EXHIBIT 10(h)


                          AMENDMENT NO. 1 TO THE
                             PEERLESS MFG. CO.
                             1995 STOCK OPTION
                         AND RESTRICTED STOCK PLAN


       WHEREAS, the Peerless Mfg. Co.  (the "Company") 1995 Stock  Option
  and Restricted  Stock  Plan  (the "Plan")  was  previously  adopted  to
  attract and  retain  the  best available  personnel  for  positions  of
  substantial responsibility and to provide incentives to such  personnel
  to promote the  success of the  business of Peerless  Mfg. Co. and  its
  subsidiaries;

       WHEREAS, certain options  granted under the  Plan are intended  to
  qualify as "incentive stock options" ("Qualified Options") pursuant  to
  Section 422 of the Internal Revenue Code of 1986, as amended from  time
  to time,  while  certain other  options  granted under  the  Plan  will
  constitute nonqualified options ("Nonqualified Options");

       WHEREAS, the Compensation Committee ("Compensation Committee") and
  the Board of Directors of Peerless  Mfg. Co., a Texas corporation  (the
  "Company") authorized  an additional  20,000  shares of  the  Company's
  Common Stock, $1.00 par value per  share (the "Additional Shares")  for
  issuance pursuant to Nonqualified Options to be issued pursuant to  the
  Plan, subject to approval of  the Nasdaq National MarketR  Notification
  Form for Listing of Additional  Shares (the "Nasdaq Application")  with
  respect to such shares;

       WHEREAS,   Compensation  Committee  and  the  Board  of  Directors
  directed and approved this  Amendment to the Plan  in order to  reflect
  the addition of the Additional Shares    to the Plan.

       NOW THEREFORE, the  following provisions  of the  Plan are  hereby
  amended and  restated as  follows, subject  to approval  of the  Nasdaq
  Application.  All terms not defined herein shall have those definitions
  set forth in the Plan  for such terms.   Except as amended hereby,  all
  other terms of the Plan remain in full force and effect.
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       Section 4 of the Plan is hereby amended and restated as follows:

       4.   Shares Subject to the Plan.  Except as otherwise provided  in
  Section 19  hereof, the  aggregate number  of  shares of  Common  Stock
  issuable upon the exercise of Options  or upon the grant of  Restricted
  Stock pursuant to this Plan shall be 100,000 shares, plus an additional
  20,000 shares which are  issuable only as  Nonqualified Options.   Such
  shares may either be authorized but unissued shares or treasury shares.
  The  Corporation shall, during the term of this Plan, reserve and  keep
  available a number of shares of Common Stock sufficient to satisfy  the
  requirements of  the  Plan.   If  an  Option should  expire  or  become
  unexercisable for any reason without having been exercised in full,  or
  Restricted Stock should fail  to vest and be  forfeited in whole or  in
  part for any reason, then the  shares that were subject thereto  shall,
  unless the Plan shall  have terminated, be available  for the grant  of
  additional Options or Restricted Stock under this Plan, subject to  the
  limitations set forth above.

       Executed, adopted and approved this 11th day of November  1999, to
  be effective from and after the  10th day  of September, 1999,  by  the
  Compensation Committee of the Company in accordance with Section 20  of
  the Plan.


                                COMPENSATION COMMITTEE


                                /s/ JOSEPH V. MARINER
                                Joseph V. Mariner, Chairman



                                /s/ DONALD A. SILLERS,JR.
                                Donald A. Sillers, Jr.



                                /s/ BERNARD S. LEE
                                Bernard S. Lee



                                /s/ DAVID D. BATTERSHELL
                                David D. Battershell