FIRST AMENDMENT TO LOAN AGREEMENT


         THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") dated as
of February 2, 1999, is by and between Hydrochem  Industrial  Services,  Inc., a
Delaware corporation (the "Borrower") and Bank One, Texas,  National Association
(the "Lender").

                                   WITNESSETH:

         WHEREAS,  the  Borrower  and the Lender have  entered into that certain
Loan Agreement dated as of July 17, 1998, pursuant to which the Lender agreed to
make  a  loan  to  the  Borrower  pursuant  to  the  terms  thereof  (the  "Loan
Agreement"); and

         WHEREAS, the Borrower and the Lender desire to amend the Loan Agreement
as hereinafter set forth;

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements  herein  contained,  the  Borrower  and the  Lender  hereby  agree as
follows:

         1.       Amendments to Loan Agreement.

                  (a) Section 1.1 of the Loan Agreement  (Definitions) is hereby
amended effective as of September 30, 1998, as follows:

                           (i)      The definition of "Capital Expenditures" is 
amended  by  adding  the  clause ", and  related  furniture,  office  equipment,
computers  and  computer  software"  after  the  word  Project in the sixth line
thereof.

                           (ii)     The definition of "EBITDA" is hereby amended
and restated in its entirety as  follows:  "`EBITDA'  means for  the  applicable
period, earnings before depreciation, amortization, interest expense,  taxes and
extraordinary  gains, plus certain restructuring  and special charges accrued in
1998 up to a maximum of $1,000,000."

                  (b)  Section  2.3(b)(i)  of  the  Loan  Agreement  (Term  Loan
Repayment)  is amended to reflect  September 30, 2006 as the "Term Loan Maturity
Date."

                  (c)  Section  6.12  of the  Loan  Agreement  (Restrictions  on
Fundamental  Changes) is hereby amended by adding the clause "and except for the
purchase of the assets and assumption of certain  liabilities of Valley Systems,
Inc. and Valley Systems of Ohio, Inc." at the end thereof.

                  (d)  Section  6.13 of the Loan  Agreement  (Liens)  is  hereby
amended by adding the clause "and except for Liens on assets of Valley  Systems,
Inc. or Valley Systems of Ohio, Inc. existing at the time of the purchase of the
assets of such entities" after the word "Indenture" in the fifth line thereof.



                                        1

<PAGE>



                  (e) Section 6.19 of the Loan Agreement  (Minimum  Consolidated
Net Worth) is hereby amended and restated in its entirety effective December 31,
1998, as follows:

         "Section 6.19.  Minimum  Consolidated  Net Worth The Borrower shall not
         permit its  Consolidated  Net Worth to be less than the  greater of (i)
         $13,000,000,  or (ii) ninety-five percent (95%) of its actual net worth
         as of December  31,  1998,  plus fifty  percent  (50%) of positive  net
         income since December 31, 1998,  plus one hundred percent (100%) of the
         net proceeds of any stock issuance."

         2. Waiver. The Lender hereby waives the Borrower's  non-compliance with
Section  6.20  (Fixed  Charge  Coverage  Ratio)  for the fiscal  quarter  ending
December 31, 1998, only.

         3.  Reaffirmation  of  Representations  and  Warranties.  To induce the
Lender to enter into this Amendment,  the Borrower hereby  reaffirms,  as of the
date hereof, its  representations  and warranties in their entirety contained in
the Loan Agreement and in all other documents  executed pursuant thereto (except
to the extent such  representations  and warranties  relate solely to an earlier
date in which  case  they  shall  have been true and  accurate  in all  material
respects as of such earlier date) and  additionally  represents  and warrants as
follows:

                  (a) The  execution  and  delivery  of this  Amendment  and the
performance by the Borrower of its obligations under this Amendment and the Loan
Agreement as amended hereby are within the  Borrower's  corporate  powers,  have
been duly  authorized  by all  necessary  corporate  action,  have  received all
necessary  governmental  and other approvals (if any shall be required),  and do
not and will not  contravene  or conflict with the  governance  documents of the
Borrower  or any  provision  of  law,  any  presently  existing  requirement  or
restriction  imposed  by any  judicial,  arbitral,  regulatory  or  governmental
instrumentality  or  constitute  a default  under,  or result in the creation or
imposition  of any Lien other than a Permitted  Lien upon any property or assets
of the Borrower or the Guarantor under,  any agreement,  instrument or indenture
by which the Borrower or the Guarantor is bound;

                  (b) This  Amendment  has been duly  executed and  delivered on
behalf of the Borrower and this  Amendment  and the Loan  Agreement,  as amended
hereby,  are  the  legal,  valid  and  binding   obligations  of  the  Borrower,
enforceable  in accordance  with their terms subject as to  enforcement  only to
bankruptcy,  insolvency,  reorganization,  moratorium  or other similar laws and
equitable  principles  affecting the enforcement of creditors' rights generally;
and

                  (c) No  Default  or  Event  of  Default  has  occurred  and is
continuing after giving effect to this Amendment.

         4.  Conditions.  The  effectiveness of this Amendment is subject to the
following conditions, all in form and substance satisfactory to the Lender:

                  (a)      The Lender shall have received:

                           (i)      Consent of Guarantor. The Guarantor shall
consent to this Amendment by executing and delivering to the  Lender the Consent
and Acknowledgment attached hereto;


                                        2

<PAGE>



                           (ii)     Certificate  of  Officer  of  Borrower.    A
certificate  of  the  Secretary or Assistant  Secretary  and  the  President  or
Vice  President  of   the   Borrower  containing  specimen   signatures  of  the
persons authorized  to  execute  this Amendment on the Borrower's behalf and any
other documents  provided for herein, together  with (x) copies  of  resolutions
of  the  Board of  Directors  of  the  Borrower  authorizing  the execution  and
delivery of this Amendment and of all other legal documents or proceedings taken
by the Borrower in connection with the execution and delivery of this Amendment,
and (y) copies of the Borrower's Certificate of  Incorporation, certified by the
Secretary of State of Delaware, and Bylaws, to the extent amended since July 17,
1998; and

                           (iii)    Certificate  of Existence and Good Standing.
A certificate of existence and good standing from the Secretary  of State of the
State of Delaware with respect to the Borrower.

                  (b) All legal  matters  incident to the execution and delivery
of this Amendment shall be satisfactory to the Lender.

         5.  Reaffirmation of Loan Agreement.  This Amendment shall be deemed to
be an  amendment  to the Loan  Agreement,  and the Loan  Agreement,  as  amended
hereby,  is hereby  ratified,  approved and confirmed in each and every respect.
All  references  to  the  Loan  Agreement  herein  and in  any  other  document,
instrument,  agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.

         6.  Defined  Terms.  Except as amended  hereby,  terms used herein when
defined in the Loan  Agreement  shall have the same  meanings  herein unless the
context otherwise requires.

         7.       Governing Law; Arbitration; Submission to Jurisdiction.

                  (a) The Loan Agreement,  as amended hereby, and the other Loan
Documents,  and the rights and duties of the parties thereto, shall be construed
in accordance with and governed by the internal laws of the State of Texas.

                  (b) EACH  PARTY  HERETO  HEREBY  WAIVES  ITS RIGHT TO  RESOLVE
DISPUTES,  CLAIMS, AND CONTROVERSIES ARISING FROM THE LOAN AGREEMENT, AS AMENDED
HEREBY,  ANY  OTHER  LOAN  DOCUMENT  OR  ANY  MATTER  IN  CONNECTION  THEREWITH,
INCLUDING,  WITHOUT LIMITATION,  CONTRACT DISPUTES AND TORT CLAIMS,  THROUGH ANY
COURT PROCEEDING OR LITIGATION AND ACKNOWLEDGES  THAT ALL SUCH DISPUTES,  CLAIMS
AND  CONTROVERSIES  SHALL BE  RESOLVED  PURSUANT  TO THIS  SECTION,  EXCEPT THAT
EQUITABLE  RELIEF AND CERTAIN  OTHER  RIGHTS AND REMEDIES SET FORTH BELOW MAY BE
SOUGHT FROM ANY COURT OF COMPETENT JURISDICTION.  The Borrower represents to the
Lender  and the  Lender  represents  to the  Borrower  that this  waiver is made
knowingly and voluntarily after consultation with and upon advice of counsel and
is a material part of this Agreement. All such disputes,claims and controversies
shall be resolved by binding arbitration pursuant to the commercial rules of the
American  Arbitration  Association  ("AAA").  Any  arbitration  proceeding  held
pursuant to this


                                        3

<PAGE>



arbitration provision shall be conducted in Houston, Texas or at any other place
selected by mutual  agreement of the Lender and the Borrower.  No act to take or
dispose  of any  collateral  shall  constitute  a  waiver  of  this  arbitration
agreement or be  prohibited  by this  arbitration  agreement.  This  arbitration
provision shall not limit the right of either party during any dispute, claim or
controversy  to seek,  use, and employ  ancillary or  preliminary  rights and/or
remedies, judicial or otherwise, for the purposes of realizing upon, preserving,
protecting, foreclosing upon or proceeding under forcible entry and detainer for
possession of, any real or personal  property,  and any such action shall not be
deemed an election of  remedies.  Such  remedies  include,  without  limitation,
obtaining injunctive relief or a temporary  restraining order,  invoking a power
of sale under any deed of trust or mortgage,  obtaining a writ of  attachment or
imposition  of a  receivership  or  exercising  any rights  relating to personal
property,  including  exercising  the right of set-off or taking or disposing of
such  property  with  or  without  judicial  process  pursuant  to  the  uniform
commercial code. Any disputes, claims or controversies concerning the lawfulness
or  reasonableness  of an act or exercise of any right or remedy  concerning any
collateral,  including  any claim to  rescind,  reform or  otherwise  modify any
agreement  relating  to the  collateral,  shall  also be  arbitrated;  provided,
however  that no  arbitrator  shall  have the  right or the  power to  enjoin or
restrain  any act of  either  party.  Judgment  upon any award  rendered  by any
arbitrator  may be  entered in any court  having  jurisdiction.  The  statute of
limitations,   estoppel,  waiver,  laches  and  similar  doctrines  which  would
otherwise be applicable  in an action  brought by a party shall be applicable in
any arbitration  proceeding,  and the commencement of an arbitration  proceeding
shall be deemed the  commencement of any action for these purposes.  The Federal
Arbitration  Act  (Title  9 of  the  United  States  Code)  shall  apply  to the
construction, interpretation, and enforcement of this arbitration provision.

                  (c) To the fullest extent permitted by applicable law, each of
the  Borrower  and the Lender  agrees that any court  proceeding  or  litigation
permitted  by Section  7(b) may be brought and  maintained  in the courts of the
State of Texas sitting in Harris County or the United States  District Court for
the Southern  District of Texas.  To the fullest extent  permitted by applicable
law,  each of the  Borrower  and the Lender  hereby  expressly  and  irrevocably
submits to the  jurisdiction  of the courts of the State of Texas and the United
States District Court for the Southern  District of Texas for the purpose of any
such  litigation  as set forth above and  irrevocably  agrees to be bound by any
judgment  rendered  thereby in connection with such  litigation.  To the fullest
extent  permitted by applicable law, each of the Borrower and the Lender further
irrevocably  consents to the service of process,  by  registered  mail,  postage
prepaid or by  personal  service  within or without  the State of Texas.  To the
fullest extent  permitted by applicable law, each of the Borrower and the Lender
hereby  expressly  and  irrevocably  waives any  objection  which it may have or
hereafter may have to the laying of venue of any such litigation  brought in any
such court  referred  to above and any claim that any such  litigation  has been
brought in an inconvenient  forum. To the extent that the Borrower or the Lender
has or hereafter may acquire any immunity from jurisdiction of any court or from
any legal  process  (whether  through  service  of notice,  attachment  prior to
judgment, attachment in aid of execution or otherwise) with respect to itself or
its property,  each of the Borrower and the Lender hereby  irrevocably waives to
the fullest


                                        4

<PAGE>



extent  permitted by applicable law, such immunity in respect of its obligations
under this Agreement.

                  (D) TO THE FULLEST  EXTENT  PERMITTED BY APPLICABLE  LAW, EACH
PARTY HERETO  VOLUNTARILY,  KNOWINGLY,  IRREVOCABLY AND  UNCONDITIONALLY (BY ITS
ACCEPTANCE  HEREOF) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY COURT  PROCEEDING
OR  LITIGATION  PERMITTED  BY  SECTION  7(B) AND WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE  IN  RESOLVING  ANY  DISPUTE  (WHETHER  BASED ON  CONTRACT,  TORT OR
OTHERWISE)  ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,  ANY OTHER
RELATED DOCUMENT OR ANY RELATIONSHIP  BETWEEN THE LENDER,  THE BORROWER,  AND/OR
THE  GUARANTOR,  AND AGREES THAT ANY SUCH ACTION,  PROCEEDING  OR DISPUTE TO THE
EXTENT  PERMITTED BY SECTION 7(B) SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE LOAN.

         8.  Counterparts.  This  Amendment  may be  executed  in any  number of
counterparts,  and by the different parties on different  counterpart  signature
pages,  each of which when  executed  shall be deemed an  original  but all such
counterparts taken together shall constitute one and the same Amendment.

         9. Severability.  Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.

         10. Headings. Section headings used in this Amendment are for reference
only and shall not affect the construction of this Amendment.

         11. Notice of Entire Agreement. This Amendment, together with the other
Loan Documents,  constitute the entire  understanding among the Borrower and the
Lender and supersedes all earlier or contemporaneous agreements, whether written
or oral,  concerning  the  subject  matter of the  Amendment  and the other Loan
Documents.  THIS  WRITTEN  AMENDMENT  TOGETHER  WITH THE  OTHER  LOAN  DOCUMENTS
REPRESENTS THE FINAL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS  OR  SUBSEQUENT  ORAL  AGREEMENTS  OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their duly authorized  officers as of the day and
year first above written.


                                        5

<PAGE>




                                   BORROWER:
                                   HYDROCHEM INDUSTRIAL SERVICES, INC., a
                                   Delaware corporation


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

                                   LENDER:

                                   BANK ONE, TEXAS, NATIONAL ASSOCIATION,


                                   By:      /s/ John E. Elam, Jr.
                                            -------------------------
                                   Name:    John E. Elam, Jr.
                                            Title:   Vice President




                                        6

<PAGE>


                           CONSENT AND ACKNOWLEDGMENT

         The undersigned  Guarantor,  by its signature hereto,  acknowledges and
agrees to the terms and  conditions  of that  certain  First  Amendment  to Loan
Agreement  (the  "Amendment")  dated as of  February  2,  1999,  by and  between
Hydrochem Industrial Services, Inc., a Delaware corporation (the "Borrower") and
Bank  One,  Texas,   National   Association  (the  "Lender").   The  undersigned
acknowledges  and reaffirms its obligations  under its Guaranty (the "Guaranty")
and agrees that the Guaranty shall remain in full force and effect. Although the
undersigned Guarantor has been informed by the Borrower of the matters set forth
in the Amendment,  and the undersigned has  acknowledged and agreed to same, the
undersigned  understands  and  agrees  that the Lender has no duty to notify the
Guarantor or to seek the Guarantor's  acknowledgment  or agreement,  and nothing
contained herein shall create such a duty as to any transactions hereafter.

         Dated as of February 2, 1999.

                                   HYDROCHEM INTERNATIONAL, INC., a
                                   Delaware corporation



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



                                        7

<PAGE>