execute a receipt and  release  therefor in such form as it
        may determine.

10.2    Notice.  Any  notice  which  shall or may be given  under this Plan or a
        Participation Agreement executed hereunder shall be in writing and shall
        be mailed by United  States mail,  postage  prepaid.  If notice is to be
        given to the Company, such notice shall be addressed to the Company at:

                       HydroChem Industrial Services, Inc.
                               900 Georgia Avenue
                             Deer Park, Texas 77536
                           Attention: General Counsel

        or, if notice to a  Participant,  addressed to the address shown on such
        Participant's   Participation   Agreement.   Either  the  Company  or  a
        Participant  may  change  its  or  his  address  for  notice  by  giving
        appropriate notice under this Section 10.2

10.3    Effect  of   Provisions.   The  provisions  of  this  Plan  and  of  any
        Participation  agreement  executed  hereunder  shall be binding upon the
        Company and its  successors  and assigns,  and upon a  Participant,  his
        Beneficiary, assigns, heirs, executors and administrators.

10.4    Headings.  The titles and headings of Articles and Sections are included
        for  convenience  of reference  only and are not to be considered in the
        construction  of the  provisions  hereof  or any  Participant  Agreement
        executed hereunder.

10.5    Governing  Law.  The  Plan  and each  Participation  Agreement  shall be
        governed  by the  laws of the  State of  Texas,  without  regard  to the
        principles  of  conflicts  of law  embodied  therein  that  might  refer
        construction of such provisions to the laws of another jurisdiction.


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<PAGE>

        IN WITNESS WHEREOF, the Company has executed this Deferred Bonus Plan as
of the effective date first herein above set forth.

                                       HydroChem Industrial Services, Inc.


                                       By: /s/ B. Tom Carter, Jr.
                                       --------------------------
                                           B. Tom Carter, Jr.
                                           Chairman and Chief Executive Officer



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