Document:

<PAGE>
                                                                  EXHIBIT 10(L)

                  This Subscription Agent Agreement is made as of the 7th day of
November, 2001.

BETWEEN:
                                        SEVEN SEAS PETROLEUM INC., a Cayman
                                        Islands exempted company limited by
                                        shares,

                                        (the "COMPANY")

                                        - and -

                                        U.S. TRUST COMPANY OF TEXAS, N.A., a
                                        national banking association,

                                        (the "AGENT")

                  WHEREAS the Company has resolved to issue Rights and
Contingent Rights to purchase units (the "Units") at a price of $100 per Unit,
plus interest accrued since July 23, 2001 through the closing date of the Rights
Offering. Each Unit consists of one 12% Series A senior secured note in the
principal amount of $100 ("Notes") and a warrant ("Warrants") to purchase
56.08667 shares of the Company's Common Stock at an exercise price of $1.782955
per share;

                  AND WHEREAS the Rights and Contingent Rights are to be issued
only to certain shareholders holding Common Stock of the Company as hereinafter
described, which shareholders held Common Stock of the Company on the Record
Date;

                  AND WHEREAS the Agent acts as trustee of the Notes and warrant
agent of the Warrants pursuant to the Master Warrant Agreement, as amended;

                  AND WHEREAS the Company desires that the Agent act as
registrar and transfer agent for the Warrants;

                  AND WHEREAS the Company deems it expedient that the Agent act
as registrar and transfer agent for the Rights and Contingent Rights, and as
custodian of monies tendered upon exercise of the Rights and Contingent Rights;

                  NOW THEREFORE, in consideration of the mutual covenants herein
set forth, the parties hereto agree as follows:

1. DEFINITIONS:

1.01 In this Agreement:

     (a)   "Agreement" means this agreement;

     (b)   "Common Stock" means the issued and outstanding ordinary shares of
           the Company, par value $0.001;

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                                      -2-

     (c)   "Contingent Rights" means the right of Shareholders owning fewer than
           169 shares to purchase Units, subject to availability of the Units
           after holders of the Rights exercise their Rights;

     (d)   "Contingent Subscription Certificate" has the meaning set forth in
           Section 2.02(a);

     (e)   "Expiration Date" means 5:00 p.m., (Eastern Standard Time), on
           December 7, 2001;

     (f)   "Qualified Shareholders" means all Common Shareholders whose address
           of record on the Record Date is in a Qualified Jurisdiction;

     (g)   "Notes" has the meaning set forth in the Recitals to this Agreement;

     (h)   "Qualified Jurisdictions" means jurisdictions outside of Canada as
           may be determined by the Company;

     (i)   "Record Date" means as at the close of business on October 8, 2001;

     (j)   "Rights" means the right of Shareholders owning at least 169 Shares
           to purchase Units;

     (k)   "Rights Offering" means the offering of the Rights and the Contingent
           Rights as described in the Rights Offering prospectus and expected to
           close on December 14, 2001.

     (l)   "Rights Offering Prospectus" means the prospectus pursuant to which
           the Rights are issued, dated November 5, 2001, a copy of which is
           attached hereto as Appendix "A";

     (m)   "Shareholders" means the holders on the Record Date of the Common
           Stock;

     (n)   "Subscription Certificates" has the meaning set forth in Section
           2.02(a);

     (o)   "Subscription Funds" means any and all monies tendered by eligible
           holders of Rights or Contingent Rights on subscription for the Units;

     (p)   "Units" has the meaning set forth in the Recitals to this Agreement;
           and

     (q)   "Warrants" has the meaning set forth in the Recitals to this
           Agreement.

2. APPOINTMENT OF AGENT:

2.01 The Agent is hereby appointed as registrar and transfer agent for the
Rights and Contingent Rights and the Agent hereby accepts such appointment upon
the terms hereinafter set forth.

2.02 The Agent shall keep the Company's register of Rights and Contingent
Rights, register of transfers and supply of unissued Subscription Certificates
and Contingent Subscription Certificates and, subject to such instructions as
may be from time to time given by the Company in writing through any of its
Chairman, President or Secretary or other duly authorized officer, the Agent
shall:

     (a)   in accordance with Section 3.01, issue to Qualified Shareholders
           certificates representing the Rights ("Subscription Certificates") or
           certificates representing the Contingent Rights (the "Contingent
           Subscription Certificates") which are to be held by them, as
           contemplated by the Rights Offering Prospectus or transferred to them
           after the initial issuance,

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                                      -3-

           respectively, and enter or register such certificates on the
           Company's register of transfers;

     (b)   mail (by first class insured mail) to each Qualified Shareholder
           (except as contemplated under Section 3.01 hereof), the Rights
           Offering Prospectus, the Rights Certificates or Contingent Rights
           Certificate, as the case may be, issued to each Qualified
           Shareholder, a cover letter and a return envelope addressed to the
           Agent;

     (c)   permit transfers to be made upon register of transfers by holders of
           Rights and Contingent Rights, or by their duly authorized attorneys,
           and cancel Subscription Certificates and Contingent Subscription
           Certificates surrendered upon such transfers provided that no
           transfer of Rights or Contingent Rights shall be made or Subscription
           Certificate or Contingent Subscription Certificates issued to any
           Shareholder that is not a Qualified Shareholder;

     (d)   in accordance with the Rights Offering Prospectus, accept
           Subscription Certificates and Subscription Funds from Qualified
           Shareholders with at least 169 shares of Common Stock, and cancel
           such Subscription Certificates properly presented for exercise from
           the register of Rights;

     (e)   in accordance with the Rights Offering Prospectus, accept Contingent
           Subscription Certificates and Subscription Funds from Qualified
           Shareholders with fewer than 169 shares of Common Stock and, if Units
           remain available after the Expiration Date, after the Rights are
           exercised, allocate one Unit to each of the Contingent Right holders
           who exercise their Contingent Rights in accordance with the terms and
           conditions set forth in the Rights Offering Prospectus; to the extent
           that the number of Contingent Rights exercised exceeds the number of
           Units available after the Rights are exercised, the Company shall
           determine and instruct the Agent which Qualified Shareholders will
           receive the available Units;

     (f)   maintain an escrow account to be used solely as a depository for
           Subscription Funds received by Contingent Right holders, such
           Subscription Funds to be held in such account until the Expiration
           Date, after which time the Funds shall be returned to each of the
           exercising Contingent Rights holders to the extent that no Units
           remain available for issuance to such holder or holders;

     (g)   in the event that any Units remain available on the Expiration Date
           after the exercise of the Rights and the Contingent Rights, advise
           the Company of the number of Units which remain available;

     (h)   after the Expiration Date and after all duly tendered Subscription
           Certificates and Contingent Subscription Certificates for the Units
           have been calculated, cancel all Rights and Contingent Rights from
           the register;

<PAGE>
                                      -4-

     (i)   until the Expiration Date, make such entries from time to time in the
           said register as may be necessary in order that the account of each
           holder of Rights and Contingent Rights, as the case may be, of the
           Company may be properly and accurately kept;

     (j)   supply the Company from time to time, as required, with lists of
           holders of Rights and Contingent Rights, as the case may be, as shown
           by the said register, correct to the dates of such lists showing the
           name and last known address of each holder and the number of Rights
           or Contingent Rights held by each holder; and

     (k)   the Agent shall:

           (i)   prior to the closing of the Rights Offering, provide to the
                 Company a complete list of holders of Rights and Contingent
                 Rights who have elected to subscribe to the Notes, including
                 the principal amount of Notes to be issued to each such holder
                 and the number of Warrants to be issued to each such holder;

           (ii)  as soon as possible following the closing of the Rights
                 Offering, issue and mail (by first class insured mail)
                 notification to each subscriber to Notes advising the holder of
                 the principal amount of Notes subscribed for and purchased by
                 such holder pursuant to the Rights Offering, and certificates
                 to each Warrant holder representing the Warrants subscribed for
                 and purchased by such holder pursuant to the Rights Offering.

3. THE RIGHTS AND CONTINGENT RIGHTS:

3.01 The Rights will be issued to Qualified Shareholders shown on the Company's
register of Common Stock as owning at least 169 shares of Common Stock on the
Record Date. The Rights will be in fully registered form and will be freely
transferable. The Rights will be exercisable in accordance with the Rights
Offering Prospectus.

3.02 The Contingent Rights will be issued to Qualified Shareholders shown on the
registers of Common Stock as owning fewer than 169 shares of Common Stock on the
Record Date. The Contingent Rights will be in fully registered form and will be
freely transferable. The Contingent Rights will be exercisable in accordance
with the Rights Offering Prospectus.

4. TAX MATTERS

4.01 The Company shall instruct the Agent in writing of the tax forms, if any,
that are to be issued and the appropriate filings that to be made with the
Internal Revenue Service prior to the Expiration of the Rights Offering. Absent
written instruction from the Company, the Agent shall not be responsible for any
tax filings.

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                                      -5-

5. APPOINTMENT OF CUSTODIAN

5.01 The Agent is hereby appointed as custodian for the receipt and holding of
the Subscription Funds and the Agent hereby accepts such appointment.

5.02 Subscription Funds received from Contingent Right holders shall be
maintained separately from the Subscription Funds for the rights.

6. DELIVERY OF SUBSCRIPTION FUNDS

6.01 Any Subscription Funds which may happen to be received by the Company will
promptly be delivered or paid over to the Agent together with all necessary
information regarding the subscriber.

6.02 After the Expiration Date, and after the calculation and tabulation of all
properly tendered subscriptions, the Subscription Funds will be paid by the
Agent to the Company upon the authentication of the global note representing the
Notes and the issuance of certificates representing the Warrants subscribed for
and purchased in the Rights Offering.

6.03 Any Subscription Funds received by the Agent from holders of Contingent
Rights, for holders who do not receive Units due to lack of availability of such
Units, shall be returned by the Agent to the appropriate Contingent Rights
holder as soon as practical after the Expiration Date in bank check form.

6.04 ANY SUBSCRIPTION FUNDS OR OTHER FUNDS HELD BY THE AGENT DURING THE TERMS OF
THIS AGREEMENT SHALL BE EITHER (i) HELD BY AGENT AS CASH, OR (ii) INVESTED BY
AGENT IN SHARES OF THE FEDERATED AUTOMATED GOVERNMENT MONEY TRUST, WHICH INVESTS
IN OBLIGATIONS OF, OR GUARANTEED BY, THE UNITED STATES GOVERNMENT, ITS AGENCIES
OR INSTRUMENTALITIES, MATURING IN ONE YEAR OR LESS, WHICH OBLIGATIONS MAY BE
PURCHASED THROUGH REPURCHASE AGREEMENTS WITH SAID OBLIGATIONS AS COLLATERAL. ANY
INTEREST EARNED ON ANY OF THE SUBSCRIPTION FUNDS OR OTHER FUNDS SHALL BE PAID TO
THE COMPANY.

7. COVENANTS BY THE COMPANY:

7.01 The Company covenants with the Agent that:

       (a)   it will pay the Agent remuneration for its services hereunder as
             per the fee agreement between Company and Agent attached as and
             will repay to the Agent on demand the amount of all out-of-pocket
             expenditures (including, but not limited to, postage, photocopying,
             telecommunications, long distance calls, overtime, legal fees and
             disbursements and stationary printing) whatever which the Agent
             reasonably incurs in the execution of its duties hereunder; and

       (b)   it will promptly give notice to the Agent of any and all changes to
             the terms and conditions of the Rights and Contingent Rights which
             it may resolve to make from time to time and that it will prepare
             and execute any and all documents to amend this Agreement pursuant
             to any such changes made.

<PAGE>
                                      -6-

8. REPLACEMENT OF LOST RIGHTS CERTIFICATES:

8.01 The authority of the Agent shall also extend to the issue as transfer agent
and registrar of any Subscription Certificate or Contingent Subscription
Certificates, the issue of which shall be authorized in writing by the Company
through any of its Chairman, President or Secretary, or other duly authorized
officer, in lieu of a Subscription Certificate or Contingent Subscription
Certificates shown to have been lost, destroyed or stolen as provided in
Sections 8.02 and 8.03.

8.02 The applicant for the issue of a new Subscription Certificate(s) or
Contingent Subscription Certificate(s) pursuant to this Article 8 shall bear the
cost of the issue thereof and in case of loss, destruction or theft shall, as a
condition precedent to the issue thereof, furnish to the Agent and the Company
such evidence of ownership and of the loss, destruction or theft of the
certificate satisfactory to the Company and to the Agent in their sole
discretion, and such applicant shall also be required to furnish an indemnity
bond satisfactory to the Company and the Agent, to save each of them harmless,
and shall pay the expenses, charges and any taxes applicable thereto to the
Company and the Agent in connection therewith.

8.03 No new Subscription Certificates or Contingent Subscription Certificates
shall be issued in lieu of Subscription Certificate or Subscription Certificates
claimed to have been lost, destroyed or stolen until a statutory declaration and
indemnity bond, if required, in form satisfactory to the Company and the Agent
shall have been furnished to the Agent.

9. INDEMNITY OF THE AGENT:

9.01 The Company hereby indemnifies the Agent and its directors, officers,
employees and agents and saves them harmless from and against any and all
liabilities, claims, losses, demands, expenses, suits, actions, proceedings,
judgments, penalties damages, levies and reasonable disbursements (collectively,
the "Liabilities") which may arise from the carrying out by the Agent of its
obligations under this Agreement in good faith without gross negligence (as
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction) and in accordance with applicable law including
the costs and expenses of defending against any claim of liability for the
foregoing. The Agent shall in no event be liable for special, indirect,
incidental, punitive or consequential loss or damage of any kind whatsoever
(including, but not limited to, lost profits), even if the Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action. This indemnity shall survive the termination of this Agreement of the
resignation or removal of the Agent.

9.02 Without in any way limiting the generality of the foregoing indemnity of
Section 9.01, the Agent may use its own judgment in the performance of its
duties but at any time it may apply to the Company or to counsel for the
Company, or to its own counsel at the expense of the Company for instructions or
advice, and the Company will fully indemnify and hold the Agent harmless in
accordance with Section 9.01 from any liability for any action taken by the
Agent in

<PAGE>
                                      -7-

accordance with its own judgment or pursuant to any applicable legislation,
regulation or order in accordance with or pursuant to such instructions or
advice as may be given to it by any of the Chairman, President or Secretary, or
other duly authorized officer of the Company, or instructions or advice of
counsel for the Company or of its own counsel. This indemnity shall survive the
resignation of the Agent in connection with any and all of its duties and
obligations under this Agreement.

9.03 In the event of any disagreement or controversy under this Agreement, or if
conflicting demands or notices are made upon the Agent, or in the event the
Agent is in doubt as to which action it should have taken under this Agreement,
Agent shall have the absolute right to either or both of the following courses
of action at the expense of the Company: (i) stop all further proceedings in,
and performance of, this Agreement and of all instructions received hereunder,
or (ii) file a suit in interpleader and obtain an order from a court of
competent jurisdiction requiring all persons involved to interplead and litigate
in such court their several claims and rights among themselves with the Agent.

9.04 The Agent shall incur no liability and shall be fully protected in acting
upon any written notice, request, waiver, consent, receipt or other paper or
document furnished to it and signed by the parties thereto, not only as to its
due execution and validity and the effectiveness of its provision but also to
the truth and acceptability of any information therein contained which it in
good faith believes to be genuine and what it purports to be.

9.05 The Agent shall have no duties except those which are expressly set forth
herein and it shall not be bound by any notice of a claim or demand with respect
to, or any waiver, modification, amendment, termination or rescission of this
Agreement, unless received by it in writing, and signed by the parties hereto
and, if its duties are herein affected, unless it shall have given prior written
consent thereto. The Agent undertakes only the duties and obligations expressly
imposed by this Agreement and assumes no implied duties or obligations.

9.06 The Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Subscription Certificates
or Contingent Subscription Certificates or be required to verify the same, but
all such statements and recitals are and shall be deemed to have been made by
the Company only.

9.07 The Company agrees that it will perform, execute, acknowledge and deliver
or cause to be delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Agent for the carrying out or
performing by the Agent of the provisions of this Agreement.

9.08 The Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or agents or for
any loss of the Company resulting from any such act, default, neglect or
misconduct, absent gross negligence (as determined by a final, non-appealable
order, judgment, decree or ruling of a court of competent jurisdiction) in the
selection and continued employment thereof.

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                                      -8-

10. NOTICES:

10.01 All payments required to be made or given pursuant to this Agreement shall
be mailed by first class mail postage prepaid or delivered by hand and any
notice required to be made or given pursuant to this Agreement shall be in
writing and shall be deemed to be validly given if delivered or if sent by
registered letter, postage prepaid or if sent by facsimile. Any notice so mailed
shall be deemed to have been given and received by the addressee on the fourth
business day next following the day on which such notice is mailed, or, if sent
by facsimile shall be deemed to have been received on the date upon which an
acknowledgement of receipt is received from the addressee provided that if such
acknowledgement of receipt is received after 4:00 p.m., eastern standard time,
such notice shall be deemed to be received on the next business day, or, if
delivered, shall be deemed to have been given on the delivery date, at the
offices and to the parties at the addresses shown below:

If to the Agent:

                  U.S. Trust Company of Texas, N.A.
                  2001 Ross Avenue, Suite 2700
                  Dallas, TX  75201

                  Attention:  Corporate Trust
                  Facsimile Number:  (xxx) xxx-xxxx

If to the Company:

                  Seven Seas Petroleum Inc.
                  5555 San Felipe, Suite 1700
                  Houston, TX  77056

                  Attention:  Larry A. Ray, President
                  Facsimile Number:  (713) 621-9770

with a copy to:

                  McAfee & Taft
                  A Professional Corporation
                  10th Floor, Two Leadership Square
                  211 North Robinson
                  Oklahoma City, OK 73102-7103

                  Attention:  Jerry A. Warren
                  Facsimile Number:  (405) 235-0439

11. GENERAL:

11.01 It is understood and agreed that any benefits accruing to the holders of
Rights or Contingent Rights at any time are held by each and every holder as
against the Company alone;

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                                      -9-

in all respects, subject to Article 3 and Section 5.02 hereof, the Agent shall
act as agent of the Company in the execution of duties specifically ascribed to
Agent hereunder.

11.02 In the event of any inconsistency between the provisions of this Agreement
and the Rights Offering Prospectus, the terms of the Rights Offering Prospectus
shall govern.

11.03 Time shall be of the essence of this Agreement.

11.04 This Agreement shall enure to the benefit of and be binding upon the
successors and assigns of the parties hereto.

11.05 This Agreement shall be governed by and construed in accordance with the
laws of the Texas.

11.06 Subject headings as used in this Agreement are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.

11.07 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same instrument.

                  IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.

                                     SEVEN SEAS PETROLEUM INC.

                                     BY:  /s/ LARRY A. RAY
                                          --------------------------------------
                                          Name: Larry A. Ray
                                          Tile: President

                                     U.S. TRUST COMPANY OF TEXAS, N.A.

                                     BY:  /s/ BILL BARBER
                                          --------------------------------------
                                          Name: Bill Barber
                                          Title: Vice President

<PAGE>

                                  APPENDIX "A"<PAGE>
                                                                    EXHIBIT 10.1

              FOURTH AMENDMENT TO FORBEARANCE, AMENDMENT AGREEMENT,
                   AND ACKNOWLEDGMENT OF COMMITMENT REDUCTION

      THIS FOURTH AMENDMENT TO FORBEARANCE, AMENDMENT AGREEMENT, AND
ACKNOWLEDGMENT OF COMMITMENT REDUCTION (the "Fourth Amendment"), dated as of
October 19, 2001, is between INDUSTRIAL HOLDINGS, INC., a Texas corporation (the
"Borrower"), a group of affiliated business entities of the Borrower as set
forth on the execution page of this Fourth Amendment (collectively the
"Guarantors"), and COMERICA BANK-TEXAS (the "Agent"), NATIONAL BANK OF CANADA, a
Canadian chartered bank, HIBERNIA NATIONAL BANK, a national banking association
and COMERICA BANK-TEXAS, a Texas banking association (collectively the
"Lenders") and it amends that certain Forbearance and Amendment Agreement more
fully described below.

                                    RECITALS:

      A. Borrower, Guarantors, Lenders, and the Agent have entered into that
certain Forbearance and Amendment Agreement (the "Agreement") dated as of August
31, 2001.

      B. Borrower, Guarantors, Lenders, and the Agent have previously entered
into that certain First Amendment dated as of September 30, 2001, that certain
Second Amendment dated as of October 5, 2001 and that certain Third Amendment
dated as of October 10, 2001, all relating to the Agreement.

      C. Borrower, Guarantors, Lenders and Agent now desire to again amend the
Agreement as herein set forth.

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

                                    ARTICLE I

                                   Definitions

      1.1 Definitions. Capitalized terms used in this Fourth Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement. The following definition is revised by deleting that currently
appears in the definition section and replacing it with what follows:

            "ACCEPTABLE DEFINITIVE DISPOSITION AGREEMENT" shall mean an
            agreement calling for the disposition of the stock and/or the assets
            of Landreth Metal Forming, Inc. ("Landreth"), GHX, Inc. ("GHX")
            and/or Beaird Industries, Inc. ("Beaird") which contain (i) no due
            diligence or any other contingencies which, in the discretion of the
            Lenders, constitute unusual pre-conditions to closing and funding;
            (ii) are with bona fide third party purchasers who are

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<PAGE>
            financially capable of completing their obligations under the
            Definitive Disposition Agreements, in the case of Landreth, by not
            later than the date the Borrower consummates the merger called for
            in the Merger Agreement and, in the case of Beaird and GHX
            contemporaneous with the date the Borrower consummates the merger
            called for in the Merger Agreement; and (iii) the terms of which,
            including but not limited to the amount of net proceeds to be
            received by each of the Lenders, are approved by each of the
            Lenders.

            "FORBEARANCE PERIOD" shall mean the period commencing on the
            Effective Date and continuing until 5:00 p.m., Houston, Texas time
            on November 15, 2001 unless extended beyond that date (but in no
            event beyond December 31, 2001) pursuant to the provisions of
            Section 2 hereof, but subject to earlier termination pursuant to the
            terms and provisions of this Agreement.

            "TERMINATION EVENT" shall mean the occurrence of any of the
            following: (i) any representation or warranty made or deemed made by
            Borrower in this Agreement shall be false, misleading or erroneous
            in any material respect when made or deemed to have been made, (ii)
            Borrower shall fail to perform, observe or comply with any covenant,
            agreement or term contained in this Agreement, (iii) any default or
            event of default, other than the Specified Defaults, shall occur
            under this Agreement or the Loan Papers, (iv) the Borrower shall
            commence a voluntary proceeding seeking liquidation, reorganization,
            or other relief with respect to itself or its debts under any
            bankruptcy, insolvency, or other similar law now or hereafter in
            effect or seeking the appointment of a trustee, receiver,
            liquidator, custodian, or other similar official of it or a
            substantial part of its property or shall consent to any such relief
            or to the appointment of or taking possession by any such official
            in an involuntary case or other proceeding commenced against it or
            shall make a general assignment for the benefit of creditors or
            shall generally fail to pay its debts as they become due or shall
            take any corporate action to authorize any of the foregoing, (v) an
            involuntary proceeding shall be commenced against the Borrower
            seeking liquidation, reorganization, or other relief with respect to
            it or its debts under any bankruptcy, insolvency, or other similar
            law now or hereafter in effect or seeking the appointment of a
            trustee, receiver, liquidator, custodian, or other similar official
            for it or a substantial part of its property, (vi) should any
            substantial creditor of the Borrower, other than EnSerCo, commence
            or threaten, in writing, to commence any legal proceeding to collect
            indebtedness owing to them by the Borrower, (vii) the conclusion of
            the Forbearance Period, (viii) any of the buyers who enter into
            Definitive Disposition Agreements indicate an unwillingness or an
            inability to consummate their obligations thereunder, (ix) should
            Lenders believe that the timely consummation of the transaction
            contemplated by the Merger Agreement is in doubt, (x) should EnSerCo
            fail

                                       2
<PAGE>
            to consent to any amendment to the Merger Agreement or (xi) the
            Termination Date.

                                   ARTICLE II

                                   Amendments

      2.1 Amendment to Section 2. Section 2 "Forbearance by Lenders" is hereby
revised by deleting what currently appears at Section 2 and replacing it with
the following:

            FORBEARANCE BY LENDERS. Subject to the terms of this Agreement and
            so long as no Termination Event shall have occurred, Lenders hereby
            agree to forbear until 5:00 p.m., Houston, Texas time on November
            15, 2001, from exercising their rights and remedies arising as a
            result of the occurrence of the Specified Defaults. Notwithstanding
            the foregoing, the forbearance granted by Lenders pursuant hereto
            shall not constitute and shall not be deemed to constitute a waiver
            of any of the Specified Defaults or of any other default under the
            Loan Papers.

            NOTWITHSTANDING THE FOREGOING, the Forbearance Period is subject to
            being extended through December 31, 2001 if the following condition
            is met, and each of the Lenders acknowledges to the Borrower in
            writing that the precondition has been met:

                  If Definitive Disposition Agreements, meeting not only the
            conditions in the definitions set forth herein, but also which
            contain no financing contingencies are entered into by 5:00 p.m. on
            November 15, 2001.

            Notwithstanding the foregoing, the forbearance granted by Lenders
            pursuant hereto shall not constitute and shall not be deemed to
            constitute a waiver of any of the Specified Defaults or of any other
            default under the Loan Papers.

      2.2 Acknowledgment of Reduction in Commitment. The Borrower and the
Lenders join herein for purposes of acknowledging that, as of November 5, 2001,
each Lender's Commitment is reduced to the amount set forth below:

                  Comerica Bank-Texas           $17,454,545.45
                  Hibernia National Bank        $ 5,818,181.82
                  National Bank of Canada       $ 8,727,272.73

      2.3 Additional Reporting Requirement. The Borrower hereby agrees to
provide the Lenders with, from and after the date hereof, the following
additional financial reporting:

            Presently the Borrower is committed to provide the Agent weekly cash
            flow projections. The Borrower acknowledges its obligation to
            continue to provide such weekly cash flow projection. The Borrower
            agrees, in the week

                                       3
<PAGE>
            following the week in which the cash flow projections apply, to
            produce a reconciliation of actual cash flow to the prior week's
            budget with an explanation, in such detail as the Agent shall
            reasonably require, of the variance between the budget and the
            actual cash flow.

      2.4 Proceeds of Landreth Transaction. In addition to the Lenders being
satisfied with the amount they receive in return for agreeing to release any
lien they have in and to the stock and/or assets of Landreth to be conveyed
pursuant to any Definitive Disposition Agreement, the Borrower hereby
acknowledges that the resulting payment to the Lenders shall be a permanent
reduction in each of the Lenders' Commitment.

                                   ARTICLE III

                              Conditions Precedent

      3.1 Conditions. The effectiveness of this Fourth Amendment is subject to
the satisfaction of the following conditions precedent:

            (a) Agent shall have received all of the following, each dated
      (unless otherwise indicated) the date of this Fourth Amendment, in form
      and substance satisfactory to Agent:

                  (1) Resolutions. Resolutions of the Board of Directors of
            Borrower certified by its Secretary or an Assistant Secretary which
            authorize the execution, delivery, and performance by Borrower and
            each Guarantor of this Amendment and the other Loan Documents to
            which Borrower and each Guarantor is or is to be a party hereunder;

                  (2) Incumbency Certificate. A certificate of incumbency
            certified by the Secretary or an Assistant Secretary of Borrower and
            each Guarantor certifying the names of the officers of Borrower and
            each Guarantor authorized to sign this Amendment and each of the
            other Loan Documents to which Borrower and each Guarantor is or is
            to be a party hereunder (including the certificates contemplated
            herein) together with specimen signatures of such officers;

                  (3) Bylaws. The bylaws of Borrower and each Guarantor
            certified by the Secretary or an Assistant Secretary of Borrower or
            Guarantor;

                  (4) Governmental Certificates. Certificates of the appropriate
            government officials of the state of incorporation of Borrower and
            each Guarantor as to the existence and good standing of Borrower and
            each Guarantor, each dated within ten (10) days prior to the date of
            this Fourth Amendment; and

                  (5) Additional Information. Agent shall have received such
            additional documents, instruments and information as Agent or its
            legal counsel, Winstead Sechrest & Minick P.C., may request.

                                       4
<PAGE>
            (b) The representations and warranties contained herein and in all
      other Loan Documents, as amended hereby, shall be true and correct as of
      the date hereof as if made on the date hereof;

            (c) All corporate proceedings taken in connection with the
      transactions contemplated by this Amendment and all documents,
      instruments, and other legal matters incident thereto shall be
      satisfactory to Agent and its legal counsel, Winstead Sechrest & Minick
      P.C.; and

            (d) The Borrower shall have reimbursed the Agent for fees and
      expenses paid or the fees and expenses of the Agent incurred, in
      connection with this Fourth Amendment to the Agreement including, but not
      limited to, the fees and expenses of the Agent's counsel.

                                   ARTICLE IV

                  Ratifications, Representations and Warranties

      4.1 Ratifications. The terms and provisions set forth in this Fourth
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect. Borrower and Agent agree that the
Agreement as amended hereby shall continue to be legal, valid, binding and
enforceable in accordance with its terms.

      4.2 Representations and Warranties. Borrower hereby represents and
warrants to Agent that (i) the execution, delivery and performance of this
Fourth Amendment and any and all other Loan Documents executed and/or delivered
in connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the articles of incorporation or
bylaws of Borrower, (ii) the representations and warranties contained in the
Agreement, as amended hereby, and any other Loan Document are true and correct
on and as of the date hereof as though made on and as of the date hereof, (iii)
no Event of Default, other than those described in the Agreement have occurred
and is continuing and no event or condition has occurred that with the giving of
notice or lapse of time or both would be an Event of Default, and (iv) other
than as described in the Agreement, Borrower is in full compliance with all
covenants and agreements contained in the Agreement as amended hereby.

                                    ARTICLE V

                                  Miscellaneous

      5.1 Survival of Representations and Warranties. All representations and
warranties made in this Fourth Amendment or any other Loan Document including
any Loan Document furnished in connection with this Amendment shall survive the
execution and delivery of this

                                       5
<PAGE>
Amendment and the other Loan Documents, and no investigation by any Lender or
any closing shall affect the representations and warranties or the right of
Lenders to rely upon them.

      5.2 Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.

      5.3 Expenses of Agent. As provided in the Agreement, Borrower agrees to
pay on demand all costs and expenses incurred by Agent in connection with the
preparation, negotiation, and execution of this Fourth Amendment and the other
Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the costs
and fees of Agent's legal counsel, and all costs and expenses incurred by Agent
in connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of Agent's legal counsel.

      5.4 Severability. Any provision of this Fourth Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Fourth Amendment and the effect thereof shall
be confined to the provision so held to be invalid or unenforceable.

      5.5 Applicable Law. This Fourth Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Dallas, Dallas County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas.

      5.6 Successors and Assigns. This Fourth Amendment is binding upon and
shall inure to the benefit of the Lenders and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the
Lenders.

      5.7 Counterparts. This Fourth Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

      5.8 Effect of Waiver. No consent or waiver, express or implied, by the
Lenders to or for any breach of or deviation from any covenant, condition or
duty by Borrower or Guarantor shall be deemed a consent or waiver to or of any
other breach of the same or any other covenant, condition or duty.

      5.9 Headings. The headings, captions, and arrangements used in this Fourth
Amendment are for convenience only and shall not affect the interpretation of
this Fourth Amendment.

                                       6
<PAGE>
      5.10 Non-Application of Chapter 346 of Texas Finance Code. The provisions
of Chapter 346 of the Texas Finance Code are specifically declared by the
parties hereto not to be applicable to this Fourth Amendment or any of the other
Loan Documents or to the transactions contemplated hereby.

      5.11 RELEASE AND COVENANT NOT TO SUE. THE BORROWER (IN ITS OWN RIGHT AND
ON BEHALF OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT
CONTRACTORS, ATTORNEYS AND AGENTS) AND GUARANTORS (IN THEIR OWN RIGHT AND ON
BEHALF OF THEIR RESPECTIVE ATTORNEYS AND AGENTS) (THE "RELEASING PARTIES")
JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND FOREVER DISCHARGE THE LENDERS AND
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS, AND ATTORNEYS (THE "RELEASED PARTIES"), TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND
OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF
ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY,
ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES,
OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH THE
RELEASING PARTIES HAVE AGAINST THE RELEASED PARTIES, INCLUDING, BUT NOT LIMITED
TO, NEGLIGENCE, GROSS NEGLIGENCE, USURY, FRAUD, DECEIT, MISREPRESENTATION,
CONSPIRACY, UNCONSCIONABILITY, DURESS, ECONOMIC DURESS, DEFAMATION, CONTROL,
INTERFERENCE WITH CONTRACTUAL AND BUSINESS RELATIONSHIPS, CONFLICTS OF INTEREST,
MISUSE OF INSIDER INFORMATION, CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF
COLLATERAL, WRONGFUL RELEASE OF COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL
DUE DILIGENCE, NEGLIGENT LOAN PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF,
VIOLATIONS OF STATUTES AND REGULATIONS OF GOVERNMENTAL ENTITIES,
INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL AND CRIMINAL), RACKETEERING
ACTIVITIES, SECURITIES AND ANTITRUST LAWS VIOLATIONS, TYING ARRANGEMENTS,
DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF ANY ALLEGED FIDUCIARY DUTY, BREACH
OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE OF CONDUCT OR DEALING, ALLEGED
OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF GOOD FAITH, AND ALLEGED
OBLIGATION OF GOOD FAITH AND FAIR DEALING, WHETHER OR NOT IN CONNECTION WITH OR
RELATED TO THE AGREEMENT OR THE NOTES OR VARIOUS SECURITY DOCUMENTS, GUARANTIES
AND ANY AND ALL DOCUMENTS RELATED THERETO (THE "LOAN PAPERS") OR THIS AGREEMENT,
AT LAW OR IN EQUITY, IN CONTRACT IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN,
SUSPECTED OR UNSUSPECTED (THE "RELEASED CLAIMS"). THE RELEASING PARTIES FURTHER
AGREE TO LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION WITH ANY CLAIM OR CAUSE
OF ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY DAMAGES, DAMAGES
ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES

                                       7
<PAGE>
ATTRIBUTABLE TO MENTAL ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING,
AND THE RELEASING PARTIES DO HEREBY WAIVE AND RELEASE ALL SUCH DAMAGES WITH
RESPECT TO ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY ARISE AT ANY TIME
AGAINST ANY OF THE RELEASED PARTIES. THE RELEASING PARTIES REPRESENT AND WARRANT
THAT NO FACTS NOW EXIST WHICH COULD PRESENTLY OR IN THE FUTURE COULD SUPPORT THE
ASSERTION OF ANY OF THE RELEASED CLAIMS AGAINST THE RELEASED PARTIES. THE
RELEASING PARTIES FURTHER COVENANT NOT TO SUE THE RELEASED PARTIES ON ACCOUNT OF
ANY OF THE RELEASED CLAIMS, AND EXPRESSLY WAIVE ANY AND ALL DEFENSES THEY MAY
HAVE IN CONNECTION WITH THEIR DEBTS AND OBLIGATIONS UNDER THE LOAN PAPERS AND
THIS AGREEMENT. THIS PARAGRAPH IS IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT
ANY OTHER RELEASE, COVENANT NOT TO SUE, OR WAIVER BY THE RELEASING PARTIES IN
FAVOR OF THE RELEASED PARTIES.

      ACCEPTANCE OF EACH ADVANCE MADE AFTER THE DATE HEREOF SHALL CONSTITUTE A
RATIFICATION, ADOPTION AND CONFIRMATION BY THE RELEASING PARTIES OF THE
FOREGOING GENERAL RELEASE OF RELEASED CLAIMS THAT ARE BASED IN WHOLE OR IN PART
ON FACTS, WHETHER OR NOT NOW KNOWN OR UNKNOWN, EXISTING ON OR PRIOR TO THE DATE
OF RECEIPT OF ANY SUCH ADVANCE.

      5.12 ENTIRE AGREEMENT. THIS FOURTH AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS FOURTH
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.

      5.13 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.

                                       8
<PAGE>
Executed as of October 19, 2001.

                                    BORROWER:

                                    INDUSTRIAL HOLDINGS, INC.,
                                    a Texas corporation

                                    By: /s/ ROBERT CONE
                                       ---------------------------------------
                                    Name:   Robert Cone
                                    Title:  Chief Executive Officer

                                    Address for Notices:

                                    Industrial Holdings, Inc.
                                    7135 Ardmore
                                    Houston, Texas 77054
                                    Fax No.: 713-749-9642
                                    Telephone No.: 713-747-1025
                                    Attention: Mr. Robert E. Cone

                                     AGENT:

                                    COMERICA BANK-TEXAS,
                                    a Texas banking association

                                    By: /s/ ROBIN M. KAIN
                                       ---------------------------------------
                                          Robin M. Kain
                                          Vice President

                                    Address for Notices:

                                    Comerica Bank - Texas
                                    P.O. Box 650282
                                    Dallas, Texas 75265-0282
                                    Fax No.:  (214) 589-4724
                                    Telephone No.:  (214) 589-4718
                                    Attention:  Mr. Joseph Sullivan
                                                MC 6510

                                       9
<PAGE>
                                    With a copy to:

                                    Comerica Bank - Texas
                                    P.O. Box 650282
                                    Dallas, Texas  75265-0282
                                    Fax No.: (214) 589-4724
                                    Telephone No.: (214) 589-4708
                                    Attention:  Robin M. Kain
                                                MC 6510

                                          LENDERS:

                                    COMERICA BANK-TEXAS
                                    a Texas banking association

                                    By: /s/ ROBIN M. KAIN
                                       ---------------------------------------
                                          Robin M. Kain
                                          Vice President

                                    Address for Notices:

                                    Comerica Bank - Texas
                                    P.O. Box 650282
                                    Dallas, Texas 75265-0282
                                    Fax No.: (214) 589-4724
                                    Telephone No.: (214) 589-4718
                                    Attention:  Mr. Joseph Sullivan
                                                MC 6510

                                    With a copy to:

                                    Comerica Bank - Texas
                                    P.O. Box 650282
                                    Dallas, Texas  75265-0282
                                    Fax No.: (214) 589-4724
                                    Telephone No.: (214) 589-4708
                                    Attention:  Robin M. Kain
                                                 MC 6510

                                       10
<PAGE>
                                    HIBERNIA NATIONAL BANK
                                    a national banking association

                                    By: /s/ DOUGLAS STALEY
                                       ---------------------------------------
                                          Douglas Staley
                                          Senior Vice President

                                    Address for Notices:

                                    Hibernia National Bank
                                    225 Barone Street, 10th Fl.
                                    New Orleans, Louisiana 70112
                                    Fax No.: (504) 533-5099
                                    Telephone No.: (504) 533-2045
                                    Attention: Ms. Tammy Angelety

                                    NATIONAL BANK OF CANADA,
                                    a Canadian charter bank

                                    By: /s/ PAT CLONINGER
                                       ---------------------------------------
                                    Name:  Pat Cloninger
                                    Title: Vice President

                                    By: /s/ MICHAEL BLOOMENFELD
                                       ---------------------------------------
                                    Name:  Michael Bloomenfeld
                                    Title: Executive Vice President

                                       11
<PAGE>
                                    Address for Notices:

                                    National Bank of Canada
                                    5200 Town Center Circle, Suite 302
                                    Boca Raton, Florida 33486
                                    Fax No.: (561) 367-1020
                                    Telephone No.: (561) 367-1700
                                    Attention: Ms. Patricia Cloninger

                                    With a copy to:

                                    National Bank of Canada

                                    -------------------------------------

                                    -------------------------------------
                                    Fax No.:
                                            -----------------------------
                                    Telephone No.:
                                                  -----------------------
                                    Attention:
                                              ---------------------------

                                       12
<PAGE>
      Guarantors hereby consent and agree to this Fourth Amendment and agree
that the Guaranty shall remain in full force and effect and shall continue to be
the legal, valid and binding obligation of Guarantors enforceable against
Guarantors in accordance with its terms.

                           GUARANTORS:

                           The Rex Group, Inc., a Texas corporation
                           First Texas Credit Corporation, a Texas corporation
                           Landreth Metal Forming, Inc., a Texas corporation
                           Pipeline Valve Specialty, Inc., a Texas corporation
                               (f/k/a Industrial Municipal Supply Company)
                           Bolt Manufacturing Co., Inc., a Texas corporation,
                               d/b/a Walker Bolt Manufacturing Co., Inc.
                           LSS-Lone Star-Houston, Inc., a Texas corporation
                           Manifold Valve Services, Inc., a Delaware
                               corporation, d/b/a Rogers Equipment & Supply
                               Company
                           GHX, Incorporated, a Texas corporation
                           Regal Machine Tool, Inc., a Texas corporation, f/k/a
                               Rex Machine Tool, Inc.
                           WHIR Acquisition, Inc., a Texas corporation, d/b/a
                           Ameritech Fastener Manufacturing
                           Moores Pump and Services, Inc., a Louisiana
                               corporation
                           GHX, Incorporated of Louisiana, a Louisiana
                               corporation
                           Beaird Industries, Inc., a Delaware corporation
                           United Wellhead Services, Inc., a Texas corporation

                           By:
                              ---------------------------------------------
                           Name:
                                -------------------------------------------
                           Title:
                                 ------------------------------------------

                                       13

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