Document:

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                                                                    Exhibit 10.6

                            ASSET PURCHASE AGREEMENT

                                     BETWEEN

                          LANDRETH METAL FORMING, INC.

                            INDUSTRIAL HOLDINGS, INC.

                                       AND

                          LANDRETH FASTENER CORPORATION

                                   DATED AS OF

                                NOVEMBER 6, 2001

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                                Table of Contents
                                   (Continued)

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1.         ASSETS PURCHASED..................................................................................................     2
           1.1       Equipment...............................................................................................     2
           1.2       Inventory...............................................................................................     2
           1.3       Receivables.............................................................................................     2
           1.4       Goodwill................................................................................................     2
           1.5       Outstanding Customer Purchase Orders....................................................................     3
           1.6       Other Assets............................................................................................     3
           1.7       Contracts...............................................................................................     3
           1.8       Licenses and Permits....................................................................................     3

2.         EXCLUDED ASSETS...................................................................................................     3
           2.1       Cash and Cash Equivalents...............................................................................     3
           2.2       Tax Deposits and Refunds................................................................................     3
           2.3       Corporate Records.......................................................................................     3
           2.4       Insurance Policies......................................................................................     3
           2.5       Employee Records........................................................................................     3
           2.6       Employee Plans..........................................................................................     3
           2.7       Computer Equipment......................................................................................     3
           2.8       Assets Related to Excluded Liabilities..................................................................     4

3.         LIABILITIES.......................................................................................................     4
           3.1       Liabilities Assumed.....................................................................................     4
           3.2       Excluded Liabilities....................................................................................     4
           3.3       Employees...............................................................................................     5

4.         PURCHASE PRICE FOR PURCHASED ASSETS...............................................................................     6
           4.1       Purchase Price..........................................................................................     6
           4.2       Allocation of Purchase Price............................................................................     6
           4.3       Post-Closing Adjustment of Purchase Price...............................................................     6

5.         PRE-CLOSING ACTIONS...............................................................................................     7
           5.1       Conduct of Business.....................................................................................     7
           5.2       Buyer's Access..........................................................................................     8
           5.3       Accuracy of Representations and Warranties and Satisfaction of Conditions...............................     8

6.         CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......................................................................     8
           6.1       Accuracy of Representations and Warranties..............................................................     8
           6.2       Performance of Covenants................................................................................     8
           6.3       No Casualty.............................................................................................     8
           6.4       Delivery of Closing Documents and Items.................................................................     8
           6.5       No Litigation...........................................................................................     9
           6.6       Certificates Regarding Conditions Precedent.............................................................     9
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7.         CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS...............................................................     9
           7.1       Accuracy of Representations and Warranties..............................................................     9
           7.2       Performance of Covenants................................................................................     9
           7.3       Delivery of Closing Documents and Items.................................................................     9
           7.4       Certificates Regarding Conditions Precedent.............................................................     9

8.         CLOSING MATTERS...................................................................................................     9
           8.1       Closing.................................................................................................     9
           8.2       Deliveries At Closing...................................................................................     9
           8.3       Certain Tax Matters.....................................................................................    11

9.         SELLER PARTIES' REPRESENTATIONS AND WARRANTIES....................................................................    11
           9.1       Organization and Standing...............................................................................    11
           9.2       Authorization...........................................................................................    11
           9.3       Existing Agreements and Other  Approvals................................................................    12
           9.4       Permits and Licenses....................................................................................    12
           9.5       Financial Statements....................................................................................    12
           9.6       No Undisclosed Liabilities..............................................................................    12
           9.7       Conduct of Business.....................................................................................    13
           9.8       Employees...............................................................................................    13
           9.9       Employee Benefit Plans..................................................................................    13
           9.10      Contracts...............................................................................................    14
           9.11      Title to Purchased Assets; Liens........................................................................    14
           9.12      Taxes...................................................................................................    15
           9.13      Litigation..............................................................................................    15
           9.14      Product Liability.......................................................................................    15
           9.15      Brokers.................................................................................................    15
           9.16      Intellectual Property...................................................................................    15
           9.17      Definition of Knowledge.................................................................................    16

10.        BUYER'S REPRESENTATIONS AND WARRANTIES............................................................................    16
           10.1      Organization and Standing...............................................................................    16
           10.2      Authorization...........................................................................................    16
           10.3      Existing Agreements and Other Approvals.................................................................    16
           10.4      Brokers.................................................................................................    17
           10.5      Buyer's Knowledge.......................................................................................    17

11.        POST-CLOSING COVENANTS............................................................................................    17
           11.1      Post-Closing Receipts...................................................................................    17
           11.2      Seller Names............................................................................................    17
           11.3      Further Assurances......................................................................................    17
           11.4      Books and Records.......................................................................................    17
           11.5      Waiver..................................................................................................    17
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12.        INDEMNIFICATION...................................................................................................    17
           12.1      Survival of Representations and Warranties..............................................................    18
           12.2      Indemnification by the Seller Parties...................................................................    18
           12.3      Indemnification by the Buyer............................................................................    18
           12.4      Procedure for Indemnification; Third-Party Claims.......................................................    18
           12.5      Procedure for Indemnification; Other than Third-Party Claims............................................    19
           12.6      Limitations on Liability................................................................................    19
           12.7      Remedies................................................................................................    20

13.        EXPENSES..........................................................................................................    20

14.        RISK OF LOSS......................................................................................................    20

15.        TERMINATION.......................................................................................................    20
           15.1      Manner of Termination...................................................................................    20
           15.2      Effect of Termination...................................................................................    21

16.        MISCELLANEOUS PROVISIONS..........................................................................................    21
           16.1      Notices.................................................................................................    21
           16.2      Assignment..............................................................................................    22
           16.3      Parties in Interest.....................................................................................    22
           16.4      Choice of Law...........................................................................................    22
           16.5      Counterparts............................................................................................    22
           16.6      Entire Agreement........................................................................................    22
           16.7      Arbitration.............................................................................................    22
           16.8      Public Announcements....................................................................................    23
           16.9      Certificate of No Tax Due...............................................................................    23
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                             EXHIBITS AND SCHEDULES
                             ----------------------

Exhibit A            Nonsolicitation Agreement
Exhibit B            Transitional Services Agreement
Exhibit C            Note
Exhibit D            Bill of Sale and Assignment
Exhibit E            Assignment and Assumption Agreement
Exhibit F            Ardmore Lease Agreement
Exhibit G            Security Agreement
Schedule 1.1         Equipment
Schedule 1.2         Inventory
Schedule 1.3         Receivables
Schedule 1.5         Outstanding Customer Purchase Orders
Schedule 1.6         Other Assets
Schedule 1.7         Assumed Contracts
Exhibit 2.7          SOFTECH Leases
Schedule 3.1(a)      Trade Accounts Payable
Schedule 3.1(b)      Other Accrued Payables
Schedule 3.1(c)      Outstanding Supplier Purchase Orders
Schedule 3.1(g)      Other Leases
Schedule 8.2(a)(iii) Permitted Liens
Schedule 9.3(a)      Existing Agreements
Schedule 9.3(b)      Other Approvals
Schedule 9.5         Financial Statements
Schedule 9.7         Conduct of Business
Schedule 9.10        Contracts and Commitments
Schedule 9.11        Title to Purchased Assets; Liens
Schedule 9.15        Brokers
Schedule 9.16        Intellectual Property

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                            ASSET PURCHASE AGREEMENT

                     THIS AGREEMENT (the "Agreement") is made on November 6,
2001, between LANDRETH METAL FORMING, INC., a Texas corporation (the "Seller"),
INDUSTRIAL HOLDINGS, INC., a Texas corporation ("IHI") (the Seller and IHI
sometimes collectively referred to herein as the "Seller Parties"), and LANDRETH
FASTENER CORPORATION, a Texas corporation (the "Buyer").

                                   BACKGROUND

A.         IHI is the owner of all the issued and outstanding capital stock of
           the Seller.

B.         The Seller manufactures solid, semi-tubular & shoulder rivets,
           externally threaded-fasteners and other cold-headed special parts in
           diameters from 3/16" to 1/2" (the "Business"):

C.         The Seller is the sole remaining entity in IHI's Engineered Products
           Group division (the "EPG Division"). Rex Machinery Movers, Inc. d/b/a
           Ideal Products ("Ideal Products"), Philform, Inc. ("Philform"), the
           limited partnership OF Acquisition, L.P. d/b/a Orbitform
           ("Orbitform") and American Rivet Company, Inc. ("American Rivet"),
           which recently sold substantially all of their assets, were formerly
           part of the EPG Division (the Seller, Ideal Products, Philform,
           Orbitform and American Rivet, collectively, the "EPG Division
           Members"). As part of the strategic disposition of the assets of the
           EPG Division from IHI's core business, Ideal Products, Philform,
           Orbitform and American Rivet have sold substantially all of their
           assets to purchasers other than the Buyer. However, the acquirers
           thereof, as well as the Buyer, are interested in (i) maintaining the
           customer and manufactured part-base that the EPG Division Members
           have historically enjoyed, without the prospect of the solicitation
           of those customers by each other, and (ii) continuing to utilize
           certain computer hardware, software and services that they are
           currently provided or have access to but that are not included among
           the Purchased Assets. Therefore, as a condition precedent to the
           Closing (as that term is defined below), the Buyer shall succeed to
           Seller's rights and assume Seller's obligations under (i) a customer
           and manufactured part-based Nonsolicitation Agreement attached as
           EXHIBIT A (the "Nonsolicitation Agreement") and (ii) a transitional
           services agreement attached as EXHIBIT B (the "Transitional Services
           Agreement").

D.         IHI acquired all of the capital stock of the Seller from, among
           others, Thomas C. Landreth ("Landreth"), the President of the Buyer,
           in 1992. Since that time, Landreth has been involved in the operation
           of the Business in a management capacity as either the President of
           the Seller or as Chief Technology Officer of the EPG Division. The
           parties therefore hereby acknowledge that Landreth is in many cases
           as knowledgeable as the Seller Parties regarding the Business, the
           Purchased Assets (as defined in Section 1 below), and the financial
           statements of the Seller.

E.         Buyer desires to purchase, and Seller desires to sell to Buyer, the
           Purchased Assets on the terms and subject to the conditions of this
           Agreement.

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                                   AGREEMENTS

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

1. ASSETS PURCHASED. At the Closing, Seller shall sell, assign, convey,
transfer, set over, and deliver to Buyer all of the assets, rights, and
interests of every conceivable kind or character whatsoever, whether tangible or
intangible, that on the Closing Date (as that term is defined below) are owned
by Seller or in which Seller has an interest of any kind, that are used in the
Business, except (a) for the Excluded Assets (as that term is defined in Section
2 below); and (b) that only Equipment (as that term is defined in Section 1.1
below) physically located on the Seller's premises shall be conveyed to the
Buyer (the assets being so purchased, the "Purchased Assets"). Other than with
respect to warranties of title, Seller shall transfer the Purchased Assets to
Buyer, and Buyer shall accept the Purchased Assets from Seller on an "AS IS,
WHERE IS" basis, with no representations or warranties of any kind or nature,
including without limitation, as to the physical or operational condition of the
Purchased Assets.

           The Purchased Assets include, without limitation:

           1.1 EQUIPMENT. All machinery, equipment, tools, fixtures,
workstations, computers, office equipment, manufacturing and engineering
drawings, and tangible personal property owned by Seller, and to the extent not
otherwise constituting equipment as defined above, all other items of tangible
personal property, all as physically located on the Premises (including, without
limitation, the items listed on SCHEDULE 1.1) (the "Equipment").

           1.2 INVENTORY. All raw materials inventory, work-in-process
inventory, and finished goods inventory owned by Seller (including, without
limitation, the items listed on SCHEDULE 1.2, except to the extent of changes
thereto in the Ordinary Course of Business (as that term is defined below) prior
to the Closing Date) (the "Inventory");

           1.3 RECEIVABLES. All accounts, chattel paper, documents, and
instruments (all as defined in the Uniform Commercial Code, as adopted in the
State of Texas (the "UCC")), and any security Seller holds for the payment
thereof (including, without limitation, the items described on SCHEDULE 1.3),
except to the extent of changes thereto in the Ordinary Course of Business prior
to the Closing Date) (the "Receivables"), and all of Seller's general
intangibles (as defined in the UCC) (except as they may pertain to Excluded
Liabilities (as that term is defined below)).

           1.4 GOODWILL. The name "Landreth Engineering," "Landreth Metal
Forming" or any substantial derivation thereof (the "Names"), and any other
assumed name currently used in the Business, and all telephone numbers, fax
numbers, and all Seller's rights and interest in and to inventions, copyrights,
patents, trademarks, designs, prototypes, trade secrets, know-how, technology,
technical literature, advertising literature, confidential information,
intangible property, and all goodwill, going concern value and customer lists,
all financial books and records, and all records pertinent to Seller's
customers, suppliers, advertising, services, and operations of the Seller.

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           1.5 OUTSTANDING CUSTOMER PURCHASE ORDERS. The full benefit of any and
all purchase orders placed with and accepted by Seller on or before the Closing
Date that have not been completely performed by Seller before the Closing Date,
covering the purchase from Seller of products to be supplied by Seller, or
covering the rendition by Seller of service on products supplied by Seller
(including, without limitation, those items listed on SCHEDULE 1.5, except to
the extent of changes thereto in the Ordinary Course of Business prior to the
Closing Date) ("Outstanding Customer Purchase Orders").

           1.6 OTHER ASSETS. The other assets of the Seller, and other claims
and rights used in, related to, or pertaining to the Business described in
SCHEDULE 1.6, except to the extent of changes thereto in the Ordinary Course of
Business prior to the Closing Date (the "Other Assets").

           1.7 CONTRACTS. All of the Seller's right, title and interest in and
to, and claims and rights under, all contracts, leases, and other agreements to
which the Seller is a party on the Closing Date or by which any of the Purchased
Assets are then bound and which are listed on SCHEDULE 1.7 (the "Assumed
Contracts").

           1.8 LICENSES AND PERMITS. All of Seller's rights in all permits and
licenses necessary for, used in, related to or pertaining to the operation of
the Business, but only to the extent the same are transferable.

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

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

           2.2 TAX DEPOSITS AND REFUNDS. Any Tax (as that term is defined in
Section 9.12(a)) deposits or prepaid Taxes, Tax refunds or Tax claim related to
the Business or the ownership of the Purchased Assets prior to the Closing Date.

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

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

           2.5 EMPLOYEE RECORDS. All employee records that Seller is required by
law to retain in its possession.

           2.6 EMPLOYEE PLANS. All of Seller's rights in connection with, and
all assets of, Employee Plans (as that term is defined in Section 9.9(a)).

           2.7 COMPUTER EQUIPMENT. All hardware and computer equipment leased
under the SOFTECH Leases attached as EXHIBIT 2.7 hereto and identified on the
exhibits thereof as being located at the 7135 Ardmore, Houston, Texas premises,
all related software access to which is being

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           provided under the Transitional Services Agreement, and the following
           computer equipment located at 7135 Ardmore, Houston, Texas, access to
           which is being provided under the Transitional Services Agreement:
           Compaq Proliant 5500, Windows NT Server that runs the BAAN
           application; Dell Poweredge 6350, Windows Terminal Server that runs
           the Citrix Application; Compaq Proliant 3000, a Windows NT Server
           that is being used as a file server by Seller and IHI; Cisco 3600
           Router that connects Houston to the Frame Relay; and Adtran TSU IQ,
           Network Equipment.

           2.8 ASSETS RELATED TO EXCLUDED LIABILITIES. All assets directly
related to Excluded Liabilities.

3.         LIABILITIES.

           3.1 LIABILITIES ASSUMED. The Seller Parties agree that Buyer does not
assume any debts, liabilities or obligations of Seller, whether accrued,
absolute, contingent, known, unknown, or otherwise, except for the following
liabilities as they exist on the Closing Date (the liabilities so assumed, the
"Assumed Liabilities").

           (a)       TRADE ACCOUNTS PAYABLE. The trade accounts payable of
                     Seller incurred in the Ordinary Course of Business with
                     respect to the materials or services used in the conduct of
                     the Business, as consistently reported by Seller, as
                     identified on SCHEDULE 3.1(a), except to the extent of
                     changes thereto in the Ordinary Course of Business prior to
                     the Closing Date;

           (b)       OTHER ACCRUED PAYABLES. The other accrued payables that are
                     related to the Business, as consistently reported by the
                     Seller, as identified in SCHEDULE 3.1(b), except to the
                     extent of changes thereto in the Ordinary Course of
                     Business prior to the Closing Date;

           (c)       OUTSTANDING CUSTOMER AND SUPPLIER PURCHASE ORDERS. All of
                     Seller's obligations under the Outstanding Customer
                     Purchase Orders and Seller's outstanding purchase orders
                     with its suppliers that are not yet recorded as trade
                     accounts payable, as identified in SCHEDULE 3.1(c), except
                     to the extent of changes thereto in the Ordinary Course of
                     Business prior to the Closing Date;

           (d)       ASSUMED CONTRACTS. All of Seller's obligations under the
                     Assumed Contracts;

           (e)       WARRANTY CLAIMS. All warranty claims (whether made before
                     or after the Closing Date) for products manufactured by the
                     Seller;

           (f)       SCRANTON ACRES LEASE. All of Seller's obligations under the
                     Lease Agreement with Purchase Option, dated October 26,
                     1992, between Seller, as tenant, and Scranton Acres, as
                     Landlord (the "Scranton Acres Lease"); and

           (g)       OTHER LEASES. All of Seller's obligations under the other
                     leases listed on SCHEDULE 3.1(g).

           3.2 EXCLUDED LIABILITIES. Buyer does not assume and will have no
liability for any debt, liability or obligation of the Seller that is not
expressly identified and assumed in Section 3.1. Without limiting the generality
of the foregoing sentence or Section 3.1 above in any way, listed

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below are certain of the liabilities and obligations that Buyer does not assume
and for which Buyer will not be liable or responsible in any way (collectively,
the "Excluded Liabilities"):

           (a)       TAXES. Any Tax liability of Seller, including, but not
                     limited to, any Tax liability: (i) arising as a result of
                     Seller's operation of the Business or ownership of the
                     Purchased Assets prior to the Closing Date, except for any
                     employment, unemployment, withholding taxes or other
                     payroll-related taxes of Seller related to accrued payroll
                     assumed by Buyer in Section 3.1(b); or (ii) that will arise
                     as a result of the sale of the Purchased Assets under this
                     Agreement.

           (b)       COMERICA NOTE. All liabilities and obligations of Seller
                     under the Amended and Restated Credit Agreement, dated June
                     17, 1999, with Comerica, Comerica Bank, as agent and
                     individually, Hibernia National Bank and National Bank of
                     Canada, in the maximum principal amount of $55,000,000;

           (c)       MGF NOTE. All liabilities and obligations of the Seller
                     under that Promissory Note, dated August 3, 2001, in the
                     original principal amount of $657,225.86, made payable
                     jointly by Seller and American Rivet to the order of MGF
                     Industries, LLC (the "MGF Note");

           (d)       OTHER LONG-TERM LIABILITIES. Any other long-term
                     liabilities of the Seller not included in the Assumed
                     Liabilities;

           (e)       ACCRUED INTEREST. All accrued interest related to items
                     3.2(b) -(d) above;

           (f)       INTERCOMPANY PAYABLES. All payables included in the line
                     item titled "Interco rec (payable)" (i) reflected on the
                     balance sheet of the Seller as of August 31, 2001 included
                     in SCHEDULE 9.5 hereto, and (ii) recorded in that account
                     as contained in the financial records of the Seller after
                     that date in the Ordinary Course of Business;

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

           (h)       ACCRUED BUSINESS INSURANCE EXPENSES. All accrued business
                     insurance of the Seller (to the extent accrued on a
                     consistent basis);

           (i)       HSO CONSULTING PAYABLE. All liabilities of the Seller under
                     the $102,836 trade account payable to HSO Consulting; and

           (j)       OTHER LEASES. All liabilities under any leases except for
                     the Scranton Acres Lease and those leases described
                     SCHEDULE 3.1(G).

           3.3 EMPLOYEES. As of the Closing, the Buyer shall make offers of
employment to all of those persons who are Seller's employees immediately before
the Closing (except for Carl Schmidt and Greg Newkirk, who shall remain
employees of the Seller) at salaries or wage rates, as applicable, comparable to
those provided by the Seller before the Closing Date, and shall become the
employer of all of such employees who accept such employment offers; provided,
however, that Buyer shall offer to the Employees such employee and fringe
benefits as Buyer determines in its sole discretion.

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4.         PURCHASE PRICE FOR PURCHASED ASSETS.

           4.1 PURCHASE PRICE. At the Closing, Buyer shall pay to Seller as
consideration for the Purchased Assets the amount of $2,250,000 and shall assume
the Assumed Liabilities (together, the "Purchase Price"), as follows:

                     (i)       $1,900,000 in cash (the "Cash Purchase Price") by
                               wire transfer in immediately available funds;

                     (ii)      a promissory note in the original principal
                               amount of $350,000.00 made payable by Buyer to
                               Seller in substantially the form of EXHIBIT C,
                               and containing subordination terms reasonably
                               satisfactory to Seller and Buyer's senior secured
                               lender(s) (the "Note"); and

                     (iii)     the balance of the Purchase Price by execution
                               and delivery of the Assignment and Assumption
                               Agreement.

           4.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets (the "Allocation") based on Buyer's and
Seller's good faith and reasonable determination thereof, and in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations promulgated thereunder. Such proposed allocation shall be made
in writing by Buyer and delivered to Seller within 60 days after the date
hereof. If the Seller does not agree with such Allocation, the items in dispute
shall be submitted in writing to Deloitte & Touche, LLP, 333 Clay Street, Suite
2300, Houston, Texas 77002 (the "Independent Accountants"), which firm shall
render its advice on such items to the Buyer and Seller. The Buyer and Seller
shall make the Allocation in accordance with such advice. Buyer and Seller agree
to prepare and file all Tax returns (including but not limited to such reports
and information returns as required under section 1060 of the Code, and the
regulations thereunder and any corresponding or comparable provisions of
applicable state and local Tax laws) in a manner consistent with the Allocation.
In the event the Allocation is disputed by any taxing authority, the party
hereto receiving notice of such dispute shall promptly notify the other party
hereto and the parties hereto shall consult and cooperate with each other
regarding the resolution of the dispute.

           4.3       POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.

           (a)       Within 30 calendar days following the Closing Date, the
                     Seller Parties shall cause to be prepared and delivered to
                     the Buyer a Statement of Net Working Capital (as that term
                     is defined in subparagraph (c) below) of the Seller as of
                     the Closing Date (such statement, the "Closing Date
                     Statement"). The Closing Date Statement shall be prepared
                     in accordance with generally accepted accounting
                     principles, consistently applied ("GAAP") and shall set
                     forth the information required to calculate Net Working
                     Capital. The Buyer shall give the Seller Parties and their
                     representatives reasonable access to the books, records and
                     personnel of the Business for the purpose of preparing and
                     auditing the Closing Date Statement. The Buyer shall have a
                     period of 30 calendar days after the delivery to it of the
                     Closing Date Statement, 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 the Seller Parties any

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                     objections to the Closing Date Statement that the Buyer may
                     have. If Buyer does not deliver in writing any objections
                     to the Seller Parties within the 30-day period, the Closing
                     Date Statement shall be deemed to be accepted and approved
                     by the Buyer. If Buyer delivers within the 30-day period
                     written objections to the Seller Parties, then the Buyer
                     and Seller Parties 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 the Seller Parties with respect to
                     the Closing Date Statement.

           (b)       If such disputes cannot be resolved by the Buyer and Seller
                     Parties within 20 calendar days after the delivery of the
                     objections to the Closing Date Statement, then the specific
                     matters in dispute shall be submitted to 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 each of the Seller
                     Parties 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 Date Statement shall be final and
                     binding upon the Buyer and each of the Seller Parties,
                     absent manifest error. All costs, fees and expenses charged
                     or incurred by the Independent Accountants, if any, shall
                     be borne equally by (i) the Seller Parties, jointly, and
                     (ii) the Buyer.

           (c)       For purposes hereof, "Net Working Capital" means, as of the
                     date of the Closing Date Statement and based thereon, an
                     amount equal to Seller's Receivables and Inventory minus
                     Seller's trade and other current accrued payables
                     (excluding accrued vacations) that the Buyer will assume at
                     the Closing under Section 3.1(a) and (b). The Inventory
                     shall be valued at the Seller's standard cost without
                     regard to any reserve for obsolescence or other
                     adjustments. The Purchase Price shall be increased by the
                     amount by which the Net Working Capital contained in the
                     Closing Date Statement is greater than $694,000, and shall
                     be decreased by the amount by which the Net Working Capital
                     contained in the Closing Date Statement is less than
                     $694,000 (whether an increase to or decrease from the
                     Purchase Price, the "Purchase Price Adjustment"). The
                     Purchase Price Adjustment shall be paid by the Seller
                     Parties to Buyer, or Buyer to the Seller Parties, as the
                     case may be, within 5 days of the determination of the
                     Purchase Price Adjustment. If Seller Parties are obligated
                     to pay the Purchase Price Adjustment to Buyer and if
                     payment is not made within 5 days of the determination of
                     the Purchase Price Adjustment, Buyer shall have the option
                     (but not the obligation) to set off the Purchase Price
                     Adjustment against obligations under the Note.

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

           5.1 CONDUCT OF BUSINESS. Seller shall carry on and conduct the
Business only in the Ordinary Course of Business (as defined below) 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 Seller pursued before the date of this
Agreement. Seller shall use its reasonable commercial efforts to preserve the
Business organization intact; to preserve the relationships with Seller's
customers, suppliers, and others having business dealings

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with Seller. "Ordinary Course of Business" means actions of the Seller that are:
(a) consistent with past practices taken in the course of its usual day-to-day
operations; (b) not required to be authorized by resolution of the Seller's
board of directors; and (c) similar in nature and magnitude to actions
customarily taken, without authorization by the boards of directors in the
ordinary course of usual day-to-day operations of other companies of similar
size in the same line of business.

           5.2 BUYER'S ACCESS. Seller Parties shall permit Buyer and its
representatives to make a full business, financial, accounting, and legal
investigation of Seller, the Business, the Purchased Assets, and the Assumed
Liabilities. Seller Parties shall take all reasonable steps necessary to
cooperate with Buyer in undertaking any investigation which it deems necessary.

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

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

           6.1       ACCURACY OF REPRESENTATIONS AND WARRANTIES.

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

           (b)       The Seller Parties shall have delivered any necessary
                     updates, amendments of and changes to the schedules
                     provided for in Section 9 of this Agreement, as are
                     necessary for Seller Parties' representations and
                     warranties to be true and correct as of the Closing Date
                     with each such update, amendment and change having been
                     reviewed and approved by the Buyer.

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

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

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

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

           6.6 CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Seller Parties
shall have delivered to Buyer certificates of the Seller Parties certifying that
as of the Closing Date all of the conditions set forth in this Section 6 have
been satisfied.

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

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

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

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

           7.4 CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Buyer shall have
delivered to the Seller Parties a certificate of the Buyer certifying that as of
the Closing Date all of the conditions set forth in this Section 7 have been
satisfied.

           8. CLOSING MATTERS.

           8.1 CLOSING. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices of Jackson Walker
L.L.P. at 10:00 a.m. on or before November 15, 2001, or at such other place
and/or on such other date as the parties may agree on (the "Closing Date").

           8.2 DELIVERIES AT CLOSING.

           (a) DELIVERIES BY THE SELLER. At the Closing, the Seller or
               the other indicated parties shall execute and deliver or
               provide to Buyer:

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

               (ii)   the Assignment and Assumption Agreement, in substantially
                      the form attached as EXHIBIT E;

               (iii)  either (y) UCC-3 termination statements as are required to
                      terminate and release all liens on the Purchased Assets
                      (including without limitation the

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                      Liens disclosed on SCHEDULE 9.11), or (z) letters of
                      creditors indicating that such Liens shall be released and
                      discharged on the Seller's payment of identified amounts
                      payable, in each case except for the permitted liens
                      ("Permitted Liens") listed on SCHEDULE 8.2(A)(III);

               (iv)   Assignment, Assumption and Landlord Consent assigning
                      Seller's leasehold interest in and its obligations under
                      the Scranton Acres Lease;

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

               (vi)   a premises lease with The Rex Group, Inc., as Landlord,
                      and the Buyer, as Tenant, with respect to the facility in
                      Houston, Texas currently leased by the Seller, in
                      substantially the form attached as EXHIBIT F (the "Ardmore
                      Lease Agreement");

               (vii)  the Security Agreement granting a lien in favor of the
                      Seller on the Purchased Assets that is subordinate to the
                      Buyer's primary secured lender, in substantially the form
                      attached as EXHIBIT G (the "Security Agreement");

               (viii) a Termination Agreement with Thomas C. Landreth
                      ("Landreth") under which the Seller and Landreth agree to
                      the termination of that certain Employment Agreement, that
                      certain Non-Competition Agreement between them, each dated
                      as of October 26, 1992, and any other agreements between
                      Landreth and the Seller, and release each other in
                      connection therewith (the "Termination Agreement"); and

               (ix)   such other documents, instruments and certificates
                      necessary or appropriate in connection with the Seller's
                      sale and transfer of the Purchased Assets and transfer and
                      assignment of the Assumed Liabilities.

           (b) DELIVERIES BY THE BUYER. At the Closing, Buyer shall execute and
               deliver, as applicable, to the Seller:

               (i)    the Cash Purchase Price and the Note;

               (ii)   the Assignment and Assumption Agreement;

               (iii)  the Assignment, Assumption and Landlord Consent with
                      respect to the Scranton Acres Lease, under which, among
                      other things, the Seller shall be fully released from any
                      liability or obligation thereunder;

               (iv)   the Ardmore Lease Agreement;

               (v)    the Security Agreement;

               (vi)   Landreth's written resignation from any and all offices
                      and employment positions with Seller;

               (vii)  the Termination Agreement; and

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                     (viii) such other documents, instruments and certificates
                            necessary or appropriate in connection with the
                            Buyer's purchase of the Purchased Assets and
                            assumption of the Assumed Liabilities.

           8.3       CERTAIN TAX MATTERS.

           (a)       TRANSFER TAXES. Seller Parties shall be jointly and
                     severally liable for and shall pay all federal, state, and
                     local sales, use, excise, documentary and similar transfer
                     Taxes payable in connection with the consummation of the
                     transactions contemplated by this Agreement ("Transfer
                     Taxes"), and the parties hereto acknowledge and agree that
                     the Purchase Price includes and is inclusive of any and all
                     such Transfer Taxes.

           (b)       AD VALOREM TAXES FOR 2001. The Seller Parties shall be
                     jointly and severally liable for and shall pay any and all
                     ad valorem and similar Taxes imposed on the Purchased
                     Assets related to all periods up to and including the
                     Closing Date, and the Buyer shall pay all ad valorem taxes
                     imposed on the Purchased Assets related to all periods
                     after the Closing Date.

           (c)       SURVIVAL OF COVENANTS. Notwithstanding anything contained
                     in this Agreement to the contrary, the covenants contained
                     in this Section 8.3 shall survive the Closing without
                     limitation and shall not be subject to any of the
                     limitations on the Seller Parties' indemnification
                     obligations contained in Section 12 of this Agreement.

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

           9.1 ORGANIZATION AND STANDING. The Seller is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Texas. Seller has all requisite power and authority to own its properties and
conduct the Business as it is now being conducted. Seller is duly qualified and
in good standing in every jurisdiction in which it is required by the nature of
its business or the ownership or lease of its properties to so qualify, except
where the failure to so qualify does not or is not reasonably expected to have a
material adverse effect on the Seller or the Business.

           9.2 AUTHORIZATION. Seller has all requisite corporate power and
authority, and Seller Parties have all requisite legal capacity (a) to execute,
deliver, and perform this Agreement and all other agreements and instruments
that will be delivered at the Closing under Section 8.2(a) (all such other
agreements and instruments, the "Related Agreements") to which each is a party
and (b) to consummate the transactions contemplated under this Agreement and the
Related Agreements. Seller has taken all necessary corporate action (including
the approval of its board of directors and shareholder), as the case may be, to
approve the execution, delivery, and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated in this
Agreement and in the Related Agreements. Each of the Seller Parties has duly
executed and delivered this Agreement. This Agreement is, and each Related
Agreement, when executed and delivered by the parties to them will be, the
legal, valid, and binding obligation of each Seller Party that is a party to it,
enforceable against each Seller Party in accordance with this its respective
terms,

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except as such enforcement may be limited by bankruptcy, insolvency, moratorium,
or similar laws relating to the enforcement of creditors' rights and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).

           9.3       EXISTING AGREEMENTS AND OTHER  APPROVALS.

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

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

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

           9.5 FINANCIAL STATEMENTS. Attached as SCHEDULE 9.5 are copies of the
Seller's balance sheet as of and statement of operations for the nine-month
period ended September 30, 2001 (the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP, subject to normal
recurring year-end adjustments and the absence of notes, and fairly present in
all material respects Seller's financial position as of the dates indicated and
the results of its operations for the periods covered thereby. Seller's books
and records have been maintained on an accrual basis in accordance with GAAP;
and accurately reflect the basis for the financial condition and the results of
its operations that are set forth in the Financial Statements.

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

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           9.7 CONDUCT OF BUSINESS. Except as otherwise disclosed on attached
SCHEDULE 9.7, since September 30, 2001, Seller has not:

           (a)       altered or amended its Articles of Incorporation or Bylaws;

           (b)       entered into, materially amended, or terminated any
                     contract, license, lease, commitment, or permit, except in
                     the Ordinary Course of Business;

           (c)       experienced any labor disturbance;

           (d)       incurred or become subject to any obligation or liability
                     (absolute, accrued, contingent, or otherwise), except (i)
                     in the Ordinary Course of Business and (ii) in connection
                     with the performance of this Agreement;

           (e)       paid or satisfied any obligation or liability (absolute,
                     accrued, contingent, or otherwise) other than (i)
                     liabilities shown or reflected in Seller's balance sheet as
                     of September 30, 2001, or (ii) liabilities incurred since
                     the date of the Seller's balance sheet as of September 30,
                     2001, in each case only in the Ordinary Course of Business
                     and in accordance with the express terms of such obligation
                     or liability;

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

           (g)       disposed of or permitted to lapse any Intellectual
                     Property;

           (h)       instituted or settled any litigation, action, or proceeding
                     before any court or governmental body relating to the
                     Purchased Assets or the Business;

           (i)       made any change in any method of accounting or any
                     accounting practice or suffered any deterioration in
                     accounting controls;

           (j)       entered into any other transaction other than in the
                     Ordinary Course of Business; or

           (k)       agreed or committed to do any of the foregoing.

           9.8 EMPLOYEES. There is not now, nor has there been at any time
during the past five years, any strike, lockout, grievance, claim for unfair
labor practices, discrimination claim based on race, religion, age of otherwise,
other labor dispute, or trouble of any nature pending or threatened against
Seller or that in any manner affects Seller.

           9.9       EMPLOYEE BENEFIT PLANS.

           (a)       No employee benefit plan, program or arrangement of
                     whatever nature, whether or not subject to any provisions
                     of the Employee Retirement Income Security Act of 1974, as
                     amended ("ERISA"), bonus, stock, or other employee pay
                     practice, consulting, retainer, employment, retirement,
                     welfare, fringe benefit, insurance, incentive, vacation,
                     holiday, sickness, leave of absence, or any other plan,
                     policy, program, agreement or other arrangement that the
                     Seller sponsors, maintains or contributes to with respect
                     to Seller's or IHI's current or former employees
                     (individually and collectively, "Employee Plan"), shall by
                     its terms or applicable law,

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<PAGE>
                     become binding upon or an obligation, liability or
                     responsibility of Buyer in any way, financial or otherwise.
                     The Seller has not engaged in any action or omission which
                     may result in Buyer being a party to, or bound by, any
                     Employee Plan. No Employee Plan provides for payment of
                     termination, change of control or retiree benefits in any
                     manner such that Buyer would become liable to provide such
                     benefits.

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

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

           (d)       During the five years preceding the Closing Date, (i) no
                     under-funded pension plan subject to Section 412 of the
                     Code has been transferred out of the Seller and (ii) Seller
                     has not participated in or contributed to, nor had an
                     obligation to contribute to, any multiemployer plan (as
                     defined in ERISA Section 3(37)) and Seller does not have
                     any withdrawal liability with respect to any multiemployer
                     plan.

           9.10 CONTRACTS. Except for (i) the contracts and commitments listed
on SCHEDULE 9.10 ("Contracts and Commitments"), (ii) contracts and commitments
specifying payment by the Seller or to the Seller of $25,000 or less over the
term of such contract or commitment; or (iii) the Outstanding Customer Purchase
Orders, the Seller is not a party to nor bound by any agreement or commitment
that materially affects the Business, the Purchased Assets, or the Assumed
Liabilities. All Contracts and Commitments are valid and binding obligations of
the Seller in accordance with their respective terms. No material default or
alleged material default exists on the part of the Seller or, to either Seller
Party's knowledge, on the part of any other party, under any of the Contracts
and Commitments. True and complete copies of all Contracts and Commitments have
been delivered to Buyer.

           9.11      TITLE TO PURCHASED ASSETS; LIENS.

           (a)       Seller is the owner of and has good title to all of the
                     Purchased Assets, free and clear of all liens, claims,
                     demands, charges, options, equity interests, leases,
                     pledges and security interests ("Liens"), except (i) as
                     described on SCHEDULE 9.11 and (ii) except for liens for
                     personal property taxes that are not yet due and payable.
                     When Buyer pays to the applicable creditor, at Seller's
                     direction, the amounts identified in the letters that will
                     be delivered to Buyer at the Closing pursuant to Section
                     8.2(a)(iii), Seller shall obtain a release of all Liens
                     except those described in Items No. 12 and 13 of SCHEDULE
                     9.11 .

           (b)       SCHEDULE 9.11 lists or describes all property used in the
                     conduct of the Business that is owned by or an interest in
                     which is claimed by any other person (whether a customer,
                     supplier, or other person) and for which Seller is
                     responsible, together with copies of all related
                     agreements.

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<PAGE>

           9.12      TAXES.

           (a)       "Tax" or "Taxes" shall mean any and all of the Seller's
                     foreign, federal, state, county, local, and other taxes
                     (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; and all transfer taxes and like charges
                     payable on and in connection with Seller's conveyance and
                     transfer of the Purchased Assets to Buyer), together with
                     interest, additions to tax, and penalties with respect
                     thereto.

           (b)       Seller has filed on a timely basis all Tax returns it is
                     required to file under foreign, federal, state, or local
                     law, and has paid or established an adequate reserve with
                     respect to all Taxes for the periods covered by such
                     returns. No agreements have been made by or on behalf of
                     Seller for any waiver or for the extension of any statute
                     of limitations governing the time of assessment or
                     collection of any Taxes. Seller and its officers have not
                     received any notice of any pending or threatened audit by
                     the IRS or any state or local agency related to its Tax
                     returns or Tax liability for any period, and a claim for
                     assessment or collection of Taxes has not been asserted
                     against Seller. There are no foreign, federal, state, or
                     local Tax liens outstanding against any of Seller's assets
                     (including, without limitation, the Purchased Assets) or
                     the Business.

           (c)       The Seller's sale of the Purchased Assets to the Buyer
                     pursuant to this Agreement will not result in the
                     imposition of, or liability of the Buyer for, any Transfer
                     Taxes.

           9.13 LITIGATION. There are no claims, disputes, actions, suits,
proceedings, or investigations pending or, to Seller's knowledge, threatened,
against or affecting the Seller, the Business, or the Purchased Assets.

           9.14 PRODUCT LIABILITY. There are no known defects or deficiencies
existing in any of the products manufactured or sold by the Seller, or in any
finished Inventory of the Seller, that could give rise to any liabilities or
claims for product liability.

           9.15 BROKERS. Seller has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in connection with the
transactions contemplated by this Agreement, except as set forth on SCHEDULE
9.15.

           9.16 INTELLECTUAL PROPERTY. SCHEDULE 9.16 lists all patents,
processes, trademarks, trade names, copyrights, service marks, logos, trade
secrets and all applications and registrations therefor that are used in the
Business, and licenses thereof under which the Seller has any right to the use
or benefit of, or other rights with respect to, any of the foregoing
("Intellectual Property"). Except as set forth in SCHEDULE 9.16, the Seller is
the sole and exclusive owner of the Intellectual Property, free and clear of all
Liens. To the Seller Parties' knowledge, none of the Seller's Intellectual
Property infringes on any other person's intellectual property, and, to the
Seller Parties' knowledge, no activity of any other person infringes on any of
the Intellectual Property. To the Seller Parties' knowledge, the Seller has been
and is now conducting the Business in a manner that has not been

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and is not now in violation of any other person's intellectual property, and
Seller does not require a license or other proprietary right to so operate the
Business.

           9.17 DEFINITION OF KNOWLEDGE. When any representation or warranty in
this Agreement is qualified to Seller Parties' knowledge, it means the actual
knowledge of such Seller Party's executive officers, except in the case of the
Seller, it means the actual knowledge of its executive officers other than
Landreth.

           10. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to each Seller Party that, as of the date hereof (except to the extent
any representation or warranty is made as of another date, which is in such case
made as of such other date):

           10.1 ORGANIZATION AND STANDING. Buyer is a corporation validly
existing under the laws of the State of Texas, and Buyer has all the requisite
corporate power and authority to own its properties and to conduct its business
as it is now being conducted.

           10.2 AUTHORIZATION. Buyer has all requisite power and authority (a)
to execute, deliver and perform this Agreement and the Related Agreements to
which it is or will be a party, and (b) to consummate the transactions
contemplated under this Agreement and the Related Agreements. Buyer has taken
all necessary action (a) to duly approve the execution, delivery, and
performance of this Agreement and (b) to consummate any related transactions.
Buyer has taken all necessary corporate action to approve the execution,
delivery and performance of this Agreement and the Related Agreements, and the
consummation of the transactions contemplated by this Agreement and the Related
Agreements. Buyer has duly executed and delivered this Agreement, and this
Agreement is its legal, valid, and binding obligation, enforceable against Buyer
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws relating to the enforcement
of creditor's rights and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).

           10.3      EXISTING AGREEMENTS AND OTHER APPROVALS.

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

           (b)       No approval, authority, or consent of, or filing by Buyer
                     with, or notification to, any federal, state, or local
                     court, authority, or governmental or regulatory body or
                     agency or any other corporation, partnership, individual,
                     or other entity is necessary (i) to authorize Buyer's
                     execution and delivery of this Agreement or (ii) to
                     authorize Buyer's consummation of the transactions
                     contemplated by this Agreement.

                                       16
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<PAGE>

           10.4 BROKERS. Buyer has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in connection with the
transactions contemplated by this Agreement.

           10.5 BUYER'S KNOWLEDGE. Landreth has no actual knowledge (and the
knowledge of other persons, including individuals and corporations or other
entities, shall not be imputed to Landreth) of any facts or circumstances that
would indicate that any of the representations or warranties of Sellers Parties
are inaccurate or untrue in any material respects as of the date made. For
purposes of this Agreement, Landreth's knowledge of a fact or circumstance shall
in all cases be attributed to the Buyer.

11.        POST-CLOSING COVENANTS.

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

           11.2 SELLER NAMES. Seller agrees that it will not use the Names
either directly or indirectly, alone or in combination with one or more other
words, in, or in connection with, any business, activities, or operations that
Seller directly or indirectly carries on or conducts.

           11.3 FURTHER ASSURANCES. From time to time after the Closing Date,
each party hereto will, at any other party's request, execute, acknowledge and
deliver to such requesting party such other instruments and take such other
actions and deliver such other documents as may be reasonably required to carry
out the intent of this Agreement and the Related Agreements.

           11.4 BOOKS AND RECORDS. Insofar as the Seller determines that any
books and records may be needed or useful in connection with federal, state or
local regulatory or tax matters, resolution of third-party disputes or contract
compliance issues, or other bona fide business purposes, for a period of seven
years after the Closing Date, Buyer will use its best efforts to preserve and
make available to the Seller, at the location of such books and records in the
Buyer's organization, access to and the right to copy such of the books and
records as such Buyer may then have in its possession or to which it may have
access upon written request of the Seller during normal business hours. The
Buyer agrees to make such of its employees and of the books and records as the
Seller may reasonably request, available at the Buyer's cost to assist in the
preparation of financial reports and tax returns for the Seller's fiscal year
ending in 2001.

           11.5 WAIVER. The Buyer hereby waives, releases, relinquishes and
acquits each of IHI, T-3 Energy Services, Inc., First Reserve Fund VIII, L.P.,
and Comerica, as agent and individually, Hibernia National Bank and National
Bank of Canada, and their directors, officers, stockholders, agent, successors,
from and against all claims, counterclaims, demands, suits, rights, actions and
causes of action of any nature whatsoever, as a result of or in connection with
the sale by IHI or the EPG Division Members (other than Seller) of the assets or
capital stock of such EPG Division Members to persons other than the Buyer.

12.        INDEMNIFICATION.

                                       17
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<PAGE>

           12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties'
representations, warranties, post-Closing covenants, agreements and indemnities
(except (i) those pursuant to the Assignment and Assumption Agreement, which
shall survive until all Assumed Liabilities have been satisfied, (ii) those of
the Seller Parties relating in any way to the Excluded Liabilities, which shall
survive until all of the Excluded Liabilities have been satisfied and (iii)
those of the Seller Parties contained in Section 8.3 which shall survive the
Closing without limitation) shall survive the Closing, the consummation of the
transactions under this Agreement and any investigation provided for with
respect thereto for a period of one year beginning on the Closing Date. The
parties' covenants and agreements contained herein to be performed or observed
at or prior to the Closing shall expire at the Closing, along with all rights
and remedies for any breach thereof. The date on which an applicable survival
period expires under the first sentence of this Section 12.1 is referred to
hereafter as the "Expiration Date."

           12.2      INDEMNIFICATION BY THE SELLER PARTIES.

           (a)       Subject to Section 12.3(b) below, the Seller Parties,
                     jointly and severally, shall defend, indemnify, and hold
                     harmless Buyer and its directors, officers, shareholders,
                     successors, and assigns (the "Buyer Indemnitees") from and
                     against any and all costs, losses, claims, suits, actions,
                     assessments, diminution in value, liabilities, fines,
                     penalties, damages (including in all cases consequential
                     and punitive damages) and expenses (including reasonable
                     legal fees) (collectively, "Damages") in connection with or
                     resulting from:

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

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

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

           12.3 INDEMNIFICATION BY THE BUYER. Subject to Section 12.2(a)(ii)
above, the Buyer shall indemnify and hold harmless the Seller Parties and their
directors, officers, shareholder, agents, successors and assigns (the "Seller
Indemnitees") from and against any Damages as they are incurred or suffered by
any of them and caused by or arising out of:

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

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

           12.4      PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.

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

                                       18
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<PAGE>
                     asserted under this Section 12 is referred to in this
                     Agreement as an "Indemnifying Person."

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

           (c)       If the Indemnifying Person, by the earlier to occur of the
                     30th day after receipt of notice of any such claim or, 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 Party, which approval shall not be
                     unreasonably withheld.

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

           12.6      LIMITATIONS ON LIABILITY.

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

           (b)       No claim for indemnification shall be made hereunder with
                     respect to any matter (i) unless and until the total amount
                     of Damages exceeds $25,000 in the aggregate ("Minimum
                     Damages"), and then only for the amount by which such
                     Damages exceeds Minimum Damages; and (ii) to the extent
                     that the total amount of Damages exceeds $1,900,000. The
                     Minimum Damages threshold shall not apply to any claim

                                       19
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<PAGE>
                     by the Seller Indemnitees related to the Assumed
                     Liabilities or to any claim by the Buyer Indemnitees for
                     Excluded Liabilities.

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

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

           (e)       The Seller Parties shall not have any liability under
                     Section 12.2, and the Buyer shall not have any liability
                     under Section 12.3, unless the notices required under
                     Sections 12.4 and 12.5 are delivered on or before the
                     Expiration Date.

           12.7 REMEDIES. The remedies of the Buyer and the Buyer Indemnitees
set forth in this Section 12 shall be the exclusive post-Closing remedies
available to them with respect to the actual or alleged breach by either Seller
Party of any provision of this Agreement or the Related Agreements (other than
the Nonsolicitation Agreement and the Transitional Services Agreement).

13. EXPENSES. Each of the parties shall pay all of the costs that it incurs
incident to the preparation, execution, and delivery of this Agreement and the
performance of any related obligations, whether or not the transactions
contemplated by this Agreement shall be consummated.

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

15.        TERMINATION.

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

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

           (b)       By Buyer or Seller Parties if the Closing does not occur on
                     or before November 30, 2001 (the "Termination Date").

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

           (d)       By Buyer or Seller Parties if there has been a material
                     breach of any of the covenants or agreements set forth in
                     this Agreement on the part of the other, and such breach is
                     not cured by the Termination Date.

                                       20
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<PAGE>

           15.2 EFFECT OF TERMINATION. If terminated as provided in Section
15.1, this Agreement shall forthwith become void and have no effect, except for
Section 13, Section 16.7 and Section 16.8, and except that a party shall not be
relieved or released from any liabilities or damages arising out of the party's
breach of any provision of this Agreement.

16.        MISCELLANEOUS PROVISIONS.

           16.1 NOTICES. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed given (a) when personally delivered or sent by facsimile
transmission to the party to be given the notice or other communication or (b)
on the business day following the day such notice or other communication is sent
by overnight courier to the following:

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

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

           IF TO BUYER:
           Thomas C. Landreth
           7135 Ardmore
           Houston, Texas 77054
           Telephone:  713-944-7400
           Facsimile:   713-944-8277

                                       21
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<PAGE>

           With a copy to:
           Fulbright & Jaworski, LLP
           1301 McKinney, Suite 5100
           Houston, Texas  77010
           Attn:  Joshua P. Agrons
           Telephone:  713-651-5529
           Facsimile:   713-651-5246

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

           16.2 ASSIGNMENT. Except as set forth herein, neither Seller Parties
nor Buyer shall assign this Agreement, or any interest in it, without the prior
written consent of the other.

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

           16.4 CHOICE OF LAW. This Agreement shall be governed by, construed,
and enforced in accordance with, the laws of the State of Texas.

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

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

           16.7      ARBITRATION.

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

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

                                       22
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<PAGE>

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

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

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

           16.9 CERTIFICATE OF NO TAX DUE. Seller ordered on November 2, 2001, a
Certificate of No Tax Due (under Section 111.020 of the Texas Tax Code) from the
Comptroller of Public Accounts of the State of Texas with respect to each Tax
under Title 2 of the Texas Tax Code with respect to which Seller is or has been
liable or filed Tax returns (including, but not limited to, Texas franchise
Taxes and Texas sales and use Taxes). Seller covenants to deliver such
Certificate of No Tax due to Buyer as promptly as practicable after receipt of
such certificate.

                                       23
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<PAGE>

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

                                       SELLER PARTIES:

                                       LANDRETH METAL FORMING, INC.

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

                                       INDUSTRIAL HOLDINGS, INC.

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

                                       LANDRETH FASTENER CORPORATION

                                       By: /s/ THOMAS C. LANDRETH
                                           -------------------------------------
                                           Thomas C. Landreth, President

                                       24
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<PAGE>

                   FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT

         THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the "First
Amendment") is dated as of November 15, 2001, between LANDRETH METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and LANDRETH FASTENER CORPORATION, a Texas
corporation (the "Buyer").

                                   BACKGROUND

A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement (the "Agreement") dated as of November 6, 2001.

B. The Seller Parties and the Buyer now desire to amend the Agreement as
herein set forth.

         NOW, THEREFORE, consistent with the Background and in consideration of
the terms and conditions set forth in this First Amendment and the Agreement,
each of the Seller Parties and Buyer agree as follows:

                                   AMENDMENTS

1. DEFINITIONS. Capitalized terms used in this First Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.

2. AMENDMENT TO SECTION 8.1. Section 8.1 "Closing" is hereby amended to read in
its entirety as follows:

                  8.1 CLOSING. The closing of the transactions contemplated in
                  this Agreement (the "Closing") shall take place at the offices
                  of Jackson Walker L.L.P. at 10:00 a.m. on or before November
                  30, 2001, or at such other place and/or on such other date as
                  the parties may agree on (the "Closing Date").

3. RATIFICATION. The terms and provisions set forth in this First Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this First
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.

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

                   [Balance of page intentionally left blank.]

<PAGE>

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

                                       SELLER PARTIES:

                                       LANDRETH METAL FORMING, INC.

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

                                       INDUSTRIAL HOLDINGS, INC.

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

                                       BUYER:

                                       LANDRETH FASTENER CORPORATION

                                       By:
                                          --------------------------------------
                                          Thomas C. Landreth, President

                                       2
<PAGE>

                  SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT

         THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Second
Amendment") is dated as of November 30, 2001, between LANDRETH METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and LANDRETH FASTENER CORPORATION, a Texas
corporation (the "Buyer").

                                   BACKGROUND

A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement (the "Agreement") dated as of November 6, 2001, and that
certain First Amendment to Asset Purchase Agreement dated as of November 15,
2001.

B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.

         NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Second Amendment and the Agreement, as amended, each of the Seller
Parties and Buyer agree as follows:

                                   AMENDMENTS

1. DEFINITIONS. Capitalized terms used in this Second Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.

2. AMENDMENT TO SECTION 8.1. Section 8.1 is hereby amended to read in its
entirety as follows:

                  "8.1 CLOSING. The closing of the transactions contemplated in
                  this Agreement (the "Closing") shall take place at the offices
                  of Jackson Walker L.L.P. at 10:00 a.m. on or before December
                  10, 2001, or at such other place and/or on such other date as
                  the parties may agree on (the "Closing Date"). For financial
                  and accounting purposes (including without limitation
                  preparation of the Closing Date Statement pursuant to Section
                  4.3), the Closing shall be deemed to have occurred as of the
                  close of business on the Closing Date."

3. AMENDMENT TO SECTION 4.3(c). Section 4.3(c) is hereby amended by adding the
following provisions after the third sentence:

                  "Though ad valorem taxes would not otherwise be taken into
                  account in the calculation of Net Working Capital, there shall
                  be charged against the Buyer and credited to the Seller an
                  amount equal to the ad valorem taxes imposed on the Purchased
                  Assets related to all periods after the Closing Date, such
                  charge to be calculated by multiplying the number of days
                  after the Closing Date remaining in the 2001 tax year ending
                  December 31, 2001 by the per diem figure of $379 per day."

<PAGE>

4. AMENDMENT TO SECTION 15.1(b). Section 15.1(b) is hereby amended to read in
its entirety as follows:

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

5. RATIFICATION. The terms and provisions set forth in this Second Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Second
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.

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

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

                                       SELLER PARTIES:

                                       LANDRETH METAL FORMING, INC.

                                       By:
                                          --------------------------------------
                                          Christine A. Smith,
                                          Vice President

                                       INDUSTRIAL HOLDINGS, INC.

                                       By:
                                          --------------------------------------
                                          Christine A. Smith,
                                          Executive Vice President

                                       BUYER:

                                       LANDRETH FASTENER CORPORATION

                                       By:
                                          --------------------------------------
                                          Thomas C. Landreth, President

                                       2

<PAGE>

                  THIRD AMENDMENT TO ASSET PURCHASE AGREEMENT

         THIS THIRD AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Third
Amendment") is dated as of December 10, 2001, between LANDRETH METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and LANDRETH FASTENER CORPORATION, a Texas
corporation (the "Buyer").

BACKGROUND

A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement dated as of November 6, 2001, that certain First Amendment to
Asset Purchase Agreement dated as of November 15, 2001, and that certain Second
Amendment to Asset Purchase Agreement dated as of November 30, 2001 (the Asset
Purchase Agreement, as amended, the "Agreement").

B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.

         NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Third Amendment and the Agreement each of the Seller Parties and Buyer
agree as follows:

AMENDMENTS

1. DEFINITIONS. Capitalized terms used in this Third Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.

2. AMENDMENT TO SECTION 8.1. Section 8.1 is hereby amended to read in its
entirety as follows:

                  "8.1 CLOSING. The closing of the transactions contemplated in
                  this Agreement (the "Closing") shall take place at the offices
                  of Jackson Walker L.L.P. at 10:00 a.m. on the later to occur
                  of (i) December 12, 2001 or (ii) the date of the consummation
                  of the proposed merger between IHI and T-3 Energy Services,
                  Inc., or at such other place and/or on such other date as the
                  parties may agree on (the "Closing Date"). For financial and
                  accounting purposes (including without limitation preparation
                  of the Closing Date Statement pursuant to Section 4.3), the
                  Closing shall be deemed to have occurred as of the close of
                  business on the Closing Date."

3. RATIFICATION. The terms and provisions set forth in this Third Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Third
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.

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

<PAGE>

The parties have executed this Third Amendment on the date set forth on the
first page.

                                        SELLER PARTIES:

                                        LANDRETH METAL FORMING, INC.

                                        By:
                                           -------------------------------------
                                           Christine A. Smith,
                                           Vice President

                                        INDUSTRIAL HOLDINGS, INC.

                                        By:
                                           -------------------------------------
                                           Christine A. Smith,
                                           Executive Vice President

                                        BUYER:

                                        LANDRETH FASTENER CORPORATION

                                        By:
                                           -------------------------------------
                                           Thomas C. Landreth, President

                                       2

<PAGE>

                  FOURTH AMENDMENT TO ASSET PURCHASE AGREEMENT

         THIS FOURTH AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Fourth
Amendment") is dated as of December 17, 2001, between LANDRETH METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and LANDRETH FASTENER CORPORATION, a Texas
corporation (the "Buyer").

                                   BACKGROUND

A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement dated as of November 6, 2001, that certain First Amendment to
Asset Purchase Agreement dated as of November 15, 2001, that certain Second
Amendment to Asset Purchase Agreement dated as of November 30, 2001, and that
Third Amendment to Asset Purchase Agreement, dated as of December 10, 2001 (the
Asset Purchase Agreement, as amended, the "Agreement").

B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.

         NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Fourth Amendment and the Agreement each of the Seller Parties and Buyer
agree as follows:

                                   AMENDMENTS

1. DEFINITIONS. Capitalized terms used in this Fourth Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.

2. AMENDMENT TO SECTION 4.1. Section 4.1 is hereby amended to read in its
entirety as follows:

                  "4.1 Purchase Price. On the date hereof, the Closing Date,
                  Buyer shall pay to Seller Parties as consideration for the
                  Purchased Assets the amount of $2,250,000 and shall assume the
                  Assumed Liabilities (together, the "Purchase Price"), as
                  follows:

                  (i) $1,180,750 in cash (the "Cash Purchase Price") by wire
                  transfer in immediately available funds;

                  (ii) that certain subordinated promissory note, dated as of
                  the Closing Date, in the original principal amount of
                  $350,000.00, executed by Buyer and made payable to Seller (the
                  "Seller Note");

                  (iii) that certain subordinated promissory note, dated as of
                  the Closing Date, in the original principal amount of
                  $719,250.00, executed by Buyer and made payable to IHI (the
                  "IHI Note"); and

                  (iv) the balance of the Purchase Price by execution and
                  delivery of the Assignment and Assumption Agreement."

<PAGE>

3. AMENDMENT TO SECTION 4.3(c). Section 4.3(c) is hereby amended by adding the
following provision at the end of the fourth sentence, which had been added by
the Second Amendment to the Agreement:

                  "provided, however, that such charge against the Buyer and
                  credit to the Seller shall only apply after the Seller has
                  paid the ad valorem taxes on the Purchased Assets for the tax
                  year ending December 31, 2001."

4. AMENDMENT TO SECTION 8.2(a). Section 8.2(a) is hereby amended as follows:

                  1. Subsection (vii) shall be restated to read in its entirety
                  as follows:

                     "(vii) that certain Security Agreement, dated as of the
                     Closing Date, executed by the Buyer in favor of the Seller
                     (the "Seller Security Agreement");"

2. The addition of the following new subsections:

                     "(x) that certain Security Agreement, dated as of the
                     Closing Date, executed by the Buyer in favor of IHI (the
                     "IHI Security Agreement");

                     (xi) that certain letter agreement, dated as of the Closing
                     Date, between Landreth and IHI; and

                     (xii) that certain letter agreement, dated as of the
                     Closing Date, between Buyer and IHI."

5. AMENDMENT TO SECTION 8.2(b). Section 8.2(b) is hereby amended as follows:

                  1. Subsection (i) shall be restated to read in its entirety as
                  follows:

                     "(i) the Cash Purchase Price, the Seller Note and the IHI
                     Note;"

                  2. Subsection (v) shall be restated to read in its entirety as
                  follows:

                     "(v) the Seller Security Agreement;"

                  3. The addition of the  following  new subsections:

                     "(ix) the IHI Security Agreement;

                     (x) that certain letter agreement, dated as of the Closing
                     Date, between Landreth and IHI; and

                     (xii) that certain letter agreement, dated as of the
                     Closing Date, between Buyer and IHI."

                                       2
<PAGE>

6. RATIFICATION. 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 Fourth
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.

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

The parties have executed this Fourth Amendment on the date set forth on the
first page.

                                       SELLER PARTIES:

                                       LANDRETH METAL FORMING, INC.

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

                                       INDUSTRIAL HOLDINGS, INC.

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

                                       BUYER:

                                       LANDRETH FASTENER CORPORATION

                                       By: /s/ THOMAS C. LANDRETH
                                           -------------------------------------
                                           Thomas C. Landreth, President

                                       3<PAGE>

                                                                    Exhibit 10.7

                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                            INDUSTRIAL HOLDINGS, INC.

                                       AND

                                  DONALD CARLIN

                                 ROBERT E. CONE

                                   DATED AS OF

                                NOVEMBER 15, 2001

STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
                                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

                                       i
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
                               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

                                       ii
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
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

                                      iii
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
                            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

STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
                  (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.

                                       2
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
         (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;

                                       3
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
         (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.

                                       4
STOCK PURCHASE AGREEMENT                                          EXECUTION COPY
<PAGE>
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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                  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

                                       20
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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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