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                                  EXHIBIT 4.10

THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.

                                    WARRANTS

                           to Purchase Common Stock of

                            INDUSTRIAL HOLDINGS, INC.

                            Expiring on June 9, 2005

         This Warrant to Purchase Common Stock (this "Warrant" or "Warrants")
certifies that for value received, Robert E. Cone, an individual (the "Holder")
or his assigns, is entitled to subscribe for and purchase from the Company (as
hereinafter defined), in whole or in part, 300,000 shares of duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock (as
hereinafter defined), at an initial Exercise Price (as hereinafter defined),
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. The number of shares of Common Stock purchasable
hereunder and the Exercise Price therefor are subject to adjustment as
hereinafter set forth. This Warrant and all rights hereunder shall expire at
5:00 p.m., Houston, Texas time, on June 9, 2005.

         As used herein, the following terms shall have the meanings set forth
below:

         "Company" shall mean Industrial Holdings, Inc., a Texas corporation,
and shall also include any successor thereto with respect to the obligations
hereunder, by merger, consolidation or otherwise.

         "Common Stock" shall mean and include the Company's Common Stock, par
value $.01 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section 3.5 hereof,
the stock, securities provided for in such Section 3.5, and (ii) any other
shares of common stock of the Company into which such shares of Common Stock may
be converted.

         "Exercise Price" the initial purchase price for each share of Common
Stock payable upon exercise of the Warrants shall be $1.25. The Exercise Price
shall be adjusted from time to time pursuant to the provisions hereof.

         "Market Price" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (i) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers National Market System or Small
Cap

                                     EX-22
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Market on such date, or, if there shall have been no trading on such date or if
the Common Stock shall not be listed on such system, the average of the closing
bid and asked prices in the over-the-counter market as furnished by any NASD
member firm selected from time to time by the Company for such purpose, in each
such case, unless otherwise provided herein, averaged over a period of ten (10)
consecutive Trading Days prior to the date as of which the determination is to
be made; or (ii) if the Common Stock shall not be listed or admitted to trading
or the closing bid and asked prices are unable to be furnished by an NASD member
firm, as provided in clause (i) above, the fair market value of the Common Stock
as determined in good faith by the Board of Directors of the Company.

         "Outstanding," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.

         "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

         "Trading Days" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.

         "Warrant Shares" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.

                                     EX-23

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                                   ARTICLE I
                              EXERCISE OF WARRANTS

         1.1 Method of Exercise. The Warrants represented hereby may be
exercised by the holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on
June 9, 2005. To exercise the Warrants, the holder hereof shall deliver to the
Company, at the Warrant Office designated in Section hereof, (i) a written
notice in the form of the Subscription Notice attached as an exhibit hereto,
stating therein the election of such holder to exercise the Warrants in the
manner provided in the Subscription Notice; (ii) payment in full of the Exercise
Price (A) in cash or by bank check for all Warrant Shares purchased hereunder,
or (B) through a "cashless" or "net-issue" exercise of each such Warrant
("Cashless Exercise"); the holder shall exchange each Warrant subject to a
Cashless Exercise for that number of Warrant Shares determined by multiplying
the number of Warrant Shares issuable hereunder by a fraction, the numerator of
which shall be the difference between (x) the Market Price and (y) the Exercise
Price for each such Warrant, and the denominator of which shall be the Market
Price; the Subscription Notice shall set forth the calculation upon which the
Cashless Exercise is based, or (C) a combination of (A) and (B) above; and (iii)
this Warrant. The Warrants shall be deemed to be exercised on the date of
receipt by the Company of the Subscription Notice, accompanied by payment for
the Warrant Shares and surrender of this Warrant, as aforesaid, and such date is
referred to herein as the "Exercise Date". Upon such exercise, the Company
shall, as promptly as practicable and in any event within ten (10) business
days, issue and deliver to such holder a certificate or certificates for the
full number of the Warrant Shares purchased by such holder hereunder, and shall,
unless the Warrants have expired, deliver to the holder hereof a new Warrant
representing the number of Warrants, if any, that shall not have been exercised,
in all other respects identical to this Warrant. As permitted by applicable law,
the Person in whose name the certificates for Common Stock are to be issued
shall be deemed to have become a holder of record of such Common Stock on the
Exercise Date and shall be entitled to all of the benefits of such holder on the
Exercise Date, including without limitation, the right to receive dividends and
other distributions for which the record date falls on or after the Exercise
Date and the right to exercise voting rights.

         1.2 Expenses and Taxes. The Company shall pay all expenses and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.

         1.3 Reservation of Shares. The Company shall reserve at all times so
long as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.

         1.4 Valid Issuance. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).

         1.5 Acknowledgment of Rights. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of the
holder hereof, the Company will acknowledge in writing its continuing obligation
to afford to such holder any rights (including, without limitation, any

                                     EX-24
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right to registration of the Warrant Shares) to which such holder shall continue
to be entitled after such exercise in accordance with the provisions of this
Warrant; provided, however, that if the holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.

         1.6 No Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.

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                                   ARTICLE II

                                    TRANSFER

         2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 7135 Ardmore, Houston, Texas 77054 and may
subsequently be such other office of the Company or of any transfer agent of the
Common Stock in the continental United States as to which written notice has
previously been given to the holder hereof. The Company shall maintain, at the
Warrant Office, a register for the Warrants in which the Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each permitted assignee of the rights of the
registered owner hereof.

         2.2 Ownership of Warrants. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.

         2.3 Restrictions on Transfer of Warrants. The Company agrees to
maintain at the Warrant Office books for the registration and transfer of the
Warrants. Subject to the restrictions on transfer of the Warrants in this
Section 2.3, the Company, from time to time, shall register the transfer of the
Warrants in such books upon surrender of this Warrant at the Warrant Office
properly endorsed or accompanied by appropriate instruments of transfer and
written instructions for transfer satisfactory to the Company. Upon any such
transfer and upon payment by the holder or its transferee of any applicable
transfer taxes, new Warrants shall be issued to the transferee and the
transferor (as their respective interests may appear) and the surrendered
Warrants shall be canceled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section .

                  2.3.1 Restrictions in General. The holder of the Warrants
         agrees that it will not transfer the Warrants unless registration of
         such Warrant Shares under the Securities Act and any applicable state
         securities or blue sky laws has become effective or the holder has
         provided to the Company an opinion of counsel acceptable to the Company
         that such registration is not required. Prior to any transfer (other
         than the grant of a security interest) as provided herein, the
         transferor shall provide written notice to the Company and an opinion
         of counsel to the effect that the proposed transfer is exempt from
         registration under all applicable securities laws, all in form and
         substance reasonably satisfactory to the Company. Any lender or lenders
         to which the Holder grants a security interest in the Warrants shall be
         entitled to exercise all remedies to which it is entitled by contract
         or by law, including (without limitation) transferring the Warrants
         into its own name or into the name of any purchaser at any sale
         undertaken in connection with enforcement by such lender of its
         remedies.

         2.4 Compliance with Securities Laws. Notwithstanding any other
provisions contained in this Warrant except Section 2.3.1, the holder hereof
understands and agrees that the following restrictions and limitations shall be
applicable to all Warrant Shares and to all resales or other transfers thereof
pursuant to the Securities Act:

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                  2.4.1 The holder hereof agrees that the Warrant Shares shall
         not be sold or otherwise transferred unless the Warrant Shares are
         registered under the Securities Act and applicable state securities or
         blue sky laws or are exempt therefrom.

                  2.4.2 A legend in substantially the following form will be
         placed on the certificate(s) evidencing the Warrant Shares:

                           "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
                  NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE
                  SECURITIES LAW AND, ACCORDINGLY, THE SECURITIES REPRESENTED BY
                  THIS CERTIFICATE MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
                  TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION
                  UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
                  APPLICABLE SECURITIES LAWS."

                  2.4.3 Stop transfer instructions may be imposed with respect
         to the Warrant Shares so as to restrict resale or other transfer
         thereof, subject to this Section.

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                                  ARTICLE III

                                 ANTI-DILUTION

         3.1 Anti-Dilution Provisions. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided.

         3.2 Adjustment of Exercise Price Upon Issuance of Common Stock.

                  3.2.1 (A) If and whenever after the date hereof the Company
         shall issue or sell any Common Stock for no consideration or for a
         consideration per share less than the Exercise Price, issue convertible
         securities other than this Warrant, including other warrants, grant
         stock options, or issue any other common stock equivalent, then,
         forthwith upon such issue or sale, the Exercise Price shall be reduced
         (but not increased), to the lower price per share (calculated pursuant
         to this Section 3.2 to the nearest one-ten thousandth of a cent) but in
         any event not less than $.001 per share.

                           (B) Notwithstanding the provisions of this Section,
         no adjustment shall be made in the Exercise Price in the event that the
         Company issues, in one or more transactions, (i) Common Stock or
         convertible securities upon exercise of any options issued to officers,
         directors or employees of the Company pursuant to a stock option plan
         or an employment, severance or consulting agreement as now or hereafter
         in effect, in each case approved by the Board of Directors (provided
         that the aggregate number of shares of Common Stock which may be
         issuable, including options issued prior to the date hereof, under all
         such employee plans and agreements shall at no time exceed the number
         of such shares of Common Stock that are issuable under currently
         effective employee plans and agreements); (ii) Common Stock upon
         exercise of the Warrants or any other warrant issued pursuant to the
         terms of the Agreement or otherwise issued to the Holder; (iii) Common
         Stock upon exercise of any stock purchase warrant or option (other than
         the options referred to in clause (i) above) or other convertible
         security outstanding on the date hereof; (iv) Common Stock upon
         conversion of any obligation of the Company to the Holder; (v) Common
         Stock issued as consideration in acquisitions (including warrants,
         options or convertible securities issued as consideration for an
         acquisition or to officers, directors or employees of the acquired
         entity in conjunction therewith); or (vi) warrants, convertible notes
         or Common Stock issuable upon exercise of any warrants or conversion of
         any notes in such case that may be issued pursuant to the transactions
         contemplated by that certain Amended and Restated Letter of Intent
         dated June 12, 2000, among Holder, the Company and St. James Capital
         Partners, L.P. In addition, for purposes of calculating any adjustment
         of the Exercise Price as provided in this Section, all of the shares
         of Common Stock issuable pursuant to any of the foregoing shall be
         assumed to be outstanding prior to the event causing such adjustment to
         be made.

                  3.2.2 For purposes of this Section, the following Sections to
         inclusive, shall be applicable:

                           (A) Issuance of Rights or Options. In case at any
         time after the date hereof the Company shall in any manner grant
         (whether directly or by assumption in a merger or otherwise) any rights
         to subscribe for or to purchase, or any options for the purchase of,
         Common Stock or any stock or securities convertible into or
         exchangeable for Common Stock (such convertible or exchangeable stock
         or securities being herein called "Convertible Securities") (other than
         warrants, options or convertible securities issued as consideration for
         or assumed in

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         conjunction with an acquisition or to officers, directors or employees
         of the acquired entity in conjunction therewith), whether or not such
         rights or options or the right to convert or exchange any such
         Convertible Securities are immediately exercisable, and the price per
         share for which shares of Common Stock are issuable upon the exercise
         of such rights or options or upon conversion or exchange of such
         Convertible Securities (determined by dividing (i) the total amount, if
         any, received or receivable by the Company as consideration for the
         granting of such rights or options, plus the minimum aggregate amount
         of additional consideration, if any, payable to the Company upon the
         exercise of such rights or options, or plus, in the case of such rights
         or options that relate to Convertible Securities, the minimum aggregate
         amount of additional consideration, if any, payable upon the issue or
         sale of such Convertible Securities and upon the conversion or exchange
         thereof, by (ii) the total maximum number of shares of Common Stock
         issuable upon the exercise of such rights or options or upon the
         conversion or exchange of all such Convertible Securities issuable upon
         the exercise of such rights or options) shall be less than the Exercise
         Price in effect as of the date of granting such rights or options, then
         the total maximum number of shares of Common Stock issuable upon the
         exercise of such rights or options or upon conversion or exchange of
         all such Convertible Securities issuable upon the exercise of such
         rights or options shall be deemed to be outstanding as of the date of
         the granting of such rights or options and to have been issued for such
         price per share, with the effect on the Exercise Price specified in
         Section hereof. Except as provided in Section hereof, no further
         adjustment of the Exercise Price shall be made upon the actual issuance
         of such Common Stock or of such Convertible Securities upon exercise of
         such rights or options or upon the actual issuance of such Common Stock
         upon conversion or exchange of such Convertible Securities.

                           (B) Change in Option Price or Conversion Rate. If:
         (i) the purchase price provided for in any right or option, (ii) the
         additional consideration, if any, payable upon the conversion or
         exchange of any Convertible Securities or (iii) the rate at which any
         Convertible Securities are convertible into or exchangeable for Common
         Stock shall be decreased (other than under or by reason of provisions
         designed to protect against dilution), the Exercise Price then in
         effect shall be decreased to the Exercise Price that would have been in
         effect had such rights, options or Convertible Securities provided for
         such changed purchase price, additional consideration or conversion
         rate at the time initially issued.

                           (C) Consideration for Stock. In case at any time
         Common Stock or Convertible Securities or any rights or options to
         purchase any such Common Stock or Convertible Securities shall be
         issued or sold for cash, the consideration therefor shall be deemed to
         be the amount received by the Company therefor. In case at any time any
         Common Stock, Convertible Securities or any rights or options to
         purchase any such Common Stock or Convertible Securities shall be
         issued or sold for consideration other than cash, the amount of the
         consideration other than cash received by the Company shall be deemed
         to be the fair value of such consideration, as determined reasonably
         and in good faith by the Board of Directors of the Company. In case at
         any time any Common Stock, Convertible Securities or any rights or
         options to purchase any Common Stock or Convertible Securities shall be
         issued in connection with any merger or consolidation in which the
         Company is the surviving corporation, the amount of consideration
         received therefor shall be deemed to be the fair value, as determined
         reasonably and in good faith by the Board of Directors of the Company,
         of such portion of the assets and business of the nonsurviving
         corporation as such Board of Directors may determine to be attributable
         to such Common Stock, Convertible Securities, rights or options as the
         case may be. In case at any time any rights or options to purchase any
         shares of Common Stock or Convertible Securities shall be issued in
         connection with the issuance and sale of other securities of the
         Company, together consisting of one integral transaction in which no
         consideration is allocated to

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         such rights or options by the parties, such rights or options shall be
         deemed to have been issued with consideration.

                           (D) Record Date. In the case the Company shall take a
         record of the holders of its Common Stock for the purpose of entitling
         them (i) to receive a dividend or other distribution payable in Common
         Stock or Convertible Securities, or (ii) to subscribe for or purchase
         Common Stock or Convertible Securities, then such record date shall be
         deemed to be the date of the issuance or sale of the Common Stock or
         Convertible Securities deemed to have been issued or sold as a result
         of the declaration of such dividend or the making of such other
         distribution or the date of the granting of such right of subscription
         or purchase, as the case may be.

                           (E) Treasury Shares. The number of shares of Common
         Stock outstanding at any given time shall not include shares owned
         directly by the Company in treasury, and the disposition of any such
         shares shall be considered an issuance or sale of Common Stock for the
         purpose of this Section.

         3.3 Stock Dividends. In case the Company shall declare a dividend or
make any other distribution upon any shares of the Company, payable in Common
Stock or Convertible Securities, any Common Stock or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.

         3.4 Stock Splits and Reverse Splits. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this Section, no adjustment in
the Exercise Price and no change in the number of Warrant Shares purchasable
shall be made under this Article III as a result of, or by reason of, any such
subdivision or combination.

         3.5 Reorganizations and Asset Sales. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:

                  3.5.1 As a condition of such reorganization, reclassification,
         consolidation, merger, share exchange, sale, transfer or other
         disposition (except as otherwise provided below in this Section),
         lawful and adequate provisions shall be made whereby the holder of
         Warrants shall thereafter have the right to purchase and receive upon
         the terms and conditions specified in this Warrant and in lieu of the
         Warrant Shares immediately theretofore receivable upon the exercise of
         the rights represented hereby, such shares of capital stock, securities
         or assets as may be issued or payable with respect to or in exchange
         for a number of outstanding shares of such Common Stock equal to the
         number of Warrant Shares immediately theretofore so receivable had such
         reorganization, reclassification, consolidation, merger, share exchange
         or sale not taken place, and in any such case appropriate provision
         reasonably satisfactory to such holder shall be made

                                     EX-30
<PAGE>

         with respect to the rights and interests of such holder to the end that
         the provisions hereof (including, without limitation, provisions for
         adjustments of the Exercise Price and of the number of Warrant Shares
         receivable upon the exercise) shall thereafter be applicable, as nearly
         as possible, in relation to any shares of capital stock, securities or
         assets thereafter deliverable upon the exercise of Warrants.

                  3.5.2 In the event of a merger, share exchange or
         consolidation of the Company with or into another Person as a result of
         which a number of shares of Common Stock or its equivalent of the
         successor Person greater or lesser than the number of shares of Common
         Stock outstanding immediately prior to such merger, share exchange or
         consolidation are issuable to holders of Common Stock, then the
         Exercise Price in effect immediately prior to such merger, share
         exchange or consolidation shall be adjusted in the same manner as
         though there were a subdivision or combination of the outstanding
         shares of Common Stock.

                  3.5.3 The Company shall not effect any such consolidation,
         merger, share exchange, sale, transfer or other disposition unless
         prior to or simultaneously with the consummation thereof the successor
         Person (if other than the Company) resulting from such consolidation,
         share exchange or merger of the Person purchasing or otherwise
         acquiring such assets shall have assumed by written instrument executed
         and mailed or delivered to the holder hereof at the last address of
         such holder appearing on the books of the Company the obligation to
         deliver to such holder such shares of capital stock, securities or
         assets as, in accordance with the foregoing provisions, such holder may
         be entitled to receive, and all other liabilities and obligations of
         the Company hereunder. Upon written request by the holder hereof, such
         successor Person will issue a new warrant revised to reflect the
         modifications in this Warrant effected pursuant to this Section.

                  3.5.4 If a purchase, tender or exchange offer is made to and
         accepted by the holders of 50% or more of the outstanding shares of
         Common Stock, the Company shall not effect any consolidation, merger,
         share exchange or sale, transfer or other disposition of all or
         substantially all of the Company's assets with the Person having made
         such offer or with any affiliate of such Person, unless prior to the
         consummation of such consolidation, merger, share exchange, sale,
         transfer or other disposition the holder hereof shall have been given a
         reasonable opportunity to then elect to receive upon the exercise of
         the Warrants either the capital stock, securities or assets then
         issuable with respect to the Common Stock or the capital stock,
         securities or assets, or the equivalent, issued to previous holders of
         the Common Stock in accordance with such offer.

         3.6 Adjustment for Asset Distribution. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for the
purpose of such dividend or distribution or, if a record is not taken, the date
as of which holders of record of Common Stock entitled to such dividend or
distribution are determined.

         3.7 De Minimis Adjustments. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of

                                     EX-31
<PAGE>

at least one share of Common Stock purchasable upon an exercise of each Warrant
and no adjustment in the Exercise Price shall be required unless such adjustment
would require an increase or decrease of at least $0.01 in the Exercise Price;
provided, however, that any adjustments which by reason of this Section are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest full share
or nearest one hundredth of a dollar, as applicable.

         3.8 Notice of Adjustment. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based, and shall obtain an opinion of the Company's
independent accountants as to the correctness of such adjustments and
calculations and to the effect that such adjustments and calculations have been
made in accordance with the terms hereof. The Company shall cause to be mailed
to the holder hereof copies of such Officer's Certificate and an independent
accountants' opinion together with a notice stating that the Exercise Price and
the number of Warrant Shares purchasable upon exercise of the Warrants have been
adjusted and setting forth the adjusted Exercise Price and the adjusted number
of Warrant Shares purchasable upon the exercise of the Warrants.

         3.9 Notifications to Holders. In case at any time the Company proposes:

                  (i) to declare any dividend upon its Common Stock payable in
         capital stock or make any special dividend or other distribution (other
         than cash dividends) to the holders of its Common Stock;

                  (ii) to offer for subscription pro rata to all of the holders
         of its Common Stock any additional shares of capital stock of any class
         or other rights;

                  (iii) to effect any capital reorganization, or
         reclassification of the capital stock of the Company, or consolidation,
         merger or share exchange of the Company with another Person, or sale,
         transfer or other disposition of all or substantially all of its
         assets; or

                  (iv) to effect a voluntary or involuntary dissolution,
         liquidation or winding up of the Company,

then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock, as the case may be, for securities or other property
deliverable upon such

                                      EX-32
<PAGE>

reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, as the case
may be.

         3.10 Company to Prevent Dilution. If any event or condition occurs as
to which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares of the type contemplated in Section hereof, and then
in no event to an amount greater than the Exercise Price as adjusted pursuant to
Section hereof.

                                      EX-33
<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1 Entire Agreement. This Warrant, together with the Belleli Letter
Agreement and the Belleli Registration Rights Agreement, contains the entire
agreement between the holder hereof and the Company with respect to the Warrant
Shares purchasable upon exercise hereof and the related transactions and
supersedes all prior arrangements or understandings with respect thereto.

         4.2 Governing Law. This warrant shall be governed by and construed in
accordance with the laws of the State of Texas.

         4.3 Waiver and Amendment. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.

         4.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.

         4.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.

         4.6 Notice. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be in writing and delivered at, or
sent by certified or registered mail to such holder at, the last address shown
on the books of the Company maintained at the Warrant Office for the
registration of this Warrant or at any more recent address of which the holder
hereof shall have notified the Company in writing. Any notice or other document
required or permitted to be given or delivered to the Company, other than such
notice or documents required to be delivered to the Warrant Office, shall be
delivered at, or sent by certified or registered mail to, the offices of the
Company at 7135 Ardmore, Houston, Texas 77054 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.

         4.7 Limitation of Liability; Not Stockholders. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

         4.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity or such other security in such
form and amount

                                      EX-34
<PAGE>

as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any warrant issued under the provisions of this
Section in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes or income taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of warrants pursuant to this
Section.

         4.9 Registration Rights. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Belleli Registration Rights Agreement.

         4.10 Headings. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.

                                      EX-35
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name as of June 9, 2000.

                                   INDUSTRIAL HOLDINGS, INC.

                                   By: /s/ MICHAEL N. MARSH
                                       _____________________________________
                                       Michael N. Marsh,
                                       President and Chief Executive Officer

                                      EX-36
<PAGE>

                               SUBSCRIPTION NOTICE

         The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby for, and to purchase thereunder,
_______ shares of the Common Stock covered by such Warrant through a "cashless"
or "net issue" exercise of such Warrant ("Cashless Exercise") pursuant to
Section 1.1 of such Warrant, and requests that certificates for such shares (and
any other securities or other property issuable upon such exercise) be issued in
the name of, and delivered to ________________.

The calculation upon which the Cashless Exercise is based is as follows:

(No. of Warrants) ((Market Price - Exercise Price)/Market Price) = No. of
shares of Common Stock

         - OR -

         The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby for, and to purchase thereunder,
_______ shares of the Common Stock covered by such Warrant, and herewith makes
payment in full for such shares, and requests (a) that certificates for such
shares (and any other securities or other property issuable upon such exercise)
be issued in the name of, and delivered to ________________, and (b) if such
shares shall not include all of the shares issuable as provided in such Warrant,
that a new Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned.

Signature: ______________________________________

Date: ___________________________________________

                                      EX-37
<PAGE>

                                   ASSIGNMENT

         For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.

Date: _______________________________________________

                                      EX-38<PAGE>

                                  EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement") is made and entered into
effective as of February 29, 2000, by and between T-3 Energy Services, Inc., a
Delaware corporation ("Employer"), and Michael L. Stansberry, a resident of
Texas ("Employee"):

         1. TERM. Employer hereby agrees to employ Employee and Employee hereby
accepts employment, on the terms and conditions hereinafter set forth. The term
of Employee's employment under this Agreement shall commence on the date hereof
(the "Effective Date") and end on the first anniversary of the Effective Date,
subject to termination as hereinafter provided (such period as it may be
extended as described in this paragraph, being herein referred to as the "Term
of Employment"). Unless terminated pursuant to this Agreement, the Employee's
term of employment hereunder shall be automatically renewed at the conclusion of
each calendar month, so that at the beginning of each calendar month, the Term
of Employment shall always be one year. Notwithstanding the foregoing,
Employee's employment hereunder may be sooner terminated as hereinafter
provided, and if so terminated, the Term of Employment shall expire as of the
effective date of such termination.

         2. DUTIES. Employee agrees to serve Employer as President and Chief
Executive Officer of Employer and in such other executive capacities as may be
requested from time to time by the Board of Directors of Employer (the "Board of
Directors") or a duly authorized committee thereof and Employee's authority
shall at all time remain subject to the authority of the Board of Directors.
During the Term of Employment, Employee shall devote his full time and exclusive
attention to, and use his best efforts to advance, the business and welfare of
Employer. During the Term of Employment, Employee will not engage in any other
employment activities for any direct or indirect remuneration without the prior
written consent of the Board of Directors.

         3. CONFIDENTIAL INFORMATION, TRADE SECRETS AND COVENANT NOT TO COMPETE.

                  3.1. CONFIDENTIAL TREATMENT FOR TRADE SECRETS. Employee hereby
agrees that, during the Term of Employment and thereafter, he will not, without
the written consent of Employer, disclose to any person, enterprise, entity or
association or otherwise use or exploit for himself or others any of the
proprietary or confidential information or knowledge of or regarding Employer or
its subsidiaries, ventures or their shareholders (individually "Company" and
collectively the "Companies"), or any of their businesses, properties or affairs
obtained by him at any time prior to or subsequent to the execution of this
Agreement, except to the extent required by his performance of assigned duties
for Employer, including without limitation: trade secrets; processes;
inventions; engineering records or data; interpretive or analytical information
or data; drilling logs; operating agreements and records; records of research;
proposals; manuals; records or information; reports; methods; techniques; lists;
memoranda; computer software; programming or records; or budgets or other
financial information, regarding the Companies (collectively, "Trade Secrets").
This Section 3.1 shall not apply to information or technology which (a) was
known to Employee or the public prior to disclosure to Employee in the course of
his employment by Employer hereunder or prior hereto with a predecessor in
interest to Employer; (b) becomes generally known to the public through no fault
of Employee or others owing duties of trust or confidentiality to Employee, (c)
is lawfully obtained by Employee from another source not under obligation to
Employer or its affiliates regarding disclosure of such information or
technology, or (d) is developed after the Term of Employment and independently
by Employee without access to or reliance on the information or technology
disclosed hereunder.

                  3.2. RETURN OF TRADE SECRETS. Upon termination of his
employment with Employer, Employee will deliver to the Companies all tangible
displays and repositories of proprietary or confidential information or
knowledge, including without limitation: Trade Secrets and other materials or
records or writings of any other type (including any copies thereof) made, used
or obtained by Employee in connection with his employment by Employer or its
predecessor in interest prior to or subsequent to the execution of this
Agreement. Employee agrees that all inventions, improvements in any of the
Companies' methods of conducting their businesses

                                      EX-39
<PAGE>

or innovations (in each case, including, by way of expansion and not limitation,
policies, procedures, products, improvements, software, ideas and discoveries,
whether or not patentable or copyrightable) conceived or made by him during any
time of his employment by Employer prior to or subsequent to the execution of
this Agreement belong to the appropriate Company or Companies and to the extent
Employee participated in the creation of the Trade Secrets he did so on a work
for hire basis. Upon termination of his Employment with Employer, Employee shall
promptly disclose such inventions, improvements or innovations to the Board of
Directors and perform all actions reasonably requested by the Board of Directors
to establish and confirm such ownership by the Companies and to protect the
intellectual property of Employer contained therein or represented thereby.

                  3.3. COVENANT NOT TO COMPETE. Employee hereby agrees that:

                       3.3.1. during the Term of Employment and until the later
of (i) the first anniversary of the date of the termination of Employee's
employment under this Agreement and (ii) such time as Employee no longer
receives any payments pursuant to Section 4, 6, 7, or 8 hereof (and as a
condition to Employee receiving any such payments), or, in the event of the
resignation of Employee, until the second anniversary of the date of the
resignation of Employee, he will not, in association with or as an officer,
principal, member, advisor, agent, partner, director, material stockholder,
employee or consultant of any corporation (or sub-unit, in the case of a
diversified business) or other enterprise, entity or association, work on the
acquisition or development of any line of business, property or project in which
the Companies are (i) then involved or (ii) have worked with or evaluated in the
last year and which are still being pursued or evaluated by Employer; and

                       3.3.2. during the Term of Employment and until the later
of (i) the second anniversary of the date of the termination of Employee's
employment under this Agreement and (ii) such time as Employee no longer
receives any payments pursuant to Section 4, 6, 7, or 8 hereof (and as a
condition to Employee receiving any such payments), or, in the event of the
resignation of Employee, until the second anniversary of the date of the
resignation of Employee, he will not solicit or induce any person who is or was
employed by the Companies at any time during such term or period, excluding
employees who may have left their employment by Employer more than 60 days prior
to being hired or solicited for employment by Employee, (A) to interfere with
the activities or businesses of any Company or (B) to discontinue his or her
employment with the Companies, or employ any such person in a business or
enterprise which competes with any of the Companies.

                       3.3.3. Employee understands that the provisions of
Section 3.3 hereof may limit his ability to earn a livelihood in a business
similar to the business of Employer and the Companies but as an executive
officer of Employer he nevertheless agrees and hereby acknowledges that (i) such
provisions do not impose a greater restraint than is necessary to protect the
goodwill or other business interests of Employer and the Companies; (ii) such
provisions contain reasonable limitations as to time and scope of activity to be
restrained; and (iii) the consideration provided hereunder, including without
limitation, any amounts or benefits provided under Sections 7 and 8 hereof, is
sufficient to compensate Employee for the restrictions contained in Section 3.3
hereof. In consideration of the foregoing and in light of Employee's education,
skills and abilities, Employee agrees that he will not assert that, and it
should not be considered that, any provisions of Section 3.3 otherwise are void,
voidable or unenforceable or should be voided or held unenforceable.

                  3.4. EXECUTIVE NATURE OF EMPLOYMENT. Employee acknowledges and
agrees that his duties with Employer are of an executive nature and that he is a
member of Employer's management group. Employee agrees that the remedy at law
for any breach by him of any of the covenants and agreements set forth in this
Section 3 will be inadequate and that in the event of any such breach, Employer
may, in addition to the other remedies which may be available to it at law,
obtain injunctive relief prohibiting Employee (together with all those persons
associated with him) from the breach of such covenants and agreements.

                  3.5. APPLICATION TO SUBSIDIARIES. For purposes of this Section
3 and of Section 2 hereof, the term "Employer" shall include Employer and any
and all of Employer's subsidiaries or ventures, or any affiliates of Employer
(as such term is defined under the Securities Act of 1933), whether currently
existing or hereafter formed. The affiliates of Employer are not intended to be
construed as meaning other controlled affiliates of First Reserve Corporation.

                                     EX-40
<PAGE>

                  3.6. CONSIDERATION. Each of the covenants of this Section 3
are given by Employee as part of the consideration for this Agreement and as an
inducement to Employer to enter into this Agreement and accept the obligations
hereunder.

         4.       BASE SALARY AND BENEFITS.

                  4.1. BASE SALARY. During the Term of Employment, Employer
shall pay Employee a salary at the rate of one hundred eighty thousand dollars
($180,000) per annum payable in equal installments at least as frequently as
monthly and subject to payroll deductions as may be necessary or customary in
respect of Employer's salaried employees in general. Such salary shall be
subject to adjustment under the Employer's periodic compensation review
procedure which shall take into account such factors as job responsibilities,
performance and cost of living considerations. In no event shall such salary be
adjusted to less than initial amount set forth above.

                  4.2. VACATIONS. During the Term of Employment, Employee shall
be entitled to vacation of the greater of four weeks or the amount of time
provided under the vacation policy of Employer applicable to employees of
Employer generally, as amended from time to time.

                  4.3. MEDICAL INSURANCE AND OTHER BENEFITS. During the Term of
Employment, Employer shall furnish Employee with such medical and hospital
insurance as is furnished to employees of Employer generally and Employee shall
be entitled to participate in all other fringe benefit programs which are
maintained by Employer and available to its executive officers generally, and
under the same terms as Employer's executive officers generally. Employee
acknowledges that he shall have no vested rights under or in respect of his
participation in any such program except as expressly provided under the terms
thereof.

                  4.4. AUTOMOBILE. The Company shall provide the Employee with
an automobile allowance in the amount of $800 per month, less any required tax
withholding.

         5. EXPENSES. Employer will pay or reimburse Employee for such
reasonable travel, entertainment, or other expenses as he may reasonably incur
during the term of this Agreement in connection with the performance of his
duties hereunder, but only to the extent that Employee shall furnish Employer
with such evidence that such expenses were incurred as Employer may from time to
time reasonably require or request.

         6. DEATH OR TOTAL DISABILITY OF EMPLOYEE. If Employee dies or becomes
totally disabled during the Term of Employment, the Term of Employment shall
automatically terminate and Employer's obligation to compensate Employee under
this Agreement shall in all respects cease, except that Employer shall pay
Employee or Employee's estate, within thirty (30) days of such death or
disability, an amount equal to the base compensation, vacation benefits provided
for under Section 4 hereof accrued and unpaid ("Accrued Compensation") as of the
time of such death or disability and Employee shall be entitled to such other
benefits provided for under Sections 4.2 and 4.3 hereof which have accrued and
have not been forfeited as of the time of such death or disability when and if
provided to be paid pursuant to the terms of any applicable Employer plans or
programs ("Accrued Benefits"). For purposes of this Section 6, Employee shall
reasonably be deemed "totally disabled" as of the time the Board of Directors
shall find, on the basis of medical evidence satisfactory to the Board of
Directors, that, as a result of a mental or physical condition, Employee is
unable to perform his normal duties of employment hereunder or is prevented from
engaging in the same level of performance as he engaged in prior to the onset of
such condition, giving effect to any reasonable accommodations which can be made
by Employer, and that such disability is likely to continue for a substantial
period of time.

         7. TERMINATION FOR CAUSE. Employee's employment under this Agreement
may be terminated by Employer for "good cause." Upon such termination,
Employer's obligation to compensate Employee under this Agreement shall in all
respects cease, except that Employer shall pay Employee, within thirty (30) days
of such termination, any Accrued Compensation as of the time of such termination
and Employee shall be entitled to any Accrued Benefits as of the time of such
termination when and if provided to be paid by the applicable program or plan.
The term "good cause" includes, but is not limited to any one or more of the
following occurrences:

                                      EX-41
<PAGE>

                  7.1. Employee's breach of any of the covenants contained in
this Agreement;

                  7.2. Employee's conviction by, or entry of a plea of guilty or
nolo contendere in, a court of competent and final jurisdiction for any crime
(excluding traffic violations and similar misdemeanors) involving moral
turpitude or which is punishable by imprisonment in the jurisdiction involved;

                  7.3. Employee's commission of an act of fraud, whether prior
or subsequent to the date hereof upon Employer or the Companies or any of their
subsidiaries, ventures or affiliates;

                  7.4. Employee's willful failure or refusal to perform his
duties as required by this Agreement, provided that, the termination of
Employee's employment pursuant to this Section 8.4. shall not constitute valid
termination for good cause unless Employee shall first have received written
notice from the President or stating with specificity the nature of such failure
or refusal in the performance of duties and affording Employee at least fifteen
(15) days to correct the act or omission complained of;

                  7.5. Gross negligence, theft of Employer's property, material
violation by Employee of any duty of loyalty to Employer or any other material
misconduct on the part of Employee; or

                  7.6. Material violation of any employee policy manual, in
effect at that time, including, without limitation, the receipt of any kickback
or side payment from any customer, service provider, supplier or vendor.

                  Notwithstanding the foregoing, and except as provided below,
termination of Employee's employment by resignation shall be deemed a
termination for good cause and shall be effective as of the effective date of
such resignation, but acceptance of such resignation by Employer shall not be
deemed a waiver of any right of Employer or the Companies under this Agreement.
If, within 18 months of a change of control of the Company, (i) Employee has
experienced a material diminution in job title or responsibility, or has been
transferred by Employer to any place other than Houston, Texas (unless such
diminution or transfer is the result of events which would otherwise entitle
Employer to terminate Employee for good cause under this Section 7), and (ii)
Employee resigns from Employer within 60 days of such event, then Employee's
resignation under such circumstances shall be deemed a termination other than
for good cause and have the effect set forth in Section 8 below. A "change of
control" shall mean the closing of a transaction or series of transactions in
which wither (A) more than 50% of the voting power of Employer, or (B)
substantially all the assets of Employer, are transferred to a party that was
not a stockholder of Employer or an affiliate of such stockholder prior to such
transaction or series of transactions.

         8. OTHER TERMINATION. Employer may terminate Employee's employment
hereunder at any time for any reason other than those referred to above as good
cause or for no reason at all, and Employer's obligation to compensate Employee
under this Agreement shall in all respects cease upon such termination, except
that (a) Employer shall pay Employee, within thirty (30) days of such
termination, any Accrued Compensation as of the time of such termination, (b)
Employee shall be entitled to any Accrued Benefits as of the time of such
termination when and if provided to be paid by the applicable program or plan;
(c) Employer shall continue to pay Employee an amount equal to his monthly base
salary under Section 4.1 hereof then in effect on the first day of each month
for a period equal to the number of months remaining in the Term of Employment;
and (d) Employee shall continue to be covered by, or Employer shall provide
comparable coverage to Employee as was provided under, Employer's medical and
hospital insurance as furnished to other employees generally, so long as
Employee receives payments pursuant to Section 8(c); provided, however, that
Employee may waive the provisions of Sections 8(a) through 8(d) and elect to
receive compensation pursuant to the stated termination policy of the Company in
effect as of the earlier of the date Employer gives written notice of
termination to Employee, or Employee is terminated pursuant to this Section 8.
Except as may be required by state or federal law, Employee shall not be
entitled to any other compensation or benefits whatsoever if Employee's
employment is terminated pursuant to this paragraph. An involuntary transfer of
Employee's resident business office location from the Houston vicinity shall be
deemed a termination other than for Cause. Notwithstanding the foregoing, any
termination, other than for good cause, following a change of control of
Employer shall extend the amount of severance pay due Employee under Section
8(c) to two years. A change of control shall be defined as sale of a majority
equity interest in Employer to a party other than an affiliate of First Reserve
Corporation.

                                      EX-42
<PAGE>

         9.       RELEASE AND SATISFACTION.

                  9.1. Unless precluded by state or federal law, with respect to
Employee, his heirs, executors, legal representatives, successors and assigns,
each payment by Employer of the amounts and benefits provided under Sections 6,
7 or 8 hereof shall release, relinquish and forever discharge Employer and any
director, officer, employee, shareholder, agent or affiliate of Employer of and
from any and all claims, damages, losses, costs, expenses, liabilities or
obligations, whether known or unknown which relate to facts or events occurring
prior to each payment under Sections 6, 7 or 8 (other than any such claims,
damages, losses, costs, expenses, liabilities or obligations arising prior to
the termination of Employee's employment and (i) covered by any written
indemnification arrangement of Employer with respect to Employee, (ii) arising
under any written employee benefit plan or arrangement whether or not
tax-qualified) covering Employee or (iii) constituting a statutory right that is
not waivable by a party to this Agreement), which Employee has incurred or
suffered or may incur or suffer as a result of Employee's employment by Employer
or the termination of such employment.

                  9.2. Any termination of Employee's employment and any
expiration of the Terms of Employment under this Agreement shall not affect the
continuing operation and effect of Section 3 hereof or this Section 9, which
shall continue in full force and effect with respect to employer and Employee
and their respective heirs, executors, personal representatives, successors or
permitted assigns. Nothing in Section 9 hereof shall be deemed to operate or
shall operate as a release, settlement or discharge of any liability of Employee
to Employer or others from any act or omission by Employee enumerated in Section
7 hereof as a possible basis for termination of Employee's employment for good
cause.

         10.      MISCELLANEOUS.

                  10.1. KEY MAN INSURANCE. Employee recognizes and acknowledges
that Employer or its affiliates may (but shall not be obligated to) seek and
purchase one or more policies providing key man life insurance with respect to
Employee, the proceeds of which would be payable to Employer or such affiliate.
Employee hereby consents to Employer's or its affiliate's seeking and purchasing
such insurance and will provide such information, undergo such medical
examinations, execute such documents, and otherwise take any and all actions
necessary or desirable in order for Employer or its affiliates to seek, purchase
and maintain in full force and effect such policy or policies.

                  10.2. SEVERABILITY. If any of the provisions of this Agreement
shall otherwise contravene or be invalid under the laws of any state or other
jurisdiction where it is applicable but for such contravention or invalidity,
such contravention or invalidity shall not invalidate all of the provisions of
this Agreement, but rather this Agreement shall be reformed and construed,
insofar as the laws of that state or jurisdiction are concerned, as not
containing the provision or provisions, but only to the extent that they are
contravening or are invalid under the laws of that state or jurisdiction, and
the rights and obligations created hereby shall be reformed and construed and
enforced accordingly.

                  10.3. MODIFICATION AND WAIVER OF BREACH. No waiver or
modification of this Agreement shall be binding unless it is in writing signed
by the parties hereto. No waiver of a breach hereof shall be deemed to
constitute a waiver of a future breach, whether of a similar or dissimilar
nature.

                  10.4. ASSIGNMENT. The rights and obligations of Employer under
this Agreement may, without the consent of Employee, be assigned by Employer, in
its sole discretion, to any subsidiary, venture or affiliate of Employer,
provided that Employee continues to have executive level responsibilities and
will not be required to relocate.

                  10.5. NOTICES. Except as otherwise required by law, any
notice, consent, request, instruction, approval and other communication provided
for herein shall be in writing and shall be deemed validly given, made or served
(i) on the date on which it is delivered personally with receipt acknowledged,
(ii) five business days after it shall have been sent by registered or certified
mail (receipt requested and postage prepaid), (iii) one business day after it is
sent by overnight courier (charges prepaid) or (iv) on the same business day
when sent before 5:00 p.m.,

                                      EX-43
<PAGE>

recipient's time, and on the next business day when sent after 5:00 p.m.,
recipient's time, by telex or telecopier, transmission confirmed and charges
prepaid: .

                           11.5.1.     if to Employer, addressed to:

                                       T-3 Energy Services, Inc.

                                       Attention:  Chief Financial Officer
                                       Telephone:  (713) 437-5187
                                       Telecopier:  (713) 224-0771

                                       With a copy to:

                                       First Reserve Corporation
                                       1801 California Street, Suite 4110

                                       Denver, CO  80202

                                       Attention:  Thomas R. Denison
                                       Telephone:  (303) 382-1271
                                       Telecopier:  (303) 382-1275

                           11.5.2.     if to Employee, addressed to him at his
then current address or number, as indicated in the books and records of the
Company; or to such other address as shall be furnished in writing by any party
to the others.

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

                  11.7. CONSTRUCTION OF AGREEMENT. This Agreement shall be
construed in accordance with, and governed by, the laws of the State of Delaware
without giving effect to the conflict of law rules thereof.

                  11.8. MERGER; COMPLETE AGREEMENT. This Agreement, and the
exhibit hereto and other documents executed contemporaneously herewith, contain
the entire agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all previous oral and written and
all contemporaneous oral negotiations or commitments and other understandings.

                  11.9. NON-TRANSFERABILITY OF INTEREST. None of the rights of
Employee to receive any form of compensation payable pursuant to this Agreement
shall be assignable or otherwise transferable except through a testamentary
disposition or by the laws of descent and distribution upon the death of
Employee. Any attempted assignment, transfer, conveyance, or other disposition
(other than as aforesaid) of any interest in the rights of Employee to receive
any form of compensation to be made by Employer pursuant to this Agreement shall
be void.

                  11.10. LEGAL FEES. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of any
alleged dispute, breach, default or misrepresentation in connection with this
Agreement, the successful or prevailing party shall be entitled to recover such
reasonable attorneys' fees and other costs it incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.

                  11.11. SUBMISSION TO JURISDICTION. Each of the parties hereto
irrevocably consents that any legal action or proceeding against it or any of
its property with respect to this agreement or any other agreement executed in
connection herewith may be brought in any court of the Sate of Delaware, any
Federal court of the United States of America located in the State of Delaware,
or both, and by the execution and delivery of this

                                      EX-44
<PAGE>

Agreement each party hereto hereby accepts with regard to any such action or
proceeding for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.

                  11.12. ARBITRATION. Any controversy, dispute, or claim arising
out of, in connection with, or in relation to, the interpretation, performance
or breach of this Agreement, including, without limitation, the validity, scope,
and enforceability of this section, may at the election of Employer or Employee
be solely and finally settled by arbitration conducted in Texas, by and in
accordance with the then existing rules for commercial arbitration of the
American Arbitration Association, or any successor organization. Judgment upon
any award rendered by the arbitrator(s) may be entered by the State or Federal
Court having jurisdiction thereof. Any of the parties may demand arbitration by
written notice to the other and to the American Arbitration Association ("Demand
for Arbitration"). Any Demand for Arbitration pursuant to this section shall be
made within 180 days from the date that the dispute upon which the demand is
based arose. The parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written.

EMPLOYEE:                            EMPLOYER:

Michael L. Stansberry                T-3 Energy Services, Inc.
                                     a Delaware corporation

/s/ MICHAEL L. STANSBERRY            By: /s/ THOMAS R. DENISON
____________________________             _______________________________________

                                      EX-45

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