<PAGE>   1

                                                                     Exhibit 2.1

                     EXHIBIT "A" - STOCK PURCHASE AGREEMENT
<PAGE>   2

                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                            INDUSTRIAL HOLDINGS, INC.
                               THE SHAREHOLDER OF
                            A & B BOLT & SUPPLY, INC.

                                       AND

                            T-3 ENERGY SERVICES, INC.







                                DATED: MAY , 2001



<PAGE>   3

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>                                                                                                <C>
      STOCK PURCHASE AGREEMENT.......................................................................1


      RECITALS:......................................................................................1


      AGREEMENT:.....................................................................................1

      1.  AGREEMENT TO SELL AND AGREEMENT TO PURCHASE................................................1

               1.1.  PURCHASE OF SHARES FROM SHAREHOLDERS............................................1

               1.2.  FURTHER ASSURANCES..............................................................2

               1.3.  CLOSING.........................................................................2

      2.  CONSIDERATION TO BE PAID BY BUYER..........................................................2

               2.1.  PURCHASE PRICE FOR SHARES.......................................................2

               2.2.  PAYMENT OF PURCHASE PRICE.......................................................2

               2.3.  PURCHASE PRICE ADJUSTMENT.......................................................3

      3.  REPRESENTATIONS AND WARRANTIES OF SELLER...................................................5

               3.1.  ORGANIZATION AND GOOD STANDING..................................................5

               3.2.  CORPORATE AUTHORITY.............................................................5

               3.3.  OWNERSHIP OF SHARES.............................................................5

               3.4.  CAPITALIZATION..................................................................6

               3.5.  FINANCIAL CONDITION.............................................................6

               3.6.  PROPERTY OF THE COMPANY.........................................................7

               3.7.  AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS....................................10

               3.8.  EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFITS........................................10

               3.9.  LABOR AND EMPLOYMENT MATTERS....................................................14

               3.10.  LITIGATION.....................................................................15
</TABLE>



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<TABLE>
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               3.11.  CONTRACTS......................................................................16

               3.12.  REGULATORY APPROVALS...........................................................17

               3.13.  COMPLIANCE WITH LAW............................................................17

               3.14.  INDEBTEDNESS FROM EMPLOYEES....................................................18

               3.15.  ACCOUNTS RECEIVABLE............................................................18

               3.16.  INSURANCE......................................................................18

               3.17.  POWERS OF ATTORNEY AND SURETYSHIPS.............................................18

               3.18.  NO UNDISCLOSED LIABILITIES.....................................................19

               3.19.  ENVIRONMENTAL MATTERS..........................................................19

               3.20.  CONFLICT OF INTEREST...........................................................20

               3.21.  TAXES..........................................................................20

               3.22.  LIENS..........................................................................26

               3.23.  OTHER INFORMATION..............................................................26

               3.24.  PROJECTIONS....................................................................27

               3.25.  CLAIMS.........................................................................27

               3.26.  NO OTHER REPRESENTATIONS.......................................................27

               3.27.  NO KNOWN BREACHES..............................................................27

      4.  REPRESENTATIONS AND WARRANTIES OF BUYER....................................................27

               4.1.  ORGANIZATION....................................................................28

               4.2.  CORPORATE AUTHORITY.............................................................28

               4.3.  AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS....................................28

               4.4.  INVESTMENT INTENT...............................................................28

               4.5.  REGULATORY AND OTHER APPROVALS..................................................28

               4.6.  NO KNOWN BREACHES...............................................................29
</TABLE>



                                       ii
<PAGE>   5

<TABLE>
<S>                                                                                                <C>
               4.7.  OTHER INFORMATION...............................................................29

               4.8.  NO OTHER REPRESENTATIONS........................................................29

      5.  CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.......................................29

               5.1.  COOPERATION IN LITIGATION.......................................................29

               5.2.  TAX MATTERS.....................................................................30

               5.3.  EMPLOYMENT AGREEMENTS...........................................................33



      6.  INDEMNIFICATION............................................................................35

               6.1.  INDEMNIFICATION BY SELLER.......................................................35

               6.2.  INDEMNIFICATION BY BUYER........................................................37

               6.3.  CLAIMS FOR INDEMNIFICATION......................................................38

               6.4.  DEFENSE BY INDEMNIFYING PARTY...................................................39

               6.5.  MANNER OF INDEMNIFICATION.......................................................39

               6.6.  LIMITATIONS ON INDEMNIFICATION..................................................40

               6.7.  SOLE BASIS FOR RECOVERY.........................................................41

      7.  DOCUMENTS TO BE DELIVERED AT CLOSING.......................................................41

               7.1.  CLOSING DOCUMENTS DELIVERED BY SELLER...........................................41

               7.2.  CLOSING DOCUMENTS DELIVERED BY BUYER............................................42

      8.  RELEASE....................................................................................42

      9.  MISCELLANEOUS..............................................................................43

               9.1.  NOTICES.........................................................................43

               9.2.  ASSIGNABILITY AND PARTIES IN INTEREST...........................................44

               9.3.  GOVERNING LAW...................................................................45

               9.4.  COUNTERPARTS....................................................................45
</TABLE>



                                       iii
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<TABLE>
<S>                                                                                                <C>
               9.5.  INDEMNIFICATION FOR BROKERAGE...................................................45

               9.6.  PUBLICITY.......................................................................45

               9.7.  COMPLETE AGREEMENT..............................................................45

               9.8.  INTERPRETATION..................................................................46

               9.9.  SEVERABILITY....................................................................46

               9.10.  KNOWLEDGE:  DUE DILIGENCE INVESTIGATION........................................46

               9.11.  EXPENSES OF TRANSACTIONS.......................................................46

               9.12.  LIMIT ON INTEREST..............................................................46

               9.13.  SUBMISSION TO JURISDICTION.....................................................46

               9.14.  ARBITRATION....................................................................47

               9.15.  WAIVER OF PUNITIVE DAMAGES.....................................................47
</TABLE>



                                       iv
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      EXHIBITS

      EXHIBIT 2.3.1 FORM OF CLOSING BALANCE SHEET

      EXHIBIT 5.3.1. EMPLOYMENT AGREEMENT



SCHEDULES

Schedule 2.2.1. Seller's Wire Transfer Instructions

Schedule 3.1. Louisiana Parishes and other jurisdictions (counties) in which the
              Company does Business

Schedule 3.5.1. Financial Statements

Schedule 3.5.2. Exceptions to Absence of Changes

Schedule 3.6.1. List of Real Property owned or leased by/to the Company

Schedule 3.6.2. Inventory of the Company

Schedule 3.6.3. Tangible Personal Property of the Company

Schedule 3.6.4. Intangible Personal Property of the Company

Schedule 3.7. Required Consents to close

Schedule 3.8.1. Labor and Employment Matters

Schedule 3.8.2. Employee Benefit Plans

Schedule 3.10. Litigation by or against the Company

Schedule 3.11. List of Material Contracts

Schedule 3.14. Employee Indebtedness

Schedule 3.15. Accounts Receivable of the Company



                                        v
<PAGE>   8

Schedule 3.16. Insurance Schedule of the Company

Schedule 3.20. Conflicts

Schedule 3.21.2. Taxable Years/Examinations

Schedule 3.21.3. Tax Returns, etc.

Schedule 3.21.3.5. Extension of Time to File Returns

Schedule 3.21.3.7. Tax Affiliates

Schedule 3.21.3.22. Tax Returns Within 60 Days

Schedule 3.21.3.23. Tax Jurisdictions

Schedule 3.22. Description of Company Indebtedness Guaranteed by Seller; Liens
               on Assets

Schedule 6.1.8. Environmental Matters

Schedule 9.5. Brokerage Arrangements



                                       vi
<PAGE>   9

                            STOCK PURCHASE AGREEMENT

         This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this      day of May, 2001, but effective as of May 1, 2001, by and
between INDUSTRIAL HOLDINGS, INC., a Texas corporation (the "Seller"), being the
sole shareholder of A & B BOLT & SUPPLY, INC., a Louisiana corporation (the
"Company"), and T-3 ENERGY SERVICES, INC., a Delaware corporation ("Buyer").

RECITALS:

         1. Seller owns all outstanding shares of the common stock, no par value
(the "Shares"), of the Company.

         2. The Company is engaged in the business of distributing fastener
related products, pipes, valves, fitting and other supplies to companies in the
oil and gas and industrial fabrication industries.

         3. Seller desires to sell to Buyer the Shares (as defined below), and
Buyer desires to acquire the Shares on the terms and conditions hereinafter set
forth.

AGREEMENT:

         NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto covenant and agree as follows:

         1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.

                  1.1. PURCHASE OF SHARES FROM SELLER.

                  On the terms and subject to the conditions set forth herein,
         Seller hereby sells, transfers, conveys, assigns and delivers to Buyer,
         free and clear of all liens, pledges, encumbrances and claims
         whatsoever, and Buyer hereby purchases, acquires and accepts from
         Seller all the Shares. Seller shall deliver to Buyer the certificate
         representing the Shares, duly endorsed for transfer at the Closing (as
         defined in Section 1.3 hereof). The Purchased Shares are evidenced as
         follows: Certificate No. 13 for 100 shares dated August 1, 1998.



                                       1

<PAGE>   10

                  1.2. FURTHER ASSURANCES.

                  From time to time after the Closing, Seller and Buyer, and
         each of their respective affiliates, will execute and deliver to the
         other party such instruments of sale, transfer, conveyance, assignment
         and delivery, consents, assurances, powers of attorney and other
         instruments as may be reasonably requested by counsel for Buyer or
         Seller in order to vest in Buyer all right, title and interest of
         Seller in and to the Shares and otherwise in order to carry out the
         purpose and intent of this Agreement.

                  1.3. CLOSING.

                  The closing (the "Closing") of the transactions herein
         contemplated shall take place at the offices of Buyer located at 600
         Travis Street, Suite 6050, Houston, TX 77002 and be effective as of
         10:00 a.m., local time, on the date hereof (the "Closing Date"). All
         actions taken and all documents delivered at the Closing shall be
         deemed to have occurred simultaneously.

         2. CONSIDERATION TO BE PAID BY BUYER.

                  2.1. PURCHASE PRICE FOR SHARES.

                  The purchase price for the Shares shall be an amount
         ("Purchase Price") equal to $15,000,000.00 plus or less, as the case
         may be, any Adjustment Amount (as defined in Section 2.3.).

                  2.2. PAYMENT OF PURCHASE PRICE.

                           2.2.1. CASH TO SELLER

                           At the Closing, Buyer shall pay in immediately
                  available funds the Purchase Price to or for the account of
                  the Seller as set forth in Schedule 2.2.1. Not more than
                  $9,000,000.00 of the Purchase Price shall be applied by
                  Comerica Bank-Texas, N.A. ("Comerica") to Seller's and
                  Company's indebtedness to Comerica, and not less than
                  $6,000,000.00 of the Purchase Price shall be used by the
                  Company for working capital purposes.



                                       2
<PAGE>   11

                  2.3.  PURCHASE PRICE ADJUSTMENTS.

                           2.3.1. Seller shall prepare or cause to be prepared
                  and delivered to Buyer at the Closing a balance sheet of the
                  Company as of March 31, 2001, prepared in accordance with
                  generally accepted accounting principles consistently applied
                  ("GAAP") on a basis consistent with the Financial Statements
                  as such term is used in Section 3.5.1. of this Agreement (the
                  "Preliminary Closing Balance Sheet"), which Preliminary
                  Closing Balance Sheet must be reasonably acceptable to Buyer.
                  Upon request, the Seller shall provide to the Buyer and its
                  representatives, accountants, and advisors with access to
                  copies of all work papers and other relevant documents to
                  verify the entries and balances contained in the Preliminary
                  Closing Balance Sheet. The Preliminary Closing Balance Sheet
                  must include a calculation of Net Working Capital (defined as
                  the Company's current assets minus the Company's current
                  liabilities, excluding short-term debt and the current portion
                  of long-term debt) in the minimum amount of $7,500,000.00. The
                  form of Closing Balance Sheet, prepared by the Buyer, for use
                  by Seller is attached to this Agreement as Exhibit 2.3.1.

                           2.3.2. In the event the preliminary determination of
                  Net Working Capital as set forth on the Preliminary Closing
                  Balance Sheet is less (applying GAAP) than $7,500,000.00, then
                  the Purchase Price shall be reduced by the Net Working Capital
                  deficiency amount. Further, in the event the Closing Balance
                  Sheet (as defined in Section 2.3.3 below) is not audited at
                  the election of the Buyer as provided in Section 2.3.3 below,
                  and the Closing Balance Sheet reflects a Net Working Capital
                  amount less than as provided on the Preliminary Balance Sheet,
                  then an adjustment to the Purchase Price shall be made in the
                  amount equal to the deficiency, and Seller shall pay such
                  deficiency amount to Buyer in immediately available funds by
                  wire transfer.

                           2.3.3. Within forty five days after the Closing, the
                  Buyer shall prepare a balance sheet of the Company as of April
                  30, 2001, prepared in accordance with GAAP, and a
                  reconciliation of all cash advances, cash receipts, and cash
                  disbursements for the period commencing May 1, 2001 through
                  the Closing Date (collectively, the "Closing Balance Sheet").
                  The Buyer will provide a copy of the Closing Balance Sheet to
                  the Seller and its representatives, accountants, and advisors,
                  and provide access to copies of all work papers and other
                  relevant documents to enable Seller to verify the entries and
                  balances contained in the Closing Balance Sheet. At the
                  election of Buyer, on or before 180 days after the Closing
                  Date, the Company shall cause the accounting firm of Arthur
                  Andersen LLP to audit the Closing Balance Sheet in accordance
                  with GAAP, and deliver the audited Closing Balance Sheet (the
                  "Audited Closing Balance Sheet") to Buyer and Seller in order
                  to determine the "Adjustment Amount" (as defined below in
                  Section 2.3.4.). Upon reasonable notice and during reasonable
                  business hours, Buyer agrees that the Company shall allow
                  Seller and Seller's accountant access to the persons involved
                  in the



                                       3
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                  preparation of the Audited Closing Balance Sheet and to all of
                  their work-papers so as to permit Seller and Seller's
                  accountant to make copies of such work-papers supporting the
                  amounts included in the Audited Closing Balance Sheet and to
                  reasonably review the accounting procedures, tests, methods
                  and approaches utilized by Arthur Andersen LLP.

                           2.3.4. On or before the 55th day following delivery
                  of the Audited Closing Balance Sheet pursuant to Section
                  2.3.3. , Seller shall notify Buyer in writing of any
                  objections to the Audited Closing Balance Sheet (and the
                  determination of the Adjustment Amounts) as not complying with
                  the requirements of Section 2.3. , specifying in reasonable
                  detail any such objections (a "Dispute Notice"). If (i) Seller
                  does not deliver a Dispute Notice within the time period
                  specified above for delivery of a Dispute Notice (the "Notice
                  Period"), or (ii) prior to the expiration of the Notice
                  Period, Seller indicates in writing to Buyer that Seller
                  relinquishes its right to object to the Audited Closing
                  Balance Sheet, or (iii) Buyer and Seller agree on the
                  resolution of all such objections or changes at any time
                  subsequent to the expiration of the Notice Period, the Audited
                  Closing Balance Sheet, with any such changes as are agreed
                  upon, shall be final and binding on the parties hereto. If
                  Seller and Buyer are unable to resolve the matters addressed
                  in any Dispute Notice, each party shall within fourteen (14)
                  business days after the delivery of such Dispute Notice,
                  summarize its position with regard to such dispute in a
                  written document and submit such summaries to the Houston,
                  Texas office of, PriceWaterhouseCoopers, LLP, or such other
                  party as the parties may mutually select (the "Accounting
                  Arbitrator"), together with the Dispute Notice and any other
                  documentation either party may desire to submit. The
                  Accounting Arbitrator shall render a decision regarding such
                  dispute in accordance with this Agreement, based on the
                  materials described above and based upon the books and records
                  of the Company within twenty business days of the submission
                  of such materials. Any decision rendered by the Accounting
                  Arbitrator pursuant hereto shall be final and binding between
                  the parties for the purpose of determining the Adjustment
                  Amounts under this Section 2.3. Within ten (10) days after the
                  final determination of the Audited Closing Balance Sheet
                  pursuant to this Section 2.3.4., the following adjustment to
                  the Purchase Price shall occur: (i) to the extent that the Net
                  Working Capital balance on the Audited Closing Balance Sheet
                  (applying GAAP) is more than the Net Working Capital balance
                  set forth on the Preliminary Balance Sheet but less than or
                  equal to $7,500,000.00, then any amount in excess of the Net
                  Working Capital shown on the Preliminary Balance Sheet shall
                  be paid by Buyer to Seller and (ii) to the extent the Net
                  Working Capital on the Audited Closing Balance Sheet (applying
                  GAAP) is less than the Net Working Capital balance set forth
                  on the Preliminary Balance Sheet, the Seller shall pay to
                  Buyer any shortfall or deficiency amount. Payments under this
                  Section 2.3.4. shall be in immediately available funds by wire
                  transfer. The term "Adjustment Amount" as used in this



                                       4
<PAGE>   13

                  Section 2.3. shall mean any adjustment to the Purchase Price
                  made by Buyer to Seller or by Seller to Buyer pursuant to
                  Sections 2.3.2. and 2.3.4. of this Agreement.

         3. REPRESENTATIONS AND WARRANTIES OF SELLER.

         Seller represents and warrants to Buyer that:

                  3.1. ORGANIZATION AND GOOD STANDING.

                  The Company is duly organized, validly existing and in good
         standing under the laws of the jurisdiction in which it was formed,
         with full power to carry on its business as it is now and has since its
         organization been conducted, and to own, lease or operate its assets.
         The Company is duly authorized to do business and is in good standing
         in such other jurisdictions in which the failure to so qualify would
         have a material and adverse effect on the results of operations,
         properties, assets, or condition (financial or otherwise) or
         contemplated material prospects of the Company (a "Material Adverse
         Effect"). Schedule 3.1. is a listing of the Louisiana parishes in which
         the Company does business, the Louisiana parishes adjacent to offshore
         waters in which the Company does business, and all other jurisdictions
         and counties in which the Company does business.

                  3.2. CORPORATE AUTHORITY.

                  Seller has all requisite power and authority to enter into
         this Agreement and to consummate the transactions contemplated hereby.
         This Agreement and all other agreements and instruments to be executed
         by Seller in connection herewith have been duly executed and delivered
         by Seller, have been effectively authorized by all necessary action,
         corporate or otherwise, and constitute legal, valid and binding
         obligations of Seller, as the case may be.

                  3.3. OWNERSHIP OF SHARES.

                  The Shares are owned beneficially and of record by Seller, and
         are being transferred to Buyer free and clear of all liens, mortgages,
         charges, option rights, pledges, security interests, restrictions,
         prior assignments, encumbrances and claims of any kind or nature
         whatsoever. No Shares are subject to any restriction with respect to
         their transferability (other than restrictions on transfer under
         applicable Federal and state securities laws).



                                       5
<PAGE>   14

                  3.4. CAPITALIZATION.

                  The authorized capital stock of the Company consists solely of
         1000 shares of common stock, no par value per share, of which 100
         shares of common stock are issued and outstanding and which are owned
         by Seller. All of the Shares have been duly authorized, validly issued
         (free of all past, present and future preemptive rights), and are fully
         paid and non-assessable. There are no outstanding or authorized
         options, warrants, subscriptions, calls, puts, conversion or other
         rights, contracts, agreements, commitments or understandings of any
         kind obligating the Company to issue, sell, purchase, return, redeem or
         pay any distribution or dividend with respect to any shares of capital
         stock of the Company or any other securities convertible into,
         exchangeable for or evidencing the right to subscribe for any shares of
         capital stock of or other ownership interest in the Company.

                  3.5. FINANCIAL CONDITION.

                           3.5.1.

                           Financial Statements. Schedule 3.5.1. sets forth the
                  following financial information of the Company: the balance
                  sheet as of March 31, 2001, December 31, 2000, December 31,
                  1999, and December 31, 1998, and the related statements of
                  income for the three months ended March 31, 2001, and the
                  related statements of income for each of the three years in
                  the period ended December 31, 2000 (collectively, the
                  "Financial Statements"). The Financial Statements were
                  prepared in accordance with generally accepted accounting
                  principles in the United States, applied on a consistent
                  basis.

                           3.5.2.

                           Absence of Certain Changes. Since December 31, 2000
                  (the "Balance Sheet Date") there has not been (i) any damage,
                  destruction or loss, whether or not covered by insurance,
                  which, if not covered by insurance, could be a Material
                  Adverse Effect; (ii) any sale or transfer of any of the assets
                  of the Company except (a) sales in the ordinary course of the
                  business of inventory or immaterial amounts of other tangible
                  personal property and (b) for the sales and transfers
                  disclosed in any registration statement, proxy statement,
                  information statement or annual report on Form 10-K or
                  periodic reports and Forms 8-K filed by Seller with the
                  Securities and Exchange Commission ("SEC Filings") listed on
                  Schedule 3.5.2.; (iii) except as set forth on Schedule 3.5.2.,
                  any increase in, or commitment to increase, the compensation
                  payable or to become payable to any of the Company's employees
                  or any bonus payment (other than as included as an accrued
                  liability on the Company's December 31, 2000 Financial
                  Statement) or similar arrangement made to or with any of the
                  Company's employees other than routine increases made in the
                  ordinary course of business not exceeding the greater of five
                  percent per annum or Two Thousand Dollars ($2,000) per annum
                  for any of them



                                       6
<PAGE>   15

                  individually; (iv) any adoption of a plan or agreement or
                  amendment to any plan or agreement providing any new or
                  additional fringe benefits; or (v) any material alteration in
                  the manner of keeping the Company's books, accounts or
                  records, or in the accounting practices therein reflected,
                  except as disclosed in SEC Filings. Since the Balance Sheet
                  Date, the Company has not (except as set forth on Schedule
                  3.5.2.): (a) entered into any material transaction not in the
                  ordinary course of business; or (b) materially amended,
                  modified, or terminated any material Contract (as defined in
                  Section 3.11.1.) other than in the ordinary course of its
                  business or as disclosed in SEC Filings.

                  3.6.  PROPERTY OF THE COMPANY.

                           3.6.1.

                           Real Property. There is listed in Schedule 3.6.1. a
                  description of each parcel of real or material immovable
                  property owned by or leased to the Company, or owned by or
                  leased to Seller for use by the Company. Except as indicated
                  in Schedule 3.6.1.:

                                    3.6.1.1.

                                    Each of the leases described in Schedule
                           3.6.1. is a valid and binding obligation of the
                           Company or Seller, as the case may be, and Seller
                           does not have any knowledge that any of said leases
                           is not a valid and binding obligation of each of the
                           other parties thereto;

                                    3.6.1.2.

                                    The Company and Seller are not, and Seller
                           does not have any knowledge that any other party to
                           any such lease is, in default with respect to any
                           material term or condition thereof, and Seller does
                           not have any knowledge that any event has occurred
                           which through the passage of time or the giving of
                           notice, or both, would constitute a default
                           thereunder or would cause the acceleration of any
                           obligation of any party thereto or the creation of a
                           lien or encumbrance upon any asset of the Company;

                                    3.6.1.3.

                                    All of the buildings, fixtures and other
                           improvements located on the real or immovable
                           property described in Schedule 3.6.1. are in good
                           operating condition and repair, and the Company or
                           Seller, as the case may be, holds valid and effective
                           certificates of occupancy, underwriters' certificates
                           relating to electrical work, building, safety, fire
                           and health approvals and all other permits and
                           licenses required by



                                       7
<PAGE>   16

                           applicable law relating to the operation of such real
                           properties and leaseholds. Neither the Company nor
                           Seller have received notice that the Company's
                           operations at the real or immovable property listed
                           in Schedule 3.6.1. as presently conducted is in
                           violation of any applicable building code, zoning
                           ordinance or other law or regulation;

                                    3.6.1.4.

                                    Neither the Company nor Seller, as the case
                           may be, have experienced during the two years
                           preceding the date hereof any material interruption
                           in the delivery of adequate quantities of any
                           utilities (including, without limitation,
                           electricity, natural gas, potable water, water for
                           cooling or similar purposes and fuel oil) or other
                           public services (including, without limitation,
                           sanitary and industrial sewer service) required by
                           the Company during such period.

                           3.6.2.

                           Inventory. The Company's Inventory as of March 31,
                  2001 has been valued in accordance with GAAP and is complete
                  and accurate in all material respects. There is listed in
                  Schedule 3.6.2. a description of all inventories of (i)
                  valves, flanges, bolts, nuts, and miscellaneous products; (ii)
                  raw material, work in progress, and finished goods; and (iii)
                  other similar items of the Company (the "Inventory"). Also
                  separately listed on Schedule 3.6.2 is a description of all
                  items of Inventory that are obsolete and/or slow moving for
                  which an Inventory reserve has been provided. Except for the
                  Inventory which is identified in such separate listing in
                  Schedule 3.6.2. for which a valuation reserve has been
                  provided, the Inventory of the Company has been valued at the
                  lower of cost or market not to exceed net realizable value.

                           3.6.3.

                           Other Tangible Personal Property. There is listed in
                  Schedule 3.6.3.: (i) a description and the location of each
                  item of tangible personal property (other than Inventory)
                  owned by the Company or in the possession of the Company
                  having on the date hereof a depreciated book value per unit in
                  excess of Five Thousand Dollars ($5,000); (ii) an
                  identification of the owner of, and any agreement relating to
                  the use of, each item of tangible personal property under
                  leases or other similar agreements which provide for rental
                  payments at a rate in excess of Two Hundred Fifty Dollars
                  ($250) per month; and (iii) an identification of the owner of,
                  and any agreement relating to the use of, each motor vehicle
                  not owned by the Company, the rights to which are to be
                  transferred to Buyer pursuant hereto;



                                       8
<PAGE>   17

                           3.6.4.

                           Intangible Personal Property. There is listed in
                  Schedule 3.6.4.: an identification of all (i) foreign and
                  United States Federal or state patents, patent applications,
                  invention disclosures, copyrights, copyright registrations,
                  trademarks, trademark registrations, service marks, service
                  mark registrations, trade names, trade name registrations and
                  applications for any of the foregoing, owned or used by the
                  Company; (ii) common law claims to trademarks, service marks
                  and tradenames; (iii) claims of copyright that exist although
                  no registrations have been issued with respect thereto; and
                  (iv) fictitious or assumed business name filings with any
                  state or local governmental authority ("intangible personal
                  property"). Schedule 3.6.4. also sets forth a true and
                  complete list of all licenses or similar agreements or
                  arrangements to which the Company is a party either as
                  licensee or licensor for each such item of intangible personal
                  property. Except as indicated in Schedule 3.6.4.:

                                    3.6.4.1.

                                    There have not been any regulatory actions
                           or other judicial or adversary proceedings involving
                           the Company concerning any of such items of
                           intangible personal property, nor is any such action
                           or proceeding threatened;

                                    3.6.4.2.

                                    To the Seller's knowledge, the Company has
                           the right and authority to use said items of
                           intangible personal property in connection with the
                           conduct of its business in the manner presently
                           conducted and, subject to the receipt of those
                           consents listed on Schedule 3.7., to convey such
                           right and authority to Buyer, and, to the Seller's
                           knowledge, such use does not conflict with, infringe
                           upon or violate any patent, trademark, servicemark,
                           trade name, registration or similar rights of any
                           other person, firm or corporation;

                                    3.6.4.3.

                                    There are no outstanding disputes or
                           disagreements with respect to any licenses or similar
                           agreements or arrangements described in Schedule
                           3.6.4., and to the Seller's knowledge, there is no
                           such threatened dispute; and



                                       9
<PAGE>   18

                                    3.6.4.4.

                                    The conduct of its business by the Company
                           does not, to the knowledge of Seller, conflict with
                           any patents, trademarks, trade secrets, trade names
                           or similar rights of others.

                           3.6.5. SUBSIDIARIES

                           There is no entity in which the Company holds a 5% or
                  greater interest (the "Subsidiaries").

                  3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.

                  The execution and delivery of this Agreement by Seller and the
         consummation of the transactions contemplated hereby will not result in
         a breach of any of the terms and provisions of, or constitute a default
         under, or conflict with: (i) any Contract or any other material
         agreement, indenture or other instrument to which Seller or the Company
         is a party or by which any of them is bound, subject to the receipt of
         those consents listed on Schedule 3.7. which have been obtained and
         provided to Buyer, (ii) the Articles of Incorporation and Bylaws of the
         Company, (iii) any judgment, decree, order or award of any court,
         governmental body or arbitrator, or (iv) any law, rule or regulation
         applicable to Seller or the Company.

                  3.8. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFITS.

                           3.8.1.

                           Except as set forth on Schedule 3.8.1., there are no
                  employment, consulting, change of control, incentive,
                  severance pay, continuation pay, termination pay or
                  indemnification agreements or other similar agreements of any
                  nature whatsoever (collectively, "Employment Agreements")
                  between the Company, on the one hand, and any current or
                  former stockholder, officer, director, employee, consultant,
                  or agent of the Company, on the other hand, that are currently
                  in effect or under which the Company has any continuing
                  obligations. Except as set forth on Schedule 3.8.1. there are
                  no Employment Agreements or any other similar agreements to
                  which the Company is a party or has any obligations under
                  which the transactions contemplated by this Agreement (i) will
                  require any payment by the Company or Buyer, or any consent or
                  waiver from any stockholder, officer, director, employee,
                  consultant or agent of the Company or Buyer, or (ii) will
                  result in any change in the nature of any rights of any
                  stockholder, officer, director, employee, consultant or agent
                  of the Company under any such Employment Agreement or other
                  similar agreement.



                                       10
<PAGE>   19

                           3.8.2.

                           Schedule 3.8.2. sets forth all of the Employee
                  Benefit Plans. The Company has made true and correct copies of
                  all governing instruments, summary plan descriptions, and all
                  other related agreements pertaining to such benefit plans
                  available to Buyer.

                           3.8.3.

                           Neither the Company nor any of its ERISA Affiliates
                  sponsors, or has ever sponsored, maintained, contributed to,
                  or incurred an obligation to contribute to, any Employee
                  Pension Benefit Plan, any plan subject to Title IV of ERISA,
                  any "multiemployer plan" (as defined in Section 3(37) of
                  ERISA), any "multiple employer welfare arrangement" (as
                  defined in Section 3(40) of ERISA), or any plan that is part
                  of a "voluntary employees' beneficiary association" (as
                  defined in Section 501(c)(9) of the Code).

                           3.8.4.

                           No individual shall accrue or receive additional
                  benefits, service or accelerated rights to payments of
                  benefits under any Employee Benefit Plan, Employee Agreement,
                  or Benefit Arrangement, including the right to receive any
                  parachute payment, as defined in Section 280G of the Code, or
                  become entitled to severance, termination allowance or similar
                  payments as a result of the transactions contemplated by this
                  Agreement.

                           3.8.5.

                           No Employee Benefit Plan has participated in, engaged
                  in or been a party to any non-exempt Prohibited Transaction,
                  and neither the Company nor any of its ERISA Affiliates has
                  had asserted against it any claim for taxes under Chapter 43
                  of Subtitle A of the Code and Section 5000 of the Code, or for
                  penalties under ERISA Sections 502(c), (i) or (l), with
                  respect to any Employee Benefit Plan nor, to the knowledge of
                  the Seller, is there a basis for any such claim. No officer,
                  director or employee of the Company has committed a material
                  breach of any responsibility or obligation imposed upon
                  fiduciaries by Title I of ERISA with respect to any Employee
                  Benefit Plan.

                           3.8.6.

                           Other than routine claims for benefits, there is no
                  claim pending, or to the knowledge of the Seller, threatened,
                  involving any Employee Benefit Plan by any Person against such
                  plan, the Company or any ERISA Affiliate. There is no pending
                  or to the knowledge of the Seller threatened proceeding



                                       11
<PAGE>   20

                  involving any Employee Benefit Plan before the IRS, the U.S.
                  Department of Labor or any other governmental authority.

                           3.8.7.

                           There is no violation of any reporting or disclosure
                  requirements imposed by ERISA or the Code with respect to any
                  Employee Benefit Plan, including, without limitation, the
                  timely filing of all applicable Forms 5500.

                           3.8.8.

                           Each Employee Benefit Plan is currently, and at all
                  times prior hereto has been, maintained in all material
                  respects, by its terms and in operation, in accordance with
                  ERISA, the Code, and all other applicable laws and
                  regulations. The Company and its ERISA Affiliates have made
                  full and timely payment of all amounts required to be
                  contributed under the terms of each Employee Benefit Plan and
                  applicable law or required to be paid as expenses under such
                  Employee Benefit Plan, and the Company and its ERISA
                  Affiliates shall continue to do so through the Closing. Each
                  Employer Benefit Plan intended to be qualified under Code
                  Section 401(a) has received a determination letter to that
                  effect from the Internal Revenue Service and no event has
                  occurred and no amendment has been made that would adversely
                  affect such qualified status. All individuals have been
                  properly classified by the Company for purposes of coverage
                  under any Employee Benefit Plan.

                           3.8.9.

                           With respect to any group health plans maintained by
                  the Company or its ERISA Affiliates, whether or not for the
                  benefit of the Company's employees, the Company and its ERISA
                  Affiliate have complied in all material respects with the
                  provisions of Parts 6 and 7 of Title I of ERISA and 4980B of
                  the Code. The Company is not obligated to provide health care
                  or other benefits of any kind (other than as required pursuant
                  to Section 601 of ERISA or pursuant to a plan intended to be
                  qualified within the meaning of Section 401(a) of the Code) to
                  its retired employees pursuant to any Employee Benefit Plan or
                  Benefit Arrangement, including without limitation any group
                  health plan, or pursuant to any agreement or understanding.

                           3.8.10.

                           The Company has made available to the Buyer a copy of
                  (i) the three (3) most recently filed Federal Form 5500 series
                  and accountant's opinion, if applicable, for each Employee
                  Benefit Plan and all applicable Internal Revenue Service
                  determination letters.



                                       12
<PAGE>   21

                           3.8.11.

                           For purposes of this Section 3.8., the following
                  definitions shall apply:

                                    3.8.11.1.

                                    "Benefit Arrangement" means any benefit
                           arrangement that is not an Employee Benefit Plan,
                           including, without limitation, (i) each employment or
                           consulting agreement, including without limitation,
                           an Employment Agreement described in Section 3.8.1.,
                           (ii) each arrangement providing for insurance
                           coverage or workers' compensation benefits, (iii)
                           each incentive bonus or deferred bonus arrangement,
                           (iv) each arrangement providing termination
                           allowance, severance or similar benefits, (v) each
                           equity or incentive compensation plan, (vi) each
                           deferred compensation plan, and (vii) each
                           compensation policy and practice maintained by the
                           Company or any ERISA Affiliate covering the
                           employees, former employees, directors and former
                           directors of the Company, and the beneficiaries of
                           any of them.

                                    3.8.11.2.

                                    "COBRA" means the Consolidated Omnibus
                           Budget Reconciliation Act of 1985, as amended, as set
                           forth in Section 4980B of the Code and Part 6 of
                           Title I of ERISA.

                                    3.8.11.3.

                                    "Code" means the Internal Revenue Code of
                           1986, as amended.

                                    3.8.11.4.

                                    "Employee Benefit Plan" means any employee
                           benefit plan, as defined in Section 3(3) of ERISA,
                           that is sponsored or contributed to by the Company or
                           any ERISA Affiliate covering employees or former
                           employees of the Company.

                                    3.8.11.5.

                                    "Employee Pension Benefit Plan" means any
                           employee pension benefit plan, as defined in Section
                           3(2) of ERISA, that is subject to Title IV of ERISA.

                                    3.8.11.6.

                                    "ERISA" means the Employee Retirement Income
                           Security Act of 1974, as amended.



                                       13
<PAGE>   22

                                    3.8.11.7.

                                    "ERISA Affiliate" of any person means any
                           other person that, together with such person as of
                           the relevant measuring date under ERISA, was or is
                           required to be treated as a single employer under
                           Section 414 of the Code.

                                    3.8.11.8.

                                    "Prohibited Transaction" means a transaction
                           that is prohibited under Section 4975 of the Code or
                           Section 406 of ERISA and not exempt under Section
                           4975 of the Code or Section 408 of ERISA,
                           respectively.

                  3.9. LABOR AND EMPLOYMENT MATTERS.

                           3.9.1.

                           There are no collective bargaining agreements binding
                  on the Company, and, no petition has been filed or proceedings
                  instituted by an employee or group of employees with any labor
                  relations board seeking recognition of a bargaining
                  representative, and there is no organizational effort
                  currently being made or threatened by or on behalf of any
                  labor union to organize any employees of the Company.

                           3.9.2.

                           (i) There is not now, and to the Seller's knowledge,
                  never has been, any labor strike, dispute, slow down or
                  stoppage pending or, to the Seller's knowledge, threatened,
                  against or directly affecting the Company, (ii) no grievance
                  or arbitration proceeding arising out of or under any
                  collective bargaining agreement is pending, and no claims
                  therefor exist; and (iii) neither the Company nor Seller has
                  received any notice or has any knowledge of any threatened
                  labor or civil rights dispute, controversy or grievance or any
                  other unfair labor practice proceeding or breach of contract
                  claim or action with respect to claims of, or obligations to,
                  any employee or group of employees of the Company.

                           3.9.3.

                           If required under the Workers Adjustment and
                  Retraining Notification Act or other applicable state law
                  regulating plant closing or mass layoffs, the Company has
                  timely caused there to be filed or distributed, as
                  appropriate, all required filings and notices with respect to
                  employment losses occurring through the Closing Date.



                                       14
<PAGE>   23

                           3.9.4.

                           The Company has complied and is currently complying,
                  in respect of all employees of the Company with all applicable
                  laws respecting employment and employment practices and the
                  protection of the health and safety of employees, from
                  whatever source such law may be derived, including, without
                  limitation, statutes, ordinances, laws, rules, regulations,
                  policies, standards, judicial or administrative precedents,
                  judgments, orders, decrees, awards, citations, licenses,
                  official interpretations and guidelines , except for such
                  instances which are not, in the aggregate, material.

                           3.9.5.

                           All individuals who are performing or have performed
                  services for the Company and are or were classified by the
                  Company as "independent contractors" qualify for such
                  classification under Section 530 of the Revenue Act of 1978 or
                  Section 1706 of the Tax Reform Act of 1986, as applicable,
                  except for such instances which are not, in the aggregate,
                  material.

                           3.9.6.

                           The Company has substantially complied and is
                  currently complying with the Americans With Disabilities Act,
                  42 U.S.C. ss.12101, et seq., and all applicable state laws
                  prohibiting discrimination against qualified individuals with
                  disabilities and requiring access accommodations.

                  3.10. LITIGATION.

                           3.10.1.

                           Except for (i) claims listed in Schedule 3.10. and
                  (ii) claims for the collection of accounts arising out of the
                  sale or purchase of goods or services in the ordinary course
                  of business involving less than $10,000 individually or
                  $50,000 in the aggregate, there are no claims, disputes,
                  actions, proceedings or investigations of any nature pending
                  or, to the knowledge of Seller, threatened against the
                  Company, or any of the officers, partners, shareholders,
                  affiliates or employees of the Company.

                           3.10.2.

                           No claim, action, suit, investigation, or other
                  proceeding is pending or threatened before any court or
                  governmental agency which presents a risk of the restraint or
                  prohibition of the transactions contemplated by this Agreement
                  or the obtaining of indemnification or other relief in
                  connection therewith.



                                       15
<PAGE>   24

                  3.11. CONTRACTS.

                           3.11.1.

                           Schedule 3.11. sets forth a true and correct list of
                  each contract to which the Company is a party, including but
                  not limited to any and all master service contracts, or to
                  which any Seller is a party and which relates to the business
                  of the Company ("Contracts"), except (i) those contracts
                  disclosed in SEC Filings, and (ii) the following:

                                    3.11.1.1.

                                    Agreements for the purchase by the Company
                           of goods, materials or services in the ordinary
                           course of business involving annual expenditures of
                           less than $50,000 in consideration in each such case;

                                    3.11.1.2.

                                    Agreements for the sale, rental or service
                           by the Company of goods or services in the ordinary
                           course of business in which the payment to be
                           received pursuant to each such agreement is less than
                           $50,000 annually for each such non-listed agreement;

                                    3.11.1.3.

                                    Agreements which are terminable at will by
                           the Company upon no more than 60 days notice without
                           penalty, default or liability and involving an amount
                           less than $50,000; and

                                    3.11.1.4.

                                    Agreements continuing for a period of one
                           year or less involving an amount less than $50,000
                           for each such nonlisted agreement.

                           3.11.2.

                           Except as set forth in Schedule 3.11.

                                    3.11.2.1.

                                    Each Contract is a valid and binding
                           agreement of the Company, and, to the knowledge of
                           Seller, of the other parties thereto, subject to the
                           effect of bankruptcy and creditors' rights generally;



                                       16
<PAGE>   25

                                    3.11.2.2.

                                    The Company has fulfilled all material
                           obligations required pursuant to each Contract to
                           have been performed by it or on its part prior to the
                           date hereof, and to the knowledge of the Seller,
                           there is no condition which would prevent the Company
                           from fulfilling, when due, all of its obligations
                           under the Contracts which remain to be performed
                           after the date hereof;

                                    3.11.2.3.

                                    There has not occurred any material default
                           under any Contract on the part of the Company or, to
                           the knowledge of Seller, on the part of the other
                           parties thereto; and there has not occurred any event
                           which with the giving of notice or the lapse of time,
                           or both, would constitute any material default under
                           any of the Contracts; and

                                    3.11.2.4.

                                    Except as provided in the Contracts, the
                           Company is not, outside the ordinary course of
                           business, under any liability or obligation with
                           respect to the return of inventory or products sold,
                           rented or serviced by it which are in the possession
                           of distributors, wholesalers, retailers or other
                           customers.

                                    3.11.2.5. Except as set forth in Schedule
                           3.11, the Company has not committed a past breach of
                           any of its master service contracts.

                  3.12. REGULATORY APPROVALS.

                  All material consents, approvals, authorizations and other
         requirements prescribed by any law, rule or regulation which must be
         obtained or satisfied by the Company or Seller and which are necessary
         for the execution and delivery by Seller of this Agreement and the
         documents to be executed and delivered by Seller in connection herewith
         have been obtained and satisfied. Seller has obtained all material
         permits, approvals, and consents of all governmental bodies or agencies
         necessary or appropriate so that consummation of the transactions
         contemplated by this Agreement will be in compliance with applicable
         law.

                  3.13.  COMPLIANCE WITH LAW.

                  The Company has not, and its business as presently conducted
         does not, violate, in any respect any Federal, state, local or foreign
         laws, regulations or orders (including, but not limited to, any of the
         foregoing relating to employment discrimination, occupational safety,
         the Americans With Disabilities Act, environmental protection,
         conservation, or corrupt practices), the enforcement of



                                       17
<PAGE>   26

         which would have a Material Adverse Effect, and the Company has not
         received any notice of any such violation.

                  3.14. INDEBTEDNESS FROM EMPLOYEES.

                  Except as set forth in Schedule 3.14. no employee of the
         Company is indebted to the Company, except for advances made to any
         employees in the ordinary course of business to meet reimbursable
         business expenses anticipated to be incurred by such employee.

                  3.15. ACCOUNTS RECEIVABLE.

                  Except as set forth in Schedule 3.15., the accounts, accounts
         receivable, notes and notes receivable of the Company existing on
         December 31, 2000 arose out of the sales of inventory or services in
         the ordinary course of business and are collectible in full, net of the
         reserve set forth in the Company's December 31, 2000 Financial
         Statement included in Schedule 3.5.1., which reserves are reasonable
         and were calculated consistent with past practices.

                  3.16. INSURANCE.

                  Schedule 3.16. sets forth a true and correct list of all
         insurance policies either maintained by the Company or maintained by
         any other person which relate to the Company in any manner whatsoever
         at the date hereof. There are no outstanding requirements or
         recommendations by any insurance company that issued any such policy or
         by any Board of Fire Underwriters or other similar body exercising
         similar functions or by any governmental authority exercising similar
         functions which requires or recommends any changes in the conduct of
         the business of, or any repairs or other work to be done on or with
         respect to any of the properties or assets of, the Company. The Company
         has not received any notice or other communication from any such
         insurance company within the three (3) years preceding the date hereof
         canceling or materially amending or materially increasing the annual or
         other premiums payable under any of said insurance policies, and no
         such cancellation, amendment or increase of premiums is threatened. The
         life insurance policies owned by the Company will, with Buyer's
         consent, be surrendered for the cash surrender value prior to Closing,
         and the cash received will be distributed.

                  3.17. POWERS OF ATTORNEY AND SURETYSHIPS.

                  Except for guarantees by the Company of the indebtedness owed
         by Seller to Comerica, the Company has no general or special powers of
         attorney outstanding (whether as grantor or grantee thereof) and has no
         obligation or liability (whether actual, accrued, accruing, contingent
         or otherwise) as guarantor, surety, co-signer,



                                       18
<PAGE>   27

         endorser, co-maker, indemnitor or otherwise in respect of the
         obligation of any person, corporation, partnership, joint venture,
         association, organization or other entity, except as endorser or maker
         of checks or letters of credit, respectively, endorsed or made in the
         ordinary course of business.

                  3.18. NO UNDISCLOSED LIABILITIES.

                  Except as and to the extent specifically reflected or reserved
         against in the Company's December 31, 2000 Financial Statement or
         otherwise disclosed herein, the Company has no liabilities or
         obligations of any nature, whether absolute, accrued, contingent or
         otherwise, and whether due or to become due (including, without
         limitation, any liability for taxes and interest, penalties and other
         charges payable with respect to any such liability or obligation) in
         accordance with GAAP which in the aggregate would constitute a Material
         Adverse Effect.

                  3.19. ENVIRONMENTAL MATTERS.

                  As of the date hereof, (a) the Company has generated,
         utilized, stored, delivered for disposal, disposed of, treated,
         transported, and otherwise managed all materials, substances, and
         wastes, whether toxic, hazardous or otherwise, in compliance with all
         laws, rules, regulations, ordinances, guidelines, and the common law,
         except to the extent any such failure would not have a Material Adverse
         Effect; (b) the real or immovable property owned, leased, or operated
         by either (i) Seller relating to the Company, or (ii) the Company is
         not listed on the National Priorities List, CERCLIS, RCRIS, or any
         comparable state listing which identifies sites for removal, remedial,
         clean-up or investigatory actions; (c) no amounts, which require
         remediation or reporting under applicable law, of asbestos, PCB's,
         ureaformaldehyde, hazardous and solid wastes, hazardous or toxic
         substances, petroleum products, pollutants or contaminates, and no
         above or underground storage tanks, have become located on the real or
         immovable property owned, leased, or currently operated by the Company,
         except to the extent the existence or remediation of such substances
         would not result in a Material Adverse Effect; and (d) the real or
         immovable property owned, leased, or operated by the Company has not
         been contaminated, tainted or polluted in any manner whatsoever
         (including, without limitation, any contamination of or injury or
         damage to soils, groundwater, biota, and wildlife located on, in, under
         or originating from such premises) with pollutants, contaminants or
         other substances or materials so as to give rise to a removal,
         remediation, clean-up, or investigatory obligation or action, and
         Seller does not now have knowledge of any removal, remediation,
         investigatory or clean-up obligation or action which the Company has
         with respect thereto under any law, rule, regulation, guideline,
         ordinance, whether



                                       19
<PAGE>   28

         domestic or foreign, Federal, state, or local, or the common law,
         except to the extent any failure to comply with any such obligation
         would not result in a Material Adverse Effect.

                  3.20. CONFLICT OF INTEREST.

                  Except as disclosed in Schedule 3.20. or in SEC Filings, no
         officer, director or shareholders of the Company or any affiliate of
         any such person now has or within the last three (3) years had, either
         directly or indirectly:

                           3.20.1.

                           any equity or debt interest in any corporation,
                  partnership, joint venture, association, organization or other
                  person or entity which furnishes or sells or during such
                  period furnished or sold services or products to the Company,
                  or purchases or during such period purchased from the Company
                  any goods or services, or otherwise does or during such period
                  did business with the Company; or

                           3.20.2.

                           a beneficial interest in any contract, commitment or
                  agreement, formal or informal, to which the Company is or was
                  a party or under which it was obligated or bound or to which
                  its properties may be or may have been subject, other than
                  stock options and other contracts, commitments or agreements
                  between the Company and such persons in their capacities as
                  employees, officers or directors of the Company.

                           3.20.3.

                           loaned money to or borrowed money from the Company.

                  3.21. TAXES.

                           3.21.1.

                           For purposes of this Agreement: (i) the term "Taxes"
                  means (A) all Federal, state, local, foreign and other net
                  income, gross income, gross receipts, sales, use, ad valorem,
                  value added, intangible, unitary, capital gain, transfer,
                  franchise, profits, license, lease, service, service use,
                  withholding, backup withholding, payroll, employment,
                  estimated, excise, severance, stamp, occupation, premium,
                  property, prohibited transactions, windfall or excess profits,
                  customs, duties or other taxes, fees, assessments or charges
                  of



                                       20
<PAGE>   29

                  any kind whatsoever, together with any interest and any
                  penalties, additions to tax or additional amounts with respect
                  thereto, (B) any liability for payment of amounts described in
                  clause (A) whether as a result of transferee liability, of
                  being a member of an affiliated, consolidated, combined,
                  unitary or other similar group for any period, or otherwise
                  through operation of law and (C) any liability for the payment
                  of amounts described in clauses (A) or (B) as a result of any
                  tax sharing, tax indemnity or tax allocation agreement or any
                  other express or implied agreement to indemnify any other
                  Person; and the term "Tax" means any one of the foregoing
                  Taxes; and (ii) the term "Returns" means all returns,
                  declarations, reports, statements and other documents required
                  to be filed in respect of Taxes; and the term "Return" means
                  any one of the foregoing Returns.

                           3.21.2.

                           Schedule 3.21.2. sets forth: (i) the taxable years of
                  the Company and Tax Affiliates (as defined in Section 3.21.3.)
                  as to which the respective statutes of limitations on the
                  assessment of United States Federal income and any applicable
                  state, local or foreign income or franchise Taxes have not
                  expired, and (ii) with respect to such taxable years sets
                  forth those years for which examinations by the IRS or the
                  state, local or foreign taxing authority have been completed,
                  those years for which examinations by such agencies are
                  presently being conducted, those years for which notice of
                  pending or threatened examination or adjustment has been
                  received, those years for which examinations by such agencies
                  have not been initiated, and those years for which required
                  Returns for such Taxes have not yet been filed. Except to the
                  extent indicated in Schedule 3.21.2., all deficiencies
                  asserted or assessments made as a result of any examinations
                  by the IRS or state, local or foreign Tax authority have been
                  fully paid, or are fully reflected as a liability in the
                  Company's December 31, 2000 Financial Statement, or are fully
                  described in Schedule 3.21.2., are being contested in good
                  faith and an adequate reserve therefor has been established
                  and is fully reflected in the Company's December 31, 2000
                  Financial Statement to the extent required by GAAP. Except as
                  described in Schedule 3.21.2., there are no Returns that are
                  presently under examination with respect to Taxes, there are
                  no proposed (whether oral or written) or final adjustments,
                  assessments or deficiencies with respect to Taxes currently
                  pending, and there are no outstanding notices of proposed or
                  actual audit, examination or investigation with respect to
                  Taxes.

                           3.21.3.

                           Seller represents and warrants to Buyer that, except
                  as described in Schedule 3.21.3.:



                                       21
<PAGE>   30

                                    3.21.3.1.

                                    the Company, and every other person for
                           whose Taxes the Company is or could be held liable
                           (whether by reason of being a member of a
                           consolidated, combined, unitary, or other similar
                           group for Tax purposes, by reason of being a
                           successor, by agreement or otherwise (for the taxable
                           period(s) or portions thereof with respect to which
                           the Company is or could be held for such other
                           Person's Taxes) (all such persons collectively
                           referred to herein as "Tax Affiliates"), have filed
                           on a timely basis all Returns required to have been
                           filed by it and have paid on a timely basis all Taxes
                           shown thereon as due. All such Returns are true,
                           complete and correct in all material respects. The
                           provisions for Taxes in the Company's December 31,
                           2000 Financial Statement sets forth the maximum
                           liability of the Company and Tax Affiliates for Taxes
                           as of the date thereof. No liability for Taxes has
                           been incurred by the Company or any Tax Affiliate
                           since December 31, 2000 other than in the ordinary
                           course of their business. No director, officer or
                           employee of the Company or any Tax Affiliate having
                           responsibility for Tax matters is in discussions with
                           Tax authorities or has reason to believe that any Tax
                           authority has valid grounds to claim or assess any
                           additional Tax with respect to the Company or any Tax
                           Affiliate in excess of the amounts shown on the
                           Company's December 31, 2000 Financial Statement for
                           the period ending on such date;

                                    3.21.3.2.

                                    with respect to all amounts in respect of
                           Taxes imposed upon the Company or Tax Affiliates, or
                           for which the Company is or could be liable, whether
                           to taxing authorities (as, for example, under law) or
                           to other persons or entities (as, for example, under
                           tax allocation agreements), and with respect to all
                           taxable periods or portions of periods ending on or
                           before the Closing, all applicable Tax laws and
                           agreements have been fully complied with in all
                           material respects, and all such amounts required to
                           be paid by the Company and Tax Affiliates to Tax
                           authorities or others have been paid;

                                    3.21.3.3.

                                    none of the Returns required to be filed by
                           the Company or any Tax Affiliate contains, or were
                           required to contain (in order to avoid the imposition
                           of a penalty), a disclosure statement under Section
                           6662 (or any predecessor provision) of the Code, or
                           any similar provision of state, local or foreign law;



                                       22
<PAGE>   31

                                    3.21.3.4.

                                    all amounts that were required to be
                           collected or withheld by the Company or any Tax
                           Affiliate have been duly collected or withheld in all
                           material respects, and all such amounts that were
                           required to be remitted to any Tax authority have
                           been duly remitted in all material respects;

                                    3.21.3.5.

                                    except as set forth on Schedule 3.21.3.5.,
                           the Company and Tax Affiliates have not requested an
                           extension of time to file any Return not yet filed,
                           and have not granted any waiver of any statute of
                           limitations with respect to, or any extension of a
                           period for the assessment of, any Tax. No power of
                           attorney granted by the Company or any Tax Affiliate
                           with respect to Taxes is in force;

                                    3.21.3.6.

                                    Seller, the Company and Tax Affiliates have
                           not taken any action not in accordance with past
                           practice that would have the effect of deferring any
                           material Tax liability of the Company or any Tax
                           Affiliate from any taxable period or portion thereof
                           ending on or before or including the Closing to any
                           subsequent taxable period;

                                    3.21.3.7.

                                    Schedule 3.21.3.7. sets forth all Tax
                           Affiliates during all periods with respect to which
                           the applicable statue of limitations on the
                           assessment of Taxes remains open;

                                    3.21.3.8.

                                    there are no current actual or deemed
                           elections under Section 338 of the Code, protective
                           carryover basis elections, offset prohibition
                           elections or similar elections applicable to the
                           Company or any Tax Affiliate;

                                    3.21.3.9.

                                    neither the Company nor any Tax Affiliate is
                           required to include in income any adjustment pursuant
                           to Sections 481 or 263A of the Code (or similar
                           provisions of other law or regulations) by reason of
                           a change in accounting method or otherwise, following
                           the Closing, and Seller have no knowledge that the
                           IRS (or other Tax authority) has



                                       23
<PAGE>   32

                           proposed, or is considering, any such change in
                           accounting method or other adjustment;

                                    3.21.3.10.

                                    there are no liens for Taxes (other than for
                           current Taxes not yet due and payable) upon the
                           assets of the Company;

                                    3.21.3.11.

                                    the Company is not party to any agreement,
                           contract, arrangement or plan that has resulted or
                           would result, separately or in the aggregate, in the
                           payment of any "excess parachute payments" within the
                           meaning of Section 280G of the Code, whether by
                           reason of the Closing or otherwise;

                                    3.21.3.12.

                                    the Company is not, and has not been, a
                           United States real property holding corporation (as
                           defined in Section 897(c)(2) of the Code) during the
                           applicable period specified in Section
                           897(c)(1)(A)(ii) of the Code (or any corresponding
                           provision of state, local or foreign Tax law);

                                    3.21.3.13.

                                    neither the Company nor any Tax Affiliate
                           has or has had a permanent establishment in any
                           foreign country, as defined in any applicable Tax
                           treaty or convention between the United States of
                           America and such foreign country and the Company has
                           not engaged in a trade or business within any foreign
                           country;

                                    3.21.3.14.

                                    neither the Company nor any Tax Affiliate is
                           a party to any joint venture, partnership, or other
                           arrangement or contract which could be treated as a
                           partnership for Federal income tax purposes;

                                    3.21.3.15.

                                    intentionally deleted;

                                    3.21.3.16.

                                    neither the Company nor any Tax Affiliate
                           has filed a consent pursuant to the collapsible
                           corporation provisions of Section 341(f) of



                                       24
<PAGE>   33

                           the Code (or any corresponding provision of state,
                           local or foreign income Tax law) or agreed to have
                           Section 341(f)(2) of the Code (or any corresponding
                           provision of state, local or foreign income Tax law)
                           apply to any disposition of any asset owned by any of
                           them;

                                    3.21.3.17.

                                    neither the Company nor any Tax Affiliate
                           has participated in an international boycott within
                           the meaning of Section 999 of the Code;

                                    3.21.3.18.

                                    the Company is not a party to or bound by
                           any Tax sharing agreement, and has no current or
                           contingent contractual obligation to indemnify any
                           other person with respect to Taxes, other than
                           obligations to indemnify a lessor for property Taxes,
                           sales/use Taxes or gross receipts Taxes (but not
                           income or franchise Taxes) imposed on lease payments
                           arising from terms that are customary for leases of
                           similar property;

                                    3.21.3.19.

                                    the Company is not a party to or bound by
                           any closing agreement or offer in compromise with any
                           Tax authority;

                                    3.21.3.20.

                                    none of the assets of the Company is
                           property that the Company is required to treat as
                           being owned by any other person pursuant to the
                           so-called "safe harbor lease" provisions of former
                           Section 168(f)(8) of the Internal Revenue Code of
                           1954, as amended; none of the assets of the Company
                           directly or indirectly secures any debt the interest
                           on which is tax exempt under Section 103(a) of the
                           Code; none of the assets of the Company is
                           "tax-exempt use property" within the meaning of
                           Section 168(h) of the Code;

                                    3.21.3.21.

                                    no material election with respect to Taxes
                           of the Company or Tax Affiliates has been made from
                           and after the date of this Agreement;

                                    3.21.3.22.

                                    Schedule 3.21.3.22. sets forth all Returns
                           with respect to the Company and Tax Affiliates the
                           due dates for which (including any



                                       25
<PAGE>   34

                           valid extensions thereof) are sixty or fewer days
                           following the Closing, and the Taxes for which
                           estimated or final payments may, based on the current
                           operations of the Company and Tax Affiliates, become
                           due in sixty or fewer days following the Closing;

                                    3.21.3.23.

                                    Schedule 3.21.3.23. sets forth all state,
                           local or foreign jurisdictions in which the Company
                           is or at any time during the past five years has been
                           subject to Tax;

                                    3.21.3.24.

                                    the Company has not incurred any liability
                           for Taxes pursuant to Section 1374 or 1375 of the
                           Code (and any predecessor provision and any similar
                           provision applicable state, local or other Tax law);

                                    3.21.3.25.

                                    there are no outstanding options to acquire
                           equity of the Company that purport to or were
                           otherwise intended (when issued) to be treated as
                           "incentive stock options" ("ISOs") within the meaning
                           of Section 422 of the Code (and any predecessor
                           provision and any similar provision applicable state,
                           local or other Tax law); and

                                    3.21.3.26.

                                    there has not been a previous ownership
                           change to the Company under Section 382 of the Code.

                  3.22. LIENS.

                  Except as disclosed on Schedule 3.22., none of the properties
         and assets owned, leased, and/or used by the Company is subject to any
         lien, charge, mortgage, pledge, security interest, or other encumbrance
         of any kind. Schedule 3.22 also sets forth a description of any
         indebtedness owed by the Company which is guaranteed in writing by the
         Seller and/or secured by collateral granted by the Seller.

                  3.23. OTHER INFORMATION.

                  The information provided by Seller to Buyer in this Agreement
         or in the Schedules does not contain any untrue statement of a material
         fact or omit to state a material fact required to be stated herein or
         therein or necessary to make the statements and facts contained herein
         or therein, in light of the circumstances in which they are made, not
         false or misleading. Copies of all documents heretofore



                                       26
<PAGE>   35

         delivered or made available to Buyer were complete and accurate records
         of such documents in all respects.

                  3.24. PROJECTIONS.

                  The Company as of the date hereof is performing in line with
         all business and financial projections for the Company for the year
         2001.

                  3.25. CLAIMS.

                  The Seller has no knowledge of any claims against the Buyer
         and its affiliates and their respective officers, directors, agents,
         representatives and employees as of the date of this Agreement.

                  3.26. NO OTHER REPRESENTATIONS.

                  Seller is not making any representation or warranty, express
         or implied, of any nature whatsoever, except as specifically set forth
         in this Agreement and the other documents executed in connection
         herewith.

                  3.27. NO KNOWN BREACHES.

                  Seller has no knowledge that Buyer's representations and
         warranties in this Agreement are untrue and Seller shall not be
         entitled to make any indemnity claims pursuant to Section 6. hereof
         with respect to any matters constituting a breach of this Section 3.25.

         4. REPRESENTATIONS AND WARRANTIES OF BUYER.

         Buyer represents and warrants to Seller that:



                                       27
<PAGE>   36

                  4.1. ORGANIZATION.

                  The Buyer is duly organized, validly existing and in good
         standing under the laws of the jurisdiction in which it was formed,
         with full power to carry on its business as it is now and has since its
         organization been conducted, and to own, lease or operate its assets.
         The Buyer is duly authorized to do business and is in good standing in
         such other jurisdictions in which the failure to so qualify would have
         a material and adverse effect on the results of operations, properties,
         assets or condition (financial or otherwise) of the Buyer.

                  4.2. CORPORATE AUTHORITY.

                  The Buyer has all requisite power and authority to enter into
         this Agreement and to consummate the transactions contemplated hereby.
         This Agreement and all other agreements and instruments herein
         contemplated to be executed by the Buyer in connection herewith have
         been duly executed and delivered by Buyer, have been effectively
         authorized by all necessary action, corporate or otherwise, and
         constitute legal, valid and binding obligations of the Buyer, as the
         case may be.

                  4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.

                  The execution and delivery of this Agreement, the consummation
         of the transactions contemplated hereby and the fulfillment of the
         terms hereof will not result in a breach of any of the terms or
         provisions of, or constitute a default under, or conflict with, any
         material agreement, indenture or other instrument to which Buyer is a
         party or by which it is bound, Buyer's Certificate of Incorporation or
         Bylaws, any judgment, decree, order or award of any court, governmental
         body or arbitrator, or any law, rule or regulation applicable to Buyer.

                  4.4. INVESTMENT INTENT.

                  Buyer is acquiring the Shares with the intention as of the
         date hereof of holding the Shares for purposes of investment, and Buyer
         has no intention as of the date hereof of selling the Shares in a
         public distribution in violation of Federal securities laws or any
         applicable state securities laws.

                  4.5. REGULATORY AND OTHER APPROVALS.

                  All consents, approvals, authorizations and other requirements
         prescribed by any law, rule or regulation, including any third party
         consents, which must be obtained or satisfied by Buyer and which are
         necessary for the execution and delivery of this Agreement and the
         consummation of the transactions contemplated by this Agreement have
         been obtained and satisfied. Buyer has obtained all material permits,



                                       28
<PAGE>   37

         approvals, and consents of all governmental bodies or agencies
         necessary or appropriate so that consummation of the transactions
         contemplated by this Agreement will be in compliance with applicable
         law.

                  4.6. NO KNOWN BREACHES.

                  Buyer has no knowledge that Seller' representations and
         warranties in this Agreement are untrue, and Buyer shall not be able to
         make any indemnity claims pursuant to Section 6. hereof with respect to
         any matters constituting a breach of this Section 4.6.

                  4.7. OTHER INFORMATION.

                  The information provided by Buyer to Seller in this Agreement
         or in the Schedules does not contain any untrue statement of a material
         fact or omit to state a material fact required to be stated herein or
         therein or necessary to make the statements and facts contained herein
         or therein, in light of the circumstances in which they are made, not
         false or misleading.

                  4.8. NO OTHER REPRESENTATIONS.

                  Buyer is not making any representation or warranty, express or
         implied, of any nature whatsoever, except as specifically set forth in
         this Agreement and the other documents executed in connection herewith.

         5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.

                  5.1. COOPERATION IN LITIGATION.

                  Each party will fully cooperate with the other in the defense
         or prosecution of any litigation or proceeding already instituted or
         which may be instituted hereafter against or by such party relating to
         or arising out of the conduct of the Company prior to or after the
         Closing Date (other than litigation arising out of the transactions



                                       29
<PAGE>   38

         contemplated by this Agreement). The party requesting such cooperation
         shall pay the out-of-pocket expenses (including legal fees and
         disbursements) of the party providing such cooperation and of its
         officers, directors, employees and agents reasonably incurred in
         connection with providing such cooperation, but shall not be
         responsible to reimburse the party providing such cooperation for such
         party's time spent in such cooperation or the salaries or costs of
         fringe benefits or other similar expenses paid by the party providing
         such cooperation to its officers, directors, employees and agents while
         assisting in the defense or prosecution of any such litigation or
         proceeding.

                  5.2. TAX MATTERS.

                           5.2.1. PRE-CLOSING RETURNS.

                           Seller will be responsible for and will cause to be
                  prepared and duly filed all Returns for federal income taxes,
                  Texas franchise taxes, Louisiana corporate income taxes, and
                  Louisiana franchise taxes payable by the Company for all
                  taxable periods ending on or before the Closing. All such
                  Returns shall be prepared in a manner consistent with prior
                  periods. All such Returns filed after the Closing shall be
                  submitted to Buyer no later than thirty days prior to the due
                  date and filing thereof, and Buyer shall have the right to
                  review and comment thereon (without reduction of Seller's
                  obligations to indemnify under this Agreement). Seller will
                  pay or cause to be paid, and shall indemnify and hold Buyer
                  and the Company harmless against, all Taxes to which such
                  Returns relate; provided, however, that to the extent such
                  Taxes are included in and specifically identified on the
                  Closing Balance Sheet (or an attachment or schedule thereto)
                  or the Audited Closing Balance Sheet (as finally determined,
                  if audited pursuant to Section 2.3.3) or an attachment or
                  schedule thereto, Buyer shall reimburse Seller for such Taxes
                  within ten business days following the later of: (i) the
                  receipt by Buyer of written evidence of actual payment of such
                  Taxes by Seller or (ii) if the Closing Balance Sheet is
                  audited pursuant to Section 2.3.3., the date the Audited
                  Closing Balance Sheet becomes final and binding.

                           5.2.2. OVERLAP PERIOD RETURNS

                           Other than Returns to be prepared by Seller pursuant
                  to Section 5.2.1., Buyer and/or the Company will prepare or
                  cause to be prepared all Returns of the Company for any and
                  all taxable periods ending on or before the Closing, all
                  taxable periods which include and end after the Closing (the
                  "Overlap Period"), and any taxable period beginning after the
                  Closing. Seller will be responsible for and will indemnify and
                  hold harmless Buyer and the Company with respect to (i) all
                  Taxes for Returns to be prepared by Buyer or the Company for
                  taxable periods ending on or before the Closing and (ii) all



                                       30
<PAGE>   39

                  Taxes for the Overlap Period in an amount equal to the
                  liability for Taxes that would have resulted had the Overlap
                  Period ended at the Closing (utilizing, if applicable, the
                  actual tax rate imposed on a particular category of income by
                  the applicable taxing jurisdiction), except to the extent such
                  Taxes are included in and specifically identified on the
                  Closing Balance Sheet (or an attachment or schedule thereto)
                  or Audited Closing Balance Sheet (as finally determined, if
                  audited pursuant to Section 2.3.3.) or an attachment or
                  schedule thereto. Any amount so payable by Seller will be
                  remitted to Buyer at least ten business days prior to the due
                  date of the respective Returns pursuant to written notice by
                  the Buyer of such due date; provided that Seller approve of
                  the amount (such approval not to be unreasonably withheld).

                           5.2.3. AMENDED RETURNS.

                           Except as may be otherwise expressly provided in this
                  Agreement, from and after the date hereof, Seller and its
                  affiliates shall not file or cause to be filed any amended
                  Return with respect to the Company, and Seller and its
                  affiliates shall not file a claim for refund of Taxes paid by
                  or on behalf of the Company. Further, Buyer agrees that
                  without the prior written consent of Seller, which consent
                  shall not be unreasonably withheld, the Buyer shall not file
                  or cause the Company to file an amended Return with respect to
                  the Company for a taxable period ending on or before the
                  Closing. Any refund resulting from any such amended Return
                  filed by the Buyer or the Company shall be the property of the
                  Buyer.

                           5.2.4. MATERIAL ELECTIONS.

                           Neither Seller nor the Company shall make any
                  material election with respect to Taxes following the date
                  hereof, of the Company or any Tax Affiliate without the prior
                  written approval of Buyer (such approval not to be
                  unreasonably withheld).

                           5.2.5. TAX INFORMATION.

                           After the Closing, Seller, on the one hand, and Buyer
                  and the Company, on the other hand, will make available to the
                  other, as reasonably requested, all information, records or
                  documents relating to liabilities for Taxes for all periods
                  prior to or including the Closing and will preserve such
                  information, records or documents until the expiration of any
                  applicable statute of limitations or extensions thereof.

                           5.2.6. INTENTIONALLY DELETED.



                                       31
<PAGE>   40

                           5.2.7. CERTAIN TAXES.

                           All sales, value added, use, transfer, registration,
                  stamp and similar Taxes imposed in connection with the sale of
                  the Shares shall be borne by Seller.

                           5.2.8 SECTION 338(h)(10) ELECTIONS.

                           Within 60 days after the Closing Date, the Seller
                  shall deliver all information reasonably requested by Buyer
                  regarding the tax attributes of (i) the Seller or (ii) the
                  Company (to the extent such information regarding the Company
                  is in the possession of the Seller) in order to allow Buyer to
                  determine whether to make any Section 338 (h)(10) Elections
                  (as defined below) with respect to the acquisition of the
                  Shares pursuant to this Agreement. With respect to the
                  acquisition of the Shares, Buyer may give written notice to
                  the Seller within 180 days after the Closing Date of its
                  intention to require the making of an election under Section
                  338(h)(10) of the Code (such Section 338(h)(10) elections and
                  any available elections under any similar state, local or
                  foreign law which Buyer specifies in its notice are
                  collectively referred to as "Section 338(h)(10) Elections"),
                  with respect to the Company. Such written notice, if any,
                  shall specify any similar state, local or foreign elections to
                  be made with respect to the acquisition of the Shares. In that
                  event, the Seller, on the one hand, and Buyer, on the other
                  hand, shall (i) report the purchase of the Shares under this
                  Agreement consistent with any Section 338(h)(10) Elections,
                  (ii) take no position contrary thereto in any Tax Return, any
                  proceeding before any taxing authority or otherwise, and (iii)
                  cooperate with each other to take all other actions necessary
                  and appropriate to effect and preserve timely Section
                  338(h)(10) Elections.

                           Buyer shall be responsible for, and shall pay all
                  expenses associated with, the preparation and filing of all
                  forms related to or required by any Section 338(h)(10)
                  Election (including forms related to any similar state, local
                  or foreign elections) ("Section 338 Forms"), and Buyer shall
                  deliver such Section 338 Forms to the Seller within 210 days
                  after the Closing Date. The Seller shall (A) cooperate with
                  Buyer in preparing all Section 338 Forms; (B) deliver to Buyer
                  all information required to complete such forms and comply
                  with Seller' obligations under this Section; and (C) execute
                  and deliver all Section 338 Forms to Buyer within 15 days
                  after receipt thereof.

                           In the event of each Section 338(h)(10) Election,
                  Buyer and the Seller agree that Buyer shall determine the
                  amount of the Modified Aggregate Deemed Sale Price ("MADSP"),
                  as defined under the Treasury Regulations applicable to a
                  Section 338(h)(10) Election, and the allocation of such MADSP
                  among the assets subject to a Section 338(h)(10) Election.
                  Such allocation of the MADSP shall be made in accordance with
                  the Code and any applicable Treasury Regulations. The Seller,
                  on the one hand, and the Buyer, on the other hand, shall (i)
                  be bound by such allocation for purposes of determining any
                  Taxes, (ii) prepare and file all Tax Returns to be filed with



                                       32
<PAGE>   41

                  any taxing authority in a manner consistent with such
                  allocation, and (iii) take no position inconsistent with such
                  allocation in any Tax Return, any proceeding before any taxing
                  authority or otherwise. In the event that such allocation is
                  disputed by any taxing authority, the party receiving notice
                  of such dispute shall promptly notify the other parties
                  concerning resolution of such dispute. To the extent that the
                  Purchase Price is adjusted by reason of any payment under this
                  Agreement or otherwise, (i) the MADSP shall be adjusted to
                  reflect such change, (ii) the provisions of this Section
                  5.2.8. shall be followed in redetermining the allocation of
                  the MADSP, and (iii) the parties to this Agreement will, to
                  the extent required by law, file amended Tax Returns
                  consistent with such revised allocation.

                           5.2.9. CARRYBACKS.

                           The Seller will immediately pay to the Buyer any Tax
                  refund (or reduction in Tax liability) resulting from a
                  carryback of a post-acquisition Tax attribute of the Company
                  into the Buyer's consolidated Tax Return, when such refund or
                  reduction is realized by the Buyer. The Buyer will cooperate
                  with the Seller and the Company in obtaining such refunds (or
                  reduction in Tax liability), including the filing of amended
                  Tax Returns or refund claims. The Buyer agrees to indemnify
                  Seller for any Taxes resulting from the disallowance of such
                  postacquisition Tax attribute on audit or otherwise.

                           5.2.10. NO RETENTION OF CARRYOVERS.

                           The Seller agrees that it shall not elect to retain
                  any net operating loss carryovers and capital loss carryovers
                  of the Company as permitted by Reg. Section 1.1502-20(g) of
                  the Code.

                           5.3. EMPLOYMENT AND CONFIDENTIALITY AGREEMENTS.

                           5.3.1. At the Closing, Company shall enter into an
                  employment agreement with Brandon Dawes, Dennis Cooley, and
                  David Dawes in substantially the form attached hereto as
                  Exhibit 5.3.1., which employment agreement shall contain
                  confidentiality provisions and one-year non-compete provisions
                  commencing upon termination of employment.

                           5.3.2. EMPLOYEE BENEFITS.

                                    5.3.2.1. Continuation of Employee Benefits
                           and Credit for Service. From and after the Closing,
                           the Buyer agrees to provide or cause to be provided
                           to employees of the Company retained by the Buyer,
                           including those listed in Section 5.3.1. (the
                           "Employees"), all



                                       33
<PAGE>   42

                           employee benefit plans (including welfare benefits,
                           medical, dental and other health plans, disability
                           pay, vacation pay, retirement and pension benefits,
                           but not including any executive or incentive
                           compensation plans or programs or benefit accruals
                           under any defined benefit pension plan) maintained or
                           contributed to by the Buyer for its own employees
                           (collectively, the "Buyer Employee Benefit Plans"),
                           with credit for eligibility purposes to participate
                           and vesting, levels of benefits, and vacation benefit
                           accruals for full and partial years of service with
                           the Company, the Seller, or their respective
                           affiliates which were accrued by the Employees prior
                           to THE Closing, except where such crediting would
                           result in the duplication of benefits.
                           Notwithstanding any provision hereof to the contrary,
                           Buyer expressly reserves the right to amend or
                           terminate any Buyer Employee Benefit Plan at any
                           time.

                                    5.3.2.2. Preexisting Conditions, Exclusions
                           and Waiting Periods; Deductibles. The Company, the
                           Buyer and their respective affiliates shall (i) waive
                           all limitations as to preexisting conditions
                           exclusions and waiting periods with respect to
                           participation and coverage requirements applicable to
                           employees of the Company retained by Buyer under any
                           of the Buyer Employee Benefit Plans that are employee
                           welfare benefit plans (within the meaning of Section
                           3(1) of ERISA) in which such employees may be
                           eligible to participate after the Closing, other than
                           exclusions or waiting periods that are already in
                           effect with respect to such employees and that have
                           not been satisfied as of the Closing and (ii) provide
                           each of the employees with credit for any co-payments
                           and deductibles paid by such employees prior to the
                           Closing for purposes of satisfying any applicable
                           deductible or out-of-pocket requirements under any
                           such welfare plans that such employee is eligible to
                           participate in after the Closing, but only if and to
                           the extent that such information regarding credited
                           co-payments and deductibles is timely provided to the
                           Buyer.

                                    5.3.2.3. COBRA. The Buyer shall be
                           responsible and liable for providing the appropriate
                           COBRA notices and coverage to all employees of the
                           Company retained by Buyer who experience a
                           "qualifying event" after the Closing, and related
                           COBRA qualified beneficiaries. The Seller shall be
                           responsible and liable for providing the appropriate
                           COBRA notices and coverage, as required, to all
                           employees of the Company (and their eligible
                           dependents) other than the employees of the Company
                           retained by Buyer.

                  5.4. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE.

                  Buyer shall pay the insurance premiums required for any
         extension of the Company's officers' and directors' liability insurance
         policy that is in



                                       34
<PAGE>   43

         force at the date hereof following the Closing Date for a "discovery"
         period elected under such insurance policy covering the officers and
         directors of the Company for a period of four years or shall provide
         substantially similar coverage for the same period under Buyer's
         directors' and officers' insurance policy for all directors and
         officers of the Company.

         6. INDEMNIFICATION.

                  6.1. INDEMNIFICATION BY SELLER.

                  Seller shall indemnify and hold harmless Buyer, the Company,
         and their respective officers (including without limitation Michael L.
         Stansberry and Michael T. Mino), employees, agents, attorneys
         (including without limitation Liskow & Lewis and Porter & Hedges and
         their respective shareholders, partners, associates and other
         employees) and shareholders (collectively, the "Buyer Group") in
         respect of any and all claims, losses, damages, liabilities and
         expenses (including, without limitation, settlement costs and any
         reasonable legal, accounting and other expenses for investigating or
         defending any actions or threatened actions) incurred (collectively,
         "Losses") by the Buyer Group, together with interest on cash
         disbursements in connection therewith at the rate equal to the Wall
         Street Journal prime rate as published from time to time, plus 1
         percent per annum (the "Reference Rate") from 60 days after the date
         such Losses were incurred by the Buyer Group until paid by Seller, in
         connection with each and all of the following:

                           6.1.1.

                           any material breach of any representation or warranty
                  made by Seller in this Agreement;

                           6.1.2.

                           the material breach of any covenant, agreement or
                  obligation of Seller contained in this Agreement or any other
                  instrument delivered at the Closing;

                           6.1.3.

                           any material misrepresentation contained in any
                  Schedule, certificate or other documents furnished by Seller
                  pursuant to this Agreement;



                                       35
<PAGE>   44

                           6.1.4.

                           the failure to pay when due any and all liabilities
                  for Taxes (as defined in Section 3.21.1.) that (i) accrued
                  with respect to any taxable periods of the Company ending on
                  or before the Closing Date, (ii) accrued with respect to the
                  assets, operations or business of the Company during all
                  periods up to and including the Closing whether or not such
                  periods are taxable periods, or (iii) are incurred and become
                  payable by the Company or Buyer as a result of the
                  transactions contemplated by this Agreement;

                           6.1.5.

                           any material claim, demand or cause of action
                  asserted or brought by any person for breach of warranty, or
                  similar claims in connection with sales of products sold or
                  leased by the Company at any time prior to the Closing Date or
                  which comprised any part of the Inventory existing on the
                  Closing Date and which was sold by Buyer within 90 days after
                  the Closing Date;

                           6.1.6.

                           any material claim, demand or cause of action
                  asserted or brought by any person for physical injury to,
                  death of, or property damage suffered by such person or any
                  other person which was approximately caused by any products
                  sold or leased by the Company at any time prior to the Closing
                  Date;

                           6.1.7.

                           the material violation of any Federal, state, local
                  or foreign laws, regulations, orders, requirements or
                  ordinances, including those dealing with environmental
                  matters, prior to the Closing Date by Seller, the Company or
                  any of their affiliates, agents or assigns; and

                           6.1.8.

                           (a) conditions existing at, or caused by events prior
                  to the Closing Date which are violations of any Federal, state
                  or local environmental statute, regulation, requirement or
                  ordinance prior to the Closing Date with respect to the
                  Company or any of its assets, and (b) any other environmental
                  conditions in existence as of the Closing Date on the real or
                  immovable property owned, leased or used by the Company,
                  whether or not described in Schedule 3.6.1(a) and (b) being
                  collectively referred to herein as "Environmental
                  Conditions"), which as of the Closing, or will in the future
                  as a result of the operation of the Company prior to Closing,
                  require remediation, removal, or other corrective actions,
                  including without limitation the Environmental Conditions
                  listed in Schedule 6.1.8. With respect to each and every
                  Environmental Condition, Seller's obligation to indemnify the
                  Buyer Group from any Losses shall include but not be limited
                  to: (i) fines, penalties, assessments and judgments (whether
                  related to current or past activities); (ii) costs associated
                  with



                                       36
<PAGE>   45

                  obtaining any necessary permits, certificates or other
                  governmental approval or complying with environmental
                  reporting or record keeping requirements, including (A)
                  remediation costs, (B) removal costs, (C) costs of
                  implementing monitoring equipment which are necessary to
                  obtain such permits, certificates or approvals, and (D) late
                  fees and filing fees; and (iii) any costs which Buyer deems
                  reasonably necessary in connection with the foregoing,
                  including without limitation costs of environmental audits,
                  surveys, reports, waste characterizations, monitoring wells,
                  soil borings, tests and samples, provided that such costs
                  incurred by Buyer pursuant to this Section 6.1.8. must be
                  approved by Seller in advance, which consent will be timely
                  given and not unreasonably withheld, collectively,
                  "Environmental Costs").

                  6.2. INDEMNIFICATION BY BUYER.

                  Buyer shall indemnify and hold harmless Seller, and its
         respective officers (including without limitation Robert Cone, Andrew
         Cormier, Christine Smith and Barbara Shuler), employees, agents, and
         attorneys (including without limitations LeBoeuf, Lamb, Greene, &
         MacRae L.L.P. and their respective shareholders, partners, associates,
         and other employees), and shareholders (collectively, the "Seller
         Group"), in respect of any and all Losses incurred by the Seller Group,
         together with interest on cash disbursements in connection therewith at
         the Reference Rate from 60 days after the date that such Losses were
         incurred by the Seller Group until paid by Buyer, in connection with
         each and all of the following:

                           6.2.1.

                           any material breach of any representation or warranty
                  made by Buyer in this Agreement.

                           6.2.2.

                           the material breach of any covenant, agreement or
                  obligation of Buyer contained in this Agreement or any other
                  instrument delivered at the Closing;

                           6.2.3.

                           any material misrepresentation contained in any
                  Schedule, certificate or any other document furnished by Buyer
                  pursuant to this Agreement;



                                       37
<PAGE>   46

                           6.2.4.

                           the operation of the Company after the Closing Date;

                           6.2.5.

                           any material claim, demand or cause of action
                  (including warranty claims and claims relating to physical
                  injury, death or property damage) relating to or approximately
                  caused by either (i) products manufactured by the Company
                  after the Closing Date or (ii) any products sold or leased by
                  the Company more than 90 days after the Closing Date;

                           6.2.6.

                           the material violation of any Federal, state, local
                  or foreign laws, regulations, orders, requirements or
                  ordinances, including those dealing with environmental
                  matters, on or after the Closing Date by Buyer and its
                  affiliates, agents or assigns in relation to the Company,
                  except with regard to existing practices of the Company;

                           6.2.7.

                           any Environmental Condition relating to the Company
                  which, except with regard to the existing practices of the
                  Company, result from the operations of the Company on or after
                  the Closing Date or which came into existence on or after the
                  Closing Date (including, but not limited to, Environmental
                  Costs to the extent they directly arise from such violations);

                           6.2.8.

                           except as set forth in Section 6.1.6., any material
                  claim, demand or cause of action asserted or brought by any
                  person for physical injury to, death of, or property damage
                  suffered by such person or any other person which was
                  approximately caused by any products sold or leased by the
                  Company after the Closing Date.

                  6.3. CLAIMS FOR INDEMNIFICATION.

                  Whenever any claim shall arise for indemnification hereunder,
         the party entitled to indemnification (the "indemnified party") shall
         promptly notify the other party (the "indemnifying party") of the claim
         and, when known, the facts constituting the basis for such claim. In
         the event of any claim for indemnification hereunder resulting from or
         in connection with any claim or legal proceedings by a third party,



                                       38
<PAGE>   47

         the notice to the indemnifying party shall specify, if known, the
         amount or an estimate of the amount of the liability potentially
         arising therefrom. The indemnified party shall not settle or compromise
         any claim by a third party for which it is entitled to indemnification
         hereunder, without the prior written consent of the indemnifying party;
         provided, however, that if such consent is not granted the amount of
         indemnity provided by the indemnifying party shall not be limited by
         Section 6.4. or 6.6. and, if Buyer is the indemnified party, at the
         election of Buyer, only the portion of any loss equal to the refused
         settlement shall be deducted or payable from the Escrow Account, all
         other amounts shall be paid directly to Buyer by wire transfer by
         Seller or the distributees of the assets of the Seller.

                  6.4. DEFENSE BY INDEMNIFYING PARTY.

                  In connection with any claim giving rise to indemnity
         hereunder resulting from or arising out of any claim or legal
         proceeding by a person who is not a party to this Agreement, the
         indemnifying party at its sole cost and expense may, upon written
         notice to the indemnified party given within 30 days after delivery of
         the written notice referred to in Section 6.3. hereof, assume the
         defense of any such claim or legal proceeding if it acknowledges to the
         indemnified party in writing its obligations to indemnify the
         indemnified party with respect to all elements of such claim. The
         indemnified party shall be entitled to participate in (but not control)
         the defense of any such action, with its own counsel and at its own
         expense. If the indemnifying party does not assume the defense of any
         such claim or litigation resulting therefrom, (a) the indemnified party
         may defend against such claim or litigation, in such manner as it may
         deem appropriate, including, but not limited to, settling such claim or
         litigation, after giving notice of the same to the indemnifying party,
         on such terms as the indemnified party may deem appropriate, and (b)
         the indemnifying party shall be entitled to participate in (but not
         control) the defense of such action, with its counsel and at its own
         expense. If the indemnifying party thereafter seeks to question the
         manner in which the indemnified party defended such third party claim
         or the amount or nature of any such settlement, the indemnifying party
         shall have the burden to prove by a preponderance of the evidence that
         the indemnified party did not defend or settle such third party claim
         in a reasonably prudent manner as a prudent businessman would if his
         own funds were subject to such suit.

                  6.5. MANNER OF INDEMNIFICATION.

                  All indemnification by either party hereunder shall be
         effected by payment of cash or delivery of a certified or official bank
         check in immediately available funds in the amount of the
         indemnification liability.



                                       39
<PAGE>   48

                  6.6. LIMITATIONS ON INDEMNIFICATION.

                  Subject to any limitations contained therein, all
         representations and warranties made by the parties herein or in any
         instrument or document furnished in connection herewith shall survive
         the Closing and any investigation at any time made by or on behalf of
         the parties hereto and shall expire on the earlier of eighteen (18)
         months after the Closing Date or the closing of the transactions
         contemplated by that certain Agreement and Plan of Merger between the
         Seller and the Buyer of even date herewith, except (i) as to any matter
         as to which a claim is submitted in writing to the indemnifying party
         prior to the applicable expiration date and identified as a claim for
         indemnification pursuant to this Agreement; (ii) as to any
         representation or warranty relating to ownership or title to the Shares
         or the Company's assets, including real or immovable property, which
         shall not expire; (iii) as to any matter which is based upon willful
         fraud by the indemnifying party, with respect to which the
         representations and warranties set forth in this Agreement shall expire
         only upon expiration of the applicable statute of limitations plus 60
         days; (iv) as to any representation or warranty concerning tax or
         environmental matters, which shall expire only upon the expiration of
         the applicable statute of limitations plus 45 days; and (v) as to any
         representation or warranty concerning the authority to execute this
         Agreement or any of the other documents contemplated hereby, which
         shall not expire. No claim or action for indemnity pursuant to Sections
         6.1. or 6.2. hereof for breach of any representation or warranty shall
         be asserted or maintained by any party hereto after the expiration of
         such representation or warranty pursuant to the preceding sentence
         except for claims made in writing prior to such expiration and actions
         (whether instituted before or after such expiration) based on any claim
         made in writing prior to such expiration. Notwithstanding any other
         provisions contained in this Agreement, neither Buyer nor Seller shall
         be entitled to receive any amount under this Section 6. which exceeds
         the Purchase Price; provided, however, the limit on indemnification
         shall exclude any obligations specifically assumed by any party in this
         Agreement, including without limitation, the obligations relating to
         Taxes and brokers as described in Sections 3.2.1., 5.2., and 9.5.
         respectively. Further, notwithstanding any other provisions in this
         Agreement, (a) Buyer shall not be entitled to payment under this
         Section 6. for a breach of any representation or warranty by Sellers
         contained in this Agreement except for the amount by which the
         aggregate of all breach of warranty or representation claims hereunder
         which have not theretofore been reimbursed to Buyer exceeds the sum of
         $300,000.00, and (b) Seller shall not be entitled to payment under this
         Section 6. except for the amount by which the aggregate of all claims
         hereunder which have not theretofore been reimbursed to Seller, exceeds
         $300,000.00. In the event the $300,000.00 threshold mentioned in clause
         (a) or (b) of the preceding sentence is exceeded, Buyer or Seller, as
         the case may be, shall then have the right to seek reimbursement of
         said threshold amount from Seller or Buyer, as the case may be, under
         this Section 6. Further, the Buyer and the Seller acknowledge that
         negotiations are pending for a merger of the Buyer and Seller. If such
         merger is accomplished, the Buyer and Seller unconditionally agree that
         the recovery of any Losses by Buyer and Seller pursuant to Section 6.
         of this Agreement shall be pursuant



                                       40
<PAGE>   49

         to the issuance of additional stock by the surviving entity of the said
         merger to the party suffering the Losses, all as more expressly set
         forth in the contemplated Agreement and Plan of Merger by and between
         the Seller and the Buyer.

                  6.7. SOLE BASIS FOR RECOVERY.

                  Unless specifically provided for elsewhere in this Agreement,
         the parties intend Section 6. to be the exclusive method for
         compensating each other for, or indemnifying each other against, claims
         relating to the Company and the transactions contemplated by this
         Agreement.

         7. DOCUMENTS TO BE DELIVERED AT CLOSING.

                  7.1. CLOSING DOCUMENTS DELIVERED BY SELLER.

                  Buyer shall have received at the Closing the following
         documents, dated as of the Closing date:

                           7.1.1. The Employment Agreements referred to in
                  Section 5.3.1. above, duly executed by Brandon Dawes, Dennis
                  Cooley, and David Dawes;

                           7.1.2. Stock certificate(s) representing the Shares,
                  duly endorsed for transfer.

                           7.1.3. An opinion of counsel to Seller in a form
                  reasonably acceptable to counsel to Buyer regarding the
                  ownership of the Shares and the authority of the Seller to
                  enter into this Agreement and to consummate the transactions
                  contemplated hereby.

                           7.1.4. Any other documents, certificates, or
                  instruments contemplated by this Agreement to be delivered by
                  Seller to Buyer, including but not limited to the Consents
                  listed in Schedule 3.7, which include all necessary lender and
                  creditor Consents.

                           7.1.5. A fully executed certification of non-foreign
                  status described in Treasury Regulation Section 1.1445-2(a)(2)
                  (and applicable provisions of state



                                       41
<PAGE>   50

                  law), in form and substance reasonably satisfactory to counsel
                  to Buyer, from each Seller.

                           7.1.6. Executed letters of resignation by each
                  officer and director of the Company.

                           7.1.7. Executed release and termination agreements
                  evidencing the release and termination of all security
                  interests and mortgage liens affecting the Shares and the
                  assets of the Company.

                  7.2. CLOSING DOCUMENTS DELIVERED BY BUYER.

                  Seller shall have received at the Closing the following
         documents, dated as of the Closing date:

                           7.2.1. Any documents, certificates, or instruments
                  contemplated by this Agreement to be delivered by Buyer to
                  Seller, and

                           7.2.2. An opinion of counsel to Buyer in a form
                  reasonably acceptable to counsel to Seller regarding the
                  authority of the Buyer to enter into this Agreement and to
                  consummate the transactions contemplated hereby.

         8. RELEASE.

         (a) As of the Closing Date, and except as may be set forth in Section
6.2. of this Agreement, the Seller does hereby for itself and its successors and
assigns remise, release, acquit and forever discharge the Company and its
affiliates, successors and assigns, of and from any and all claims, demands,
liabilities, responsibilities, disputes, causes of action and obligations of
every nature whatsoever, liquidated or unliquidated, known or unknown, matured
or unmatured, fixed or contingent, that Seller or its affiliates now has, owns
or holds or has at any time previously had, owned or held against such parties,
including without limitation all liabilities created as a result of the
negligence, gross negligence and willful acts of the Company and its employees
and agents, or under a theory of strict liability, existing as of the Closing
Date or relating to any action, omission or event occurring on or prior to the
Closing Date. Notwithstanding the foregoing, however, any claims, liabilities,
debts or causes of action that may arise in connection with the failure of any
of the parties hereto to perform any of their obligations hereunder or under any
other agreement relating to the transactions contemplated hereby or from any
breaches by any of them of any representations or warranties herein or in
connection with any of such other agreements shall not be released or discharged
pursuant to this Agreement.



                                       42
<PAGE>   51

         (b) Seller represents and warrants that, he has not previously assigned
or transferred, or purported to assign or transfer, to any person or entity
whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations released herein.
Seller covenants and agrees that Seller will not assign or transfer to any
person or entity whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations to be released
herein. Seller represents and warrants that Seller has read and understands all
of the provisions of this Section 8. and that Seller has been represented by
legal counsel of its own choosing in connection with the negotiation, execution
and delivery of this Agreement.

         (c) The release provided by the Seller pursuant to this Section 8.
shall apply notwithstanding that the matter for which release is provided may
relate to the ordinary, sole or contributory negligence, gross negligence,
willful misconduct or violation of law by a released party, including the
Company and its respective officers, directors, employees and agents, and for
liabilities based on theories of strict liability, and shall be applicable
whether or not negligence of the released party is alleged or proven, it being
the intention of the parties to release the released party from and against its
ordinary, sole and contributory negligence and gross negligence as well as
liabilities based on the willful actions or omissions of the released party and
liabilities based on theories of strict liability.

         9. MISCELLANEOUS.

                  9.1. NOTICES.

                  All notices, requests, demands, and other communications
         hereunder shall be in writing and shall be deemed given if delivered
         personally or sent by fax during normal business hours of the
         recipient, the next business day if sent by a national overnight
         delivery service, charges prepaid, or three (3) days after mailed by
         certified or registered mail, postage prepaid, return receipt
         requested, to the parties, their successors in interest or their
         assignees at the following addresses, or at such other addresses as the
         parties may designate by written notice in the manner aforesaid:

                  If to Buyer:

                           T-3 Energy Services, Inc.
                           600 Travis, Suite 6050
                           Houston, Texas 77002
                           Attention: Mr. Michael L. Stansberry



                                       43
<PAGE>   52

                  With a copy to:

                           First Reserve Corporation
                           1801 California Street
                           Denver, Colorado 80202
                           Attention: Thomas R. Denison, Esq.


                           and

                           Liskow & Lewis
                           822 Harding Street
                           Lafayette, Louisiana 70503
                           Attention: Billy J. Domingue, Esq.


                  If to Seller:

                           Industrial Holdings, Inc.
                           7135 Ardmore
                           Houston, TX 77054
                           Attention: Stephen W. Nash, Esq.

                  With copies to:

                           LeBouef, Lamb, Greene & MacRae LLP
                           1000 Louisiana
                           Houston, TX 77002
                           Attention: Dawn Born, Esq.

                  9.2. ASSIGNABILITY AND PARTIES IN INTEREST.

                  Seller or Buyer may, with the written consent of the other
         party (which will not be unreasonably withheld if such assignee has the
         financial capacity to assume and honor the indemnity obligations
         hereunder), assign the rights and obligations under this Agreement
         among their affiliates or in connection with a sale of their business.
         In either case, any such assignee must expressly assume all indemnity
         obligations hereunder. This Agreement shall inure to the benefit of and
         be binding upon Buyer and Seller and their respective permitted
         successors and assigns.



                                       44
<PAGE>   53

                  9.3. GOVERNING LAW.

                  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
         ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
         APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT
         STATE.

                  9.4. COUNTERPARTS.

                  This Agreement may be executed simultaneously in one or more
         counterparts, each of which shall be deemed an original, but all of
         which shall constitute but one and the same instrument.

                  9.5. INDEMNIFICATION FOR BROKERAGE.

                  Buyer and Seller each represent and warrant that, except as
         set forth in Schedule 9.5, no broker or finder has acted on its behalf
         in connection with this Agreement or the transactions contemplated
         hereby. In addition to the indemnification obligations contained in
         Section 6., each party hereto agrees to indemnify and hold harmless the
         others from any claim or demand for commissions or other compensation
         by any broker, finder or similar agent who is or claims to have been
         employed by or on behalf of such party.

                  9.6. PUBLICITY.

                  Seller and Buyer agree that press releases and other
         announcements to be made by any of them with respect to the
         transactions contemplated hereby shall be subject to mutual agreement.
         Notwithstanding the foregoing, Seller and Buyer may respond to
         inquiries relating to this Agreement and the transactions contemplated
         hereby by the press, securities analysts, employees, or customers
         without any notice or further consent of the other parties hereto.

                  9.7. COMPLETE AGREEMENT.

                  This Agreement, the Exhibits hereto, the Schedules and the
         documents delivered pursuant to this Agreement contain or will contain
         the entire agreement between the parties hereto with respect to the
         transactions contemplated herein and shall supersede all previous oral
         and written and all contemporaneous oral negotiations, commitments, and
         understandings.



                                       45
<PAGE>   54

                  9.8. INTERPRETATION.

                  The headings contained in this Agreement are for reference
         purposes only and shall not affect in any way the meaning or
         interpretation of this Agreement.

                  9.9. SEVERABILITY.

                  Any provision of this Agreement which is invalid, illegal, or
         unenforceable in any jurisdiction shall, as to that jurisdiction, be
         ineffective to the extent of such invalidity, illegality, or
         unenforceability, without affecting in any way the remaining provisions
         hereof in such jurisdiction or rendering that or any other provision of
         this Agreement invalid, illegal, or unenforceable in any other
         jurisdiction.

                  9.10. KNOWLEDGE.

                  As used in this Agreement, references to the "knowledge" of
         any party shall mean the actual knowledge of the executive officers of
         such party and of the senior employees or managers of such party
         responsible for the area of operations of such party to which such
         party's knowledge relates, based on and assuming a reasonable
         investigation of such matters.

                  9.11. EXPENSES OF TRANSACTIONS.

                  All fees, costs and expenses incurred by Buyer or Seller in
         connection with the transactions contemplated by this Agreement shall
         be borne by the party incurring the same.

                  9.12. LIMIT ON INTEREST.

                  Notwithstanding anything in this Agreement to the contrary,
         neither party hereto shall be obligated to pay interest at a rate
         higher than the maximum rate permitted by applicable law.

                  9.13. SUBMISSION TO JURISDICTION.

                  Each of the parties hereto irrevocably consents that any legal
         action or proceeding against it or any of its property with respect to
         this Agreement or any other agreement executed in connection herewith
         may be brought in any court of the



                                       46
<PAGE>   55

         State of Texas, any Federal court of the United States of America
         located in Texas, and by the execution and delivery of this Agreement
         each party hereto hereby accepts with regard to any such action or
         proceeding for itself and in respect of its property, generally and
         unconditionally, the jurisdiction of the aforesaid courts.

                  9.14. ARBITRATION.

                  Except as provided in Section 2.3., any controversy, dispute,
         or claim arising out of, in connection with, or in relation to, the
         interpretation, performance or breach of this Agreement, including,
         without limitation, the validity, scope, and enforceability of this
         Section 9.14., may at the election of Buyer or Seller be solely and
         finally settled by confidential arbitration conducted in Houston, TX.
         The arbitration shall be governed by the Federal Arbitration Act, 9
         U.S.C. Section 1 et seq., and administered by the American Arbitration
         Association in accordance with its Commercial Arbitration Rules. The
         arbitrators shall not be allowed to award punitive, exemplary or
         multiple damages. The arbitrators may only award compensatory damages.
         The parties hereby expressly waive any right any of them may have to
         punitive, exemplary or multiple damages. The parties intend that this
         agreement to arbitrate be valid, enforceable and irrevocable.
         Notwithstanding the foregoing, this Section 9.14. shall not apply nor
         be interpreted to affect the resolution of a Dispute Notice through the
         arbitration procedures set forth in Section 2.3.4. of this Agreement.

                  9.15. WAIVER OF PUNITIVE, EXEMPLARY AND MULTIPLE DAMAGES.

                  The parties hereby expressly waive any right any of them may
         have to punitive, exemplary or multiple damages.

           (THIS REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK)



                                       47

<PAGE>   56

         IN WITNESS WHEREOF, the undersigned duly execute this Agreement as of
the date first written above.


                                       SELLER:


                                       INDUSTRIAL HOLDINGS, INC.,
                                          a Texas corporation

                                       By:
                                          --------------------------------------
                                       Name: Robert E. Cone
                                       Title: President and Chief Executive
                                              Officer

                                       BUYER:

                                       T-3 ENERGY SERVICES, INC.,
                                          a Delaware corporation


                                       By:
                                          --------------------------------------
                                          Michael L. Stansberry
                                          Title: President



                                       48