Document:

<PAGE>   1
                                                                    EXHIBIT 10.9

                   CONTRIBUTION AND INDEMNIFICATION AGREEMENT

         THIS CONTRIBUTION AND INDEMNIFICATION AGREEMENT (this "Agreement"),
dated as of August 14, 1998, is entered into by and among each of the
undersigned (each a "Company" and collectively, the "Companies").

                                R E C I T A L S:

         1. Industrial Holdings, Inc., Bolt Manufacturing Co., Inc., American
Rivet Company, Inc., LSS-Lone Star-Houston, Inc., Manifold Valve Services, Inc.
and Rex Machinery Movers, Inc. (collectively, "Borrowers") have or are obtaining
credit from Heller Financial, Inc. ("Heller") pursuant to loan documents listed
on Annex I (the "Loan Documents").

         2. Such credit will inure to the direct and material benefit of the
Companies as affiliates of Borrowers who conduct their business as part of a
common enterprise with Borrowers.

         3. Concurrently herewith, the Companies have executed and delivered to
Heller their Guaranty ("Guaranty") pursuant to which the Companies jointly and
severally guarantee the full and prompt payment and performance of the
Indebtedness of Borrowers.

         4. The Companies wish to enter into this Contribution Agreement to
effect an equitable sharing of their risk in respect of the Indebtedness.

                               A G R E E M E N T:

         NOW, THEREFORE, in consideration of the premises and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

         1. Capitalized terms used in this Contribution Agreement to the extent
not otherwise defined herein shall have the same meanings as in the Loan
Documents.

         2. If any Company makes a payment in respect of the Indebtedness, it
shall have the rights of contribution and reimbursement set forth below against
the other Companies and shall be indemnified as set forth below; provided that
no Company shall enforce its rights to any payment by exercising its rights of
contribution, reimbursement or indemnification unless and until all the
Indebtedness shall have been indefeasibly paid in full.

         3. If any Company makes a payment in respect of the Indebtedness that
is greater than its Pro Rata Percentage (hereinafter defined) of the
Indebtedness, calculated as of the date such payment is made, the Companies
making such payment shall have the right to receive from each of the other
Companies, and the other Companies jointly and severally agree to pay to such
Company, when permitted by paragraph 2 hereof, an amount such that the net
payments made by the Companies in respect of the Indebtedness shall be shared
among the Companies pro rata in proportion to their respective Pro Rata
Percentages of the Indebtedness. The Companies hereby jointly and severally
indemnify each of the other Companies and jointly and severally agree to hold
each of them harmless from and against any and all amounts which any such
Company shall ever be required to pay in respect of the Indebtedness in excess
of such Company's respective Pro Rata Percentage of the Indebtedness.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Company that shall accrue pursuant
to this Agreement shall be paid nor shall it be deemed owed pursuant to this
Agreement or any Loan Documents unless and until all of the Indebtedness shall
be indefeasibly paid in full. As used herein, the term "Pro Rata Percentage"
shall mean, for each Company, the percentage derived by dividing (a) the amount
by which the fair saleable value of its assets on July 31, 1998 exceeds its
liabilities (without giving effect to the Guaranty) (such excess for each
Company, its "Net Worth"), by (b) the Net Worth of all of the Companies.

<PAGE>   2

         4. If any Company makes any payment in respect of the Indebtedness, the
Company making such payment shall have the right to receive from the other
Companies, an amount equal to such payment net of any amounts received by such
Company from any other Company. Notwithstanding anything to the contrary
contained in this paragraph or in this Agreement, no liability or obligation of
a Company that shall accrue pursuant to this Agreement shall be paid or shall be
deemed owed pursuant to this Agreement or any Loan Documents unless and until
all of the Indebtedness shall be indefeasibly paid in full.

         5. Each Company represents and warrants to each other Company and to
their respective successors and assigns that:

            (1) the execution, delivery and performance by each party hereto of
         this Contribution Agreement are within such Company's corporate power,
         have been duly authorized by all necessary corporate action, require no
         action by or in respect of, or filing with, any governmental body,
         agency or official and do not contravene, or constitute a default
         under, any provision of applicable law or regulation or of the articles
         or certificate of incorporation or bylaws or other organizing document
         of such party or of any agreement, judgment, injunction, order, decree
         or other instrument binding upon such party or result in the creation
         or imposition of any lien, security interest or other charge or
         encumbrance on any asset of such Company;

            (2) this Agreement constitutes a legal, valid and binding agreement
         of each Company, enforceable against such Company in accordance with
         its terms; and

            (3) such Company has adequate capital to conduct its business as a
         going concern, as presently conducted and as proposed to be conducted,
         will be able to meet its obligations hereunder and in respect of its
         other existing and future indebtedness and liabilities as and when the
         same shall be due and payable, and is not insolvent (as that term is
         defined in 11 U.S.C. ss. 101 or applicable law) and will not be
         rendered insolvent by its obligations hereunder, and the foregoing
         representation is supported by such Company's financial statements and
         records, internal projections and forecasts.

         6. No failure or delay by any Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and non-exclusive of any rights or remedies
provided by law.

         7. Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the parties
hereto and consented to by Heller.

         8. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

         9. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS.

         10. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when a counterpart hereof shall have been signed by all the parties hereto.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                                  THE REX GROUP, INC., a Texas corporation

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

                                       2
<PAGE>   3

                                  REX MACHINERY SALES, INC., a Texas corporation

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

                                  U.S. CRATING, INC., a Texas corporation

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

                                  FIRST TEXAS CREDIT CORPORATION, a
                                  Texas corporation

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

                                  LANDRETH ENGINEERING COMPANY, a Texas
                                  corporation

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

                                  PIPELINE VALVE SPECIALTY, INC., a Texas
                                  corporation

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

                                  PHILFORM, INC., a Michigan corporation

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

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<PAGE>   4

                                  GHX, INCORPORATED, a Texas corporation

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

                                  REGAL MACHINE TOOL, INC., a Texas corporation

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

                                  WHIR ACQUISITION, INC., a Texas corporation

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

                                  MOORES PUMP AND SUPPLY, INC., a Louisiana
                                  corporation

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

                                  GHX, INCORPORATED OF LOUISIANA, a Louisiana
                                  corporation

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

                                  BEAIRD INDUSTRIES, INC., a Delaware
                                  corporation

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

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<PAGE>   5

                                  UNITED WELLHEAD SERVICES, INC.

                                  By:
                                     -----------------------------------
                                     Name:  Christine A. Smith
                                     Title: Vice President

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<PAGE>   6

                                     Annex I

                        [See attached Closing Checklist]

                                       6<PAGE>   1
                                                                   EXHIBIT 10.10

                                 PROMISSORY NOTE

$7,500,000                                                       August 14, 1998

         FOR VALUE RECEIVED, Industrial Holdings, Inc., a Texas corporation,
American Rivet Company, Inc., an Illinois corporation, LSS-Lone Star-Houston,
Inc., a Texas corporation, Bolt Manufacturing Co., Inc., a Texas corporation,
Manifold Valve Services, Inc., a Delaware corporation, and Rex Machinery Movers,
Inc., a Texas corporation (collectively, "Maker"), jointly and severally,
promise to pay to the order of Heller Financial, Inc., a Delaware corporation
(together with any holder of this Note, "Payee"), at its office located at 500
West Monroe Street, Chicago, Illinois 60661, or at such other place as Payee may
from time to time designate, the principal sum of Seven Million Five Hundred
Thousand and 00/100 Dollars ($7,500,000), together with interest thereon at a
rate per annum equal to the One Month LIBOR Rate (hereafter defined), plus two
and 50/100 percent (2.50%), payable in seventy-two (72) consecutive monthly
installments of principal plus interest commencing October 1, 1998 and
continuing on the same day of each consecutive calendar month thereafter until
this Note is fully paid. Subject to adjustment in accordance with the next
sentence in the event of the Mandatory Prepayment (as defined in Section 3 of
the Security Agreement (defined below)), the first seventy-one (71) such monthly
installments shall each be in the principal amount of One Hundred Four Thousand
One Hundred Sixty-Seven and 00/100 Dollars ($104,167), plus accrued interest,
and the final monthly installment shall be in the amount of the entire then
outstanding principal balance hereunder, plus all accrued and unpaid interest,
charges and other amounts owing hereunder or under the Security Agreement
(defined below). Notwithstanding anything else in this Note, if Maker makes the
Mandatory Prepayment, each consecutive monthly installment payment hereunder
shall thereafter be in an equal amount of principal, determined by dividing the
outstanding principal balance of this Note, after giving effect to the Mandatory
Prepayment, by the number of principal installments then remaining, plus accrued
interest, provided, however that the final monthly installment shall be in the
amount of the entire then outstanding principal balance hereunder, plus all
accrued and unpaid interest, charges and other amounts owing hereunder or under
the Security Agreement. All payments shall be applied first to interest and then
to principal. Interest shall be computed on the basis of a 360 day year and
charged for the actual number of days elapsed. Maker shall make an interest only
initial payment on September 1, 1998 of all accrued interest from the date of
this Note through August 31, 1998.

         For purposes of this Note, the term "One Month LIBOR Rate" means, for
each calendar month, a rate of interest equal to:

                  (a) the rate of interest determined by Payee at which deposits
in U.S. Dollars are offered for the one (1) month interest period based on
information presented on the Reuters Screen LIBO Page as of 11:00 A.M. (London
time) on the day which is two (2) business days (not counting Saturdays) prior
to the first day of each calendar month; provided that if at least two (2) such
offered rates appear on the Reuters Screen LIBO Page in respect of such interest
period, the arithmetic mean of all such rates (as determined by Payee) will be
the rate used; provided further that if there are fewer than two (2) offered
rates or Reuters ceases to provide LIBOR quotations, such rate shall be

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the average rate of interest determined by Payee at which deposits in U.S.
Dollars are offered for the one (1) month interest period by Bankers Trust
Company and Chase Bank, N. A. (or their respective successors) to banks with
combined capital and surplus in excess of $500,000,000 in the London interbank
market as of 11:00 A.M. (London time) on the applicable interest rate
determination date, divided by

                  (b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) business days prior to the
beginning of each calendar month (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other governmental authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System; (such rate to be adjusted to the
nearest one sixteenth of one percent (1/16 of 1%) or, if there is no nearest one
sixteenth of one percent (1/16 of 1%), to the next higher one sixteenth of one
percent (1/16 of 1%)).

         For the initial funding month (or any fraction thereof) under this
Note, the interest rate hereunder shall be the One Month LIBOR Rate in effect on
the day of funding, plus Two and 50/100 percent (2.50%).

         Notwithstanding the foregoing, if at any time implementation of any
provision hereof shall cause the interest contracted for or charged herein or
collectable hereunder to exceed the applicable lawful maximum rate, then the
interest shall be limited to such applicable lawful maximum.

         This Note is secured by, among other property, the collateral described
in the Amended and Restated Security Agreement dated August 14, 1998, between
Maker and Payee (the "Security Agreement;" and together with all related
documents and instruments, the "Loan Documents") to which reference is made for
a statement of the nature and extent of protection and security afforded,
certain rights of Payee and certain rights and obligations of Maker, including
Maker's rights and obligations, if any, to prepay the principal balance hereof.

         Time is of the essence hereof. If payment of any installment or any
other sum due under this Note or the Loan Documents is not paid within ten (10)
days of its then due date, Maker agrees to pay a late charge equal to the lesser
of (i) five cents (5(cent)) per dollar on, and in addition to, the amount of
each such payment, or (ii) the maximum amount Payee is permitted to charge by
law. In the event of the occurrence of an Event of Default (as defined in the
Security Agreement), then the entire unpaid principal balance hereof with
accrued and unpaid interest thereon, together with all other sums payable under
this Note or the Loan Documents, shall, at the option of Payee and without
notice or demand, become immediately due and payable, such accelerated balance
bearing interest until paid at the rate of three and .50/100 percent (3.50%) per
annum above the then otherwise applicable interest rate hereunder.

                                       2
<PAGE>   3

         Maker and all endorsers, guarantors or any others who may at any time
become liable for the payment hereof hereby consent to any and all extensions of
time, renewals, waivers and modifications of, and substitutions or release of
security or of any party primarily or secondarily liable on, or with respect to,
this Note or any of the Loan Documents or any of the terms and provisions
thereof that may be made, granted or consented to by Payee, and agree that suit
may be brought and maintained against any one or more of them, at the election
of Payee, without joinder of the others as parties thereto, and that Payee shall
not be required to first foreclose, proceed against, or exhaust any security
herefor, in order to enforce payment of this Note by any one or more of them.
Maker and all endorsers, guarantors or any others who may at any time become
liable for the payment hereof hereby severally waive presentment, demand for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
and all other notices in connection with this Note, filing of suit and diligence
in collecting this Note or enforcing any of the security herefor, and, without
limiting any provision of any of the Loan Documents, agree to pay, if permitted
by law, all expenses incurred in collection, including reasonable attorneys'
fees, and hereby waive all benefits of valuation, appraisement and exemption
laws.

         If there be more than one Maker, all the obligations, promises,
agreements and covenants of Maker under this Note are joint and several.

         THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. AT PAYEE'S ELECTION AND WITHOUT LIMITING PAYEE'S
RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION, MAKER HEREBY SUBMITS TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT (FEDERAL, STATE OR LOCAL)
HAVING SITUS WITHIN THE STATE OF ILLINOIS, EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF MAKER, WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN
TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.

         MAKER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE. THIS WAIVER IS INFORMED AND
FREELY MADE. MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT PAYEE HAS ALREADY RELIED ON THE WAIVER
IN MAKING THE LOAN EVIDENCED BY THIS NOTE, AND THAT PAYEE WILL CONTINUE TO RELY
ON THE WAIVER IN ITS RELATED FUTURE DEALINGS. MAKER FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

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<PAGE>   4

<Table>
<S>                                                        <C>
Industrial Holding, Inc.,                                   Bolt Manufacturing Co., Inc.,
a Texas corporation                                         a Texas corporation

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

American Rivet Company, Inc.,                               LSS-Lone Star-Houston, Inc.,
an Illinois corporation                                     a Texas corporation

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

Manifold Valve Services, Inc.                               Rex Machinery Movers, Inc.,
a Delaware corporation                                      a Texas corporation

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

</Table>

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