Document:

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                                                                    EXHIBIT 10.3

                           FIRST AMENDED AND RESTATED
                    SUBORDINATION AND INTERCREDITOR AGREEMENT

      THIS FIRST AMENDED AND RESTATED SUBORDINATION AND INTERCREDITOR AGREEMENT
dated as of September 30, 2004 (as amended, supplemented, restated or otherwise
modified, the "Agreement") is entered into by and among T-3 ENERGY SERVICES,
INC., a Delaware corporation ("Borrower"), each Guarantor (as such term is
defined in the Senior Credit Agreement) set forth on the signature pages hereof,
GENERAL ELECTRIC CAPITAL CORPORATION ("GECC"), COMERICA BANK ("Comerica"), WELLS
FARGO BANK, NATIONAL ASSOCIATION, successor by merger with Wells Fargo Bank
Texas, National Association (collectively with GECC, Comerica, and any other
party that becomes a lender under the Senior Credit Agreement defined below,
"Senior Lenders", and as agent for Senior Lenders, "Senior Agent"), and WELLS
FARGO ENERGY CAPITAL, INC. (collectively with any other party that becomes a
lender under the Junior Credit Agreement defined below, "Junior Lenders", and as
agent for Junior Lenders, "Junior Agent").

                                    RECITALS

      A. Borrower has obtained credit from Junior Lenders, and Borrower has
obtained credit from Senior Lenders.

      B. In connection with such credits, Borrower, Junior Agent, Junior
Lenders, Senior Agent and Senior Lenders have entered into that certain
Subordination and Intercreditor Agreement dated as of December 17, 2001 (the
"Existing Intercreditor Agreement").

      C. Borrower proposes to obtain additional credit from Junior Lenders, and
Borrower proposes to obtain additional credit from Senior Lenders.

      D. Senior Lenders have indicated they will extend such additional credit
to Borrower if certain conditions are met, including without limitation, the
requirement that Junior Lenders execute this Agreement.

      E. Junior Lenders have indicated they will extend such additional credit
to Borrower if certain conditions are met, including without limitation, the
requirement that Senior Lenders execute this Agreement.

      F. Senior Agent, Senior Lenders, Junior Agent and Junior Lenders desire to
set forth their relative rights and priorities regarding their respective credit
arrangements with Borrower.

      NOW, THEREFORE, as an inducement to Senior Lenders and Junior Lenders to
extend credit and for other valuable consideration, the parties hereto agree to
amend and completely restate the Existing Intercreditor Agreement, as follows:

      1. DEFINITIONS. As used herein, the following terms shall have the
following meanings:

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            "Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq.

            "Critical Needs Advances" means Revolving Credit Advances that (i)
are made for the purposes of preserving or protecting Collateral or (ii) are
made at the request of the Borrower, the proceeds of which the Borrower
represents are to be used to pay payroll taxes, utility bills, insurance and
other expenses necessary to prevent immediate and irreparable harm to the
Borrower's business or assets (provided, however, that the Senior Lenders shall
not be responsible for ensuring that the proceeds of any Revolving Credit
Advances are used for such purposes).

            "Indebtedness" means any and all principal, interest, fees and
expenses of Borrower and/or one or more Guarantor incurred or created, whether
voluntary or involuntary and however arising, whether due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
whether Borrower and/or one or more Guarantor may be liable individually or
jointly with others.

            "Junior Credit Agreement" means that certain Loan Agreement dated as
of September 30, 2004, by and among Borrower, Junior Agent and Junior Lenders,
as amended, extended, renewed or restated from time to time as permitted under
this Agreement and the Senior Credit Agreement.

            "Junior Creditors" means, collectively, Junior Lenders and Junior
Agent, and "Junior Creditor" means any of them individually.

            "Junior Debt" means all Indebtedness now or at any time hereafter
owing from Borrower or any Guarantor to any Junior Creditor (including without
limitation, interest thereon which may accrue subsequent to Borrower becoming
subject to any state or federal debtor-relief statute) including, without
limitation, all Indebtedness owing from Borrower to any Junior Creditor pursuant
to the Junior Credit Agreement and the Junior Note.

            "Junior Note" means that certain Promissory Note dated as of
September 30, 2004, made by Borrower payable to the order of Junior Lenders in
the principal amount of $15,000,000, as amended, extended, renewed or restated
from time to time as permitted under this Agreement and the Senior Credit
Agreement.

            "Lien Priority" is defined in Section 5 of this Agreement.

            "Senior Credit Agreement" means that certain First Amended and
Restated Credit Agreement dated as of September 30, 2004, by and among Borrower,
Senior Agent and Senior Lenders, as amended, extended, refinanced, renewed or
restated from time to time; subject however to the provisions of Section 12
hereof with respect to the extension of the maturity date of any Senior Debt.

            "Senior Creditor" means, collectively, Senior Lenders and Senior
Agent, and "Senior Creditor" means any of them individually.

            "Senior Debt" means all Indebtedness now or at any time hereafter
owing from Borrower or any Guarantor to any Senior Creditor pursuant to the
Senior Credit Agreement and the Senior Notes (including by way of example and
without limitation, all Obligations, all obligations of Subsidiaries under
Guaranty Agreements and interest thereon which may accrue subsequent to Borrower
becoming subject to any state or federal bankruptcy or debtor-relief statute),
provided that the principal amount of such Indebtedness shall never exceed
$75,000,000 plus up to $1,000,000 for Critical Needs Advances.

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      "Senior Notes" means (a) those certain Revolving Credit Notes dated as of
September 30, 2004, made by Borrower payable to the order of Senior Lenders in
the aggregate principal amount of $50,000,000, (b) that certain Swing Line Note
dated as of September 30, 2004, made by Borrower payable to the order of Senior
Agent in the aggregate principal amount of $5,000,000, (c) notes evidencing
Critical Needs Advances, and (d) any of the notes referenced in clauses (a), (b)
or (c) above, as amended, extended, renewed or restated from time to time, as
permitted under this Agreement.

      Other capitalized terms herein not otherwise defined herein shall have the
meanings ascribed to such terms in the Senior Credit Agreement.

      2. INDEBTEDNESS SUBORDINATED. Junior Creditors hereby subordinate all
Junior Debt to all Senior Debt. Junior Creditors irrevocably consent and direct
that all Senior Debt shall be paid in full in cash (or solely with respect to
Letter of Credit Liabilities, fully cash collateralized in accordance with the
terms of the Senior Credit Agreement) prior to Borrower making any payment on
any Junior Debt except such payments as are expressly permitted by Section 3 of
this Agreement. Junior Agent will, and Senior Agent is authorized in the name of
Junior Creditors from time to time to, execute and file such financing
statements and other documents as Senior Agent may require in order to (i) give
notice to other persons and entities of the terms and provisions of this
Agreement and (ii) give effect to the provisions of this Agreement.

      3. RESTRICTION OF PAYMENT OF JUNIOR DEBT; DISPOSITION OF PAYMENTS RECEIVED
BY JUNIOR CREDITORS. Until the Senior Debt has been paid in full, Borrower shall
not make, and Junior Creditors shall not accept or receive, any payment or
benefit in cash, by setoff or otherwise, directly or indirectly, on account of
principal, interest or any other amounts owing on any Junior Debt, except for
payment of the facility fees upon the execution and delivery of the Junior
Credit Agreement as set forth in the Junior Credit Agreement and such other
payments as are expressly permitted herein. Borrower is permitted to make and
Junior Creditors to receive all scheduled payments of interest on the Junior
Note and, after the Senior Debt has been paid in full in cash (or, solely with
respect to Letter of Credit Liabilities, fully cash collateralized in accordance
with the terms of the Senior Credit Agreement) and the Senior Lenders'
commitments to lend under the Senior Credit Agreement have been terminated,
payments of principal, or other amounts owing on the Junior Note; provided that
(a) Borrower shall not make, and Junior Creditors shall not accept or receive,
any prepayment or accelerated payment of or on any or all of the Junior Debt,
and (b) Borrower shall not make, and Junior Creditors shall not accept or
receive, any payment of principal, interest or other amounts owing on any or all
of the Junior Debt (A) while there is any monetary default on the Senior Debt or
(B) after written notice (a "Blockage Notice") from Senior Agent to Junior Agent
that a non-monetary Event of Default has occurred under the terms of any Senior
Debt for a period (each a "Blockage Period") commencing on the date of receipt
of such Blockage Notice and ending on the earlier of (i) the date such Event of
Default shall have been cured or waived in writing by the requisite Senior
Creditors in their sole discretion, and (ii) the date 181 days from the date of
receipt of such Blockage Notice, provided that Senior Agent may only deliver a
Blockage Notice if no previous Blockage Notice has been delivered within the 365
day period immediately preceding the date such Blockage Notice is proposed to be
delivered. During any Blockage Period, and while there is any monetary default
on the Senior Debt, Junior Creditors will not take any action or initiate any
proceedings, judicial or otherwise, (i) to enforce Junior Creditors' rights or
remedies with respect to any Junior Debt, including without limitation, any

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action to enforce any rights or remedies with respect to any collateral securing
any Junior Debt or (ii) to obtain any judgment or prejudgment remedy against
Borrower or any such collateral. If any payment is made in violation of this
Agreement, the applicable Junior Creditor shall promptly deliver the same to
Senior Agent in the form received, with any endorsement or assignment necessary
for the transfer of such payment or amounts setoff from such Junior Creditor to
Senior Creditors, to be either (in Senior Creditors' sole discretion) held as
cash collateral securing the Senior Debt or applied in reduction of the Senior
Debt in such order as Senior Creditors shall determine, and until so delivered,
such Junior Creditor shall hold such payment in trust for and on behalf of, and
as the property of, Senior Creditors.

      4. DISPOSITION OF EVIDENCE OF INDEBTEDNESS. If there is any existing
promissory note or other evidence of any of the Junior Debt, including the
Junior Note, or if any promissory note or other evidence of Indebtedness is
executed at any time hereafter with respect thereto, and if there are any
financing statements now or hereafter executed, relating to the Collateral and
any security interests securing the Junior Debt, then Borrower and the
applicable Junior Creditor will mark the same with a legend, in form and
substance satisfactory to Senior Agent, stating that it is subject to this
Agreement, and if asked to do so, will deliver the same to Senior Agent. At any
time that any Senior Debt remains outstanding and/or any Senior Creditor remains
committed to extend any credit to Borrower, Junior Creditors shall not, without
Senior Creditors' prior written consent, assign any of their respective rights,
interests or obligations in connection with the Junior Debt, except as provided
in the Junior Credit Agreement and so long as any assignee of such rights,
interests or obligations agrees, in a writing in form and substance satisfactory
to Senior Agent, to be subject in all respects to the terms and conditions of
this Agreement as a "Junior Lender".

      5. SUBORDINATION OF LIENS AND SECURITY INTERESTS. The parties hereby agree
that Senior Agent, for the benefit of itself and Senior Lenders, shall have a
first priority security interest in the Collateral, and Junior Agent, for the
benefit of Junior Lenders, shall have a second priority security interest in the
Collateral (the "Lien Priority"). Irrespective of the order of recording of
financing statements, security agreements or other instruments, and irrespective
of the descriptions of collateral contained in any such documents, the parties
agree among themselves that their respective security interests in the
Collateral shall be governed by the Lien Priority, which shall be controlling in
the event of any conflict between this Agreement and any other documents. After
all of the Senior Debt has become due and payable, whether by acceleration of
maturity or otherwise, the Junior Agent will release its Lien to the extent
requested by the Senior Agent in order for the Borrower or a Subsidiary (as
applicable) to effect a commercially reasonable sale or other commercially
reasonable disposition to which the requisite Senior Creditors have consented.
For the avoidance of doubt, a sale or other disposition would not be
commercially reasonable if the range of proceeds to be received by the Borrower
or a Subsidiary (as applicable) is significantly below the range of proceeds
that would be received in a disposition complying with Chapter 9 of the UCC to a
Person other than a secured party, a Person related to a secured party or a
secondary obligor.

      6. NOTICE OF DEFAULT UNDER JUNIOR DEBT. Prior to exercising any rights or
remedies Junior Creditors may have pursuant to the Junior Credit Agreement, the
Junior Note, at law or in equity, Junior Agent shall provide Senior Agent with
written notice of any default under the Junior Credit Agreement or the Junior
Note and allow Senior Creditors 10 days to (a) cure such default (but Senior
Creditors shall not be obligated to cure such default) or (b) deliver

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notice via Senior Agent to Junior Agent pursuant to Section 3 of this Agreement
of the commencement of a Blockage Period; provided, however, the obligation to
provide such notice prior to exercise of any rights or remedies shall not apply
to a default resulting from any voluntary or involuntary bankruptcy of the
Borrower that causes automatic acceleration of the Junior Debt.

      7. BREACH OF AGREEMENT BY BORROWER OR JUNIOR CREDITORS. In the event of
any breach of this Agreement by Borrower or any Junior Creditor, then and at any
time thereafter for so long as such breach is continuing Senior Creditors shall
have the right to declare immediately due and payable all or any portion of the
Senior Debt without presentment, demand, or any other notices of any kind,
including without limitation notice of nonperformance, protest, notice of
protest, notice of dishonor, notice of intention to accelerate or notice of
acceleration, all of which are expressly waived by Borrower and Junior
Creditors. No delay, failure or discontinuance of Senior Creditors in exercising
any right, privilege, power or remedy hereunder shall affect or operate as a
waiver of such right, privilege, power or remedy; nor shall any single or
partial exercise of any such right, privilege, power or remedy preclude, waive
or otherwise affect any other or further exercise thereof or the exercise of any
other right, privilege, power or remedy. Any waiver, permit, consent or approval
of any kind by Senior Creditors with respect to this Agreement must be in
writing and shall be effective only to the extent set forth in writing.

      8. REPRESENTATIONS AND WARRANTIES; INFORMATION. Borrower and each Junior
Creditor represent and warrant to Senior Creditors that: (a) no interest in the
Junior Debt has been assigned or otherwise transferred to any person or entity;
(b) payment of the Junior Debt has not been heretofore subordinated to any other
creditor of Borrower; and (c) such Junior Creditor has the requisite power and
authority to enter into and perform its obligations under this Agreement. Each
Junior Creditor further represents and warrants to Senior Creditors that such
Junior Creditor has established adequate, independent means of obtaining from
Borrower on a continuing basis financial and other information pertaining to
Borrower's financial condition, and each Senior Creditor represents and warrants
to Junior Creditors that such Senior Creditor has established adequate,
independent means of obtaining from Borrower on a continuing basis financial and
other information pertaining to Borrower's financial condition. Junior Creditors
agree to keep adequately informed from such means of any facts, events or
circumstances which might in any way affect Junior Creditors' risks hereunder,
and Junior Creditors agree that Senior Creditors shall have no obligation to
disclose to Junior Creditors information or material about Borrower which is
acquired by any Senior Creditor in any manner. Senior Creditors may, but are in
no way obligated to, disclose to Junior Creditors any information or material
relating to Borrower which is acquired by any Senior Creditor by any means, and
Borrower hereby agrees to and authorizes any such disclosure by any Senior
Creditor.

      9. TRANSFER OF ASSETS OR REORGANIZATION OF BORROWER. If any petition is
filed or any proceeding is instituted by or against Borrower under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, or
any other or similar law relating to bankruptcy, insolvency, reorganization or
other relief for debtors, or generally affecting creditors' rights, or seeking
the appointment of a receiver, trustee, custodian or liquidator of or for
Borrower or any of its assets, any payment or distribution of any of Borrower's
assets, whether in cash, securities or any other property, which would be
payable or

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deliverable with respect to any Junior Debt, shall be paid or delivered to
Senior Creditors until all Senior Debt is paid in full. Junior Creditors grant
to Senior Creditors the right to enforce, collect and receive any such payment
or distribution and to give releases or acquittances therefor, and each Junior
Creditor authorizes Senior Agent as its attorney-in-fact to vote and prove the
Junior Debt in any of the above-described proceedings or in any meeting of
creditors of Borrower relating thereto.

      10. SENIOR CREDITORS' RIGHTS UNAFFECTED. Except as expressly set forth in
Section 12 below and as otherwise expressly set forth in this Agreement, (a)
Senior Creditors shall have no direct or indirect obligations to Junior
Creditors of any kind with respect to the manner or time in which Senior
Creditors exercise (or refrains from exercising) any of their rights or remedies
with respect to the Senior Debt, Borrower or any of Borrower's assets, (b)
Senior Creditors shall have the right to administer the Senior Debt, the
Collateral securing the Senior Debt and any of Senior Creditors' agreements with
Borrower with respect to the Senior Debt in any way Senior Creditors deem
appropriate, without regard to Junior Creditors or the Junior Debt, including
without limitation, the right to (i) waive, or release any of Senior Creditor's
security or rights; (ii) waive or ignore any defaults by Borrower; and/or (iii)
restructure, renew, modify or supplement the Senior Debt, or any portion
thereof, or any agreement with Borrower relating to any Senior Debt, and (c) all
rights, privileges, powers and remedies of Senior Creditors may be exercised
from time to time by Senior Creditors without notice to or consent of Junior
Creditors. Each Junior Creditor waives any right such Junior Creditor might
otherwise have to require a marshalling of any security held by any Senior
Creditor for all or any part of the Senior Debt or to direct or affect the
manner or timing with which Senior Creditors enforce any of their security.

      11. AMENDMENTS TO JUNIOR DEBT. Borrower and Junior Creditors hereby
acknowledge and agree that, until the Senior Debt has been paid in full and this
Agreement has been terminated in writing by all the parties hereto, no change or
amendment to the terms of any agreement, document or instrument evidencing or
executed in connection with the Junior Debt, including without limitation the
Junior Note and the Junior Credit Agreement, shall be effective without the
prior written consent of Required Banks if the effect of such change or
amendment is to (a) increase the interest rate on any Junior Debt, (b) change
the dates upon which payments of principal or interest are due on any Junior
Debt other than to extend such dates, (c) change any default or event of default
or covenant other than to delete or make less restrictive any default or
covenant provision therein, or add any covenant with respect to such any Junior
Debt, (d) change the redemption or prepayment provisions of any Junior Debt
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith, (e) grant any additional security, collateral or guaranty
to secure payment of any Junior Debt unless (i) prior to or concurrent with such
grant, Senior Agent, for the benefit of Senior Lenders, is granted the identical
security, collateral or guaranty to secure payment of the Senior Debt, and (ii)
the additional security interest or guaranty to secure payment of the Junior
Debt is expressly made subordinate in priority to the additional security
interest or guaranty to secure payment of the Senior Debt, or (f) change or
amend any other term if such change or amendment would materially increase the
obligations of Borrower or confer additional material rights to Junior Creditors
in a manner adverse to Borrower or Senior Creditors.

      12. AMENDMENTS TO SENIOR DEBT. Borrower and Senior Creditors hereby
acknowledge and agree that, until this Agreement has been terminated in writing
by all the

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parties hereto, no change or amendment to the terms of any agreement, document
or instrument evidencing or executed in connection with the Senior Debt,
including without limitation the Senior Notes and the Senior Credit Agreement,
shall be effective without the prior written consent of holders of at least 51%
of the outstanding Junior Debt if the effect of such change or amendment is to
extend the final maturity date of any Senior Debt beyond the final maturity date
of any Junior Debt.

      13. DELIVERY OF POSSESSORY COLLATERAL. After the Senior Debt has been paid
in full (or, solely with respect to Letter of Credit Liabilities, fully cash
collateralized in accordance with the terms of the Senior Credit Agreement) and
the Senior Lenders' commitments to lend under the Senior Credit Agreement have
been terminated, Senior Agent will, upon receipt of a written request from
Borrower, deliver all possessory Collateral in Senior Agent's possession to the
Borrower or such third party as Borrower shall instruct Senior Agent in such
request.

      14. COSTS, EXPENSES AND ATTORNEYS' FEES. If any party hereto institutes
any arbitration or judicial or administrative action or proceeding to enforce
any provisions of this Agreement, or alleging any breach of any provision hereof
or seeking damages or any remedy, the losing party or parties shall pay to the
prevailing party or parties all costs and expenses, including reasonable
attorneys' fees (to include outside counsel fees), expended or incurred by the
prevailing party or parties in connection therewith, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Senior Creditors or any other person) relating to
Borrower, Junior Creditors or any other person or entity.

      15. SUCCESSORS; ASSIGNS; AMENDMENT; COUNTERPARTS. This Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties. This Agreement may
be amended or modified only in writing signed by all parties hereto. This
Agreement may be executed in one or more counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken together
shall constitute one and the same instrument.

      16. CONSTRUCTION. All words used herein in the singular shall be deemed to
have been used in the plural where the context so requires.

      17. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such waiver or other provision or any
remaining provisions of this Agreement.

      18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

      19. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER, JUNIOR CREDITORS AND SENIOR CREDITORS HEREBY IRREVOCABLY AND
EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF

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OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF SENIOR CREDITORS IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.

      20. ARBITRATION.

      (a) Arbitration. The parties hereto agree, upon demand by any party, to
submit to binding arbitration all claims, disputes and controversies between or
among them (and their respective employees, officers, directors, attorneys, and
other agents), whether in tort, contract or otherwise arising out of or relating
to in any way (i) the loan and related loan and security documents which are the
subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.

      (b) Governing Rules. Any arbitration proceeding will (i) proceed in a
location in Texas selected by the American Arbitration Association ("AAA"); (ii)
be governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.

      (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

      (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in
which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Texas with a minimum of ten years experience
in the substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an

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issue is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Texas and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Texas Rules of Civil Procedure or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction. The institution and maintenance of an action for judicial
relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for
judicial relief.

      (e) Discovery. In any arbitration proceeding discovery will be permitted
in accordance with the Rules. All discovery shall be expressly limited to
matters directly relevant to the dispute being arbitrated and must be completed
no later than 20 days before the hearing date and within 180 days of the filing
of the dispute with the AAA. Any requests for an extension of the discovery
periods, or any discovery disputes, will be subject to final determination by
the arbitrator upon a showing that the request for discovery is essential for
the party's presentation and that no alternative means for obtaining information
is available.

      (f) Class Proceedings and Consolidations. The resolution of any dispute
arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.

      (g) Payment of Arbitration Costs And Fees. The arbitrator shall award all
costs and expenses of the arbitration proceeding.

      (h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the documents between the parties or the subject matter of the
dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the documents or any relationship between the
parties.

      21. NOTICES. All notices, requests and demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to each party at the following address, provided
that (a) all such notices, requests and demands required to be delivered to
Junior Lenders may be delivered to Junior Agent and (b) all such notices,
requests and demands required to be delivered to Senior Lenders may be delivered
to Senior Agent:

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      BORROWER:     T-3 ENERGY SERVICES, INC.
                    13111 Northwest Freeway #500
                    Houston, Texas 77040
                    Fax No.: (713) 224-6430
                    Telephone No.: (713) 996-4122
                    Attention: Michael T. Mino

      JUNIOR AGENT: WELLS FARGO ENERGY CAPITAL, INC.
                    1000 Louisiana, Suite 600
                    Houston, Texas  77002
                    Fax No.: (713) 652-5874
                    Telephone No.: (713) 319-1612
                    Attention: Gary Milavec

      SENIOR AGENT: WELLS FARGO BANK, NATIONAL ASSOCIATION
                    1000 Louisiana, 3rd Floor
                    Houston, Texas  77002
                    Fax No.: (713) 739-1087
                    Telephone No.: (713) 319-1371
                    Attention: Bret C. West

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

      22. BORROWER'S ACKNOWLEDGEMENT AND CONSENT. Borrower herein executes this
Agreement to evidence its consent and acknowledgement of the terms and
provisions herein and agrees to be subject to the terms and conditions hereof.

      23. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof, each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS
CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES RELATING TO THE INDEBTEDNESS.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                       10
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

BORROWER:

T-3 ENERGY SERVICES, INC.,

By:  /s/ Michael T. Mino
    ---------------------------------
     Michael T. Mino, Vice President

GUARANTORS:

A & B Bolt & Supply, Inc.
Cor-Val Holdings, Inc.
Preferred Industries Holdings, Inc.
T-3 Custom Coating Applicators, Inc.
T-3 Financial Services LP, Inc.
T-3 Investment Corporation III
T-3 Support Services, Inc.
T-3 Management Holdings, Inc.
T-3 Property Holdings, Inc.
O & M Equipment Holdings, Inc.
Manifold Valve Services, Inc.
Pipeline Valve Specialty, Inc.
United Wellhead Services, Inc.

By:  /s/ Michael T. Mino
    ----------------------------------
    Michael T. Mino, Vice President of
    each of the foregoing companies

Cor-Val, L.P.

By: Cor-Val Holdings, Inc.,
    its sole general partner

    By:  /s/ Michael T. Mino
        -------------------------------
        Michael T. Mino, Vice President

T-3 Management Services, L.P.

By: T-3 Management Holdings, Inc.,
    its sole general partner

    By:  /s/ Michael T. Mino
        -------------------------------
        Michael T. Mino, Vice President

 (Signature Page to First Amended and Restated Subordination and Intercreditor
                                   Agreement)

<PAGE>

Preferred Industries, L.P.

By: Preferred Industries Holdings, Inc.,
    its sole general partner

    By:  /s/ Michael T. Mino
        -------------------------------
        Michael T. Mino, Vice President

O&M Equipment, L.P.

By: O & M Equipment Holdings, Inc.,
    its sole general partner

    By:  /s/ Michael T. Mino
        -------------------------------
        Michael T. Mino, Vice President

T-3 Financial Services, L.P.

By: T-3 Management Holdings, Inc.
    its sole general partner

    By:  /s/ Michael T. Mino
        -------------------------------
        Michael T. Mino, Vice President

JUNIOR AGENT AND JUNIOR LENDERS:
as Junior Agent and a Junior Lender

WELLS FARGO ENERGY CAPITAL, INC.

By:  /s/ Gary Milavec
    -----------------------------------
    Gary Milavec, Senior Vice President

 (Signature Page to First Amended and Restated Subordination and Intercreditor
                                   Agreement)

<PAGE>

SENIOR AGENT AND SENIOR LENDERS:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Senior Agent and a Senior Lender

By:  /s/ Bret C. West
    ----------------------------
    Bret C. West, Vice President

 (Signature Page to First Amended and Restated Subordination and Intercreditor
                                   Agreement)

<PAGE>

GENERAL ELECTRIC CAPITAL CORPORATION,
as a Senior Lender

By: /s/ Thomas S. Beck
    -----------------------------
Name: Thomas S. Beck
Title: Duly Authorized Signatory

COMERICA BANK,
as a Senior Lender

By: /s/ Kenyatta Gibbs
    ----------------------------------
Name: Kenyatta Gibbs
Title: Vice President - Texas Division

 (Signature Page to First Amended and Restated Subordination and Intercreditor
                                   Agreement)exv10w01

 

Exhibit 10.01

WGL Holdings, Inc.

1999 Incentive Compensation Plan

Nonqualified Stock Option Award Agreement

TO: ______________________(Participant)

     You have been selected to be a Participant in the WGL Holdings, Inc. 1999
Incentive Compensation Plan As Amended and Restated on March 5, 2003 (the
“Plan”).* In accordance with the Plan, you have been awarded a certain stock
option, as specified below:

Date of Grant: ________________

Number of Shares Covered by this Option: _________________ (the “Shares”)

Exercise Price: _____________________ (the “Exercise Price”)

Date of Vesting: ________________________ (the “Vesting Date”)

Date of Expiration: _____________________ (the “Date of Expiration”)

     THIS AGREEMENT, effective as of the Date of Grant set forth above,
represents the grant of a nonqualified stock option (the “Option”) to acquire
shares of common stock of WGL Holdings, Inc. (the “Company”), to you, the
Participant named above, pursuant to the provisions of the Plan and subject to
terms and conditions of this Agreement.

     The Plan provides a complete description of the terms and conditions
governing the Option. If there is any inconsistency between the terms of this
Agreement and the terms of the Plan, the Plan’s terms shall completely
supersede and replace the conflicting terms of this Agreement. All capitalized
terms have the meanings ascribed to them in the Plan, unless otherwise
indicated in this Agreement.

     In accordance with the Plan and this Option, the parties hereto agree as
follows:

     1. Grant of Stock Option. The Company hereby grants to the Participant an
Option to purchase the number of Shares of the Company set forth above, at the
stated Exercise

	*NOTE:	 	Effective November 1, 2000, WGL Holdings, Inc. assumed all the
obligations of Washington Gas Light Company under the Plan.

This document constitutes part of a prospectus covering securities which have
been registered under the Securities Act of 1933.           [date]

-1-

 

Price, which is one hundred percent (100%) of the Fair Market Value of a Share
on the Date of Grant, in the manner and subject to the terms and conditions of
the Plan and this Agreement. The Option shall not constitute an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986.

     2. Exercise of Stock Option. Except as hereinafter provided, the Participant
may exercise this Option at any time between the “Vesting Date” and the “Date
of Expiration”, as those dates appear on page 1 of this Agreement. The Vesting
Date is the third anniversary of the Date of Grant. The Date of Expiration is
the tenth anniversary of the Date of Grant. Options may be exercised in
accordance with procedures set forth in this Agreement and the Plan, defined
above.

     This Option may be exercised in whole or in part, but not for less than
100 Shares at any one time, unless fewer than 100 Shares then remain subject to
the Option, and the Option is then being exercised as to all such remaining
Shares.

     3. Termination of Employment or Service:

      (a) Termination on death or Disability of the Participant.
Immediately upon death or Disability of the Participant, this Option to
purchase all shares shall become fully vested. Such shares may be
purchased until the earlier of: (i) the expiration date of this Option;
or (ii) the first anniversary of the date of death or Disability. In the
case of death of the Participant, this Option may be exercised by the
Participant’s designated beneficiary under this Agreement, or, if none,
then by the legal representative of the Participant’s estate. For
purposes of this Agreement “Disability” shall be determined in the same
manner as “Disability” under the terms of the Washington Gas Light
Company Employees’ Pension Plan.

      (b) Termination on Retirement: Immediately upon Retirement this
Option shall become vested and fully exercisable. Upon Retirement, this
Option, whether or not previously vested, may be exercised until the
earlier of: (i) the expiration date of this Option; or (ii) the third
anniversary date of Retirement. For this purpose, “Retirement” shall be
defined as “Retirement” under the Washington Gas Light Company Employees’
Pension Plan.

      (c) Death after Retirement or Disability: If a Participant dies
following Retirement or Disability with options which have not been
exercised, the Participant’s Designated Beneficiary or Personal
Representative may exercise this Option until the earlier of (i) the
expiration date of this Option, or (ii) the first anniversary of the date
of death of the Participant.

      (d) For other reasons: Unless otherwise determined by the Committee,
in the event of termination of employment for any reasons other than
death, Disability or Retirement, this Option shall automatically expire,
if it has not vested by its terms as of that date. If this Option is
vested as of the date of termination of employment for any reason other
than death, Disability or Retirement, this Option may be exercised until
the earlier of:

-2-

 

(i) the expiration date of this Option; or (ii) the end of the 3 month
period following the date of termination of employment (except in the
case of termination for cause, as determined by the Committee, or in
breach of an employment agreement with the Company, in which case all
unexercised Options, whether or not vested, including this Option, held
by the Participant shall expire as of the termination of employment or
service).

     4. Change of Control. In the event of a Change of Control as defined in the
Plan and subject to the limitations of Section 7(f) of the Plan, all shares
under this Option shall become immediately 100% vested and shall remain
exercisable for their entire term.

     5. Rights as a Stockholder. The Participant has no rights as a stockholder of
the Company with respect to the Shares subject to this Option Agreement until
such time as the Option has vested, it has been exercised in accordance with
this Agreement, the Exercise Price has been paid, and the Shares have been
issued and delivered to the Participant.

     6. Adjustments. Subject to Sections 4(c) and 8(e) of the Plan, if the Committee
determines that any recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, exchange of stock,
stock or cash dividend, other distribution, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Participants, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of the certain specified terms of Awards,
including this Option. These adjustments may include, among other adjustments,
adjustments to (i) the number and kind of shares of stock relating to this
Option, and (ii) the exercise price relating to this Option (or, if deemed
appropriate, the Committee may make provisions for a cash payment with respect
to this Option). In addition, the Committee is authorized to make adjustments
in the terms and conditions of, and the criteria included in, this Option
(including, without limitation, cancellation of unexercised or outstanding
Options or substitution of Awards using stock of a successor or other entity)
in recognition of unusual or nonrecurring events (including, among other
matters, events constituting a Change of Control) affecting the Company of any
Subsidiary or the financial statements of the Company or any Subsidiary, or in
response to changes in applicable laws, regulations or accounting principles.
Notwithstanding anything herein to the contrary, without the prior approval of
the shareholders of the Company, neither the Board of Directors nor the
Committee may take any action that would constitute repricing of this option.

     7. Procedure for Exercise of Option. To the extent this Option is
exercisable, it may be exercised by delivery of written notice to the Company
on any business day at its executive offices, addressed to the attention of its
Secretary. Such notice: (a) shall be signed by the Participant or his or her
legal representative (including the legal representative of a deceased
Participant’s estate); (b) shall specify the number of full Shares then elected
to be purchased with respect to the Option; (c) unless a Registration Statement
under the Securities Act of 1933 is in effect with respect to the Shares to be
purchased, shall contain a representation of the Participant that the Shares
are being acquired by him or her for investment and with no present intention
of selling or transferring them, and that he or she will not sell or otherwise
transfer the Shares except in compliance with all applicable securities laws
and requirements of any stock exchange upon which the Shares may then be
listed; and (d) shall be accompanied by payment in full of the Exercise Price
of the Shares to be purchased.

-3-

 

     The Exercise Price upon exercise of this Option shall be payable to the
Company in full either: (a) in cash or its equivalent (acceptable cash
equivalents shall be determined at the sole discretion of the Committee); or
(b) by tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Exercise Price (provided that
the Shares which are tendered much have been held by the Participant for at
least six (6) months prior to their tender to satisfy the Exercise Price); or
(c) by a combination of (a) and (b).

     Subject to the approval of the Committee, the Participant may be permitted
to exercise pursuant to a “cashless exercise” procedure, as permitted under
Federal Reserve Board’s Regulation T, subject to securities law restrictions,
or by any other means which the Committee, in its sole discretion, determines
to be consistent with the Plan’s purpose and applicable law.

     As promptly as practicable after receipt of notice and payment upon
exercise, the Company shall cause to be issued and delivered to the Participant
or his or her legal representative, as the case may be, certificates for the
Shares so purchased, which may, if appropriate, be endorsed with appropriate
restrictive legends. The Share certificates shall be issued in the
Participant’s name (or, at the discretion of the Participant, jointly in the
names of the Participant and the Participant’s spouse). The Company shall
maintain a record of all information pertaining to the Participant’s rights
under this Agreement, including the number of Shares for which their Option is
exercisable. If the Option shall have been exercised in full, this Agreement
shall be returned to the Company and canceled.

     8. Tax Withholding. The Company or its affiliate may deduct or withhold, or
require the Participant or beneficiary to remit to the Company or its
affiliate, an amount sufficient to satisfy federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with respect
to any taxable event arising as a result of this Agreement.

     9. Share Withholding. Participants may elect to satisfy the tax withholding
requirement, in whole or in part, by having the Company or its affiliate
withhold Shares having a Fair Market Value equal to taxes required to be
withheld on the transaction. All such elections shall be irrevocable, made in
writing, signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.

     10. Limitations on Transferability. Except as provided by the Plan or by the
Committee, this Option and rights or benefits under this Agreement are not
transferable by the Participant except by will or the laws of descent and
distribution or to a Beneficiary in the event of the Participant’s death, and
shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise be subject to the claims of creditors. This Option may be transferred
to one or more transferees during the lifetime of the Participant only to the
extent and on such terms and conditions as may then be permitted by the
Committee.

     11. Beneficiary Designation. The Participant may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under this Agreement is to be distributed and who may exercise
this Option pursuant to Paragraph 3(a) of this Agreement in case of the
Participant’s death before the Participant receives any or all of such benefit.
Each such designation shall revoke all prior designations by the Participant,
shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Secretary of the Company during
the Participant’s lifetime. In the absence of any such

-4-

 

designation, this Option is exercisable by the legal representative of the
estate of the Participant and any benefits remaining unpaid at the
Participant’s death shall be paid to the Participant’s estate.

     12. No Right to Continued Employment or Service. Neither the Plan, this Option
nor any action taken hereunder shall be construed as giving the Participant or
any employee or any person the right to be retained in the employ or service,
as applicable, of the Company or any Subsidiary, nor shall it interfere in any
way with the right of the Company or any Subsidiary to terminate the
Participant or any employee’s employment or any person’s service at any time.

     13. Successors and Assigns. All obligations of the Company under the Plan and
this Agreement, with respect to this Option, shall be binding on any successor
to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company. See Paragraph
6 of this Agreement and Sections 4(c) and 8(e) of the Plan regarding certain
adjustments the Committee may make to this Award in the event there is a
successor to the Company.

     14. Administration. This Option Agreement and the rights of the Participant
hereunder are subject to all the terms and conditions of the Plan, as the same
may be amended from time to time, as well as to such rules and regulations as
the Committee may adopt for administration of the Plan. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise of
this Option, as it may deem advisable, including, without limitation,
restrictions under applicable Federal or State securities laws, under the
requirements of any stock exchange upon Shares are then traded. The Committee
is authorized to administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Option Agreement, all of
which shall be binding upon the Participant.

     15. Amendment and Termination of the Plan. The 1999 Plan may be amended,
altered, suspended, discontinued or terminated by the Board of Directors
without stockholder approval unless the Board seeks to increase the number of
shares of Common Stock subject to the Plan or stockholder approval is required
by law or regulation or under the rules of any stock exchange or automated
quotation system on which the Common Stock is then listed or quoted.
Stockholder approval will not deemed to be required under laws or regulations
that conditions favorable tax treatment on such approval, although the Board
may, in its discretion, seek stockholder approval in any circumstances in which
it deems such approval advisable.

     16. Miscellaneous:

      (a) If the day for vesting or expiration of this Option falls on a
non-business day for the Company, that vesting or expiration will be
deemed to occur on the Company’s next business day. If the day for any
other action to be taken under this Agreement falls on a non-business day
for the Company, the period for taking such action will extend through
the Company’s next business day.

      (b) The Participant agrees to take all steps necessary to comply
with all applicable provisions of federal and state securities law in
exercising his or her rights under this Agreement.

-5-

 

      (c) This Agreement is subject to all applicable laws, rules, and
regulations, and any required approvals by any governmental agencies or
national securities exchanges.

      (d) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Virginia.

           IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the Date of Grant.

	 	 	 
	 	 	
WGL Holdings, Inc.
	Participant	 	 
	_______________________________	 	
By: ____________________________________

          
	 	 	
 

-6-

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