Document:

Exhibit 10.49

                  WARRANT  AGREEMENT  dated as of August __, 2001 between  TSET,
INC.  a Nevada  corporation  (the  "Company")  and THE  EAGLE  ROCK  GROUP,  LLC
("Holder").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, the Company proposes to issue to Holder warrants (the
"Warrants") to purchase up to an aggregate of one million four hundred  thousand
(1,400,000)  shares (the  "Shares") of common  stock of the  Company,  par value
$.001 per share (the "Common Stock"); and

                  WHEREAS,  Holder has agreed  pursuant to the letter  agreement
(the "Letter Agreement") dated as of the date hereof between the the Company and
Holder, to provide certain support and services to the Company,  as set forth in
the Letter Agreement; and

                  WHEREAS,  the Warrants  issued  pursuant to this Agreement are
being issued by the Company to Holder, in consideration  for, and as part of the
Holder's  compensation  in  connection  with the  services to be rendered to the
Company pursuant to the Letter Agreement;

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

                  1. GRANT.  Holder, and its designees,  successors and assigns,
are hereby granted the right to purchase, at any time from January 1, 2002 until
5:00 P.M., New York City time, on January 1, 2012 (the "Warrant Exercise Term"),
up to an aggregate of one million four hundred thousand (1,400,000) Shares at an
initial  exercise  price (subject to adjustment as provided in Article 8 hereof)
of [$0.68] per Share subject to the terms and conditions of this Agreement.

                  2.  WARRANT   CERTIFICATES.   The  warrant  certificates  (the
"Warrant Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth as  Exhibit  A  attached  hereto  and made a part
hereof,  with such appropriate  insertions,  omissions,  substitutions and other
variations as required or permitted by this Agreement.

                  3. EXERCISE OF WARRANTS.

                     3.1 CASH EXERCISE.  The Warrants  initially are exercisable
at a price of $.68 per Share, payable in cash or by certified check to the order
of the  Company,  or any  combination  of cash or  certified  check,  subject to
adjustment  as  provided  in Article 8 hereof.  Upon  surrender  of the  Warrant
Certificate  with the  annexed  Form of  Election  to  Purchase  duly  executed,
together with payment of the Exercise Price (as hereinafter defined) for the

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Shares  purchased  at the  Company's  principal  offices,  the  Holder  shall be
entitled to receive a certificate or  certificates  for the Shares so purchased.
The purchase rights  represented by each Warrant  Certificate are exercisable at
the option of the Holder  hereof,  in whole or in part (but not as to fractional
shares of the Common Stock underlying the Warrants). In the case of the purchase
of less than all the  Shares  purchasable  under any  Warrant  Certificate,  the
Company shall cancel said Warrant  Certificate  upon the  surrender  thereof and
shall  execute  and  deliver a new  Warrant  Certificate  of like  tenor for the
balance of the Shares purchasable thereunder.

                     3.2  CASHLESS  EXERCISE.  At any time  during  the  Warrant
Exercise Term, the Holder may, at its option, exchange this Warrant, in whole or
in part (a "Warrant  Exchange") and/or shares of the Company's Common Stock held
by  Holder (a  "Share  Exchange"),  into the  number  of  Shares  determined  in
accordance  with  this  Section  3.2,  by  surrendering  this  Warrant,   and/or
certificates  representing  the shares of Common Stock to be  exchanged,  at the
principal  office  of the  Company  or at the  office  of  its  transfer  agent,
accompanied  by a notice  stating  (i)  such  Holder's  intent  to  effect  such
exchange,  (ii) the number of Shares to be exchanged and (iii) the date on which
the Holder requests that such Warrant  Exchange and/or Share Exchange occur (the
"Notice of  Exchange").  The Warrant  Exchange  and/or Share Exchange shall take
place on the date specified in the Notice of Exchange or, if later, the date the
Notice  of  Exchange  is  received  by  the  Company  (the   "Exchange   Date").
Certificates  for the Shares  issuable upon such Warrant  Exchange  and/or Share
Exchange and, if applicable,  a new Warrant of like tenor evidencing the balance
of the  Shares  remaining  subject  to this  Warrant,  shall be issued as of the
Exchange  Date  and  delivered  to the  Holder  within  five (5)  business  days
following  the Exchange  Date. In connection  with any Warrant  Exchange  and/or
Share  Exchange,  this Warrant  shall  represent  the right to subscribe for and
acquire the number of Shares (rounded to the next highest  integer) equal to (i)
the number of Shares  specified  by the Holder in its  Notice of  Exchange  (the
"Total Number") less (ii) the number of Shares equal to the quotient obtained by
dividing (A) the product of the Total Number and the existing Exercise Price (as
hereinafter defined) by (B) the current market value of a share of Common Stock.
For purposes of this Section 3.2, the term "current market value" shall mean the
(i)  last  reported  sale  price  on the last  trading  day or,  in case no such
reported  sale takes place on such day, the average last reported sale price for
the last three (3) trading days,  in either case as  officially  reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading,  or by the Nasdaq  National  Market or  SmallCap  Market  (referred  to
hereinafter  as  "NASDAQ")  if the  Common  Stock is not listed or  admitted  to
trading on any national securities exchange but is listed or quoted upon NASDAQ,
or (ii) if the Common Stock is not traded on a national  securities  exchange or
NASDAQ,  the  closing  bid price on the last  trading  day,  or, in case no such
reported bid takes place on such day, the average closing bid price for the last
three (3) trading days, as furnished by NASDAQ or similar organization if NASDAQ
is no longer  reporting  such  information,  or (iii) if the Common Stock is not
listed upon a principal  exchange or quoted on NASDAQ, but quotes for the Common
Stock are  available in the OTC  Bulletin  Board or "pink  sheets",  the average
closing bid price for the last three (3) trading  days as  furnished  on the OTC
Bulletin  Board or (iv) in the  event  the  Common  Stock is not  traded  upon a
principal  exchange and not listed on NASDAQ and quotes are not available on the
OTC Bulletin  Board,  the price as determined in good faith by resolution of the
Board of Directors of the Company,  based on the best  information  available to
it.

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                  4. ISSUANCE OF CERTIFICATES.

                     4.1  ISSUANCE.  Upon  the  exercise  of the  Warrants,  the
issuance of  certificates  for the Shares  shall be made  forthwith  (and in any
event within five (5) business  days  thereafter)  without  charge to the Holder
thereof including,  without limitation,  any tax which may be payable in respect
of the issuance thereof,  and such certificates shall (subject to the provisions
of  Article  5 hereof)  be  issued  in the name of,  or in such  names as may be
directed in writing by, the Holder thereof;  provided however,  that the Company
shall not be  required  to pay any tax which may be  payable  in  respect of any
transfer  involved in the issuance and  delivery of any such  certificates  in a
name  other than that of the Holder and the  Company  shall not be  required  to
issue or  deliver  such  certificates  unless  or until the  person  or  persons
requesting  the  issuance  thereof  shall have paid to the Company the amount of
such tax or shall have  established to the satisfaction of the Company that such
tax has been paid.

                     4.2 FORM OF  CERTIFICATES.  The  Warrant  Certificates  and
certificates  representing the Shares shall be executed on behalf of the Company
by the  manual or  facsimile  signature  of the then  present  Chairman  or Vice
Chairman of the Board of Directors or President or Vice president of the Company
under its  corporate  seal  reproduced  thereon,  attested  to by the  manual or
facsimile  signature of the then present Secretary or Assistant Secretary of the
Company.  Warrant  Certificates  shall be dated  the  date of  execution  by the
Company upon initial issuance, division, exchange, substitution or transfer. The
Warrant  Certificates  and, upon exercise of the Warrants,  in part or in whole,
certificates  representing the Shares shall bear a legend substantially  similar
to the following:

             "The  securities  represented  by this  certificate  have  not been
             registered  under  the  Securities  Act of 1933,  as  amended  (the
             "Act"),  and may not be offered or sold  except (i)  pursuant to an
             effective  registration statement under the Act, (ii) to the extent
             applicable, pursuant to Rule 144 under the Act (or any similar rule
             under such Act relating to the disposition of securities), or (iii)
             upon the  delivery  by the  holder to the  Company of an opinion of
             counsel, reasonably satisfactory to counsel to the Company, stating
             that an exemption from registration under such Act is available."

                  5. TRANSFER OF WARRANTS.  The Holder of a Warrant  Certificate
may sell, transfer,  assign, hypothecate or otherwise dispose of, in whole or in
part, a Warrant Certificate, in which case such designee, assignee or transferee
shall be entitled to receive a  replacement  Warrant  Certificate  in accordance
with Section 9 hereof upon presentment of a properly executed Form of Assignment
in the form set forth on  Exhibit A  attached  to the  Warrant  Certificate.  In
connection  with the transfer or exercise of Warrants,  the purchaser and Holder
agree to execute any documents  which may be  reasonably  required by counsel to
the  Company  to comply  with the  provisions  of the Act and  applicable  state
securities laws.

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                  6. PRICE.

                     6.1  INITIAL  AND  ADJUSTED  EXERCISE  PRICE.  The  initial
exercise price of each Warrant shall be [$.68] per Share. The adjusted  exercise
price shall be the price  which shall  result from time to time from any and all
adjustments of the initial  exercise price in accordance  with the provisions of
Article 8 hereof.

                     6.2 EXERCISE PRICE.  The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted  exercise price,  depending upon
the context.

                  7. REGISTRATION RIGHTS.

                     7.1  REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933.  The
Warrants  and the  Shares  have not  been  registered  for  purposes  of  public
distribution under the Securities Act of 1933, as amended (the "Act").

                     7.2  REGISTRABLE  SECURITIES.   As  used  herein  the  term
"Registrable  Security"  means each of the Shares and any shares of Common Stock
issued  upon any  stock  split or stock  dividend  in  respect  of such  Shares;
provided,  however,  that with respect to any particular  Registrable  Security,
such security  shall cease to be a Registrable  Security when, as of the date of
determination, (i) it has been effectively registered under the Act and disposed
of  pursuant  thereto,  or  (ii)  it has  ceased  to be  outstanding.  The  term
"Registrable  Securities" means any and/or all of the securities  falling within
the  foregoing  definition  of a  "Registrable  Security.  " In the event of any
merger,  reorganization,  consolidation,  recapitalization  or other  change  in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of  "Registrable  Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Article 7.

                     7.3 PIGGYBACK REGISTRATION.  (a) Except with respect to the
S-1  Registration  Statement  to be filed by the  Company  with  respect  to the
transaction with Fusion Capital Fund II LLC, if, at any time during the ten (10)
years following the date of this Agreement,  the Company proposes to prepare and
file  any  new  registration  statement  or  post-effective  amendments  thereto
covering equity or debt securities of the Company, or any such securities of the
Company  held by its  shareholders  (other than in  connection  with a merger or
pursuant to a Form S-8 or a  successor  form) (for  purposes of this  Article 7,
collectively,  a "Registration  Statement"),  it will give written notice of its
intention  to do so by  registered  mail  ("Notice"),  at least thirty (30) days
prior to the filing of each such Registration  Statement,  to all holders of the
Registrable Securities. Upon the written request of such a holder (a "Requesting
Holder"),  made within  twenty (20) days after  receipt of the Notice,  that the
Company  include any of the Requesting  Holder's  Registrable  Securities in the
proposed Registration  Statement,  the Company shall, as to each such Requesting
Holder,  use its best  efforts to effect the  registration  under the Act of the
Registrable  Securities  which it has been so requested to register  ("Piggyback
Registration"), at the Company's sole cost and expense and at no cost or expense
to the Requesting  Holders (other than  underwriting  discounts and  commissions
applicable  to the  sale  of  such  Registrable  Securities  and  the  fees  and
disbursements,  if any,  of counsel or any advisor to the  Requesting  Holders),
provided that, if such Registration Statement relates to an underwritten public

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offering and the  managing  underwriter  advises the Company and the  Requesting
Holders  in  writing  that the  number of  Registrable  Securities  which can be
included in such offering must be limited,  the Requesting Holders will agree to
reduce  the  number of  Registrable  Securities  included  in such  Registration
Statement on a pro rata basis with any other  selling  security  holder on whose
behalf other securities of the Company may be included therein for registration.
Notwithstanding  the provisions of this Section  7.3(a),  the Company shall have
the right at any time after it shall have given written notice  pursuant to this
Section  7.3(a)  (irrespective  of whether any written  request for inclusion of
Registrable  Securities  shall have  already been made) to elect not to file any
such proposed Registration  Statement,  or to withdraw the same after the filing
but prior to the effective date thereof.

                  7.4 DEMAND REGISTRATION

                      (a) At any time  during the  Warrant  Exercise  Term,  any
"Demand  Holder"  (as such  term is  defined  in  Section  7.4(d)  below) of the
Registrable  Securities  shall have the right (which right is in addition to the
piggyback   registration   rights   provided  for  under  Section  7.3  hereof),
exercisable  by  written  notice  to  the  Company  (the  "Demand   Registration
Request"), to have the Company prepare and file with the Securities and Exchange
Commission  (the  "Commission"),  on two  occasions,  at the sole expense of the
Company,  a  Registration  Statement  and  such  other  documents,  including  a
prospectus,  as may be necessary (in the opinion of both counsel for the Company
and counsel for such Demand Holders),  in order to comply with the provisions of
the  Act,  so as to  permit  a  public  offering  and  sale  of the  Registrable
Securities by such Demand  Holders and any other Holders of the Warrants  and/or
Shares who notify the Company  within  twenty (20) days after  receiving  notice
from the Company of such request.

                      (b) The  Company  covenants  and  agrees  to give  written
notice of any  Demand  Registration  Request to all  holders of the  Registrable
Securities  within ten (10) days from the date of the  Company's  receipt of any
such Demand  Registration  Request.  After receiving  notice from the Company as
provided in this Section 7.4(b),  holders of Registrable  Securities may request
the  Company  to  include  their  Registrable  Securities  in  the  Registration
Statement to be filed pursuant to Section 7.4(a) hereof by notifying the Company
of their decision to have such securities included within ten (10) days of their
receipt of the Company's notice.

                      (c) In addition to the  registration  rights  provided for
under  Section 7.3 hereof and  subsection  (a) of this  Section 7.4, at any time
during the Warrant Exercise Term, any Demand Holder (as defined below in Section
7.4(d)) of Registrable  Securities shall have the right,  exercisable by written
request  to the  Company,  to  have  the  Company  prepare  and  file  with  the
Commission, on one occasion in respect of all holders of Registrable Securities,
a  Registration  Statement  so as to permit a public  offering  and sale of such
Registrable Securities; provided, however, that all costs incident thereto shall
be at the expense of the holders of the Registrable  Securities included in such
Registration Statement;  and, provided,  further, that a Demand Holder shall not
be entitled to exercise any  registration  right pursuant to this Section 7.4(c)
without  the prior  written  consent of Holder.  If a Demand  Holder  shall give
notice  to the  Company  at any  time of its or their  desire  to  exercise  the
registration right granted pursuant to this Section 7.4(c), then within ten (10)
days after the Company's receipt of such notice, the Company shall give notice

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to the other holders of Registrable Securities advising them that the Company is
proceeding  with  such   registration   and  offering  to  include  therein  the
Registrable  Securities of such holders,  provided they furnish the Company with
such  appropriate  information  in  connection  therewith  as the Company  shall
reasonably  request in  writing.  Nothing  contained  herein  shall  require the
Company  to  undergo  an audit of its  financial  statements  other  than in the
ordinary course of business.

                      (d) The term  "Demand  Holder" as used in this Section 7.4
shall mean any holder or any  combination of holders of Registrable  Securities,
if included in such holders' Registrable Securities are that aggregate number of
Shares  (including  Shares  already issued and Shares  issuable  pursuant to the
exercise  of  outstanding  Warrants)  as  would  constitute  50% or  more of the
aggregate number of Shares  (including Shares already issued and Shares issuable
pursuant  to  the  exercise  of  outstanding  Warrants)  included  in all of the
Registrable Securities, but in any event not less than 100,000 Shares.

                      (e) No right of any Demand  Holder  under this Section 7.4
shall be deemed to have been exercised if with respect to such right:

                      (A) the requisite  notice given by Demand Holders pursuant
                to this Section 7.4 is withdrawn  prior to the date of filing of
                a Registration Statement or if a Registration Statement filed by
                the Company  under the  Securities  Act pursuant to this Section
                7.4 is withdrawn prior to its effective date, in either case, by
                written  notice to the Company from the Holders of fifty percent
                (50%) or more of the  Warrants  and/or  Shares to be included or
                which are included in such  Registration  Statement stating that
                such  Holders  have  elected  not to proceed  with the  offering
                contemplated  by  such  registration  statement  because  (i)  a
                development in the Company's  affairs has occurred or has become
                known  to such  Demand  Holders  subsequent  to the  date of the
                notice  by  the  Demand   Holders  to  the  Company   requesting
                registration of the Warrants and/or Shares of the filing of such
                Registration  Statement  which,  in the  judgment of such Demand
                Holders  or the  managing  underwriter  of the  proposed  public
                offering,  adversely  affects the market price of such Shares or
                (ii) a Registration  Statement filed by the Company  pursuant to
                this Section 7.4, in the reasonable  opinion of counsel for such
                Demand  Holders  or the  managing  underwriter  of the  proposed
                public offering, contains an untrue statement of a material fact
                or omits to state a material fact required to be stated  therein
                or necessary to make the  statements  therein not  misleading in
                light of the circumstances under which made (other than any such
                statement or omission  relating to such Demand Holders and based
                on information  supplied or failed to be supplied by such Demand
                Holders) and the Company has not,  promptly after written notice
                thereof,  corrected  such  statement or omission in an amendment
                filed to such registration statement; or

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                      (B) a Registration  Statement pursuant to this Section 7.4
                shall have become effective under the Securities Act and (i) the
                underwriters  shall not purchase any Shares because of a failure
                of condition contained in the underwriting agreement (other than
                a  condition  to be  performed  by or within the  control of the
                Demand  Holders)  relating  to  the  offering  covered  by  such
                Registration  Statement  or (ii)  less  than  85% of the  Shares
                included  therein  shall  have been sold as a result of any stop
                order,   injunction  or  other  order  or   requirement  of  the
                Commission or other governmental agency or court.

                  7.5 SHELF  REGISTRATION.  Within thirty (30) days after filing
the  Company's  Form 10-Q for the period ended  December  31, 2001,  the Company
shall prepare and file with the Commission,  at the sole expense of the Company,
a Registration  Statement and such other documents,  including a prospectus,  as
may be necessary (in the opinion of both counsel for the Company and counsel for
such the Holders of the Warrants), in order to comply with the provisions of the
Act, so as to permit a public offering and sale of the Registrable Securities by
any Holders of the Warrants and/or Shares. The registration effected pursuant to
this  Section  7.5  shall  not  be  counted  as  demands  for   registration  or
registrations effected pursuant to Sections 7.3 or 7.4, respectively.

                  7.6 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The
Company covenants and agrees as follows:

                      (a) In connection with any registration  under Section 7.4
hereof,  the Company shall file the  Registration  Statement as expeditiously as
possible,  but in no event later than thirty (30) days (except  during the first
quarter of any fiscal year of the Company,  in which case any such  Registration
Statement shall be filed within ten (10) days after the date that is the earlier
of the date (i) the  Company's  Form 10-K was filed or (ii) was  required  to be
filed without reference to any requested  extension for filing,  delay in filing
or the like)  following  receipt of any demand  therefor  (unless delayed by the
failure  of  a  holder  of  Registrable  Securities  to  promptly  furnish  such
information  necessary to complete such registration  statement),  shall use its
best efforts to have any such Registration  Statement  declared effective at the
earliest  possible time and shall furnish each holder of Registrable  Securities
such number of prospectuses as shall reasonably be requested.

                      (b) The Company shall pay all costs,  fees and expenses in
connection  with all  Registration  Statements  filed  pursuant to Sections 7.3,
7.4(a) and 7.5 hereof  (excluding  any  underwriting  discounts and  commissions
which may be incurred in connection with the sale of any Registrable Securities)
including, without limitation, the Company's legal and accounting fees, printing
expenses, and blue sky fees and expenses.

                      (c) The Company will take all reasonably  necessary action
which may be required in qualifying or registering  the  Registrable  Securities
included in a Registration  Statement for offering and sale under the securities
or blue sky laws of such states as are  reasonably  requested  by the holders of
such securities,  provided that the Company shall not be obligated to execute or

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file any  general  consent  to  service  of  process  or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.

                      (d)  The  Company  shall   indemnify  any  holder  of  the
Registrable Securities to be sold pursuant to any Registration Statement and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any,  who  controls  such  holder or  underwriter  or person  deemed to be an
underwriter  within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"),  against all loss,
claim, damage,  expense or liability (including all expenses reasonably incurred
in investigating,  preparing or defending against any claim whatsoever) to which
any of them may become  subject  under the Act, the  Exchange Act or  otherwise,
arising from such Registration Statement.

                      (e)  Any  holder  of  Registrable  Securities  to be  sold
pursuant to a Registration  Statement,  and its  successors  and assigns,  shall
severally,  and not jointly,  indemnify, the Company, its officers and directors
and each person,  if any, who controls the Company within the meaning of Section
15 of the Act or Section  20(a) of the Exchange  Act,  against all loss,  claim,
damage or expense or liability  (including all expenses  reasonably  incurred in
investigating,  preparing or defending  against any claim  whatsoever)  to which
they may become  subject under the Act, the Exchange Act or  otherwise,  arising
from  information  furnished in writing by or on behalf of such  holder,  or its
successors or assigns, for specific inclusion in such Registration Statement.

                      (f) Nothing contained in this Agreement shall be construed
as requiring any Holder to exercise its Warrants  prior to the initial filing of
any Registration Statement or the effectiveness thereof.

                      (g) The Company shall  deliver  promptly to each holder of
Registrable   Securities   participating   in  the   offering   copies   of  all
correspondence  between the Commission and the Company,  its counsel or auditors
and all memoranda  relating to discussions with the Commission or its staff with
respect to the  Registration  Statement  and permit each  holder of  Registrable
Securities and underwriters to do such  investigation,  upon reasonable  advance
notice,   with  respect  to  information   contained  in  or  omitted  from  the
Registration   Statement  as  it  deems  reasonably  necessary  to  comply  with
applicable  securities  laws or rules of the National  Association of Securities
Dealers, Inc. ("NASD"); provided that each such holder of Registrable Securities
agrees  not to  disclose  such  information  without  the prior  consent  of the
Company.   Such  investigation  shall  include  access  to  books,  records  and
properties  and  opportunities  to discuss the  business of the Company with its
officers and independent  auditors,  all to such  reasonable  extent and at such
reasonable  times and as often as any such holder of  Registrable  Securities or
underwriter shall reasonably request.

                      (h) If required by the  underwriter in connection  with an
underwritten offering which includes Registrable  Securities pursuant to Article
7, the  Company  shall  enter into an  underwriting  agreement  with one or more
underwriters  selected for such underwriting,  such agreement shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily  contained in agreements of that type used by the  underwriters.
If required by the underwriter,  the holders of Registrable  Securities shall be
parties to any underwriting  agreement relating to an underwritten sale of their
Registrable  Securities  and may, at their  option,  require that any or all the

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representations  and  warranties  of the  Company to or for the  benefit of such
underwriters  shall, to the extent that they may be applicable,  also be made to
and for the benefit of such holders of Registrable  Securities.  Such holders of
Registrable  Securities  shall not be  required to make any  representations  or
warranties to or agreements with the Company or the underwriters  except as they
may relate to such holders of Registrable  Securities and their intended methods
of distribution.

                      (i) In connection  with any  Registration  Statement filed
pursuant  to Section  7.3  hereof,  the  Company  shall  furnish to each  Holder
participating in any  underwritten  offering and to each  underwriter,  a signed
counterpart,  addressed  to such  Holder or  underwriter,  of (i) an  opinion of
counsel to the Company,  dated the effective date of such registration statement
(and, if such registration  includes an underwritten public offering, an opinion
dated the date of the  closing  under the  underwriting  agreement),  and (ii) a
"cold comfort" letter,  dated the effective date of such Registration  Statement
(and, if such registration  includes an underwritten  public offering,  a letter
dated the date of the closing under the underwriting  agreement),  signed by the
independent  public  accountants  who  have  issued a  report  on the  Company's
financial  statements  included  in such  registration  statement,  in each case
covering  substantially  the same  matters  with  respect  to such  registration
statement  (and  the  prospectus  included  therein)  and,  in the  case of such
accountants'  letter,  with  respect  to events  subsequent  to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants'  letters  delivered to  underwriters in underwritten  public
offerings of securities.

                      (j) The  Company  shall  promptly  notify  each  Holder of
Warrants and/or Warrants Shares covered by such registration  statement,  at any
time when a prospectus  relating  thereto is required to be delivered  under the
Act, upon the Company's  discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading in the light of the  circumstances  under which they were
made, and at the request of any such Holder promptly prepare and furnish to such
Holder  and each  underwriter,  if any,  a  reasonable  number  of  copies  of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue  statement of a material  fact or omit to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading in the light of the circumstances under which they were made.

                      (k) Whenever  required to effect the  registration  of any
Registrable  Securities,  the Company shall use all reasonable  efforts to cause
such  Registration  Statement  to become  effective  and keep such  Registration
Statement  effective  until  the  holders  of the  Registrable  Securities  have
completed the distribution with respect thereto. In connection with Section 7.5,
the Company  shall be required to file,  cause to become  effective and maintain
the  effectiveness of a Registration  Statement that contemplates a distribution
of securities on a delayed or  continuous  basis  pursuant to Rule 415 under the
Securities  Act. The Company  shall  prepare and file with the  Commission  such
amendments and supplements to any Registration Statement and the prospectus used

                                       9
<PAGE>

in  connection  with such  Registration  Statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.

                   8. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF SHARES.

                   8.1  COMPUTATION OF ADJUSTED PRICE. In case the Company shall
at any time after the date  hereof pay a dividend  in shares of Common  Stock or
make a  distribution  in shares  of Common  Stock,  then upon such  dividend  or
distribution the Exercise Price in effect  immediately prior to such dividend or
distribution shall forthwith be reduced to a price determined by dividing:

                      (a) an  amount  equal to the  total  number  of  shares of
Common Stock  outstanding  immediately  prior to such  dividend or  distribution
multiplied by the Exercise Price in effect immediately prior to such dividend or
distribution, by

                      (b) the total number of shares of Common Stock outstanding
immediately  after such issuance or sale. For the purposes of any computation to
be made in  accordance  with the  provisions  of this Section 8.1, the following
provisions  shall be  applicable:  Common  Stock  issuable by way of dividend or
other  distribution  on any  stock of the  Company  shall be deemed to have been
issued  immediately after the opening of business on the date following the date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution.

                   8.2 SUBDIVISION AND COMBINATION. In case the Company shall at
any time  subdivide  or combine  the  outstanding  shares of Common  Stock,  the
Exercise  Price shall  forthwith  be  proportionately  decreased  in the case of
subdivision or increased in the case of combination.

                   8.3 ADJUSTMENT IN NUMBER OF SHARES.  Upon each  adjustment of
the Exercise  Price  pursuant to the provisions of this Article 8, the number of
Shares  issuable  upon the  exercise  of each  Warrant  shall be adjusted to the
nearest full Share,  by  multiplying  a number  equal to the  Exercise  Price in
effect  immediately  prior to such  adjustment by the number of Shares  issuable
upon exercise of the Warrants  immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.

                   8.4  RECLASSIFICATION  CONSOLIDATION MERGER ETC. In the event
of a Change of Control (defined below),  then, except as provided in Section 8.8
below,  proper provision shall be made so that, upon the basis and the terms and
in the manner  provided in this  Agreement and the Warrants,  the Holders of the
Warrants,  upon the  exercise  thereof at any time after the  consummation  of a
Change of Control, shall be entitled to receive (at the aggregate Exercise Price
in effect at the time of such  consummation  for all Common Stock  issuable upon
such  exercise  immediately  prior to such  Change of  Control),  in lieu of the
Common  Stock or other  securities  issuable  upon such  exercise  prior to such
Change of Control,  the highest amount of securities,  cash or other property to
which such Holders would actually have been entitled as  stockholders  upon such

                                       10
<PAGE>

Change of Control if such Holders had  exercised the rights  represented  by the
Warrants immediately prior thereto,  subject to adjustments  (subsequent to such
Change of Control) as nearly equivalent as possible to the adjustments  provided
for in Section 8;  PROVIDED that if a purchase,  tender or exchange  offer shall
have  been  made  to and  accepted  by  the  holders  of  more  than  50% of the
outstanding shares of Common Stock, and if a Holder of Warrants so designates in
a notice given to the Company on or before the date  immediately  preceding  the
date of the  consummation  of a Change of Control,  such Holder of such Warrants
shall be entitled to receive the  highest  amount of  securities,  cash or other
property to which such Holder would actually have been entitled as a stockholder
if such  Holder  of such  Warrants  had  exercised  such  Warrants  prior to the
expiration of such  purchase,  tender or exchange offer and accepted such offer,
subject to adjustments (from and after the consummation of such purchase, tender
or exchange offer) as nearly equivalent as possible to the adjustments  provided
for in Section 8.  Notwithstanding  anything  contained  in the  Warrants to the
contrary,  the Company will not effect a Change of Control unless,  prior to the
consummation thereof, each person (other than the Company) which may be required
to deliver  any stock,  securities,  cash or property  upon the  exercise of the
Warrants as provided herein shall assume,  by written  instrument  delivered to,
and reasonably satisfactory to, the Holders of the Warrants, (a) the obligations
of the Company  under this  Agreement and the Warrants (and if the Company shall
survive the consummation of such Change of Control,  such assumption shall be in
addition to, and shall not release the Company from, any continuing  obligations
of the Company under this  Agreement and the Warrants) and (b) the obligation to
deliver to such Holders such shares of stock,  securities,  cash or property as,
in accordance with the foregoing provisions of this Section, such Holders may be
entitled to receive,  and such person  shall have  similarly  delivered  to such
Holders an opinion of counsel for such person, which counsel shall be reasonably
satisfactory to such Holders, stating that this Agreement and the Warrants shall
thereafter  continue in full force and effect and the terms  hereof  (including,
without limitation, all of the provisions of this Section 8) shall be applicable
to the stock, securities,  cash or property which such person may be required to
deliver upon any exercise of the Warrants or the exercise of any rights pursuant
hereto.  For purposes of this  Agreement,  a "Change in Control"  shall mean the
happening of any of the following events:  (i) an acquisition by any individual,
entity or group  (within  the  meaning of Section  13(d)(3)  or  14(d)(2) of the
Exchange Act of 1934, as amended) (a "Person") of beneficial  ownership  (within
the  meaning  of Rule  13d-3  promulgated  under the  Exchange  Act of 1934,  as
amended)  of 20% or more of  either  (1) the then  outstanding  shares of common
stock  of the  Company  (the  "Outstanding  Company  Common  Stock")  or (2) the
combined voting power of the then outstanding  voting  securities of the Company
entitled to vote  generally  in the  election  of  directors  (the  "Outstanding
Company Voting  Securities");  or (ii) the approval by the  stockholders  of the
Company  of  a  reorganization,   merger  or  consolidation  or  sale  or  other
disposition of all or substantially all of the assets of the Company ("Corporate
Transaction");  excluding,  however,  such a Corporate  Transaction  pursuant to
which (1) all or  substantially  all of the individuals and entities who are the
beneficial  owners,  respectively,  of the outstanding  Company Common Stock and
Outstanding  Company  Voting  Securities  immediately  prior  to such  Corporate
Transaction will  beneficially  own,  directly or indirectly,  more than 50% of,
respectively,  the outstanding  shares of Common Stock,  and the combined voting
power of the then outstanding  voting  securities  entitled to vote generally in
the election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including,  without limitation,  a corporation which
as a result of such transaction owns the Company or all or substantially  all of
the Company's  assets,  either directly or through one or more  subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Corporate  Transaction,  of the outstanding Company Common Stock and Outstanding
Company  Voting  Securities,  as the case may be, (2) no Person  (other than the
Company; any employee benefit plan (or related trust) sponsored or maintained by
the  Company,  by  any  corporation  controlled  by  the  Company,  or  by  such
corporation  resulting from such Corporate  Transaction)  will beneficially own,
directly or indirectly,  more than 20% of, respectively,  the outstanding shares
of Common Stock of the corporation  resulting from such Corporate Transaction or
the  combined  voting  power  of  the  outstanding  voting  securities  of  such
corporation  entitled to vote generally in the election of directors,  except to
the extent that such ownership  existed with respect to the Company prior to the

                                       11
<PAGE>

Corporate  Transaction,  and (3)  individuals  who were  members of the board of
directors of the Company  immediately  prior to the approval by the stockholders
of the  Corporation of such  Corporate  Transaction  will  constitute at least a
majority of the members of the board of directors of the Company  resulting from
such Corporate  Transaction;  or (iii) the approval by the  stockholders  of the
Company of a complete liquidation or dissolution of the Company, other than to a
corporation  pursuant to a transaction  which would comply with clauses (1), (2)
and  (3)  of  subsection  (ii)  above,  assuming  for  this  purpose  that  such
transaction  were a Corporate  Transaction;  or (iv) during any  consecutive  36
month period,  individuals  who at the beginning of such period  constituted the
members  of the board of  directors  of the  Company or  equivalent  body of any
successor of the Company  (together  with any new directors  whose  election was
approved  by a vote of the  majority of the  directors  then still in office who
were  directors at the beginning of such period or whose election was previously
so  approved)  cease for any reason  (other  than by action of the  Holders)  to
constitute a majority of the board of directors then in office of the Company or
equivalent  body of any successor of the Company;  or (v) shall effect a capital
reorganization  or  reclassification  of the Common  Stock (other than a capital
reorganization or  reclassification  resulting in the issue of additional shares
of Common  Stock for which  adjustment  in the  Exercise  Price is  provided  in
Section 8).

                      8.5  DETERMINATION OF OUTSTANDING  SHARES OF COMMON STOCK.
The number of shares of Common Stock at any one time  outstanding  shall include
the aggregate  number of shares issued or issuable upon the exercise of options,
rights,  warrants  and  upon  the  conversion  or  exchange  of  convertible  or
exchangeable  securities (excluding shares issuable upon the exercise of options
and warrants outstanding on the date hereof).

                      8.6  DIVIDENDS  AND OTHER  DISTRIBUTIONS  WITH  RESPECT TO
OUTSTANDING SECURITIES. In the event that the Company shall at any time prior to
the  exercise  of all  Warrants  declare  a  dividend  (other  than  a  dividend
consisting  solely of shares of Common Stock or a cash dividend or  distribution
payable out of current or retained  earnings)  or  otherwise  distribute  to its
shareholders any monies, assets,  property,  rights,  evidences of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another person or entity,  or any other thing of value, the Holder or Holders
of the  unexercised  Warrants shall  thereafter be entitled,  in addition to the
shares of Common Stock or other securities receivable upon the exercise thereof,
to receive,  upon the  exercise of such  Warrants,  the same  monies,  property,
assets,  rights,  evidences of  indebtedness,  securities  or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution.  At the time of any such dividend or distribution,  the Company
shall  make  appropriate  reserves  to  ensure  the  timely  performance  of the
provisions of this Section 8.6.

                                       12
<PAGE>

                      8.7  SUBSCRIPTION  RIGHTS  FOR  SHARES OF COMMON  STOCK OR
OTHER  SECURITIES.  In the case the Company or an affiliate of the Company shall
at any time after the date hereof and prior to the  exercise of all the Warrants
issue any rights to subscribe for shares of Common Stock or any other securities
of the Company or of such affiliate to all the shareholders of the Company,  the
Holders of the unexercised Warrants shall be entitled, in addition to the shares
of  Common  Stock or  other  securities  receivable  upon  the  exercise  of the
Warrants,  to receive such rights at the time such rights are distributed to the
other shareholders of the Company.

                      8.8  REDEMPTION  RIGHTS.  Notwithstanding  anything to the
contrary  contained  in Section  8.4 above,  within  twenty  (20) days after the
Holders  have been  provided  notice by the Company that the Company has entered
into a  transaction  that will result in a Change of Control  (which such notice
must be  provided  to the  Company  within ten (10) days after the  Company  has
entered  into such  transaction),  the Holder  shall have the option to have the
Company  repurchase  any or  all  of  the  Warrants  and/or  the  Shares  at the
difference  between the Exercise Price and the average  closing bid price of the
Shares for the last ten (10) trading days prior to the date of the  consummation
of the Change of Control. Such repurchase,  if elected by the Holders,  shall be
in immediately  available funds and shall close  simultaneously with the closing
of the Change of Control.

                   9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES.

                      9.1 EXCHANGE.  Each Warrant  Certificate  is  exchangeable
without  expense,  upon the  surrender  hereof by the  registered  Holder at the
principal executive office of the Company, for a new Warrant Certificate of like
tenor and date  representing  in the  aggregate  the right to purchase  the same
number of Shares in such  denominations  as shall be  designated  by the  Holder
thereof at the time of such surrender.

                      9.2  REPLACEMENT.  Upon receipt by the Company of evidence
reasonably  satisfactory to it of the loss, theft,  destruction or mutilation of
any  Warrant  Certificate,  and,  in case of  loss,  theft  or  destruction,  of
indemnity or security  reasonably  satisfactory to it, and  reimbursement to the
Company of all reasonable expenses  incidental  thereto,  and upon surrender and
cancellation of the Warrants, if mutilated,  the Company will make and deliver a
new Warrant Certificate of like tenor, in lieu thereof.

                   10.  ELIMINATION OF FRACTIONAL  INTERESTS.  The Company shall
not be required to issue certificates representing fractions of shares of Common
Stock and shall not be required to issue scrip or pay cash in lieu of fractional
interests,  it being the intent of the  parties  that all  fractional  interests
shall be  eliminated  by rounding any fraction up to the nearest whole number of
shares of Common Stock.

                   11. RESERVATION AND LISTING OF SECURITIES.  The Company shall
at all times reserve and keep available out of its  authorized  shares of Common
Stock,  solely for the purpose of issuance  upon the  exercise of the  Warrants,

                                       13
<PAGE>

such  number of shares of Common  Stock as shall be issuable  upon the  exercise
thereof.  The Company  covenants and agrees that,  upon exercise of the Warrants
and payment of the Exercise Price  thereof,  all shares of Common Stock issuable
upon such exercise shall be duly and validly issued, fully paid,  non-assessable
and not  subject to the  preemptive  rights of any  shareholder.  As long as the
Warrants shall be  outstanding,  the Company shall use its best efforts to cause
all shares of Common  Stock  issuable  upon the  exercise of the  Warrants to be
listed on or quoted by the  exchange  upon which the  Company's  Common Stock is
then listed or quoted.

                   12.  NOTICES TO WARRANT  HOLDERS.  Nothing  contained in this
Agreement  shall be construed as conferring upon the Holder or Holders the right
to vote or to consent or to receive  notice as a  shareholder  in respect of any
meetings of shareholders  for the election of directors or any other matter,  or
as having any rights whatsoever as a shareholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise,  any of the
following events shall occur:

                      (a) the Company  shall take a record of the holders of its
shares of Common Stock for the purpose of  entitling  them to receive a dividend
or  distribution  payable  otherwise  than  in  cash,  or  a  cash  dividend  or
distribution  payable  otherwise  than out of current or retained  earnings,  as
indicated by the accounting  treatment of such dividend or  distribution  on the
books of the Company; or

                      (b) the  Company  shall  offer to all the  holders  of its
Common Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company,  or
any option, right or warrant to subscribe therefor; or

                      (c) a  dissolution,  liquidation  or  winding  up  of  the
Company (other than in connection with a  consolidation  or merger) or a sale of
all or  substantially  all of its  property,  assets and business as an entirety
shall be proposed;

then, in any one or more of said events,  the Company shall give written  notice
of such event at least twenty (20) days prior to the date fixed as a record date
or the  date  of  closing  the  transfer  books  for  the  determination  of the
shareholders   entitled  to  such   dividend,   distribution,   convertible   or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such  proposed  dissolution,  liquidation,  winding up or sale.  Such
notice  shall  specify  such record date or the date of closing of the  transfer
books,  as the case may be.  Failure to give such  notice or any defect  therein
shall not  affect  the  validity  of any  action  taken in  connection  with the
declaration or payment of any such dividend or distribution,  or the issuance of
any convertible or exchangeable  securities or subscription  rights,  options or
warrants, or any proposed dissolution, liquidation, winding up or sale.

                   13.  NOTICES.  All  notices,  requests,  consents  and  other
communications  hereunder  shall be in writing  and shall be deemed to have been
duly made when delivered,  telecopied or mailed by registered or certified mail,
return receipt requested:

                      (a) If to a  registered  Holder  of the  Warrants,  to the
address of such Holder as shown on the books of the Company; or

                                       14
<PAGE>

                      (b) If to the  Company,  to the  address of the  principal
office of the Company or to such other  address as the Company may  designate by
notice to the Holders.

                   14.  SUPPLEMENTS AND  AMENDMENTS.  The Company and Holder may
from time to time supplement or amend this Agreement without the approval of any
Holders of Warrant  Certificates  in order to cure any ambiguity,  to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions  arising  hereunder which the Company and Holder may deem necessary
or desirable  and which the Company and Holder deem not to adversely  affect the
interests of the Holders of Warrant Certificates.

                   15.  SUCCESSORS.  All the  covenants  and  provisions of this
Agreement  by or for the benefit of the  Company  and the  Holders  inure to the
benefit of their respective successors and assigns hereunder.

                   16.   GOVERNING   LAW.   This   Agreement  and  each  Warrant
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of Oregon  with  respect  to  contracts  made and to be wholly
performed  in said State and for all purposes  shall be construed in  accordance
with the laws of said State.  The Company,  the Holder and any other  registered
holder or holders  agree of the  Warrant  Certificates  (a) agree that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted  exclusively in a federal or state court located in Clackamas County,
Oregon (b) waive any  objection  which the they may have now or hereafter to the
venue of any such suit, action or proceeding, and (c) irrevocably consent to the
jurisdiction of a any federal or state court located in Clackamas County, Oregon
in any such suit,  action or procedure.  In the event of litigation  between the
parties arising  hereunder,  the prevailing party shall be entitled to costs and
reasonable attorney's fees.

                   17.  BENEFITS OF THIS  AGREEMENT.  Nothing in this  Agreement
shall be construed to give to any person or corporation,  other than the Company
and  Holder  and  any  other  registered   holder  or  holders  of  the  Warrant
Certificates,  Warrants or the Shares,  any legal or equitable right,  remedy or
claim  under  this  Agreement;  and  this  Agreement  shall  be for the sole and
exclusive  benefit of the Company and Holder and any other  holder or holders of
the Warrant Certificates, Warrants or the Shares.

                  19. PRESERVATION OF RIGHTS. The Company will not, by amendment
of its  certificate  of  incorporation  or through  any  consolidation,  merger,
reorganization,  transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement or the Warrants or the rights  represented
thereby,  but will at all times in good faith  assist in the carrying out of all
such  terms  and in the  taking  of  all  such  action  as may be  necessary  or
appropriate  in order to  protect  the  rights of the  Holders  of the  Warrants
against dilution or other impairment.

                   20.  COUNTERPARTS.  This  Agreement  may be  executed  in any
number of counterparts and each of such  counterparts  shall for all purposes be
deemed to be an original,  and such counterparts  shall together  constitute but
one and the same instrument.

                                       15
<PAGE>

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

[SEAL]                                     TSET, INC.

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

Attest:

Name:
Title:

                                           THE EAGLE ROCK GROUP, LLC

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

                                       16
<PAGE>

                                                                       EXHIBIT A

THE WARRANTS  REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES  ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE ACT"),  AND MAY NOT BE OFFERED OR SOLD EXCEPT (I) PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF  SECURITIES),  OR (III) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY,  STATING  THAT  AN  EXEMPTION  FROM  REGISTRATION  UNDER  SUCH  ACT  IS
AVAILABLE.

THE  TRANSFER OR EXCHANGE OF THE WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE
                    5:00 P.M., NEW YORK TIME, JANUARY 1, 2012
No. W-                                                        1,400,000 Warrants

                               WARRANT CERTIFICATE

                  This Warrant Certificate  certifies that THE EAGLE ROCK GROUP,
LLC or registered  assigns is the registered  holder of one million four hundred
thousand  (1,400,000)  Warrants to  purchase,  at any time from  January 1, 2002
until 5:00 P.M. New York City time on January 1, 2012 ("Expiration  Date") up to
one million four hundred thousand  (1,400,000)  shares  ("Shares") of fully-paid
and nonassessable  common stock, par value $.001 per share ("Common Stock"),  of
TSET, INC., a Nevada corporation (the "Company"), at the initial exercise price,
subject to adjustment in certain  events (the "Exercise  Price"),  of [$.68] per
Share upon  surrender  of this Warrant  Certificate  and payment of the Exercise
Price at an office or agency of the Company,  but subject to the  conditions set
forth herein and in the warrant  agreement dated as of August __, 2001 ("Warrant
Agreement")  between the Company and The Eagle Rock Group,  LLC.  Payment of the
Exercise  Price may be made in cash,  or by certified or official  bank check in
New York  Clearing  House  funds  payable  to the order of the  Company,  or any
combination of cash or certified check, or in accordance with Section 3.2 of the
Warrant Agreement.

                  No Warrant  may be  exercised  after 5:00 P.M.,  New York City
time,  on the  Expiration  Date,  at which time all Warrants  evidenced  hereby,
unless exercised prior thereto, shall thereafter be void.

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized  issue of Warrants  issued pursuant to the Warrant  Agreement,
which Warrant  Agreement is hereby  incorporated by reference in and made a part
of this  instrument  and is hereby  referred to in a description  of the rights,
limitation  of rights,  obligations,  duties and  immunities  thereunder  of the
Company and the holders (the words "holders" or "holder"  meaning the registered
holders or registered holder) of the Warrants.

<PAGE>

                  The Warrant  Agreement  provides  that upon the  occurrence of
certain  events,  the Exercise  Price and/or number of the Company's  securities
issuable  thereupon may,  subject to certain  conditions,  be adjusted.  In such
event,  the Company  will,  at the  request of the  holder,  issue a new Warrant
Certificate  evidencing  the  adjustment  in the  Exercise  Price and the number
and/or type of securities issuable upon the exercise of the Warrants;  provided,
however,  that the failure of the Company to issue such new Warrant Certificates
shall not in any way  change,  alter,  or  otherwise  impair,  the rights of the
holder as set forth in the Warrant Agreement.

                  Upon due  presentment  for  registration  of  transfer of this
Warrant  Certificate  at an  office  or agency  of the  Company,  a new  Warrant
Certificate  or  Warrant  Certificates  of  like  tenor  and  evidencing  in the
aggregate  a like  number of Warrants  shall be issued to the  transferee(s)  in
exchange  for this  Warrant  Certificate,  subject to the  limitations  provided
herein and in the Warrant  Agreement,  without any charge except for any tax, or
other governmental charge imposed in connection therewith.

                  Upon the exercise of less than all of the  Warrants  evidenced
by this  Certificate,  the Company shall  forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.

                  The Company may deem and treat the registered holder(s) hereof
as the  absolute  owner(s)  of this  Warrant  Certificate  (notwithstanding  any
notation of ownership or other writing  hereon made by anyone),  for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other  purposes,  and the Company shall not be affected by any notice to the
contrary.

                                       2
<PAGE>

                  All terms used in this Warrant  Certificate  which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

                  IN  WITNESS  WHEREOF,  the  Company  has caused  this  Warrant
Certificate to be duly executed under its corporate seal.

Dated: July __, 2001                       TSET, INC.

[SEAL]                                     By: _________________________________

                                                Name:
                                                Title:

Attest:

Name:
Title:

                                       3
<PAGE>

                         [FORM OF ELECTION TO PURCHASE]

                  The  undersigned  hereby  irrevocably  elects to exercise  the
right, represented by this Warrant Certificate,  to purchase Shares and herewith
tenders in payment for such Shares  cash or a certified  or official  bank check
payable in New York Clearing  House Funds to the order of  _____________________
in the  amount  of  $_______  all in  accordance  with  the  terms  hereof.  The
undersigned  requests  that a  certificate  for such Shares be registered in the
name of ____________________,  whose address is  _____________________  and that
such Certificate be delivered to whose address is ___________________________.

|_| The  Undersigned  hereby  elects to exercise of the  Warrants  held by it in
accordance with Section 3.2 of the Warrant Agreement dated August _____, 2001.

Dated:                                     Signature:
                                           -------------------------------------
                                           (Signature   must   conform   in  all
                                           respects   to  name  of   holder   as
                                           specified  on the face of the Warrant
                                           Certificate.)

                        ---------------------------------
                         (Insert Social Security or Other
                         Identifying Number of Holder)

<PAGE>

                              [FORM OF ASSIGNMENT]

                  (To be  executed  by the  registered  holder  if  such  holder
desires to transfer the Warrant Certificate.)

                  FOR VALUE  RECEIVED  _________________________________  hereby
sells, assigns and transfers unto

________________________________________________________________________________
                  (Please print name and address of transferee)

this Warrant  Certificate,  together with all right, title and interest therein,
and does hereby irrevocably  constitute and appoint  __________________________,
Attorney,  to  transfer  the  within  Warrant  Certificate  on the  books of the
within-named Company, with full power of substitution.

Dated:                                     Signature:
                                           -------------------------------------
                                           (Signature   must   conform   in  all
                                           respects   to  name  of   holder   as
                                           specified  on the face of the Warrant
                                           Certificate.)

                        --------------------------------
                         (Insert Social Security or Other
                         Identifying Number of Holder)

<PAGE><PAGE>

                                                                    EXHIBIT 10.1

                      THIRD AMENDMENT TO CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated
effective as of June 8, 2001, is among ENCOMPASS SERVICES CORPORATION, a Texas
corporation (formerly Group Maintenance America Corp., the "Company"), the
Subsidiaries of the Company listed on the signature pages hereto as Guarantors
(together with each other Person who subsequently becomes a Guarantor,
collectively, the "Guarantors"), the banks and other financial institutions
listed on the signature pages hereto under the caption "Banks" (together with
each other person who becomes a Bank, collectively, the "Banks") THE CHASE
MANHATTAN BANK (formerly Chase Bank of Texas, National Association),
individually as a Bank and as Syndication Agent, FIRST UNION NATIONAL BANK,
individually as a Bank and as Documentation Agent, and BANK OF AMERICA, N.A.,
individually as a Bank ("Bank of America") and as Administrative Agent for the
other Banks (in such capacity, together with any other Person who becomes the
administrative agent, the "Administrative Agent").

The Company, the Banks, the Syndication Agent, the Documentation Agent and the
Administrative Agent have entered into that certain Credit Agreement dated as of
February 22, 2000 (as amended, restated, or modified from time to time, the
"Credit Agreement").

The Company has requested that the Credit Agreement be amended in certain
respects, and the Banks party hereto are willing to comply with such request
subject to the terms and provisions of this Amendment.

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

                                   ARTICLE 1

                                  DEFINITIONS

     Section 1.1  Definitions.  Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Credit Agreement, as amended hereby.

                                   ARTICLE 2

                                  AMENDMENTS

     Section 2.1  Amendments to Section 1.01.

        (a) The following definitions appearing in Section 1.01 of the Credit
     Agreement are hereby amended to read in their entirety as follows:

          "Agreement" means this Agreement, as it may be amended from time to
     time.

          "Qualified High Yield Offerings" means one or more Designated
     issuances after June 8, 2001 and on or before September 1, 2001, of
     subordinated, unsecured debt securities by the Company and/or one or more
     of its Subsidiaries (which may be guaranteed by the Company and any of its
     Subsidiaries on a subordinated basis) in an
<PAGE>

     aggregate principal amount not to exceed $200,000,000 at any one time
     outstanding the terms of which are substantially identical to the BOSC
     Senior Subordinated Notes Indenture or are otherwise consented-to by the
     Majority Banks and that have (a) a maturity date after the Term Loan
     Maturity Date or the Tranche C Term Loan Maturity Date and (b) an average
     life to maturity greater than that of the Term Loans (as of the date of
     each such Qualified High Yield Offering).

        (b) The following additional definitions are added to Section 1.01 of
     the Credit Agreement to appear therein in their proper alphabetical order
     and to read in their entirety as follows:

         "Approving Banks" means Banks executing the Third Amendment and
     returning it to the Administrative Agent by 5:00 p.m. on June 12, 2001.

         "Designated" means that the Company has given the Administrative Agent
     a Designation Notice.

         "Designation Notice" means a written notice from the Company to the
     Administrative Agent to the effect that it desires to consummate Qualified
     High Yield Offerings and incur Indebtedness pursuant to Section 7.03(o) of
     this Agreement, which notice shall set out in detail the terms and
     conditions of the proposed Qualified High Yield Offerings.

         "Third Amendment" means the Third Amendment to this Agreement dated as
     of June 8, 2001.

     Section 2.2 Amendment to Section 2.07. Section 2.07 of the Credit Agreement
is amended by adding the following clause thereto:

         "(vi) Prepayments from Qualified High Yield Offerings. Not later than
     the third Business Day following the date of receipt of the proceeds from
     Qualified High Yield Offerings, Borrower shall make a prepayment in respect
     of the Revolving Loans equal to the Net Proceeds thereof. Prepayments made
     pursuant to this clause (vi) shall not constitute a permanent reduction of
     the Revolving Loan Commitments."

     Section 2.3 Amendment to Section 7.13. Section 7.13 of the Credit Agreement
is amended by deleting therefrom the words: "$60,000,000 or six percent (6%)"
and inserting in lieu thereof the words "$80,000,000 or eight percent (8%)."

                                   ARTICLE 3

                 RATIFICATIONS, REPRESENTATIONS AND WARRANTIES

     Section 3.1  Ratifications.  The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Credit Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Credit Agreement and the other
Loan Documents are ratified and confirmed and shall continue in full force and
effect.  The Company and the Banks agree that the Credit Agreement as amended
hereby and the other Loan Documents shall continue to be legal, valid, binding
and enforceable

THIRD AMENDMENT TO CREDIT AGREEMENT    2
<PAGE>

in accordance with their respective terms, except, in each case, as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally, and by general principles of
equity regardless of whether such enforceability is sought in a proceeding in
equity or at law.

     Section 3.2 Representations and Warranties. The Company hereby represents
and warrants to the Banks that (i) the execution, delivery and performance of
this Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite action on the part of
the Company and will not violate the certificate or articles of incorporation,
other organizational documents or bylaws of the Company or any Guarantor; (ii)
the representations and warranties contained in the Credit Agreement, as amended
hereby, and any other Loan Document are true and correct in all material
respects on and as of the date hereof as though made on and as of the date
hereof (except to the extent that such representations and warranties were
expressly, in the Credit Agreement, made only in reference to a specific date);
and (iii) no Default or Event of Default has occurred and is continuing.

                                   ARTICLE 4

                                 MISCELLANEOUS

     Section 4.1 Conditions to Effectiveness. This Amendment shall be effective
upon the execution hereof by the Company, Majority Banks and the Administrative
Agent and upon delivery to the Administrative Agent of each of the following
documents:

        (a) Designation Notice. The Company shall have given a Designation
     Notice.

        (b) Consent of Majority Banks; Payment of Fee. (i) If the Qualified High
     Yield Offering is other than substantially identical to the BOSC Senior
     Subordinated Notes Indenture, the Majority Banks shall have consented in
     writing to the Qualified High Yield Offerings described in the Designation
     Notice and (ii) the Company shall have paid to the Administrative Agent for
     the ratable account of the Approving Banks a fully earned, non-refundable
     fee for the Third Amendment equal to five basis points times the
     Commitments of the Approving Banks.

        (c) Resolutions. Resolutions of the board of directors or other
     appropriate body of the Company and each Subsidiary certified by its
     Secretary or an Assistant Secretary or other analogous officer or
     representative which authorize the execution, delivery and performance by
     such Person of this Amendment and such other Loan Documents to be executed
     in connection herewith to which it is or is to be a party;

        (d) Incumbency Certificate. A certificate of incumbency certified by the
     Secretary or an Assistant Secretary or other analogous officer or
     representative of the Company and each Subsidiary certifying as to the name
     of each officer or other representative of such Person (i) who is
     authorized to sign this Amendment or any Loan Documents to which such
     Person is or is to be a party (including any certificates contemplated
     herein), together with specimen signatures of each such officer or other
     representative, and (ii) who will, until replaced by other officers or
     representatives duly authorized for that purpose, act as its representative
     for the purposes of signing

THIRD AMENDMENT TO CREDIT AGREEMENT    3
<PAGE>

     documents and giving notices and other communications in connection with
     the Loan Documents and the transactions contemplated thereby;

        (e) Articles or Certificates of Incorporation, etc. Certified copies of
     any amendments of or other changes to the articles or certificates of
     incorporation, certificate of formation, certificate of limited
     partnership, partnership agreement or other analogous constitutional
     document of the Company since May 10, 2000, certified by the Secretary of
     State or other applicable Governmental Authority of the state or other
     jurisdiction of incorporation or organization of the Company and dated as
     of a current date;

        (f) Bylaws. Certified copies of any amendments of or other changes to
     the bylaws or other analogous constitutional document of the Company since
     May 10, 2000, certified by the Secretary or an Assistant Secretary or other
     analogous officer or representative of such Person;

        (g) Government Certificates. Certificates of appropriate officials as to
     the existence and good standing, status or compliance, as applicable, of
     the Company in its jurisdiction of incorporation or organization and any
     and all jurisdictions where the Company is qualified to do business as a
     foreign corporation or other entity, each such certificate to be dated as
     of a current date;

        (h) Payment of Fees and Expenses. The Company shall have paid all fees
     and expenses of or incurred by the Administrative Agent and its counsel to
     the extent billed on or before the date hereof and payable pursuant to this
     Amendment;

        (i)  No Prohibitions.  No Governmental Requirement shall prohibit the
     consummation of the transactions contemplated by this Amendment or any
     other Loan Document to be delivered in connection herewith, and no order,
     judgment or decree of any Governmental Authority or arbitrator shall, and
     no litigation or other proceeding shall be pending or threatened which
     would, enjoin, prohibit, restrain or otherwise adversely affect the
     consummation of the transactions contemplated by this Amendment or the
     other Loan Documents to be delivered in connection herewith;

        (j) Opinion of Counsel. Opinion addressed to the Administrative Agent
     and the Banks from Bracewell & Patterson, L.L.P. and the General Counsel to
     the Company, as to such matters as the Administrative Agent may reasonably
     request; and

        (k) Proceedings Satisfactory. All matters and proceedings taken in
     connection with this Amendment and the other Loan Documents to be delivered
     in connection herewith shall be reasonably satisfactory to the
     Administrative Agent and its counsel.

Borrower shall deliver, or cause to be delivered, to the Administrative Agent
sufficient counterparts of each agreement, document or instrument to be received
by the Administrative Agent under this Section 4.1 to permit the Administrative
Agent to distribute a copy of the same to each Lender.

     Section 4.2 Survival of Representations and Warranties. All representations
and warranties made in this Amendment or any other Loan Document including any
Loan Document furnished in connection with this Amendment shall survive the
execution and delivery of this Amendment and the other Loan Documents, and no
investigation by the Banks or the

THIRD AMENDMENT TO CREDIT AGREEMENT    4
<PAGE>

Administrative Agent shall affect the representations and warranties or the
right of the Banks or the Administrative Agent to rely upon them.

     Section 4.3 Reference to Credit Agreement. Each of the Loan Documents,
including the Credit Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Credit Agreement as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Credit Agreement
shall mean a reference to the Credit Agreement as amended hereby.

     Section 4.4 Expenses of Agent. As provided in the Credit Agreement, the
Company agrees to pay on demand all costs and expenses incurred by the
Administrative Agent in connection with the preparation, negotiation, and
execution of this Amendment and the other Loan Documents executed pursuant
hereto.

     Section 4.5 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

     Section 4.6 Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.

     Section 4.7 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Company, the Banks and the Administrative
Agent and their respective successors and assigns, except that the Company may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Banks.

     Section 4.8 Counterparts. This Amendment may be executed in one or more
counterparts, and on telecopy counterparts each of which when so executed shall
be deemed to be an original, but all of which when taken together shall
constitute one and the same agreement.

     Section 4.9 Effect of Waiver. No consent or waiver, express or implied, by
the Banks to or for any breach of or deviation from any covenant, condition or
duty by the Company or any Guarantor shall be deemed a consent or waiver to or
of any other breach of the same or any other covenant, condition or duty.

     Section 4.10 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.

     Section 4.11 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR

THIRD AMENDMENT TO CREDIT AGREEMENT    5
<PAGE>

DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.

     Section 4.12 Reaffirmation of Guaranty. The undersigned Guarantors of the
obligations of the Company to the Banks under the Credit Agreement and the other
Loan Documents each hereby: (i) consents to the execution and delivery of the
foregoing Amendment, (ii) agrees that the Amendment shall not limit or diminish
the obligations of the undersigned under the Credit Agreement as Guarantors,
(iii) reaffirms its obligations under its guaranty and (iv) agrees that the
Guaranty remains in full force and effect and is hereby ratified and confirmed.

                            [Signature Pages Follow]

THIRD AMENDMENT TO CREDIT AGREEMENT    6
<PAGE>

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

                                THE COMPANY:

                                ENCOMPASS SERVICES CORPORATION

                                By: /s/  TODD A. MATHERNE
                                ---------------------------------------
                                Name:  Todd A. Matherne
                                Title: Vice President

GUARANTORS:
-----------
A-1 Mechanical of Lansing, Inc.
          (successor by merger to New Construction Air Conditioning, Inc.)
AA Advance Air, Inc.
AA Jarl, Inc.
A-ABC Appliance, Inc.
A-ABC Services, Inc.
Air Conditioning, Plumbing & Heating Service Co., Inc.
Aircon Energy Incorporated
Air Systems, Inc.
Airtron, Inc. (successor by merger to Air Conditioning Engineers, Inc.)
Airtron of Central Florida, Inc.
American Air Company, Inc.
AMS Arkansas, Inc. (formerly Arkansas Mechanical Services, Inc.)
Atlantic Industrial Constructors, Inc.
B&R Electrical Services, Inc.
Barr Electric Corp.
Building One Commercial, Inc.
          (formerly Spann Building Maintenance Company)
Building One Service Solutions, Inc.
          (successor by merger to D&P Janitorial, Inc. and
           Direct Engineered Maintenance, Inc.)
BUYR, Inc.
Callahan Roach Products & Publications, Inc.
Cardinal Contracting Corporation
Central Air Conditioning Contractors, Inc.
Central Carolina Air Conditioning Company
Chapel Electric Co.
Charlie Crawford, Inc.
Clark Converse Electric Service, Inc.
Colonial Air Conditioning Company
Commercial Air Holding Company
Commercial Air, Power and Cable, Inc.
Conch Republic Corp.
Continental Electrical Construction Co.
Costa and Rihl, Inc.

THIRD AMENDMENT TO CREDIT AGREEMENT    7
<PAGE>

Costner Brothers, Inc.
Cramar Electric, Inc.
C.R. Hipp Construction Co., Inc.
Del-Air Service Company, Inc.
Delta Innovations, Ltd., a limited liability company,
           by Roth Companies Incorporated, its sole member
Divco, Inc.
Diversified Management Services U.S.A., Inc.
Dynalink Corporation
EDG Power Group, Inc.
EET Holdings, Inc.
Electrical Contracting, Inc.
Electrical Design & Construction, Inc.
Engineering Design Group, Inc.
Encompass Electrical Technologies Central Tennessee, Inc.
           (formerly Sullivan Electric, Inc.)
Encompass Electrical Technologies Eastern Tennessee, Inc.
           (formerly Advent Electric Co., Inc.)
Encompass Electrical Technologies - Florida, LLC,
           by EET Holdings, Inc., its sole member
Encompass Electrical Technologies Georgia, Inc.
           (formerly Regency Electric Company Atlanta Office, Inc.)
Encompass Electrical Technologies Jacksonville, Inc.
           (formerly All Service Electric, Inc.)
Encompass Electrical Technologies North Carolina, Inc.
           (formerly Regency Electric Company Charlotte Office, Inc.)
Encompass Electrical Technologies North Florida, Inc.
           (formerly Regency Electric Company Jacksonville Office, Inc.)
Encompass Electrical Technologies of Nevada, Inc.
           (formerly Potter Electric Co., Inc., successor by merger to
           TSE Acquisition Corp.)
Encompass Electrical Technologies of New England, Inc.
Encompass Electrical Technologies Projects Group, Inc.
           (formerly Regency Electric Company Projects Group, Inc.)
Encompass Electrical Technologies South Carolina, Inc.
           (formerly Atlantic Electric Company, Inc.)
Encompass Electrical Technologies Southeast, Inc.
           (formerly Regency Electric Company, Inc.)
Encompass Electrical Technologies Western Tennessee, Inc.
           (formerly Regency Electric Company Memphis Office, Inc.)
Encompass Electrical Technologies of Texas, Inc.
           (formerly Walker Engineering, Inc., successor by merger
           to Electrical Associates of Dallas, Inc., Gentzler
           Electrical Contractors, Inc. and MH Technologies, Inc.)
Encompass Facility Services, Inc.
           (formerly GroupMAC Facility Services, Inc.)
Encompass Global Technologies, Inc.
           (formerly GroupMAC Maryland Corp.)

THIRD AMENDMENT TO CREDIT AGREEMENT    8
<PAGE>

Encompass Mechanical Services Southeast, Inc.
           (formerly Ivey Mechanical Company , Inc., successor by merger
           to Statewide Heating & Air Conditioning, Inc.)
Encompass Plumbing, Inc.
           (formerly Costa and Rihl Plumbing, Inc.)
Encompass Services Holding Corp. (formerly GroupMAC Holding Corp.)
Encompass Services Indiana L.L.C. (formerly GroupMac Indiana, L.L.C.)
           by Airtron, Inc., Cardinal Contracting Corporation, Paul E. Smith
           Co., Inc., and Roth Companies Incorporated, its sole members
Encompass Ind./Mech. of Texas, Inc.
           (formerly Trinity Contractors, Inc., successor by merger to
           Mechanical Interiors, Inc. and K&A Mechanical, Inc.)
ESR PC, L.P., by Conch Republic Corp., general partner
Evans Services, Inc.
FacilityDirect.com, LLC,
           by Building One Service Solutions, Inc., its sole member
The Farfield Company
Ferguson Electric Corporation
Fred Clark Electrical Contractor, Inc.
Gamewell Mechanical, Inc.
Garfield-Indecon Electrical Services, Inc.
Gilbert Mechanical Contractors, Inc.
Gregory Electric, Inc.
GroupMAC Texas, L.P.,
           by Encompass Services Holding Corp., general partner
Gulf States, Inc.
           (successor by merger to Brazosport Management, Inc.,
           G.S. Financial, Inc., G.S. Group, Inc., G.S.I. of California, Inc.
           and Testronics, Inc.)
Hallmark Air Conditioning, Inc.
HPS Plumbing Services, Inc.
Hungerford Mechanical Corporation
HVAC Services, Inc. (formerly Noron, Inc.)
Hydro Cooling, Inc.
Interstate Building Services, L.L.C.,
           by Building One Service Solutions, Inc., its sole member
Isla Morada, LLC, by Conch Republic Corp., its sole member
Ivey Mechanical Services, L.L.C.,
           by Encompass Mechanical Services Southeast, Inc., its sole
           member
K&N Plumbing, Heating and Air Conditioning, Inc.
Laney's, Inc.
The Lewis Companies, Inc.
Lexington/Ivey Mechanical Company, L.L.C.,
           by Encompass Mechanical Services Southeast, Inc., its sole
           member
Linford Service Co.
L.T. Mechanical, Inc.
MacDonald-Miller Co., Inc.

THIRD AMENDMENT TO CREDIT AGREEMENT    9
<PAGE>

MacDonald-Miller Industries, Inc.
MacDonald-Miller of Oregon, Inc.
MacDonald-Miller Service, Inc.
Masters, Inc.
Mechanical Services of Orlando, Inc.
Merritt Island Air & Heat, Inc.
National Network Services, Inc.
Oil Capital Electric, Inc.
Omni Mechanical Company
Omni Mechanical Services,
           by Omni Mechanical Company, general partner
Pacific Rim Mechanical Contractors, Inc.
Paul E. Smith Co., Inc.
Phoenix Electric Company
Pro Wire Security Systems, Inc.
Ray and Claude Goodwin, Inc.
Regency Electric Company South Florida Office, Inc.
Reliable Mechanical, Inc.
Riviera Electric of California, Inc.
Robinson Mechanical Company
           (successor by merger to J.D. Steward Air Conditioning, Inc. and
           Valley Wide Plumbing and Heating, Inc.)
Romanoff Electric Corp.
Roth Companies Incorporated
Sanders Bros., Inc. (successor by merger to McIntosh Mechanical, Inc.)
Sequoyah Corporation
Sibley Services, Incorporated
SKC Electric, Inc.
SKCE, Inc.
S.L. Page Corporation
Snyder Mechanical
Southeast Mechanical Service, Inc.
Stephen C. Pomeroy, Inc.
Sterling Air Conditioning, Inc.
Sun Plumbing, Inc.
Taylor-Hunt Electric, Inc. (formerly Taylor Electric, Inc.)
Team Mechanical, Inc.
Tower Electric Company
           (successor by merger to Walter C. Davis & Sons, Inc.)
Town & Country Electric, Inc.
Tri-City Electrical Contractors, Inc.
Tri-M Corporation
           (formerly Tri-M Electrical Construction Corp., successor by
           merger to Tri-M Building Automation Systems Corp.,
           Tri-M Corporation, and Tri-M Holding Corp.)
Tri-State Acquisition Corp.
United Acquisition Corp.
United Service Alliance, Inc.
Van's Comfortemp Air Conditioning, Inc.

THIRD AMENDMENT TO CREDIT AGREEMENT
<PAGE>

Vantage Mechanical Contractors, Inc.
Vermont Mechanical, Inc.
Wade's Heating & Cooling, Inc.
Watson Electrical Construction Co.
Wiegold & Sons, Inc.
Willis Refrigeration, Air Conditioning & Heating, Inc.
Wilson Electric Company, Inc.
         (successor by merger to Chambers Electronic Communications, Inc.)
Yale Incorporated

By:    /s/ GRAY H. MUZZY
       -------------------------------------
Name:  Gray H. Muzzy
Title: Vice President
       Acting on Behalf of Each of the Above

Encompass Management Co. (formerly
GroupMAC Management Co. and successor
by merger to Building One Mechanical Services, Inc.)

By:    /s/  GRAY H. MUZZY
       -------------------------------------
Name:  Gray H. Muzzy
Title: Vice President

Encompass Electrical Technologies - Rocky Mountains, Inc.
(formerly Riviera Electric Construction Co., successor
by merger to Zwart, Inc.)

By:    /s/  DANIEL W. KIPP
       -------------------------------------
Name:  Daniel W. Kipp
Title: Vice President

ChiP Corp.
Wayzata, Inc.

By:    /s/  LAYNE ALBERT
       -------------------------------------
Name:  Layne Albert
Title: Vice President

THIRD AMENDMENT TO CREDIT AGREEMENT

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