EnSerCo v. Industrial Holdings, Inc.

EnSerCo plans to file an arbitration demand against Industrial Holdings,
Inc. to obtain re-payment of a $15 million promissory note.

EnSerCo also plans to make demand against the guarantors of the IHI debt:The
Rex Group, Rex Machinery Sales, Inc., Rex Machinery Movers, Inc., U.S.
Crating, Inc., First Texas Credit Corporation, Landreth Engineering Company,
Pipeline Valve Specialty, Inc., Bolt Manufacturing Co.Inc., LSS-Lone Star
Houston, Inc., American Rivet Company, Inc., Manifold Valve Services, Inc.,
Philform, Inc., GHX Incorporated, Regal Machine Tool, Inc., Whir Acquisition,
Inc., Moores Pump and Supply, Inc., GHX Incorporated of Louisiana and Beird
Industries, Inc.

If you are aware of any reason why an arbitration demand should not be filed
against any of these entities, please call me or e-mail me by the end of
business on Monday March 5, 2001. If I don't hear from you by then, I will
assume that you have no objection to moving forward against these companies.

Thanks in advance.

GAIL