<PAGE>
                                                                    EXHIBIT 10.8

                            ASSET PURCHASE AGREEMENT




                                  BY AND AMONG




                           REX MACHINERY MOVERS, INC.
                              D/B/A IDEAL PRODUCTS

                              OF ACQUISITION, L.P.
                              D/B/A ORBITFORM, INC.

                                 PHILFORM, INC.

                            INDUSTRIAL HOLDINGS, INC.


                                       and


                                  SMSG, L.L.C.

                                  SMSP, L.L.C.



                                   Dated as of

                                October 16, 2001
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                                TABLE OF CONTENTS
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1.    Purchased Assets.......................................................2
      1.1   Equipment........................................................2
      1.2   Inventory........................................................3
      1.3   Receivables......................................................3
      1.4   Real Property....................................................3
      1.5   Goodwill.........................................................3
      1.6   Outstanding Customer Purchase Orders.............................3
      1.7   Contracts........................................................3
      1.8   Licenses and Permits.............................................3

2.    Excluded Assets........................................................3
      2.1   Cash and Cash Equivalents........................................3
      2.2   Tax Deposits and Refunds.........................................4
      2.3   Corporate Records................................................4
      2.4   Intercompany Notes and Receivables...............................4
      2.5   Insurance Policies...............................................4
      2.6   Employee Records.................................................4
      2.7   Employee Plans...................................................4
      2.8   Assets related to Excluded Liabilities...........................4
      2.9   Blastco Note Receivable..........................................4

3.    Liabilities............................................................4
      3.1   Assumed Liabilities..............................................4
            (a)   Trade Accounts Payable.....................................4
            (b)   Other Accrued Payables.....................................4
            (c)   Outstanding Customer and Supplier Purchase Orders..........4
            (d)   Assumed Contracts..........................................4
            (e)   Warranty Claims............................................5
            (f)   Post-Closing Date Property Taxes...........................5
            (g)   Liabilities Related to CTDEP Activities....................5
            (h)   CTDEP Financial Assurance..................................5
      3.2   Excluded Liabilities.............................................5
            (a)   Taxes......................................................5
            (b)   Comerica Notes.............................................5
            (c)   Heller Notes...............................................5
            (d)   General Electric Note......................................5
            (e)   Citizens Bank Notes........................................5
            (f)   SJMB Note..................................................6
            (g)   SOFTECH Leases.............................................6
            (h)   Accrued Interest...........................................6
            (i)   Intercompany Payables......................................6
            (j)   Accrued Acquisition Expenses...............................6
            (k)   Pre-Closing Date Property Taxes............................6
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                                       i
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                               TABLE OF CONTENTS
                                  (continued)
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            (l)   Accrued Waterbury, CT Rent.................................6
            (m)   Accrued Sales and Use Tax..................................6
            (n)   Accrued Business Insurance Expenses........................6

4.    Purchase Price for Purchased Assets....................................6
      4.1   Allocation of Purchase Price.....................................6

5.    Pre-Closing Actions....................................................6
      5.1   Conduct of Business..............................................7
      5.2   Compliance with Applicable Laws..................................7
      5.3   Accuracy of Representations and Warranties ......................7

6.    Conditions Precedent to Buyers' Obligations............................7
      6.1   Accuracy of Representations and Warranties.......................7
      6.2   Performance of Covenants.........................................8
      6.3   No Casualty......................................................8
      6.4   Delivery of Closing Documents and Items..........................8
      6.5   Certificates Regarding Conditions Precedent......................8
      6.6   No Litigation....................................................8
      6.7   Title Commitments................................................8

7.    Conditions Precedent to Seller Parties' Obligations....................8
      7.1   Accuracy of Representations and Warranties.......................8
      7.2   Performance of Covenants.........................................8
      7.3   Delivery of Closing Documents and Items..........................9

8.    Closing Matters........................................................9
      8.1   Closing..........................................................9
      8.2   Deliveries At Closing............................................9
            (a)   Deliveries by the Sellers..................................9
            (b)   Deliveries by the Buyers...................................9
      8.3   Certain Closing Expenses........................................10
      8.4   Further Assurances..............................................10

9.    Seller Parties' Representations and Warranties........................10
      9.1   Organization and Standing.......................................10
      9.2   Authorization...................................................10
      9.3   Existing Agreements and Governmental Approvals..................11
      9.4   No Subsidiaries.................................................11
      9.5   No Insolvency...................................................11
      9.6   Permits and Licenses............................................12
      9.7   Financial Statements............................................12
      9.8   No Undisclosed Liabilities......................................12
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                                       ii
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                               TABLE OF CONTENTS
                                  (continued)
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      9.9   Conduct of Business.............................................12
      9.10  No Adverse Changes..............................................13
      9.11  Employees.......................................................13
      9.12  Employee Benefit Plans..........................................13
      9.13  Contracts.......................................................14
      9.14  Title to Purchased Assets.......................................14
      9.15  Sufficiency of Purchased Assets.................................15
      9.16  Taxes...........................................................15
      9.17  Litigation......................................................16
      9.18  Product Liability...............................................16
      9.19  Environmental Matters...........................................16
      9.20  Compliance with Laws............................................17
      9.21  No Brokers......................................................17
      9.22  Intellectual Property...........................................17
      9.23  Disclosure......................................................17

10.   Buyers' Representations and Warranties................................17
      10.1  Organization and Standing.......................................17
      10.2  Authorization...................................................18
      10.3  Existing Agreements and Governmental Approvals..................18
      10.4  Deposit of Cash Receipts........................................18
      10.5  Sales of Scrap Metals...........................................18
      10.6  No Delay in Collection of Receivables...........................18
      10.7  Vendor Payments.................................................18
      10.8  Arbor Automation................................................19
      10.9  Transaction Expenses............................................19
      10.10 Compensation Increases..........................................19
      10.11 Disclosure......................................................19

11.   Post-Closing Covenants................................................19
      11.1  Post-Closing Receipts...........................................19
      11.2  Sellers' Names..................................................19
      11.3  Further Assurances..............................................19
      11.4  Books and Records...............................................19
      11.5  Sellers' Employees..............................................20
      11.6  Waiver..........................................................20
      11.7  Rollover of Employee 401(k) Balances............................20
      11.8  Continuation of CTDEP Activities................................20
      11.9  CTDEP Financial Assurance.......................................21
      11.10 Continuation of Coverage........................................22

12.   Indemnification.......................................................22
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                                       iii
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                               TABLE OF CONTENTS
                                  (continued)
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      12.1  Survival of Representations and Warranties......................22
      12.2  Indemnification by the Seller Parties...........................22
      12.3  Indemnification by the Buyers...................................23
      12.4  Procedure for Indemnification; Third Party Claims...............23
      12.5  Procedure for Indemnification; Other than Third Party Claims....24
      12.6  Limitations on Liability of the Seller Parties..................24
      12.7  Compliance with Bulk Sales Law..................................25
      12.8  Remedies........................................................25

13.   Expenses..............................................................25

14.   Risk of Loss..........................................................25

15.   Termination...........................................................25
      15.1  Manner of Termination...........................................25
      15.2  Effect of Termination...........................................25

16.   Miscellaneous Provisions..............................................25
      16.1  Notices.........................................................25
      16.2  Assignment......................................................26
      16.3  Parties in Interest.............................................26
      16.4  Choice of Law...................................................27
      16.5  Counterparts....................................................27
      16.6  Entire Agreement................................................27
      16.7  Arbitration.....................................................27
      16.8  Public Announcements............................................28
      16.9  Facsimile Signatures............................................28
</TABLE>


                                       iv
<PAGE>
                            ASSET PURCHASE AGREEMENT
                         (IDEAL PRODUCTS AND ORBITFORM)


      THIS AGREEMENT (the "Agreement") is made on October 16, 2001, between REX
MACHINERY MOVERS, INC., a Texas corporation ("Rex Machinery") d/b/a IDEAL
PRODUCTS ("Ideal Products"), OF ACQUISITION, L.P., a Texas limited partnership
d/b/a ORBITFORM, INC. ("Orbitform") and PHILFORM, INC., a Michigan corporation
("Philform"), (Ideal Products, Orbitform, and Philform collectively referred to
as the "Sellers"), and INDUSTRIAL HOLDINGS, INC., a Texas corporation ("IHI")
(the Sellers and IHI sometimes collectively referred to herein as the "Seller
Parties"), and SMSG, L.L.C., a Michigan limited liability company ("SMSG"), and
SMSP, L.L.C., a Michigan limited liability company ("SMSP") (SMSP and SMSG are
collectively referred to herein as the "Buyers").

                                   BACKGROUND

A.    IHI is the owner of all the issued and outstanding capital stock of Ideal
      Products and Philform. Philform is the owner of a 49% limited partner
      interest in Orbitform and IHI is the owner of the remaining 51% limited
      partner interest and is the general partner of Orbitform. Philform's only
      asset is the real property and manufacturing facility described in E(2)
      below, which it leases to Orbitform, which it is selling hereunder to the
      Buyers.

B.    The Sellers are engaged in the following business operations
      (collectively, the "Business"):

      (1)   Ideal Products manufactures stamped metal components, fourslide &
            multi-slide components, wire-formed pins & drapery hardware, rivets
            (solid, semi-tubular & tubular), externally & internally-threaded
            fasteners and other cold-headed special parts (sometimes called the
            "Ideal Products Business").

      (2)   Orbitform manufactures rivet-setting machinery and automated
            assembly systems primarily for the automotive industry (sometimes
            called the "Orbitform Business").

C.    The Sellers are currently part of IHI's Engineered Products Group
      division, along with IHI's wholly-owned subsidiaries American Rivet
      Company, Inc. ("American Rivet") and Landreth Metal Forming, Inc.
      ("Landreth") (the Sellers, American Rivet and Landreth collectively
      referred to as the "EPG Division Members"). As part of the strategic
      disposition of the assets of that division from IHI's core business,
      American Rivet and Landreth are selling substantially all of their assets
      to purchasers other than the Buyers. However, the acquirors thereof, as
      well as Buyers, are interested in maintaining the customer and
      manufactured parts base that the EPG Division Members currently have and
      enjoy, without the prospect of the solicitation of those customers by each
      other. Therefore, as a condition precedent to the Closing (as defined
      below) the Buyers and American Rivet and Landreth shall enter into a
      customer and manufactured part-based Nonsolicitation Agreement, the terms
      of which shall provide that the rights, duties and obligations of the
      parties thereunder shall be assignable to the buyers of the stock or
      assets of American Rivet and Landreth (the "Nonsolicitation Agreement").
<PAGE>
D.    The Business of the Sellers is conducted at the following premises (the
      "Premises"):

      (1)   The Ideal Products Business is conducted at an owned manufacturing
            facility in Beacon Falls, Connecticut, consisting of a 174,000
            square foot facility on 31 acres of property, commonly known as 158
            Pinesbridge Rd., Beacon Falls, Connecticut (the "Ideal Products Real
            Property");

      (2)   The Orbitform Business is conducted at a manufacturing facility
            owned by Philform, located in Jackson, Michigan, consisting of a
            110,000 square foot facility known as 1600 Executive Drive, Jackson,
            Michigan (the "Philform Real Property") (the Ideal Products Real
            Property and the Philform Real Property, collectively, the "Real
            Property").

E.    Buyers desire to purchase, and Sellers desire to sell to Buyers, the
      Purchased Assets (as defined in Section 1 below) on the terms and subject
      to the conditions of this Agreement.

F.    IHI acquired all of the capital stock of Philform in February 1998 from
      Michael Shirkey ("Shirkey") and certain other selling stockholders and
      acquired substantially all of the assets of Ideal Products, then operated
      as the Hardware and Components Division of Kirsch, Inc., in June 1998 from
      Kirsch, Inc. Before IHI purchased Philform from Shirkey, Philform
      conducted the Orbitform Business. Shirkey, the Manager of the Buyers, has
      been the President of the Sellers since June 1, 2000 and the Chief
      Operating Officer of the Sellers for the past year; in addition, he has
      been the Chief Executive Officer of Philform or Chief Executive Officer of
      Philform (d/b/a Orbitform) before IHI acquired Philform in 1997 and
      General Manager of OF Acquisition (d/b/a Orbitform) after its creation in
      1997. The parties therefore hereby acknowledge that Shirkey is in many
      cases as knowledgeable as, and in some cases more knowledgeable than, the
      Seller Parties regarding the Business and the Purchased Assets, and that
      the Buyers are therefore uniquely positioned, having a Manager who
      formerly owned and operated the Orbitform Business and who currently
      operates the Orbitform Business and the Ideal Products Business.

                                   AGREEMENTS

      NOW, THEREFORE, consistent with the Background and in consideration of the
terms and conditions set forth in this Agreement, each of the Seller Parties and
Buyers agrees as follows:

1.    PURCHASED ASSETS. At the Closing, Sellers shall sell, assign, convey,
      transfer, set over, and deliver to Buyers all of the assets, rights, and
      interests of every conceivable kind or character whatsoever, whether
      tangible or intangible, that on the Closing Date are owned by Sellers
      except for the Excluded Assets (as that term is defined in Section 2
      below) (the assets being so purchased, the "Purchased Assets"). The
      Purchased Assets include, without limitation:

1.1   EQUIPMENT. All machinery, equipment, tools, fixtures, workstations,
      computers, computer software, office equipment, manufacturing and
      engineering drawings, and tangible personal property owned by Sellers, and
      to the extent not otherwise constituting equipment as defined above, all
      other items of tangible personal property, in each case whether or not
      capitalized on Sellers' books, and physically located on the Premises
      (including, without limitation, the items listed on SCHEDULE 1.1) (the
      "Equipment").

                                       2
<PAGE>
1.2   INVENTORY. All raw materials inventory, work-in-process inventory, and
      finished goods inventory owned by Sellers on the Closing Date (including,
      without limitation, the items listed on SCHEDULE 1.2) (the "Inventory").

1.3   RECEIVABLES. All accounts, chattel paper, documents, and instruments (all
      as defined in the Uniform Commercial Code (the "UCC"), and also any
      security Sellers hold for the payment thereof (including, without
      limitation, the items described on SCHEDULE 1.3) (the "Receivables"), and
      all of Sellers' general intangibles (as defined in the UCC) and, to the
      extent not otherwise constituting general intangibles as defined above,
      any interest of Sellers in any and all claims by Sellers against any other
      person, whether now accrued or later to accrue, contingent or otherwise,
      known or unknown, including, but not limited to, all rights under express
      or implied warranties from suppliers (except as they may pertain to
      Sellers' liabilities, other than Assumed Liabilities described in Section
      2 below), claims for collection or indemnity, claims in bankruptcy, and
      choses in action.

1.4   REAL PROPERTY. Indefeasible title in fee simple to the Real Property, as
      further described on SCHEDULE 1.4.

1.5   GOODWILL. All of Sellers' right, title and interest in and to the names
      "Ideal Products" "Orbitform", or any substantially similar derivations
      thereof, any other assumed name currently used by Sellers, and all
      telephone numbers, fax numbers, and websites, and all Sellers' rights and
      interest in and to inventions, copyrights, patents, trademarks, designs,
      prototypes, trade secrets, know-how, technology, technical literature,
      advertising literature, confidential information, intangible property, and
      all goodwill, going concern value and customer lists, and all records
      pertinent to Sellers' customers, suppliers, advertising, services, and
      operations (the "Goodwill").

1.6   OUTSTANDING CUSTOMER PURCHASE ORDERS. The full benefit of any and all
      purchase orders placed with and accepted by Sellers on or before the
      Closing Date that have not been completely performed by Sellers before the
      Closing Date, covering the purchase from Sellers of products to be
      supplied by Sellers, or covering the rendition by Sellers of service on
      products supplied by Sellers and including all deposits, progress
      payments, and credits (the "Outstanding Customer Purchase Orders").

1.7   CONTRACTS. All of the Sellers' right, title and interest in and to and
      claims and rights under the assumed contracts listed on SCHEDULE 1.7 (the
      Assumed Contracts").

1.8   LICENSES AND PERMITS. All of Sellers' rights in all permits and licenses
      necessary for the operation of the Business, but only to the extent the
      same are transferable.

2.    EXCLUDED ASSETS. The assets of the Sellers that are not being purchased
      hereunder are as follows (collectively, the "Excluded Assets"):

2.1   CASH AND CASH EQUIVALENTS. All of the Sellers' cash, temporary cash
      investments and instruments representing the same and all other cash
      equivalents, including checks, automated clearing house deposits or cash
      delivered to Comerica Bank-Texas ("Comerica") on the Closing Date or held
      by Comerica on the Closing Date.

                                       3
<PAGE>
2.2   TAX DEPOSITS AND REFUNDS. Any Tax (as that term is defined in Section
      9.16(a)) deposits or prepaid Taxes, Tax refunds or Tax claim related to
      the Business or the ownership of the Purchased Assets prior to the Closing
      Date.

2.3   CORPORATE RECORDS. Certificates of Incorporation and original minute books
      and corporate records of the Sellers (it being agreed that a copy of such
      documents shall be supplied to the Buyer on its request).

2.4   INTERCOMPANY NOTES AND RECEIVABLES. All intercompany notes and receivables
      of the Sellers (other than those among Ideal Products, Orbitform and
      Philform).

2.5   INSURANCE POLICIES. All casualty, liability, life or other insurance
      policies owned or obtained on the Sellers' behalf and all claims or rights
      under any such insurance policies.

2.6   EMPLOYEE RECORDS. All employee records that Sellers are required by law to
      retain in their possession.

2.7   EMPLOYEE PLANS. All of Sellers' rights in connection with and all assets
      of Employee Plans (as that term is defined in Section 9.12).

2.8   ASSETS RELATED TO EXCLUDED LIABILITIES. All prepaid assets related to the
      excluded accrued business insurance expenses of the Sellers.

2.9   BLASTCO NOTE RECEIVABLE. That promissory note dated June 14, 2000 made
      payable to Orbitform by Blastco Services Company, in the original
      principal amount of $200,000.

3.    LIABILITIES.

3.1   ASSUMED LIABILITIES. Sellers agree that Buyers shall assume no liabilities
      of Sellers, whether accrued, absolute, contingent, known, unknown, or
      otherwise, except for the following as they exist on the Closing Date
      (collectively, the "Assumed Liabilities"):

      (a)   TRADE ACCOUNTS PAYABLE. The trade accounts payable of Sellers
            incurred in the Ordinary Course of Business with respect to the
            materials or services used in the conduct of the Business, as
            consistently reported by Sellers, as described on SCHEDULE 3.1(a),
            as the same shall be updated from the date thereof to the Closing
            Date;

      (b)   OTHER ACCRUED PAYABLES. The other accrued payables that are related
            to the Business, as consistently reported by the Sellers, as
            described on SCHEDULE 3.1(b), as the same shall be updated from the
            date thereof to the Closing Date;

      (c)   OUTSTANDING CUSTOMER AND SUPPLIER PURCHASE ORDERS. All obligations
            of the Sellers under the Outstanding Customer Purchase Orders and
            under their outstanding purchase orders with their vendors that are
            not yet recorded as trade accounts payable;

      (d)   ASSUMED CONTRACTS. All obligations of the Sellers under the Assumed
            Contracts;

                                       4
<PAGE>
      (e)   WARRANTY CLAIMS. All warranty claims (whether made before or after
            the Closing Date) for products manufactured by Philform or
            Orbitform, without limitation, and for products manufactured by
            Ideal Products since June 1, 2000;

      (f)   POST-CLOSING DATE PROPERTY TAXES. All ad valorem taxes related to
            the Real Property accrued after the Closing Date and apportioned to
            the Buyers based on the post-Closing period of use and occupancy;

      (g)   LIABILITIES RELATED TO CTDEP ACTIVITIES. Liabilities accrued from
            and after the Closing Date for continuation of groundwater
            monitoring and other obligations required under that certain
            "Closure and Post-Closure RCRA Surface Impoundments, Ideal
            Manufacturing, 158 Pinesbridge Road, Beacon Falls, Connecticut
            06403", prepared by YWC Technologies, Inc. (approved on September
            18, 1989 by the Connecticut Department of Environmental Protection
            ("CTDEP") and U.S. Environmental Protection Agency Region I) (the
            "Post-Closure Obligations"), except to the extent of the Excess
            Obligations Reimbursement of IHI under Section 11.8; and

(h)         CTDEP FINANCIAL ASSURANCE. Liabilities for compliance (as the
            owner/operator of the Ideal Products facility) with the requirements
            of "financial assurance" contained in 40 CFR parts 264 and 265,
            respecting the estimated costs of the Post-Closure Obligations), but
            only as to any transferee of or successor-in-interest from Buyers of
            the Ideal Products Real Property.

3.2   EXCLUDED LIABILITIES. Buyers do not assume and will have no liability for
      any debt, liability or obligation of the Sellers except as expressly
      provided in Section 3.1. Without limiting the generality of the foregoing
      sentence in any way, listed below are several of the liabilities and
      obligations that Buyers do not assume and will not be liable or
      responsible for the following (collectively, the "Excluded Liabilities"):

      (a)   TAXES. Any Tax liability of Sellers;

      (b)   COMERICA NOTES. All liabilities and obligations of any Seller under
            the Amended and Restated Credit Agreement with Comerica, dated June
            17, 1999, and under the following ancillary promissory notes made
            payable to Comerica: (i) note 0059-6; (ii) note 0099-2; (iiii) note
            0053-9; and (iv) note 0111-5;

      (c)   HELLER NOTES. All liabilities and obligations of any Seller under
            those certain Promissory Notes dated November 10, 1997 and August
            14, 1988, payable to Heller Financial, Inc. in the original
            principal amounts of Eight Million Dollars ($8,000,000) and Seven
            Million Five Hundred Thousand Dollars ($7,500,000), respectively;

      (d)   GENERAL ELECTRIC NOTE. All liabilities and obligations of any Seller
            under that certain Promissory Note dated December 6, 1995, made
            payable to General Electric Capital Corporation, in the original
            principal amount of Two Million Eight Hundred Thousand Dollars
            ($2,800,000);

      (e)   CITIZENS BANK NOTES. All liabilities and obligations of any Seller
            under that certain Inventory Term Note dated October 2, 1995,
            payable to Citizens Bank in the original principal amount of One
            Million Two Hundred Thousand Dollars ($1,200,000), and that certain
            note dated February 28, 1997, made payable to Citizens Bank, in the
            original

                                       5
<PAGE>
            principal amount of One Million Eight Hundred and Two Thousand Five
            Hundred Dollars ($1,802,500).

      (f)   SJMB NOTE. All liabilities and obligations of any Seller under that
            certain $3,450,000 Subordinated Convertible Promissory Note dated
            August 2000, made payable to SJMB, L.P., in the original principal
            amount of Three Million Four Hundred and Fifty Thousand Dollars
            ($3,450,000);

      (g)   SOFTECH LEASES. All liabilities and obligations under the two
            SOFTECH Financial Master Lease Agreements, each dated November 5,
            1998, between IHI as lessee and SOFTECH Financial, a division of EAB
            Leasing Corp. (the "SOFTECH Leases");

      (h)   ACCRUED INTEREST. All accrued interest related to the Comerica
            Notes, the Heller Notes, the GE Note, the SJMB Note and the Citizens
            Bank Notes;

      (i)   INTERCOMPANY PAYABLES. All intercompany payables (other than those
            among Ideal Products, Orbitform and Philform);

      (j)   ACCRUED ACQUISITION EXPENSES. Any and all expenses recorded by IHI
            as part its purchase accounting in connection with the acquisition
            of the Sellers;

      (k)   PRE-CLOSING DATE PROPERTY TAXES. All ad valorem taxes related to the
            Real Property accrued up to the Closing Date and apportioned to the
            Sellers based on the pre-Closing period of use and occupancy;

      (l)   ACCRUED WATERBURY, CT RENT. All accrued rent on the Waterbury,
            Connecticut facility formerly occupied by Ideal Products;

      (m)   ACCRUED SALES AND USE TAX. All accrued sales and use taxes of Ideal
            Products as of the Closing Date; and

      (n)   ACCRUED BUSINESS INSURANCE EXPENSES. All accrued business insurance
            of the Sellers (to the extent accrued on a consistent basis).

4.    PURCHASE PRICE FOR PURCHASED ASSETS. In consideration for the Purchased
      Assets, Buyers shall pay to Sellers at the Closing Twelve Million Two
      Hundred Fifty Thousand Dollars ($12,250,000) (the "Purchase Price"), by
      wire transfer in immediately available funds.

4.1   ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated among
      the Purchased Assets in accordance with attached SCHEDULE 4.1. Buyers and
      Sellers agree that none of them will take a position on any income tax
      return, before any governmental agency or in any judicial proceeding that
      is in any way inconsistent with the allocation set forth on SCHEDULE 4.1,
      and to file all Tax returns and other returns and reports in a manner
      consistent with the allocations in this Section 4.1.

5.    PRE-CLOSING ACTIONS. From the date of this Agreement to the Closing Date:

                                       6
<PAGE>
5.1   CONDUCT OF BUSINESS. Seller Parties shall carry on and conduct the
      Business only in the Ordinary Course of Business (as defined below),
      without any change in the policies, practices, and methods that Sellers
      pursued before the date of this Agreement, including without limitation,
      IHI's policy regarding cash allocation to Ideal Products and Orbitform.
      Seller Parties will use their reasonable commercial efforts to preserve
      the Business organization intact; to preserve the relationships with
      Sellers' customers, suppliers, and others having business dealings with
      them; and to preserve the services of Sellers' employees, agents, and
      representatives. Ordinary Course of Business" means, with respect to each
      Seller, actions of the Seller that are: (a) consistent with past practices
      taken in the course of its usual day-to-day operations; (b) not required
      to be authorized by resolution of the Seller's board of directors; and (c)
      similar in nature and magnitude to actions customarily taken, without
      authorization by the boards of directors in the ordinary course of usual
      day-to-day operations of other companies of similar size in the same line
      of business. Without limitation of the foregoing, (a) Ideal Products shall
      not undertake any action without the prior written consent of Buyers that,
      if taken before the date of this Agreement, would have been required to be
      disclosed on SCHEDULE 9.9; and (b) Seller Parties will not take action or
      refrain from taking action that would result in any change in the
      Purchased Assets, the Business or Assumed Liabilities, other than in the
      Ordinary Course of Business. The Buyers shall in all cases be considered
      to have actual knowledge of and, for purposes of this Section 5.1, to
      approve, all actions of and decisions made by Shirkey in operating the
      Business and his management thereof from the date of this Agreement to the
      Closing Date, and his knowledge regarding the Business and the Purchased
      Assets shall in all cases be attributed to the Buyers.

5.2   COMPLIANCE WITH APPLICABLE LAWS. Seller Parties and Buyers acknowledge and
      agree that it is their intention to carry out the transactions herein in
      compliance with applicable laws.

5.3   ACCURACY OF REPRESENTATIONS AND WARRANTIES AND SATISFACTION OF CONDITIONS.
      Seller Parties will promptly advise Buyers in writing if (a) any of Seller
      Parties' representations or warranties are untrue or incorrect in any
      material respect or (b) Seller Parties become aware of the occurrence of
      any event or of any state of facts that results in any of the
      representations and warranties of Seller Parties being untrue or incorrect
      in any material respect as if Seller Parties were then making them. Seller
      Parties will use their reasonable commercial efforts to cause all
      conditions within their control that are set forth in Section 5 to be
      satisfied as promptly as practicable under the circumstances.

6.    CONDITIONS PRECEDENT TO BUYERS' OBLIGATIONS. Buyers' obligation to
      consummate the transactions contemplated by this Agreement is subject to
      the fulfillment (or waiver by Buyers) before or at the Closing of each of
      the following conditions:

6.1   ACCURACY OF REPRESENTATIONS AND WARRANTIES.

      (a)   Except as provided in Section 6.1(b), the representations and
            warranties of Seller Parties contained in this Agreement and all
            related documents shall be true and correct at and as of the Closing
            Date as though such representations and warranties were made on that
            date.

      (b)   The Seller Parties shall have delivered any necessary updates,
            amendments of and changes to the schedules provided for in Section 9
            of this Agreement, as are

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<PAGE>
            necessary for Seller Parties' representations and warranties to be
            true and correct as of the Closing Date with each such update,
            amendment and change having been reviewed and approved by the
            Buyers.

6.2   PERFORMANCE OF COVENANTS. The Seller Parties shall have in all respects
      performed and complied with all covenants, agreements, and conditions that
      this Agreement and all related documents require to be performed or
      complied with before or on the Closing Date.

6.3   NO CASUALTY. Sellers shall not have incurred, or be threatened with, a
      material liability or casualty not covered by insurance that would
      materially impair the value of the Purchased Assets.

6.4   DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Sellers shall have delivered or
      caused to have been delivered to Buyers the documents and general
      instruments of transfer enumerated in Section 8.2(a) of this Agreement.

6.5   CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Seller Parties shall have
      delivered to Buyers certificates of the Seller Parties certifying that as
      of the Closing Date all of the conditions set forth in Sections 6.1, 6.2,
      6.4, and 6.6 have been satisfied.

6.6   NO LITIGATION. No action, suit, proceeding, or investigation shall have
      been instituted before any court or governmental body, or instituted by
      any governmental agency, (a) to restrain or prevent the carrying out of
      the transactions contemplated by this Agreement, or (b) that might affect
      Buyers' right to own, operate, and control the Purchased Assets after the
      Closing Date.

6.7   TITLE COMMITMENTS. As evidence of each respective title in and to the Real
      Property owned by it, each of Ideal Products and Philform shall have
      furnished Buyers, the basic cost of which shall be at each such Seller's
      cost, a policy of title insurance issued by a recognized title insurance
      company, or commitments therefor (a "Title Commitment"), in an amount not
      less than the Purchase Price allocated to the Real Property, insuring
      Buyers' fee simple and indefeasible title to the Real Property, subject
      only to the Permitted Encumbrances (as that term is defined in Section
      9.14(b)). In the event that Buyers make objection to the condition of
      title, Sellers shall have 5 days from the date of notice of objection to
      remedy the title, and obtain title insurance.

7.    CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS. Seller Parties'
      obligations to consummate the transactions contemplated by this Agreement
      are subject to the fulfillment of each of the following conditions before
      or at the Closing Date:

7.1   ACCURACY OF REPRESENTATIONS AND WARRANTIES. Buyers' representations and
      warranties contained in this Agreement and all related documents shall be
      true and correct at and as of the Closing Date as though such
      representations and warranties were made on that date.

7.2   PERFORMANCE OF COVENANTS. Buyers shall have in all respects performed and
      complied with its obligations under all the covenants, agreements, and
      conditions that this Agreement and all related documents require.

                                       8
<PAGE>
7.3   DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Buyers shall have delivered or
      caused to have been delivered to Sellers the Purchase Price and the
      documents and general instruments of transfer enumerated in Section 8.2(b)
      of this Agreement.

8.    CLOSING MATTERS.

8.1   CLOSING. The closing of the transactions contemplated in this Agreement
      (the "Closing") shall take place at the offices of Citizens Bank, Jackson,
      Michigan at 10:00 a.m. on October ___, 2001, or at such other place and/or
      on such other date as the parties may agree on (the "Closing Date").

8.2   DELIVERIES AT CLOSING.

      (a)   DELIVERIES BY THE SELLERS. At the Closing, the Sellers or the other
            indicated parties shall execute and deliver or provide to Buyers:

            (i)   the Bill of Sale and Assignment conveying the Purchased
                  Assets, in substantially the form attached as EXHIBIT A;

            (ii)  the Assignment and Assumption Agreement in substantially the
                  form of EXHIBIT B;

            (iii) either (y) UCC-3 termination statements as are required to
                  terminate and release all liens on the Purchased Assets
                  (including without limitation the Liens disclosed on SCHEDULE
                  9.14), except for Permitted Encumbrances (as that term is
                  defined in Section 9.14(b)) and the permitted liens
                  ("Permitted Liens") listed on SCHEDULE 8.2(a)(iii), or (z)
                  letters of creditors indicating that such Liens shall be
                  released on the Sellers' payment of identified amounts
                  payable;

            (iv)  the Nonsolicitation Agreement, in substantially the form of
                  EXHIBIT C;

            (v)   Warranty deeds conveying the Real Property and the Title
                  Commitments for the Real Property;

            (vi)  for all Purchased Assets the ownership of which is evidenced
                  by certificates of title, certificates of title duly endorsed
                  for transfer to Buyers;

            (vii) certificates, dated as of a date no earlier than 15 days
                  before the Closing Date, duly issued by the appropriate
                  governmental authority in their states of incorporation,
                  reflecting that each Seller is in existence and in good
                  standing in such state(s);

           (viii) for the Ideal Products Real Property, a fully completed Form
                  III, Property Transfer Program, pursuant to Connecticut
                  General Statutes 22a-134 through 22a-134d, and accompanying
                  Environmental Condition Assessment Form, signed by Ideal
                  Products as transferor and to be signed by Buyers as
                  transferees and certifying parties.

      (b)   DELIVERIES BY THE BUYERS. At the Closing, Buyers shall execute and
            deliver, as applicable, to the Sellers or other applicable party:

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<PAGE>
            (i)   the Purchase Price;

            (ii)  the Assignment and Assumption Agreement;

            (iii) the Nonsolicitation Agreement;

            (iv)  the Transitional Services Agreement as to Buyers' provision of
                  post-Closing data processing support to American Rivet and
                  Landreth, as the rights, duties and obligations of the parties
                  shall be assignable to the buyers of the stock or assets of
                  American Rivet and Landreth, in substantially the form of
                  EXHIBIT D;

8.3   CERTAIN CLOSING EXPENSES. Seller Parties shall be liable for and shall pay
      all federal, state, and local sales, use, excise, and documentary stamp
      taxes and all other taxes, duties, or other like charges properly payable
      on and in connection with the Sellers' conveyance and transfer of the
      Purchased Assets to Buyers.

8.4   FURTHER ASSURANCES. Seller Parties shall cooperate with and assist Buyers
      with the transfer of the Purchased Assets under this Agreement and take
      all other reasonable actions to assure that the Business is smoothly
      transferred to Buyers. From time to time after the Closing Date, Seller
      Parties shall, at the request of Buyers, execute and deliver such
      additional conveyances, transfers, documents, instruments, assignments,
      applications, certifications, papers, and other assurances that Buyers
      request as necessary, appropriate, convenient, useful or desirable to
      effectively carry out the intent of this Agreement and to transfer the
      Purchased Assets to Buyers.

9.    SELLER PARTIES' REPRESENTATIONS AND WARRANTIES. Each of the Seller
      Parties, jointly and severally, represents and warrants to Buyers that, as
      of the date hereof (except to the extent any representation or warranty is
      made as of another date, which are in such case made as of such other
      date):

9.1   ORGANIZATION AND STANDING. Rex Machinery and Philform are corporations
      duly incorporated, validly existing, and in good standing under the laws
      of the State of Texas and Michigan, respectively, and Orbitform is a
      limited partnership duly organized, validly existing, and in good standing
      under the laws of the State of Texas. Sellers have all requisite power and
      authority (corporate and otherwise) to own their properties and conduct
      their businesses as they are now being conducted. Each Seller is duly
      qualified and in good standing in every jurisdiction in which it is
      required by the nature of its business or the ownership or lease of its
      properties to so qualify, except where the failure to so qualify does not
      or is not reasonably expected to have a material adverse effect on any
      Seller or its business. Except for "Ideal Products", Rex Machinery has
      not, and except for "Orbitform" (Ideal Products and Orbitform
      collectively, the "Names"), OF Acquisition has not, used or assumed any
      other name in connection with the conduct of its business during the last
      five years. Ideal Products has filed assumed or fictitious name
      certificates for the name "Ideal Products" in the states in which it uses
      such names.

9.2   AUTHORIZATION. Sellers have all requisite power and authority (corporate
      and otherwise), and Seller Parties have all requisite legal capacity (a)
      to execute, deliver, and perform this Agreement and all other agreements
      and instruments that will be delivered at the Closing

                                       10
<PAGE>
      under Section 8.2 (all such other agreements and instruments, the "Related
      Agreements") to which each is a party and (b) to consummate the
      transactions contemplated under this Agreement and the Related Agreements.
      Sellers have taken all necessary corporate or partnership action
      (including the approval of its board of directors and shareholders), as
      the case may be, to approve the execution, delivery, and performance of
      this Agreement and the Related Agreements to be executed and delivered by
      it and the consummation of the transactions contemplated in this Agreement
      and in the Related Agreements. Each of the Seller Parties has duly
      executed and delivered this Agreement. This Agreement is, and the Related
      Agreements when executed and delivered by the parties to them will be,
      legal, valid, and binding obligations of each of the Seller Parties that
      are a party to them, enforceable against each of them in accordance with
      the Agreement and Related Agreements' respective terms, except as such
      enforcement may be limited by bankruptcy, insolvency, moratorium, or
      similar laws relating to the enforcement of creditors' rights and by
      general principles of equity (regardless of whether such enforceability is
      considered in a proceeding at law or in equity).

9.3   EXISTING AGREEMENTS AND GOVERNMENTAL APPROVALS.

      (a)   Except as set forth on SCHEDULE 9.3, the execution, delivery, and
            performance of this Agreement and the Related Agreements and the
            consummation of the transactions contemplated by them: (i) do not
            and will not violate any provisions of law applicable to any of the
            Seller Parties, the Business, or the Purchased Assets; (ii) do not
            and will not conflict with, result in the breach or termination of
            any provision of, or constitute a default under (in each case
            whether with or without the giving of notice or the lapse of time or
            both) Sellers' Certificates or Articles of Incorporation or Bylaws,
            or any indenture, mortgage, lease, deed of trust, or other
            instrument, contract, or agreement or any order, judgment,
            arbitration award, or decree to which any of the Seller Parties is a
            party or by which any of them or any of their respective assets and
            properties are bound (including, without limitation, the Purchased
            Assets being operated and used as of the Closing Date); and (iii) do
            not and will not result in the creation of any lien or encumbrance
            on any of the Seller Parties' properties, assets, or Business
            (including, without limitation, the Purchased Assets).

      (b)   Except as set forth on SCHEDULE 9.3, no approval, authority, or
            consent of, or filing by, any Seller Party with, or notification to,
            any federal, state, or local court, authority, or governmental or
            regulatory body or agency or any other corporation, partnership,
            individual, or other entity is necessary (i) to authorize the
            execution and delivery of this Agreement or any of the Related
            Agreements by any of the Seller Parties, (ii) to authorize the
            consummation of the transactions contemplated by this Agreement or
            any of the Related Agreements by any of the Seller Parties, or (iii)
            to continue Buyers' use and operation of the Purchased Assets after
            the Closing Date.

9.4   NO SUBSIDIARIES. Sellers do not have any subsidiaries or directly or
      indirectly own any interest or have any investment in any other
      corporation, partnership, or other entity.

9.5   NO INSOLVENCY. No insolvency proceeding of any character, including,
      without limitation, bankruptcy, receivership, reorganization, composition,
      or arrangement with creditors, voluntary or involuntary, affecting Sellers
      or any of their assets or properties is pending or,

                                       11
<PAGE>
      to any Seller Parties' actual knowledge, threatened. Seller Parties have
      not taken any action in contemplation of, or that would constitute the
      basis for, the institution of any such insolvency proceedings.

9.6   PERMITS AND LICENSES. The Sellers have, to their actual knowledge, all
      necessary permits, certificates, licenses, approvals, consents, and other
      authorizations required to carry on and conduct the Business as presently
      conducted and to own, lease, use, and operate the Purchased Assets at the
      places and in the manner in which the Business is presently conducted, all
      of which to the extent transferable shall be transferred or assigned to
      Buyers at the Closing, without expense to Buyers.

9.7   FINANCIAL STATEMENTS. Sellers have delivered to Buyers the financial
      statements attached as SCHEDULE 9.7 (the "Financial Statements"). The
      Financial Statements have been and will be prepared in accordance with
      GAAP, subject to normal recurring year-end adjustments and the absence of
      notes, and fairly present Sellers' financial position as of the dates
      indicated and the results of their operations as of the dates indicated
      and for the periods covered thereby. All Taxes (as defined in Section
      9.16(a)) of Sellers due or paid are and will be timely reflected in the
      Financial Statements; and all Taxes not yet due and payable are and will
      be fully accrued or otherwise provided for. Except as otherwise disclosed
      on SCHEDULE 9.7, Sellers' books and records are and have been maintained
      on an accrual basis in accordance with GAAP; and accurately reflect, and
      will accurately reflect, the basis for the financial condition and the
      results of their operations that are set forth in the Financial
      Statements. Notwithstanding any other contrary provision of this Section
      9.7, the Seller Parties make no representations whatsoever with respect to
      Orbitform's operating income statement included in its Financial
      Statements or with respect to the accounts receivable, inventory, accounts
      payable and accrued expenses and payables reflected on its balance sheet
      included in the Financial Statements.

9.8   NO UNDISCLOSED LIABILITIES. Except as otherwise disclosed on SCHEDULE 9.8
      or in the Financial Statements, Ideal Products has no liabilities or
      obligations, whether accrued, absolute, contingent, or otherwise, and, to
      the Seller Parties' actual knowledge, there exists no fact or circumstance
      that could give rise to any such liabilities or obligations in the future,
      and which requires disclosure on the Financial Statements in accordance
      with GAAP.

9.9   CONDUCT OF BUSINESS. Except as otherwise disclosed on attached SCHEDULE
      9.9, since August 31, 2001, Ideal Products has not:

      (a)   Declared or paid any dividend or made any other payment from capital
            or surplus or other distribution of any nature, or directly or
            indirectly redeemed, purchased, or otherwise acquired,
            recapitalized, or reclassified any of its capital stock.

      (b)   Merged or consolidated with any other entity.

      (c)   Altered or amended its Articles of Incorporation or Bylaws.

      (d)   Entered into, materially amended, or terminated any contract,
            license, lease, commitment, or permit, except in the Ordinary Course
            of Business.

      (e)   Experienced any labor disturbance.

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<PAGE>
      (f)   Incurred or become subject to any obligation or liability (absolute,
            accrued, contingent, or otherwise), except (i) in the Ordinary
            Course of Business, and (ii) in connection with the performance of
            this Agreement.

      (g)   Paid or satisfied any obligation or liability (absolute, accrued,
            contingent, or otherwise) other than (i) liabilities shown or
            reflected in Sellers' balance sheet as of August 31, 2001, or (ii)
            liabilities incurred since the date of the balance sheet, in each
            case only in the Ordinary Course of Business and in accordance with
            the express terms of such obligation or liability.

      (h)   Sold, transferred, or agreed to sell or transfer any asset,
            property, or business; cancelled or agreed to cancel any debt or
            claim; or waived any right, except in the Ordinary Course of
            Business.

      (i)   Disposed of or permitted to lapse any Intellectual Property.

      (j)   Instituted or settled any litigation, action, or proceeding before
            any court or governmental body relating to the Purchased Assets or
            the Business.

      (k)   Made any change in any method of accounting or any accounting
            practice or suffered any deterioration in accounting controls.

      (l)   Entered into any other transaction other than in the Ordinary Course
            of Business.

      (m)   Agreed or committed to do any of the foregoing.

9.10  NO ADVERSE CHANGES. Except as otherwise disclosed in SCHEDULE 9.10, since
      August 31, 2001, no Seller Party has actual knowledge of any occurrence,
      condition, or development that has adversely affected, or is likely to
      adversely affect, Sellers, their prospects, their condition (financial or
      otherwise), their affairs, their operations, the Business, or the
      Purchased Assets.

9.11  EMPLOYEES. There is not now, nor has there been at any time during the
      past five years, any strike, lockout, grievance, other labor dispute, or
      trouble of any nature pending or threatened against Sellers or that in any
      manner affects Sellers.

9.12  EMPLOYEE BENEFIT PLANS.

      (a)   No employee benefit plan, program or arrangement of whatever nature,
            whether or not subject to any provisions of the Employee Retirement
            Income Security Act of 1974, as amended ("ERISA"), bonus, stock, or
            other employee pay practice, consulting, retainer, employment,
            retirement, welfare, fringe benefit, insurance, incentive, vacation,
            holiday, sickness, leave of absence, or any other plan, policy,
            program, agreement or other arrangement that any Seller sponsors,
            maintains or contributes to with respect to IHI's current or former
            employees (individually and collectively, "Employee Plan"), shall by
            its terms or applicable law, become binding upon or an obligation,
            liability or responsibility of Buyers in any way, financial or
            otherwise. No Seller has engaged in any action or omission which may
            result in either Buyer being a party to, or bound by, any Employee
            Plan. The Sellers warrant that no Employee Plan provides for payment
            of termination, change of control or

                                       13
<PAGE>
            retiree benefits in any manner such that either Buyer would become
            liable to provide such benefits.

      (b)   Each employee pension benefit plan, as that term is defined in
            ERISA, and its related trust ("Pension Plan and Trust"), meet, and
            since their inception have met, the requirement for qualification
            under Section 401(a) and 401(k) of the Internal Revenue Code of
            Section 1986, as amended (the "Code"), and are not and since their
            inception have been, exempt from taxation under Section 501(a) of
            the Code, and the Internal Revenue Service has issued a favorable
            determination letter with respect to the qualified status of the
            Pension Plan and Trust and has not taken any action to revoke such
            letter.

      (c)   With respect to any Employee Plan that is subject to the
            continuation requirements of Sections 601-608 of ERISA and Section
            4980B of the Code ("COBRA coverage") or the continuation
            requirements of any applicable state or local law, each respective
            Seller sponsoring, maintaining or contributing to such Employee
            Plans has complied with all such applicable laws and regulatory
            requirements with respect to the Sellers' current or former
            employees.

      (d)   No Employee Plan is either (i) a "multiemployer plan" (as defined in
            Section 3(37) of ERISA) or (ii) a defined benefit pension plan
            subject to Title IV of ERISA.

      (e)   During the five years preceding the Closing Date, (i) no
            under-funded pension plan subject to Section 412 of the Code has
            been transferred out of any Seller and (ii) no Seller has
            participated in or contributed to, nor had an obligation to
            contribute to, any multiemployer plan (as defined in ERISA Section
            3(37)) and no Seller has any withdrawal liability with respect to
            any multiemployer plan.

9.13  CONTRACTS. Except for the contracts and commitments listed on SCHEDULE
      9.13 ("Contracts and Commitments"), or as otherwise listed on SCHEDULE
      9.13, no Seller is a party to nor bound by any agreement or commitment
      that materially affects the Business, the Purchased Assets, or the Assumed
      Liabilities. All Contracts and Commitments are valid and binding
      obligations of the Sellers in accordance with their respective terms. No
      material default or alleged material default exists on the part of either
      Seller or, to the Seller Parties' actual knowledge, on the part of any
      other party, under any of the Contracts and Commitments. True and complete
      copies of all Contracts and Commitments have been delivered to Buyers.
      Notwithstanding any other provision of this Agreement to the contrary,
      Buyers acknowledge and agree that the Levelor Kirsch Drapery Hardware
      Supply Agreement, dated August 15, 2001 (the "Levelor Kirsch Contract"),
      requires the prior written consent of Levelor Kirsch, a division of Newell
      Window Furnishings, Inc., to its assignment to Buyers, which is not being
      obtained prior to Closing.

9.14  TITLE TO PURCHASED ASSETS.

      (a)   Except as described on SCHEDULE 9.14, Seller Parties are the sole
            and absolute owners of the Purchased Assets and have good title to
            all of the Purchased Assets other than the Real Property, free and
            clear of any and all free and clear of all liens, claims, demands,
            charges, options, equity interests, leases, pledges, security
            interests ("Liens").

                                       14
<PAGE>
      (b)   Philform has indefeasible title in fee simple in and to the Philform
            Real Property and Ideal Products has indefeasible title in and to
            the Ideal Products Real Property, free and clear of any and all
            Encumbrances, except for (i) those encumbrances listed on Schedule B
            of the Title Commitments and (ii) liens for real property taxes,
            assessments and charges not yet due and payable ("Permitted
            Encumbrances").

      (c)   SCHEDULE 9.14 lists or describes all property used in the conduct of
            the Business and/or situated on the Premises that is owned by or an
            interest in which is claimed by any other person (whether a
            customer, supplier, or other person) and for which Sellers are
            responsible, together with copies of all related agreements.

9.15  SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets constitute all the
      property and assets, real, personal, and mixed, tangible and intangible
      (including, without limitation, contract rights), that are used or are
      useful in, or are necessary for the conduct of, the Business in accordance
      with the Sellers' present practices.

9.16  TAXES.

      (a)   "Tax" or "Taxes" shall mean all of Sellers' federal, state, county,
            local, and other taxes relating to all periods before the Closing
            Date (including, without limitation, income taxes; premium taxes;
            single-business taxes; excise taxes; sales taxes; use taxes;
            value-added taxes; gross receipts taxes; franchise taxes; ad valorem
            taxes; real estate taxes; severance taxes; capital levy taxes;
            transfer taxes; stamp taxes; employment, unemployment, and
            payroll-related taxes; withholding taxes; and governmental charges
            and assessments).

      (b)   Except as otherwise disclosed on SCHEDULE 9.16, Sellers have filed
            on a timely basis all Tax returns they are required to file under
            federal, state, or local law, and has paid or established an
            adequate reserve with respect to all Taxes for the periods covered
            by such returns. No agreements have been made by or on behalf of
            Ideal Products for any waiver or for the extension of any statute of
            limitations governing the time of assessment or collection of any
            Taxes. Ideal Products and its officers have received no notice of
            any pending or threatened audit by the IRS or any state or local
            agency related to its Tax returns or Tax liability for any period,
            and no claim for assessment or collection of Taxes has been asserted
            against Ideal Products. There are no federal, state, or local tax
            liens outstanding against any of Ideal Products' assets (including,
            without limitation, the Purchased Assets) or its Business.

      (c)   The sale by Sellers of the Purchased Assets and the Buyers'
            acquisition of such assets will not result in the imposition of or
            liability on the Buyers for any sales or use taxes except in
            connection with the transfer of any motor vehicles that are part of
            the Purchased Assets.

      (d)   After the Closing Date: (i) Sellers shall file final Tax returns
            with respect to Ideal Products and Philform and shall pay any Taxes
            that are due with respect to each Seller; and (ii) Buyers shall
            prepare all Tax returns of Orbitform.

                                       15
<PAGE>
9.17  LITIGATION. To the Seller Parties' actual knowledge, there are no claims,
      disputes, actions, suits, proceedings, or investigations pending or
      threatened against or affecting any Seller, the Business, or the Purchased
      Assets.

9.18  PRODUCT LIABILITY. To the Seller Parties' actual knowledge, no defect or
      deficiency exists in any of the products manufactured or sold by Sellers,
      or in any finished Inventory of Sellers, that could give rise to any
      liabilities or claims for breach of warranty, product liability, or
      similar liabilities or claims.

9.19  ENVIRONMENTAL MATTERS.

      (a)   The following terms used in this Section 9.19 have the meanings set
            forth below:

            (i)   CTDEP means the Connecticut Department of Environmental
                  Protection.

            (ii)  Environmental Laws means all federal, state, county, municipal
                  and local, foreign, and other statutes, laws, regulations, and
                  ordinances that relate to or deal with protection of human
                  health or the environment, all as may be amended from time to
                  time.

            (iii) Hazardous Substance(s) means (A) any flammable or combustible
                  substance, explosive, radioactive material, hazardous waste,
                  toxic substance, pollutant, contaminant, or any related
                  materials or substances identified in or regulated by any of
                  the Environmental Laws; and (B) asbestos, polychlorinated
                  biphenyls, urea formaldehyde, chemicals and chemical wastes,
                  explosives, known carcinogens, petroleum products and
                  by-products (including fractions thereof), and radon.

            (iv)  Property means any parcel of real estate now or previously
                  owned, leased, or operated by Sellers or in which Sellers have
                  or had any interest, including the Premises.

      (b)   Except as described in SCHEDULE 9.19, to the Seller Parties' actual
            knowledge: (i) Ideal Products is now and has at all times been in
            full compliance with all Environmental Laws; (ii) there are no
            substances or conditions in or on the Ideal Products Real Property
            that might reasonably be expected to support a claim or cause of
            action against Ideal Products under any Environmental Laws; (iii)
            there are not, and never have been, any underground storage tanks
            located in or under the Ideal Products Real Property, except for the
            two (2) underground tanks identified in the Phase I report with
            respect to the Ideal Products Real Property, as to which, based on
            the results of the ongoing groundwater monitoring at the site, there
            is no hydrocarbon contamination at the site in excess of the
            applicable CTDEP Remediation Standards Regulations for Surface Water
            Protection Criteria for hydrocarbons in groundwater; (iv) neither
            Ideal Products nor its directors, officers, employees, or agents,
            have generated or transported any Hazardous Substances at any time
            that have been transported to or disposed of in any landfill or
            other facility where the transportation or disposal could create
            liability to any unit of government or any third party.

      (c)   Except as described in SCHEDULE 9.19, during the time Ideal Products
            has owned the Real Property, no activity has been undertaken on the
            Ideal Products Real Property

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<PAGE>
            by Ideal Products that would cause the Ideal Products Real Property
            to become a treatment, storage or disposal facility within the
            meaning of any Environmental Laws. Ideal Products has not, to its
            actual knowledge, undertaken any activity that has caused (i) a
            release or threatened release of any Hazardous Substances; or (ii)
            the discharge of pollutants or effluents into any water source or
            system or into the air, or the dredging or filling of any waters,
            where such action would require a permit under any Environmental
            Laws. Ideal Products has obtained all permits required by all
            applicable Environmental Laws, and all such permits are in full
            force and effect.

      (d)   Ideal Products has disclosed and delivered to Buyers all
            environmental reports and investigations that it has ever obtained
            or ordered with respect to the Ideal Products Real Property.

9.20  COMPLIANCE WITH LAWS. Ideal Products has, and, to the Seller Parties'
      actual knowledge, Orbitform has, complied with all laws, orders,
      regulations, rules, decrees, and ordinances affecting to any material
      extent or manner any aspects of the Business or the Purchased Assets.

9.21  NO BROKERS. Sellers have not engaged, and are not responsible for any
      payment to, any finder, broker, or consultant in connection with the
      transactions contemplated by this Agreement, except as set forth on
      SCHEDULE 9.21.

9.22  INTELLECTUAL PROPERTY. SCHEDULE 9.22 lists all patents, processes,
      trademarks, trade names, copyrights, service marks, logos, trade secrets
      and all applications and registrations therefor that are used in the
      Business, and licenses thereof under which the Sellers have any right to
      the use or benefit of, or other rights with respect to, any of the
      foregoing ("Intellectual Property"). Except as set forth in SCHEDULE 9.22,
      the identified Seller is, to the Seller Parties' actual knowledge, the
      sole and exclusive owner of the Intellectual Property, free and clear of
      all Encumbrances. To the Seller Parties' actual knowledge, none of the
      Sellers' Intellectual Property infringes on any other person's
      intellectual property, and, to the Seller Parties' actual knowledge, no
      activity of any other person infringes on any of the Intellectual
      Property. To the Seller Parties' actual knowledge, the Sellers have been
      and are now conducting the Business in a manner that has not been and is
      not now in violation of any other person's intellectual property, and
      Sellers do not require a license or other proprietary right to so operate
      the Business.

9.23  DISCLOSURE. No representation or warranty of the Seller Parties in this
      Agreement and no statement in any of the Schedules of Sellers hereto
      contains any untrue statement of, or omits to state, a material fact
      necessary to make statements herein or therein, in light of the
      circumstances in which they were made, not misleading.

10.   BUYERS' REPRESENTATIONS AND WARRANTIES. Buyers jointly and severally
      represent and warrant to each Seller Party that, as of the date hereof
      (except to the extent any representation or warranty is made as of another
      date, which are in such case made as of such other date):

10.1  ORGANIZATION AND STANDING. Buyers are limited liability companies duly
      organized and validly existing under the laws of the State of Michigan,
      and Buyers have all the requisite

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<PAGE>
      power and authority (corporate and otherwise) to own their properties and
      to conduct their business as it is now being conducted.

10.2  AUTHORIZATION. Buyers have taken all necessary action (a) to duly approve
      the execution, delivery, and performance of this Agreement and (b) to
      consummate any related transactions. Buyers have duly executed and
      delivered this Agreement. This Agreement is the legal, valid, and binding
      obligation of Buyers, enforceable against Buyers in accordance with its
      terms, except as such enforcement may be limited by bankruptcy,
      insolvency, moratorium, or similar laws relating to the enforcement of
      creditor's rights and by general principles of equity (regardless of
      whether such enforceability is considered in a proceeding at law or in
      equity).

10.3  EXISTING AGREEMENTS AND GOVERNMENTAL APPROVALS.

      (a)   Except as set forth on SCHEDULE 10.3, the execution, delivery, and
            performance of this Agreement and the consummation of the
            transactions contemplated by them: (i) do not and will not violate
            any provisions of the law applicable to Buyers; (ii) do not and will
            not conflict with, result in the breach or termination of any
            provision of, or constitute a default under (in each case whether
            with or without the giving of notice or the lapse of time, or both)
            Buyers' Articles of Organization or Operating Agreement, or any
            indenture, mortgage, lease, deed of trust, or other instrument,
            contract, or agreement or any order, judgment, arbitration award, or
            decree to which Buyers are a party or by which it or any of its
            assets and properties are bound; and (iii) do not and will not
            result in the creation of any line or encumbrance on any of the
            Buyers' properties, assets, or business.

      (b)   Except as set forth on SCHEDULE 10.3, no approval, authority, or
            consent of, or filing by Buyers with, or notification to, any
            federal, state, or local court, authority, or governmental or
            regulatory body or agency or any other corporation, partnership,
            individual, or other entity is necessary (i) to authorize Buyers'
            execution and delivery of this Agreement or (ii) to authorize
            Buyers' consummation of the transactions contemplated by this
            Agreement.

10.4  DEPOSIT OF CASH RECEIPTS. Except as set forth on SCHEDULE 10.4, since June
      1, 2000, all cash receipts of Ideal Products and Orbitform have been
      promptly deposited into their bank accounts (i.e., such deposits have in
      all cases been made within 24 hours of receipt).

10.5  SALES OF SCRAP METALS. Except as set forth on SCHEDULE 10.5, since June
      30, 2001, all sales of scrap metals of Ideal Products and Orbitform have
      been made on a basis consistent with historical practices, and no scrap
      metals have been retained in the plant for sale after Closing.

10.6  NO DELAY IN COLLECTION OF RECEIVABLES. Except as set forth on SCHEDULE
      10.6, since June 1, 2000, neither Ideal Products nor Orbitform has made
      any special arrangements with customers, whether formal or informal,
      causing or that would cause collection of receivables to extend beyond
      customary terms for payment.

10.7  VENDOR PAYMENTS. Except as set forth on SCHEDULE 10.7, since June 30,
      2001, all vendor payments of Orbitform have been made in a manner
      consistent with past practices, as cash has been made available and all
      vendor payments of Ideal Products have been made in

                                       18
<PAGE>
      accordance with instructions from corporate cash management. No advances
      have been made to any vendors of Orbitform or Ideal Products.

10.8  ARBOR AUTOMATION. Since June 1, 2000, nothing has occurred within Arbor
      Automation which is outside of the scope of that transaction that Shirkey
      discussed with IHI management, as more fully described on EXHIBIT 10.8.

10.9  TRANSACTION EXPENSES. Except as set forth on SCHEDULE 10.9, no funds have
      been expended or expenses incurred by Orbitform or Philform in connection
      with this transaction (including those of consultants, accountants and
      attorneys) and no funds have been expended or expenses incurred by
      Orbitform or Philform for the benefit of Arbor Automation.

10.10 COMPENSATION INCREASES. Since June 30, 2001, there have been no
      compensation increases or bonus payments made to Shirkey except as
      authorized by IHI.

10.11 DISCLOSURE. No representation or warranty of the Buyers in this Agreement
      and no statement in any of the Schedules of Buyers hereto contains any
      untrue statement of, or omits to state, a material fact necessary to make
      statements herein or therein, in light of the circumstances in which they
      were made, not misleading.

11.   POST-CLOSING COVENANTS.

11.1  POST-CLOSING RECEIPTS. From and after the Closing Date, Sellers will
      promptly notify and transfer to Buyers any payments or other receipts they
      receive with respect to any of the Purchased Assets. Pending any such
      transfer, Sellers will segregate any such payments from its other assets
      and will clearly mark or designate them as the property of Buyers.

11.2  SELLERS' NAMES. From and after the Closing Date, Sellers agree to take or
      cause to be taken any and all steps or actions that shall be or become
      permissible, proper, or convenient to enable or permit Buyers to use the
      Names. Sellers shall not use either directly or indirectly the Names,
      either alone or in combination with one or more other words, in or in
      connection with any business, activities, or operations that Sellers
      directly or indirectly carry on or conduct after the Closing. Within 7
      business days after the Closing Date, the Sellers shall file and record
      such documents as will terminate the rights of the Sellers in and to the
      Names in the jurisdictions in which they are so recorded and filed.

11.3  FURTHER ASSURANCES. From time to time after the Closing Date, each party
      hereto will, at any other party's request, execute, acknowledge and
      deliver to such requesting party such other instruments and take such
      other actions and deliver such other documents as may be reasonably
      required to carry out the intent of this Agreement and the Related
      Agreements. After the Closing Date, the Sellers will use their reasonable
      commercial efforts to work with the Buyers to obtain the written consent
      of Levelor Kirsch to the assignment of the Levelor Kirsch Contract to the
      Buyers.

11.4  BOOKS AND RECORDS. Insofar as any Seller determines that any books and
      records may be needed or useful in connection with federal, state or local
      regulatory or tax matters, resolution of third party disputes or contract
      compliance issues, or other bona fide business purposes, for a period of
      seven years after the Closing Date, Buyers will use their best efforts to
      preserve and make available to the Sellers, at the location of such books
      and records in the respective Buyer's organization, access to and the
      right to copy such of the books and

                                       19
<PAGE>
      records as such Buyer may then have in its possession or to which it may
      have access upon written request of any Seller during normal business
      hours. The Buyers agree to make such of their employees and of the books
      and records as any Seller Party may request, available at the Buyers' cost
      to assist in the preparation of financial reports and tax returns for the
      Sellers' fiscal years ending in 2001.

11.5  SELLERS' EMPLOYEES. As of after the Closing Date, the Buyers shall make
      offers of employment to all existing employees of the Sellers with
      salaries and employee benefits comparable to those provided by the Sellers
      before the Closing Date. The parties intend that all employees of the
      Sellers that Buyers hire will be new employees of the Buyers as of the
      Closing Date or the date of hire, whichever is later.

11.6  WAIVER. The Buyers and all persons and entities that directly, or
      indirectly through one or more intermediaries, control, or are controlled
      by, or are under common control with, the Buyers, hereby waive, release,
      relinquish and acquit each of IHI, T-3 Energy Services, Inc., First
      Reserve Fund VIII, L.P., and Comerica, as agent and individually, Hibernia
      National Bank and National Bank of Canada, and their directors, officers,
      stockholders, agents and successors, from and against all claims,
      counterclaims, demands, suits, rights, actions and causes of action of any
      nature whatsoever, as a result of or in connection with the sale by IHI or
      the EPG Division Members (other than Sellers) of the assets or capital
      stock of such EPG Division Members to persons other than the Buyers.

11.7  ROLLOVER OF EMPLOYEE 401(k) BALANCES. After the Closing, based on the
      instructions and elections of any person who was before the Closing an
      employee of either Seller, each Seller shall follow such directions or
      instructions and cooperate in "rolling over" their Pension Plan and Trust
      accounts to an account of Buyers' comparable plan, as such comparable plan
      or plans shall allow.

11.8  CONTINUATION OF CTDEP ACTIVITIES. Buyers acknowledge that Ideal Products
      has engaged CCA, LLC ("CCA"), as environmental consultants, to perform the
      work at the Ideal Products Real Property as outlined in CCA's proposal
      letter dated December 20, 2000 (the "CCA Proposal Letter") (a copy of
      which proposal letter was previously furnished to Buyers), which work
      includes the installation of two new bedrock aquifer monitoring wells (the
      "Bedrock Aquifer Wells") at the Ideal Products Real Property. From and
      after the Closing Date, Buyers shall assume and continue, at their expense
      (except as hereinbelow provided), any further remediation activity at the
      Ideal Products Real Property beyond that covered by the CCA Proposal
      Letter, including any additional testing and/or monitoring required by
      CTDEP, to demonstrate to the satisfaction of CTDEP that the pre-existing
      environmental impact of discharges from the Ideal Products Premises on the
      bedrock aquifer below the Ideal Products Real Property is in compliance
      with the applicable CTDEP Remediation Standards Regulations for Surface
      Water Protection Criteria for such discharged substance(s) in groundwater,
      such that either an approval of the remediation is received by the
      Commissioner of CTDEP pursuant to Section 22a-134a(i) of the Connecticut
      General Statutes, or that a Licensed Environmental Professional
      independently verifies the Ideal Products Real Property as having complied
      with the CTDEP Remediation Standard Regulations pursuant to Section
      22a-134a(h) of the Connecticut General Statutes (either, "CT Statutory
      Compliance"). To the extent that the annual out-of-pocket costs to Buyers
      of (i) compliance with the Post-Closure Obligations, plus (ii) further
      testing, monitoring, and/or remediation to obtain CT

                                       20
<PAGE>
      Statutory Compliance beyond that covered by the CCA Proposal Letter, plus
      (iii) if required by CTDEP, monitoring of the Bedrock Aquifer Wells,
      exceed in the aggregate $10,000 in any single calendar year, IHI shall
      reimburse Buyers, promptly upon demand, for such costs in such calendar
      year exceeding $10,000 (the "Excess Obligations Reimbursement"). The
      Seller Parties and Buyers agree that the benefit of the Excess Obligations
      Reimbursement shall be personal to Buyers and to any entity controlled by
      Buyers to whom the Ideal Products Real Property is transferred (such
      controlled entity, a "Buyer-Controlled Entity"), shall not be transferable
      or assignable by Buyers, except to a Buyer-Controlled Entity, and shall
      terminate upon the sale, transfer or other disposition of the Ideal
      Products Real Property by Buyers or any Buyer-Controlled Entity (such
      event, a "Non-Affiliate Sale"); provided, however, that (y) only an entity
      in which the members of the Buyers, who are Shirkey, Philip Miller and
      Philip Schaltz, own either individually or collectively at least 51% of
      the capital stock or membership or partnership interests, as the case may
      be, shall be considered a Buyer-Controlled Entity to which the Buyers may
      transfer the Excess Obligations Reimbursement; and (z) the Collateral
      Assignment of Asset Purchase Agreement executed in connection with this
      Agreement shall not be considered a Non-Affiliate Sale. Notwithstanding
      the foregoing, Buyers will not be entitled to recover the amount of Excess
      Obligations Reimbursement payable to Buyers hereunder unless and until the
      amount of such Excess Obligations Reimbursement exceeds, in the aggregate,
      $10,000.

11.9  CTDEP FINANCIAL ASSURANCE.

      (a)   The Seller Parties have provided a trust fund (the "Trust Fund") to
            CTDEP to satisfy the "financial assurance" requirements contained in
            40 CFR parts 264 and 265, respecting the estimated costs of the
            "Closure and Post-Closure RCRA Surface Impoundments, Ideal
            Manufacturing, 158 Pinesbridge Road, Beacon Falls, Connecticut
            06403", prepared by YWC Technologies, Inc. (approved on September
            18, 1989 by the CTDEP and U.S. Environmental Protection Agency
            Region I) ("the Post-Closure Obligations", and such financial
            assurance, the "Financial Assurance Requirements"). As soon as
            possible after the Closing Date, the Buyers shall use commercially
            reasonable efforts to obtain any legally allowable financial
            assurance mechanism that will be sufficient to permit the release to
            IHI of the then-remaining balance of the Trust Fund. The parties
            acknowledge that any balance of the Trust Fund remaining on its
            release by CTDEP shall be remitted and returned solely to IHI.

      (b)   If for some reason Buyers do not obtain such legally allowable
            financial assurance mechanism or CTDEP does not allow the release of
            the then-remaining balance of the Trust Fund to the Seller Parties,
            then in any event:

            (i)   Any transferee from or successor-in-interest of Buyers of the
                  Ideal Products Real Property shall, as a condition precedent
                  to the transfer of the Ideal Products Real Property, satisfy
                  the Financial Assurance Requirements, which financial
                  assurance shall take the form of a trust account, letter of
                  credit or surety bond in compliance with the provisions of the
                  Financial Assurance Requirements. In such instance, compliance
                  with Financial Assurance requirements shall be sufficient to
                  permit the CTDEP's release to the Seller Parties of the
                  then-remaining balance of the Trust Fund;

                                       21
<PAGE>
            (ii)  for as long as the Buyers continue to own the Ideal Products
                  Real Property and the Trust Fund remains in place: (y) the
                  Buyers shall provide copies to the Seller Parties of all
                  correspondence with the CTDEP and all environmental tests and
                  reports with respect to the Ideal Products Real Property; and
                  (z) the Buyers shall obtain the prior written approval of the
                  Seller Parties to any plan of action or proposal made to CTDEP
                  in order to obtain CT Statutory Compliance.

11.10 CONTINUATION OF COVERAGE. After the Closing, Seller Parties shall offer
      COBRA coverage to the employees of Ideal Products, who are covered as of
      the Closing Date, as such coverage is currently offered to such employees,
      as the same is required by law. Seller Parties shall accept payment from
      Buyers rather than from such employees for cost of such health insurance
      coverage, plus a reasonable administrative fee.

12.   INDEMNIFICATION.

12.1  SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties' representations,
      warranties covenants, agreements and indemnities shall survive the
      Closing, the consummation of the transactions this Agreement provides for
      and any investigation with respect thereto a period of two years beginning
      on the Closing Date (except those pursuant to the Assignment and
      Assumption Agreement, which shall survive until all Assumed Liabilities
      have been satisfied), except that (i) the indemnity period for
      representation and warranties of the Seller Parties with respect to Taxes
      under Section 9.14 and under Section 9.19(b) regarding the Underground
      Tanks on the Ideal Products Real Property shall survive until expiration
      of the relevant statues of limitation or any extension thereof; and (ii)
      the indemnity period for representations and warranties under Sections 9.2
      and 10.2 shall have no expiration date. The two-year anniversary date of
      the Closing Date is referred to hereafter as the "Expiration Date", and
      any later expiration date provided for in this Section 12.1 is referred to
      as the "Extended Expiration Date". Notwithstanding anything to the
      contrary, the covenants of IHI as set forth in Section 11.8 with respect
      to the Excess Obligations Reimbursement shall not expire, except upon a
      Non-Affiliate Sale.

12.2  INDEMNIFICATION BY THE SELLER PARTIES.

      (a)   Subject to Section 12.2(b) below, the Seller Parties, jointly and
            severally, shall defend, indemnify, and hold harmless Buyers and
            their directors, officers, shareholders, members, partners,
            successors, and assigns from and against any and all costs, losses,
            claims, suits, actions, assessments, diminution in value,
            liabilities, fines, penalties, damages (excluding in all cases
            consequential and punitive damages), and expenses (including
            reasonable legal fees) (collectively, "Damages") in connection with
            or resulting from:

            (i)   All debts, liabilities, and obligations of Sellers, whether
                  accrued, absolute, contingent, known, unknown, or otherwise,
                  but excluding any Assumed Liabilities.

            (ii)  Any inaccuracy in any representation or breach of any warranty
                  of Seller Parties contained in this Agreement or any Related
                  Agreement.

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<PAGE>
            (iii) Any failure by Seller Parties to perform or observe in full,
                  or to have performed or observed in full, any covenant,
                  agreement, or condition to be performed or observed by the
                  Seller Parties under this Agreement or any Related Agreement.

      (b)   Seller Parties shall not be obligated to indemnify the Buyers (i)
            with respect to any matter to the extent Shirkey had actual
            knowledge of such matter prior to the Closing and did not disclose
            such matter to the Seller Parties; or (ii) for claims for Damages
            related to or in connection with the failure to obtain, prior to the
            Closing, the consent of Levelor Kirsch to the assignment of the
            Levelor Kirsch Contract to Buyers.

12.3  INDEMNIFICATION BY THE BUYERS. The Buyers, jointly and severally, share,
      indemnify and hold harmless the Seller Parties and their directors,
      officers, shareholders, agents, successors and assigns (the "Seller
      Indemnitees") from and against any Damages as they are incurred or
      suffered by any of them and caused by or arising out of:

      (a)   The Buyers' breach of or default in the performance of any covenant
            or agreement in this Agreement or in any Related Agreement,
            including without limitation its obligations under the Assignment
            and Assumption Agreement; and

      (b)   The Buyers' breach of any representation or warranty in this
            Agreement.

12.4  PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.

      (a)   Any party claiming indemnification under this Section 12 is referred
            to in this Agreement as an "Indemnified Person" and any party
            against whom such claims are asserted under this Section 12 is
            referred to in this Agreement as an "Indemnifying Person."

      (b)   Within 15 days after receipt of notice of commencement of any action
            by any third party evidenced by service of process or other legal
            pleading, or with reasonable promptness after the assertion in
            writing of any claim by a third party, the Indemnified Person shall
            give the Indemnifying Person written notice thereof, together with a
            copy of such claim, process or other legal pleading. The failure to
            so notify the Indemnifying Person within the above time frame will
            not relieve the Indemnifying Person of any liability it may have to
            the Indemnified Person, except to the extent the Indemnifying Person
            demonstrates that the defense of such action is unduly prejudiced by
            the Indemnified Person's failure to give such notice, or except if
            such notice is not delivered before the time specified in Section
            12.1. The Indemnifying Person shall have the right to undertake and
            control the defense, settlement, compromise or other disposition
            thereof at its own expense and through a legal representative of its
            own choosing. The Indemnified Person and its counsel shall have the
            right to be present at the negotiation, defense and settlement of
            such action or claim, and any settlement or compromise of any such
            action or claim shall be subject to the approval of the Indemnified
            Person, which approval shall not be unreasonably withheld.

      (c)   If the Indemnifying Person, by the 30th day after receipt of notice
            of any such claim (or, if earlier, by the 10th day immediately
            preceding the day on which an answer or

                                       23
<PAGE>
            other pleading must be served in order to prevent judgment by
            default in favor of the person asserting such claim), has not
            notified the Indemnified Person of its election to defend against
            such claim, the Indemnified Person shall have the right to undertake
            the defense, compromise or settlement of such claim through counsel
            of its choice on behalf of and for the account and risk of the
            Indemnifying Person, at the cost and expense of the Indemnifying
            Person. In such event, the Indemnifying Party and its counsel shall
            have the right to be present at the negotiation, defense and
            settlement of such action or claim, and any settlement or compromise
            of any such action or claim shall be subject to the approval of the
            Indemnifying Party, which approval shall not be unreasonably
            withheld.

12.5  PROCEDURE FOR INDEMNIFICATION; OTHER THAN THIRD-PARTY CLAIMS. Any claim
      for indemnification for a matter not involving a third-party claim shall
      be asserted by written notice, which specifies in reasonable detail the
      factual basis of such claim, and delivered to the party or parties from
      which indemnification is sought.

12.6  LIMITATIONS ON LIABILITY.

      (a)   Other than as specifically provided for claims as to the matters
            specified in Section 12.1, no claim for indemnification shall be
            made hereunder unless asserted by a written notice given to the
            Indemnifying Party on or before the Expiration Date or the Extended
            Expiration Date, as the case may be.

      (b)   No claim for indemnification shall be made hereunder with respect to
            any matter (i) unless and until the total amount of Damages exceeds
            $50,000 in the aggregate ("Minimum Damages"), and then only for the
            amount by which such Damages exceeds Minimum Damages; and (ii) to
            the extent that the total amount of Damages exceeds $10,000,000
            ("Maximum Damages"); provided, however, that any claim for Damages
            resulting from IHI's failure to perform or observe its covenants as
            to the Excess Obligations Reimbursement of Section 11.8 may be made
            without being subject to Minimum Damages and shall also not be
            included in the calculation of, and shall be in addition to, Maximum
            Damages.

      (c)   The Indemnified Person shall act in good faith and in a commercially
            reasonable manner to mitigate any Damages for which it may seek
            indemnification under this Section 12.

      (d)   An indemnity payment for Damages otherwise due and payable under
            this Section 12 shall be decreased to the extent of any (i) net
            reduction of tax liability the Indemnified Party or any affiliated
            party thereof actually realizes as a result of such indemnifiable
            loss, and (ii) insurance proceeds the Indemnified Party or any
            affiliated party thereof actually collects in connection with the
            indemnifiable loss.

      (e)   The Seller Parties shall not have any liability under Section 12.2,
            and the Buyers shall have no liability under Section 12.3, unless
            the notices required under Sections 12.4 and 12.5 are delivered on
            or before the Expiration Date or the Extended Expiration Date, as
            the case may be.

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<PAGE>
12.7  COMPLIANCE WITH BULK SALES LAW. Buyers and the Seller Parties hereby waive
      compliance with the bulk sales law in any applicable jurisdiction for the
      transactions this Agreement provides for.

12.8  REMEDIES. The remedies of the Buyers and the Buyer Indemnitees set forth
      in this Section 12 shall be the exclusive post-Closing remedies available
      to them with respect to the actual or alleged breach by any of the Seller
      Parties of any provision of this Agreement or the Related Agreements.

13.   EXPENSES. Each of the parties shall pay all of the costs that it incurs
      incident to the preparation, execution, and delivery of this Agreement and
      the performance of any related obligations, whether or not the
      transactions contemplated by this Agreement shall be consummated, except
      that all such costs and all liabilities of Sellers other than the Assumed
      Liabilities, including, without limitation, Tax liabilities, shall be paid
      out of the proceeds of the Purchase Price and shall not be charged to the
      Business as an expense.

14.   RISK OF LOSS. The risk of loss of or damage to the Purchased Assets from
      fire or other casualty or cause shall be on Sellers at all times up to the
      Closing, and it shall be the responsibility of Sellers to repair, or cause
      to be repaired, and to restore the property to the condition it was before
      the loss or damage.

15.   TERMINATION.

15.1  MANNER OF TERMINATION. This Agreement may be terminated at any time before
      the Closing Date as follows:

      (a)   By Buyers and Seller Parties in a written instrument signed by each
            of them.

      (b)   By Buyers or Seller Parties if the Closing does not occur on or
            before October 31, 2001.

      (c)   By Buyers or Seller Parties if there has been a material breach of
            any of the representations or warranties set forth in this Agreement
            on the part of the other, and this breach by its nature cannot be
            cured before the Closing.

      (d)   By Buyers or Seller Parties if there has been a material breach of
            any of the covenants or agreements set forth in this Agreement on
            the part of the other, and this breach is not cured within 10
            business days after the breaching party or parties receive written
            notice of the breach from the other party.

15.2  EFFECT OF TERMINATION. If terminated as provided in Section 15.1, this
      Agreement shall forthwith become void and have no effect, except for
      Section 13, Section 16.7 and Section 16.8, and except that no party shall
      be relieved or released from any liabilities or damages arising out of the
      party's breach of any provision of this Agreement.

16.   MISCELLANEOUS PROVISIONS.

16.1  NOTICES. All notices, demands, and requests required or permitted to be
      given under the provisions of this Agreement shall be in writing and shall
      be deemed given (a) when personally delivered or sent by facsimile
      transmission to the party to be given the notice or

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<PAGE>
      other communication or (b) on the business day following the day such
      notice or other communication is sent by overnight courier to the
      following:

      IF TO SELLER PARTIES:
      Robert E. Cone
      Industrial Holdings, Inc.
      7135 Ardmore
      Houston, Texas 77054
      Telephone Number 713-747-1025
      FAX 713-749-9642

      With a copy to:
      Jackson Walker L.L.P.
      1100 Louisiana, Suite 4200
      Houston, Texas 77002
      Attn: Sabrina A. McTopy
      Telephone Number 713-752-4200
      FAX 713-752-4221

      IF TO BUYERS:
      Michael Shirkey
      1600 Executive Drive
      Jackson, Michigan 49203
      Telephone Number 517-787-9447
      FAX 517-787-6609

      With a copy to:
      Laflamme & Mauldin, P.C.
      Attn:  Clyde W. Mauldin
      2540 Spring Arbor Road
      Jackson, Michigan 49203
      Telephone Number 517-784-9122
      FAX 517-784-1818

      or to such other address or facsimile number that the parties may
      designate in writing.

16.2  ASSIGNMENT. Except as set forth herein, neither Seller Parties nor Buyers
      shall assign this Agreement, or any interest in it, without the prior
      written consent of the other, except that either Buyer may, without Seller
      Parties' consent, assign its rights and obligations under this Agreement
      to one or more subsidiaries or wholly owned limited liability companies
      formed by the Buyers; provided, however, that each such assignee must
      accede to all of the obligations of the Buyers hereunder.

16.3  PARTIES IN INTEREST. This Agreement shall inure to the benefit of, and be
      binding on, the named parties and their respective successors and
      permitted assigns, but not any other person.

                                       26
<PAGE>
16.4  CHOICE OF LAW. This Agreement shall be governed, construed, and enforced
      in accordance with the laws of the State of Michigan.

16.5  COUNTERPARTS. This Agreement may be signed in any number of counterparts
      with the same effect as if the signature on each counterpart were on the
      same instrument.

16.6  ENTIRE AGREEMENT. This Agreement and all related documents, schedules,
      exhibits, or certificates represent the entire understanding and agreement
      between the parties with respect to the subject matter and supersede all
      prior agreements or negotiations between the parties. This Agreement may
      be amended, supplemented, or changed only by an agreement in writing that
      makes specific reference to this Agreement or the agreement delivered
      pursuant to it and that is signed by the party against whom enforcement of
      any such amendment, supplement, or modification is sought.

16.7  ARBITRATION.

      (a)   Any dispute, controversy, or claim arising out of or relating to
            this Agreement or relating to the breach, termination, or invalidity
            of this Agreement, whether arising in contract, tort, or otherwise,
            shall at the request of any party be resolved in binding
            arbitration. Any arbitration shall proceed in accordance with Title
            9 of the United States Code, as it may be amended or recodified from
            time to time ("Title 9"), and the current Commercial Arbitration
            Rules (the "Arbitration Rules") of the American Arbitration
            Association ("AAA") to the extent that Title 9 and the Arbitration
            Rules do not conflict with any provision of this Section 16.7.

      (b)   No provision of or the exercise of any rights under this Section
            16.7 shall limit the right of any party to seek and obtain
            provisional or ancillary remedies (such as injunctive relief,
            attachment, or the appointment of a receiver) from any court having
            jurisdiction before, during, or after the pendency of an arbitration
            proceeding under this Section. The institution and maintenance of
            any such action or proceeding shall not constitute a waiver of the
            right of any party (including the party taking the action or
            instituting the proceeding) to submit a dispute, controversy, or
            claim to arbitration under this Section.

      (c)   Any award, order, or judgment made pursuant to arbitration shall be
            deemed final and may be entered in any court having jurisdiction
            over the enforcement of the award, order, or judgment. Each party
            agrees to submit to the jurisdiction of any court for purposes of
            the enforcement of the award, order, or judgment.

      (d)   The arbitration shall be held before one arbitrator knowledgeable in
            the general subject matter of the dispute, controversy, or claim and
            selected by AAA in accordance with the Arbitration Rules, except
            that any arbitration in which the disputed, controverted, or claimed
            amount (as reflected on the demand for arbitration, as the same may
            be amended) exceeds $500,000.00 shall be held before three
            arbitrators, one arbitrator being selected by Buyer, one by the
            Seller Parties, and the third by the other two from a panel of
            persons identified by AAA who are knowledgeable in the general
            subject matter of the dispute, controversy, or claim.

                                       27
<PAGE>
      (e)   The arbitration shall be held at the office of AAA located in
            Detroit, Michigan (as the same may be from time to time relocated),
            or at another place the parties agree on.

      (f)   In any arbitration proceeding under this Section 16.7, subject to
            the award of the arbitrator(s), each party shall pay all its own
            expenses, an equal share of the fees and expenses of the arbitrator,
            and, if applicable, the fees and expenses of its own appointed
            arbitrator. The arbitrator(s) shall have the power to award recovery
            of costs and fees (including reasonable attorney fees,
            administrative and AAA fees, and arbitrators' fees) among the
            parties as the arbitrators determine to be equitable under the
            circumstances.

      (g)   The interpretation and construction of this Section 16.7, including,
            but not limited to, its validity and enforceability, shall be
            governed by Title 9 of the U.S. Code, notwithstanding the choice of
            law set forth in Section 16.4 of this Agreement.

16.8  PUBLIC ANNOUNCEMENTS. The parties agree to advise and confer with each
      other prior to the issuance of any public reports, statements or press
      releases pertaining to this Agreement and the transactions contemplated
      hereby. Each party will use its best efforts to maintain in strict
      confidence the existence and terms of this Agreement and the transactions
      contemplated hereby. Unless otherwise required by law or as set forth
      above, no party shall make any public announcement or disclosure
      concerning this Agreement, except as mutually agreed. The financial terms
      of the Agreement are to be kept confidential, except to the extent that
      the disclosure is required under law. Nothing in the foregoing is intended
      to prevent IHI from making any filings required with the Securities and
      Exchange Commission.

16.9  FACSIMILE SIGNATURES. The parties acknowledge that signatures on this
      Agreement may be delivered by facsimile in lieu of an original signature
      and the parties agree to treat such signatures as original signatures and
      shall be bound thereby.

      The parties have executed this Agreement on the date set forth on the
first page of this Agreement.

                                 SELLER PARTIES:

                                 REX MACHINERY MOVERS, INC. D/B/A IDEAL PRODUCTS

                                 By:
                                    ---------------------------------------

                                    [NAME OF AUTHORIZED SIGNER]

                                 Its:
                                     --------------------------------------

                                       28
<PAGE>
                                    PHILFORM , INC.

                                    By:
                                       ---------------------------------------

                                       [NAME OF AUTHORIZED SIGNER]

                                    Its:
                                        --------------------------------------

                                    OF ACQUISITION, L.P., D/B/A ORBITFORM

                                    By:
                                       ---------------------------------------

                                       [NAME OF AUTHORIZED SIGNER]

                                    Its:
                                        --------------------------------------

                                    INDUSTRIAL HOLDINGS, INC.

                                    By:
                                       ---------------------------------------

                                       [NAME OF AUTHORIZED SIGNER]

                                    Its:
                                        --------------------------------------

                                    BUYERS:

                                    SMSG, L.L.C.

                                    By:
                                       ---------------------------------------

                                       [NAME OF AUTHORIZED SIGNER]

                                    Its:
                                        --------------------------------------

                                    SMSP, L.L.C.

                                    By:
                                       ---------------------------------------

                                       [NAME OF AUTHORIZED SIGNER]

                                    Its:
                                        --------------------------------------

                                       29