EXTENSION AGREEMENT

                  THIS  EXTENSION  AGREEMENT  (this  "Agreement")  is  made  and
entered  into as of the 2nd day of  February,  1999,  by and  between  HYDROCHEM
INDUSTRIAL SERVICES,  INC., a Delaware corporation  ("Borrower"),  and BANK ONE,
TEXAS, National Association, a national banking association ("Lender").

                              W I T N E S S E T H:

                  WHEREAS, in accordance with the terms and provisions of a Loan
Agreement  dated as of July 17,  1998 (as amended  from time to time,  the "Loan
Agreement"),  Borrower has executed  and  delivered to Lender a Promissory  Note
(the  "Note")  dated of even date  therewith,  in original  principal  amount of
$7,500,000.00; and

                  WHEREAS,  the payment of the Note is secured  by,  among other
things,  the Deed of Trust (with Security  Amendment and Assignment of Rents and
Leases) (the "Deed of Trust") dated July 17, 1998,  from Borrower to Christopher
T. Klinko,  Trustee,  filed for record under Clerk's File No. T168142, Film Code
No.  ###-##-####  of the  Official  Public  Records of Real  Property  of Harris
County,  Texas,  and  covering,  among  other  things,  the real  property  (the
"Property") described therein; and

                  WHEREAS,  Borrower  and Lender have agreed to renew and extend
the time and  manner  of  payment  of the Note and to carry  forward  the  liens
granted in the Deed of Trust, as hereinafter provided.

                  NOW,  THEREFORE,  for and in consideration of the premises and
the  mutual  covenants  contained  herein,  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Lender and Borrower agree as follows:

         1.  Renewal.  Borrower and Lender hereby renew and extend the principal
balance  of the  Note,  and  Borrower  promises  to pay to the  order of  Lender
$7,500,000.00,  or so much thereof as may be advanced and outstanding  under the
terms of the Loan Agreement,  together with interest  accruing thereon as herein
provided.

         2.  Interest.  Interest shall continue to accrue on the Note, as hereby
renewed  and  extended,  in the  manner  provided  for in the  Note and the Loan
Agreement.

         3. Note Payment. The Note, as hereby renewed and extended, shall be due
and payable as follows:

                           (i)  Commencing  on the last  Business  Day of April,
                  1999, and continuing regularly and quarterly thereafter on the
                  last Business Day of


                                       -1-

<PAGE>



                  each  fiscal  quarter  until the earlier of July 16, 1999 (the
                  "Construction  Loan Maturity  Date") or the  Conversion  Date,
                  interest only at the Construction Loan Rate on the outstanding
                  principal, shall be due and payable; and

                           (ii)  A  final  installment  in  the  amount  of  all
                  outstanding principal, plus accrued and unpaid interest, shall
                  be due and payable on the  Construction  Loan  Maturity  Date,
                  unless the Borrower satisfies the conditions of converting the
                  Construction Loan to the Term Loan described in Section 2.5 of
                  the Loan Agreement and elects to convert the Construction Loan
                  to the Term Loan in the  manner  therein  described,  in which
                  case the Borrower shall pay interest only at the  Construction
                  Loan Rate on the outstanding principal on the Conversion Date.

If the undersigned  satisfies the conditions of converting the Construction Loan
to the Term Loan described in Section 2.5 of the Loan  Agreement,  and elects to
convert the Construction Loan to the Term Loan in the manner therein  described,
the Borrower shall repay the unpaid  principal amount of the Loan, plus interest
thereon, as follows:

                           (i) On the last  Business Day of the first full three
                  (3) month period after the  Conversion  Date,  and  continuing
                  regularly and quarterly thereafter on the last Business Day of
                  each and every three (3) month period until September 30, 2006
                  (the  "Term  Loan  Maturity  Date"),   quarterly  payments  of
                  principal  shall be made as set forth in Exhibit  A,  together
                  with all accrued  and unpaid  interest on the Term Loan at the
                  Term Loan Rate; and

                           (ii)  A  final  installment  in  the  amount  of  all
                  outstanding  principal,  plus all accrued and unpaid  interest
                  thereon at the Term Loan Rate and any other unpaid amounts due
                  and  payable to the  Lender,  shall be due and  payable on the
                  Term Loan Maturity Date.

         4.  Prepayment.  Borrower shall have the right at any time or from time
to time to prepay the outstanding principal balance of the Note existing at such
time, or any portion  thereof,  subject to and in accordance  with the terms and
provisions of the Note and the Loan Agreement.

         5. Lien Continuation. The liens granted in the Deed of Trust are hereby
ratified and  confirmed as  continuing to secure the payment of the Note and the
other  indebtedness  (as such term is  defined  in the Deed of  Trust).  Nothing
herein shall in any manner  diminish,  impair,  or extinguish  the  indebtedness
evidenced by the Note or the liens  securing the  indebtedness  evidenced by the
Note. The liens granted in the Deed of Trust are not waived.  Borrower  ratifies
and acknowledges the indebtedness evidenced by the Note is just, due, owing, and
unpaid, as stated herein, and is subject


                                       -2-

<PAGE>



to no offsets,  deductions,  credits,  charges,  or claims of whatsoever kind or
character, and further agrees that all offsets,  credits, charges, and claims of
whatsoever kind or character are fully settled and satisfied.

         6. Title  Insurance.  At the time of the  execution of this  Agreement,
Borrower shall: (a) cause Lawyers Title Insurance Company ("Title Insurer"),  to
issue and  deliver to Lender an  endorsement  to the  Mortgagee  Policy of Title
Insurance  (the "Policy")  previously  issued to Lender by the Title Insurer and
now insuring the lien of the Deed of Trust, in form and substance  acceptable to
Lender,  agreeing  that the  Policy  remains in effect  and is not  impaired  or
limited by this Agreement,  extending the Title Insurer's liability by reference
to the extended  maturity  date of the Note (if the maturity date of the Note is
extended by this  Agreement),  and confirming and stating that  indefeasible fee
simple title to the Property  remains solely as provided in the Policy;  and (b)
pay the costs of the  endorsement  to the Policy and the filing and recording of
this Agreement and all other out-of-pocket costs and expenses incurred by Lender
in connection with the preparation,  negotiation, and delivery of this Agreement
(including attorneys' fees).

         7.  Limitations  on  Interest.  (a) It is the  intention  of Lender and
Borrower to confirm strictly to any applicable usury laws.  Accordingly,  if the
transactions  contemplated hereby would be usurious under any applicable,  then,
in that event, notwithstanding anything to the contrary in the Note, the Deed of
Trust,  the Loan Agreement,  or any other  agreement  entered into in connection
with or as security for or  guaranteeing  the Deed of Trust,  or the Note, it is
agreed as follows:  (i) the  aggregate of all  consideration  which  constitutes
interest under applicable law that is contracted for, taken,  reserved,  charged
or received by Lender under the Note, the Deed of Trust, the Loan Agreement,  or
under any other agreement  entered into in connection with or as security for or
guaranteeing  Deed of Trust or the Note shall under no circumstances  exceed the
Maximum Rate (as defined in the Note and hereafter  used),  and any excess shall
be cancelled  automatically  and, if theretofore  paid,  shall, at the option of
Lender,  be credited by Lender on the principal amount of any indebtedness  owed
to Lender by Borrower or refunded by Lender to  Borrower,  and (ii) in the event
that the maturity of the Note is  accelerated or in the event of any required or
permitted  prepayment,  then such consideration that constitutes  interest under
law applicable to Lender may never include more than the Maximum Rate and excess
interest,  if any,  provided  for in the  Note,  the  Deed of  Trust,  the  Loan
Agreement,  or otherwise shall be cancelled automatically as of the date of such
acceleration  or prepayment  and, if theretofore  paid,  shall, at the option of
Lender,  be credited by Lender on the principal amount of any indebtedness  owed
to Lender by Borrower or refunded by Lender to Borrower.

                  (b) Notwithstanding  anything herein the contrary, in no event
will interest  payable to Lender exceed the maximum amount  permitted by the law
applicable to Lender  (after  taking into account all charges  payable to Lender
which constitute interest under such applicable law), but if any amount referred
to in the


                                       -3-

<PAGE>



Note which  would be payable  to Lender  but for the  applicability  of usury or
other laws limiting the consideration payable to Lender is not paid to Lender as
a result of the  applicability  of such laws,  then interest on the  outstanding
principal  balance of the Note payable to Lender shall, to the extent  permitted
by the law,  accrue at the maximum rate of interest  permitted by applicable law
(after  taking  into  account  all charges  payable to Lender  which  constitute
interest under applicable laws) until the total amount received by Lender equals
the amount it would have received had no such laws been applicable.

         8.  Preservation.  Except as  specifically  amended and modified by the
terms of this Agreement,  all of the terms, provisions,  covenants,  warranties,
and agreements  contained in the Note, the Deed of Trust, and the Loan Agreement
shall  remain in full force and effect.  Capitalized  terms not  defined  herein
shall have the meanings assigned to them in the Loan Agreement.

         9.  Counterparts.  This  Agreement  may be  executed  in  two  or  more
counterparts,  and it shall not be necessary that any one of the counterparts be
executed  by all  of the  parties  hereto.  Each  fully  or  partially  executed
counterpart  shall  be  deemed  an  original,  but all such  counterparts  taken
together shall constitute but one and the same instrument.

         10. Joinder by Guarantor.  HydroChem  International,  Inc. joins in the
execution and delivery of this  Agreement to evidence his agreement to the terms
and provisions hereof and that its Guaranty dated July 17, 1998, remains in full
force and effect and is not in any way limited,  impaired,  or  discounted  as a
result of the delivery of this Agreement by Borrower.

         11. NO ORAL  AGREEMENTS.  THIS WRITTEN  AGREEMENT AND THE OTHER WRITTEN
LOAN DOCUMENTS  REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED  BY  EVIDENCE  OF  PRIOR,  CON  TEMPORANEOUS,  OR  SUBSEQUENT  ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL  AGREEMENTS  BETWEEN THE
PARTIES.

                  EXECUTED as of the date first above written.

                                   LENDER:

                                   BANK ONE TEXAS,
                                   NATIONAL ASSOCIATION


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


                                       -4-

<PAGE>



                                   BORROWER:

                                   HYDROCHEM INDUSTRIAL SERVICES, INC.,
                                   a Delaware corporation


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



JOINED IN FOR THE PURPOSES DESCRIBED
ABOVE AND FOR PURPOSES OF SECTION
26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE:

HYDROCHEM INTERNATIONAL, INC.


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




THE STATE OF TEXAS                                       
                                                         
COUNTY  OF  HARRIS                                       

     This instrument was  acknowledged  before me, on February 24, 1999, by John
E. Elam, Jr., Vice President of Bank One, Texas, a national banking association,
on behalf of said institution.

                                   /s/ Mary Dase
                                   -------------
                                   Notary Public Signature

My Commission Expires:             Mary Dase
     10/6/2002                     --------------
                                   Printed Name of Notary Public





                                       -5-

<PAGE>



THE STATE OF TEXAS                                       
                                                         
COUNTY  OF  HARRIS                                       

         This  instrument was  acknowledged  before me, on February 23, 1999, by
Selby F.  Little,  III, in his capacity as Executive  Vice  President  and Chief
Financial   Officer  of  HYDROCHEM   INDUSTRIAL   SERVICES,   INC.,  a  Delaware
corporation, on behalf of said corporation.

                                   /s/ Carol Schanafelt
                                   --------------------
                                   Notary Public Signature

My Commission Expires:             Carol Schanafelt
                                   --------------------
    1/27/2002                      Printed Name of Notary Public



THE STATE OF TEXAS                                       
                                                         
COUNTY  OF  HARRIS                                       

         This  instrument was  acknowledged  before me, on February 23, 1999, by
Selby F.  Little,  III, in his capacity as Executive  Vice  President  and Chief
Financial Officer of HYDROCHEM INTERNATIONAL,  INC., a Delaware corporation,  on
behalf of said corporation.

                                   /s/ Carol Schanafelt
                                   --------------------
                                   Notary Public Signature

My Commission Expires:             Carol Schanafelt
                                   --------------------
    1/27/2002                      Printed Name of Notary Public






                                       -6-

<PAGE>