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                                                                    Exhibit 10.7


                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG


                            INDUSTRIAL HOLDINGS, INC.


                                       AND



                                  DONALD CARLIN

                                 ROBERT E. CONE




                                   DATED AS OF

                                NOVEMBER 15, 2001



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                                TABLE OF CONTENTS

                                                                          Page

1.    Sale and Purchase of the Stock; Closing................................1
  1.1    Sale and Purchase...................................................1
  1.2    Purchase Price......................................................1
  1.3    Post-Closing Adjustment of Purchase Price...........................2
  1.4    Closing.............................................................3
  1.5    Deliveries at Closing...............................................3
2.    Representations and Warranties of IHI..................................5
  2.1    Organization and Good Standing......................................5
  2.2    Authorization and Enforceability....................................5
  2.3    Capitalization......................................................5
  2.4    No Conflicts........................................................6
  2.5    Financial Statements................................................6
  2.6    Liabilities and Obligations.........................................6
  2.7    Furniture, Fixtures, Machinery and Equipment........................7
  2.8    Legal Proceedings...................................................7
  2.9    Title to Assets; Liens..............................................7
  2.10   Subsidiaries, Etc...................................................7
  2.11   Material Agreements.................................................7
  2.12   Employee Benefit Plans..............................................8
  2.13   Tax Matters.........................................................9
  2.14   Leased Property.....................................................9
  2.15   Intellectual Property Rights........................................9
  2.16   Permits and Licenses...............................................10
  2.17   Deposit Accounts...................................................10
  2.18   Brokers' Fees......................................................10
  2.19   Limitation on Representations; Definition of Knowledge.............10
3.    Representations and Warranties of Buyer...............................10
  3.1    Authorization and Enforceability...................................10
  3.2    No Violation of Law, Etc...........................................11
  3.3    Legal Proceedings..................................................11
  3.4    Brokers' Fees......................................................11
  3.5    Buyer's Knowledge..................................................11
4.    Pre-Closing Actions...................................................11
  4.1    Conduct of Business................................................11
  4.2    Notification of Inaccuracy of Representations and Warranties.......11
5.    Conditions Precedent to Buyer's Obligations at the Closing............11
  5.1    Compliance with this Agreement.....................................12
  5.2    Accuracy of Representations and Warranties.........................12
  5.3    Satisfaction of Conditions to Merger...............................12
  5.4    No Material Adverse Change.........................................12
6.    Conditions Precedent to the Obligations of IHI at the Closing.........12

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                               Table of Contents
                                  (continued)

                                                                          Page
  6.1    Compliance with this Agreement.....................................12
  6.2    Accuracy of Representations and Warranties.........................12
  6.3    Satisfaction of Conditions to Merger...............................12
  6.4    Release from Guaranty..............................................13
7.    Noncompetition........................................................13
  7.1    Prohibited Activities..............................................13
  7.2    Damages............................................................13
  7.3    Reasonable Restraint...............................................13
  7.4    Severability; Reformation..........................................13
8.    Indemnification.......................................................13
  8.1    Survival of Representations and Warranties.........................13
  8.2    Indemnification by IHI.............................................13
  8.3    Indemnification by Buyer...........................................14
  8.4    Procedure for Indemnification; Third-Party Claims..................14
  8.5    Procedure for Indemnification; Other Than Third-Party Claims.......14
  8.6    Special Provisions Regarding Liability.............................15
  8.7    Remedies...........................................................16
9.    Post-Closing Matters..................................................16
  9.1    Reattribution of Loss Carryovers...................................16
  9.2    Further Assurances.................................................16
  9.3    Books and Records..................................................16
  9.4    Tax Matters........................................................16
10.   Termination...........................................................17
  10.1   Manner of Termination..............................................17
  10.2   Effect of Termination..............................................17
11.   Miscellaneous.........................................................17
  11.1   Entire Agreement...................................................17
  11.2   Notices............................................................18
  11.3   Amendment and Waivers..............................................19
  11.4   Assignment.........................................................19
  11.5   Governing Law; Venue...............................................19
  11.6   Severability.......................................................19
  11.7   Arbitration........................................................19
  11.8   Multiple Counterparts..............................................20
  11.9   Expenses...........................................................20
  11.10  Waiver of Breach...................................................20
  11.11  Construction.......................................................20
  11.12  Public Announcements...............................................21
  11.13  Facsimile signatures...............................................21

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SCHEDULES AND EXHIBITS

EXHIBIT A         Form of Promissory Note
EXHIBIT B         Form of Security Agreement
SCHEDULE 2.2      Authorization
SCHEDULE 2.5      Financial Statements
SCHEDULE 2.7      Furniture, Fixtures, Machinery and Equipment
SCHEDULE 2.8      Description of Legal Proceedings
SCHEDULE 2.9      Title to Assets; Liens
SCHEDULE 2.11     Material Agreements
SCHEDULE 2.12     Employee Benefit Plans
SCHEDULE 2.14     Leased Real Property
SCHEDULE 2.15     Intellectual Property Rights
SCHEDULE 2.16     Permits and Licenses Used in the Business
SCHEDULE 2.17     Bank and Lockbox Accounts



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                            STOCK PURCHASE AGREEMENT


      THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of November 15,
2001, by and among DONALD CARLIN ("Carlin") AND ROBERT E. CONE ("Cone") and
their permitted assigns (collectively, "Buyer"), and INDUSTRIAL HOLDINGS, INC.,
a Texas corporation ("IHI").

                                   BACKGROUND

      IHI owns 100% of the outstanding capital stock (the "Stock") of Beaird
Industries, Inc., a Delaware corporation (the "Company"), and desires to sell
the Stock to Buyer on the terms and subject to the conditions in this Agreement.
In connection with the sale and purchase of the Stock, the Company, IHI and
Buyer will enter into certain related agreements, the forms of which are
attached to this Agreement as exhibits ("Exhibits").

                                   AGREEMENTS

1.       SALE AND PURCHASE OF THE STOCK; CLOSING.

1.1      SALE AND PURCHASE. At the Closing, IHI will sell, assign, transfer and
         deliver to Buyer, and Buyer will purchase, an aggregate of 1,000 shares
         of common stock, $1.00 par value per share, of the Company (the
         "Stock").

1.2      PURCHASE PRICE. The purchase price ("Purchase Price") for the Stock
         will be $10,000,000 (the "Purchase Price), subject to adjustment
         pursuant to Section 1.3 below, to be paid to IHI as follows:

                  (i)      assumption of the residual $3,000,000 amount to be
                           due and owing as of the Closing under that certain
                           Lease Financing Agreement (the "Comerica Financing
                           Agreement") dated as of June 30, 1998, between
                           Comerica Leasing Corporation, a Michigan corporation
                           ("Comerica Leasing"), collectively as lessor, and the
                           Company and IHI, collectively as lessee; the amount
                           owing under the Comerica Financing Agreement to be
                           reduced to $3,000,000 at or immediately prior to the
                           Closing by IHI; and

                  (ii)     assumption of the residual $3,000,000 principal
                           balance to be due and owing as of the Closing under
                           that certain promissory note (the "Trinity Note") in
                           the original principal amount of $3,400,000, made by
                           IHI and payable to the order of Trinity Industries,
                           Inc. ("Trinity"); the principal balance of the
                           Trinity Note to be reduced to $3,000,000 at or
                           immediately prior to the Closing by IHI; with the
                           Trinity Note, as may be mutually agreeable to the
                           parties, to be amended and/or restated as of the
                           Closing to reflect the aforesaid assumption and to be
                           secured by a security agreement (in form and
                           substance to be mutually acceptable to Buyer and
                           Trinity) entered into at the Closing, granting a
                           second and subordinate security interest in the
                           Company's assets to Trinity as security for the
                           Trinity Note (such security interest to be
                           subordinate to the security interests in the
                           Company's assets currently held by Comerica Leasing);
                           and


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                  (iii)    a subordinated promissory note in the original
                           principal amount of $4,000,000, made payable by Buyer
                           to the order of IHI, in substantially the form
                           attached as EXHIBIT A (the "Note").

                  At the Closing, and as a condition precedent thereto, IHI
                  shall receive a full written release from any and all
                  liability and obligations under the Comerica Financing
                  Agreement from Comerica Leasing and a full written release
                  from any and all liability and obligations under the Trinity
                  Note from Trinity.

1.3      POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.

         (a)      Within 30 calendar days after the Closing, IHI shall prepare
                  or cause to be prepared and delivered to the Buyer an
                  unaudited condensed balance sheet of the Company as of the
                  close of business on the Closing Date (the "Closing Balance
                  Sheet"). The Closing Balance Sheet shall be prepared in
                  accordance with generally accepted accounting principles
                  ("GAAP") consistent with those previously applied by the
                  Company in its financial reporting. If the sum of the
                  Company's cash and equivalents plus accounts receivable minus
                  its accounts payable and accrued expenses on the Closing
                  Balance Sheet ("Closing Value") has decreased by more than 5%
                  (such excess decrease up to a maximum amount of $500,000, the
                  "Reduction Amount") from the sum of the Company's cash and
                  equivalents plus accounts receivable minus its accounts
                  payable and accrued expenses on the Company's June 30, 2001
                  unaudited condensed balance sheet ("Interim Value"), then the
                  Purchase Price shall be reduced by the Reduction Amount, and
                  the Reduction Amount shall be applied to reduce the
                  outstanding principal amount of the Note effective as of the
                  Closing Date (as defined below). If the Closing Value has
                  increased by more than 5% from the Interim Value (such excess
                  increase up to a maximum amount of $500,000, the "Addition
                  Amount"), then the Purchase Price shall be increased by the
                  Addition Amount, and the Addition Amount shall be added to the
                  outstanding principal amount of the Note effective as of the
                  Closing Date and the Buyer shall execute an amended or
                  replacement promissory note to the Note to reflect such
                  increase. Notwithstanding the foregoing, intercompany payables
                  to IHI and intercompany receivables from IHI shall not be
                  included in calculating the Interim Value or the Closing
                  Value.

         (b)      The Buyer shall give IHI and its representatives reasonable
                  access to the books, records and personnel of the Company for
                  the purpose of preparing the Closing Balance Sheet. The Buyer
                  shall have a period of 30 calendar days after the delivery to
                  it of the Closing Balance Sheet, and during such time the
                  Buyer shall have access to all workpapers and other relevant
                  documents, to review the foregoing and to deliver in writing
                  to IHI any objections to the Closing Balance Sheet that the
                  Buyer may have. If Buyer does not deliver in writing any
                  objections to IHI within the 30-day period, the Closing
                  Balance Sheet shall be deemed to be accepted and approved by
                  the Buyer. If Buyer delivers within the 30-day period written
                  objections to IHI, then the Buyer and IHI shall attempt to
                  resolve the matter or matters in dispute. The Buyer shall
                  quantify its objections to the extent reasonably practicable
                  in all written objections delivered to IHI with respect to the
                  Closing Balance Sheet.

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         (c)      If such disputes cannot be resolved by the Buyer and IHI
                  within 20 calendar days after the delivery of the objections
                  to the Closing Balance Sheet, then the specific matters in
                  dispute shall be submitted to the Deloitte & Touche, LLP, 333
                  Clay Street, Suite 2300, Houston, Texas 77002 (the
                  "Independent Accountants"), which firm shall render its
                  opinion as to such matters. Based on that opinion, the
                  Independent Accountants shall then send to the Buyer and to
                  IHI a written determination of the matters in dispute and a
                  written determination of the Purchase Price as adjusted based
                  upon such opinion, whereupon the confirmed or revised Closing
                  Balance Sheet shall be final and binding upon the Buyer and
                  IHI, absent manifest error. All costs, fees and expenses
                  charged or incurred by the Independent Accountants, if any,
                  shall be borne equally by IHI and the Buyer.

1.4      CLOSING. The purchase and sale and related transactions this Agreement
         provides for (the "Closing") will occur at the offices of Jackson
         Walker, L.L.P., 1100 Louisiana Street, Suite 4200, Houston, Texas 77002
         on the earlier to occur of (i) December 31, 2001 or (ii) the date of
         the consummation of the proposed merger between IHI and T-3 Energy
         Services, Inc. (such entity, "T-3" and the proposed merger, the
         "Merger"), or at such other time or place as the parties shall mutually
         agree (the "Closing Date"), subject in all cases to the conditions set
         forth in Sections 5 and 6.

1.5      DELIVERIES AT CLOSING.

         (a)      DELIVERIES BY IHI. IHI or the other indicated parties shall
                  have executed and delivered to Buyer the following:

         (i)      documentation reasonably satisfactory to the parties to
                  evidence the portion of the Purchase Price described in
                  Section 1.2(i) and (ii);

         (ii)     either (y) UCC-termination statements as are required to
                  terminate and release all liens on the Company's assets and
                  equipment (including without limitation the Liens disclosed on
                  SCHEDULE 2.9), or (z) letters of creditors indicating that
                  such liens, and that certificates evidencing IHI's ownership
                  of the Stock, shall be released to IHI on IHI's payment of
                  identified amounts payable, in each case except for the
                  permitted liens ("Permitted Liens") listed on SCHEDULE 2.9;

         (iii)    a Security Agreement granting a lien in favor of IHI on the
                  assets of the Company, in substantially the form attached as
                  EXHIBIT B (the "Security Agreement");

         (iv)     the Company's corporate records, including its Certificate of
                  Incorporation, Bylaws and corporate minute book;

         (v)      a certificate executed by IHI representing and warranting to
                  Buyer that each of IHI's representations and warranties in
                  this Agreement is accurate in all material respects as of the
                  Closing Date;

         (vi)     copies certified by IHI's Secretary of resolutions duly
                  adopted by the board of directors of IHI authorizing and
                  approving the execution and delivery of this Agreement,
                  including the exhibits hereto, and the transactions
                  contemplated hereby;

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         (vii)    certificates, dated as of a date no earlier than 10 days
                  before the Closing Date, duly issued by the appropriate
                  governmental authority in its state of organization and in any
                  state in which the Company is authorized to do business,
                  showing the Company is in good standing and authorized to do
                  business; and

         (viii)   such other documents, instruments and certificates necessary
                  or appropriate in connection with the IHI's sale and transfer
                  of the Stock, including without limitation, certificates
                  evidencing IHI's ownership of the Stock, duly endorsed in
                  blank or accompanied by duly executed stock powers in blank,
                  in proper form for transfer to Buyer either at Closing or as
                  soon thereafter as IHI is able to obtain such certificates and
                  releases of the security interests in the Stock as described
                  on SCHEDULE 2.2.

         (b)      DELIVERIES BY BUYER. Buyer or the other indicated parties
                  shall have executed and delivered to IHI the following:

         (i)      documentation reasonably satisfactory to the parties to
                  evidence the portion of the Purchase Price described in
                  Section 1.2(i) and (ii);

         (ii)     the Note;

         (iii)    the Security Agreement;

         (iv)     a certificate executed by Buyer representing and warranting to
                  IHI that each of Buyer's representations and warranties in
                  this Agreement is accurate in all material respects as of the
                  Closing Date (except that if before the Closing, Buyer assigns
                  all of its rights to and obligations under this Agreement to a
                  permitted assignee pursuant to Section 11.4 (such assignee,
                  the "Buyer Permitted Assignee"), then such representations and
                  warranties shall be made as to the Buyer Permitted Assignee,
                  and if the Buyer Permitted Assignee is other than a natural
                  person, then an additional representation as to such buyer's
                  due organization and qualification shall be made, and such
                  buyer shall also make representations that its execution,
                  delivery and performance of this Agreement, the Related
                  Agreements and the Note does not (a) conflict with, violate or
                  constitute a breach of or a default under, or (b) result in
                  the creation or imposition of any lien upon any of the assets
                  or properties of such buyer under such buyer's Organizational
                  Documents;

         (v)      if there is a Buyer Permitted Assignee that is other than a
                  natural person, copies certified by its secretary (or the
                  holder of a similar office) of resolutions duly adopted by its
                  board of directors authorizing and approving the execution and
                  delivery of this Agreement, including the exhibits hereto, and
                  the transactions contemplated hereby;

         (vi)     if there is a Buyer Permitted Assignee that is other than a
                  natural person, certificates dated as of a date no earlier
                  than 10 days before the Closing Date, duly issued by the
                  appropriate governmental authority in the state of its
                  organization and in any state in which such Buyer is
                  authorized to do business, showing such Buyer is in good
                  standing and authorized to do business; and

         (vii)    such other documents, instruments and certificates necessary
                  or appropriate in connection with the Buyer's purchase of the
                  Stock.


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2.       REPRESENTATIONS AND WARRANTIES OF IHI. IHI represents and warrants to
         Buyer that the statements in this Section 2 are true and correct as of
         the date of this Agreement and will be true and correct on the Closing
         Date as if made on the Closing Date (except to the extent any
         representation or warranty is made as of another date, which is hereby
         made as of such other date).

2.1      ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
         incorporated, validly existing and in good standing under the laws of
         the State of Delaware. The Company is duly qualified and in good
         standing in every jurisdiction in which it is required by the nature of
         its business 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 the Company or its operations.

2.2      AUTHORIZATION AND ENFORCEABILITY. IHI has full legal capacity and
         authority to execute and deliver this Agreement and all other
         agreements to be executed and delivered by it in connection with this
         Agreement that are identified in Section 1.5(a) of this Agreement (such
         other agreements, collectively, the "Related Agreements"), and to
         perform its obligations under this Agreement and the Related
         Agreements. IHI has duly executed and delivered this Agreement, and it
         is IHI's legal, valid and binding obligation, enforceable against it in
         accordance with its terms, except as its enforcement may be limited by
         bankruptcy, insolvency moratorium, or similar laws relating to the
         enforcement of creditors' rights and by general principals of equity
         (regardless of whether such enforceability is considered in a
         proceeding at law or in equity) (collectively, the "Exceptions"). When
         IHI executes and delivers the Related Agreements, the Related
         Agreements will be IHI's legal, valid and binding obligations,
         enforceable against it in accordance with their respective terms,
         except as the enforcement thereof may be limited by the Exceptions.
         Except as disclosed on SCHEDULE 2.2, IHI is not required to obtain any
         consent, approval or authorization of, or registration, declaration or
         filing with any Governmental Authority or third party to authorize its
         execution, delivery or performance of its obligations under this
         Agreement or the Related Agreements.

         "Governmental Authority" means any foreign governmental authority, the
         United States of America, any state of the United States, and any
         political subdivision of any of the foregoing, and any agency,
         department, commission, board, bureau or court of any of the foregoing
         having jurisdiction over the respective party or their assets.

2.3      CAPITALIZATION. The Company's authorized equity securities consist of
         1,000 shares of common stock, $1.00 par value per share, of which all
         1,000 shares are issued and outstanding and constitute the Stock. IHI
         owns all of the Stock, free and clear of all liens, claims,
         encumbrances, equities, voting trusts and agreements, and proxies. The
         Stock is all of the outstanding capital stock of the Company. Each
         outstanding share of the Stock has been duly authorized and validly
         issued and is fully paid and non-assessable. There are no options,
         warrants, subscriptions, or other rights to purchase, or securities
         convertible into or exchangeable for, any of the Company's authorized
         or outstanding securities. None of the Stock has been issued or
         disposed of in violation of the preemptive rights of any of the
         Company's present or former stockholders. In addition, IHI hereby
         waives any preemptive or other right to acquire shares of capital stock
         of the Company that it has or may have had.


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2.4      NO CONFLICTS. Except as disclosed on SCHEDULE 2.2, IHI's execution,
         delivery and performance of this Agreement and the Related Agreements
         does not:

         (a)      conflict with, violate or constitute a material breach of or a
                  material default under; or

         (b)      result in the creation or imposition of any lien upon any of
                  the property or assets of IHI or the Company under the terms
                  of:

                  (i)      the Organizational Documents (as defined below) of
                           IHI; or

                  (ii)     any material credit or loan agreement, mortgage,
                           indenture, promissory note or any other material
                           agreement or instrument to which IHI or the Company
                           is a party or by which either of them or any of their
                           properties may be bound or affected.

         "Organizational Documents" means, as applicable, Articles of
         Incorporation and Bylaws of the Company or IHI, each as amended and in
         effect on the date of this Agreement or the applicable formation and
         organization of documents of the Buyer Permitted Assignee.

2.5      FINANCIAL STATEMENTS. Attached as SCHEDULE 2.5 are copies of the
         Company's:

         (a)      unaudited Condensed Balance Sheet as of December 31, 2000, and
                  related unaudited Condensed Income Statement (the December 31,
                  2000 Balance Sheet and Income Statement referred to as the
                  "2000 Financial Statements"); and

         (b)      unaudited Condensed Balance Sheet as of September 30, 2001
                  (the "Interim Balance Sheet") and related unaudited Condensed
                  Income Statement for the nine months then ended (collectively,
                  the "Interim Financial Statements").

         The 2000 Financial Statements and the Interim Financial Statements are
         referred to collectively as the "Financial Statements." The Financial
         Statements have been prepared from the Company's books and records in
         conformity with GAAP, subject to normal recurring year-end adjustments
         (the effect of which will not, individually or in the aggregate, be
         materially adverse) and the absence of notes to the Financial
         Statements. The Financial Statements present fairly in all material
         respects the Company's financial position at the dates indicated and
         the results of its operations for the periods then ended. For purposes
         of this Agreement, December 31, 2000 is referred to as the "2000
         Financial Statement Date" and September 30, 2001 is referred to as the
         "Interim Financial Statement Date."

2.6      LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
         adequately provided for on the Interim Balance Sheet, and except for
         liabilities and obligations that have arisen since the Interim
         Financial Statement Date in the Ordinary Course of Business (as that
         term is defined below), the Company has not incurred any material
         liabilities of a type required by GAAP to be reflected on a balance
         sheet.

         "Ordinary Course of Business" means actions of the Company that are:

         (a)      consistent with past practices taken in the course of its
                  usual day-to-day operations;

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         (b)      not required to be authorized by resolution of the Company'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.

2.7      FURNITURE, FIXTURES, MACHINERY AND EQUIPMENT. SCHEDULE 2.7 is a list of
         all of the material items of the Company's furniture, fixtures,
         machinery and equipment, which constitutes substantially all the
         fixtures, machinery and equipment used in the conduct of the Company's
         business. SCHEDULE 2.7 also identifies any such equipment that is
         leased.

2.8      LEGAL PROCEEDINGS. Except as disclosed on SCHEDULE 2.8, there are no
         actions, suits or proceedings pending, or known to be threatened,
         against the Company or any of its properties, at law or in equity, or
         before or by any Governmental Authority.

2.9      TITLE TO ASSETS; LIENS. The Company has good and marketable title to
         its assets and properties (not taking into account personal property
         the Company leases). Such assets are not subject to any liens, claims,
         demands, equity interests, pledges or security interests ("Liens"),
         except as disclosed on SCHEDULE 2.9 and except for: (a) liens for taxes
         not yet due and payable or being contested in good faith by appropriate
         proceedings; and (b) statutory liens not yet due and payable.

2.10     SUBSIDIARIES, ETC. The Company (a) has no subsidiaries; (b) is not a
         co-venturer in any joint venture or a partner in any partnership; and
         (c) owns no interest in any other corporation, business enterprise or
         other entity.

2.11     MATERIAL AGREEMENTS. SCHEDULE 2.11 is a list of the material contracts,
         notes receivables, loans, leases and other agreements (collectively,
         the "Material Agreements") imposing any obligation on the Company or to
         which the Company's properties are subject, except for:

         (a)      contracts terminable without penalty solely at the Company's
                  option upon 30 days notice or less;

         (b)      purchase and sales orders, electric, gas and water utility
                  contracts or similar agreements entered into by the Company in
                  the Ordinary Course of Business and not involving expenditures
                  of $25,000 or more; and

         (c)      contracts otherwise disclosed in this Agreement.

         The Company is not a party to or bound by any material contract or
         agreement except those disclosed on SCHEDULE 2.11. Except as otherwise
         disclosed on SCHEDULE 2.11, the Material Agreements are valid, binding
         and in full force and effect in accordance with their terms and
         conditions. The Company is not in breach of or in default under any
         Material Agreement and neither IHI nor the Company is aware that any
         other party is in breach or default under any Material Agreement, or of
         any conditions that, with the passage of time or the giving of notice,
         or both, will constitute such a breach or default.


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2.12     EMPLOYEE BENEFIT PLANS.

         (a)      SCHEDULE 2.12 discloses all pension, profit-sharing, bonus,
                  incentive, deferred compensation, stock purchase, stock, stock
                  appreciation right, group insurance, severance pay, retirement
                  and other employee benefit plans, agreements or arrangements
                  of the Company or to which it is required to contribute.
                  Except as disclosed on SCHEDULE 2.12, the Company neither
                  sponsors, maintains nor contributes to any plan, program, fund
                  or arrangement that constitutes an employee pension benefit
                  plan and it has no obligation to contribute to or accrue or
                  pay any benefits under any deferred compensation or retirement
                  funding arrangement on behalf of any employee or employees
                  (such as, for example, and without limitation, any individual
                  retirement account or annuity, any "excess benefit plan"
                  (within the meaning of Section 3(36) of the Employee
                  Retirement Income Security Act of 1974, as amended ("ERISA"))
                  or any non-qualified deferred compensation arrangement. For
                  the purposes of this SECTION 2.12, the term "employee pension
                  benefit plan" has the same meaning given that term in Section
                  3(2) of ERISA.

         (b)      No employee benefit plan listed on SCHEDULE 2.12 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.

         (c)      All employee benefit plans listed on SCHEDULE 2.12 that are
                  intended to qualify ("Qualified Plans") under Section 401(a)
                  of the Internal Revenue Code of 1986, as amended, (the "Code")
                  have been so qualified. All reports and other documents
                  required to be filed with any governmental agency or
                  distributed to plan participants or beneficiaries (including,
                  but not limited to, actuarial reports, audits or tax returns)
                  have been timely filed or distributed, and copies of the most
                  recent annual reports for such plans are included as part of
                  SCHEDULE 2.12. Neither IHI, any plan listed in SCHEDULE 2.12,
                  nor the Company has engaged in any transaction prohibited and
                  not exempted under Section 4975 of the Code or Sections 406
                  and 408 of ERISA; no plan listed in SCHEDULE 2.12 has incurred
                  an accumulated funding deficiency, as defined in Section
                  412(a) of the Code and Section 302(1) of ERISA; and the
                  Company has not incurred any liability for excise tax or
                  penalty due to the Internal Revenue Service or any liability
                  to the Pension Benefit Guaranty Corporation ("PBGC").

         (d)      There have been no terminations, partial terminations or
                  discontinuance of contributions to any such Qualified Plan
                  intended to qualify under Section 401(a) of the Code without
                  notice to and approval by the Internal Revenue Service; no
                  plan listed in SCHEDULE 2.12 subject to the provisions of
                  Title IV of ERISA has been terminated; there have been no
                  "reportable events" (as that term is defined in Section 4043
                  of ERISA) with respect to any such plan listed in SCHEDULE
                  2.12; the Company has not incurred liability under Section
                  4062 of ERISA; and no circumstances exist under which the
                  Company could have any direct or indirect liability whatsoever
                  (including, but not limited to, any liability to any
                  multiemployer plan or the PBGC under Title IV of ERISA or to
                  the Internal Revenue Service for any excise tax or penalty, or
                  being subject to any statutory lien to secure payment of any
                  such liability) with respect to any plan now or previously
                  maintained or contributed to by any entity


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                  other than the Company that is, or at any time was, along with
                  the Company, considered a single employer under Sections
                  414(b), (c), (m) or (o) of the Code.

         (e)      With respect to any employee benefit plan that is subject to
                  the continuation requirements of Sections 601-608 of ERISA and
                  Section 4980B of the Code or the continuation requirements of
                  any applicable state or local law, the Company has complied
                  with all such applicable laws and regulatory requirements.

2.13     TAX MATTERS.

         (a)      "Tax" or "Taxes" shall mean all of the Company's 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;
                  but excluding all transfer taxes), and include interest,
                  additions to tax, and penalties.

         (b)      The Company has duly and timely filed all Tax returns and
                  reports it is required to file by any Governmental Authority.
                  The Company has paid or established adequate reserves for all
                  Taxes (including penalties and interest) that have or may
                  become due under such returns and any assessments that have
                  been received by it or otherwise. All such Tax returns or
                  reports fairly reflect the Taxes of the Company for the
                  periods covered thereby.

         (c)      The Company is not delinquent in the payment of any Tax
                  assessment or governmental charge and there are no Tax
                  deficiencies or delinquencies asserted against the Company. No
                  Internal Revenue Service audit of the Company is pending or
                  threatened, and the results of any completed audits are
                  properly reflected in the Financial Statements. The Company
                  has not granted to any taxing authority any extension of the
                  limitation period during which any Tax liability may be
                  asserted. All amounts of money the Company is required to
                  withhold from employees or collect from customers for Taxes,
                  social security and unemployment insurance, and the portion of
                  any such Taxes the Company is required to pay to any
                  Governmental Authority, have been collected or withheld and
                  either paid to the respective Governmental Authority or set
                  aside in accounts for such purpose, or such monies have been
                  reserved against and entered on the Company books.

2.14     LEASED PROPERTY. Disclosed on SCHEDULE 2.14 is a list by legal
         description of all real property that the Company leases in its
         business (the "Leased Property"). All of the Leased Property is leased
         by the Company from the City of Shreveport, Louisiana under the
         Shreveport Lease (SCHEDULE 2.11, Item No. 11).

2.15     INTELLECTUAL PROPERTY RIGHTS. To IHI's knowledge, no patents,
         processes, inventions, trademarks, trade names, copyrights, licenses,
         information and proprietary rights (collectively, "Intellectual
         Property Rights") being used by the Company in the conduct of its


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         business infringe upon or are in conflict with the rights of others.
         SCHEDULE 2.15 is a summary of all Intellectual Property Rights.

2.16     PERMITS AND LICENSES. SCHEDULE 2.16 is a list and description of each
         permit, license or similar authorization from a Governmental Authority
         with respect to the Company's operations, together with the expiration
         date of each, and each association of which the Company is a member and
         each association or governmental agency by which the Company is
         accredited. IHI and the Company have provided to Buyer copies of the
         permits, licenses or similar authorizations that are disclosed on
         SCHEDULE 2.16.

2.17     DEPOSIT ACCOUNTS. SCHEDULE 2.17 is a list of:

         (a)      the name of the financial institution in which the Company has
                  accounts or safe deposit boxes;

         (b)      the names in which the accounts or boxes are held;

         (c)      the type of account and account number; and

         (d)      the name of the person authorized to draw thereon or have
                  access thereto.

2.18     BROKERS' FEES. Neither the Company nor IHI is obligated (contingently
         or otherwise) under any contract or other agreement, and there are no
         outstanding claims against any of them for the payment of any broker's
         or finder's fee or agent's commission or other similar payment in
         connection with the origin, negotiation, execution or performance of
         this Agreement or the Related Agreements.

2.19     LIMITATION ON REPRESENTATIONS; DEFINITION OF KNOWLEDGE. All
         representations and warranties of IHI in this Section 2 are being made
         to its "knowledge" (as that term is defined below) except for those
         representations and warranties made in Sections 2.2 and 2.3. When any
         representation or warranty in this Section 2 is qualified to IHI's
         "knowledge," it means the actual knowledge of its executive officers
         other than Robert E. Cone.

3.       REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
         to IHI that the statements in this Section 3 are true and correct as of
         the date of this Agreement and will be true and correct on the Closing
         Date as if made on the Closing Date (except to the extent any
         representation or warranty is made as of another date, which are hereby
         made as of such other date):

3.1      AUTHORIZATION AND ENFORCEABILITY. Buyer has full power and authority to
         execute and deliver this Agreement, all other agreements to be executed
         and delivered by it under this Agreement, the Related Agreements and
         the Note, and to perform its obligations hereunder and thereunder.
         Buyer has duly authorized the execution, delivery and performance of
         this Agreement, and it is Buyer's legal, valid and binding obligation,
         enforceable against it in accordance with its terms, except for the
         Exceptions. When Buyer executes and delivers the Related Agreements and
         the Note, they will have been duly executed and delivered by Buyer and
         will constitute their legal, valid and binding obligations, except as
         the enforcement thereof may be limited by the Exceptions. Buyer is not
         required to obtain any consent, approval or authorization of, or
         registration, declaration or filing with any Governmental


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         Authority or third party to authorize the execution and delivery of,
         the performance of their obligations under this Agreement, the Related
         Agreements, or the Note.

3.2      NO VIOLATION OF LAW, ETC. Buyer's execution, delivery and performance
         of this Agreement, the Related Agreements and the Note does not
         conflict with, violate or constitute a breach of or a default under, or
         result in the creation or imposition of any lien upon any of the assets
         or properties of Buyer under the terms of, any credit or any loan
         agreement, mortgage, indenture, promissory note or other agreement or
         instrument to which Buyer is a party or by which either of them or any
         of their properties may be bound or affected.

3.3      LEGAL PROCEEDINGS. There are no actions, suits or proceedings pending
         or known to be threatened against Buyer or any of their properties, at
         law or in equity, or before or by any Governmental Authority.

3.4      BROKERS' FEES. The Buyer is not obligated (contingently or otherwise)
         under any contract or other agreement, and there are no outstanding
         claims against either of them for the payment of any broker's or
         finder's fee or agent's commission or other similar payment in
         connection with the origin, negotiation, execution or performance of
         this Agreement, the Related Agreements or the Note.

3.5      BUYER'S KNOWLEDGE. Buyer has no knowledge of any facts or circumstances
         that would indicate that any of the representations or warranties of
         IHI are inaccurate or untrue in any material respects as of the date
         made or as of the Closing Date. For purposes of this Agreement, Robert
         E. Cone's knowledge of a fact or circumstance shall in all cases be
         attributed to the Buyer.

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

4.1      CONDUCT OF BUSINESS. IHI shall cause the Company to carry on and
         conduct its operations only in the Ordinary Course of Business
         including the collection of its accounts receivable, payment of trade
         account and other payables, and maintenance of inventory levels,
         without any change in the policies, practices, and methods that the
         Company pursued before the date of this Agreement. IHI will use its
         reasonable commercial efforts to preserve the business organizations of
         the Company intact, to preserve the relationships with Company's
         customers, suppliers, and others having business dealings with the
         Company.

4.2      NOTIFICATION OF INACCURACY OF REPRESENTATIONS AND WARRANTIES. IHI will
         promptly advise Buyer in writing if (a) any of its representations or
         warranties are untrue or incorrect in any material respect or (b) IHI
         becomes aware of the occurrence of any event or of any state of facts
         that results in any of the representations and warranties of IHI being
         untrue or incorrect in any material respect as if IHI were then making
         them.

5.       CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS AT THE CLOSING. Buyer's
         obligation to purchase the Stock on the Closing Date is subject to the
         satisfaction, by the Closing Date, of the conditions of this Section 5.
         If any such condition is not satisfied or waived, then Buyer shall have
         no obligation to purchase the Stock.

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5.1      COMPLIANCE WITH THIS AGREEMENT. By the Closing Date, IHI and the
         Company shall have performed, and complied with all agreements and
         conditions contained in this Agreement that they are required to
         perform or comply with.

5.2      ACCURACY OF REPRESENTATIONS AND WARRANTIES.

         (a)      All of the representations and warranties of IHI in this
                  Agreement (considered collectively), and each of these
                  representations and warranties (considered individually), must
                  have been accurate, in light of the circumstance under which
                  they were made, in all material respects as of the date of
                  this Agreement, and must be accurate in all material respects
                  as of the Closing Date as if made on the Closing Date.

         (b)      Buyer must not have discovered any material error,
                  misstatement or omission in the representations and warranties
                  made by IHI in this Agreement, the Financial Statements, or in
                  any Exhibit, schedule or other disclosure made hereunder.

5.3      SATISFACTION OF CONDITIONS TO MERGER. All of the conditions precedent
         to the Merger shall have been satisfied and performed.

5.4      NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and the
         Closing Date, there must not have occurred any material adverse change
         in the Company's financial condition or results of operations.

6.       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF IHI AT THE CLOSING. IHI's
         obligation to sell the Stock to Buyer on the Closing Date is subject to
         the satisfaction, by the Closing Date, of the conditions set forth in
         this Section 6. If any such condition is not satisfied or waived, then
         IHI shall have no obligation to sell the Stock to Buyer.

6.1      COMPLIANCE WITH THIS AGREEMENT. By the Closing Date, Buyer shall have
         performed and complied with all agreements and conditions contained in
         this Agreement that it is required to perform or comply with.

6.2      ACCURACY OF REPRESENTATIONS AND WARRANTIES.

         (a)      All of Buyer's representations and warranties in this
                  Agreement (considered collectively), and each of its
                  representations and warranties in this Agreement (considered
                  individually), must have been accurate, in light of the
                  circumstance under which they were made, in all material
                  respects as of the date of this Agreement and must be accurate
                  in all material respects as of the Closing Date as if made on
                  the Closing Date.

         (b)      IHI must not have discovered any material error, misstatement
                  or omission in the representations and warranties Buyer made
                  in this Agreement or in any Exhibit, schedule or other
                  disclosure hereunder.

6.3      SATISFACTION OF CONDITIONS TO MERGER. All of the conditions precedent
         to the Merger shall have been satisfied and performed.


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6.4      RELEASE FROM GUARANTY. The City of Shreveport, Louisiana, as landlord
         under the Company's lease with respect to its facility in Shreveport
         (the "Shreveport Lease"), shall have released IHI from its Guaranty of
         the Shreveport Lease.

7.       NONCOMPETITION.

7.1      PROHIBITED ACTIVITIES. IHI will not, for a period of two years after
         the Closing Date, directly or indirectly, for itself or on behalf of or
         in conjunction with any other person, persons, company, partnership,
         corporation or business of whatever nature:

         (a)      engage in the design, manufacture, or assembly of (i)
                  refinery, petrochemical, pulp and paper vessels with special
                  fittings, (ii) industrial silencers, (iii) evaporators and
                  desalination equipment, or (iv) contract fabrication and
                  machining of magnetic resonance imaging components and gas
                  turbine bodies and steam and wind-powered generator components
                  (the "Beaird Business");

         (b)      contact or solicit any person or entity which is, at that
                  time, or which has been, within one year before the Closing
                  Date, a customer of the Company (a "Protected Customer"), in
                  order to divert the Protected Customer to any other company or
                  entity in the Beaird Business.

         Notwithstanding the above, the foregoing covenants shall not prohibit
         IHI from (i) continuing to engage in the design, manufacture,
         fabrication, assembly or sale of any equipment, parts or component
         parts in which IHI or T-3 or any of their subsidiaries or affiliates
         (including specifically Belleli Energy S.r.L. ("Belleli")) currently
         engages, or (iii) acquiring as an investment no more than 1% of the
         capital stock of a competing business whose stock is traded on a
         national securities exchange or in the over-the-counter market.

7.2      DAMAGES. Because of the difficulty of measuring economic losses to
         Buyer as a result of a breach of any of the foregoing covenants, and
         because of the immediate and irreparable damage that will result to
         Buyer for which it would have no other adequate remedy, IHI agrees that
         the foregoing covenant may be enforced by Buyer if there is a breach by
         IHI, by injunctive relief, restraining orders, or other extraordinary
         relief to be cumulative to, but not in limitation of, any other
         remedies to which Buyer may be entitled.

7.3      REASONABLE RESTRAINT. The parties agree that the covenants in this
         Section 7 impose a reasonable restraint on IHI in light of the
         activities and business of the Company as of the date of this
         Agreement.

7.4      SEVERABILITY; REFORMATION. The covenants in this Section 7 are
         severable and separate, and the unenforceability of any specific
         covenant shall not affect the provisions of any other covenant. If any
         court of competent jurisdiction determines that the scope, time or
         territorial restrictions are unreasonable, the parties intend that such
         restrictions be enforced to the fullest extent the court deems
         reasonable, and the Agreement shall thereby be reformed.

8.       INDEMNIFICATION.

8.1      SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties'
         representations, warranties, covenants, agreements and indemnities in
         this Agreement shall survive the Closing, the


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         consummation of the transactions evidenced by this Agreement, and any
         investigation with respect thereto for a period of one year after the
         Closing Date (the "Expiration Date"). Notwithstanding the foregoing,
         any representation, warranty, covenant, agreement or indemnity in
         respect to which indemnity may be sought, shall survive the time at
         which it would otherwise terminate if notice of the inaccuracy or
         breach thereof shall have been given to the party against whom such
         indemnity may be sought before such time. The parties' covenants and
         agreements contained herein to be performed or observed at or before
         the Closing shall expire at the Closing, along with all rights and
         remedies for any breach thereof.

8.2      INDEMNIFICATION BY IHI.

         (a)      Subject to the provisions of this Section 8, IHI agrees to
                  protect, indemnify and hold harmless Buyer and its
                  stockholders, officers, directors, agents and attorneys, (the
                  "Buyer Indemnitees"), from and against any demand, claim,
                  action, cause of action, suit, proceeding, investigation,
                  liability, obligation, judgment, loss, damage, cost or expense
                  (excluding in all cases consequential and punitive damages,
                  but including reasonable attorneys' fees) (collectively,
                  "Damages") as they are incurred or suffered by any of them and
                  caused by or arising out of:

                  (i)      IHI's or the Company's breach or default in the
                           performance of any covenant or agreement in this
                           Agreement or in any Related Agreement; and

                  (ii)     IHI's breach of or inaccurate or erroneous
                           representation or warranty made in this Agreement.

         (b)      IHI shall not be obligated to indemnify the Buyer with respect
                  to any matter to the extent Cone or Carlin had actual
                  knowledge of such matter prior to the Closing and did not
                  disclose such matter to IHI.

8.3      INDEMNIFICATION BY BUYER. Subject to the provisions of this Section 8,
         Buyer agrees to protect, indemnify and hold harmless IHI and its
         stockholders, officers, directors, agents, attorneys and assigns (the
         "IHI Indemnitees") from and against any Damages as they are incurred or
         suffered by any of them and caused by or arising out of:

         (a)      Buyer's breach or default in the performance of any covenant
                  or agreement in this Agreement or in any Related Agreement;
                  and

         (b)      Buyer's breach of or inaccurate or erroneous representation or
                  warranty made in this Agreement.

8.4      PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.

         (a)      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 party
                  entitled to indemnification hereunder ("Indemnified Person")
                  shall give the party obligated to provide indemnification
                  under Section 8.2 or 8.3 hereof (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


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<PAGE>
                  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 Expiration Date. The
                  Indemnifying Person shall have the right to undertake 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.

         (b)      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 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 Person, which approval shall not be unreasonably
                  withheld.

8.5      PROCEDURE FOR INDEMNIFICATION; OTHER THAN THIRD-PARTY CLAIMS. Any claim
         for indemnification for any matter not involving a third-party claim
         shall be asserted by written notice, which specifies in reasonable
         detail the factual basis of such claim, delivered to the Indemnifying
         Person on or before the Expiration Date.

8.6      SPECIAL PROVISIONS REGARDING LIABILITY.

         (a)      No claim for indemnification shall be made hereunder unless
                  asserted by a written notice given to the Indemnifying Person,
                  on or before the Expiration Date.

         (b)      Buyer and IHI shall have no liability or obligation on a claim
                  for indemnification hereunder with respect to any matter
                  unless and until the total amount of Damages incurred by the
                  other parties Indemnitees exceeds $100,000 in the aggregate
                  ("Minimum Damages"), and then only for the amount by which
                  such Damages exceeds Minimum Damages. In no event shall either
                  Buyer's or IHI's aggregate liability for a claim or claims for
                  indemnification for Damages hereunder exceed $6,000,000
                  ("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 8.


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         (d)      An indemnity payment for Damages otherwise due and payable
                  under this Section 8 shall be decreased to the extent of any
                  (i) net reduction of tax liability the Indemnified Party
                  actually realizes as a result of such indemnifiable loss, and
                  (ii) insurance proceeds the Indemnified Party actually
                  collects in connection with the indemnifiable loss.

8.7      REMEDIES. The remedies of the Buyer and the Buyer Indemnitees set forth
         in this Section 8 shall be the exclusive post-Closing remedies
         available to them with respect to the actual or alleged breach by IHI
         of any provision of this Agreement (other than for an actual or alleged
         breach under Section 7 hereof) or the Related Agreements.

9.       POST-CLOSING MATTERS.

9.1      REATTRIBUTION OF LOSS CARRYOVERS. IHI and Buyer agree that IHI will
         make an election under Treasury Regulation Section 1.1502-20(g)
         promulgated under the Code or any corresponding provisions of any Tax
         law to reattribute to itself any portion of the net operating loss
         carryovers and net capital loss carryovers attributable to the Company
         or any subsidiary or affiliate. Buyer agrees to cooperate with IHI in
         connection with Tax matters relating to the Company including, without
         limitation, the preparation and filing of the election to be made
         pursuant to Treasury Regulation Section 1.1502-20(g) and to file its
         Tax returns and reports in a manner consistent with such election made
         by IHI.

9.2      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.

9.3      BOOKS AND RECORDS. Insofar as IHI 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, Buyer and the Company
         will use their best efforts to preserve and make available to IHI, at
         the location of such books and records in Buyer's and the Company's
         organization, access to and the right to copy such of the books and
         records as such they may then have in their possession or to which it
         may have access.

9.4      TAX MATTERS.

         (a)      IHI shall prepare or cause to be prepared and file or cause to
                  be filed any required Tax Returns for Tax periods ending on or
                  before the Closing Date, and shall pay all Taxes of the
                  Company for Tax periods ending on or before the Closing Date.

         (b)      The Buyer shall cooperate fully, as and to the extent
                  reasonably requested by IHI in connection with the filing of
                  Tax Returns pursuant to this Section 9.4 and any audit,
                  litigation, or other proceeding with respect to Taxes. Such
                  cooperation shall include the retention and (upon IHI's
                  request) the provision of records and information which are
                  reasonably relevant to any such audit, litigation or other
                  proceeding and making employees available on a mutually
                  convenient basis to provide additional information and
                  explanation of any material provided hereunder. Buyer agrees
                  (i) to retain all books and records with respect to Tax
                  matters pertinent to the Company


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<PAGE>
                  relating to any Tax period beginning before the Closing Date
                  until the expiration of any applicable statutes of limitations
                  (including, to the extent notified by IHI) of the respective
                  Tax periods, and to abide by all record retention agreements
                  entered into with any Tax authority, and (ii) to give IHI
                  reasonable written notice prior to transferring, destroying,
                  or discarding any such books and records and, if IHI shall
                  request, the Buyer shall allow IHI to take possession of such
                  books and records. Should any audit, litigation or other
                  proceeding with respect to Taxes potentially give rise to a
                  payment obligation by IHI or the Company, Buyer will allow IHI
                  and its counsel to review and comment on written responses
                  provided to the IRS or Tax authority, if it so elects, at its
                  own expense in the defense of such audit, litigation, or other
                  proceeding, upon written request of IHI during normal business
                  hours.

10.      TERMINATION.

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

         (a)      By Buyer and IHI in a written instrument signed by each of
                  them.

         (b)      By Buyer or IHI if the Closing does not occur on or before
                  December 31, 2001 (the "Termination Date").

         (c)      By Buyer or IHI 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 Termination Date.

         (d)      By Buyer or IHI 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 by the
                  Termination Date.

10.2     EFFECT OF TERMINATION. If terminated as provided in Section 10.1, this
         Agreement shall forthwith become void and have no effect, except for
         Section 11.9 and Section 11.12, 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.

11.      MISCELLANEOUS.

11.1     ENTIRE AGREEMENT. This Agreement, including the Exhibits and schedules
         hereto, constitutes the entire agreement between the parties with
         respect to the subject matter hereof and no party shall be liable or
         bound to any other party in any manner by any warranties,
         representations or covenants except as specifically set forth herein or
         therein. This Agreement supersedes all letters, memoranda and term
         sheets previously prepared in connection with the negotiations
         surrounding the subject matter hereof. The terms and conditions of this
         Agreement shall inure to the benefit of and be binding upon the
         parties' respective successors and permitted assigns. Nothing in this
         Agreement, express or implied, is intended to confer upon any third
         party any rights, remedies, obligations or liabilities under or by
         reason of this Agreement, except as expressly provided in this
         Agreement.


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<PAGE>
11.2     NOTICES. Any notices permitted or required to be given under the terms
         of this Agreement shall be in writing and shall be deemed given if
         delivered to the party to be notified at the address specified below,
         by first class mail, overnight courier or fax with hard copy being sent
         by first class mail or overnight courier. Such notice shall be deemed
         received 24 hours after it is sent via fax (with receipt confirmed) or
         overnight courier. Any notice given in any other manner shall be
         effective only if and when received.

         (a)      if to Buyer, at:

                        Robert E. Cone
                        c/o Beaird Industries, Inc.
                        601 Benton Kelly Street
                        Shreveport, LA  71106-7198
                        Telephone No.: (713) 254-3122
                        Facsimile No.:   (318) 868-1701

                        Donald Carlin
                        c/o Beaird Industries, Inc.
                        601 Benton Kelly Street
                        Shreveport, LA  71106-7198
                        Telephone No.: (318) 865-6351
                        Facsimile No.:  (318) 868-1701

                  With a copy (which shall not constitute notice) to:

                        Teri H. Kelley
                        10303 N.W. Freeway, Suite 400
                        Houston, Texas  77092
                        Telephone No.:  (713) 683-9944
                        Facsimile No.: (713) 683-9940

         (b)      if to IHI, at:

                        Industrial Holdings, Inc.
                        7135 Ardmore
                        Houston, Texas 77054
                        Attn: Christine A. Smith
                        Telephone No. (713) 747-1025
                        Facsimile No.:  (713) 749-9642

                  With a copy (which shall not constitute notice) to:

                        Jackson Walker L.L.P.
                        1100 Louisiana, Suite 4200
                        Houston, Texas 77002
                        Attn: Sabrina A. McTopy
                        Telephone No. (713) 752-4265
                        Facsimile No.:  (713) 752-4221


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<PAGE>
         or at such other address or facsimile number that the parties may
         designate in writing.

11.3     AMENDMENT AND WAIVERS. This Agreement may be amended, modified or
         supplemented only by a written instrument designated as an "amendment"
         to this Agreement and signed by the parties hereto. The observance of
         any term of this Agreement may be waived (either generally or in a
         particular instance and either retroactively or prospectively) only by
         a written instrument signed by the person specifically waiving such
         observance.

11.4     ASSIGNMENT. This Agreement shall inure to the benefit of and be binding
         upon the parties hereto and their respective legal representatives,
         successors and permitted assigns; provided, however, that no party may
         assign this Agreement without the prior written consent of the other
         party, which consent shall not be unreasonably withheld, except that
         Buyer may, on having given prior written notice to IHI but without
         IHI's prior written consent, assign its rights and obligations under
         this Agreement to an entity to be formed and wholly-owned by Carlin and
         Cone, which entity thereafter shall become the Buyer hereunder at the
         Closing.

11.5     GOVERNING LAW; VENUE. This Agreement shall be governed by, construed
         under, enforced and interpreted in accordance with the internal
         substantive laws of the State of Texas that apply to agreements to be
         made and performed solely within such state, without giving effect to
         any conflicts or choice of laws principles that might otherwise apply.
         The parties hereto agree that any dispute arising in connection with
         this Agreement shall be resolved by arbitration in accordance with
         Section 11.7 of this Agreement; provided, however to the extent a party
         exercises his or its rights under Section 7 of this Agreement; venue
         shall lie with a court of competent jurisdiction in Harris County,
         Texas.

11.6     SEVERABILITY. If any provision of this Agreement is declared
         unenforceable by any court of competent jurisdiction, such provision
         shall be enforced to the greatest extent permitted by law, and such
         declaration shall not affect the validity of any other provision of
         this Agreement.

11.7     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 11.7.

         (b)      No provision of or the exercise of any rights under this
                  Section 11.7 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

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<PAGE>
                  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 neutral,
                  disinterested 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 $1,000,000.00 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.

         (e)      The arbitration shall be held at the office of AAA located in
                  Harris County, Texas (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 11.7, 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 11.7,
                  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 11.4 of
                  this Agreement.

11.8     MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
         counterparts, each of which shall be deemed an original but all of
         which shall constitute one instrument.

11.9     EXPENSES. IHI and Buyer are each solely responsible for and will bear
         all of their own respective expenses, including, without limitation,
         expenses of legal counsel, investment bankers, brokers, consultants,
         accountants and other advisors, incurred at any time in connection with
         this Agreement, the Related Agreements, the Note, and the transactions
         contemplated hereby and thereby, and no such expenses shall be borne by
         the Company.

11.10    WAIVER OF BREACH. No waiver of any provision of this Agreement shall
         constitute a waiver of any other provision of this Agreement, nor shall
         such waiver constitute a waiver of any subsequent breach of such
         provision.

11.11    CONSTRUCTION. The headings contained in this Agreement are for
         reference purposes only and shall not affect this Agreement in any
         manner whatsoever. Wherever required by the

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<PAGE>
         context, any gender shall include any other gender, the singular shall
         include the plural, and the plural shall include the singular.

11.12    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.

11.13    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.


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

                                 INDUSTRIAL HOLDINGS, INC.


                                 By: /s/ CHRISTINE SMITH
                                     -------------------------------------
                                 Name:  Christine Smith
                                 Title: Executive Vice President


                                 BUYER

                                    /s/ DONALD CARLIN
                                    --------------------------------------
                                    Donald Carlin

                                    /s/ ROBERT E. CONE
                                    --------------------------------------
                                    Robert E. Cone



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