<PAGE>

                                                                    EXHIBIT 10.5


                         CONSULTING SERVICES AGREEMENT
                         -----------------------------


     This Consulting Services Agreement dated May 6, 1996 (the "Agreement") is
made and entered into by and between Magnetic Bearing Technologies, Inc., a
Texas corporation (the "Company"), and Eric L. Jones ("Consultant").

     1.   Term of the Agreement.  The Company hereby engages Consultant to
          ---------------------
perform certain consulting services described herein, and Consultant hereby
accepts such engagement with the Company for an initial term of one year,
commencing on the date hereof (the "Initial Term").  Upon the expiration of the
Initial Term, unless either party shall have given the other notice of its
intent to terminate the Agreement in the manner provided in Section 6, the
Agreement shall renew and extend for successive one month terms until terminated
in the manner provided in Section 6.

     2.   Duties and Obligations.
          ----------------------

          a.  Consultant initially shall be Chairman of the Board of Directors
of the Company (the "Board") and shall have such powers and duties customarily
associated with his position as a member of the Board.  In his capacity as a
consultant and as Chairman of the Board, Consultant shall advise the Company
with respect to general corporate strategy, as well as, but not limited to,
finance, budgeting, marketing, administration, acquisitions and corporate
partnering.

          b.  During the term of this Agreement, Consultant shall devote an
average of approximately ten hours per week to the provision of services
hereunder.

          c.  Consultant currently is subject to a Proprietary Information and
Nondisclosure Agreement with the Company and agrees to remain subject to such
agreement or to such other similar agreement as the Company and Consultant may
later agree during the term of the Agreement.

     3.   Compensation.  As partial compensation for the services of Consultant,
          ------------
during the Initial term, the Company shall pay to Consultant a fee of $6,250 per
month (prorated for any partial month in which services are rendered), resulting
in a fee of $75,000 during the Initial Term. Compensation for additional terms
during which this Agreement is in effect shall be agreed to by Consultant and
the Company's Board of Directors.

     4.   Equity Interest in the Company.  As additional compensation for the
          ------------------------------
services of Consultant, Consultant shall be granted, concurrent with the
execution of this Agreement, options to purchase 50,000 shares of the Company's
Common Stock at an exercise price of $0.40 per share, which options shall be
governed exclusively by the Stock Option Agreement substantially in the form
attached hereto as Exhibit A (the "Option Agreement").
<PAGE>

Any subsequent option grants to Consultant, in his capacity as consultant or
otherwise, shall be at the discretion of the Board of Directors.


     5.   Expenses.  The Company shall promptly reimburse Consultant for all
          --------
reasonable out-of-pocket expenses incurred in connection with the provisions of
consulting services to the Company, including costs Consultant incurs in
attending Board meetings.  Consultant shall provide the Company with monthly
invoices detailing expense reimbursements which Consultant believes are due
under this Agreement, and shall itemize and provide receipts for expenses upon
request.

     6.   Termination of Consulting Services. Consultant may terminate this
          ----------------------------------
Agreement at any time, including during the Initial Term, by delivery to the
Company of 30 days prior notice.  During any period in which the Agreement is in
effect, including the Initial Term, the Company may terminate this Agreement for
"Cause."  After the Initial Term, either party may terminate the Agreement upon
30 days prior notice.  For purposes of this Agreement, "Cause" shall mean any of
the following:  gross misconduct or acts of commission or omission that involve
a conviction for fraud, embezzlement or misappropriation of any property or
proprietary information of the Company.

     7.   Miscellaneous.
          -------------

          a.  Independent Contractor.  Consultant is an independent contractor
              ----------------------
and is solely responsible for all taxes, withholdings, and other similar
statutory obligations, including, but not limited to, workers' compensation
insurance, if any be required.

          b.  Governing Law.  This Agreement shall be interpreted, construed,
              -------------
governed and enforced according to the laws of the State of Texas.

          c.  Severability.  If any provision of this Agreement is determined by
              ------------
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain in
full force and effect.

          d.  Successors and Assigns.  The rights and obligations of the Company
              ----------------------
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.  Consultant shall not be entitled to
assign any of his rights or obligations under this Agreement.

          e.  Entire Agreement.  This Agreement, together with the Stock Option
              ----------------
Agreement and the Proprietary Information and Nondisclosure Agreement,
constitutes the entire agreement between the parties with respect to the subject
matter hereof.  This Agreement may be amended or modified only pursuant to a
writing signed by Consultant and an authorized representative of the Company.

          f.  Notices.  Any notice or other communication required or permitted
              -------
to be given hereunder shall be in writing and shall be given by U.S. mail,
certified and postage prepaid, by overnight courier or by hand delivery at the
address set forth below such party's name on the signature page hereto.  Any
notice shall be deemed to have been received at the time

                                       2
<PAGE>

it is delivered. Notice of change of address shall also be governed by this
section or may be delivered by first-class mail or by facsimile.

          g.  Counterparts.  This Agreement may be executed in multiple
              ------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have executed this Consulting Services
Agreement as of the date set forth above.



                              CONSULTANT

                              /s/ ERIC L. JONES

                              Eric L. Jones

                              10528 Glass Mountain Trail
                              Austin, TX  78750
                              Fax: 512.258.9433


                              MAGNETIC BEARING TECHNOLOGIES, INC.


                              By: /S/ Joseph F. Pinkerton, III
                                 -----------------------------
                                 Joseph F. Pinkerton, III
                                 President

                              11525 Stonehollow Drive, Suite 135
                              Austin, TX  78758
                              Fax:  512.836.4511