Document:

<PAGE>   1
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE

<S>                                                                                                            <C>
                                                     ARTICLE I

                                         DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms...............................................................................2
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions.........................................41
SECTION 1.03. Accounting Terms...................................................................................41

                                                    ARTICLE II

                            AMOUNTS AND TERMS OF THE ADVANCES and the letters of credit

SECTION 2.01. The Advances and the Letter of Credit..............................................................41
SECTION 2.02. Making the Advances................................................................................43
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit.................................46
SECTION 2.04. Repayment of Advances..............................................................................48
SECTION 2.05. Termination or Reduction of the Commitments........................................................53
SECTION 2.06. Prepayments........................................................................................54
SECTION 2.07. Interest...........................................................................................57
SECTION 2.08. Fees...............................................................................................58
SECTION 2.09. Conversion of Advances.............................................................................59
SECTION 2.10. Increased Costs, Etc...............................................................................59
SECTION 2.11. Payments and Computations..........................................................................62
SECTION 2.12. Taxes..............................................................................................63
SECTION 2.13. Sharing of Payments, Etc...........................................................................66
SECTION 2.14. Use of Proceeds....................................................................................67
SECTION 2.15. Defaulting Lenders.................................................................................67
SECTION 2.16. Evidence of Debt...................................................................................70
SECTION 2.17. Increase in the Tranche B Term Commitments.........................................................71

                                                    ARTICLE III

                             CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

SECTION 3.01. Conditions Precedent to Initial Extension of Credit................................................73
</TABLE>

<PAGE>   2
                                       ii

<TABLE>
<S>                                                                                                             <C>
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and Renewal....................................77
SECTION 3.03. Determinations Under Section 3.01..................................................................78

                                                    ARTICLE IV

                                          REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrowers and the Parent.....................................78

                                                     ARTICLE V

                                              COVENANTS OF THE PARENT

SECTION 5.01. Affirmative Covenants..............................................................................86
SECTION 5.02. Negative Covenants.................................................................................93
SECTION 5.03. Reporting Requirements............................................................................104
SECTION 5.04. Financial Covenants...............................................................................108

                                                    ARTICLE VI

                                                 EVENTS OF DEFAULT

SECTION 6.01. Events of Default.................................................................................110
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default..........................................113

                                                    ARTICLE VII

                                                    THE AGENTS

SECTION 7.01. Authorization and Action..........................................................................114
SECTION 7.02. Agents' Reliance, Etc.............................................................................114
SECTION 7.03. MSSF, CSFB and Affiliates.........................................................................115
SECTION 7.04. Lender Party Credit Decision......................................................................115
SECTION 7.05. Indemnification...................................................................................115
SECTION 7.06. Successor Agents..................................................................................117
SECTION 7.07. Collateral Agent acting as Joint Creditor.........................................................118
SECTION 7.08. Co-Documentation Agents and Syndication Agent.....................................................118
</TABLE>

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                                      iii

<TABLE>
<S>                                                                                                             <C>
                                                   ARTICLE VIII

                                                     GUARANTY

SECTION 8.01. Guaranty; Limitation of Liability.................................................................118
SECTION 8.02. Guaranty Absolute.................................................................................119
SECTION 8.03. Waivers and Acknowledgments.......................................................................120
SECTION 8.04. Subrogation.......................................................................................121
SECTION 8.05. Guaranty Supplements..............................................................................122
SECTION 8.06. Continuing Guaranty; Assignments..................................................................122
SECTION 8.07. Release of Guarantor..............................................................................123
SECTION 8.08. Payment...........................................................................................123

                                                    ARTICLE IX

                                                   MISCELLANEOUS

SECTION 9.01. Amendments, Etc...................................................................................124
SECTION 9.02. Notices, Etc......................................................................................125
SECTION 9.03. No Waiver; Remedies...............................................................................125
SECTION 9.04. Costs and Expenses................................................................................125
SECTION 9.05. Right of Set-off..................................................................................127
SECTION 9.06. Binding Effect....................................................................................127
SECTION 9.07. Assignments and Participations....................................................................127
SECTION 9.08. Execution in Counterparts.........................................................................131
SECTION 9.09. No Liability of the Issuing Bank..................................................................131
SECTION 9.10. Confidentiality...................................................................................132
SECTION 9.11. Release of Collateral.............................................................................132
SECTION 9.12. Judgment..........................................................................................132
SECTION 9.13. Jurisdiction, Etc.................................................................................133
SECTION 9.14. Substitution of Currency..........................................................................134
SECTION 9.15. Governing Law.....................................................................................134
SECTION 9.16. Waiver of Jury Trial..............................................................................134
</TABLE>

SCHEDULES

<TABLE>
<S>                   <C>      <C>
Schedule I            -        Commitments and Applicable Lending Offices
Schedule II           -        Subsidiary Guarantors
Schedule III          -        Associated Costs
Schedule 4.01(b)      -        Subsidiaries
Schedule 4.01(d)      -        Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(f)      -        Disclosed Litigation
</TABLE>

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                                       iv

<TABLE>
<S>                   <C>      <C>
Schedule 4.01(o)      -        Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(p)      -        Environmental Disclosure
Schedule 4.01(s)      -        Existing Debt
Schedule 4.01(t)      -        Surviving Debt
Schedule 4.01(u)      -        Liens
Schedule 4.01(v)      -        Owned Real Property
Schedule 4.01(w)      -        Leased Real Property
Schedule 4.01(x)      -        Investments
Schedule 4.01(y)      -        Intellectual Property
</TABLE>

<PAGE>   5
                                       v

EXHIBITS

<TABLE>
<S>               <C>      <C>
Exhibit A-1       -        Form of Revolving Credit Note
Exhibit A-2       -        Form of Tranche A U.S. Term Note
Exhibit A-3       -        Form of Tranche A Euro Term Note
Exhibit A-4       -        Form of Tranche B Term Note
Exhibit B         -        Form of Notice of Borrowing
Exhibit C         -        Form of Assignment and Acceptance
Exhibit D         -        Form of Security Agreement
Exhibit E         -        Form of Mortgage
Exhibit F         -        Form of Solvency Certificate
Exhibit G         -        Form of Opinion of United States Counsel to the Loan Parties
Exhibit H         -        Form of Guaranty Supplement
Exhibit I         -        Form of Opinion of Local Counsel to the Loan Parties
</TABLE>

<PAGE>   6
                                                                     EXHIBIT 4.5

                                CREDIT AGREEMENT

                  CREDIT AGREEMENT dated as of April 10, 2001 among DRESSER,
INC., a Delaware corporation (the "U.S. BORROWER"), D.I. LUXEMBOURG S.A.R.L., a
corporation organized and existing under the laws of Luxembourg (the "EURO
BORROWER", and, collectively with the U.S. Borrower, the "BORROWERS"), DEG
ACQUISITIONS, LLC, a limited liability company organized and existing under the
laws of Delaware (the "PARENT"), the Subsidiary Guarantors (as hereinafter
defined), the banks, financial institutions and other institutional lenders
listed on the signature pages hereof as the Initial Lenders (the "INITIAL
LENDERS"), the bank listed on the signature pages hereof as the Initial Issuing
Bank (the "INITIAL ISSUING BANK") and WELLS FARGO BANK TEXAS, N.A., as the swing
line bank (in such capacity and any successor swing line bank, the "SWING LINE
BANK"), MORGAN STANLEY & CO. INCORPORATED ("MS & CO."), as collateral agent
(together with any successor collateral agent appointed pursuant to Article VII,
the "COLLATERAL AGENT"), MORGAN STANLEY SENIOR FUNDING, INC. ("MSSF"), as
administrative agent (together with any successor administrative agent appointed
pursuant to Article VII, the "ADMINISTRATIVE AGENT") for the Lender Parties (as
hereinafter defined), and CREDIT SUISSE FIRST BOSTON ("CSFB"), as syndication
agent (the "SYNDICATION AGENT", and together with the Collateral Agent and the
Administrative Agent, the "AGENTS").

PRELIMINARY STATEMENTS:

                  1. Pursuant to the Amended and Restated Agreement and Plan of
Recapitalization dated January 30, 2001, as amended and restated April 10, 2001
(as the same may be further amended, modified or otherwise supplemented from
time to time to the extent permitted under Section 5.02(p), the "AGREEMENT AND
PLAN OF RECAPITALIZATION") among Halliburton Company, a Delaware corporation,
Dresser B.V., a Netherlands company, and the Parent, the Parent has agreed to
enter into the recapitalization transaction and other related transactions
described therein (the "RECAPITALIZATION").

                  2. The Borrowers have requested that, concurrently with and
subject to the consummation of the First Closing (as defined in the Agreement
and Plan of Recapitalization) with respect to the Recapitalization, the Lender
Parties lend to the Borrowers up to U.S.$820,000,000, consisting of
U.S.$165,000,000 under the Tranche A U.S. Term Facility (as hereinafter defined)
extended to the U.S. Borrower, the Equivalent in Euros of U.S.$100,000,000 under
the Tranche A Euro Term Facility (as hereinafter defined) extended to the Euro
Borrower, U.S.$455,000,000 under the Tranche B Term Facility (as hereinafter
defined) extended to the U.S. Borrower and up to U.S.$100,000,000 under the
Revolving Credit Facility (as hereinafter defined) for the benefit of the U.S.
Borrower to finance the Recapitalization, repay any Existing Debt (as
hereinafter defined), pay transaction fees and costs and that, from time to
time, the Lender Parties lend to the U.S. Borrower and issue Letters of Credit
for the account of the U.S. Borrower to provide revolving credit for the U.S.
Borrower and its Subsidiaries. The Lender

<PAGE>   7
                                       2

Parties have indicated their willingness to agree to lend such amounts on the
terms and conditions of this Agreement.

                  NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

                  "ADMINISTRATIVE AGENT" has the meaning specified in the
         recital of parties to this Agreement.

                  "ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
         Administrative Agent maintained by the Administrative Agent as the
         Administrative Agent shall specify in writing to the Lender Parties.

                  "ADVANCE" means a Tranche A U.S. Term Advance, a Tranche A
         Euro Term Advance, a Tranche B Term Advance, a Revolving Credit
         Advance, a Swing Line Advance or a Letter of Credit Advance.

                  "AFFILIATE" means, as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or is a director or officer of such Person.
         For purposes of this definition, the term "control" (including the
         terms "controlling", "controlled by" and "under common control with")
         of a Person means the possession, direct or indirect, of the power to
         direct or cause the direction of the management and policies of such
         Person, whether through the ownership of Voting Interests, by contract
         or otherwise.

                  "AGENTS" has the meaning specified in the recital of parties
         to this Agreement.

                  "AGREEMENT AND PLAN OF RECAPITALIZATION" has the meaning
         specified in the Preliminary Statements.

                  "AGREEMENT VALUE" means, for each Hedge Agreement, on any date
         of determination, an amount determined by the Administrative Agent
         equal to: (a) in the case of a Hedge Agreement documented pursuant to
         the Master Agreement (Multicurrency-Cross Border) published by the
         International Swap and Derivatives Association, Inc. (the "MASTER
         AGREEMENT"), the amount, if any, that would be payable by

<PAGE>   8
                                       3

         any Loan Party or any of its Subsidiaries to its counterparty to such
         Hedge Agreement, as if (i) such Hedge Agreement was being terminated
         early on such date of determination, (ii) such Loan Party or Subsidiary
         was the sole "Affected Party", and (iii) the Administrative Agent was
         the sole party determining such payment amount (with the Administrative
         Agent making such determination pursuant to the provisions of the form
         of Master Agreement); or (b) in the case of a Hedge Agreement traded on
         an exchange, the mark-to-market value of such Hedge Agreement, which
         will be the unrealized loss on such Hedge Agreement to the Loan Party
         or Subsidiary of a Loan Party to such Hedge Agreement determined by the
         Administrative Agent based on the settlement price of such Hedge
         Agreement on such date of determination, or (c) in all other cases, the
         mark-to-market value of such Hedge Agreement, which will be the
         unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary
         of a Loan Party to such Hedge Agreement determined by the
         Administrative Agent as the amount, if any, by which (i) the present
         value of the future cash flows to be paid by such Loan Party or
         Subsidiary exceeds (ii) the present value of the future cash flows to
         be received by such Loan Party or Subsidiary pursuant to such Hedge
         Agreement; capitalized terms used and not otherwise defined in this
         definition shall have the respective meanings set forth in the above
         described Master Agreement.

                  "APPLICABLE BORROWER" means, (a) with respect to the Tranche A
         U.S. Term Facility, the Tranche B Term Facility, the Revolving Credit
         Facility, the Swing Line Facility or the Letter of Credit Facility or
         any Advances or Borrowings thereunder, the U.S. Borrower and (b) with
         respect to the Tranche A Euro Term Facility or any Advances or
         Borrowings thereunder, the Euro Borrower.

                  "APPLICABLE CURRENCY" means, (a) with respect to the Tranche A
         U.S. Term Facility, the Tranche B Term Facility, the Revolving Credit
         Facility, the Swing Line Facility or the Letter of Credit Facility or
         any Advances, Borrowings or Letters of Credit thereunder, Dollars and
         (b) with respect to the Tranche A Euro Term Facility or any Advances or
         Borrowings thereunder, Euros.

                  "APPLICABLE LENDING OFFICE" means, with respect to each Lender
         Party, (i) such Lender Party's Domestic Lending Office in the case of a
         Base Rate Advance, (ii) such Lender Party's Eurodollar Lending Office
         in the case of a Eurodollar Rate Advance, and (iii) such Lender Party's
         Euro Lending Office in the case of a Euro Rate Advance.

                  "APPLICABLE MARGIN" means (A) in respect of the Tranche B Term
         Loan Facility, during the period from the Effective Date until the
         six-month anniversary of the Effective Date, 2.50% per annum for Base
         Rate Advances and 3.50% for Eurodollar Rate Advances, and thereafter a
         percentage per annum determined by reference to the Total Debt/EBITDA
         Ratio as set forth below:

<PAGE>   9
                                       4

<TABLE>
<CAPTION>
=================================================
TOTAL DEBT/EBITDA      BASE RATE  EURODOLLAR RATE
      RATIO            ADVANCES       ADVANCES
=================================================
<S>                    <C>        <C>
Level I
less than 2.50:1.00      2.00%         3.00%
-------------------------------------------------
Level II
2.50:1.00 or greater,
but less than
3.00:1.00                2.25%         3.25%
-------------------------------------------------
Level III
3.00:1.00 or greater,
but less than
3.50:1.00                2.25%         3.25%
-------------------------------------------------
Level IV
3.50:1.00 or greater,
but less than
4.00:1.00                2.50%         3.50%
-------------------------------------------------
Level V
4.00:1.00 or greater,
but less than
4.50:1.00                2.50%         3.50%
-------------------------------------------------
Level VI
4.50:1.00 or greater     2.75%         3.75%
=================================================
</TABLE>

         ; and (B) in respect of the Tranche A U.S. Term Facility, the Tranche A
         Euro Term Facility and the Revolving Credit Facility, during the period
         from the Effective Date until the six-month anniversary of the
         Effective Date, 2.00% per annum for the Base Rate Advances, 3.00% per
         annum for Eurodollar Rate Advances, 3.00% per annum for Euro Rate
         Advances, and thereafter a percentage per annum determined by reference
         to the Total Debt/EBITDA Ratio as set forth below:

<PAGE>   10
                                       5

<TABLE>
<CAPTION>
=============================================================
       TOTAL
    DEBT/EBITDA        BASE RATE  EURODOLLAR RATE  EURO RATE
       RATIO           ADVANCES      ADVANCES      ADVANCES
=============================================================
<S>                    <C>        <C>              <C>
Level I
less than 2.50:1.00      1.00%         2.00%          2.00%
-------------------------------------------------------------
Level II
2.50:1.00 or greater,
but less than
3.00:1.00                1.25%         2.25%          2.25%
-------------------------------------------------------------
Level III
3.00:1.00 or greater,
but less than
3.50:1.00                1.50%         2.50%          2.50%
-------------------------------------------------------------
Level IV
3.50:1.00 or greater,
but less than
4.00:1.00                1.75%         2.75%          2.75%
-------------------------------------------------------------
Level V
4.00:1.00 or greater,
but less than
4.50:1.00                2.00%         3.00%          3.00%
-------------------------------------------------------------

Level VI
4.50:1.00 or greater     2.25%         3.25%          3.25%
=============================================================
</TABLE>

         The Applicable Margin shall be determined by reference to the Total
         Debt/EBITDA Ratio in effect from time to time; provided, however, that
         (i) no change in the Applicable Margin shall be effective until three
         Business Days after the date on which the Administrative Agent receives
         the financial statements required to be delivered pursuant to Section
         5.03(b) or (c), as the case may be, and a certificate of the Chief
         Financial Officer of the U.S. Borrower demonstrating such Total
         Debt/EBITDA Ratio and (ii) the Applicable Margin shall be at Level VI
         for so long as the U.S. Borrower has not submitted to the
         Administrative Agent the information described in clause (i) of this
         proviso as and when required under Section 5.03(b) or (c), as the case
         may be. The Applicable Margin at any time with respect to Swing Line
         Advances held by the Swing Line Bank shall be equal to the Applicable
         Margin as set forth above for Revolving Credit Advances less 1.00% per
         annum.

<PAGE>   11
                                       6

                  "APPLICABLE PERCENTAGE" means (a) during the period from the
         Effective Date until the six-month anniversary of the Effective Date,
         0.50% per annum and (b) thereafter a percentage per annum determined by
         reference to the Total Debt/EBITDA Ratio as set forth below:

<TABLE>
<CAPTION>
                  ---------------------------------------
                  TOTAL DEBT/EBITDA RATIO  COMMITMENT FEE
                  ---------------------------------------
<S>                                        <C>
                  Level I
                  less than 2.50:1.00          .375%
                  ---------------------------------------
                  Level II
                  2.50:1.00 or greater          .50%
                  ---------------------------------------
</TABLE>

         The Applicable Percentage shall be determined by reference to the Total
         Debt/EBITDA Ratio in effect from time to time; provided, however, that
         (A) no change in the Applicable Percentage shall be effective until
         three Business Days after the date on which the Administrative Agent
         receives the financial statements required to be delivered pursuant to
         Section 5.03(b) or (c), as the case may be, and a certificate of the
         Chief Financial Officer of the U.S. Borrower demonstrating such Total
         Debt/EBITDA Ratio, and (B) the Applicable Percentage shall be at Level
         II for so long as the U.S. Borrower has not submitted to the
         Administrative Agent the information described in clause (A) of this
         proviso as and when required under Section 5.03(b) or (c), as the case
         may be.

                  "APPROPRIATE LENDER" means, at any time, with respect to (a)
         any of the Tranche A U.S. Term, Tranche A Euro Term, Tranche B Term or
         Revolving Credit Facilities, a Lender that has a Commitment with
         respect to such Facility at such time, (b) the Swing Line Facility, (i)
         the Swing Line Bank and (ii) if the other Revolving Credit Lenders have
         made Swing Line Advances pursuant to Section 2.02(b) that are
         outstanding at such time, each such other Revolving Credit Lender and
         (c) the Letter of Credit Facility, (i) the Issuing Bank and (ii) if the
         other Revolving Credit Lenders have made Letter of Credit Advances
         pursuant to Section 2.03(c) that are outstanding at such time, each
         such other Revolving Credit Lender.

                  "APPROVED FUND" means, with respect to any Lender that is a
         fund that invests in bank loans, any other fund that invests in bank
         loans and is advised or managed by the same investment advisor as such
         Lender or by an Affiliate of such investment advisor.

                  "ASSET SALES" shall, with respect to the U.S. Borrower and its
         Subsidiaries, have the meaning specified in the Indenture.

                  "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
         entered into by a Lender Party and an Eligible Assignee, and accepted
         by the Administrative Agent, in accordance with Section 9.07 and in
         substantially the form of Exhibit C hereto.

                  "ASSOCIATED COSTS" shall mean the cost imputed to each Tranche
         A Euro Term Lender of compliance with (a) the cash ratios and special
         deposit requirements of the

<PAGE>   12
                                       7

         Bank of England and/or the banking supervision or other costs imposed
         by the Financial Services Authority, as determined in accordance with
         Schedule III, and (b) any reserve asset requirements of the European
         Central Bank.

                  "ASSUMING LENDER" has the meaning specified in Section
         2.17(d).

                  "ASSUMPTION AGREEMENT" has the meaning specified in Section
         2.17(d).

                  "AVAILABLE AMOUNT" of any Letter of Credit means, at any time,
         the maximum amount available to be drawn under such Letter of Credit at
         such time (assuming compliance at such time with all conditions to
         drawing).

                  "BACKLOG" means, at any time, the aggregate amount payable by
         customers under all orders or contracts for the delivery of goods or
         services that are to be, but have not yet been, delivered or supplied
         by any of the Foreign Subsidiaries in the ordinary course of business.

                  "BASE RATE" means a fluctuating interest rate per annum in
         effect from time to time, which rate per annum shall at all times be
         equal to the higher of:

                           (a) the rate of interest announced publicly by
                  Citibank, N.A. in New York, New York, from time to time, as
                  Citibank, N.A.'s base rate; and

                           (b) 1/2 of 1% per annum above the Federal Funds Rate.

                  "BASE RATE ADVANCE" means an Advance that bears interest as
         provided in Section 2.07(a)(i).

                  "BORROWER'S ACCOUNT" means (a) with respect to the U.S.
         Borrower, the account of the U.S. Borrower maintained by the U.S.
         Borrower with Citibank, N.A. at its office at 399 Park Avenue, New
         York, New York 10043, Account No. 30426272, or such other account as
         the U.S. Borrower shall specify in writing to the Administrative Agent,
         and (b) with respect to the Euro Borrower, the account of the Euro
         Borrower maintained by the Euro Borrower with Citibank, N.A. at its
         offices at 399 Park Avenue, New York, NY 10043, Account No. 30426328,
         or such other account as the Euro Borrower shall specify in writing to
         the Administrative Agent.

                  "BORROWERS" has the meaning specified in the recital of
         parties to this Agreement.

                  "BORROWING" means a Tranche A U.S. Term Borrowing, a Tranche A
         Euro Term Borrowing, a Tranche B Term Borrowing, a Revolving Credit
         Borrowing or a Swing Line Borrowing.

                  "BUSINESS DAY" means a day of the year on which banks are not
         required or authorized by law to close in New York City and, (x) if the
         applicable Business Day

<PAGE>   13
                                       8

         relates to any Eurodollar Rate Advances, a day on which dealings are
         carried on in the London interbank market, and (y) if the applicable
         Business Day relates to any Euro Rate Advances, a day on which the
         Trans-European Automated Real-Time Gross Settlement Express Transfer
         (TARGET) Payment System is open.

                  "CAPITAL EXPENDITURES" means, for any Person for any period,
         the sum of, without duplication, (a) all expenditures made in cash by
         such Person or any of its Subsidiaries during such period for
         equipment, tangible fixed assets, real property or improvements, or for
         replacements or substitutions therefor or additions thereto, that have
         been or should be, in accordance with GAAP, reflected as additions to
         property, plant or equipment on a Consolidated balance sheet of such
         Person plus (b) the aggregate principal amount of all Debt (including
         Obligations under Capitalized Leases) assumed or incurred to finance
         any such expenditures that were not made in cash, except in each case
         any such expenditures made or recorded as part of a Permitted
         Acquisition or the Pending Acquisition.

                  "CAPITALIZED LEASES" means all leases that have been or should
         be, in accordance with GAAP, recorded as capitalized leases.

                  "CASH EQUIVALENTS" means any of the following, to the extent
         owned by any of the Borrowers or any of their respective Subsidiaries
         free and clear of all Liens other than Liens created under the
         Collateral Documents: (a) any evidence of indebtedness, maturing not
         more than 365 days after the date of the purchase, issued by the United
         States of America or any instrumentality or agency thereof, the
         principal, interest and premium, if any, of which is guaranteed fully
         by, or backed by the full faith and credit of, the United States of
         America, (b) Dollar denominated (or foreign currency fully hedged) time
         deposits, certificates of deposits and bankers acceptances maturing not
         more than 365 days after the date of purchase, issued by (x) any Lender
         or (y) a commercial banking institution that is a member of the U.S.
         Federal Reserve System or a commercial banking institution organized
         and located in a country recognized by the United States of America
         having, or which is the principal banking subsidiary of a bank holding
         company having, combined capital and surplus and undivided profits of
         not less than $200,000,000 and a commercial paper rating of "P-1" (or
         higher) according to Moody's Investors' Service, Inc. ("MOODY'S"),
         "A-1" (or higher) according to Standard & Poor's Ratings Service, a
         division of The McGraw-Hill Companies, Inc. ("S&P") or the equivalent
         rating by any other nationally recognized rating agency at the time as
         of which any investment therein is made (any such bank, an "APPROVED
         BANK") or (z) a non-United States commercial banking institution which
         is either currently ranked among the 100 largest banks in the world (by
         assets, according to the American Banker), has combined capital and
         surplus and undivided profits of not less than $500,000,000 or whose
         commercial paper (or the commercial paper of such bank's holding
         company) has a rating of "P-1" (or higher) according to Moody's, "A-1"
         (or higher) according to S&P or the equivalent rating by any other
         nationally recognized rating agency at the time as of

<PAGE>   14
                                       9

         which any investment therein is made, (c) commercial paper, maturing
         not more than 365 days after the date of purchase, issued or guaranteed
         by a corporation with a rating, at the time as of which any
         determination thereof is to be made, of "P-1" (or higher) according to
         Moody's, or "A-1" (or higher) according to S&P, (d) demand deposits
         with any bank or trust company maintained in the ordinary course of
         business, (e) repurchase or reverse repurchase agreements covering
         obligations of the type specified in clause (a) with a term of not more
         than seven days with any Approved Bank and (f) shares of any money
         market mutual fund rated at least "AAA" or the equivalent thereof by
         S&P or at least "Aaa" or the equivalent thereof by Moody's at the time
         as of which any investment therein is made.

                  "CERCLA" means the Comprehensive Environmental Response,
         Compensation and Liability Act of 1980, as amended from time to time.

                  "CERCLIS" means the Comprehensive Environmental Response,
         Compensation and Liability Information System maintained by the U.S.
         Environmental Protection Agency.

                  "CFC" means any entity that is a controlled foreign
         corporation under Section 957 of the Internal Revenue Code (or any
         successor provision thereto).

                  "CHANGE OF CONTROL" means the occurrence of any of the
         following: (a) the Permitted Investors and their Related Parties cease
         to own, directly or indirectly, more than 50% of the Voting Interests
         of the U.S. Borrower, or (b) the first date during any consecutive
         two-year period on which a majority of the members of the board of
         directors of the Parent are not Continuing Directors, or (c) prior to
         an IPO, the Parent shall cease to own at least 90% of the Voting
         Interests, other than Excluded Voting Interests, in each of the
         Borrowers (provided that the Parent shall in no event cease to own more
         than 50% of the Voting Interests in the U.S. Borrower on a fully
         diluted basis (such percentage to be calculated taking into account the
         Excluded Voting Interests), or (d) after an IPO, the Parent shall cease
         to own more than 50% of the Voting Interests in the U.S. Borrower.

                  "COLLATERAL" means all "Collateral" referred to in the
         Collateral Documents and all other property that is or is intended
         under any Collateral Document to be subject to any Lien in favor of the
         Collateral Agent for the benefit of the Secured Parties.

                  "COLLATERAL AGENT" has the meaning specified in the recital of
         parties to this Agreement.

                  "COLLATERAL DOCUMENTS" means the Security Agreement, the
         Mortgages, the Non-U.S. Security Documents and any other agreement
         executed by any Loan Party that creates or purports to create a Lien in
         favor of the Collateral Agent for the benefit of the Secured Parties.

<PAGE>   15
                                       10

                  "COMMITMENT" means a Tranche A U.S. Term Commitment, a Tranche
         A Euro Term Commitment, a Tranche B Term Commitment, a Revolving Credit
         Commitment or a Letter of Credit Commitment.

                  "COMMITMENT DATE" has the meaning specified in Section
         2.17(b).

                  "COMMITMENT INCREASES" has the meaning specified in Section
         2.17(a).

                  "CONFIDENTIAL INFORMATION" means information that any Loan
         Party furnishes to any Agent or any Lender Party on a confidential
         basis, but does not include any such information that is or becomes
         generally available to the public or that is or becomes available to
         such Agent or such Lender Party from a source other than the Loan
         Parties.

                  "CONSOLIDATED" refers to the consolidation of accounts in
         accordance with GAAP.

                  "CONTINGENT OBLIGATION" means, with respect to any Person, any
         Obligation or arrangement of such Person to guarantee or intended to
         guarantee any Debt, leases, dividends or other payment Obligations
         ("PRIMARY OBLIGATIONS") of any other Person (the "PRIMARY OBLIGOR") in
         any manner, whether directly or indirectly, including, without
         limitation, (a) the direct or indirect guarantee, endorsement (other
         than for collection or deposit in the ordinary course of business),
         co-making, discounting with recourse or sale with recourse by such
         Person of the Obligation of a primary obligor, (b) the Obligation to
         make take-or-pay or similar payments, if required, regardless of
         nonperformance by any other party or parties to an agreement or (c) any
         Obligation of such Person, whether or not contingent, (i) to purchase
         any such primary obligation or any property constituting direct or
         indirect security therefor, (ii) to advance or supply funds (A) for the
         purchase or payment of any such primary obligation or (B) to maintain
         revolving credit or equity capital of the primary obligor or otherwise
         to maintain the net worth or solvency of the primary obligor, (iii) to
         purchase property, assets, securities or services primarily for the
         purpose of assuring the owner of any such primary obligation of the
         ability of the primary obligor to make payment of such primary
         obligation or (iv) otherwise to assure or hold harmless the holder of
         such primary obligation against loss in respect thereof. The amount of
         any Contingent Obligation shall be deemed to be an amount equal to the
         stated or determinable amount of the primary obligation in respect of
         which such Contingent Obligation is made (or, if less, the maximum
         amount of such primary obligation for which such Person may be liable
         pursuant to the terms of the instrument evidencing such Contingent
         Obligation) or, if not stated or determinable, the maximum reasonably
         anticipated liability in respect thereof (assuming such Person is
         required to perform thereunder), as determined by such Person in good
         faith.

                  "CONTINUING DIRECTORS" means (i) members of the board of
         directors on the Effective Date; and (ii) other Persons nominated or
         elected to the board of directors with the approval of a majority of
         the Continuing Directors who were members of the board of directors at
         the time of such election or nomination.

<PAGE>   16
                                       11

                  "CONVERSION", "CONVERT" and "CONVERTED" each refer to a
         conversion of Advances of one Type into Advances of the other Type
         pursuant to Section 2.09 or 2.10.

                  "CSFB" has the meaning specified in the recital of parties
         hereto.

                  "CURRENT ASSETS" of any Person means all assets of such Person
         that would, in accordance with GAAP, be classified as current assets of
         a company conducting a business the same as or similar to that of such
         Person, after deducting any reserve required by GAAP in each case in
         which a reserve is proper in accordance with GAAP.

                  "CURRENT LIABILITIES" of any Person means, as of any date (a)
         all Debt of such Person that by its terms is payable on demand or
         matures within one year after such date (excluding (i) any Debt
         renewable or extendible, at the option of such Person, to a date more
         than one year from such date or arising under a revolving credit or
         similar agreement that obligates the lender or lenders to extend credit
         during a period of more than one year from such date, and (ii) all
         amounts of other Funded Debt of such Person required to be paid or
         prepaid within one year after such date), and (b) all other items
         (including taxes accrued as estimated) that in accordance with GAAP
         would be classified as current liabilities of such Person.

                  "DEBT" of any Person means (a) all indebtedness of such Person
         for borrowed money, (b) all Obligations of such Person for the deferred
         purchase price of property or services (other than trade payables and
         other operating liabilities not overdue by more than 120 days or being
         disputed in good faith in each case incurred in the ordinary course of
         such Person's business), (c) all Obligations of such Person evidenced
         by notes, bonds, debentures or other similar instruments, (d) all
         Obligations of such Person created or arising under any conditional
         sale or other title retention agreement with respect to property
         acquired by such Person (even though the rights and remedies of the
         seller or lender under such agreement in the event of default are
         limited to repossession or sale of such property), except agreements
         for the purchase of property in the ordinary cause of business and on
         current payment terms solely to the extent such agreements shall not be
         overdue by more than 120 days or being disputed in good faith, (e) all
         Obligations of such Person as lessee under Capitalized Leases, (f) all
         Obligations of such Person under acceptance, letter of credit or
         similar credit facilities, (g) all Obligations of such Person to
         purchase, redeem, retire, defease or otherwise make any payment in
         respect of any Equity Interests in such Person or any Affiliate of such
         Person or any warrants, rights or options to acquire such Equity
         Interests, valued, in the case of Redeemable Preferred Interests, at
         the greater of its voluntary or involuntary liquidation preference plus
         accrued and unpaid dividends, except (in each case) Qualified Preferred
         Stock, (h) all Obligations of such Person in respect of Hedge
         Agreements, valued at the Agreement Value thereof, (i) all Contingent
         Obligations of such Person incurred by such Person with respect to any
         indebtedness and other payment Obligations referred to in clauses (a)
         through (h) above and (j) all indebtedness and other payment
         Obligations referred to in clauses (a) through (i) above of another
         Person secured by (or for which the holder of such Debt has an

<PAGE>   17
                                       12

         existing right, contingent or otherwise, to be secured by) any Lien on
         property (including, without limitation, accounts and contract rights)
         owned by such Person, even though such Person has not assumed or become
         liable for the payment of such indebtedness or other payment
         Obligations.

                  "DEBT FOR BORROWED MONEY" of any Person means all items of
         Debt that, in accordance with GAAP, would be classified as indebtedness
         on a Consolidated balance sheet of such Person and the amount thereof
         at any time shall be the amount then required by GAAP to be shown on
         such balance sheet.

                  "DEFAULT" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.

                  "DEFAULTED ADVANCE" means, with respect to any Lender Party at
         any time, the portion of any Advance required to be made by such Lender
         Party to a Borrower pursuant to Section 2.01 or 2.02 at or prior to
         such time that has not been made by such Lender Party or by the
         Administrative Agent for the account of such Lender Party pursuant to
         Section 2.02(e) as of such time. In the event that a portion of a
         Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the
         remaining portion of such Defaulted Advance shall be considered a
         Defaulted Advance originally required to be made pursuant to Section
         2.01 on the same date as the Defaulted Advance so deemed made in part.

                  "DEFAULTED AMOUNT" means, with respect to any Lender Party at
         any time, any amount required to be paid by such Lender Party to any
         Agent or any other Lender Party hereunder or under any other Loan
         Document at or prior to such time that has not been so paid as of such
         time, including, without limitation, any amount required to be paid by
         such Lender Party to (a) the Swing Line Bank pursuant to Section
         2.02(b) to purchase a portion of a Swing Line Advance made by the Swing
         Line Bank, (b) the Issuing Bank pursuant to Section 2.03(c) to purchase
         a portion of a Letter of Credit Advance made by the Issuing Bank, (c)
         the Administrative Agent pursuant to Section 2.02(e) to reimburse the
         Administrative Agent for the amount of any Advance made by the
         Administrative Agent for the account of such Lender Party, (d) any
         other Lender Party pursuant to Section 2.15 to purchase any
         participation in Advances owing to such other Lender Party and (e) any
         Agent or the Issuing Bank to reimburse such Agent or the Issuing Bank
         for such Lender Party's ratable share of any amount required to be paid
         by the Lender Parties to such Agent or the Issuing Bank. In the event
         that a portion of a Defaulted Amount shall be deemed paid pursuant to
         Section 2.15(b), the remaining portion of such Defaulted Amount shall
         be considered a Defaulted Amount originally required to be paid
         hereunder or under any other Loan Document on the same date as the
         Defaulted Amount so deemed paid in part.

<PAGE>   18
                                       13

                  "DEFAULTING LENDER" means, at any time, any Lender Party that,
         at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
         shall take any action or be the subject of any action or proceeding of
         a type described in Section 6.01(f).

                  "DEGI GROUP" has the meaning specified in the Agreement and
         Plan of Recapitalization.

                  "DOLLARS" and the sign "U.S.$" each means lawful money of the
         United States of America.

                  "DOMESTIC LENDING OFFICE" means, with respect to any Lender
         Party, the office of such Lender Party specified as its "Domestic
         Lending Office" opposite its name on Schedule I hereto or in the
         Assignment and Acceptance or other instrument pursuant to which it
         became a Lender Party, as the case may be, or such other office of such
         Lender Party as such Lender Party may from time to time specify to the
         U.S. Borrower and the Administrative Agent.

                  "DOMESTIC SUBSIDIARY" means any Subsidiary other than a
         Foreign Subsidiary.

                  "EBITDA" means, in each case of the U.S. Borrower and each of
         its Subsidiaries, for any period, the sum (without duplication) of (a)
         Net Income, and (b) to the extent Net Income has been reduced thereby,
         (i) all income taxes and foreign withholding taxes paid or accrued for
         such period, (ii) Interest Expense, (iii) Non-cash Charges less any
         non-cash items increasing Net Income for such period (other than normal
         accruals in the ordinary course of business), (iv) any cash charges
         resulting from the Transactions and the related financings that, in
         each case, are incurred prior to the six month anniversary of the
         Initial Extension of Credit, and (v) any non-capitalized transactions
         costs incurred in connection with actual, proposed or abandoned
         financings, acquisitions or divestitures, including, but not limited
         to, financing and refinancing fees and costs incurred in connection
         with the Transactions, all as determined in accordance with GAAP for
         such period, provided that, for purposes of the last quarter of Fiscal
         Year 2000 and the first quarter of Fiscal Year 2001, Consolidated
         EBITDA of the U.S. Borrower and its Subsidiaries shall mean,
         respectively U.S.$58,300,000 and U.S.$54,900,000.

                  "EFFECTIVE DATE" means the first date on which the conditions
         set forth in Article III are satisfied.

                  "ELIGIBLE ASSIGNEE" means any commercial bank or financial
         institution (including, without limitation, any fund that regularly
         invests in loans similar to the Tranche A Euro Term Advances or Tranche
         B Term Advances) as approved (which approval shall be required only so
         long as no Event of Default has occurred and is continuing at the time
         of an assignment) by the U.S. Borrower (such approval not to be
         unreasonably withheld or delayed); provided, however, that neither any
         Loan Party nor any Subsidiary of a Loan Party shall qualify as an
         Eligible Assignee under this definition.

<PAGE>   19
                                       14

                  "ENVIRONMENTAL ACTION" means any action, suit, demand, demand
         letter, claim, notice of non-compliance or violation, notice of
         liability or potential liability, investigation, proceeding, consent
         order or consent agreement relating in any way to any Environmental
         Law, any Environmental Permit or Hazardous Material or arising from
         alleged injury or threat to health, safety or the environment,
         including, without limitation, (a) by any governmental or regulatory
         authority for enforcement, cleanup, removal, response, remedial or
         other actions or damages and (b) by any governmental or regulatory
         authority or third party for damages, contribution, indemnification,
         cost recovery, compensation or injunctive relief.

                  "ENVIRONMENTAL LAW" means any applicable Federal, state, local
         or foreign statute, law, ordinance, rule, regulation, code, order,
         writ, judgment, injunction or decree, or any judicial or agency
         interpretation, policy or guidance having the force or effect of law,
         relating to pollution or protection of the environment, health, safety
         or natural resources, including, without limitation, those relating to
         the use, handling, transportation, treatment, storage, disposal,
         release or discharge of Hazardous Materials.

                  "ENVIRONMENTAL PERMIT" means any permit, approval,
         identification number, license or other authorization required under
         any Environmental Law.

                  "EQUIPMENT" means all Equipment referred to in Section 1(a) of
         the Security Agreement.

                  "EQUITY CONTRIBUTION" has the meaning specified in Section
         3.01(h).

                  "EQUITY INTERESTS" means, with respect to any Person, shares
         of capital stock of (or other ownership interests in) such Person,
         warrants, options or other rights for the purchase or other acquisition
         from such Person of shares of capital stock of (or other ownership
         interests in) such Person, securities convertible into or exchangeable
         for shares of capital stock of (or other ownership interests in) such
         Person or warrants, rights or options for the purchase or other
         acquisition from such Person of such shares (or such other interests),
         and other ownership interests in such Person (including, without
         limitation, partnership, member or trust interests therein), whether
         voting or nonvoting, and whether or not such shares, warrants, options,
         rights or other interests are authorized or otherwise existing on any
         date of determination.

                  "EQUIVALENT" in Dollars of any Euros on any date means the
         equivalent in Dollars of such Euros determined by using the quoted spot
         rate at which the Administrative Agent's principal office in New York
         City offers to exchange Dollars for Euros in New York City prior to
         4:00 P.M. (New York City time) (unless otherwise indicated by the terms
         of this Agreement) on such date, and the "EQUIVALENT" in Euros of any
         Dollars means the equivalent in Euros of such Dollars determined by
         using the quoted spot rate at which the Administrative Agent's
         principal office in New York City offers to exchange

<PAGE>   20
                                       15

         Euros for Dollars in New York City prior to 4:00 P.M. (New York City
         time) (unless otherwise indicated by the terms of this Agreement) on
         such date.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "ERISA AFFILIATE" means any Person that for purposes of Title
         IV of ERISA is a member of the controlled group of any Loan Party, or
         under common control with any Loan Party, within the meaning of Section
         414 (b) or (c) of the Internal Revenue Code, and solely for purposes of
         Section 412 of the Internal Revenue Code, within the meaning of Section
         414(m) or (o) of the Internal Revenue Code.

                  "ERISA EVENT" means (a) (i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC or (ii) the requirements of Section 4043(b)
         of ERISA apply with respect to a contributing sponsor, as defined in
         Section 4001(a)(13) of ERISA, of a Plan, and an event described in
         paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
         reasonably expected to occur with respect to such Plan within the
         following 30 days; (b) the application for a minimum funding waiver
         with respect to a Plan; (c) the provision by the administrator of any
         Plan of a notice of intent to terminate such Plan, pursuant to Section
         4041(a)(2) of ERISA (including any such notice with respect to a plan
         amendment referred to in Section 4041(e) of ERISA); (d) the cessation
         of operations at a facility of any Loan Party or any ERISA Affiliate in
         the circumstances described in Section 4062(e) of ERISA; (e) the
         withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
         Employer Plan during a plan year for which it was a substantial
         employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
         for imposition of a lien under Section 302(f) of ERISA shall have been
         met with respect to any Plan; (g) the adoption of an amendment to a
         Plan requiring the provision of security to such Plan pursuant to
         Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
         to terminate a Plan pursuant to Section 4042 of ERISA, or the
         occurrence of any event or condition described in Section 4042 of ERISA
         that constitutes grounds for the termination of, or the appointment of
         a trustee to administer, such Plan.

                  "EURO" and the sign "E." each means the single currency of
         the Participating Member States of the European Union.

                  "EURO BORROWER" has the meaning specified in the recital of
         parties to this Agreement.

                  "EURO LENDING OFFICE" means, with respect to any Lender Party,
         the office of such Lender Party specified as its "Euro Lending Office"
         opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it becomes a Lender

<PAGE>   21
                                       16

         Party, as the case may be, or such other office of such Lender Party as
         such Lender Party may from time to time specify to the Euro Borrower
         and the Administrative Agent.

                  "EURO RATE" means, for any Interest Period for all Euro Rate
         Advances comprising part of the same Borrowing, (i) an interest rate
         per annum equal to the rate per annum appearing on Reuters Page
         EURIBOR-01 (or any successor page) at 11:00 A.M. (Brussels time) two
         Business Days before the first day of such Interest Period for a period
         equal to such Interest Period, or (ii) if such rate per annum is not
         shown on Reuters Page EURIBOR-01 (or on such other page or service
         specified by the Administrative Agent after consultation with the Euro
         Borrower for the purpose of displaying the Banking Federation of the
         European Union rates for deposits in Euros), the average offered
         quotation by four prime banks in the Euro-zone interbank market to the
         Administrative Agent for Euro-deposits of amounts comparable to the
         principal amount of the Borrowing consisting of Euro Rate Advances with
         maturities comparable to the applicable Interest Period therefor,
         determined at 11:00 A.M. (Brussels time) two Business Days before the
         first day of such Interest Period, provided that, in the event (x) the
         Tranche A Euro Term Lenders shall have notified the Administrative
         Agent in accordance with Section 2.10(c)(ii) or (y) the circumstances
         described in Section 2.10(d)(ii) in respect of Euro Rate Advances shall
         have occurred, the Euro Rate determined pursuant to this definition
         shall instead be the rate per annum determined by the Administrative
         Agent from time to time as the all-in-cost of funds for the
         Administrative Agent to fund Euro Rate Advances with maturities
         comparable to the Interest Period applicable thereto.

                  "EURO RATE ADVANCE" means an Advance that bears interest as
         provided in Section 2.07(a)(iii).

                  "EUROCURRENCY LIABILITIES" has the meaning specified in
         Regulation D of the Board of Governors of the Federal Reserve System,
         as in effect from time to time.

                  "EURODOLLAR LENDING OFFICE" means, with respect to any Lender
         Party, the office of such Lender Party specified as its "Eurodollar
         Lending Office" opposite its name on Schedule I hereto or in the
         Assignment and Acceptance pursuant to which it became a Lender Party
         (or, if no such office is specified, its Domestic Lending Office), or
         such other office of such Lender Party as such Lender Party may from
         time to time specify to the U.S. Borrower and the Administrative Agent.

                  "EURODOLLAR RATE" means, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the rate per annum (rounded upwards, if necessary, to the
         nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
         page) as the London interbank offered rate for deposits in U.S. dollars
         at 11:00 A.M. (London time) two Business Days before the first day of
         such Interest Period for a period equal to such Interest Period
         (provided that, if for any reason such rate is not available,

<PAGE>   22
                                       17

         the term "Eurodollar Rate" shall mean, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, the
         rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
         1%) appearing on Reuters Screen LIBOR Page as the London interbank
         offered rate for deposits in Dollars at approximately 11:00 A.M.
         (London time) two Business Days prior to the first day of such Interest
         Period for a term comparable to such Interest Period; provided,
         however, if more than one rate is specified on Reuters Screen LIBO
         Page, the applicable rate shall be the arithmetic mean of all such
         rates) by (b) a percentage equal to 100% minus the Eurodollar Rate
         Reserve Percentage for such Interest Period.

                  "EURODOLLAR RATE ADVANCE" means an Advance that bears interest
         as provided in Section 2.07(a)(ii).

                  "EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period
         for all Eurodollar Rate Advances comprising part of the same Borrowing
         means the reserve percentage applicable two Business Days before the
         first day of such Interest Period under regulations issued from time to
         time by the Board of Governors of the Federal Reserve System (or any
         successor) for determining the maximum reserve requirement (including,
         without limitation, any emergency, supplemental or other marginal
         reserve requirement) for a member bank of the Federal Reserve System in
         New York City with respect to liabilities or assets consisting of or
         including Eurocurrency Liabilities (or with respect to any other
         category of liabilities related to the basis on which the interest rate
         on Eurodollar Rate Advances is determined) having a term equal to such
         Interest Period.

                  "EURO-ZONE" means the region composed of the Participating
         Member States.

                  "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

                  "EXCESS CASH FLOW" means, for any period, the lesser of (X)

                           (a) the sum of:

                                    (i) Consolidated Net Income of the U.S.
                           Borrower and its Subsidiaries for such period
                           (without taking into account any income or gain from
                           sales, transfers or other dispositions of assets)
                           plus

                                    (ii) the aggregate amount of all Non-cash
                           Charges deducted in arriving at such Consolidated Net
                           Income plus

                                    (iii) if there was a net increase in
                           Consolidated Current Liabilities of the U.S. Borrower
                           and its Subsidiaries during such period, the amount
                           of such net increase plus

<PAGE>   23
                                       18

                                    (iv) if there was a net decrease in
                           Consolidated Current Assets (excluding cash and Cash
                           Equivalents) of the U.S Borrower and its Subsidiaries
                           during such period, the amount of such net decrease
                           plus

                                    (v) any Rollover Amount permitted to be used
                           for Capital Expenditures during such period, to the
                           extent not used during such period less

                           (b) the sum of:

                                    (i) the aggregate amount of all non-cash
                           credits included in arriving at such Consolidated Net
                           Income plus

                                    (ii) if there was a net decrease in
                           Consolidated Current Liabilities of the U.S. Borrower
                           and its Subsidiaries during such period, the amount
                           of such net decrease plus

                                    (iii) if there was a net increase in
                           Consolidated Current Assets (excluding cash and Cash
                           Equivalents) of the U.S. Borrower and its
                           Subsidiaries during such period, the amount of such
                           net increase plus

                                    (iv) the aggregate amount of Capital
                           Expenditures of the U.S. Borrower and its
                           Subsidiaries permitted to be made in accordance with
                           the terms hereof and paid in cash (other than the Net
                           Cash Proceeds from the sale, transfer or other
                           dispositions of assets) during such period plus

                                    (v) the aggregate amount of all regularly
                           scheduled principal payments of Debt for Borrowed
                           Money made during such period plus

                                    (vi) the aggregate amount of all optional
                           prepayments of Advances under the Tranche A Euro Term
                           Facility, Tranche A U.S. Term Facility and the
                           Tranche B Term Facility plus

                                    (vii) (without duplication) the aggregate
                           amount of Investments made in cash during such period
                           (other than with the proceeds of Debt) and otherwise
                           permitted under this Agreement plus

                                    (viii) the Rollover Amount for such period,
                           and

                           (Y) the excess, as of the last day of such period, of
                  the aggregate principal amount of cash and Cash Equivalents of
                  the U.S. Borrower and its Subsidiaries over U.S.$35,000,000.

                  "EXCLUDED TAXES" has the meaning specified in Section 2.12(a).

<PAGE>   24
                                       19

                  "EXCLUDED VOTING INTERESTS" means (i) the Voting Interests
         held by Dresser Industries, Inc. on the Effective Date in the U.S.
         Borrower, (ii) any Voting Interests of the U.S. Borrower issued to or
         any Voting Interests of the U.S. Borrower underlying any warrants,
         rights or options granted to or for the benefit of management of the
         U.S. Borrower or any of its Subsidiaries, (iii) the Voting Interests of
         the U.S. Borrower (up to 10% in the aggregate of the Voting Interests
         of the U.S. Borrower on a fully-diluted basis) issued as full or
         partial consideration in connection with Permitted Acquisitions, and
         (iv) the Voting Interests of the U.S. Borrower issued as full or
         partial consideration in connection with the Pending Acquisition.

                  "EXISTING DEBT" means Debt of each Loan Party and its
         Subsidiaries outstanding immediately before giving effect to the
         consummation of the Transaction.

                  "EXTRAORDINARY RECEIPT" means any cash received by or paid to
         or for the account of any Person that under GAAP is required to be
         reported as an extraordinary item, excluding any sale, lease, transfer
         or other disposition of assets but including, without limitation, any
         such extraordinary items resulting from (i) pension plan reversions,
         (ii) proceeds of property insurance in excess of, in the aggregate,
         U.S.$1,000,000, (iii) condemnation awards in excess of, in the
         aggregate, U.S.$1,000,000 (and payments in lieu thereof), and (iv)
         indemnity payments received pursuant to Article XII of the Agreement
         and Plan of Recapitalization in an amount in excess of, in the
         aggregate, U.S.$1,000,000; provided, however, that an Extraordinary
         Receipt shall not include cash receipts received from proceeds of
         insurance, condemnation awards (or payments in lieu thereof) or
         indemnity payments to the extent that such proceeds, awards or payments
         (A) in respect of loss or damage to equipment, fixed assets or real
         property are applied (or in respect of which expenditures were
         previously incurred) to replace or repair the equipment, fixed assets
         or real property in respect of which such proceeds were received, so
         long as such application is made within 12 months after the occurrence
         of such damage or loss or (B) are received by any Person in respect of
         any third party claim against such Person and applied to pay (or to
         reimburse such Person for its prior payment of) such claim and the
         costs and expenses of such Person with respect thereto.

                  "FACILITY" means the Tranche A U.S. Term Facility, the Tranche
         A Euro Term Facility, the Tranche B Term Facility, the Revolving Credit
         Facility, the Swing Line Facility or the Letter of Credit Facility.

                  "FEDERAL FUNDS RATE" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average of the rates on overnight Federal funds transactions
         with members of the Federal Reserve System arranged by Federal funds
         brokers, as published for such day (or, if such day is not a Business
         Day, for the next preceding Business Day) by the Federal Reserve Bank
         of New York, or, if such rate is not so published for any day that is a
         Business Day, the average of the quotations for such day for such
         transactions received by the

<PAGE>   25
                                       20

         Administrative Agent from three Federal funds brokers of recognized
         standing selected by it.

                  "FEE LETTER" means the fee letter dated January 30, 2001 and
         entered into by and between the U.S. Borrower and the Administrative
         Agent, as amended.

                  "FISCAL YEAR" means a fiscal year of the Parent and its
         Consolidated Subsidiaries ending on December 31 in any calendar year.

                  "FOREIGN SUBSIDIARY" means a Subsidiary organized under the
         laws of a jurisdiction other than the United States or any state
         thereof or the District of Columbia.

                  "FUNDED DEBT" of any Person, means Debt in respect of the
         Advances, in the case of each of the Borrowers, and all other Debt of
         such Person that by its terms matures more than one year after the date
         of determination or matures within one year from such date but is
         renewable or extendible, at the option of such Person, to a date more
         than one year after such date or arises under a revolving credit or
         similar agreement that obligates the lender or lenders to extend credit
         during a period of more than one year after such date, including,
         without limitation, all amounts of Funded Debt of such Person required
         to be paid or prepaid within one year after the date of determination.

                  "GAAP" has the meaning specified in Section 1.03.

                  "GUARANTIES" means the Parent Guaranty and the Subsidiary
         Guaranty.

                  "GUARANTORS" means the Parent and the Subsidiary Guarantors.

                  "HAZARDOUS MATERIALS" means (a) petroleum or petroleum
         products, by-products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls and radon gas
         and (b) any other chemicals, materials or substances designated,
         classified or regulated as hazardous or toxic or as a pollutant or
         contaminant under any Environmental Law.

                  "HEDGE AGREEMENTS" means interest rate swap, cap or collar
         agreements, interest rate future or option contracts, currency swap
         agreements, currency future or option contracts and other hedging
         agreements.

                  "HEDGE BANK" means any Lender Party or an Affiliate of a
         Lender Party in its capacity as a party to a Secured Hedge Agreement.

                  "INCREASE DATES" has the meaning specified in Section 2.17.

                  "INCREASING LENDER" has the meaning specified in Section 2.17.

                  "INDEMNIFIED PARTY" has the meaning specified in Section
         9.04(b).

<PAGE>   26
                                       21

                  "INDENTURE" means the indenture dated as of the date hereof,
         and entered into by and among, the U.S. Borrower, the Subsidiary
         Guarantors and State Street Bank and Trust Company, as trustee, as such
         indenture may be amended, supplemented or otherwise modified from time
         to time in accordance with its terms to the extent permitted by Section
         5.02(p).

                  "INFORMATION MEMORANDUM" means the information memorandum
         dated March 2001 used by the Joint Lead Arrangers in connection with
         the syndication of the Commitments.

                  "INITIAL EXTENSION OF CREDIT" means the earlier to occur of
         the initial Borrowing and the initial issuance of a Letter of Credit
         hereunder.

                  "INITIAL ISSUING BANK" and "INITIAL LENDERS" each has the
         meaning specified in the recital of parties to this Agreement.

                  "INSUFFICIENCY" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "INTEREST COVERAGE RATIO" means, for any period, the ratio of
         (a) Consolidated EBITDA of the U.S. Borrower and its Subsidiaries to
         (b) the sum of (i) Consolidated Interest Expense of the U.S. Borrower
         and its Subsidiaries and (ii) without duplication, for the U.S.
         Borrower and its Subsidiaries, determined on a Consolidated basis, the
         aggregate amount of dividends paid or payable with respect to Preferred
         Interests that are not Qualified Preferred Stock, during such period.

                  "INTEREST EXPENSE" means, in each case of the U.S. Borrower
         and each of its Subsidiaries, for any period, the sum (without
         duplication) of: (i) the aggregate of all cash and non-cash interest
         expense with respect to all outstanding Debt, including the net costs
         associated with interest rate Hedge Agreements, but excluding the
         amortization or write-off of debt issuance costs, (ii) the interest
         expense that was capitalized during such period, and (iii) the interest
         component of Capitalized Leases paid, accrued and/or scheduled to be
         paid or accrued, all as determined in accordance with GAAP for such
         period, provided that, for purposes of the last quarter of Fiscal Year
         2000 and the first quarter of Fiscal Year 2001, Consolidated Interest
         Expense of the U.S. Borrower and its Subsidiaries shall mean, for each
         of such fiscal quarters, U.S.$22,000,000.

                  "INTEREST PERIOD" means (A) for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period commencing on the
         date of such Eurodollar Rate Advance or the date of the Conversion of
         any Base Rate Advance into such Eurodollar Rate Advance, and ending on
         the last day of the period selected by the U.S. Borrower pursuant to
         the provisions below and, thereafter, each subsequent period commencing
         on the last day of the immediately preceding Interest Period and ending
         on the last day of the period selected by the U.S. Borrower pursuant to
         the provisions below, and (B) for each

<PAGE>   27
                                       22

         Euro Rate Advance comprising part of the same Borrowing, the period
         commencing on the date of such Euro Rate Advance and ending on the last
         day of the period selected by the Euro Borrower pursuant to the
         provisions below and, thereafter, each subsequent period commencing on
         the last day of the immediately preceding Interest Period and ending on
         the last day of the period selected by the Euro Borrower pursuant to
         the provisions below. The duration of each Interest Period with respect
         to any Euro Rate or Eurodollar Rate Advances shall be one, two, three
         or six months, or, to the extent made available by all the Appropriate
         Lenders, twelve months, as the Applicable Borrower may, upon notice
         received by the Administrative Agent not later than 11:00 A.M. (New
         York City time) on the third Business Day prior to the first day of
         such Interest Period, select; provided, however, that:

                           (a) the U.S. Borrower may not select any Interest
                  Period with respect to any Eurodollar Rate Advance under a
                  Facility that ends after any principal repayment installment
                  date for such Facility unless, after giving effect to such
                  selection, the aggregate principal amount of Base Rate
                  Advances and of Eurodollar Rate Advances having Interest
                  Periods that end on or prior to such principal repayment
                  installment date for such Facility shall be at least equal to
                  the aggregate principal amount of Advances under such Facility
                  due and payable on or prior to such date;

                           (b) the Euro Borrower may not select any Interest
                  Period with respect to any Euro Rate Advance under a Facility
                  that ends after any principal repayment installment date for
                  such Facility unless, after giving effect to such selection,
                  the aggregate principal amount of Euro Rate Advances having
                  Interest Periods that end on or prior to such principal
                  repayment installment date for such Facility shall be at least
                  equal to the aggregate principal amount of Advances under such
                  Facility due and payable on or prior to such date;

                           (c) Interest Periods commencing on the same date for
                  Euro Rate Advances or Eurodollar Rate Advances comprising part
                  of the same Borrowing shall be of the same duration;

                           (d) whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day, provided, however, that, if
                  such extension would cause the last day of such Interest
                  Period to occur in the next following calendar month, the last
                  day of such Interest Period shall occur on the next preceding
                  Business Day;

                           (e) whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of

<PAGE>   28
                                       23

                  months in such Interest Period, such Interest Period shall end
                  on the last Business Day of such succeeding calendar month;
                  and

                           (f) notwithstanding anything provided herein, the
                  Applicable Borrower shall only be entitled to select an
                  Interest Period of seven days with regard to any Euro Rate or
                  Eurodollar Rate Advances to be made as of the Initial
                  Extension of Credit.

                  "INTERNAL REVENUE CODE" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         rulings issued thereunder.

                  "INVENTORY" means all Inventory referred to in Section 1(b) of
         the Security Agreement.

                  "INVESTMENT" in any Person means any loan or advance to such
         Person, any purchase or other acquisition of any Equity Interests or
         Debt or the assets comprising a division or business unit or a
         substantial part or all of the business of such Person, any capital
         contribution to such Person or any other direct or indirect investment
         in such Person, including, without limitation, any acquisition by way
         of a merger or consolidation and any arrangement pursuant to which the
         investor incurs Debt of the types referred to in clause (i) or (j) of
         the definition of "Debt" in respect of such Person.

                  "ISSUING BANK" means the Initial Issuing Bank and any Eligible
         Assignee to which a Letter of Credit Commitment hereunder has been
         assigned pursuant to Section 9.07 so long as such Eligible Assignee
         expressly agrees to perform in accordance with their terms all of the
         obligations that by the terms of this Agreement are required to be
         performed by it as an Issuing Bank and notifies the Administrative
         Agent of its Applicable Lending Office and the amount of its Letter of
         Credit Commitment (which information shall be recorded by the
         Administrative Agent in the Register), for so long as such Initial
         Issuing Bank or Eligible Assignee, as the case may be, shall have a
         Letter of Credit Commitment.

                  "IPO" means a bona fide underwritten initial public offering
         of Voting Interests of the U.S. Borrower, with aggregate gross proceeds
         of at least U.S.$100,000,000.

                  "JOINT LEAD ARRANGERS" means each of MSSF and CSFB.

                  "L/C CASH COLLATERAL ACCOUNT" has the meaning specified in the
         Security Agreement.

                  "L/C RELATED DOCUMENTS" has the meaning specified in Section
         2.04(f)(ii).

                  "LENDER PARTY" means any Lender, the Swing Line Bank or the
         Issuing Bank.

<PAGE>   29
                                       24

                  "LENDERS" means the Initial Lenders and each Person that shall
         become a Lender hereunder pursuant to Section 9.07 or pursuant to
         Section 2.17 or pursuant to any amendment to this Agreement, for so
         long as such Initial Lender or Person, as the case may be, shall be a
         party to this Agreement.

                  "LETTER OF CREDIT ADVANCE" means an advance made by the
         Issuing Bank or any Revolving Credit Lender pursuant to Section
         2.03(c).

                  "LETTER OF CREDIT AGREEMENT" has the meaning specified in
         Section 2.03(a).

                  "LETTER OF CREDIT COMMITMENT" means, with respect to the
         Issuing Bank at any time, the amount set forth opposite the Issuing
         Bank's name on Schedule I hereto under the caption "Letter of Credit
         Commitment" or, if the Issuing Bank has entered into one or more
         Assignment and Acceptances, set forth for the Issuing Bank in the
         Register maintained by the Administrative Agent pursuant to Section
         9.07(d) as the Issuing Bank's "Letter of Credit Commitment", as such
         amount may be reduced at or prior to such time pursuant to Section
         2.05.

                  "LETTER OF CREDIT FACILITY" means, at any time, an amount
         equal to the lesser of (a) the amount of the Issuing Bank's Letter of
         Credit Commitment at such time and (b) U.S.$50,000,000, as such amount
         may be reduced at or prior to such time pursuant to Section 2.05.

                  "LETTERS OF CREDIT" has the meaning specified in Section
         2.01(f).

                  "LIEN" means any lien, security interest or other charge or
         encumbrance of any kind, or any other type of preferential arrangement,
         including, without limitation, the lien or retained security title of a
         conditional vendor and any easement, right of way or other encumbrance
         on title to real property.

                  "LOAN DOCUMENTS" means (a) for purposes of this Agreement and
         the Notes and any amendment, supplement or modification hereof or
         thereof, (i) this Agreement, (ii) the Notes, (iii) the Guaranties, (iv)
         the Collateral Documents and (v) the Fee Letter, (vi) each Letter of
         Credit Agreement and (b) for purposes of the Guaranties and the
         Collateral Documents and for all other purposes other than for purposes
         of this Agreement and the Notes, (i) this Agreement, (ii) the Notes,
         (iii) the Guaranties, (iv) the Collateral Documents, (v) the Fee
         Letter, (vi) each Letter of Credit Agreement and (vii) each Secured
         Hedge Agreement, in each case as amended.

                  "LOAN PARTIES" means each of the Borrowers and each of the
         Guarantors.

                  "MARGIN STOCK" has the meaning specified in Regulation U.

<PAGE>   30
                                       25

                  "MATERIAL ADVERSE CHANGE" means any material adverse change in
         the business, condition (financial or otherwise), operations,
         performance or properties of the Parent and its Subsidiaries, taken as
         a whole.

                  "MATERIAL ADVERSE EFFECT" means a material adverse effect on
         (a) the business, condition (financial or otherwise), operations,
         performance or properties of the Parent and its Subsidiaries, taken as
         a whole, (b) the rights and remedies of any Agent or any Lender Party
         under any Transaction Document or (c) the ability of any Loan Party to
         perform its material Obligations under any Loan Document.

                  "MATERIAL SUBSIDIARY" means, at any time, with respect to a
         Loan Party, a Subsidiary of such Loan Party having assets in an amount
         equal to at least 5% of the amount of total Consolidated assets of such
         Loan Party and its Subsidiaries (determined as of the last day of the
         most recent fiscal quarter of such Loan Party) or revenues or net
         income in an amount equal to at least 5% of the amount of total
         Consolidated revenues or net income of such Loan Party and its
         Subsidiaries for the 12-month period ending on the last day of the most
         recent fiscal quarter of such Loan Party; provided, however, that, (x)
         the aggregate assets of all non-Material Subsidiaries of such Loan
         Party shall not, at any time, exceed 10% of the amount of total
         Consolidated assets of such Loan Party and its Subsidiaries (determined
         as of the last day of the most recent fiscal quarter of such Loan
         Party) and (y) the aggregate revenues or net income of all non-Material
         Subsidiaries of such Loan Party shall not exceed 10% of the amount of
         total Consolidated revenues or net income of such Loan Party and its
         Subsidiaries for the 12-month period ending on the last day of the most
         recent fiscal quarter of such Loan Party.

                  "MORTGAGE POLICIES" has the meaning specified in Section
         5.02(n).

                  "MORTGAGES" has the meaning specified in Section 5.02(n).

                  "MSSF" has the meaning specified in the recital of parties
         hereto.

                  "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
         Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
         Affiliate is making or accruing an obligation to make contributions, or
         has within any of the preceding five plan years made or accrued an
         obligation to make contributions.

                  "MULTIPLE EMPLOYER PLAN" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of any Loan Party or any ERISA Affiliate and at least one
         Person other than the Loan Parties and the ERISA Affiliates or (b) was
         so maintained and in respect of which any Loan Party or any ERISA
         Affiliate could reasonably be expected to have liability under Section
         4064 or 4069 of ERISA in the event such plan has been or were to be
         terminated.

<PAGE>   31
                                       26

                  "NET CASH PROCEEDS" means, with respect to any sale, lease,
         transfer or other disposition of any asset or the incurrence or
         issuance of any Debt or the sale or issuance of any Equity Interests to
         any Person other than by the U.S. Borrower to the Parent or by any
         Subsidiary of the U.S. Borrower to the U.S. Borrower or another
         Subsidiary of the U.S. Borrower (including, without limitation, receipt
         of any capital contribution) by any Person, or any Extraordinary
         Receipt received by or paid to or for the account of any Person, the
         aggregate amount of cash received from time to time (whether as initial
         consideration or through payment or disposition of deferred
         consideration) by or on behalf of such Person in connection with such
         transaction after deducting therefrom only (without duplication) (a)
         reasonable and customary brokerage commissions, underwriting fees and
         discounts, legal fees, finder's fees and other similar fees and
         commissions, (b) the amount of taxes payable in connection with or as a
         result of such transaction and (c) the amount of any Debt secured by a
         Lien on such asset that, by the terms of the agreement or instrument
         governing such Debt, is required to be repaid (and that is repaid) upon
         such disposition, in each case to the extent, but only to the extent,
         that the amounts so deducted are, at the time of receipt of such cash,
         actually paid to a Person that is not an Affiliate of such Person or
         any Loan Party or any Affiliate of any Loan Party and are properly
         attributable to such transaction or to the asset that is the subject
         thereof; provided, however, that in the case of taxes that are
         deductible under clause (b) above but for the fact that, at the time of
         receipt of such cash, such taxes have not been actually paid or are not
         then payable, such Loan Party or such Subsidiary may deduct an amount
         (the "RESERVED AMOUNT") equal to the amount reserved in accordance with
         GAAP for such Loan Party's or such Subsidiary's reasonable estimate of
         such taxes, other than taxes for which such Loan Party or such
         Subsidiary is indemnified, provided further, however, that, at the time
         such taxes are paid, an amount equal to the amount, if any, by which
         the Reserved Amount for such taxes exceeds the amount of such taxes
         actually paid shall constitute "Net Cash Proceeds" of the type for
         which such taxes were reserved for all purposes hereunder; and provided
         further still that Net Cash Proceeds from the sale, lease, transfer or
         other disposition of any asset or from Extraordinary Receipts shall be
         determined (and, for the purposes of Section 2.05(b), be deemed to have
         been received) as of the first anniversary of the actual receipt
         thereof and shall not include any amount of cash proceeds received in
         connection with such transaction to the extent such cash proceeds are
         reinvested in the business of the U.S. Borrower or any of its
         Subsidiaries, so long as application is made within 12 months after the
         actual receipt thereof.

                  "NET INCOME" means, in each case of the U.S. Borrower and each
         of its Subsidiaries, for any period, the aggregate net income (or loss)
         for such period, determined in accordance with GAAP and without any
         deduction in respect of distributions with respect to Preferred
         Interests; provided that there shall be excluded from the definition of
         Net Income, in each case of the U.S. Borrower and each of its
         Subsidiaries: (i) gains and losses from Asset Sales (without regard to
         the U.S.$5,000,000 limitation set forth in the definition thereof) and
         the related tax effects, (ii) gains and losses due solely to
         fluctuations in currency values and the related tax effects, (iii) all

<PAGE>   32
                                       27

         extraordinary, unusual or nonrecurring charges, gains and losses
         (including, without limitation, all restructuring costs and any expense
         or charge related to the repurchase of Equity Interests or warrants or
         options to purchase Equity Interests) and the related tax effects, (iv)
         the net income (or loss) of any Person acquired in a pooling of
         interests transaction accrued prior to the date it becomes a Subsidiary
         or is merged or consolidated with or into the U.S. Borrower or any
         Subsidiary of the U.S. Borrower, (v) the net income (or loss) of any
         Subsidiary to the extent that the declaration of dividends or similar
         distributions by that Subsidiary of that income is prohibited by
         contract, operation of law or otherwise, (vi) the net loss of any
         Person, other than a Subsidiary of the U.S. Borrower, (vii) the net
         income of any Person, other than a Subsidiary of the U.S. Borrower,
         except to the extent of cash dividends or distributions paid to the
         U.S. Borrower or a Subsidiary of the U.S. Borrower by such Person,
         (viii) in the case of a successor to the U.S. Borrower or any of its
         Subsidiaries by consolidation or merger or as a transferee of the U.S.
         Borrower's or such Subsidiary's assets, any earnings of the successor
         corporation prior to such consolidation, merger or transfer of assets,
         and (ix) any non-cash compensation charges, including any arising from
         existing stock options resulting from any merger or recapitalization
         transaction, all as determined in accordance with GAAP for such period.

                  "NON-CASH CHARGES" means, in each case of the U.S. Borrower
         and each of its Subsidiaries, for any period, the aggregate
         depreciation, amortization and other non-cash charges and expenses
         reducing Net Income of the U.S. Borrower or any of its Subsidiaries for
         such period, all as determined on a consolidated basis in accordance
         with GAAP (excluding any such charges that require an accrual of or a
         reserve for cash payments for any future period other than accruals or
         reserves in the ordinary course of business or associated with
         mandatory repurchases of Equity Interests). Notwithstanding the
         foregoing, accruals in respect of payables in the ordinary course of
         business shall be deemed not to constitute a "Non-cash Charge."

                  "NON-U.S. SECURITY DOCUMENTS" has the meaning specified in
         Section 3.01(a)(iv).

                  "NOTE" means a Tranche A U.S. Term Note, a Tranche A Euro Term
         Note, a Tranche B Term Note or a Revolving Credit Note.

                  "NOTICE OF BORROWING" has the meaning specified in Section
         2.02(a).

                  "NOTICE OF ISSUANCE" has the meaning specified in Section
         2.03(a).

                  "NOTICE OF RENEWAL" has the meaning specified in Section
         2.01(f).

                  "NOTICE OF TERMINATION" has the meaning specified in Section
         2.01(f).

                  "NPL" means the National Priorities List under CERCLA.

<PAGE>   33
                                       28

                  "OBLIGATION" means, with respect to any Person, any payment,
         performance or other obligation of such Person of any kind, including,
         without limitation, any liability of such Person on any claim, whether
         or not the right of any creditor to payment in respect of such claim is
         reduced to judgment, liquidated, unliquidated, fixed, contingent,
         matured, disputed, undisputed, legal, equitable, secured or unsecured,
         and whether or not such claim is discharged, stayed or otherwise
         affected by any proceeding referred to in Section 6.01(f). Without
         limiting the generality of the foregoing, the Obligations of any Loan
         Party under the Loan Documents shall include the obligation to pay
         principal, interest, Letter of Credit commissions, charges, expenses,
         fees, attorneys' fees and disbursements, indemnities and other amounts
         payable by such Loan Party under any Loan Document.

                  "OPEN YEAR" has the meaning specified in Section 4.01(8)(iii).

                  "OTHER TAXES" has the meaning specified in Section 2.12(b).

                  "PARENT" has the meaning specified in the recital of parties
         to this Agreement.

                  "PARENT GUARANTY" means the guaranty of the Parent set forth
         in Article VIII.

                  "PARTICIPATING MEMBER STATES" means a member state of the
         European Communities that adopts or has adopted the euro as its
         currency in accordance with legislation of the European Union relating
         to the European Economic and Monetary Union.

                  "PBGC" means the Pension Benefit Guaranty Corporation (or any
         successor).

                  "PENDING ACQUISITION" means the acquisition by the U.S.
Borrower of all or substantially all of the Equity Interests in, or assets of,
Subsidiaries of Affiliates of First Reserve Corporation, which Subsidiaries are
primarily engaged in the production of valve equipment, complementing the U.S.
Borrower's existing product line, which acquisition shall satisfy either of the
following conditions:

                  (a) a majority of the disinterested members of the board of
         directors of the U.S. Borrower shall determine in good faith that such
         acquisition is on terms that are not materially less favorable than
         those that might reasonably have been obtained in a comparable
         transaction at such time on an arm's-length basis from a Person that is
         not an Affiliate of the U.S. Borrower; or

                  (b) the board of directors of the U.S. Borrower shall obtain
         an opinion from a nationally recognized investment banking, appraisal
         or accounting firm that such acquisition is on terms that are not
         materially less favorable than those that might reasonably have been
         obtained in a comparable transaction at such time on an arm's-length
         basis from a Person that is not an Affiliate of the U.S. Borrower.

<PAGE>   34
                                       29

                  "PERMITTED ACQUISITION" means any purchase by the U.S.
         Borrower or any of its Subsidiaries of all or substantially all of the
         Equity Interests in, or assets of, or business conducted by, another
         Person or the merger, consolidation or amalgamation of any Person with
         or into the U.S. Borrower or any of its Subsidiaries if all of the
         following conditions are met:

                           (a) immediately before and after giving effect to
                  such purchase, merger, consolidation or amalgamation, no
                  Default has occurred and is continuing or would result
                  therefrom;

                           (b) the Person or business acquired in such
                  acquisition shall not be engaged in any material respect in
                  any business other than a Permitted Business;

                           (c) immediately before and after giving effect to
                  such purchase, merger, consolidation or amalgamation, the U.S.
                  Borrower shall be in pro forma compliance with the covenants
                  contained in Section 5.04, calculated based on the financial
                  statements most recently delivered to the Lender Parties
                  pursuant to Section 5.03 and as though such acquisition had
                  occurred at the beginning of the four-quarter period covered
                  thereby, as evidenced by a certificate of the Chief Financial
                  Officer of the U.S. Borrower delivered to the Lender Parties
                  demonstrating such compliance;

                           (d) all transactions related thereto are consummated
                  in compliance, in all material respects, with applicable
                  requirements of law;

                           (e) all actions, if any, required to be taken
                  hereunder with respect to any acquired or newly formed
                  Subsidiary and its property are taken as and when required;
                  and

                           (f) the aggregate consideration for such acquisition,
                  when added to all such consideration for all such prior
                  acquisitions (not taking into account the Pending
                  Acquisition), shall not exceed the sum of (i) U.S.$95,000,000
                  and (ii) the lesser of (A) U.S.$50,000,000 and (B) the
                  aggregate amount of all payments on the Tranche A U.S. Term
                  Advances, the Tranche A Euro Term Advances and the Tranche B
                  Term Advances previously made from (x) Excess Cash Flow, (y)
                  Net Cash Proceeds from any sale, lease transfer or other
                  disposition of any assets, or (z) optional prepayments.

                  Notwithstanding anything to the contrary contained in this
         definition of Permitted Acquisition, an acquisition which does not
         otherwise meet the requirements set forth above shall constitute a
         Permitted Acquisition if, and to the extent, the Required Lenders agree
         in writing that such acquisition shall constitute a Permitted
         Acquisition for purposes of this Agreement.

<PAGE>   35
                                       30

                  "PERMITTED BUSINESS" shall mean each business conducted by the
         Parent, the U.S. Borrower and its Subsidiaries on the Effective Date
         and any other business or activity that is related thereto or a
         reasonable extension thereof.

                  "PERMITTED ENCUMBRANCES" has the meaning specified in clause
         (ii) or (ix) of the definition of "Permitted Liens", and as to which no
         enforcement, collection, execution, levy or foreclosure procedure shall
         have been commenced.

                  "PERMITTED INVESTORS" shall mean First Reserve Corporation,
         its Affiliates and any general or limited partners of First Reserve
         Corporation on the Effective Date, Odyssey Investment Partners Fund,
         LP, its Affiliates and any general or limited partners of Odyssey
         Investment Partners Fund, LP on the Effective Date.

                  "PERMITTED LIENS" means such of the following as to which no
         enforcement, collection, execution, levy or foreclosure proceeding
         shall have been commenced: (i) Liens for taxes, assessments and
         governmental charges or levies that are not yet due and payable or are
         being contested in good faith and by appropriate proceedings and as to
         which reserves shall be maintained in accordance with Section 5.01(b),
         (ii) statutory or common law Liens of landlords and carriers,
         warehousemen, mechanics, suppliers, materialmen, repairmen and other
         similar Liens, arising in the ordinary course of business for sums
         which either (x) do not in the aggregate materially detract from the
         value of such property or assets or materially impair the use thereof
         in the operation of the business of the U.S. Borrower or any of its
         Subsidiaries or (y) are not yet delinquent or are being contested in
         good faith by appropriate proceedings, (iii) Liens incurred or deposits
         made in the ordinary course of business in connection with workers'
         compensation, unemployment insurance and other types of social security
         laws or regulations, (iv) Liens incurred or deposits made to secure the
         performance of tenders, bids, leases, statutory or regulatory
         obligations, surety and appeal bonds, government contracts, performance
         and return-of-money bonds and other obligations of a like-nature, in
         each case in the ordinary course of business, and a bank's unexercised
         right of set-off with respect to deposits made in the ordinary course,
         (v) licenses, leases or subleases granted to third Persons in the
         ordinary course of business not interfering in any material respect
         with the business of the U.S. Borrower or any of its Subsidiaries,
         taken as a whole, (vi) any interest or title of a lessor or licensor in
         any property subject to any lease or license in the ordinary course of
         such lessor's or licensor's business and covering only the assets so
         leased or licensed, (vii) Liens arising out of judgments, decrees or
         attachments (other than in circumstances constituting an Event of
         Default) in respect of which, within 5 Business Days after the
         enforcement of such Lien, the U.S. Borrower or any of its Subsidiaries
         shall in good faith be prosecuting an appeal or proceedings for review
         and shall have secured a subsisting stay of execution pending such
         appeal or proceedings for review, (viii) Liens in favor of customs or
         revenue authorities arising as a matter of law to secure payment of
         customs duties in connection with the importation of goods, (ix)
         easements, rights-of-way, restrictions and other similar encumbrances

<PAGE>   36
                                       31

         incurred in the ordinary course of business that, in the aggregate, are
         not substantial in amount and that do not in any case materially
         detract from the value of the property subject thereto or materially
         interfere with the ordinary conduct of the business of the U.S.
         Borrower or any Subsidiary, and (x) Liens upon specific items of
         inventory or other goods and proceeds of any Person securing such
         Person's obligation in respect of bankers' acceptances issued or
         created for the account of such Person to facilitate the purchase,
         shipment or storage of such inventory or other goods.

                  "PERMITTED SUBORDINATED DEBT" shall mean either (a) Debt for
         Borrowed Money of the U.S. Borrower or the Subsidiary Guarantors
         incurred to pay or finance purchase consideration for a Permitted
         Acquisition or the Pending Acquisition or to finance any repayment of
         outstanding Tranche A U.S. Term Advances, Tranche A Euro Term Advances
         and Tranche B Term Advances, the governing documents of which either
         (x) contain covenants, defaults, subsidiary guarantees and
         subordination provisions at least as favorable (taken as a whole) to
         the Lender Parties as those set forth in the Senior Subordinated Debt
         Documents and do not require any principal payments prior to the tenth
         anniversary of the Effective Date (except in the case of a Change of
         Control or any sale, lease, transfer or other disposition of any assets
         on the terms set forth in the Senior Subordinated Debt Documents) or
         (y) contain terms and conditions that are otherwise reasonably
         satisfactory to the Required Lenders or (b) Preferred Interests of the
         U.S. Borrower that are not Qualified Preferred Stock, provided, in each
         case, that immediately after the incurrence or issuance of such Debt
         the U.S. Borrower shall be in pro forma compliance with the covenants
         contained in Section 5.04, calculated based on the financial statements
         most recently delivered to the Lender Parties pursuant to Section 5.03,
         as evidenced by a certificate of the Chief Financial Officer of the
         U.S. Borrower delivered to the Lender Parties demonstrating such
         compliance.

                  "PERMITTED SUBORDINATED REFINANCING DEBT" shall mean Debt of
         the U.S. Borrower or the Subsidiary Guarantors issued or given in
         exchange for, or all the proceeds of which are used to refinance, all
         or any portion of any outstanding Senior Subordinated Debt or Permitted
         Subordinated Debt, so long as (a) such Debt has weighted average life
         to maturity greater than or equal to the weighted average life to
         maturity of the Senior Subordinated Notes, (b) such refinancing does
         not (i) increase the amount of such Debt outstanding immediately prior
         to such refinancing or (ii) add guarantors, obligors or security from
         that which applied to the Senior Subordinated Notes, (c) such Debt has
         substantially the same (or, from the perspective of the Lender Parties,
         more favorable) subordination provisions, if any, as applied to the
         Senior Subordinated Notes, (d) all other terms of such refinancing
         (including, without limitation, with respect to the redemption
         provisions, maturities, covenants, defaults and remedies), are not,
         taken as a whole, materially less favorable to the Lender Parties than
         those previously existing with respect to the Senior Subordinated
         Notes, (e) the interest rate applicable to any such refinancing does
         not exceed the then applicable market interest rate, and (f) no Default
         or Event of Default shall be in existence of the time of such

<PAGE>   37
                                       32

         refinancing or immediately after giving effect thereto, provided, in
         each case, that immediately after the incurrence or issuance of such
         Debt the U.S. Borrower shall be in pro forma compliance with the
         covenants contained in Section 5.04, calculated based on the financial
         statements most recently delivered to the Lender Parties pursuant to
         Section 5.03, as evidenced by a certificate of the Chief Financial
         Officer of the U.S. Borrower delivered to the Lender Parties
         demonstrating such compliance.

                  "PERSON" means an individual, partnership, corporation
         (including a business trust), limited liability company, joint stock
         company, trust, unincorporated association, joint venture or other
         entity, or a government or any political subdivision or agency thereof.

                  "PLAN" means a Single Employer Plan or a Multiple Employer
         Plan.

                  "PLEDGED DEBT" has the meaning specified in the Security
         Agreement.

                  "PLEDGED SHARES" has the meaning specified in the Security
         Agreement.

                  "PREFERRED INTERESTS" means, with respect to any Person,
         Equity Interests issued by such Person that are entitled to a
         preference or priority over any other Equity Interests issued by such
         Person upon any distribution of such Person's property and assets,
         whether by dividend or upon liquidation.

                  "PRO FORMA ADJUSTED EBITDA" for any period, means Consolidated
         EBITDA of the U.S. Borrower and its Subsidiaries for such period
         adjusted to give effect on a pro forma basis for such period to any
         sale, transfer, lease or other disposition of assets permitted by the
         terms of this Agreement or a Permitted Acquisition or the Pending
         Acquisition (including, without limitation, (A) any Permitted
         Acquisition or the Pending Acquisition giving rise to the need to make
         such adjustments as a result of the U.S. Borrower or one of its
         Subsidiaries (including any Person who becomes a Subsidiary as a result
         of the Permitted Acquisition or Pending Acquisition) incurring,
         assuming or otherwise being liable for Debt that was outstanding
         immediately prior to the consummation of such Permitted Acquisition or
         Pending Acquisition and was not incurred in connection with, or in
         contemplation of, such Permitted Acquisition or Pending Acquisition,
         and (B) any Consolidated EBITDA including any pro forma expense and
         cost reductions and other operating improvements that have occurred or
         are reasonably expected to occur in the reasonable judgment of the
         Chief Financial Officer of the U.S. Borrower (regardless of whether
         those cost savings or operating improvements could then be reflected in
         pro forma financial statements in accordance with GAAP, Regulation S-X
         of the Securities Act of 1933 or any other regulation or policy of the
         SEC related thereto) attributable to the assets which are the subject
         of such sale, transfer, lease, other disposition or acquisition and
         without regard to clause (iv) of the definition of Net Income)
         occurring during the four fiscal quarter period ended on the last date
         of such

<PAGE>   38
                                       33

         period, as if such sale, transfer, lease, other disposition or
         acquisition occurred on the first date of such four fiscal quarter
         period.

                  "PRO RATA SHARE" of any amount means, with respect to any
         Revolving Credit Lender at any time, the product of such amount times a
         fraction the numerator of which is the amount of such Lender's
         Revolving Credit Commitment at such time (or, if the Commitments shall
         have been terminated pursuant to Section 2.05 or Section 6.01, such
         Lender's Revolving Credit Commitment as in effect immediately prior to
         such termination) and the denominator of which is the Revolving Credit
         Facility at such time (or, if the Commitments shall have been
         terminated pursuant to Section 2.05 or Section 6.01, the Revolving
         Credit Facility as in effect immediately prior to such termination).

                  "QUALIFIED PREFERRED STOCK" shall mean any Preferred Interest
         of the U.S. Borrower in respect of which no dividends thereon (other
         than dividends payable solely in kind) shall be required to be paid at
         any time or to the extent that such payment would be prohibited by the
         terms of this Agreement, and that is not redeemable prior to the tenth
         anniversary of the Effective Date under any circumstance, except (i)
         for Permitted Subordinated Debt or (ii) upon a Change of Control, if
         payment of the redemption price upon a Change of Control is required
         and only if permitted by the terms of this Agreement.

                  "RECAPITALIZATION" has the meaning specified in the
         Preliminary Statements.

                  "RECEIVABLES" means all Receivables referred to in Section
         1(c) of the Security Agreement.

                  "REDEEMABLE" means, with respect to any Equity Interest, any
         Debt or any other right or Obligation, any such Equity Interest, Debt,
         right or Obligation that (a) the issuer has undertaken to redeem at a
         fixed or determinable date or dates, whether by operation of a sinking
         fund or otherwise, or upon the occurrence of a condition not solely
         within the control of the issuer or (b) is redeemable at the option of
         the holder.

                  "REDUCTION AMOUNT" has the meaning specified in Section
         2.06(b)(v).

                  "REGISTER" has the meaning specified in Section 9.07(d).

                  "REGULATION U" means Regulation U of the Board of Governors of
         the Federal Reserve System, as in effect from time to time.

                  "RELATED DOCUMENTS" means the Agreement and Plan of
         Recapitalization, the Senior Subordinated Debt Documents, the Tax
         Agreement and the Sponsors Letter.

<PAGE>   39
                                       34

                  "RELATED PARTY" with respect to any Permitted Investor means,
         (a) (i) any spouse, sibling, parent, or child of such Permitted
         Investor, or (ii) the estate of any Permitted Investor during any
         period in which such estate holds capital stock of the U.S. Borrower
         for the benefit of any Person referred to in clause (a)(i) above, or
         (b) any trust, corporation, partnership, limited liability company or
         other entity the beneficiaries, stockholders, partners, owners or
         Persons beneficially owning an interest of more than 50% of which
         consist of, or the sole managing member of which is, one or more
         Permitted Investors and/or such other Persons referred to in the
         immediately preceding clause (a).

                  "REQUIRED LENDERS" means, at any time, Lenders owed or holding
         at least a majority in interest of the aggregate principal amount
         (based, in the case of the Tranche A Euro Term Facility, on the
         Equivalent in Dollars at such time) of the sum of (a) the aggregate
         principal amount of the Advances outstanding at such time, (b) the
         aggregate Available Amount of all Letters of Credit outstanding at such
         time, (c) the aggregate unused Commitments under all Facilities (other
         than the Revolving Credit Facility, the Swing Line Facility or the
         Letter of Credit Facility) at such time and (d) the aggregate Unused
         Revolving Credit Commitments at such time; provided, however, that, if
         any Lender shall be either (i) a Defaulting Lender or (ii) an Affiliate
         of any Loan Party at such time, there shall be excluded from the
         determination of Required Lenders at such time (A) the aggregate
         principal amount (based, to the extent applicable, on the Equivalent in
         Dollars at such time) of the Advances owing to such Lender (in its
         capacity as a Lender) and outstanding at such time, (B) such Lender's
         Pro Rata share of the aggregate Available Amount of all Letters of
         Credit outstanding at such time, (C) the aggregate unused Commitments
         of such Lender under all Facilities (other than the Revolving Credit
         Facility, the Swing Line Facility or the Letter of Credit Facility) at
         such time and (D) the Unused Revolving Credit Commitment of such Lender
         at such time. For purposes of this definition, the aggregate principal
         amount of Swing Line Advances owing to the Swing Line Bank and of
         Letter of Credit Advances owing to the Issuing Bank and the Available
         Amount of each Letter of Credit shall be considered to be owed to the
         Revolving Credit Lenders ratably in accordance with their respective
         Revolving Credit Commitments.

                  "RESPONSIBLE OFFICER" means any officer of any Loan Party or
         any of its Subsidiaries.

                  "REVOLVING CREDIT ADVANCE" has the meaning specified in
         Section 2.01(d).

                  "REVOLVING CREDIT BORROWING" means a borrowing consisting of
         simultaneous Revolving Credit Advances of the same Type made by the
         Revolving Credit Lenders.

                  "REVOLVING CREDIT COMMITMENT" means, with respect to any
         Revolving Credit Lender at any time, the amount set forth opposite such
         Lender's name on Schedule I hereto under the caption "Revolving Credit
         Commitment" or, if such Lender has entered

<PAGE>   40
                                       35

         into one or more Assignment and Acceptances, set forth for such Lender
         in the Register maintained by the Administrative Agent pursuant to
         Section 9.07(d) as such Lender's "Revolving Credit Commitment", as such
         amount may be reduced at or prior to such time pursuant to Section
         2.05.

                  "REVOLVING CREDIT FACILITY" means, at any time, the aggregate
         amount of the Revolving Credit Lenders' Revolving Credit Commitments at
         such time.

                  "REVOLVING CREDIT LENDER" means any Lender that has a
         Revolving Credit Commitment.

                  "REVOLVING CREDIT NOTE" means a promissory note of the U.S.
         Borrower payable to the order of any Revolving Credit Lender, in
         substantially the form of Exhibit A-1 hereto, evidencing the aggregate
         indebtedness of the U.S. Borrower to such Lender resulting from the
         Revolving Credit Advances, Letter of Credit Advances and Swing Line
         Advances made by such Lender, as amended. If requested by the Swing
         Line Bank, the commitment of the Swing Line Bank to make Swing Line
         Advances shall be evidenced by a separate promissory note.

                  "ROLLOVER AMOUNT" has the meaning specified in Section
         5.02(n).

                  "SECURED HEDGE AGREEMENT" means any Hedge Agreement required
         or permitted under Article V that is entered into by and between any
         Loan Party and any Hedge Bank.

                  "SECURED OBLIGATIONS" has the meaning specified in Section 2
         of the Security Agreement.

                  "SECURED PARTIES" means the Agents, the Lender Parties and the
         Hedge Banks.

                  "SECURITY AGREEMENT" has the meaning specified in Section
         3.01(a)(ii).

                  "SENIOR SUBORDINATED DEBT" means any Debt issued pursuant to
         the Indenture and any other Debt of any Loan Party that is subordinated
         to the Obligations of such Loan Party under the Loan Documents on, and
         that otherwise contains, terms and conditions satisfactory to the
         Required Lenders.

                  "SENIOR SUBORDINATED DEBT DOCUMENTS" means the Indenture and
         all other agreements, indentures and instruments pursuant to which
         Senior Subordinated Debt is issued, in each case as amended, to the
         extent permitted under Section 5.02(p).

                  "SPONSORS LETTER" means the letter dated as of April 10, 2001
         from First Reserve Corporation and Odyssey Investments Partners, LLC to
         the U.S. Borrower.

<PAGE>   41
                                       36

                  "SENIOR SUBORDINATED NOTES" means the senior subordinated
         notes of the U.S. Borrower in an aggregate principal amount of
         U.S.$300,000,000 issued pursuant to the Indenture.

                  "SINGLE EMPLOYER PLAN" means a single employer plan, as
         defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
         employees of any Loan Party or any ERISA Affiliate and no Person other
         than the Loan Parties and the ERISA Affiliates or (b) was so maintained
         and in respect of which any Loan Party or any ERISA Affiliate could
         reasonably be expected to have liability under Section 4069 of ERISA in
         the event such plan has been or were to be terminated.

                  "SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
         particular date, that on such date (a) the fair value of the property
         of such Person is greater than the total amount of liabilities,
         including, without limitation, contingent liabilities, of such Person,
         (b) the present fair salable value of the assets of such Person is not
         less than the amount that will be required to pay the probable
         liability of such Person on its debts as they become absolute and
         matured, (c) such Person does not intend to, and does not believe that
         it will, incur debts or liabilities beyond such Person's ability to pay
         such debts and liabilities as they mature and (d) such Person is not
         engaged in business or a transaction, and is not about to engage in
         business or a transaction, for which such Person's property would
         constitute an unreasonably small capital. The amount of contingent
         liabilities at any time shall be computed as the amount that, in the
         light of all the facts and circumstances existing at such time,
         represents the amount that can reasonably be expected to become an
         actual or matured liability.

                  "STANDBY LETTER OF CREDIT" means any Letter of Credit issued
         under the Letter of Credit Facility, other than a Trade Letter of
         Credit.

                  "SUBSIDIARY" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such partnership, joint
         venture or limited liability company or (c) the beneficial interest in
         such trust or estate is at the time directly or indirectly owned or
         controlled by such Person, by such Person and one or more of its other
         Subsidiaries or by one or more of such Person's other Subsidiaries.

                  "SUBSIDIARY GUARANTORS" means the Subsidiaries of the U.S.
         Borrower listed on Schedule II hereto and each other Subsidiary of the
         U.S. Borrower that shall be required to execute and deliver a guaranty
         pursuant to Section 5.01(j).

<PAGE>   42
                                       37

                  "SUBSIDIARY GUARANTY" means the guaranty of the Subsidiary
         Guarantors set forth in Article VIII.

                  "SUPERMAJORITY LENDERS" means, at any time, with respect a
         Facility, Lenders owed or holding at least two-thirds in interest of
         the aggregate principal amount (based, in the case of the Tranche A
         Euro Term Facility, on the Equivalent in Dollars at such time) of the
         sum of (a) the aggregate principal amount of the Advances outstanding
         at such time under such Facility and (b) the aggregate unused
         Commitments at such time under such Facility (which, for purposes of
         the Revolving Credit Facility, shall be equal to the Unused Revolving
         Credit Commitments at such time); provided, however, that if any Lender
         shall be either (i) a Defaulting Lender or (ii) an Affiliate of any
         Loan Party at such time, there shall be excluded from the determination
         of Supermajority Lenders at such time (A) the aggregate principal
         amount (based, in the case of the Tranche A Euro Term Facility, on the
         Equivalent in Dollars at such time) of the Advances owing to such
         Lender (in its capacity as a Lender), and outstanding at such time
         under such Facility, and (B) the aggregate unused Commitments of such
         Lender at such time under such Facility (which, for purposes of the
         Revolving Credit Facility, shall be equal to the Unused Revolving
         Credit Commitments at such time). For purposes of this definition, the
         aggregate principal amount of Swing Line Advances owing to the Swing
         Line Bank shall be considered to be owed to the Revolving Credit
         Lenders ratably in accordance with their respective Revolving Credit
         Commitments under the Revolving Credit Facility.

                  "SURVIVING DEBT" means Debt of each Loan Party and its
         Subsidiaries outstanding immediately before and after giving effect to
         the Transaction.

                  "SWING LINE ADVANCE" means an advance made by (a) the Swing
         Line Bank pursuant to Section 2.01(e) or (b) any Revolving Credit
         Lender pursuant to Section 2.02(c).

                  "SWING LINE BANK" means Wells Fargo Bank Texas, N.A. and each
         Person that shall become the Swing Line Bank hereunder pursuant to
         Section 9.07.

                  "SWING LINE BORROWING" means a borrowing consisting of a Swing
         Line Advance made by the Swing Line Bank pursuant to Section 2.01(e) or
         the Revolving Credit Lenders pursuant to Section 2.02(c).

                  "SWING LINE FACILITY" has the meaning specified in Section
         2.01(e).

                  "SWING LINE RESERVE" has the meaning specified in Section
         2.02(b).

                  "SYNDICATION AGENT" has the meaning specified in the recital
         of parties to this Agreement.

<PAGE>   43
                                       38

                  "TAX AGREEMENT" means that certain tax sharing agreement
         entered into by and between the U.S. Borrower and the Parent, as
         amended, supplemented or otherwise modified from time to time, to the
         extent permitted under Section 5.02(p).

                  "TAX CERTIFICATE" has the meaning specified in Section
         5.03(k).

                  "TAXES" has the meaning specified in Section 2.12(a).

                  "TERMINATION DATE" means the earlier of (a) the date of
         termination in whole of the Revolving Credit Commitments, the Letter of
         Credit Commitment, the Tranche A U.S. Term Commitments, the Tranche A
         Euro Term Commitments and the Tranche B Term Commitments pursuant to
         Section 2.05 or Section 6.01 and (b) (i) for purposes of the Revolving
         Credit Facility, the Letter of Credit Facility, the Tranche A U.S. Term
         Facility and the Tranche A Euro Term Facility, April 10, 2007, and (ii)
         for purposes of the Tranche B Term and for all other purposes, April
         10, 2009.

                  "TOTAL DEBT/EBITDA RATIO" means, for any period, the ratio of
         (A) the sum of (i) Consolidated Debt for Borrowed Money of the U.S.
         Borrower and its Subsidiaries on the last day of such period, and (ii)
         without duplication, for the U.S. Borrower and its Subsidiaries,
         determined on a Consolidated basis, the aggregate amount of the
         liquidation preference with respect to any Preferred Interests that are
         not Qualified Preferred Stock issued and outstanding on the last day of
         such period to (B) Consolidated Pro Forma Adjusted EBITDA of the U.S.
         Borrower and its Subsidiaries for the four fiscal quarter period ending
         on the last day of such period, provided there shall be excluded,
         solely for the purpose of the calculation of Consolidated Debt for
         Borrowed Money for this definition, any cash or Cash Equivalents
         maintained by the U.S. Borrower or any of its Subsidiaries for any date
         of determination during the Fiscal Year ended December 31, 2001.

                  "TRADE LETTER OF CREDIT" means any Letter of Credit that is
         issued under the Letter of Credit Facility for the benefit of a
         supplier of Inventory (in its capacity as such) to the U.S. Borrower or
         any of its Subsidiaries to effect payment for such Inventory.

                  "TRANCHE A EURO TERM ADVANCE" has the meaning specified in
         Section 2.01(b).

                  "TRANCHE A EURO TERM BORROWING" means a borrowing consisting
         of simultaneous Tranche A Euro Term Advances made by the Tranche A Euro
         Term Lenders.

                  "TRANCHE A EURO TERM COMMITMENT" means, with respect to any
         Tranche A Euro Term Lender at any time, the amount set forth opposite
         such Lender's name on Schedule I hereto under the caption "Tranche A
         Euro Term Commitment" or, if such Lender has entered into one or more
         Assignment and Acceptances, the amount set forth for such Lender in the
         Register maintained by the Administrative Agent pursuant to

<PAGE>   44
                                       39

         Section 9.07(d) as such Lender's "Tranche A Euro Term Commitment", as
         such amount may be reduced at or prior to such time pursuant to Section
         2.05.

                  "TRANCHE A EURO TERM FACILITY" means, at any time, the
         aggregate amount of the Tranche A Euro Term Lenders' Tranche A Euro
         Term Commitments at such time.

                  "TRANCHE A EURO TERM LENDER" means any Lender that has a
         Tranche A Euro Term Commitment.

                  "TRANCHE A EURO TERM NOTE" means a promissory note of the Euro
         Borrower payable to the order of any Tranche A Euro Term Lender, in
         substantially the form of Exhibit A-3 hereto, evidencing the
         indebtedness of the Euro Borrower to such Lender resulting from the
         Tranche A Euro Term Advance made by such Lender, as amended.

                  "TRANCHE A U.S. TERM ADVANCE" has the meaning specified in
         Section 2.01(a).

                  "TRANCHE A U.S. TERM BORROWING" means a borrowing consisting
         of simultaneous Tranche A U.S. Term Advances of the same Type made by
         the Tranche A U.S. Term Lenders.

                  "TRANCHE A U.S. TERM COMMITMENT" means, with respect to any
         Tranche A U.S. Term Lender at any time, the amount set forth opposite
         such Lender's name on Schedule I hereto under the caption "Tranche A
         U.S. Term Commitment" or, if such Lender has entered into one or more
         Assignment and Acceptances, the amount set forth for such Lender in the
         Register maintained by the Administrative Agent pursuant to Section
         9.07(d) as such Lender's "Tranche A U.S. Term Commitment", as such
         amount may be reduced at or prior to such time pursuant to Section
         2.05.

                  "TRANCHE A U.S. TERM FACILITY" means, at any time, the
         aggregate amount of the Tranche A U.S. Term Lenders' Tranche A U.S.
         Term Commitments at such time.

                  "TRANCHE A U.S. TERM LENDER" means any Lender that has a
         Tranche A U.S. Term Commitment.

                  "TRANCHE A U.S. TERM NOTE" means a promissory note of the U.S.
         Borrower payable to the order of any Tranche A U.S. Term Lender, in
         substantially the form of Exhibit A-2 hereto, evidencing the
         indebtedness of the U.S. Borrower to such Lender resulting from the
         Tranche A U.S. Term Advance made by such Lender, as amended.

                  "TRANCHE B TERM ADVANCE" has the meaning specified in Section
         2.01(c).

                  "TRANCHE B TERM BORROWING" means a borrowing consisting of
         simultaneous Tranche B Term Advances of the same Type made by the
         Tranche B Term Lenders.

<PAGE>   45
                                       40

                  "TRANCHE B TERM COMMITMENT" means, with respect to any Tranche
         B Term Lender at any time, the amount set forth opposite such Lender's
         name on Schedule I hereto under the caption "Tranche B Term Commitment"
         or, if such Lender has entered into one or more Assignment and
         Acceptances, the amount set forth for such Lender in the Register
         maintained by the Administrative Agent pursuant to Section 9.07(d) as
         such Lender's "Tranche B Term Commitment", as such amount may be
         reduced at or prior to such time pursuant to Section 2.05.

                  "TRANCHE B TERM FACILITY" means, at any time, the aggregate
         amount of the Term Lenders' Tranche B Term Commitments at such time.

                  "TRANCHE B TERM LENDER" means any Lender that has a Tranche B
         Term Commitment.

                  "TRANCHE B TERM NOTE" means a promissory note of the U.S.
         Borrower payable to the order of any Tranche B Term Lender, in
         substantially the form of Exhibit A-4 hereto, evidencing the
         indebtedness of the U.S. Borrower to such Lender resulting from the
         Tranche B Term Advance made by such Lender, as amended.

                  "TRANSACTION" means the Recapitalization and the other
         transactions contemplated by the Transaction Documents.

                  "TRANSACTION DOCUMENTS" means, collectively, the Loan
         Documents and the Related Documents.

                  "TYPE" refers to the distinction among Advances bearing
         interest based on the Base Rate, Advances bearing interest based on the
         Eurodollar Rate and Advances bearing interest based on the Euro Rate.

                  "UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to
         any Revolving Credit Lender at any time, (a) such Lender's Revolving
         Credit Commitment at such time minus (b) the sum of (i) the aggregate
         principal amount of all Revolving Credit Advances made by such Lender
         and outstanding at such time plus (ii) such Lender's Pro Rata Share of
         (A) the aggregate Available Amount of all Letter of Credit outstanding
         at such time, (B) the aggregate principal amount of all Letter of
         Credit Advances made by the Issuing Bank pursuant to Section 2.03(c)
         and outstanding at such time and (C) the Swing Line Reserve at such
         time.

                  "U.S. BORROWER" has the meaning specified in the recital of
         parties to this Agreement.

                  "VOTING INTERESTS" means shares of capital stock issued by a
         corporation, or equivalent Equity Interests in any other Person, the
         holders of which are ordinarily, in the absence of contingencies,
         entitled to vote for the election of directors (or persons

<PAGE>   46
                                       41

         performing similar functions) of such Person, even if the right so to
         vote has been suspended by the happening of such a contingency.

                  "WELFARE PLAN" means a welfare plan, as defined in Section
         3(1) of ERISA, that is maintained for employees of any Loan Party or in
         respect of which any Loan Party could have liability.

                  "WITHDRAWAL LIABILITY" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

                  SECTION 1.02. Computation of Time Periods; Other Definitional
Provisions. In this Agreement and the other Loan Documents in the computation of
periods of time from a specified date to a later specified date, the word "FROM"
means "from and including" and the words "TO" and "UNTIL" each mean "to but
excluding". References in the Loan Documents to any agreement or contract shall
mean and be a reference to such agreement or contract as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with its terms and in compliance with the Loan Documents.

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(g) ("GAAP").

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

                  SECTION 2.01. The Advances and the Letter of Credit. (a) The
Tranche A U.S. Term Advances. Each Tranche A U.S. Term Lender severally agrees,
on the terms and conditions hereinafter set forth, to make a single advance (a
"TRANCHE A U.S. TERM ADVANCE") to the U.S. Borrower on the Effective Date in
Dollars and in an amount equal to such Lender's Tranche A U.S. Term Commitment
at such time. The Tranche A U.S. Term Borrowing shall consist of Tranche A U.S.
Term Advances made simultaneously by the Tranche A U.S. Term Lenders ratably
according to their Tranche A U.S. Term Commitments. Amounts borrowed under this
Section 2.01(a) and repaid or prepaid may not be reborrowed.

                  (b) The Tranche A Euro Term Advances. Each Tranche A Euro Term
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make a single advance (a "TRANCHE A EURO TERM ADVANCE") to the Euro Borrower on
the Effective Date in Euros in an amount equal to the Equivalent in Euros, on
the Effective Date, of such Lender's Tranche A Euro Term Commitment at such
time. The Tranche A Euro Term Borrowing shall consist of Tranche A Euro Term
Advances made simultaneously by the Tranche A Euro Term Lenders

<PAGE>   47
                                       42

ratably according to their Tranche A Euro Term Commitments. Amounts borrowed
under this Section 2.01(b) and repaid or prepaid may not be reborrowed.

                  (c) The Tranche B Term Advances. Each Tranche B Term Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (a "TRANCHE B TERM ADVANCE") to the U.S. Borrower on the
Effective Date in Dollars in an amount equal to such Lender's Tranche B Term
Commitment at such time. The Tranche B Term Borrowing shall consist of Tranche B
Term Advances made simultaneously by the Tranche B Term Lenders ratably
according to their Tranche B Term Commitments. Amounts borrowed under this
Section 2.01(c) and repaid or prepaid may not be reborrowed.

                  (d) The Revolving Credit Advances. Each Revolving Credit
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make advances (each, a "REVOLVING CREDIT ADVANCE") to the U.S. Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date in Dollars in an amount for each such Advance specified by
the U.S. Borrower not to exceed, after giving effect to any use of proceeds
thereof to repay any Swing Line Advances or Letter of Credit Advances such
Lender's Unused Revolving Credit Commitment at such time. Each Revolving Credit
Borrowing shall be in an aggregate amount of U.S.$5,000,000 or an integral
multiple of U.S.$1,000,000 in excess thereof and shall consist of Revolving
Credit Advances made simultaneously by the Revolving Credit Lenders ratably
according to their Revolving Credit Commitments, provided, however, that the
Revolving Credit Borrowing made on the Effective Date shall not exceed
U.S.$3,000,000. Within the limits of each Revolving Credit Lender's Unused
Revolving Credit Commitment in effect from time to time, the U.S. Borrower may
borrow under this Section 2.01(d), prepay pursuant to Section 2.06(a) and
reborrow under this Section 2.01(d).

                  (e) The Swing Line Advances. The U.S. Borrower may request the
Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and
conditions hereinafter set forth, Swing Line Advances to the U.S. Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date in respect of the Revolving Credit Facility (i) in Dollars
in an aggregate amount not to exceed at any time outstanding U.S.$15,000,000
(the "SWING LINE FACILITY") and (ii) in an amount not at any time exceeding the
then amount of the Swing Line Reserve. No Swing Line Advance shall be used for
the purpose of funding the payment of principal of any other Swing Line Advance.
Each Swing Line Borrowing shall be made as a Base Rate Advance. Within the
limits of the Swing Line Facility and within the limits referred to in clause
(ii) above, the U.S. Borrower may borrow under this Section 2.01(e), repay
pursuant to Section 2.04(e) or prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(e).

                  (f) The Letters of Credit. The Issuing Bank agrees, on the
terms and conditions hereinafter set forth, to issue letters of credit (the
"LETTERS OF CREDIT") for the account of the U.S. Borrower from time to time on
any Business Day during the period from the date hereof until 5 days before the
Termination Date in an aggregate Available Amount (i) for all Letters of Credit
not to exceed at any time the lesser of (x) the Letter of Credit Facility at
such

<PAGE>   48
                                       43

time and (y) the Issuing Bank's Letter of Credit Commitment at such time and
(ii) for each such Letter of Credit not to exceed the Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time. No Letter of Credit
shall have an expiration date (including all rights of the U.S. Borrower or the
beneficiary to require renewal) later than 5 days before the Termination Date
and (A) in the case of a Standby Letter of Credit, one year after the date of
issuance thereof, but may by its terms be renewable annually upon notice (a
"NOTICE OF RENEWAL") given to the Issuing Bank and the Administrative Agent on
or prior to any date for notice of renewal set forth in such Letter of Credit
but in any event at least three Business Days prior to the date of the proposed
renewal of such Standby Letter of Credit and upon fulfillment of the applicable
conditions set forth in Article III unless the Issuing Bank has notified the
U.S. Borrower (with a copy to the Administrative Agent) on or prior to the date
for notice of termination set forth in such Letter of Credit but in any event at
least 30 Business Days prior to the date of automatic renewal of its election
not to renew such Standby Letter of Credit (a "NOTICE OF TERMINATION") and (B)
in the case of a Trade Letter of Credit, 180 days after the date of issuance
thereof; provided that the terms of each Standby Letter of Credit that is
automatically renewable annually shall (x) require the Issuing Bank that issued
such Standby Letter of Credit to give the beneficiary named in such Standby
Letter of Credit notice of any Notice of Termination, (y) permit such
beneficiary, upon receipt of such notice, to draw under such Standby Letter of
Credit prior to the date such Standby Letter of Credit otherwise would have been
automatically renewed and (z) not permit the expiration date (after giving
effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date later than 5 days before the Termination Date. If either a
Notice of Renewal is not given by the U.S. Borrower or a Notice of Termination
is given by the Issuing Bank pursuant to the immediately preceding sentence,
such Standby Letter of Credit shall expire on the date on which it otherwise
would have been automatically renewed; provided, however, that even in the
absence of receipt of a Notice of Renewal the Issuing Bank may in its
discretion, unless instructed to the contrary by the Administrative Agent or the
U.S. Borrower, deem that a Notice of Renewal had been timely delivered and in
such case, a Notice of Renewal shall be deemed to have been so delivered for all
purposes under this Agreement. Within the limits of the Letter of Credit
Facility, and subject to the limits referred to above, the U.S. Borrower may
request the issuance of Letters of Credit under this Section 2.01(f), repay any
Letter of Credit Advances resulting from drawings thereunder pursuant to Section
2.03(c) and request the issuance of additional Letters of Credit under this
Section 2.01(f).

                  SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b), each Borrowing shall be made on notice, given not
later than 11:00 A.M. (New York City time) on the third Business Day prior to
the date of the proposed Borrowing in the case of a Borrowing consisting of
Eurodollar Rate Advances, on the fourth Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Euro Rate Advances
or on the first Business Day prior to the date of the proposed Borrowing in the
case of a Borrowing consisting of Base Rate Advances, by the Applicable Borrower
to the Administrative Agent, which shall give to each Appropriate Lender prompt
notice thereof by telex or telecopier. Each such notice of a Borrowing (a
"NOTICE OF BORROWING") shall be by

<PAGE>   49
                                       44

telephone, confirmed immediately in writing, or telex or telecopier, in
substantially the form of Exhibit B hereto, specifying therein the requested (i)
date of such Borrowing, (ii) Facility under which such Borrowing is to be made,
(iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such
Borrowing and (v) in the case of a Borrowing consisting of Euro Rate Advances or
Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before 11:00 A.M. (New York City time) on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such Lender and the
other Appropriate Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Applicable
Borrower by crediting the U.S. Borrower's Account; provided, however, that, in
the case of any Revolving Credit Borrowing, the Administrative Agent shall first
make a portion of such funds equal to the aggregate principal amount of any
Letter of Credit Advances made by the Issuing Banks and by any other Revolving
Credit Lender and outstanding on the date of such Revolving Credit Borrowing,
plus interest accrued and unpaid thereon to and as of such date, available to
the Issuing Bank and such other Revolving Credit Lenders for repayment of such
Letter of Credit Advances.

                  (b) Swing Line Borrowings may be made on a daily basis under
mechanics mutually agreed to by the U.S. Borrower and the Swing Line Bank. The
Swing Line Reserve at any time shall be the amount (not exceeding $15,000,000)
most recently established by the U.S. Borrower by written notice to the
Administrative Agent confirmed in writing by the Swing Line Bank as the maximum
aggregate principal amount of Swing Line Borrowings to be outstanding at any one
time, provided, that, in no event shall the Swing Line Reserve exceed
$15,000,000 at any time. Swing Line Advances shall be made without any
requirement for a prior written or telephonic request given to the
Administrative Agent. The Swing Line Bank will notify the Administrative Agent,
on a monthly basis, of any Swing Line Advances so made. The Swing Line Bank
shall not at any time permit the aggregate outstanding amount of the Swing Line
Advances to exceed the then amount of the Swing Line Reserve. Upon written
demand by the Swing Line Bank, with a copy of such demand to the Administrative
Agent, each other Revolving Credit Lender shall purchase from the Swing Line
Bank, and the Swing Line Bank shall sell and assign to each such other Revolving
Credit Lender, such other Lender's Pro Rata Share of such outstanding Swing Line
Advance as of the date of such demand, by making available for the account of
its Applicable Lending Office to the Administrative Agent for the account of the
Swing Line Bank, by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
such Swing Line Advance to be purchased by such Lender. The U.S. Borrower hereby
agrees to each such sale and assignment. Each Revolving Credit Lender agrees to
purchase its Pro Rata Share of an outstanding Swing Line Advance on (i) the
Business Day on which demand therefor is made by the Swing Line Bank, provided
that notice of such demand is given not later than 11:00 A.M. (New York City
time) on such Business Day or (ii) the first Business Day next succeeding such

<PAGE>   50
                                       45

demand if notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Revolving Credit Lender of a
portion of a Swing Line Advance, the Swing Line Bank represents and warrants to
such other Lender that the Swing Line Bank is the legal and beneficial owner of
such interest being assigned by it, but makes no other representation or
warranty and assumes no responsibility with respect to such Swing Line Advance,
the Loan Documents or any Loan Party. If and to the extent that any Revolving
Credit Lender shall not have so made the amount of such Swing Line Advance
available to the Administrative Agent, such Revolving Credit Lender agrees to
pay to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing Line Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate. If such Lender shall pay to the Administrative Agent such amount for
the account of the Swing Line Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Swing Line Advance made by such Lender
on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Swing Line Advance made by the Swing Line Bank shall be
reduced by such amount on such Business Day. Since the Swing Line Borrowings
will be made on a daily automated basis without review by the Administrative
Agent or the Swing Line Bank of the satisfaction of conditions precedent to
Swing Line Borrowings set forth herein, some Swing Line Borrowings may be made
without satisfaction of such conditions precedent (including without limitation
the condition precedent that no Default shall have occurred), but the Revolving
Credit Lenders shall nevertheless remain obligated to purchase their respective
Pro Rata Share of such Swing Line Borrowings as provided for herein. Nothing set
forth herein shall excuse the U.S. Borrower from its obligation to satisfy such
conditions. The Swing Line Bank agrees (with the concurrence of U.S. Borrower)
that it shall not make any Swing Line Advance after receipt of written notice
from the Administrative Agent that a Default or an Event of Default shall have
occurred which is continuing or that U.S. Borrower shall have otherwise failed
to satisfy all of the conditions precedent to further Swing Line Borrowings
hereunder.

                  (c) Anything in subsection (a) above to the contrary
notwithstanding, the Applicable Borrower may not select Euro Rate Advances or
Eurodollar Rate Advances for any Borrowing if the aggregate amount of such
Borrowing is less than U.S.$5,000,000 (or the Equivalent in Euros at such time)
or Eurodollar Rate Advances if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
Section 2.10; provided, however, that if the syndication under this Agreement
has not been completed on or prior to the Effective Date then the Applicable
Borrower may only select Euro Rate Advances or Eurodollar Rate Advances with
7-day Interest Period until the earlier of (i) the date which is one month after
the Effective Date and (ii) the date the syndication has been completed as shall
be specified by the Joint Lead Arrangers in a notice to the Borrowers. In
addition, the Tranche A U.S. Term Advances may not be outstanding as part of
more than three separate Borrowings, the Tranche A Euro Term Advances may not be
outstanding as part of more than three separate Borrowings, the Tranche B Term
Advances may not be outstanding as part of more than six separate Borrowings and
the Revolving Credit Advances may not be outstanding as part of more than six
separate Borrowings.

<PAGE>   51
                                       46

                  (d) Each Notice of Borrowing shall be irrevocable and binding
on the Applicable Borrower. In the case of any Borrowing that the related Notice
of Borrowing specifies is to be comprised of Euro Rate Advances or Eurodollar
Rate Advances, the Applicable Borrower shall indemnify each Appropriate Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
for such Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (including loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.

                  (e) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Applicable Borrower
on such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Administrative Agent,
such Lender and the Applicable Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount and to pay
interest thereon, for each day from the date such amount is made available to
the Applicable Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Applicable Borrower, the
interest rate applicable at such time under Section 2.07 to Advances comprising
such Borrowing and (ii) in the case of such Lender, (A) the Federal Funds Rate
in the case of Advances denominated in Dollars or (B) the cost of funds incurred
by the Administrative Agent in respect of such amount in the case of Advances
denominated in Euros. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's Advance
as part of such Borrowing for all purposes.

                  (f) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.

                  SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
tenth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the U.S. Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telex or telecopier. Each such notice of issuance of a Letter of Credit (a
"NOTICE OF

<PAGE>   52
                                       47

ISSUANCE") shall be by telephone, confirmed immediately in writing, or telex or
telecopier, specifying therein the requested (A) date of such issuance (which
shall be a Business Day), (B) Available Amount of such Letter of Credit, (C)
expiration date of such Letter of Credit and whether such Letter of Credit is a
Trade Letter of Credit, (D) name and address of the beneficiary of such Letter
of Credit and (E) form of such Letter of Credit, and shall be accompanied by
such application and agreement for letter of credit as the Issuing Bank may
specify to the U.S. Borrower for use in connection with such requested Letter of
Credit (a "LETTER OF CREDIT AGREEMENT"). If (x) the requested form of such
Letter of Credit is acceptable to the Issuing Bank in its sole discretion and
(y) the Issuing Bank has not received notice of objection asserting that the
conditions contained in Section 3.02 have not been satisfied to such issuance
from Lenders holding at least a majority of the Revolving Credit Commitments and
(z) issuance of the requested Letter of Credit is within the limits of Section
2.01(f), the Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to the U.S.
Borrower at its office referred to in Section 8.02 or as otherwise agreed with
the U.S. Borrower in connection with such issuance. In the event and to the
extent that the provisions of any Letter of Credit Agreement shall conflict with
this Agreement, the provisions of this Agreement shall govern.

                  (b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
month a written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding month and drawings during such month under
all Letters of Credit and (C) to the Administrative Agent and each Revolving
Credit Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available Amount during the
preceding calendar quarter of all Letters of Credit.

                  (c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by the Issuing Bank, with a copy of such demand to the Administrative
Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and
the Issuing Bank shall sell and assign to each such Revolving Credit Lender,
such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of
the date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Revolving Credit Lender. Promptly after
receipt thereof, the Administrative Agent shall transfer such funds to the
Issuing Bank. The U.S. Borrower hereby agrees to each such sale and assignment.
Each Revolving Credit Lender agrees to purchase its Pro Rata Share of an
outstanding Letter of Credit Advance on (i) the Business Day on which demand
therefor is made by the Issuing Bank, provided that notice of such

<PAGE>   53
                                       48

demand is given not later than 11:00 A.M. (New York City time) on such Business
Day, or (ii) the first Business Day next succeeding such demand if notice of
such demand is given after such time. Upon any such assignment by the Issuing
Bank to any Revolving Credit Lender of a portion of a Letter of Credit Advance,
the Issuing Bank represents and warrants to such other Lender that the Issuing
Bank is the legal and beneficial owner of such interest being assigned by it,
free and clear of any liens, but makes no other representation or warranty and
assumes no responsibility with respect to such Letter of Credit Advance, the
Loan Documents or any Loan Party. If and to the extent that any Revolving Credit
Lender shall not have so made the amount of such Letter of Credit Advance
available to the Administrative Agent, such Revolving Credit Lender agrees to
pay to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Issuing Bank until
the date such amount is paid to the Administrative Agent, at the Federal Funds
Rate for its account or the account of the Issuing Bank, as applicable. If such
Lender shall pay to the Administrative Agent such amount for the account of the
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Letter of Credit Advance made by such Lender on such Business
Day for purposes of this Agreement, and the outstanding principal amount of the
Letter of Credit Advance made by the Issuing Bank shall be reduced by such
amount on such Business Day.

                  (d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.

                  SECTION 2.04. Repayment of Advances. (a) Tranche A U.S. Term
Advances. The U.S. Borrower shall repay to the Administrative Agent for the
ratable account of the Tranche A U.S. Term Lenders the aggregate outstanding
principal amount of the Tranche A U.S. Term Advances on the following dates in
the amounts indicated (which amounts shall be reduced as a result of the
application of prepayments in accordance with Section 2.06).

<PAGE>   54
                                       49

<TABLE>
<CAPTION>
       Date                               Amount
       ----                               ------
<S>                                  <C>
September 30, 2001                    U.S.$2,062,500
December 31, 2001                     U.S.$2,062,500

March 31, 2002                        U.S.$2,062,500
June 30, 2002                         U.S.$2,062,500
September 30, 2002                    U.S.$4,125,000
December 31, 2002                     U.S.$4,125,000

March 31, 2003                        U.S.$4,125,000
June 30, 2003                         U.S.$4,125,000
September 30, 2003                    U.S.$6,187,500
December 31, 2003                     U.S.$6,187,500

March 31, 2004                        U.S.$6,187,500
June 30, 2004                         U.S.$6,187,500
September 30, 2004                    U.S.$8,250,000
December 31, 2004                     U.S.$8,250,000

March 31, 2005                        U.S.$8,250,000
June 30, 2005                         U.S.$8,250,000
September 30, 2005                   U.S.$10,312,500
December 31, 2005                    U.S.$10,312,500

March 31, 2006                       U.S.$10,312,500
June 30, 2006                        U.S.$10,312,500
September 30, 2006                   U.S.$10,312,500
December 31, 2006                    U.S.$10,312,500

March 31, 2007                       U.S.$10,312,500
Termination Date                     U.S.$10,312,500
</TABLE>

provided, however, that the final principal installment shall be repaid on the
Termination Date in respect of the Tranche A U.S. Term Facility and in any event
shall be in an amount equal to the aggregate principal amount of the Term
Advances outstanding on such date.

                  (b) Tranche A Euro Term Advances. The Euro Borrower shall
repay to the Administrative Agent for the ratable account of the Tranche A Euro
Term Lenders the aggregate outstanding principal amount of the Tranche A Euro
Term Advances on the following dates in the amounts represented by the
percentages set forth below, as the respective percentages of the aggregate
outstanding principal amount, denominated in Euros, of the Tranche A Euro Term
Advances outstanding as of the Initial Extension of Credit (which amounts shall
be reduced as a result of the application of prepayments in accordance with
Section 2.06).

<PAGE>   55
                                       50

<TABLE>
<CAPTION>
       Date             Percentage
       ----             ----------
<S>                     <C>
September 30, 2001        1.25%
December 31, 2001         1.25%

March 31, 2002            1.25%
June 30, 2002             1.25%
September 30, 2002        2.50%
December 31, 2002         2.50%

March 31, 2003            2.50%
June 30, 2003             2.50%
September 30, 2003        3.75%
December 31, 2003         3.75%

March 31, 2004            3.75%
June 30, 2004             3.75%
September 30, 2004        5.00%
December 31, 2004         5.00%

March 31, 2005            5.00%
June 30, 2005             5.00%
September 30, 2005        6.25%
December 31, 2005         6.25%

March 31, 2006            6.25%
June 30, 2006             6.25%
September 30, 2006        6.25%
December 31, 2006         6.25%

March 31, 2007            6.25%
Termination Date          6.25%
</TABLE>

provided, however, that the final principal installment shall be repaid on the
Termination Date in respect of the Tranche A Euro Term Facility and in any event
shall be in an amount equal to the aggregate principal amount of the Tranche A
Euro Term Advances outstanding on such date.

                  (c) Term B Advances. The U.S. Borrower shall repay to the
Administrative Agent for the ratable account of the Term B Lenders the aggregate
outstanding principal amount of the Term B Advances on the following dates in
the amounts indicated (which amounts shall be reduced as a result of the
application of prepayments in accordance with Section 2.06):

<PAGE>   56
                                       51

<TABLE>
<CAPTION>
       Date                               Amount
       ----                               ------
<S>                                   <C>
September 30, 2001                    U.S.$1,137,500
December 31, 2001                     U.S.$1,137,500

March 31, 2002                        U.S.$1,137,500
June 30, 2002                         U.S.$1,137,500
September 30, 2002                    U.S.$1,137,500
December 31, 2002                     U.S.$1,137,500

March 31, 2003                          U.S.$1,137,500
June 30, 2003                           U.S.$1,137,500
September 30, 2003                      U.S.$1,137,500
December 31, 2003                       U.S.$1,137,500

March 31, 2004                          U.S.$1,137,500
June 30, 2004                           U.S.$1,137,500
September 30, 2004                      U.S.$1,137,500
December 31, 2004                       U.S.$1,137,500

March 31, 2005                          U.S.$1,137,500
June 30, 2005                           U.S.$1,137,500
September 30, 2005                      U.S.$1,137,500
December 31, 2005                       U.S.$1,137,500

March 31, 2006                          U.S.$1,137,500
June 30, 2006                           U.S.$1,137,500
September 30, 2006                      U.S.$1,137,500
December 31, 2006                       U.S.$1,137,500

March 31, 2007                          U.S.$1,137,500
June 30, 2007                           U.S.$1,137,500
September 30, 2007                      U.S.$1,137,500
December 31, 2007                       U.S.$1,137,500

March 31, 2008                          U.S.$1,137,500
June 30, 2008                           U.S.$1,137,500
September 30, 2008                    U.S.$105,787,500
December 31, 2008                     U.S.$105,787,500

March 31, 2009                        U.S.$105,787,500
Termination Date                      U.S.$105,787,500
</TABLE>

provided, however, that the final principal installment shall be repaid on the
Termination Date in respect of the Term B Facility and in any event shall be in
an amount equal to the aggregate principal amount of the Term B Advances
outstanding on such date.

                  (d) Revolving Credit Advances. The U.S. Borrower shall repay
to the Administrative Agent for the ratable account of the Revolving Credit
Lenders on the Termination Date in respect of the Revolving Credit Facility the
aggregate principal amount of the Revolving Credit Advances then outstanding.

                  (e) Swing Line Advances. The U.S. Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the
Termination Date in respect of the Revolving Credit Facility, provided, to the
extent the U.S. Borrower shall not have repaid such Swing Line

<PAGE>   57
                                       52

Advance on the maturity date thereof specified in the applicable demand, such
Swing Line Advance shall automatically convert into a Revolving Credit Advance,
accruing interest at the Base Rate.

                  (f) Letter of Credit Advances. (i) The U.S. Borrower shall
repay to the Administrative Agent for the account of the Issuing Bank and each
other Revolving Credit Lender that has made a Letter of Credit Advance on the
earlier of the thirtieth day after the date on which such Advance was made and
the Termination Date the outstanding principal amount of each Letter of Credit
Advance made by each of them, provided, to the extent the U.S. Borrower shall
not have repaid such Letter of Credit Advance on the thirtieth day after the
date on which such Advance was made, such Letter of Credit Advance shall
automatically convert into a Revolving Credit Advance, which shall be a Base
Rate Advance.

                  (ii) The Obligations of the U.S. Borrower under this
Agreement, any Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances (it
being understood that any such payment by the U.S. Borrower is without prejudice
to, and does not constitute a waiver of, any rights the U.S. Borrower might have
or might acquire as a result of the payment by the Issuing Bank of any draft or
the reimbursement by the U.S. Borrower thereof):

                  (A) any lack of validity or enforceability of any Loan
         Document, any Letter of Credit Agreement, any Letter of Credit or any
         other agreement or instrument relating thereto (all of the foregoing
         being, collectively, the "L/C RELATED DOCUMENTS");

                  (B) any change in the time, manner or place of payment of, or
         in any other term of, all or any of the Obligations of the U.S.
         Borrower in respect of any L/C Related Document or any other amendment
         or waiver of or any consent to departure from all or any of the L/C
         Related Documents;

                  (C) the existence of any claim, set-off, defense or other
         right that the U.S. Borrower may have at any time against any
         beneficiary or any transferee of a Letter of Credit (or any Persons for
         which any such beneficiary or any such transferee may be acting), the
         Issuing Bank or any other Person, whether in connection with the
         transactions contemplated by the L/C Related Documents or any unrelated
         transaction;

                  (D) any statement or any other document presented under a
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect;

                  (E) payment by the Issuing Bank under a Letter of Credit
         against presentation of a draft or certificate that does not strictly
         comply with the terms of such Letter of Credit;

<PAGE>   58
                                       53

                  (F) any exchange, release or non-perfection of any Collateral
         or other collateral, or any release or amendment or waiver of or
         consent to departure from the Guaranty or any other guarantee, for all
         or any of the Obligations of the U.S. Borrower in respect of the L/C
         Related Documents; or

                  (G) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing, including, without limitation, any
         other circumstance that might otherwise constitute a defense available
         to, or a discharge of, the U.S. Borrower or a guarantor.

                  SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Applicable Borrower may, upon at least five Business Days' notice
to the Administrative Agent, terminate in whole or reduce in part the unused
portions of the Tranche A U.S. Term Commitments, the Tranche A Euro Term
Commitments, the Tranche B Term Commitments, the Unused Revolving Credit
Commitments and the Letter of Credit Facility; provided, however, that each
partial reduction of a Facility (i) shall be in an aggregate amount of
U.S.$5,000,000 (or the Equivalent in Euros at such time) or an integral multiple
of U.S.$1,000,000 (or the Equivalent in Euros at such time) in excess thereof
and (ii) shall be made ratably among the Appropriate Lenders in accordance with
their Commitments with respect to such Facility.

                  (b) Mandatory. (i) On the date of each repayment or prepayment
of the Tranche A U.S. Term Advances, the aggregate Tranche A U.S. Term
Commitments of the Tranche A U.S. Term Lenders shall be automatically and
permanently reduced, on a pro rata basis, by an amount equal to the amount by
which the aggregate Tranche A U.S. Term Commitments immediately prior to such
reduction exceed the aggregate unpaid principal amount of the Tranche A U.S.
Term Advances then outstanding.

                  (ii) On the date of each repayment or prepayment of the
Tranche A Euro Term Advances, the aggregate Tranche A Euro Term Commitments of
the Tranche A Euro Term Lenders shall be automatically and permanently reduced,
on a pro rata basis, by an amount equal to the amount by which the aggregate
Tranche A Euro Term Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Tranche A Euro Term Advances then
outstanding.

                  (iii) On the date of each repayment or prepayment of the
Tranche B Term Advances, the aggregate Tranche B Term Commitments of the Tranche
B Term Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate Tranche B Term
Commitments immediately prior to such reduction exceed the aggregate unpaid
principal amount of the Tranche B Term Advances then outstanding.

                  (iv) The Swing Line Facility shall be permanently reduced from
time to time on the date of each reduction in the Revolving Credit Facility by
the amount, if any, by which the amount of the Swing Line Facility exceeds the
Revolving Credit Facility after giving effect to such reduction of the Revolving
Credit Facility.

<PAGE>   59
                                       54

                  (v) The Revolving Credit Facility shall be automatically and
permanently reduced, on each date on which prepayment thereof is required to be
made pursuant to Section 2.06(b)(i) or (ii) in an amount equal to the applicable
Reduction Amount, provided that each such reduction of the Revolving Credit
Facility shall be made ratably among the Revolving Credit Lenders in accordance
with their Revolving Credit Commitments.

                  (vi) The Letter of Credit Facility shall be permanently
reduced from time to time on the date of each reduction in the Revolving Credit
Facility by the amount, if any, by which the amount of the Letter of Credit
Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.

                  SECTION 2.06. Prepayments. (a) Optional. The Applicable
Borrower may, upon at least one Business Day's notice in the case of Base Rate
Advances and three Business Days' notice in the case of Euro Rate Advances or
Eurodollar Rate Advances, in each case to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment, and if such
notice is given the Applicable Borrower shall, prepay the outstanding aggregate
principal amount of the Advances comprising part of the same Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid at any time and from time
to time, without premium or penalty; provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount of U.S.$3,000,000 (or the
Equivalent in Euros at such time) or an integral multiple of U.S.$1,000,000 (or
the Equivalent in Euros at such time) in excess thereof and (y) if any
prepayment of a Euro Rate Advance or a Eurodollar Rate Advance is made on a date
other than the last day of an Interest Period for such Advance, the Applicable
Borrower shall also pay any amounts owing pursuant to Section 9.04(c). Each such
prepayment shall be applied, at the option of the U.S. Borrower either (i) to
the next four installments in order of maturity of the Tranche A U.S. Term
Facility, the Tranche A Euro Term Facility and the Tranche B Term Facility and
to such installments on a pro rata basis, subject to Section 2.06(c), or (ii) to
the Revolving Credit Facility or (iii) to the Swing Line Advances or (iv) to the
Letter of Credit Advances. Notwithstanding the foregoing, prepayment of Swing
Line Advances held by the Swing Line Bank shall not require any prior notice.

                  (b) Mandatory. (i) The Applicable Borrower shall, on the 90th
day following the end of each Fiscal Year, beginning with Fiscal Year 2002,
prepay an aggregate principal amount of the Advances comprising part of the same
Borrowings and deposit an amount in the L/C Cash Collateral Account in an amount
equal to (A) if the Total Debt/EBITDA Ratio at such time is greater than
4.00:1.00, 75% of Excess Cash Flow for such Fiscal Year, or (B) if the Total
Debt/EBITDA Ratio at such time is less than or equal to 4.00:1.00 but greater
than 2.50:1.00, 50% of Excess Cash Flow for such Fiscal Year. No such prepayment
shall be required if the Total Debt/EBITDA Ratio is equal to or less than
2.50:1.00. Each such prepayment shall be applied first to the next four
installments in order of maturity of the Tranche A U.S. Term Facility, the
Tranche A Euro Term Facility and the Tranche B Term Facility and to such

<PAGE>   60
                                       55

installments on a pro rata basis, subject to Section 2.06(c), and second to the
Revolving Credit Facility as set forth in clause (v) hereof.

                  (ii) The Applicable Borrower shall, on the date of receipt of
the Net Cash Proceeds by the Parent or any of its Subsidiaries from (A) the
sale, lease, transfer or other disposition of any assets of the Parent or any of
its Subsidiaries (other than any sale, lease, transfer or other disposition of
(i) Inventory, Equipment or other operating assets in the ordinary course of
business and not as a part of the sale of a business, and (ii) other assets for
Net Cash Proceeds, in the aggregate, not to exceed U.S.$1,000,000, in any Fiscal
Year), (B) the incurrence or issuance by the Parent or any of its Subsidiaries
of any Debt (other than Debt permitted by Section 5.02(b)), (C) the issuance and
sale by the Parent or any of its Subsidiaries of any Equity Interests
(including, without limitation, receipt of any capital contribution but
excluding (i) any issuance of Equity Interests of the Parent solely for the
purpose of repaying the Senior Subordinated Notes or any other Debt permitted by
Section 5.02(b), (ii) any issuance of Equity Interests by the U.S. Borrower to
the Parent or by any Subsidiary of the U.S. Borrower to the U.S. Borrower or
another Subsidiary of the U.S. Borrower, (iii) 50% of any Net Cash Proceeds from
any issuance of Equity Interests of the Parent or any of its Subsidiaries
pursuant to a bona fide underwritten initial public offering if the Total
Debt/EBITDA Ratio at such time is equal to or greater than 2.00:1.00 (calculated
after giving effect to the application of the proceeds of such issuance), (iv)
100% of any Net Cash Proceeds from any issuance of Equity Interests of the
Parent or any of its Subsidiaries pursuant to a bona fide underwritten initial
public offering if the Total Debt/EBITDA Ratio at such time is less than
2.00:1.00 (calculated after giving effect to the application of the proceeds of
such issuance), and (v) any issuance of Equity Interests of the Parent or any of
its Subsidiaries solely to finance a Permitted Acquisition or the Pending
Acquisition) and (D) any Extraordinary Receipt received by or paid to or for the
account of the Parent or any of its Subsidiaries and not otherwise included in
clause (A), (B) or (C) above, prepay an aggregate principal amount of the
Advances comprising part of the same Borrowings and deposit an amount in the L/C
Cash Collateral Account, as applicable, in an amount equal to the amount of such
Net Cash Proceeds. Each such prepayment shall be applied first ratably to the
Tranche A U.S. Term Facility, the Tranche A Euro Term Facility and the Tranche B
Term Facility and to the installments thereof on a pro rata basis, subject to
the provisions of Section 2.06(c), and second to the Revolving Credit Facility
as set forth in clause (v) hereof.

                  (iii) The U.S. Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings, the Letter of Credit Advances and the Swing Line Advances
and deposit an amount in the L/C Cash Collateral Account in an amount equal to
the amount by which (A) the sum of the aggregate principal amount of (x) the
Revolving Credit Advances, (y) the Swing Line Advances and (z) the Letter of
Credit Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the Revolving Credit Facility on
such Business Day.

                  (iv) The U.S. Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an amount
sufficient to cause the aggregate

<PAGE>   61
                                       56

amount on deposit in the L/C Cash Collateral Account to equal the amount by
which the aggregate Available Amount of all Letters of Credit then outstanding
exceeds the Letter of Credit Facility on such Business Day.

                  (v) Prepayments of the Revolving Credit Facility made pursuant
to clause (i), (ii) or (iii) above shall be first applied to prepay Letter of
Credit Advances then outstanding until such Advances are paid in full, second
applied to prepay Revolving Credit Advances then outstanding comprising part of
the same Borrowings until such Advances are paid in full and third deposited in
the L/C Cash Collateral Account to cash collateralize 100% of the Available
Amount of the Letters of Credit then outstanding; and, in the case of
prepayments of the Revolving Credit Facility required pursuant to clause (i) or
(ii) above, the amount remaining (if any) after the prepayment in full of the
Advances then outstanding and the 100% cash collateralization of the aggregate
Available Amount of Letters of Credit then outstanding (the sum of such
prepayment amounts, cash collateralization amounts and remaining amount being
referred to herein as the "REDUCTION AMOUNT") may, if not used as set forth
above, be retained by the U.S. Borrower and the Revolving Credit Facility shall
be permanently reduced as set forth in Section 2.05(b)(v). Upon the drawing of
any Letter of Credit for which funds are on deposit in the L/C Cash Collateral
Account, such funds shall be applied to reimburse the Issuing Bank or the
Revolving Credit Lenders, as applicable.

                  (vi) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.

                  (c) Tranche B Opt Out. With respect to any prepayment of
Tranche A U.S. Term Advances, Tranche A Euro Term Advances or Tranche B Term
Advances, the Administrative Agent shall ratably pay the Tranche A U.S. Term
Lenders, the Tranche A Euro Term Lenders and Tranche B Term Lenders; provided,
however, that any Tranche B Lender, at its option, to the extent that any
Tranche A U.S. Term Advances or Tranche A Euro Term Advances are then
outstanding, may elect not to accept such prepayment. Upon receipt by the
Administrative Agent of any such prepayment, the amount of the prepayment that
is available to prepay the Tranche B Term Advances shall be deposited in a cash
collateral account on terms reasonably satisfactory to the Administrative Agent
and the Borrowers (the "PREPAYMENT AMOUNT"), pending application of such amount
on the Prepayment Date as set forth below and promptly after such receipt (the
date of such receipt being the "RECEIPT DATE"), the Administrative Agent shall
give written notice to the Tranche B Term Lenders of the amount available to
prepay the Term B Advances and the date on which such prepayment shall be made
(the "PREPAYMENT DATE"), which date shall be 10 days after the Receipt Date. Any
Lender declining such prepayment (a "DECLINING LENDER") shall given written
notice to the Administrative Agent by 11:00 A.M. (New York City time) on the
Business Day immediately preceding the Prepayment Date. On the Prepayment Date,
an amount equal to that portion of the Prepayment Amount accepted by the Tranche
B Term Lenders other than the Declining Lenders (such Lenders being the
"ACCEPTING LENDERS") to prepay Tranche B Term Advances owing to such Accepting
Lenders shall be withdrawn from the cash collateral account and applied to

<PAGE>   62
                                       57

prepay Tranche B Term Advances owing to such Accepting Lenders on a pro rata
basis. Any amounts that would otherwise have been applied to prepay Advances
under the Tranche B Term Facility owing to Declining Lenders shall instead be
applied ratably to prepay the remaining Tranche A U.S. Term Advances and Tranche
A Euro Term Advances as provided in Section 2.06(a) and (b)(i).

                  SECTION 2.07. Interest. (a) Scheduled Interest. The Applicable
Borrower shall pay interest on the unpaid principal amount of each Advance owing
to each Lender from the date of such Advance until such principal amount shall
be paid in full, at the following rates per annum:

                  (i) Base Rate Advances. During such periods as such Advance is
         a Base Rate Advance, a rate per annum equal at all times to the sum of
         (A) the Base Rate in effect from time to time plus (B) the Applicable
         Margin in effect from time to time, payable in arrears quarterly on the
         last day of each March, June, September and December during such
         periods and on the date such Base Rate Advance shall be Converted or
         paid in full.

                  (ii) Eurodollar Rate Advances. During such periods as such
         Advance is a Eurodollar Rate Advance, a rate per annum equal at all
         times during each Interest Period for such Advances to the sum of (A)
         the Eurodollar Rate for such Interest Period for such Advance plus (B)
         the Applicable Margin in effect from time to time, payable in arrears
         on the last day of such Interest Period and, if such Interest Period
         has a duration of more than three months, on each day that occurs
         during such Interest Period every three months from the first day of
         such Interest Period and on the date such Eurodollar Rate Advance shall
         be Converted or paid in full.

                  (iii) Euro Rate Advances. During such periods as such Advance
         is a Euro Rate Advance, a rate per annum equal at all times during each
         Interest Period for such Advance, to the sum of (A) the Euro Rate for
         such Interest Period for such Advance plus (B) the Applicable Margin in
         effect from time to time plus (C) any Associated Costs applicable from
         time to time, payable in arrears on the last day of such Interest
         Period and, if such Interest Period has a duration of more than three
         months, on each day that occurs during such Interest Period every three
         months from the first day of such Interest Period and on the date such
         Euro Rate Advance shall be paid in full.

                  (b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default and the request of the Required Lenders,
interest shall accrue on (i) the unpaid principal amount of each Advance owing
to each Lender, payable in arrears on the dates referred to in clause (a)(i),
(a)(ii) or (a)(iii) above and on demand, at a rate per annum equal at all times
to 2% per annum above the rate per annum required to be paid on such Advance
pursuant to clause (a)(i), (a)(ii) or (a)(iii) above and (ii) to the fullest
extent permitted by law, the amount of any interest, fee or other amount payable
under the Loan Documents that is not paid when due, from the date such amount
shall be due until such amount shall be paid in full, payable in arrears on the
date such amount shall be paid in full and on demand, at a rate per annum equal
at all

<PAGE>   63
                                       58

times to 2% per annum above the rate per annum required to be paid, in the case
of interest, on the Advance on which such interest has accrued pursuant to
clause (a)(i), (a)(ii) or (a)(iii) above and, in all other cases, on Base Rate
Advances pursuant to clause (a)(i) above.

                  (c) Notice of Interest Period and Interest Rate. Promptly
after receipt of a Notice of Borrowing pursuant to Section 2.02(a), a notice of
Conversion pursuant to Section 2.09 or a notice of selection of an Interest
Period pursuant to the terms of the definition of "Interest Period", the
Administrative Agent shall give notice to the Applicable Borrower and each
Appropriate Lender of the applicable Interest Period and the applicable interest
rate determined by the Administrative Agent for purposes of clause (a)(i),
(a)(ii) or (a)(iii) above.

                  SECTION 2.08. Fees. (a) Commitment Fee. The Applicable
Borrower shall pay to the Administrative Agent for the account of the Revolving
Credit Lenders a commitment fee, from the date of the Initial Extension of
Credit, payable in arrears quarterly on the last day of each March, June,
September and December, commencing June 30, 2001, and on the Termination Date,
at the rate equal to the Applicable Percentage then in effect on the average
daily portion of the sum of each Revolving Credit Lender's Unused Revolving
Credit Commitment, and its Pro Rata Share of the Swing Line Reserve (except, for
any day, Swing Line Advances then made by, and outstanding to, such Revolving
Credit Lender) during such period; provided, however, that any commitment fee
accrued with respect to any of the Commitments of a Defaulting Lender during the
period prior to the time such Lender became a Defaulting Lender and unpaid at
such time shall not be payable by the Applicable Borrower so long as such Lender
shall be a Defaulting Lender except to the extent that such commitment fee shall
otherwise have been due and payable by such Applicable Borrower prior to such
time; and provided further that no commitment fee shall accrue on any of the
Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting
Lender.

                  (b) Agents' Fees. The U.S. Borrower shall pay such further
fees as set forth in that certain Fee Letter dated January 30, 2001.

                  (c) Letter of Credit Fees, Etc. (i) The U.S. Borrower shall
pay to the Administrative Agent for the account of each Revolving Credit Lender
a commission, payable in arrears quarterly on the last day of each March, June,
September and December, commencing June 30, 2001, and on the earliest to occur
of the full drawing, expiration, termination or cancellation of any Letter of
Credit and on the Termination Date, on such Lender's Pro Rata Share of the
average daily aggregate Available Amount during such quarter, at a rate equal to
the then Applicable Margin for Eurodollar Rate Advances under the Revolving
Credit Facility.

                  (ii) The U.S. Borrower shall pay to the Issuing Bank, for its
own account, (A) an issuance fee for each Letter of Credit in an amount equal to
0.125% of the Available Amount of such Letter of Credit on the date of issuance
thereof, payable on such date, or such other amount as the U.S. Borrower and the
Issuing Bank may agree and (B) such other commissions, fronting fees, transfer
fees and other fees and charges in connection with the

<PAGE>   64
                                       59

issuance or administration of each Letter of Credit as the U.S. Borrower and the
Issuing Bank shall agree.

                  SECTION 2.09. Conversion of Advances. (a) Optional. The U.S.
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Section
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(c) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the
Appropriate Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the U.S. Borrower.

                  (b) Mandatory. (i) If the Applicable Borrower shall fail to
select the duration of any Interest Period for any Eurodollar Rate Advances or
Euro Rate Advances, as the case may be, in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Applicable Borrower and the
Appropriate Lenders, whereupon each such Eurodollar Rate Advance or Euro Rate
Advance, as the case may be, will automatically, on the last day of the then
existing Interest Period therefor, be continued as a Eurodollar Rate Advance or
Euro Rate Advance, as the case may be, for a one-month Interest Period.

                  (ii) Upon the occurrence and during the continuance of any
Event of Default, (x) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (y) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended.

                  SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request issued or made after the date hereof by any central bank or other
governmental authority, including, without limitation, any agency of the
European Union or similar monetary or multinational authority (whether or not
having the force of law), there shall be any increase in the cost to any Lender
Party of agreeing to make or of making, funding or maintaining Euro Rate
Advances or Eurodollar Rate Advances or of agreeing to issue or of issuing or
maintaining or participating in Letters of Credit or of agreeing to make or of
making or maintaining Letter of Credit Advances (excluding, for purposes of this
Section 2.10, any such increased costs resulting from or representing (x) Taxes
or Other Taxes

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                                       60

(as to which Section 2.12 shall govern) and (y) Excluded Taxes), then the
Applicable Borrower shall from time to time, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost; provided,
however, that a Lender Party claiming additional amounts under this Section
2.10(a) agrees to use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost that may thereafter accrue and would
not, in the reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. A certificate as to the amount of such
increased cost, submitted to the Applicable Borrower by such Lender Party, shall
be conclusive and binding for all purposes, absent manifest error.

                  (b) If, due to either (i) the introduction of or any change in
or in the interpretation of any law or regulation after the date hereof or (ii)
the compliance with any guideline or request issued or made after the date
hereof by any central bank or other governmental authority, including, without
limitation, any agency of the European Union or similar monetary or
multinational authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
any Lender Party or any corporation controlling such Lender Party as a result of
or based upon the existence of such Lender Party's commitment to lend or to
issue or participate in Letters of Credit hereunder and other commitments of
such type or the issuance or maintenance of or participation in the Letters of
Credit (or similar contingent obligations), then, upon demand by such Lender
Party or such corporation (with a copy of such demand to the Administrative
Agent), the Applicable Borrower shall pay to the Administrative Agent for the
account of such Lender Party, from time to time as specified by such Lender
Party, additional amounts sufficient to compensate such Lender Party in the
light of such circumstances, to the extent that such Lender Party reasonably
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend or to issue or participate in Letters of
Credit hereunder or to the issuance or maintenance of or participation in any
Letters of Credit. A certificate as to such amounts submitted to the Applicable
Borrower by such Lender Party shall be conclusive and binding for all purposes,
absent manifest error.

                  (c) (i) If, with respect to any Eurodollar Rate Advances under
any Facility, the Required Lenders notify the Administrative Agent in writing,
that the Eurodollar Rate for such Interest Period will not adequately reflect
the cost to such Lenders of making, funding or maintaining their Eurodollar Rate
Advances for such Interest Period (setting forth in the writing the nature and
amount of such costs), the Administrative Agent shall forthwith so notify the
U.S. Borrower and the Appropriate Lenders, whereupon, unless the U.S. Borrower
offers to pay such increased costs to such Lenders, (x) each such Eurodollar
Rate Advance under such Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Appropriate Lenders to make, or to Convert Advances into such
Eurodollar Rate Advances shall be suspended until the Administrative Agent

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                                       61

shall notify the U.S. Borrower that such Lenders have determined that the
circumstances causing such suspension no longer exist.

                  (ii) If, with respect to any Euro Rate Advances under the
Tranche A Euro Term Facility, Tranche A Euro Term Lenders holding at least a
majority of the Tranche A Euro Term Commitments notify in writing, the
Administrative Agent that the Euro Rate for any Interest Period for such
Advances will not adequately reflect the cost to such Lenders of making, funding
or maintaining their Euro Rate Advances for such Interest Period (setting forth
in the writing the nature and amount of such costs), the Administrative Agent
shall forthwith so notify the Euro Borrower and the Appropriate Lenders,
whereupon, unless the Euro Borrower offers to pay such increased costs to such
Lenders, the applicable Euro Rate shall be determined by the Administrative
Agent on the basis set forth in the proviso to the definition of Euro Rate.

                  (d) (i) Notwithstanding any other provision of this Agreement,
if the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the U.S. Borrower
through the Administrative Agent, (x) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Base Rate Advance and (y) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the U.S.
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.

                  (ii) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Tranche A Euro Term Lender
or its Euro Lending Office to perform its obligations hereunder to make Euro
Rate Advances or to continue to fund or maintain Euro Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Euro Borrower
through the Administrative Agent, the Euro Borrower shall repay all outstanding
Tranche A Euro Term Borrowings which include such affected Euro Rate Advances in
full, provided that (x) if the circumstances described above apply to any Euro
Rate Advances, the Euro Borrower may, in lieu of repayment of the applicable
Borrowings, either (A) maintain such Euro Rate Advances, in which case the
applicable Euro Rate shall be determined on the basis set forth in the proviso
to the definition of

<PAGE>   67
                                       62

Euro Rate, unless the maintenance of such Euro Rate Advance outstanding on such
basis would not stop the condition described above from existing (in which case
the action described above, without giving effect to this proviso, shall be
required to be taken) or (B) declare that such Euro Rate Advances shall
forthwith be converted into Advances denominated in Dollars pursuant to Section
2.17 (in which case the provisions herein relating to Base Rate Advances and
Eurodollar Rate Advances shall apply from and after such conversion), and (y) if
more than one Tranche A Euro Lender is affected at any time, then all such
affected Lenders must be treated the same pursuant to this Section 2.10(d)(ii).

                  (e) Notwithstanding anything contained in this Section 2.10,
neither Borrower shall be liable for any amounts incurred or accrued pursuant to
this Section 2.10 more than 180 days prior to the date on which notice of the
event or occurrence giving rise to the obligation to make a payment under this
Section 2.10 in given to the Applicable Borrower.

                  SECTION 2.11. Payments and Computations. (a) Each Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off (except as otherwise provided in Section 2.15), not
later than (A) 2:00 P.M. (New York City time) in the case of the U.S. Borrower,
and (B) 12:00 noon (London time) in the case of the Euro Borrower, on the day
when due in the Applicable Currency to the Administrative Agent at the
Administrative Agent's Account in same day funds, with payments being received
by the Administrative Agent after such time being deemed to have been received
on the next succeeding Business Day. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by a Borrower
is in respect of principal, interest, commitment fees or any other Obligation
then payable hereunder and under the Notes to more than one Lender Party, to
such Lender Parties for the account of their respective Applicable Lending
Offices ratably in accordance with the amounts of such respective Obligations
then payable to such Lender Parties and (ii) if such payment by a Borrower is in
respect of any Obligation then payable hereunder to one Lender Party, to such
Lender Party for the account of its Applicable Lending Office, in each case to
be applied in accordance with the terms of this Agreement. Upon its acceptance
of an Assignment and Acceptance and recording of the information contained
therein in the Register pursuant to Section 9.07(d), from and after the
effective date of such Assignment and Acceptance, the Administrative Agent shall
make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.

                  (b) Each Borrower hereby authorizes each Lender Party and each
of its Affiliates, if and to the extent payment owed to such Lender Party is not
made when due hereunder or, in the case of a Lender, under the Note held by such
Lender, to charge from time to time, to the fullest extent permitted by law,
against any or all of each Borrower's accounts with such Lender Party or such
Affiliate any amount so due.

<PAGE>   68
                                       63

                  (c) All computations of interest and fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days (or, to the extent interest is determined based on the Base Rate, 365
or 366 days, as applicable), in each case for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest, fees or commissions are payable. Each determination by the
Administrative Agent of an interest rate, fee or commission hereunder shall be
conclusive and binding for all purposes, absent manifest error.

                  (d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

                  (e) Unless the Administrative Agent shall have received notice
from the Applicable Borrower prior to the date on which any payment is due to
any Lender Party hereunder that the Applicable Borrower will not make such
payment in full, the Administrative Agent may assume that the Applicable
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender Party on such due date an amount equal to the
amount then due such Lender Party. If and to the extent the Applicable Borrower
shall not have so made such payment in full to the Administrative Agent, each
such Lender Party shall repay to the Administrative Agent forthwith on demand
such amount distributed to such Lender Party together with interest thereon, for
each day from the date such amount is distributed to such Lender Party until the
date such Lender Party repays such amount to the Administrative Agent, at (i)
the Federal Funds Rate in the case of Advances denominated in Dollars or (ii)
the cost of funds incurred by the Administrative Agent in respect of such amount
in the case of Advances denominated in Euros.

                  (f) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.

                  SECTION 2.12. Taxes. (a) Any and all payments by the Loan
Parties hereunder or under the Notes shall be made, in accordance with Section
2.10, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges

<PAGE>   69
                                       64

or withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender Party and each Agent, taxes that are imposed on its net
income (including branch profits taxes, minimum taxes and franchise taxes
imposed in lieu of net income taxes) by the country, state or foreign
jurisdiction under the laws of which such Lender Party or such Agent, as the
case may be, is organized or any political subdivision thereof or in which such
Lender Party or such Agent (but not the U.S. Borrower or the Euro Borrower) is
engaged in a trade or business and, in the case of each Lender Party, taxes that
are imposed on its overall net income (including branch profits taxes, minimum
taxes and franchise taxes imposed in lieu of net income taxes) by the country,
state or foreign jurisdiction of such Lender Party's Applicable Lending Office
or any political subdivision thereof (hereinafter, "EXCLUDED TAXES") (all such
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes, other than Excluded Taxes,
being hereinafter referred to as "TAXES"). If a Loan Party shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender Party or any Agent, (i) the sum payable by such Loan
Party shall be increased as may be necessary so that after such Loan Party and
the Administrative Agent have made all required deductions (including deductions
applicable to additional sums payable under this Section 2.12) such Lender Party
or such Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Party shall make
all such deductions and (iii) such Loan Party shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.

                  (b) In addition, the Loan Parties shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performance under, or otherwise with
respect to, this Agreement or the Notes, or with respect to the transfer of
Notes in accordance with the provisions of Section 9.07 (hereinafter referred to
as "OTHER TAXES").

                  (c) Each Loan Party shall indemnify each Lender Party and each
Agent for and hold them harmless against the full amount of Taxes and Other
Taxes (including Taxes and Other Taxes, but not including Excluded Taxes,
imposed on the indemnity payable under this subsection (c)), imposed on or paid
by such Lender Party or such Agent (as the case may be) (including penalties,
additions to tax, interest and expenses arising therefrom or with respect
thereto), provided, however, that the Loan Parties shall not be obligated to
make payment to the Lender Parties or any Agent (as the case may be) pursuant to
this subsection (c) in respect of penalties, interest and other liabilities
attributable to any Taxes or Other Taxes, if (i) written demand therefor has not
been made by such Lender Party or such Agent within 90 days from the date on
which such Lender Party or such Agent received written notice of the imposition
of Taxes or Other Taxes by the relevant taxing or governmental authority, but
only if one or more of the Loan Parties have not received a written demand or
notice of the imposition of Taxes or Other Taxes from such authority and only to
the extent such penalties, interest and other similar liabilities are
attributable to such failure or delay by such Lender Party or such Agent in
making such written demand, (ii) such penalties, interest and other liabilities
have accrued after the Loan

<PAGE>   70
                                       65

Party had indemnified or paid an additional amount due as of the date of such
payment pursuant to this subsection (c) and are imposed because the Lender Party
failed to deposit the indemnity payment with the applicable taxing or other
governmental authority or (iii) such penalties, interest and other liabilities
are attributable to the gross negligence or willful misconduct of the Lender
Party or the Agent. This indemnification shall be made within 30 days from the
date such Lender Party or such Agent (as the case may be) makes written demand
therefor.

                  (d) Within 30 days after the date of any payment of Taxes, the
Applicable Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing such payment or, if such receipt is not obtainable, other evidence of
such payment reasonably satisfactory to the Administrative Agent.

                  (e) (i) In the case of payments made by the U.S. Borrower,
each Lender Party organized under the laws of a jurisdiction outside the United
States shall, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender Party and on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender Party in the
case of each other Lender Party, and in the case of any Lender Party, on or
prior to the date the Lender Party changes its Applicable Lending Office, and
from time to time thereafter as requested in writing by a Borrower (but only so
long thereafter as such Lender Party remains lawfully able to do so), provide
each of the Administrative Agent and such Borrower with two original Internal
Revenue Service forms W-8ECI or W-8BEN (or successor form) (and, if such Lender
delivers a form W-8BEN claiming the benefits of exemption from United States
withholding tax under Section 881(c), a certificate representing that such
Lender Party is not a "bank" for purposes of Section 881(c) of the Internal
Revenue Code, is not a 10-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of such Borrower and is not a
controlled foreign corporation related to such Borrower (within the meaning of
Section 864(d)(4) of the Internal Revenue Code). If a Lender Party is unable to
deliver one of these forms or if the forms provided by a Lender Party at the
time such Lender Party first becomes a party to this Agreement or at the time a
Lender Party changes its Applicable Lending Office (other than at the request of
one of the Borrowers) indicate a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes unless and until such Lender Party provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
forms; provided, however, that if, at the effective date of the Assignment and
Acceptance pursuant to which a Lender Party becomes a party to this Agreement,
the Lender Party assignor was entitled to payments under subsection (a) of this
Section 2.12 in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W-8BEN
or W-8ECI

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                                       66

(or the related certificate described above) or any successor form, that the
applicable Lender Party reasonably considers to be confidential, such Lender
Party shall give notice thereof to the Applicable Borrower and shall not be
obligated to include in such form or document such confidential information.

                  (ii) In the case of payments made by the Euro Borrower, each
Lender Party shall, as requested by the Euro Borrower, (i) provide information,
documents or other evidence concerning the nationality, residence or identity of
the Lender Party ("FORMS") and (ii) make and deliver any declaration or other
similar claim, or satisfy any information or reporting requirements which are
imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to a whole or partial exemption from any
Tax or Other Tax, assessment or other governmental charge ("DECLARATIONS");
provided, however, that if any such Forms or Declarations require the disclosure
of information substantially more comprehensive than the information required by
the Internal Revenue Service Form W-8BEN or W-8ECI (or any successor from) and
that the Lender Party reasonably considers to be confidential such Lender Party
shall give notice thereof to the Euro Borrower and shall not be obligated to
include in such Forms or Declarations such confidential information.

                  (f) For any period with respect to which a Lender Party has
failed to provide a Borrower with the appropriate form described in subsection
(e) above (other than if such failure is due to a change in law occurring after
the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) above in respect of a Lender
Party assignee), such Lender Party shall not be entitled to indemnification
under subsection (a) or (c) of this Section 2.12 with respect to Taxes imposed
by reason of such failure; provided, however, that, should a Lender Party become
subject to Taxes because of its failure to deliver a form required hereunder,
the Applicable Borrower shall take such steps as such Lender Party shall
reasonably request to assist such Lender Party to recover such Taxes.

                  (g) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be disadvantageous to such Lender Party.

                  SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, through the application of any proceeds of
Collateral or otherwise, other than as a result of an assignment pursuant to
Section 9.07) (a) on account of Obligations due and payable to such Lender Party
hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender Party at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time) of payments on account of the Obligations due and payable to all
Lender Parties hereunder and under the Notes at such time obtained by all the

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                                       67

Lender Parties at such time or (b) on account of Obligations owing (but not due
and payable) to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations owing to such Lender Party at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party's
ratable share (according to the proportion of (i) the purchase price paid to
such Lender Party to (ii) the aggregate purchase price paid to all Lender
Parties) of such recovery together with an amount equal to such Lender Party's
ratable share (according to the proportion of (i) the amount of such other
Lender Party's required repayment to (ii) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered; provided
further that, so long as the Obligations under the Loan Documents shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other Appropriate Lenders. Each Borrower
agrees that any Lender Party so purchasing an interest or participating interest
from another Lender Party pursuant to this Section 2.13 may, to the fullest
extent permitted by law, exercise all its rights of payment (including the right
of set-off) with respect to such interest or participating interest, as the case
may be, as fully as if such Lender Party were the direct creditor of such
Borrower in the amount of such interest or participating interest, as the case
may be.

                  SECTION 2.14. Use of Proceeds. The proceeds of the Tranche A
U.S. Term Advances, the Tranche A Euro Term Advances and the Tranche B Term
Advances shall be available (and the Applicable Borrower agrees that it shall
use such proceeds) solely to finance the Recapitalization, to refinance Existing
Debt and pay fees and expenses incurred in connection with the Transaction. The
proceeds of the Revolving Credit Advances, the Swing Line Advances and the
issuances of Letters of Credit shall be available (and the U.S. Borrower agrees
that it shall use such proceeds) solely to provide revolving credit for the U.S.
Borrower and its Subsidiaries and for any other lawful purpose permitted
hereunder.

                  SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to a Borrower and (iii) such
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then such Borrower
may, so long as no Default shall occur or be continuing at such time and to the
fullest extent permitted by applicable law, set off and otherwise apply the
Obligation of such

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                                       68

Borrower to make such payment to or for the account of such Defaulting Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that, on any date, a Borrower shall so set off and otherwise apply
its obligation to make any such payment against the obligation of such
Defaulting Lender to make any such Defaulted Advance on or prior to such date,
the amount so set off and otherwise applied by such Borrower shall constitute
for all purposes of this Agreement and the other Loan Documents an Advance by
such Defaulting Lender made on the date of such setoff under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.01. Such Advance shall be considered, for all
purposes of this Agreement, to comprise part of the Borrowing in connection with
which such Defaulted Advance was originally required to have been made pursuant
to Section 2.01, even if the other Advances comprising such Borrowing shall be
Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant
to this subsection (a). Each Borrower shall notify the Administrative Agent at
any time such Borrower exercises its right of set-off pursuant to this
subsection (a) and shall set forth in such notice (A) the name of the Defaulting
Lender and the Defaulted Advance required to be made by such Defaulting Lender
and (B) the amount set off and otherwise applied in respect of such Defaulted
Advance pursuant to this subsection (a). Any portion of such payment otherwise
required to be made by a Borrower to or for the account of such Defaulting
Lender which is paid by such Borrower, after giving effect to the amount set off
and otherwise applied by such Borrower pursuant to this subsection (a), shall be
applied by the Administrative Agent as specified in subsection (b) or (c) of
this Section 2.15.

                  (b) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to any Agent or any of the other Lender Parties and (iii) a Borrower
shall make any payment hereunder or under any other Loan Document to the
Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Agents or
such other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by such Borrower to or for the account of
such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay such Defaulted Amount. In the event that the
Administrative Agent shall so apply any such amount to the payment of any such
Defaulted Amount on any date, the amount so applied by the Administrative Agent
shall constitute for all purposes of this Agreement and the other Loan Documents
payment, to such extent, of such Defaulted Amount on such date. Any such amount
so applied by the Administrative Agent shall be retained by the Administrative
Agent or distributed by the Administrative Agent to such other Agents or such
other Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent, such other
Agents and such other Lender Parties and, if the amount of such payment made by
such Borrower shall at such time be insufficient to pay all Defaulted Amounts
owing at such time to the Administrative Agent, such other Agents and such other
Lender Parties, in the following order of priority:

<PAGE>   74

                                       69

                  (i) first, to the Agents for any Defaulted Amounts then owing
         to them, in their capacities as such, ratably in accordance with such
         respective Defaulted Amounts then owing to the Agents;

                  (ii) second, to the Issuing Bank and the Swing Line Bank for
         any Defaulted Amounts then owing to them, in their capacities as such,
         pro rata in accordance with such Defaulted Amounts then owing to the
         Issuing Bank and the Swing Line Bank; and

                  (iii) third, to any other Lender Parties for any Defaulted
         Amounts then owing to such other Lender Parties, ratably in accordance
         with such respective Defaulted Amounts then owing to such other Lender
         Parties.

Any portion of such amount paid by a Borrower for the account of such Defaulting
Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.

                  (c) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a
Defaulted Advance or a Defaulted Amount and (iii) a Borrower, any Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then such Borrower or such Agent or such other Lender Party shall pay
such amount to the Administrative Agent to be held by the Administrative Agent,
to the fullest extent permitted by applicable law, in escrow or the
Administrative Agent shall, to the fullest extent permitted by applicable law,
hold in escrow such amount otherwise held by it. Any funds held by the
Administrative Agent in escrow under this subsection (c) shall be deposited by
the Administrative Agent in an account with MS & Co., in the name and under the
control of the Administrative Agent, but subject to the provisions of this
subsection (c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be MS & Co.'s standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the Administrative Agent in escrow under, and applied by the
Administrative Agent from time to time in accordance with the provisions of,
this subsection (c). The Administrative Agent shall, to the fullest extent
permitted by applicable law, apply all funds so held in escrow from time to time
to the extent necessary to make any Advances required to be made by such
Defaulting Lender and to pay any amount payable by such Defaulting Lender
hereunder and under the other Loan Documents to the Administrative Agent or any
other Lender Party, as and when such Advances or amounts are required to be made
or paid and, if the amount so held in escrow shall at any time be insufficient
to make and pay all such Advances and amounts required to be made or paid at
such time, in the following order of priority:

                  (i) first, to the Agents for any amounts then due and payable
         by such Defaulting Lender to them hereunder, in their capacities as
         such, ratably in accordance with such respective amounts then due and
         payable to the Agents;

<PAGE>   75
                                       70

                  (ii) second, to the Issuing Bank and the Swing Line Bank for
         any amounts then due and payable to them hereunder, in their capacities
         as such, pro rata by such Defaulting Lender, in accordance with such
         amounts then due and payable to the Issuing Bank and the Swing Line
         Bank;

                  (iii) third, to any other Lender Parties for any amount then
         due and payable by such Defaulting Lender to such other Lender Parties
         hereunder, ratably in accordance with such respective amounts then due
         and payable to such other Lender Parties; and

                  (iv) fourth, to such Borrower for any Advance then required to
         be made by such Defaulting Lender pursuant to a Commitment of such
         Defaulting Lender.

In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.

                  (d) The rights and remedies against a Defaulting Lender under
this Section 2.15 are in addition to other rights and remedies that a Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that any Agent or any Lender Party may have against such Defaulting Lender
with respect to any Defaulted Amount.

                  SECTION 2.16. Evidence of Debt. (a) Each Lender Party shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Applicable Borrower to such Lender resulting from each
Advance owing to such Lender Party from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder. Each Borrower agrees that upon notice by any Lender Party to such
Borrower (with a copy of such notice to the Administrative Agent) to the effect
that a promissory note or other evidence of indebtedness is required or
appropriate in order for such Lender Party to evidence (whether for purposes of
pledge, enforcement or otherwise) the Advances owing to, or to be made by, such
Lender Party, such Borrower shall promptly execute and deliver to such Lender
Party, with a copy to the Administrative Agent, a Revolving Credit Note, a
Tranche A U.S. Term Note, Tranche A Euro Term Note and a Tranche B Note, as
applicable, in substantially the form of Exhibits A-1, A-2, A-3 and A-4 hereto,
respectively, payable to the order of such Lender Party in a principal amount
equal to the Revolving Credit Commitment, the Tranche A U.S. Term Commitment,
the Tranche A Euro Term Commitment and the Tranche B Term Commitment,
respectively, of such Lender Party. All references to Notes in the Loan
Documents shall mean Notes, if any, to the extent issued hereunder.

                  (b) The Register maintained by the Administrative Agent
pursuant to Section 9.07(d) shall include a control account, and a subsidiary
account for each Lender Party, in which accounts (taken together) shall be
recorded (i) the date and amount of each Borrowing

<PAGE>   76
                                       71

made hereunder, the Type of Advances comprising such Borrowing and, if
appropriate, the Interest Period applicable thereto, (ii) the terms of each
Assignment and Acceptance delivered to and accepted by it, (iii) the amount of
any principal or interest due and payable or to become due and payable from each
Borrower to each Lender Party hereunder, and (iv) the amount of any sum received
by the Administrative Agent from each Borrower hereunder and each Lender Party's
share thereof.

                  (c) Entries made in good faith by the Administrative Agent in
the Register pursuant to subsection (b) above, and by each Lender Party in its
account or accounts pursuant to subsection (a) above, shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from each Borrower to, in the case of the Register, each Lender
Party and, in the case of such account or accounts, such Lender Party, under
this Agreement, absent manifest error; provided, however, that the failure of
the Administrative Agent or such Lender Party to make an entry, or any finding
that an entry is incorrect, in the Register or such account or accounts shall
not limit or otherwise affect the obligations of each Borrower under this
Agreement.

                  SECTION 2.17. Increase in the Tranche B Term Commitments. (a)
The U.S. Borrower may, at any time and from time to time prior to the
Termination Date, by notice to the Administrative Agent, request the addition of
a new facility pursuant to an increase in the Tranche B Term Commitments (each,
a "COMMITMENT INCREASE") equal to up to U.S.$95,000,000 in the aggregate to be
effective as of a date that is at least 90 days prior to the scheduled
Termination Date then in effect (the "INCREASE DATE") as specified in the
related notice to the Administrative Agent; provided, however, that (i) in no
event shall the aggregate amount of all of the Increases exceed U.S.$95,000,000,
(ii) on the date of any request by the U.S. Borrower for a Commitment Increase
and on the related Increase Date, the applicable conditions set forth in Section
3.02 and in clause (d) of this Section 2.17 shall be satisfied and, to the
extent such Commitment Increase shall be used to finance a Permitted Acquisition
or the Pending Acquisition, the conditions set forth in respectively the
definition of Permitted Acquisition or in Section 5.02(f)(vii) shall be
satisfied, and (iii) such new facility shall contain such other terms as may be
agreed by the U.S. Borrower and the Agents.

                  (b) The Administrative Agent shall promptly notify the Lenders
of a request by the U.S. Borrower for a Commitment Increase, which notice shall
include (i) the proposed amount of such requested Commitment Increase, (ii) the
proposed Increase Date and (iii) the date by which Lenders wishing to
participate in the Commitment Increase must commit to an increase in the amount
of their respective Commitments (the "COMMITMENT DATE"). Each Lender that is
willing to participate in the requested Commitment Increase (each an "INCREASING
LENDER") shall, in its sole discretion, give written notice to the
Administrative Agent on or prior to the Commitment Date of the amount by which
it is willing to increase its Tranche B Term Commitment. If the Lenders notify
the Administrative Agent that they are willing to participate in a Commitment
Increase by an aggregate amount that exceeds the amount of the requested
Commitment Increase, the requested Commitment Increase shall be allocated among
the Lenders

<PAGE>   77
                                       72

willing to participate therein in such amounts as are agreed between the U.S.
Borrower and the Administrative Agent.

                  (c) Promptly following the applicable Commitment Date, the
Administrative Agent shall notify the U.S. Borrower as to the amount, if any, by
which the Lenders are willing to participate in the requested Commitment
Increase. If the aggregate amount by which the Lenders are willing to
participate in the requested Commitment Increase on any such Commitment Date is
less than the requested Commitment Increase, then the U.S. Borrower may extend
offers to one or more Eligible Assignees to participate in any portion of the
requested Commitment Increase that has not been committed to by the Lenders as
of the Commitment Date; provided, however, that the Commitment of each such
Eligible Assignee shall be in an amount equal to at least U.S.$1,000,000.

                  (d) On the applicable Increase Date, each Eligible Assignee
that accepts an offer to participate in a requested Commitment Increase in
accordance with Section 2.17(c) (each such Eligible Assignee, an "ASSUMING
LENDER") shall become a Lender party to this Agreement as of the applicable
Increase Date and the Commitment of each Increasing Lender for such Commitment
Increase shall be so increased by such amount (or by the amount allocated to
such Lender pursuant to the last sentence of Section 2.17(b)) as of such
Increase Date; provided, however, that the Administrative Agent shall have
received on or before the Increase Date the following, each dated such date:

                  (i) (A) certified copies of resolutions of the Board of
         Directors of the U.S. Borrower approving the applicable Commitment
         Increase and the corresponding modifications to this Agreement and (B)
         an opinion of counsel for the U.S. Borrower (which may be in-house
         counsel), in a form reasonably satisfactory to the Administrative
         Agent;

                  (ii) an assumption agreement from each Assuming Lender, if
         any, in form and substance satisfactory to the U.S. Borrower and the
         Administrative Agent (each an "ASSUMPTION AGREEMENT"), duly executed by
         such Eligible Assignee, the Administrative Agent and the U.S. Borrower;
         and

                  (iii) confirmation from each Increasing Lender of the increase
         in the amount of its Commitment in a writing satisfactory to the U.S.
         Borrower and the Administrative Agent.

On the applicable Increase Date, upon fulfillment of the conditions set forth in
the immediately preceding sentence of this Section 2.17(d), the Administrative
Agent shall notify the Lenders (including, without limitation, each Assuming
Lender) and the U.S. Borrower, on or before 1:00 P.M. (New York City time), by
telecopier or telex, of the occurrence of the applicable Commitment Increase to
be effected on the related Increase Date and shall record in the Register the
relevant information with respect to each Increasing Lender and each Assuming
Lender on such date.

<PAGE>   78
                                       73

                                  ARTICLE III

            CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

                  SECTION 3.01. Conditions Precedent to Initial Extension of
Credit. The obligation of each Lender to make an Advance or of the Issuing Bank
to issue a Letter of Credit on the occasion of the Initial Extension of Credit
hereunder is subject to the satisfaction of the following conditions precedent
before or concurrently with the Initial Extension of Credit:

                  (a) The Administrative Agent shall have received on or before
         the day of the Initial Extension of Credit the following, each dated
         such day (unless otherwise specified), in form and substance
         satisfactory to the Administrative Agent (unless otherwise specified)
         and (except for the Notes) in sufficient copies for each Lender Party:

                           (i) The Notes payable to the order of the Lenders to
                  the extent requested pursuant to Section 2.16.

                           (ii) A security agreement in substantially the form
                  of Exhibit D hereto (together with each other security
                  agreement and security agreement supplement delivered pursuant
                  to Section 5.01(j), in each case as amended, the "SECURITY
                  AGREEMENT"), duly executed by each Loan Party, together with:

                                    (A) certificates representing the Pledged
                           Shares referred to therein accompanied by undated
                           stock powers executed in blank and instruments
                           evidencing the Pledged Debt indorsed in blank,

                                    (B) financing statements, duly executed for
                           filing under the Uniform Commercial Code of all
                           jurisdictions that the Administrative Agent may deem
                           necessary or desirable in order to perfect and
                           protect the first priority liens and security
                           interests created under the Security Agreement,
                           covering the Collateral described in the Security
                           Agreement,

                                    (C) completed requests for information,
                           dated on or before the date of the Initial Extension
                           of Credit, listing all effective financing statements
                           filed in the jurisdictions referred to in clause (B)
                           above that name any Loan Party as debtor, together
                           with copies of such financing statements,

                                    (D) evidence of the insurance required by
                           the terms of the Security Agreement, and

                                    (E) evidence that all other action that the
                           Administrative Agent may deem necessary or desirable
                           in order to perfect and protect the first priority
                           liens and security interests created under the
                           Security Agreement

<PAGE>   79
                                       74

                           has been taken (including, without limitation,
                           receipt of duly executed payoff letters, UCC-3
                           termination statements and landlords' and bailees'
                           waiver and consent agreements).

                           (iii) Security agreements (or other applicable
                  agreement under local law), duly executed by the applicable
                  Loan Party, together with any document empowered under local
                  law to obtain a validly perfected first priority security
                  interest in the Equity Interests owned by it (to the extent
                  they constitute Collateral) and, in the case of the Euro
                  Borrower, in the intercompany notes and intercompany loans
                  owing to it (collectively, the "NON-U.S. SECURITY DOCUMENTS").

                           (iv) Certified copies of the resolutions of the Board
                  of Directors of each Loan Party approving the Transaction and
                  each Transaction Document to which it is or is to be a party,
                  and of all documents evidencing other necessary corporate
                  action and governmental and other third party approvals and
                  consents, if any, with respect to the Transaction and each
                  Transaction Document to which it is or is to be a party.

                           (v) A copy of a certificate of the Secretary of State
                  of the jurisdiction of incorporation of each Loan Party (or
                  other appropriate governmental official), dated reasonably
                  near the date of the Initial Extension of Credit, certifying
                  (A) as to a true and correct copy of the charter of such Loan
                  Party and each amendment thereto on file in such Secretary's
                  office and (B) that (1) such amendments are the only
                  amendments to such Loan Party's charter on file in such
                  Secretary's office, (2) such Loan Party has paid all franchise
                  taxes to the date of such certificate and (C) such Loan Party
                  is duly incorporated and in good standing or presently
                  subsisting under the laws of the state of the jurisdiction of
                  its incorporation.

                           (vi) A certificate of each Loan Party, signed on
                  behalf of such Loan Party by its President or a Vice President
                  and its Secretary or any Assistant Secretary, dated the date
                  of the Initial Extension of Credit (the statements made in
                  which certificate shall be true on and as of the date of the
                  Initial Extension of Credit), certifying as to (A) the absence
                  of any amendments to the charter of such Loan Party since the
                  date of the Secretary of State's certificate referred to in
                  Section 3.01(a)(v), (B) a true and correct copy of the bylaws
                  of such Loan Party as in effect on the date on which the
                  resolutions referred to in Section 3.01(a)(iv) were adopted
                  and on the date of the Initial Extension of Credit, (C) the
                  due incorporation and good standing or valid existence of such
                  Loan Party as a corporation organized under the laws of the
                  jurisdiction of its incorporation, and the absence of any
                  proceeding for the dissolution or liquidation of such Loan
                  Party, (D) the truth of the representations and warranties
                  contained in the Loan Documents as though made on and as of
                  the date of the Initial Extension of Credit

<PAGE>   80
                                       75

                  and (E) the absence of any event occurring and continuing, or
                  resulting from the Initial Extension of Credit, that
                  constitutes a Default.

                           (vii) A certificate of the Secretary or an Assistant
                  Secretary of each Loan Party certifying the names and true
                  signatures of the officers of such Loan Party authorized to
                  sign each Transaction Document to which it is or is to be a
                  party and the other documents to be delivered hereunder and
                  thereunder.

                           (viii) Certified copies of each of the Related
                  Documents and the intercompany notes, duly executed by the
                  parties thereto and in form and substance satisfactory to the
                  Lender Parties acting reasonably, together with all
                  agreements, instruments and other documents delivered in
                  connection therewith as the Administrative Agent shall
                  request.

                           (ix) Certificates, in substantially the form of
                  Exhibit F hereto, attesting to the Solvency of the U.S.
                  Borrower and the Guarantors before and after giving effect to
                  the Transaction, from its President.

                           (x) Evidence of insurance required by the Loan
                  Documents, and in each case naming the Collateral Agent as
                  additional insured and loss payee.

                           (xi) A Notice of Borrowing relating to the Initial
                  Extension of Credit.

                           (xii) A favorable opinion of Latham & Watkins,
                  counsel for the Loan Parties, in substantially the form of
                  Exhibit G hereto.

                           (xiii) Favorable opinions of local counsel to the
                  Loan Parties in France, Italy, Luxembourg, the Netherlands and
                  Sweden, in substantially the forms of Exhibit I attached
                  hereto.

                           (xiv) Evidence satisfactory to the Administrative
                  Agent that CT Corporation System shall have been appointed as
                  Process Agent under Section 9.13 hereof.

                  (b) The Lender Parties shall be satisfied with the corporate
         and legal structure and capitalization of each Loan Party and each of
         its Subsidiaries the Equity Interests in which Subsidiaries is being
         pledged pursuant to the Loan Documents, including the terms and
         conditions of the charter, bylaws and each class of Equity Interest in
         each Loan Party and each such Subsidiary and of each agreement or
         instrument relating to such structure or capitalization.

                  (c) The final terms and conditions of the Transaction shall be
         consistent with the form of the Agreement and Plan of Recapitalization
         (draft dated 01/27/01) provided to the Joint Lead Arrangers. The
         Transaction shall be structured such that the goodwill

<PAGE>   81
                                       76

         allocable to the United States shall be tax-deductible by the U.S.
         Borrower and the other Loan Parties organized under the laws of a State
         of the United States and the Parent shall have properly and timely
         filed an election on Form 8832, Entity Classification Election, to be
         treated for U.S. federal income tax purposes as an association taxable
         as a corporation.

                  (d) At least 90% of the capital stock of the U.S. Borrower
         shall be owned by the Parent and all capital stock of each of the U.S.
         Borrower's subsidiaries shall be owned by such Borrower or one or more
         of such Borrower's subsidiaries (except as otherwise described in the
         Agreement and Plan of Recapitalization), in each case free and clear of
         any Lien, other than the Liens created under the Collateral Documents.

                  (e) Before giving effect to the Transaction, there shall have
         occurred no Material Adverse Change since December 31, 2000 or material
         adverse change in the business, condition (financial or otherwise),
         operations, performance or properties of DEGI Group since December 31,
         2000.

                  (f) There shall exist no action, suit, investigation,
         litigation or proceeding affecting any Loan Party or any of its
         Subsidiaries pending or threatened before any court, governmental
         agency or arbitrator that (i) could reasonably be expected to have a
         Material Adverse Effect (other than the matters described on Schedule
         4.01(f) hereto (the "DISCLOSED LITIGATION")) or (ii) purports to
         affect the legality, validity or enforceability of any Transaction
         Document or the consummation of the Transaction.

                  (g) All governmental and third party consents and approvals
         necessary in connection with the Transaction shall have been obtained
         (without the imposition of any conditions that are not acceptable to
         the Lender Parties) and shall remain in effect (other than any consent
         or approval the absence of which, either individually or together with
         all other such consents or approvals, shall not have a Material Adverse
         Effect); all applicable waiting periods in connection with the
         Transaction shall have expired without any action being taken by any
         competent authority (other than any waiting period the absence of the
         expiration of which shall not, either individually or together with all
         such other waiting periods, have a Material Adverse Effect), and no law
         or regulation shall be applicable in the judgment of the Lender
         Parties, in each case that restrains, prevents or imposes materially
         adverse conditions upon the Transaction or the rights of the Loan
         Parties or their Subsidiaries freely to transfer or otherwise dispose
         of, or to create any Lien on, any properties now owned or hereafter
         acquired by any of them.

                  (h) The Lender Parties shall be reasonably satisfied with the
         terms and conditions of the equity contribution made by First Reserve
         Corporation and Odyssey Investment Partners Fund, LP to the Parent (the
         "EQUITY CONTRIBUTION") and the Senior Subordinated Notes. Dresser
         Industries, Inc. shall have "roll over" equity in the U.S. Borrower of
         at least U.S.$21,496,311 based on the value of the equity contribution
         made by First Reserve Corporation and Odyssey Investment Partners. In
         addition, the Parent

<PAGE>   82
                                       77

         shall have received at least U.S.$400,000,000 in cash proceeds from the
         Equity Contribution and shall have contributed such cash proceeds to
         the capital of the U.S. Borrower. The U.S. Borrower shall have received
         at least U.S.$300,000,000 in gross cash proceeds from the sale of the
         Senior Subordinated Notes, and such proceeds (together with the
         proceeds contributed to the capital of the U.S. Borrower) shall be used
         simultaneously with the Initial Extension of Credit by the U.S.
         Borrower to finance the Recapitalization.

                  (i) The Total Debt/EBITDA Ratio determined as of December 31,
         2000 on a pro forma basis after giving effect to the Transaction is no
         greater than 4.60:1.00 (calculated net of cash and Cash Equivalents,
         and excluding any Revolving Credit Advance used to fund estimated
         closing and post-closing adjustments made in accordance with the
         Agreement and Plan of Recapitalization).

                  (j) Each Borrower shall have directed the Administrative Agent
         to pay, from the proceeds of the Initial Extension of Credit all
         accrued fees and expenses then due and payable under any of the Loan
         Documents.

                  (k) The Agreement and Plan of Recapitalization shall be in
         full force and effect.

                  SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance and Renewal. The obligation of each Appropriate Lender to make an
Advance (other than a Letter of Credit Advance made by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance
made by a Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion
of each Borrowing (including the initial Borrowing), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) or
renew a Letter of Credit and the right of the U.S. Borrower to request a Swing
Line Borrowing, shall be subject (a) to the further conditions precedent that on
the date of such Borrowing or issuance or renewal the following statements shall
be true (and each of the giving of the applicable Notice of Borrowing, Notice of
Issuance or Notice of Renewal and the acceptance by the Applicable Borrower of
the proceeds of such Borrowing or of such Letter of Credit or the renewal of
such Letter of Credit shall constitute a representation and warranty by such
Borrower that both on the date of such notice and on the date of such Borrowing
or issuance or renewal such statements are true):

                  (i) the representations and warranties contained in each Loan
         Document are correct on and as of such date, before and after giving
         effect to such Borrowing or issuance or renewal and to the application
         of the proceeds therefrom, as though made on and as of, the date of
         such Borrowing or issuance or renewal, other than any such
         representations or warranties that, by their terms, refer to a specific
         date other than the date of such Borrowing or issuance or renewal, in
         which case as of such specific date; and

<PAGE>   83
                                       78

                  (ii) no Default has occurred and is continuing, or would
         result from such Borrowing or issuance or renewal or from the
         application of the proceeds therefrom;

and (b) the Administrative Agent shall have received such other certificates,
opinions and other documents as any Appropriate Lender Party through the
Administrative Agent may reasonably request in order to confirm (i) the accuracy
of the Applicable Borrower's representations and warranties, (ii) the Applicable
Borrower's timely compliance with the terms, covenants and agreements set forth
in this Agreement and (iii) the absence of any Default.

                  SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and such Lender Party shall not have made available to the Administrative Agent
such Lender Party's ratable portion of such Borrowing.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Borrowers
and the Parent. Each of the Borrowers and the Parent represents and warrants
(and in the case of the Euro Borrower as to itself only and not as to any other
Loan Party or any Subsidiary of a Loan Party) as follows:

                  (a) Each Loan Party and each of its Subsidiaries (i) is a
         corporation duly organized, validly existing and in good standing under
         the laws of the jurisdiction of its incorporation, (ii) is duly
         qualified and in good standing as a foreign corporation in each other
         jurisdiction in which it owns or leases property or in which the
         conduct of its business requires it to so qualify or be licensed except
         where the failure to so qualify or be licensed would not be reasonably
         likely to have a Material Adverse Effect and (iii) has all requisite
         corporate power and authority (including, without limitation, all
         governmental licenses, permits and other approvals) to own or lease and
         operate its properties and to carry on its business as now conducted
         and as proposed to be conducted, except, in the case of such licenses,
         permits and approvals, where a failure to obtain such licenses, permits
         or approvals would not, either individually or in the aggregate, be
         reasonably likely to have a Material Adverse Effect. All of the
         outstanding Equity Interests in each of the Borrowers has been validly
         issued, is fully paid and non-assessable and at least 90% of such
         Equity Interests in the U.S. Borrower is owned by the Parent and 100%
         of such Equity Interests in the Euro Borrower is owned by

<PAGE>   84
                                       79

         Dresser International, Inc., a Delaware corporation and a wholly owned
         subsidiary of the U.S. Borrower, in each case free and clear of any
         Liens, except those created under the Collateral Documents.

                  (b) Set forth on Schedule 4.01(b) hereto is a complete and
         accurate list, as of the date hereof, of all Subsidiaries of each Loan
         Party, showing as of the date hereof (as to each such Subsidiary) the
         jurisdiction of its incorporation, the number of shares of each class
         of its Equity Interests authorized, and the number outstanding, on the
         date hereof and the percentage of each such class of its Equity
         Interests owned (directly or indirectly) by such Loan Party and the
         number of shares covered by all outstanding options, warrants, rights
         of conversion or purchase and similar rights at the date hereof. All of
         the outstanding Equity Interests in each Loan Party's Subsidiaries has
         been validly issued, are fully paid and non-assessable and all such
         Equity Interests directly or indirectly owned by a Loan Party are owned
         by it or one or more of its Subsidiaries free and clear of all Liens,
         except those created under the Collateral Documents.

                  (c) The execution, delivery and performance by each Loan Party
         of each Transaction Document to which it is or is to be a party, and
         the consummation of the Transaction, are within such Loan Party's
         corporate or organizational powers, have been duly authorized by all
         necessary corporate or organizational action, and do not (i) contravene
         such Loan Party's charter or bylaws, (ii) violate any law, rule,
         regulation (including, without limitation, Regulation X of the Board of
         Governors of the Federal Reserve System), order, writ, judgment,
         injunction, decree, determination or award, (iii) conflict with or
         result in the breach of, or constitute a default or require any payment
         to be made under, any contract, loan agreement, indenture, mortgage,
         deed of trust, lease or other instrument binding on or affecting any
         Loan Party, any of its Subsidiaries or any of their properties, the
         conflict, breach, default or payment of which could be reasonably
         likely to have a Material Adverse Effect or (iv) except for the Liens
         created under the Loan Documents, result in or require the creation or
         imposition of any Lien upon or with respect to any of the properties of
         any Loan Party or any of its Subsidiaries. No Loan Party or any of its
         Subsidiaries is in violation of any such law, rule, regulation, order,
         writ, judgment, injunction, decree, determination or award or in breach
         of any such contract, loan agreement, indenture, mortgage, deed of
         trust, lease or other instrument, the violation or breach of which
         could be reasonably likely to have a Material Adverse Effect.

                  (d) No authorization or approval or other action by, and no
         notice to or filing with, any governmental authority or regulatory body
         or any other third party is required for (i) the due execution,
         delivery, recordation, filing or performance by any Loan Party of any
         Transaction Document to which it is or is to be a party, or for the
         consummation of the Transaction, (ii) the grant by any Loan Party of
         the Liens granted by it pursuant to the Collateral Documents, (iii) the
         perfection or maintenance of the Liens created under the Collateral
         Documents (including the first priority nature thereof) or (iv) the
         exercise

<PAGE>   85

                                       80

         by any Agent or any Lender Party of its rights under the Loan Documents
         or the remedies in respect of the Collateral pursuant to the Collateral
         Documents, except for the authorizations, approvals, actions, notices
         and filings listed on Schedule 4.01(d) hereto, all of which have been
         duly obtained, taken, given or made and are in full force and effect.
         All applicable waiting periods in connection with the Transaction have
         expired without any action having been taken by any competent authority
         restraining, preventing or imposing materially adverse conditions upon
         the Transaction or the rights of the Loan Parties or their Subsidiaries
         freely to transfer or otherwise dispose of, or to create any Lien on,
         any properties now owned or hereafter acquired by any of them. The
         Recapitalization shall be or has been consummated on the date of the
         Initial Extension of Credit in accordance with the Agreement and Plan
         of Recapitalization and applicable law.

                  (e) This Agreement has been, and each other Transaction
         Document when delivered hereunder will have been, duly executed and
         delivered by each Loan Party thereto. This Agreement is, and each other
         Transaction Document when delivered hereunder will be, the legal, valid
         and binding obligation of each Loan Party party thereto, enforceable
         against such Loan Party in accordance with its terms, subject to the
         effect of bankruptcy, insolvency, reorganization, moratorium or other
         similar laws now or hereafter in effect relating to or affecting the
         rights or remedies of creditors generally and the effect of general
         principles of equity.

                  (f) There is no action, suit, investigation, litigation or
         proceeding affecting any Loan Party or any of its Subsidiaries,
         including any Environmental Action, pending or, to the knowledge of the
         Loan Parties, threatened before any court, governmental agency or
         arbitrator that (i) could be reasonably likely to have a Material
         Adverse Effect or (ii) purports to affect the legality, validity or
         enforceability of any Transaction Document or the consummation of the
         Transaction.

                  (g) The Consolidated balance sheets of the U.S. Borrower and
         its Subsidiaries as at December 31, 2000, and the related Consolidated
         statements of income and Consolidated statement of cash flows of the
         U.S. Borrower and its Subsidiaries for the Fiscal Year then ended,
         accompanied by an unqualified opinion of Arthur Andersen LLP,
         independent public accountants, copies of which have been furnished to
         each Lender Party, fairly present the Consolidated financial condition
         of the U.S. Borrower and its Subsidiaries as at such dates and the
         Consolidated results of operations of the U.S. Borrower and its
         Subsidiaries for the periods ended on such dates, all in accordance
         with generally accepted accounting principles applied on a consistent
         basis, subject (in the case of interim statements) to normal year-end
         adjustments and the absence of footnote disclosure and since December
         31, 2000, there has been no Material Adverse Change.

                  (h) The Consolidated pro forma balance sheet of the U.S.
         Borrower and its Subsidiaries as at December 31, 2000, certified by the
         Chief Financial Officer of the U.S. Borrower, copies of which have been
         furnished to each Lender Party, fairly presents the

<PAGE>   86
                                       81

         Consolidated pro forma financial condition of the U.S. Borrower and its
         Subsidiaries as at such date, giving effect to the Transactions, all in
         accordance with GAAP.

                  (i) The Consolidated forward-looking balance sheets,
         statements of income and statements of cash flows of the U.S. Borrower
         and its Subsidiaries delivered to the Lender Parties pursuant to
         Section 5.03 were prepared in good faith on the basis of the
         assumptions stated therein, which assumptions were fair in light of the
         conditions existing at the time of delivery of such forward-looking
         balance sheets and statements (it being understood that such
         forward-looking balance sheets and statements represent a business plan
         and do not constitute a forecast or projection and there is no
         assurance that such business plan can be fully attained).

                  (j) Taken as a whole, neither the Information Memorandum nor
         any other information, exhibit or report furnished by or on behalf of
         any Loan Party to any Agent or any Lender Party in connection with the
         negotiation and syndication of the Loan Documents or pursuant to the
         terms of the Loan Documents contained any untrue statement of a
         material fact or omitted to state a material fact necessary to make the
         statements made therein not materially misleading.

                  (k) Neither Borrower is engaged in the business of extending
         credit for the purpose of purchasing or carrying Margin Stock, and no
         proceeds of any Advance or drawings under any Letter of Credit will be
         used to purchase or carry any Margin Stock or to extend credit to
         others for the purpose of purchasing or carrying any Margin Stock.

                  (l) Neither any Loan Party nor any of its Subsidiaries is an
         "investment company", or an "affiliated person" of, or "promoter" or
         "principal underwriter" for, an "investment company", as such terms are
         defined in the Investment Company Act of 1940, as amended. Neither any
         Loan Party nor any of its Subsidiaries is a "holding company", or a
         "subsidiary company" of a "holding company", or an "affiliate" of a
         "holding company" or of a "subsidiary company" of a "holding company",
         as such terms are defined in the Public Utility Holding Company Act of
         1935, as amended. Neither the making of any Advances, nor the issuance
         of any Letters of Credit, nor the application of the proceeds or
         repayment thereof by the Applicable Borrower, nor the consummation of
         the other transactions contemplated by the Transaction Documents, will
         violate any provision of any such Act or any rule, regulation or order
         of the Securities and Exchange Commission thereunder.

                  (m) Upon the filing of the financing statements delivered to
         the Administrative Agent in accordance with the Collateral Documents
         from time to time, and the taking of such further action as required by
         the Collateral Documents from time to time all, filings and other
         actions necessary or desirable to perfect the security interest in the
         Collateral created under the Collateral Documents have been duly made
         or taken and are in full force and effect, and the Collateral Documents
         create in favor of the Collateral Agent for the benefit of the Secured
         Parties a valid and, together with such filings and other actions,

<PAGE>   87
                                       82

         perfected first priority security interest (subject to any Liens
         permitted by the Loan Documents and imposed in accordance therewith) in
         the Collateral to the extent a security interest in such Collateral can
         be perfected by filing or the taking of such further action, securing
         the payment of the Secured Obligations. The Loan Parties are the legal
         and beneficial owners of the Collateral free and clear of any Lien,
         except for the liens and security interests created or permitted under
         the Loan Documents, and except with respect to Collateral, having a
         fair market value, of U.S.$1,000,000 in the aggregate.

                  (n) Each Loan Party (other than the Euro Borrower) is,
         individually and together with its Subsidiaries, Solvent.

                  (o) (i) Set forth on Schedule 4.01(o) hereto is a complete
         and accurate list of all Plans, Multiemployer Plans and Welfare Plans.

                  (ii) Except as could not, individually or in the aggregate, be
         reasonably expected to have a Material Adverse Effect:

                           (A) No ERISA Event has occurred or is reasonably
                  expected to occur with respect to any Plan that has resulted
                  in or is reasonably expected to result in a material liability
                  of any Loan Party or any ERISA Affiliate;

                           (B) Schedule B (Actuarial Information) to the most
                  recent annual report (Form 5500 Series) for each Plan, copies
                  of which have been filed with the Internal Revenue Service and
                  furnished to the Lender Parties, is complete and accurate and
                  fairly presents the funding status of such Plan, and since the
                  date of such Schedule B there has been no material adverse
                  change in such funding status;

                           (C) Neither any Loan Party nor any ERISA Affiliate
                  has incurred or is reasonably expected to incur any Withdrawal
                  Liability to any Multiemployer Plan;

                           (D) Neither any Loan Party nor any ERISA Affiliate
                  has been notified by the sponsor of a Multiemployer Plan that
                  such Multiemployer Plan is in reorganization or has been
                  terminated, within the meaning of Title IV of ERISA, and no
                  such Multiemployer Plan is reasonably expected to be in
                  reorganization or to be terminated, within the meaning of
                  Title IV of ERISA; and

                           (E) With respect to each scheme or arrangement
                  mandated by a government other than the United States (a
                  "FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT") and with respect
                  to each employee benefit plan maintained or contributed to by
                  any Loan Party or any Subsidiary of any Loan Party that is not
                  subject to United States law (a "FOREIGN PLAN"):

<PAGE>   88
                                       83

                                    (1) Any employer and employee contributions
                           required by law or by the terms of any Foreign
                           Government Scheme or Arrangement or any Foreign Plan
                           have been made, or, if applicable, accrued, in
                           accordance with normal accounting practices;

                                    (2) The fair market value of the assets of
                           each funded Foreign Plan, the liability of each
                           insurer for any Foreign Plan funded through insurance
                           or the book reserve established for any Foreign Plan,
                           together with any accrued contributions, is
                           sufficient to procure or provide for the accrued
                           benefit obligations, as of the date hereof, with
                           respect to all current and former participants in
                           such Foreign Plan according to the actuarial
                           assumptions and valuations most recently used to
                           account for such obligations in accordance with
                           applicable generally accepted accounting principles;
                           and

                                    (3) Each Foreign Plan required to be
                           registered has been registered and has been
                           maintained in good standing with applicable
                           regulatory authorities.

                  (p) (i) Except as otherwise set forth on Part I of Schedule
         4.01(p) hereto, and except as could not reasonably be likely to have,
         individually or in the aggregate, a Material Adverse Effect, the
         operations and properties of each Loan Party and each of its
         Subsidiaries comply with all applicable Environmental Laws and
         Environmental Permits, all past non-compliance with such Environmental
         Laws and Environmental Permits has been resolved without ongoing
         obligations or costs, and no circumstances exist that could be
         reasonably likely to (A) form the basis of an Environmental Action
         against any Loan Party or any of its Subsidiaries or any of their
         properties or (B) cause any such property to be subject to any
         restrictions on ownership, occupancy, use or transferability under any
         Environmental Law.

                  (ii) Except as otherwise set forth on Part II of Schedule
         4.01(p) hereto, (a) none of the properties currently or formerly owned
         or operated by any Loan Party or any of its Subsidiaries is listed or,
         to the best of the Parent's or the U.S. Borrower's knowledge, proposed
         for listing on the NPL or on the CERCLIS or any analogous state or
         local list or is adjacent to any such property; (b) except as could not
         reasonably be likely to have, individually or in the aggregate, a
         Material Adverse Effect, there are no and never have been any
         underground or aboveground storage tanks or any surface impoundments,
         septic tanks, pits, sumps or lagoons in which Hazardous Materials are
         being or have been treated, stored or disposed on any property
         currently owned or operated by any Loan Party or any of its
         Subsidiaries or, to the best of its knowledge, on any property formerly
         owned or operated by any Loan Party or any of its Subsidiaries; (c)
         except as could not reasonably be likely to have, individually or in
         the aggregate, a Material Adverse Effect, there is no asbestos or
         asbestos-containing material on any property currently owned or
         operated by any Loan Party or any of its Subsidiaries; and

<PAGE>   89
                                       84

         (d) Hazardous Materials have not been released, discharged or disposed
         of on any property currently or formerly owned or operated by any Loan
         Party or any of its Subsidiaries, except as could not reasonably be
         likely to have, individually or in the aggregate, a Material Adverse
         Effect.

                  (iii) Except as otherwise set forth on Part III of Schedule
         4.01(p) hereto, and except as could not reasonably be likely to have,
         individually or in the aggregate, a Material Adverse Effect, neither
         any Loan Party nor any of its Subsidiaries is undertaking, and has not
         completed, either individually or together with other potentially
         responsible parties, any investigation or assessment or remedial or
         response action relating to any actual or threatened release, discharge
         or disposal of Hazardous Materials at any site, location or operation,
         either voluntarily or pursuant to the order of any governmental or
         regulatory authority or the requirements of any Environmental Law; and
         all Hazardous Materials generated, used, treated, handled or stored at,
         or transported to or from, any property currently or formerly owned or
         operated by any Loan Party or any of its Subsidiaries have been
         disposed of in a manner not reasonably expected to result in liability
         to any Loan Party or any of its Subsidiaries.

                  (q) (i) Neither any Loan Party nor any of its Subsidiaries is
         party to any tax sharing agreement other than the Tax Agreement.

                  (ii) Except for any matter that could not reasonably be
         expected, individually or in the aggregate, to have a Material Adverse
         Effect on the businesses of Parent or each Loan Party, or each of their
         respective Affiliates or Subsidiaries, Parent, each Loan Party, their
         Subsidiaries and Affiliates have filed or been included in any and all
         returns, reports, forms, schedules, attachments, statements, and other
         similar declarations and documents ("TAX RETURNS") in respect of Taxes
         required to be filed by them taking into account all applicable
         extensions; all Taxes shown as due on such Tax Returns have been paid;
         all such Tax Returns are true, correct and complete in all respects;
         and no adjustment relating to such Tax Returns has been proposed in
         writing by any Tax authority.

                  (iii) There are no pending tax audits or examinations and no
         deficiencies or other claims for unpaid Taxes are proposed in writing
         in respect of Taxes due from, or with respect to, any of the Parent,
         each Loan Party, their Subsidiaries and Affiliates or with respect to
         any Tax Return filed by, or in respect of, any of them that could have
         a Material Adverse Effect.

                  (iv) The Parent's acquisition of the DEGI Group will
         constitute a "qualified stock purchase" for purposes of Section 338 of
         the Internal Revenue Code, and Halliburton Company, as seller of the
         DEGI Group, shall pay any U.S. federal or state income tax or franchise
         tax on any income as a result of an election under such Section in
         connection with the Transaction.

<PAGE>   90
                                       85

                  (r) Neither the business nor the properties of any Loan Party
         or any of its Subsidiaries are affected by any fire, explosion,
         accident, strike, lockout or other labor dispute, drought, storm, hail,
         earthquake, embargo, act of God or of the public enemy or other
         casualty (whether or not covered by insurance) that is reasonably
         likely to have a Material Adverse Effect.

                  (s) Set forth on Schedule 4.01(s) hereto is a complete and
         accurate list of all Existing Debt (other than Surviving Debt), showing
         as of the date hereof the obligor and the principal amount outstanding
         thereunder.

                  (t) Set forth on Schedule 4.01(t) hereto is a complete and
         accurate list of all Surviving Debt (other than Debt permitted pursuant
         to Section 5.02(b)(i)(B) or 5.02(b)(ii)(E) or (M)), showing as of the
         date hereof the obligor and the principal amount outstanding
         thereunder, the maturity date thereof and the amortization schedule
         therefor.

                  (u) Set forth on Schedule 4.01(u) hereto is a complete and
         accurate list of all Liens imposed with respect to (x) Debt for
         Borrowed Money or (y) any other Obligations outstanding in excess of
         U.S.$750,000, on property or assets with a fair market value in excess
         of U.S.$500,000 of any Loan Party or any of its Subsidiaries, showing
         as of the date hereof the lienholder thereof, the principal amount of
         the obligations secured thereby and the property or assets of such Loan
         Party or such Subsidiary subject thereto.

                  (v) Set forth on Schedule 4.01(v) hereto is a complete and
         accurate list, as of the date hereof, of all real property located
         within the United States with a fair market value in excess of
         U.S.$2,000,000, owned by any Loan Party or any of its Subsidiaries,
         showing as of the date hereof the street address, county or other
         relevant jurisdiction, state, record owner and book and fair value
         thereof. As of the Effective Date, each Loan Party or such Subsidiary
         has good, marketable and insurable fee simple title to such real
         property, free and clear of all Liens, other than Liens created or
         permitted by any of the Loan Documents.

                  (w) Set forth on Schedule 4.01(w) hereto is a complete and
         accurate list of all leases of real property located within the United
         States and leased at a current annual rent in excess of U.S.$120,000
         under which any Loan Party or any of its Subsidiaries is the lessee,
         showing as of the date hereof the street address, county or other
         relevant jurisdiction, state, lessor, lessee, expiration date and
         annual rental cost thereof. Each such lease is the legal, valid and
         binding obligation of the lessor thereof, enforceable in accordance
         with its terms.

                  (x) Set forth on Schedule 4.01(x) hereto is a complete and
         accurate list, as of the date hereof, of all Investments (other than
         Equity Interests in, or Obligations of, the U.S. Borrower or any of its
         Subsidiaries) held by any Loan Party or any of its Subsidiaries on the
         date hereof, showing as of the date hereof the amount, obligor or
         issuer and maturity, if any, thereof.

<PAGE>   91
                                       86

                  (y) Set forth on Schedule 4.01(y) hereto is a complete and
         accurate list, as of the date hereof, of all patents, trademarks, trade
         names, service marks and copyrights in the United States, and all
         applications therefor and licenses thereof in the United States, of
         each Loan Party or any of its Subsidiaries, showing as of the date
         hereof the jurisdiction in which registered, the registration number,
         the date of registration and the expiration date.

                                    ARTICLE V

                             COVENANTS OF THE PARENT

                  SECTION 5.01. Affirmative Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document with respect to
the payment of principal, interest or fees shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Parent will:

                  (a) Compliance with Laws, Etc. Comply, and cause each of its
         Subsidiaries to comply with all applicable laws, rules, regulations and
         orders, such compliance to include, without limitation, compliance with
         ERISA, if the failure to so comply is reasonably likely to have a
         Material Adverse Effect.

                  (b) Payment of Taxes, Etc. Pay and discharge, and cause each
         of its Subsidiaries to pay and discharge, before the same shall become
         delinquent, (i) all taxes, assessments and governmental charges or
         levies imposed upon it or upon its property and (ii) all lawful claims
         that, if unpaid, might by law become a Lien upon its property;
         provided, however, that neither the Parent nor any of its Subsidiaries
         shall be required to pay or discharge any such tax, assessment, charge
         or claim that is being contested in good faith and by proper
         proceedings and as to which any financial statement reserves required
         by GAAP are being maintained, unless and until any Lien resulting
         therefrom attaches to its property and becomes enforceable against its
         other creditors; file jointly with Halliburton Company, as seller of
         the DEGI Group, and properly on a timely basis in accordance with
         applicable law an election under Section 338(h)(10) of the Internal
         Revenue Code with respect to the stock of the U.S. Borrower and its
         Subsidiaries organized in the United States to treat the acquisition of
         such stock by Parent pursuant to the Transaction as a deemed asset
         acquisition for U.S. federal income tax purposes.

                  (c) Compliance with Environmental Laws. Comply, and cause
         each of its Subsidiaries and use commercially reasonable best efforts
         to cause all lessees and other Persons operating or occupying its
         properties to comply with all applicable Environmental Laws and
         Environmental Permits if failure to comply therewith is reasonably
         likely to have a Material Adverse Effect; obtain and renew and cause
         each of its Subsidiaries to obtain and renew all Environmental Permits
         necessary for its operations and properties if failure to comply
         therewith is reasonably likely to have a

<PAGE>   92
                                       87

         Material Adverse Effect; and conduct, and cause each of its
         Subsidiaries to conduct, any investigation, study, sampling and
         testing, and undertake any cleanup, removal, remedial or other action
         necessary to remove and clean up all Hazardous Materials from any of
         its properties, in accordance with the requirements of all
         Environmental Laws if failure to comply therewith is reasonably likely
         to have a Material Adverse Effect; provided, however, that neither the
         Parent nor any of its Subsidiaries shall be required to undertake any
         such cleanup, removal, remedial or other action to the extent that its
         obligation to do so is being contested in good faith and by proper
         proceedings and as to which any financial statement reserves required
         by GAAP are being maintained.

                  (d) Maintenance of Insurance. Maintain, and cause each of its
         Subsidiaries to maintain, insurance with responsible and reputable
         insurance companies or associations in such amounts and covering such
         risks as is usually carried by companies engaged in similar businesses
         and owning similar properties in the same general areas in which the
         Borrowers or such Subsidiaries operate.

                  (e) Preservation of Corporate Existence, Etc. Preserve and
         maintain, and cause each of its Subsidiaries to preserve and maintain,
         its existence, rights (charter and statutory), permits, licenses,
         approvals, privileges and franchises; provided, however, that the U.S.
         Borrower may consummate the Recapitalization and any other merger or
         consolidation permitted under Section 5.02(d) and provided further that
         none of the Borrowers nor any of their Subsidiaries shall be required
         to preserve any right, permit, license, approval, privilege or
         franchise material to its business if the Board of Directors of a
         Borrower or such Subsidiary shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of such
         Borrower or such Subsidiary, as the case may be, and that the loss
         thereof is not disadvantageous in any material respect to such
         Borrower, such Subsidiary or the Lender Parties.

                  (f) Visitation Rights. At any reasonable time and from time
         to time, in reasonable intervals and upon reasonable prior notice to
         the U.S. Borrower, permit any of the Agents or any of the Lender
         Parties, or any agents or representatives thereof, at such Agent's or
         such Lender Party's own expense so long as no Default has occurred and
         is continuing and at the U.S. Borrower's expense after the occurrence
         and during the continuance of any Default, to examine and make copies
         of and abstracts from the records and books of account of, and visit
         the properties of, the Borrowers and any of their Subsidiaries, and to
         discuss the affairs, finances and accounts of the Borrowers and any of
         their Subsidiaries with any of their officers or directors and with
         their independent certified public accountants.

                  (g) Keeping of Books. Keep, and cause each of its
         Subsidiaries to keep, proper books of record and account, in which full
         and correct entries shall be made of all financial transactions and the
         assets and business of the Borrowers and each such Subsidiary in
         accordance with generally accepted accounting principles in effect from
         time to time, if the failure to do so is reasonably likely to have a
         Material Adverse Effect.

<PAGE>   93
                                       88

                  (h) Maintenance of Properties, Etc. Maintain and preserve,
         and cause each of its Subsidiaries to maintain and preserve, all of its
         properties that are used or useful in the conduct of its business in
         good working order and condition, ordinary wear and tear excepted.

                  (i) Transactions with Affiliates. Conduct, and cause each of
         its Subsidiaries to conduct, all transactions that are not otherwise
         prohibited by this Agreement with any of their Affiliates on terms that
         are fair and reasonable and no less favorable to the Borrowers or such
         Subsidiary than it would or could reasonably expect to obtain in a
         comparable arm's-length transaction with a Person not an Affiliate. The
         restrictions set forth in the first paragraph of this Section 5.01
         shall not apply to:

                           (i) reasonable fees and compensation in an aggregate
                  amount not to exceed $5,000,000 per year paid to, and
                  customary indemnity provided on behalf of, officers,
                  directors, employees or consultants of the U.S. Borrower as
                  determined in good faith by the U.S. Borrower's board of
                  directors or senior management;

                           (ii) transactions exclusively between or among the
                  U.S. Borrower and any Loan Party or exclusively between or
                  among such Loan Parties, provided such transactions are not
                  otherwise prohibited by the Agreement;

                           (iii) the Investor Rights Agreement dated as of April
                  10, 2001 among the U.S. Borrower, Halliburton, the Parent and
                  the employees listed therein as signatories and the Sponsor
                  Right Agreement dated as of April 10, 2001 among the U.S.
                  Borrower, the Parent and Affiliates of First Reserve
                  Corporation and Odyssey Investment Partners Fund, LP;

                           (iv) the payment of customary annual management,
                  consulting and advisory fees and related expenses to the
                  Permitted Investors and their Affiliates made pursuant to any
                  financial advisory, financing, underwriting or placement
                  agreement or in respect of other investment banking
                  activities, including, without limitation, in connection with
                  acquisitions or divestitures which are approved by the board
                  of directors of the U. S. Borrower or such Subsidiary
                  Guarantor in good faith in an aggregate amount not to exceed
                  $5,000,000 per year;

                           (v) payments or loans to employees or consultants
                  that are approved by the board of directors of the U.S.
                  Borrower in good faith;

                           (vi) the existence of, or the performance by the U.S.
                  Borrower or any Subsidiary Guarantor of its obligations under
                  the terms of, any stockholders agreement (including any
                  registration rights agreement or purchase agreement related
                  thereto) to which it is a party as of the Initial Extension of
                  Credit and any similar agreements which it may enter into
                  thereafter; provided, however, that the

<PAGE>   94
                                       89

                  existence or, or the performance by the U.S. Borrower or any
                  of its Subsidiary Guarantors of obligations under, any further
                  amendment to any such existing agreement or under any similar
                  agreement entered into after the Initial Extension of Credit
                  shall only be permitted by this clause (vi) to the extent that
                  the terms of any such amendment or new agreement are not
                  disadvantageous to the Lenders in any material respect;

                           (vii) any payments or transactions provided for in
                  any of the Transaction Documents;

                           (viii) distributions to the Parent provided for in
                  the Tax Sharing Agreement; and

                           (ix) distributions to the Parent to pay
                  administrative and other operating expenses in an aggregate
                  amount not to exceed U.S.$500,000 per Fiscal Year.

                  (j) Covenant to Guarantee Obligations and Give Security. Upon
         (x) the request of the Collateral Agent following the occurrence and
         during the continuance of a Default, (y) the formation or acquisition
         of any new direct Subsidiary by any Loan Party (other than (i) any
         Subsidiary that is a CFC or (ii) a Subsidiary (other than a Domestic
         Subsidiary) that is held directly or indirectly by a CFC) or (z) the
         acquisition of any material property by any Loan Party, and such
         property, in the judgment of the Collateral Agent, shall not already be
         subject to a perfected first priority security interest (subject to any
         Liens permitted by the Loan Documents and imposed in accordance
         therewith) in favor of the Collateral Agent for the benefit of the
         Secured Parties, then the Parent and each Borrower shall, in each case
         at such Borrower's expense:

                           (i) in connection with the formation or acquisition
                  of a Subsidiary that is not (A) a CFC or (B) a Subsidiary
                  (other than a Domestic Subsidiary) that is held directly or
                  indirectly by a CFC, within 10 days after such formation or
                  acquisition, cause such Subsidiary, to duly execute and
                  deliver to the Collateral Agent a guaranty or guaranty
                  supplement, in form and substance satisfactory to the
                  Collateral Agent, guaranteeing the other Loan Parties'
                  obligations under the Loan Documents,

                           (ii) within 10 days after such request, formation or
                  acquisition, furnish to the Collateral Agent a description of
                  the real and personal properties, which shall be newly
                  acquired or otherwise acquired after the date hereof and which
                  shall not already be subject to a perfected first priority
                  security interest (subject to any Liens permitted by the Loan
                  Documents and imposed in accordance therewith) in favor of the
                  Collateral Agent for the benefit of the Secured Parties, of
                  the Loan Parties and their respective Subsidiaries in detail
                  reasonably satisfactory to the Collateral Agent,

<PAGE>   95
                                       90

                           (iii) if the fair market value of any such property
                  exceeds U.S.$7,500,000, within 15 days after such request,
                  formation or acquisition, duly execute and deliver, and cause
                  each such Subsidiary to duly execute and deliver, to the
                  Collateral Agent mortgages, pledges, assignments, security
                  agreement supplements and other security agreements with
                  respect to such properties, as specified by and in form and
                  substance satisfactory to the Collateral Agent, securing
                  payment of all the Obligations of the applicable Loan Party or
                  such Subsidiary, as the case may be, under the Loan Documents
                  and constituting Liens on all such properties,

                           (iv) if the fair market value of any such property
                  exceeds U.S.$7,500,000, within 45 days after such request,
                  formation or acquisition, take, and cause such Subsidiary to
                  take, any and all reasonable action (including, without
                  limitation, the recording of mortgages, the filing of Uniform
                  Commercial Code financing statements, the giving of notices
                  and the endorsement of notices on title documents) that may be
                  necessary or advisable in the reasonable opinion of the
                  Collateral Agent to vest in favor of the Collateral Agent (or
                  in any representative of the Collateral Agent designated by
                  it) valid, enforceable and subsisting Liens on the properties
                  purported to be subject to the mortgages, pledges,
                  assignments, security agreement supplements and security
                  agreements delivered pursuant to this Section 5.01(j),

                           (v) within 60 days after such request, formation or
                  acquisition, deliver to the Collateral Agent, upon the request
                  of the Collateral Agent in its sole discretion, a signed copy
                  of a favorable opinion, addressed to the Collateral Agent and
                  the other Secured Parties, of counsel for the Loan Parties
                  acceptable to the Collateral Agent as to the matters contained
                  in clauses (i), (iii) and (iv) above, in form and substance
                  reasonably consistent with the legal opinions delivered as to
                  such matters pursuant to Section 3.01(a)(xiv),

                           (vi) if the fair market value of any such property
                  exceeds U.S.$7,500,000, as promptly as practicable after such
                  request, formation or acquisition, deliver, upon the request
                  of the Collateral Agent in its sole discretion, to the
                  Collateral Agent with respect to each parcel of real property
                  owned or held by the entity that is the subject of such
                  request, formation or acquisition title reports and
                  environmental assessment reports, each in scope, form and
                  substance satisfactory to the Collateral Agent, provided,
                  however, that to the extent that any Loan Party or any of its
                  Subsidiaries shall have otherwise received any of the
                  foregoing items with respect to such real property, such items
                  shall, promptly after the receipt thereof, be delivered to the
                  Collateral Agent, and

                           (vii) at any time and from time to time, promptly
                  execute and deliver any and all further instruments and
                  documents and take all such other action as the Collateral
                  Agent may reasonably deem necessary or desirable in obtaining
                  the

<PAGE>   96
                                       91

                  full benefits of, or in perfecting and preserving the Liens
                  created or intended to be created by the Collateral Documents.

                  (k) Further Assurances. (i) Promptly upon request by the
         Administrative Agent or the Collateral Agent, correct, and cause each
         of its Subsidiaries promptly to correct, any material defect or error
         that may be discovered in any Loan Document or in the execution,
         acknowledgment, filing or recordation thereof, and

                  (ii) Promptly upon request by the Administrative Agent or the
         Collateral Agent, do, execute, acknowledge, deliver, record, re-record,
         file, re-file, register and re-register any and all such further acts,
         deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust
         deeds, assignments, financing statements and continuations thereof,
         termination statements, notices of assignment, transfers, certificates,
         assurances and other instruments as the Administrative Agent or the
         Collateral Agent, may reasonably require from time to time in order to
         (A) to the fullest extent permitted by applicable law, subject any Loan
         Party's or any of its Subsidiaries' properties, assets, rights or
         interests to the Liens now or hereafter intended to be covered by any
         of the Collateral Documents, (B) perfect and maintain the validity,
         effectiveness and priority of any of the Collateral Documents and any
         of the Liens intended to be created thereunder and (C) assure, convey,
         grant, assign, transfer, preserve, protect and confirm more effectively
         unto the Secured Parties the rights granted or now or hereafter
         intended to be granted to the Secured Parties under any Loan Document
         or under any other instrument executed in connection with any Loan
         Document to which any Loan Party or any of its Subsidiaries is or is to
         be a party, and cause each of its Subsidiaries to do so.

                  (l) Preparation of Environmental Reports. At the reasonable
         request of the Required Lenders from time to time (but no more often
         than once every two years), provide to the Lender Parties within 60
         days after such request, at the expense of the Borrowers, a Phase I
         environmental site assessment report and, if recommended in such Phase
         I report, a Phase II environmental site assessment report, for any of
         its Subsidiaries' properties described in the request, prepared by an
         environmental consulting firm acceptable to the Required Lenders,
         indicating the likely presence or absence of Hazardous Materials and
         the estimated cost of any compliance, removal or remedial action in
         connection with any Hazardous Materials on such properties; without
         limiting the generality of the foregoing, if the Required Lenders
         determine at any time, after reasonable cooperation with management of
         the U.S. Borrower, that a material risk exists that any such report
         will not be provided within the time referred to above, the Required
         Lenders may retain an environmental consulting firm to prepare such
         report at the expense of the Borrowers, and each Borrower hereby grants
         and agrees to cause any Subsidiary that owns any property described in
         such request to grant at the time of such request to the Agents, the
         Lender Parties, such firm and any agents or representatives

<PAGE>   97
                                       92

         thereof an irrevocable non-exclusive license, subject to the rights of
         tenants, to enter onto their respective properties to undertake such an
         assessment.

                  (m) Interest Rate Hedging. Cause the U.S. Borrower to enter
         into prior to 90 days after the date of the Initial Extension of Credit
         hereunder, and maintain until the third anniversary of the date of the
         Initial Extension of Credit hereunder, either Debt for Borrowed Money
         of the U.S. Borrower accruing interest at a fixed rate, or interest
         rate Hedge Agreements with Persons and on terms acceptable to the
         Administrative Agent, in an aggregate principal amount outstanding or
         covering a notional amount, as the case may be, of not less than 50% of
         the sum of (i) the Tranche A U.S. Term Commitments, Tranche A Euro Term
         Commitments and Tranche B Term Commitments outstanding hereunder and
         (ii) the aggregate outstanding principal amount of the Debt for
         Borrowed Money of the U.S. Borrower accruing interest at a fixed rate.

                  (n) Mortgages, Deeds of Trust, etc. As soon as possible and
         in any event within 30 days after the Initial Extension of Credit,
         deliver to the Administrative Agent, with sufficient copies for each
         Lender Party, deeds of trust, trust deeds, or mortgages, in
         substantially the form of Exhibit E hereto and covering the properties
         identified as "Real Property subject to a Mortgage" on Schedule 4.01(v)
         hereto (together with the Assignments of Leases and Rents referred to
         therein and each other mortgage delivered pursuant to Section 5.01(j),
         in each case as amended, the "MORTGAGES"), duly executed by the
         appropriate Loan Party in form required for filing or recordation in
         all filing or recording offices that the Administrative Agent may deem
         necessary or desirable in order to create a valid first and subsisting
         Lien (subject to any Permitted Encumbrances) on the property described
         therein in favor of the Collateral Agent for the benefit of the Secured
         Parties together with (A) evidence that all filing and recording taxes
         and fees have been paid, (B) fully paid American Land Title Association
         Lender's Extended Coverage title insurance policies (the "MORTGAGE
         POLICIES") in form and substance, with endorsements available in the
         States in which the mortgaged properties are located, and in the
         amounts indicated on Schedule 4.01(v) issued, coinsured and reinsured
         by title insurers reasonably acceptable to the Administrative Agent,
         insuring the Mortgages to be valid first and subsisting Liens (subject
         to any Permitted Encumbrances) on the property described therein, free
         and clear of all defects (including, but not limited to, mechanics' and
         materialmen's Liens) and encumbrances, excepting only Permitted
         Encumbrances, and providing for such other affirmative insurance and
         such coinsurance and direct access reinsurance as the Administrative
         Agent may deem necessary or desirable, (C) the Assignments of Leases
         and Rents referred to in the Mortgages, duly executed by the
         appropriate Loan Party, (D) evidence of the insurance required by the
         terms of the Mortgages, (E) favorable opinions of local Counsel to the
         Lender Parties with respect to the Mortgages, and (F) evidence that all
         other actions necessary or desirable in order to create valid first and
         subsisting Liens (subject to any Permitted Encumbrances) on the
         property described in the Mortgages has been taken.

<PAGE>   98
                                       93

                  (o) Post Closing Requirements. (i) As soon as possible and
         in any event within 10 days after the Initial Extension of Credit, the
         Parent will cause the U.S. Borrower to open a L/C Cash Collateral
         Account (as defined in the Security Agreement) and enter into a control
         agreement in the form attached to the Security Agreement, and

                  (ii) As soon as possible and in any event with 20 days after
         the Initial Extension of Credit, the Parent will cause the applicable
         Foreign Subsidiary, to execute, acknowledge, file, deliver or otherwise
         do anything that may be required under the relevant local law to ensure
         valid perfection of any security interest required to be created under
         any of the Non U.S. Security Documents.

                  SECTION 5.02. Negative Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document with respect to
the payment of principal, interest or fees shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Parent will not, at any time:

                  (a) Liens, Etc. Create, incur, assume or suffer to exist, or
         permit any of its Subsidiaries to create, incur, assume or suffer to
         exist, any Lien on or with respect to any of its properties of any
         character (including, without limitation, accounts) whether now owned
         or hereafter acquired, or sign or file or suffer to exist, or permit
         any of its Subsidiaries to sign or file or suffer to exist, under the
         Uniform Commercial Code of any jurisdiction, a financing statement that
         names the Parent or any of its Subsidiaries as debtor, or sign or
         suffer to exist, or permit any of its Subsidiaries to sign or suffer to
         exist, any security agreement authorizing any secured party thereunder
         to file such financing statement, or assign, or permit any of its
         Subsidiaries to assign, any accounts or other right to receive income,
         except for the following:

                           (i) Liens created under the Loan Documents;

                           (ii) Liens existing on the date hereof and described
                  on Schedule 4.01(u) hereto;

                           (iii) in the case of any Loan Party organized under
                  the laws of one of the States of the United States, purchase
                  money Liens upon or in real property or equipment acquired or
                  held by a Borrower or any of its Subsidiaries in the ordinary
                  course of business to secure the purchase price of such
                  property or equipment or to secure Debt incurred solely for
                  the purpose of financing the acquisition, construction or
                  improvement of any such property or equipment to be subject to
                  such Liens, or Liens existing on any such property or
                  equipment at the time of acquisition (other than any such
                  Liens created in contemplation of such acquisition that do not
                  secure the purchase price), or extensions, renewals or
                  replacements of any of the foregoing for the same or a lesser
                  amount; provided, however, that no such Lien shall extend to
                  or cover any property other than the property or equipment
                  being acquired, constructed or improved, and no such

<PAGE>   99
                                       94

                  extension, renewal or replacement shall extend to or cover any
                  property not theretofore subject to the Lien being extended,
                  renewed or replaced; and provided further that the aggregate
                  principal amount of the Debt secured by Liens permitted by
                  this clause (iii) shall not exceed the amount permitted under
                  Section 5.02(b)(ii)(B) at any time outstanding;

                           (iv) Liens arising in connection with Capitalized
                  Leases permitted under Section 5.02(b)(ii)(C); provided that
                  no such Lien shall extend to or cover any Collateral or assets
                  other than the assets subject to such Capitalized Leases;

                           (v) Liens on property or assets acquired pursuant to
                  a Permitted Acquisition or the Pending Acquisition, or on
                  property or assets of a Subsidiary of the U.S. Borrower in
                  existence at the time such Subsidiary is acquired pursuant to
                  a Permitted Acquisition or the Pending Acquisition, provided
                  that (i) any Debt that is secured by such Liens is permitted
                  to exist under Section 5.02(b)(i)(F), and (ii) such Liens are
                  not incurred in connection with, or in contemplation or
                  anticipation of, such Permitted Acquisition or the Pending
                  Acquisition, as the case may be, and do not attach to any
                  other asset of the U.S. Borrower or any of its Subsidiaries;

                           (vi) Liens securing reimbursement obligations with
                  respect to commercial letters of credit (other than Trade
                  Letters of Credit under the Letter of Credit Facility),
                  provided that such Liens shall cover only the documents in
                  respect of which such letters of credit were issued, the goods
                  covered thereby and the insurance proceeds of such goods;

                           (vii) Permitted Liens; and

                           (viii) other Liens securing Obligations of the Parent
                  or any of its Domestic Subsidiaries that, in the aggregate, do
                  not exceed U.S.$35,000,000 at any one time outstanding;

                  (b) Debt. Create, incur, assume or suffer to exist, or
         permit any of its Subsidiaries to create, incur, assume or suffer to
         exist, any Debt, except:

                           (i) in the case of the U.S. Borrower or any
                  Subsidiary Guarantor,

                                    (A) Debt in respect of Hedge Agreements
                           designed to hedge against fluctuations in interest
                           rates or currency exchange rates incurred in the
                           ordinary course of business and consistent with
                           prudent business practice,

                                    (B) Debt owed to a Loan Party, which Debt
                           (x) shall constitute Pledged Debt, and (y) shall be
                           evidenced by promissory notes or other

<PAGE>   100

                                       95

                           instruments reasonably satisfactory to the
                           Administrative Agent that are pledged as security for
                           the Obligations of the holder thereof under the Loan
                           Documents to which such holder is a party and
                           delivered to the Collateral Agent pursuant to the
                           terms of the Security Agreement, and

                                    (C) Senior Subordinated Debt, evidenced by
                           the Senior Subordinated Notes or otherwise, not to
                           exceed in the aggregate U.S.$300,000,000 at any time
                           outstanding, and any Senior Subordinated Debt in
                           excess thereof to repay any outstanding Tranche A
                           U.S. Term Advances, Tranche A Euro Term Advances and
                           Tranche B Term Advances; and

                           (ii) in the case of the Parent and its Subsidiaries,

                                    (A) Debt under the Loan Documents,

                                    (B) in the case of any Loan Party organized
                           under the laws of one of the States of the United
                           States, Debt secured by Liens permitted by Section
                           5.02(a)(iii) not to exceed in the aggregate
                           U.S.$10,000,000 at any time outstanding,

                                    (C) Capitalized Leases not to exceed in the
                           aggregate U.S.$10,000,000 at any time outstanding,

                                    (D) the Surviving Debt and any Debt
                           extending the maturity of, or refunding or
                           refinancing, in whole or in part, any Surviving Debt,
                           provided that the principal amount of such Surviving
                           Debt shall not be increased above the principal
                           amount thereof outstanding immediately prior to such
                           extension, refunding or refinancing, and the direct
                           and contingent obligors therefor shall not be
                           changed, as a result of or in connection with such
                           extension, refunding or refinancing, provided further
                           that the terms relating to principal amount,
                           amortization, maturity, collateral (if any) and
                           subordination (if any), and other material terms
                           taken as a whole, of any such extending, refunding or
                           refinancing Debt, and of any agreement entered into
                           and of any instrument issued in connection therewith,
                           are no less favorable in any material respect to the
                           Loan Parties or the Lender Parties than the terms of
                           any agreement or instrument governing the Surviving
                           Debt being extended, refunded or refinanced and the
                           interest rate applicable to any such extending,
                           refunding or refinancing Debt does not exceed the
                           then applicable market interest rate,

                                    (E) Debt of one or more Foreign Subsidiaries
                           of the U.S. Borrower not to exceed (i) for such
                           Foreign Subsidiaries organized and

<PAGE>   101

                                       96

                           existing under the laws of France, U.S.$10,000,000 in
                           the aggregate at any one time outstanding, (ii) for
                           such Foreign Subsidiaries organized and existing
                           under the laws of Italy, U.S.$45,000,000 in the
                           aggregate at any one time outstanding, (iii) for such
                           Foreign Subsidiaries organized and existing under the
                           laws of Japan, U.S.$15,000,000 in the aggregate at
                           any one time outstanding, (iv) for such Foreign
                           Subsidiaries organized and existing under the laws of
                           the United Kingdom, U.S.$10,000,000 in the aggregate
                           at any one time outstanding, and (v) in addition, for
                           any and all such Foreign Subsidiaries (including such
                           Foreign Subsidiaries referred to in subclauses (i),
                           (ii), (iii) and (iv) above), an amount in the
                           aggregate at any one time outstanding not to exceed
                           10% of the Backlog of all Foreign Subsidiaries of the
                           U.S. Borrower as of the last day of the most recently
                           ended calendar month for which the U.S. Borrower has
                           delivered a certificate to the Administrative Agent
                           in accordance with Section 5.03(d), provided that any
                           Debt outstanding under this Section 5.02(b)(ii)(E)
                           shall not exceed, at any time, in the aggregate, an
                           amount equal to 95% of the Backlog of any and all
                           Foreign Subsidiaries of the U.S. Borrower as of the
                           last day of the most recently ended calendar month
                           for which the U.S. Borrower has delivered a
                           certificate to the Administrative Agent in accordance
                           with Section 5.03(d),

                                    (F) Debt of a Subsidiary of the U.S.
                           Borrower incurred and outstanding on the date such
                           Subsidiary was acquired by the U.S. Borrower in a
                           principal amount that, when taken together with the
                           principal amount of all other Debt incurred pursuant
                           to this subclause (F) that is at any one time
                           outstanding, does not exceed U.S.$40,000,000,
                           provided that such Debt was incurred by such
                           Subsidiary prior to such acquisition by the U.S.
                           Borrower and was not incurred in connection with, or
                           contemplation of, such acquisition by the U.S.
                           Borrower, provided further that after giving effect
                           to such acquisition, the U.S. Borrower shall be in
                           pro forma compliance with the covenants contained in
                           Section 5.04, calculated based on the financial
                           statements most recently delivered to the Lender
                           Parties pursuant to Section 5.03, as evidenced by a
                           certificate of the Chief Financial Officer of the
                           U.S. Borrower delivered to the Lender Parties
                           demonstrating such compliance,

                                    (G) Permitted Subordinated Debt incurred in
                           accordance with the requirements of the definition
                           thereof,

                                    (H) Permitted Subordinated Refinancing Debt
                           incurred in accordance with the requirements of the
                           definition thereof,

                                    (I) Debt arising from agreements of the U.S.
                           Borrower or Subsidiary of the U.S. Borrower providing
                           for indemnification, adjustment

<PAGE>   102
                                       97

                           of purchase price, earn out or other similar
                           obligations, in each case, incurred or assumed in
                           connection with the disposition of any business,
                           assets or a Subsidiary of the U.S. Borrower, other
                           than guarantees of Debt incurred by any Person
                           acquiring all or any portion of such business, assets
                           or Subsidiary for the purpose of financing such
                           acquisition, provided that the maximum assumable
                           liability in respect of all such Debt shall at no
                           time exceed the gross proceeds actually received by
                           the U.S. Borrower and its Subsidiaries in connection
                           with such disposition,

                                    (J) Debt arising from the honoring by a bank
                           or other financial institution of a check, draft or
                           similar instrument inadvertently (except in the case
                           of daylight overdrafts) drawn against insufficient
                           funds in the ordinary course of business, provided
                           that such Debt is extinguished within five Business
                           Days of its incurrence,

                                    (K) Debt of the U.S. Borrower or any of its
                           Domestic Subsidiaries represented by letters of
                           credit for the account of the U.S. Borrower or such
                           Domestic Subsidiary, as the case may be, issued in
                           the ordinary course of business of the U.S. Borrower
                           or such Domestic Subsidiary, including, without
                           limitation, in order to provide security for workers'
                           compensation claims or payment obligations in
                           connection with self-insurance or similar
                           requirements in the ordinary course of business and
                           other Debt with respect to workers' compensation
                           claims, self-insurance obligations, performance,
                           surety and similar bonds and completion guarantees
                           provided by the U.S. Borrower or any Domestic
                           Subsidiary of the U.S. Borrower in the ordinary
                           course of business, such Debt, in the aggregate, not
                           to exceed, at any one time outstanding
                           U.S.$10,000,000,

                                    (L) unsecured Debt incurred by the U.S.
                           Borrower to current or former employees in connection
                           with the purchase or redemption of Equity Interests
                           of the U.S. Borrower or any of its Affiliates not to
                           exceed in the aggregate at any one time outstanding
                           U.S.$10,000,000,

                                    (M) (i) Debt owed by one Foreign Subsidiary
                           of a Loan Party to another Foreign Subsidiary of a
                           Loan Party, (ii) Debt outstanding on the date of the
                           Initial Extension of Credit and owed by a Subsidiary
                           of the U.S. Borrower to the U.S. Borrower or another
                           Subsidiary of the U.S. Borrower and (iii) Debt
                           consisting of Investments permitted by Section
                           5.02(f)(i)(D);

                                    (N) Debt incurred by a Foreign Subsidiary of
                           the U.S. Borrower in connection with a Permitted
                           Acquisition (without giving effect to clause (f) of
                           the definition thereof) made by a Foreign Subsidiary

<PAGE>   103
                                       98

                           of the U.S. Borrower, such Debt in an aggregate
                           amount, at any one time outstanding, not to exceed
                           U.S.$50,000,000; and

                                    (O) other Debt, in the aggregate, not to
                           exceed at any one time outstanding U.S.$25,000,000,
                           to the extent such Debt shall constitute unsecured
                           Debt subordinated on terms reasonably acceptable to
                           the Administrative Agent to the Debt under the Loan
                           Documents.

                  (c) Change in Nature of Business. Engage, or permit any of
         its Subsidiaries to engage, to any material extent, in any business
         other than a Permitted Business.

                  (d) Mergers, Etc. Merge into or consolidate with any Person
         or permit any Person to merge into it, or permit any of its
         Subsidiaries to do so, except that:

                           (i) The U.S. Borrower and its Subsidiaries may
                  consummate the transactions contemplated by the Agreement and
                  Plan of Recapitalization;

                           (ii) any Subsidiary of the U.S. Borrower (other than
                  the Euro Borrower) may merge into or consolidate with any
                  other Subsidiary of the U.S. Borrower (other than the Euro
                  Borrower), provided that, in the case of any such merger or
                  consolidation to which a Subsidiary Guarantor is a party, the
                  Person formed by such merger or consolidation shall be a
                  Subsidiary Guarantor;

                           (iii) in connection with any acquisition permitted
                  under Section 5.02(f), any Subsidiary of the U.S. Borrower may
                  merge into or consolidate with any other Person or permit any
                  other Person to merge into or consolidate with it; provided
                  that the Person surviving such merger shall be a wholly owned
                  Subsidiary of the U.S. Borrower (except for any qualifying
                  shares required by applicable law); and

                           (iv) in connection with any sale or other disposition
                  permitted under Section 5.02(e) (other than clause (ii)
                  thereof), any Subsidiary of the U.S. Borrower may merge into
                  or consolidate with any other Person or permit any other
                  Person to merge into or consolidate with it;

         provided, however, that in each case, immediately after giving effect
         thereto, no Event of Default shall result from such merger or
         consolidation and, in the case of any such merger to which a Borrower
         is a party, such Borrower shall be the surviving corporation.

                  (e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise
         dispose of, or permit any of its Subsidiaries to sell, lease, transfer
         or otherwise dispose of any assets, or grant any option or other right
         to purchase, lease or otherwise acquire any assets, except:

<PAGE>   104
                                       99

                           (i) sales, leases, transfers and dispositions of
                  assets in the ordinary course of its business;

                           (ii) in a transaction authorized by Section 5.02(d)
                  (other than subsection (iv) thereof);

                           (iii) sales and other dispositions of assets for fair
                  market value of not more than U.S.$25,000,000 in any one
                  Fiscal Year and U.S.$75,000,000 in the aggregate for all such
                  transactions (of which at least 75% shall be payable in cash);
                  and

                           (iv) sales or other dispositions of assets permitted
                  by Section 5.02(f);

         provided that, in the case of sales or other dispositions of assets
         pursuant to clause (iii) above, the Borrowers shall, on the first
         anniversary of the date of receipt by any Loan Party or any of its
         Subsidiaries of the Net Cash Proceeds from such sale, prepay the
         Advances if and to the extent required by Section 2.06(b)(ii).

                  (f) Investments in Other Persons. Make or hold, or permit
         any of its Subsidiaries to make or hold, any Investment in any Person,
         except:

                           (i) (A) equity Investments by the Parent and its
                  Subsidiaries in their Subsidiaries outstanding on the date
                  hereof, (B) additional Investments by the Parent, the U.S.
                  Borrower and the Subsidiary Guarantor in Loan Parties (other
                  than the Euro Borrower), (C) Investments by the Loan Parties
                  in the Euro Borrower solely to repay the Euro Borrower's
                  Obligations outstanding under the Loan Documents, (D)
                  additional equity or debt Investments by the Parent, the U.S.
                  Borrower and the Subsidiary Guarantors in an aggregate amount
                  outstanding at any time not to exceed U.S.$50,000,000, and (E)
                  additional equity Investments by Subsidiaries of the Parent
                  which are not Loan Parties, in their Subsidiaries;

                           (ii) loans and advances to employees in the ordinary
                  course of the business of the Borrowers and their Subsidiaries
                  as presently conducted in an aggregate principal amount not to
                  exceed U.S.$5,000,000 at any time outstanding;

                           (iii) Investments by the Borrowers and their
                  Subsidiaries in Cash Equivalents;

                           (iv) Investments existing on the date hereof and
                  described on Schedule 4.01(x) hereto;

                           (v) Investments by the U.S. Borrower in Hedge
                  Agreements permitted under Section 5.02(b)(i)(A);

<PAGE>   105
                                      100

                           (vi) Investments consisting of intercompany Debt
                  permitted under Section 5.02(b);

                           (vii) Investments by the Parent, the U.S. Borrower
                  and the Subsidiaries of the U.S. Borrower consisting of the
                  Pending Acquisition, provided that (x) the aggregate amount of
                  Debt incurred, acquired or assumed by the Parent or any of its
                  Subsidiaries in connection with the Pending Acquisition shall
                  not exceed the lower of (A) U.S.$45,000,000 and (B) 75% of the
                  aggregate purchase consideration for the Pending Acquisition,
                  (y) immediately after giving effect to the Pending
                  Acquisition, the ratio of (A) Debt incurred, acquired or
                  assumed by the Parent or any of its Subsidiaries in connection
                  with the Pending Acquisition to (B) the increase in
                  Consolidated Pro Forma Adjusted EBITDA due solely to the
                  consummation of the Pending Acquisition, shall not be greater
                  than 4.40:1.00, and (z) all other purchase consideration for
                  the Pending Acquisition shall be funded solely from the
                  proceeds of the issuance and sale of Equity Interests in the
                  U.S. Borrower or shall be payable solely in such Equity
                  Interests;

                           (viii) Investments that consist of Permitted
                  Acquisitions; and

                           (ix) other Investments in an aggregate amount not to
                  exceed at any one time U.S.$35,000,000, provided that, after
                  giving effect to such Investment, the U.S. Borrower shall be
                  in pro forma compliance with the covenants contained in
                  Section 5.04, calculated based on the financial statements
                  most recently delivered to the Lender Parties pursuant to
                  Section 5.03, as evidenced by a certificate of the Chief
                  Financial Officer of the U.S. Borrower delivered to the Lender
                  Parties demonstrating such compliance.

                  (g) Restricted Payments. Declare or pay any dividends,
         purchase, redeem, retire, defease or otherwise acquire for value any of
         its Equity Interests now or hereafter outstanding, return any capital
         to its stockholders, partners or members (or the equivalent Persons
         thereof) as such, make any distribution of assets, Equity Interests,
         obligations or securities to its stockholders, partners or members (or
         the equivalent Persons thereof) as such or permit any of its
         Subsidiaries to do any of the foregoing, or permit any of its
         Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
         for value any Equity Interests in any of the Borrowers (any and all
         such actions being referred to as "RESTRICTED PAYMENTS"), except that,
         so long as no Default shall have occurred and be continuing at the time
         of any action described:

                           (i) the U.S. Borrower may declare and pay dividends
                  and distributions payable only in common or preferred stock of
                  the U.S. Borrower;

                           (ii) any Subsidiary of the U.S. Borrower may make any
                  Restricted Payment so long as the Person receiving any cash in
                  connection with such Restricted Payment is the U.S. Borrower
                  or any of its Subsidiaries.

<PAGE>   106

                                      101

                           (iii) the U.S. Borrower or any of its Subsidiaries
                  may make payments to purchase Equity Interest from former
                  officers, directors and employees, so long as the aggregate
                  amount so paid when added to the payments made on any Debt
                  incurred to purchase such Equity Interests does not exceed
                  U.S.$5,000,000 in the aggregate in any one Fiscal Year;

                           (iv) any Loan Party may make distributions to the
                  Parent provided for in the Tax Agreement; and

                           (v) any Subsidiary of the Parent may make
                  distributions to the Parent to pay administrative and other
                  operating expenses in an aggregate amount not to exceed
                  U.S.$500,000 per Fiscal Year.

                  (h) Amendments of Constitutive Documents. Amend, or permit
         any of its Subsidiaries to amend, its certificate of incorporation or
         bylaws or other constitutive documents, other than any amendment which
         is not reasonably likely to have a Material Adverse Effect.

                  (i) Accounting Changes. Make or permit, or permit any of its
         Subsidiaries to make or permit, any change in (i) accounting policies
         or reporting practices, except as permitted or required by generally
         accepted accounting principles as in effect from time to time, or (ii)
         Fiscal Year.

                  (j) Prepayments, Etc., of Senior Subordinated Debt. Prepay,
         redeem, purchase, defease or otherwise satisfy prior to the scheduled
         maturity thereof in any manner, or make any payment in violation of any
         subordination terms of, any Senior Subordinated Debt, or amend, modify
         or change in any manner that is materially adverse to the Lender
         Parties, any term or condition of any Senior Subordinated Debt, or
         permit any of its Subsidiaries to do any of the foregoing other than
         (x) any prepayment of Senior Subordinated Debt with any Permitted
         Subordinated Refinancing Debt or (y) any amendments to the Senior
         Subordinated Debt Documents that either (i) contain covenants,
         defaults, subsidiary guarantees and subordination provisions at least
         as favorable (taken as a whole) to the Lender Parties as those set
         forth in the Senior Subordinated Debt Documents and do not require any
         principal payments prior to the tenth anniversary of the Effective Date
         (except in the case of a Change of Control or any sale, lease, transfer
         or other disposition of any assets on the terms set forth in the Senior
         Subordinated Debt Documents) or (ii) contain terms and conditions that
         are otherwise reasonably satisfactory to the Required Lenders.

                  (k) Negative Pledge. Enter into or suffer to exist, or
         permit any of its Subsidiaries to enter into or suffer to exist, any
         agreement prohibiting or conditioning the creation or assumption of any
         Lien upon any of its property except (i) in favor of the Secured
         Parties, (ii) as set forth in the Indenture, (iii) in connection with
         (A) any Surviving Debt, (B) any purchase money Debt permitted by
         Section 5.02(b)(ii)(B) solely

<PAGE>   107
                                      102

         to the extent that the agreement or instrument governing such Debt
         prohibits a Lien on the property acquired with the proceeds of such
         Debt, (C) any Capitalized Lease permitted by Section 5.02(b)(ii)(C)
         solely to the extent that such Capitalized Lease prohibits a Lien on
         the property subject thereto, or (D) any Debt of a Subsidiary permitted
         by Section 5.02(b)(ii)(E) or Section 5.02(b)(ii)(F), solely as to the
         property of such Subsidiary (so long as, in the case of Section
         5.01(b)(ii)(F), such agreement was not entered into solely in
         contemplation of such Subsidiary becoming a Subsidiary of the U.S.
         Borrower), and (iv) in connection with any assets to be sold or
         otherwise disposed of as permitted by Section 5.02(e), pursuant to any
         agreement relating to such sale or disposition, but solely as to such
         assets to be sold or disposed of.

                  (l) Partnerships, Etc. Become a general partner in any
         general or limited partnership or joint venture, or permit any of its
         Subsidiaries to do so, other than any Subsidiary the sole assets of
         which consist of its interest in such partnership or joint venture.

                  (m) Speculative Transactions. Engage, or permit any of its
         Subsidiaries to engage, in any transaction involving commodity options
         or futures contracts or any similar speculative transactions.

                  (n) Capital Expenditures. Make, or permit any of its
         Subsidiaries to make, any Capital Expenditures that would cause the
         aggregate of all such Capital Expenditures made by the Parent and its
         Subsidiaries (excluding expenditures made with Net Cash Proceeds that
         shall have been reinvested in accordance with this Agreement and the
         reimbursement of insurance proceeds) in any period set forth below to
         exceed the sum of (a) 25% of the increase (the "INCREASE PORTION") in
         Consolidated Pro Forma Adjusted EBITDA due solely to the consummation
         of a Permitted Acquisition or Pending Acquisition during such period or
         any prior period (such Increase Portion to be applied pro rata for the
         remaining of the Fiscal Year in which such Permitted Acquisition or
         Pending Acquisition is consummated), and (b) the amount set forth below
         for such period:

<PAGE>   108
                                      103

<TABLE>
<CAPTION>
=========================================
FISCAL YEAR ENDING IN         AMOUNT
-----------------------------------------
<S>                       <C>
December 31, 2001         U.S.$48,000,000
December 31, 2002         U.S.$50,000,000
December 31, 2003         U.S.$53,000,000
December 31, 2004         U.S.$56,000,000
December 31, 2005         U.S.$59,000,000
For each Fiscal
Year thereafter           U.S.$62,000,000
=========================================
</TABLE>

         Notwithstanding the foregoing, in the event that the amount of Capital
         Expenditures permitted to be made in any Fiscal Year (before giving
         effect to any increase in such permitted expenditure amount pursuant to
         this sentence) exceeds the amount of Capital Expenditures made during
         such Fiscal Year, such excess (the "ROLLOVER AMOUNT") may be carried
         forward and utilized to make Capital Expenditures in the next
         succeeding Fiscal year, provided that in no event shall the aggregate
         amount of Capital Expenditures made during any Fiscal Year pursuant to
         this sentence exceed 150% of the Capital Expenditures that would be
         permitted to be made but for the provisions of this sentence.

                  (o) Payment Restrictions Affecting Subsidiaries. Directly or
         indirectly, enter into or suffer to exist, or permit any of its
         Subsidiaries to enter into or suffer to exist, any agreement or
         arrangement limiting the ability of any of its Subsidiaries to declare
         or pay dividends or other distributions in respect of its Equity
         Interests or repay or prepay any Debt owed to, make loans or advances
         to, or otherwise transfer assets to or invest in, the Borrowers or any
         Subsidiary of the Borrowers (whether through a covenant restricting
         dividends, loans, asset transfers or investments, a financial covenant
         or otherwise), except (i) the Loan Documents, (ii) any agreement or
         instrument evidencing Surviving Debt, (iii) any agreement with respect
         to the sale, lease, transfer or other disposition of assets as
         permitted by Section 5.02(e), and (iv) any agreement with respect to
         any Debt incurred by a Subsidiary of the U.S. Borrower pursuant to
         Section 5.02(b)(ii)(F).

                  (p) Amendment, Etc., of Related Document. Cancel or
         terminate any Related Document or consent to or accept any cancellation
         or termination thereof, amend or otherwise modify any Related Document
         or give any consent, waiver or approval thereunder, waive any default
         under or breach of any Related Document, agree in any manner to any
         other amendment, modification or change of any term or condition of any
         Related Document or take any other action in connection with any
         Related Document that would impair the value of the interest or rights
         of any Loan Party thereunder or that would impair the interest or
         rights of any Agent or any Lender Party, or permit any of its
         Subsidiaries to do any of the foregoing, except (i) with respect to the
         Senior Subordinated Debt Documents, as to which Section 5.02(j) shall
         govern, and (ii) with the consent of the

<PAGE>   109
                                      104

         Administrative Agent for any other Related Documents, which shall not
         be unreasonably withheld.

                  SECTION 5.03. Reporting Requirements. So long as any Advance
or any other Obligation of any Loan Party under any Loan Document with respect
to the payment of principal, interest or fees shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Borrowers will furnish to the Agents and the Lender Parties:

                  (a) Default Notice. As soon as possible and in any event
         within three Business Days after a Responsible Officer or senior
         management of the Parent or any of Loan Party obtains actual knowledge
         of the occurrence of a Default or any event reasonably likely to have a
         Material Adverse Effect continuing on the date of such statement, a
         statement of the Chief Financial Officer of the U.S. Borrower setting
         forth details of such Default or event and the action that the U.S.
         Borrower has taken and proposes to take with respect thereto.

                  (b) Annual Financials. As soon as available and in any event
         within 90 days after the end of each Fiscal Year, a copy of the annual
         audit report for such year for the U.S. Borrower and its Subsidiaries,
         including therein Consolidated balance sheets of the U.S. Borrower and
         its Subsidiaries as of the end of such Fiscal Year and Consolidated
         statements of income and a Consolidated statement of cash flows of the
         U.S. Borrower and its Subsidiaries for such Fiscal Year, in each case
         accompanied by an opinion of Arthur Andersen or other independent
         public accountants of nationally recognized standing in the United
         States, together with (i) a certificate of such accounting firm
         (consistent with generally accepted accounting practice in the United
         States for certificates of this type) stating that in the course of the
         regular audit of the business of the U.S. Borrower and its
         Subsidiaries, which audit was conducted by such accounting firm in
         accordance with generally accepted auditing standards, such accounting
         firm has obtained no knowledge that a Default has occurred and is
         continuing with respect to Section 5.04, or if, in the opinion of such
         accounting firm, any such Default has occurred and is continuing, a
         statement as to the nature thereof, (ii) a schedule in form reasonably
         satisfactory to the Administrative Agent of the computations used in
         determining, as of the end of such Fiscal Year, compliance with the
         covenants contained in Section 5.04, provided that, in the event of any
         change in generally accepted accounting principles used in the
         preparation of such financial statements, the U.S. Borrower shall also
         provide, if necessary for the determination of compliance with Section
         5.04, a statement of reconciliation conforming such financial
         statements to GAAP and (iii) a certificate of the Chief Financial
         Officer of the U.S. Borrower stating that no Default has occurred and
         is continuing or, if a Default has occurred and is continuing, a
         statement as to the nature thereof and the actions that the Borrowers
         have taken and propose to take with respect thereto.

<PAGE>   110
                                      105

                  (c) Quarterly Financials. As soon as available and in any
         event within 45 days after the end of each of the first three quarters
         of each Fiscal Year, Consolidated balance sheets of the U.S. Borrower
         and its Subsidiaries as of the end of such quarter and Consolidated
         statements of income and a Consolidated statement of cash flows of the
         U.S. Borrower and its Subsidiaries for the period commencing at the end
         of the previous fiscal quarter and ending with the end of such fiscal
         quarter and Consolidated statements of income and a Consolidated
         statement of cash flows of the U.S. Borrower and its Subsidiaries for
         the period commencing at the end of the previous Fiscal Year and ending
         with the end of such quarter, setting forth in each case in comparative
         form the corresponding figures for the corresponding date or period of
         the preceding Fiscal Year, all in reasonable detail and duly certified
         (subject to normal year-end audit adjustments and the absence of
         footnote disclosure) by the Chief Financial Officer of the U.S.
         Borrower as having been prepared in accordance with generally accepted
         accounting principles, together with (i) a certificate of said officer
         stating that no Default has occurred and is continuing or, if a Default
         has occurred and is continuing, a statement as to the nature thereof
         and the action that the U.S. Borrower has taken and proposes to take
         with respect thereto and (ii) a schedule in form reasonably
         satisfactory to the Administrative Agent of the computations used by
         the U.S. Borrower in determining compliance with the covenants
         contained in Section 5.04, provided that, in the event of any change in
         generally accepted accounting principles used in the preparation of
         such financial statements, the U.S. Borrower shall also provide, if
         necessary for the determination of compliance with Section 5.04, a
         statement of reconciliation conforming such financial statements to
         GAAP.

                  (d) Monthly Financials, Backlog, etc. As soon as available
         and in any event within 30 days after the end of each month, a
         Consolidated balance sheet of the U.S. Borrower and its Subsidiaries as
         of the end of such month and Consolidated statements of income and a
         Consolidated statement of cash flows of the U.S. Borrower and its
         Subsidiaries for the period commencing at the end of the previous month
         and ending with the end of such month and Consolidated statements of
         income and a Consolidated statement of cash flows of the U.S. Borrower
         and its Subsidiaries for the period commencing at the end of the
         previous Fiscal Year and ending with the end of such month, setting
         forth in each case in comparative form the corresponding figures for
         the preceding month, all in reasonable detail and duly certified
         (subject to normal year-end audit adjustments and the absence of
         footnote disclosure) by the Chief Financial Officer of the U.S.
         Borrower. As soon as available and in any event within 30 days after
         the end of each calendar month, a certificate setting forth, in
         reasonable detail, as of the end of such month, the amount of Backlog
         of any and all Foreign Subsidiaries of the U.S. Borrower and duly
         certified by the Chief Financial Officer of the U.S. Borrower.

                  (e) Annual Business Plan. As soon as available and in any
         event no later than 30 days before the end of each Fiscal Year, a
         business plan prepared by management of the U.S. Borrower, in form
         reasonably satisfactory to the Administrative Agent, including

<PAGE>   111
                                      106

         balance sheets, income statements and cash flow statements on a monthly
         basis for the Fiscal Year following such Fiscal Year and on an annual
         basis for each Fiscal Year thereafter until the Termination Date.

                  (f) Litigation. Promptly after the commencement thereof,
         notice of all actions, suits, investigations, litigation and
         proceedings before any court or governmental department, commission,
         board, bureau, agency or instrumentality, domestic or foreign,
         affecting any Loan Party or any of its Subsidiaries that is reasonably
         likely to have a Material Adverse Effect, and promptly after the
         occurrence thereof, notice of any adverse change in the status or the
         financial effect on any Loan Party or any of its Subsidiaries of the
         Disclosed Litigation from that described on Schedule 4.01(f) hereto.

                  (g) Securities Reports. Promptly after the sending or filing
         thereof, copies of all proxy statements, financial statements and
         reports that any Loan Party or any of its Subsidiaries sends to its
         stockholders, and copies of all regular, periodic and special reports,
         and all registration statements, that any Loan Party or any of its
         Subsidiaries files with the Securities and Exchange Commission or any
         governmental authority that may be substituted therefor, or with any
         national securities exchange.

                  (h) Creditor Reports. Promptly after the furnishing thereof,
         copies of any statement or report furnished to any holder of Debt
         securities of any Loan Party or of any of its Subsidiaries pursuant to
         the terms of any indenture, loan or credit or similar agreement and not
         otherwise required to be furnished to the Lender Parties pursuant to
         any other clause of this Section 5.03, to the extent any Debt
         outstanding with respect to such Debt securities shall be equal to at
         least U.S.$50,000,000.

                  (i) Agreement Notices. Promptly upon receipt thereof, copies
         of all written notices, requests and other documents received by any
         Loan Party or any of its Subsidiaries under or pursuant to any Related
         Document or instrument, indenture, loan or credit or similar agreement
         regarding or related to any breach or default by any party thereto or
         any other event that is reasonably likely to have a Material Adverse
         Effect and copies of any amendment, modification or waiver of any
         provision of any Related Document and, from time to time upon request
         by the Administrative Agent, such information and reports regarding the
         Related Documents and any other instruments, indentures and loan and
         credit and similar agreements as the Administrative Agent may
         reasonably request.

                  (j) Tax Certificates. (i) Promptly, and in any event within
         five Business Days after the due date (with extensions) for filing the
         final federal income tax return in respect of each taxable year, a
         certificate (a "TAX CERTIFICATE"), signed by the President or the Chief
         Financial Officer of the U.S. Borrower, stating that the common parent
         of the affiliated group (within the meaning of Section 1504(a)(1) of
         the Internal Revenue Code) of which the U.S. Borrower is a member has
         paid to the Internal Revenue Service or other taxing authority, the
         full amount that such affiliated group is required to pay in

<PAGE>   112
                                      107

         respect of federal income tax for such year and that the U.S. Borrower
         and its Subsidiaries have received any amounts payable to them, and
         have not paid amounts in respect of taxes (federal, state, local or
         foreign) in excess of the amount they are required to pay in respect of
         such taxable year.

                  (ii) Promptly, and in any event within five Business Days
         after the due date (with extensions) for filing the final income tax
         return in respect of each taxable year, a certificate (a "TAX
         CERTIFICATE"), signed by the President or the Chief Financial Officer
         of the Euro Borrower, stating that the Euro Borrower has paid to the
         applicable taxing authority, the full amount that the Euro Borrower is
         required to pay in respect of income tax for such year.

                  (k) ERISA. (i) ERISA Events and ERISA Reports. (A) Promptly
         and in any event within 10 Business Days after a Responsible Officer or
         senior management of any Loan Party or any ERISA Affiliate obtains
         actual knowledge that any ERISA Event has occurred, a statement of the
         Chief Financial Officer of the U.S. Borrower describing such ERISA
         Event and the action, if any, that such Loan Party or such ERISA
         Affiliate has taken and proposes to take with respect thereto and (B)
         on the date any records, documents or other information must be
         furnished to the PBGC with respect to any Plan pursuant to Section 4010
         of ERISA, a copy of such records, documents and information.

                  (ii) Plan Terminations. Promptly and in any event within three
Business Days after receipt thereof by any Loan Party or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate any Plan
or to have a trustee appointed to administer any Plan.

                  (iii) Plan Annual Reports. If requested by the Administrative
Agent, promptly and in any event within 30 days after the filing thereof with
the Internal Revenue Service, copies of each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) with respect to each Plan.

                  (iv) Multiemployer Plan Notices. Promptly and in any event
within 10 Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning (A) the imposition of Withdrawal Liability by any such Multiemployer
Plan, (B) the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (C) the amount of liability incurred,
or that may be incurred, by such Loan Party or any ERISA Affiliate in connection
with any event described in clause (A) or (B).

                  (l) Environmental Conditions. Promptly after the assertion
         or occurrence thereof, notice of any Environmental Action against or of
         any noncompliance by any Loan Party or any of its Subsidiaries with any
         Environmental Law or Environmental Permit that would (i) reasonably be
         likely to have a Material Adverse Effect or (ii) cause

<PAGE>   113
                                      108

         any property described in the Mortgages to be subject to any material
         restrictions on ownership, occupancy, use or transferability under any
         Environmental Law.

                  (m) Real Property. As soon as available and in any event
         within 30 days after the end of each Fiscal Year, a report
         supplementing Schedules 4.01(n) and 4.01(m) hereto, including an
         identification of all owned and leased real property located within the
         United States disposed of by each Borrower or any of their Subsidiaries
         during such Fiscal Year, a list and description (including the street
         address, county and state, record owner, book value thereof and, in the
         case of leases of property, lessor, lessee, expiration date and annual
         rental cost thereof) of all real property located within the United
         States and acquired or leased at a current annual rent in excess of
         U.S.$120,000 during such Fiscal Year and a description of such other
         changes in the information included in such Schedules as may be
         necessary for such Schedules to be accurate and complete.

                  (n) Insurance. As soon as available and in any event within
         30 days after the end of each Fiscal Year, a report summarizing the
         insurance coverage (specifying type, amount and carrier) in effect for
         each Loan Party and its Subsidiaries and containing such additional
         information as the Administrative Agent may reasonably request.

                  (o) Other Information. Such other information respecting
         the business, condition (financial or otherwise), operations,
         performance or properties of any Loan Party or any of its Subsidiaries
         as any Agent, or any Lender Party through the Administrative Agent, may
         from time to time reasonably request.

                  SECTION 5.04. Financial Covenants. So long as any Advance or
any other Obligation of any Loan Party under any Loan Document with respect to
the payment of principal, interest or fees shall remain unpaid, any Letter of
Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the U.S. Borrower will:

<PAGE>   114
                                      109

                  (a) Total Debt/EBITDA Ratio. Maintain at the end of each
         fiscal quarter of the U.S. Borrower a Total Debt/EBITDA Ratio of not
         more than the amount set forth below for each period set forth below:

<TABLE>
<CAPTION>
==================================================
         QUARTER ENDING                    RATIO
==================================================
<S>                                      <C>
September 30, 2001                       4.90:1.00
December 31, 2001                        4.90:1.00

March 31, 2002                           4.90:1.00
June 30, 2002                            4.90:1.00
September 30, 2002                       4.50:1.00
December 31, 2002                        4.50:1.00

March 31, 2003                           4.50:1.00
June 30, 2003                            4.50:1.00
September 30, 2003                       4.10:1.00
December 31, 2003                        4.10:1.00

March 31, 2004                           4.10:1.00
June 30, 2004                            4.10:1.00
September 30, 2004                       3.75:1.00
December 31, 2004                        3.75:1.00

March 31, 2005                           3.75:1.00
June 30, 2005                            3.75:1.00
September 30, 2005                       3.25:1.00
December 31, 2005                        3.25:1.00

March 31, 2006                           3.25:1.00
June 30, 2006                            3.25:1.00

For each fiscal quarter thereafter       3.00:1.00

==================================================
</TABLE>

                  (b) Interest Coverage Ratio. Maintain at the end of each
         fiscal quarter of the U.S. Borrower an Interest Coverage Ratio of not
         less than the amount set forth below for each period set forth below:

<PAGE>   115
                                      110

<TABLE>
<CAPTION>
========================================================
              QUARTER ENDING                     RATIO
========================================================
<S>                                            <C>
September 30, 2001                             2.00:1.00
December 31, 2001                              2.00:1.00

March 31, 2002                                 2.00:1.00
June 30, 2002                                  2.00:1.00
September 30, 2002                             2.15:1.00
December 31, 2002                              2.15:1.00

March 31, 2003                                 2.15:1.00
June 30, 2003                                  2.15:1.00
September 30, 2003                             2.30:1.00
December 31, 2003                              2.30:1.00

March 31, 2004                                 2.30:1.00
June 30, 2004                                  2.30:1.00
September 30, 2004                             2.60:1.00
December 31, 2004                              2.60:1.00

March 31, 2005                                 2.60:1.00
June 30, 2005                                  2.60:1.00
September 30, 2005                             2.90:1.00
December 31, 2005                              2.90:1.00

March 31, 2006                                 2.90:1.00
June 30, 2006                                  2.90:1.00

For each fiscal quarter thereafter             3.00:1.00
========================================================
</TABLE>

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION 6.01. Events of Default. If any of the following
events ("EVENTS OF DEFAULT") shall occur and be continuing:

                  (a) (i) any Borrower shall fail to pay any principal of any
         Advance when the same shall become due and payable or (ii) any Borrower
         shall fail to pay any interest on any Advance, or any Loan Party shall
         fail to make any other payment under any Loan Document, in each case
         under this clause (ii) within two Business Days after the same becomes
         due and payable; or

<PAGE>   116
                                      111

                  (b) any representation or warranty made by any Loan Party
         (or any of its officers) under or in connection with any Loan Document
         shall prove to have been incorrect in any material respect when made;
         or

                  (c) any Borrower shall fail to perform or observe any term,
         covenant or agreement contained in Section 2.14, 5.01(e), (f), (i),
         (j), (m) or (p), 5.02, 5.03(a), (b), (c) or (l), or 5.04; or

                  (d) any Loan Party shall fail to perform or observe any
         other term, covenant or agreement contained in any Loan Document on its
         part to be performed or observed if such failure shall remain
         unremedied for 30 days after the earlier of the date on which (i) a
         Responsible Officer acknowledges such failure in writing or (ii)
         written notice thereof shall have been given to the U.S. Borrower by
         any Agent or any Lender Party; or

                  (e) any Loan Party or any of its Subsidiaries shall fail to
         pay any principal of, premium or interest on or any other amount
         payable in respect of any Debt of such Loan Party or such Subsidiary
         (as the case may be) that is outstanding in a principal amount (or, in
         the case of any Hedge Agreement, an Agreement Value) of at least
         U.S.$10,000,000 either individually or in the aggregate (but excluding
         Debt outstanding hereunder), when the same becomes due and payable
         (whether by scheduled maturity, required prepayment, acceleration,
         demand or otherwise) and such failure shall continue after the
         applicable grace period, if any, specified in the agreement or
         instrument relating to such Debt; or any other event shall occur or
         condition shall exist under any agreement or instrument relating to any
         such Debt outstanding in such principal amount and shall continue after
         the applicable grace period, if any, specified in such agreement or
         instrument, if the effect of such event or condition is to accelerate,
         or to permit the immediate acceleration of, the maturity of such Debt
         or otherwise to cause, or to permit the holder thereof to cause, such
         Debt to mature; or any such Debt shall be declared to be due and
         payable or required to be prepaid or redeemed (other than by a
         regularly scheduled required prepayment or redemption), purchased or
         defeased, or an offer to prepay, redeem, purchase or defease such Debt
         shall be required to be made, in each case prior to the stated maturity
         thereof; or

                  (f) any Loan Party or any of its Material Subsidiaries
         shall admit in writing its inability to pay its debts generally, or
         shall make a general assignment for the benefit of creditors; or any
         proceeding shall be instituted by or against any Loan Party or any of
         its Material Subsidiaries seeking to adjudicate it a bankrupt or
         insolvent, or seeking liquidation, winding up, reorganization,
         arrangement, adjustment, protection, relief, or composition of it or
         its debts under any law relating to bankruptcy, insolvency or
         reorganization or relief of debtors, or seeking the entry of an order
         for relief or the appointment of a receiver, trustee or other similar
         official for it or for any substantial part of its property and, in the
         case of any such proceeding instituted against it (but not instituted
         by it) that is being diligently contested by it in good faith, either
         such proceeding shall remain undismissed or unstayed for a period of 60
         days or any of the

<PAGE>   117
                                      112

         actions sought in such proceeding (including, without limitation, the
         entry of an order for relief against, or the appointment of a receiver,
         trustee, custodian or other similar official for, it or any substantial
         part of its property) shall occur; or any Loan Party or any of its
         Material Subsidiaries shall take any corporate action to authorize any
         of the actions set forth above in this subsection (f); or

                  (g) any judgments or orders, either individually or in the
         aggregate, for the payment of money in excess of U.S.$10,000,000 shall
         be rendered against any Loan Party or any of its Material Subsidiaries
         and either (i) enforcement proceedings shall have been commenced by any
         creditor upon such judgment or order or (ii) there shall be any period
         of 10 consecutive days during which a stay of enforcement of such
         judgment or order, by reason of a pending appeal or otherwise, shall
         not be in effect; or

                  (h) any material provision of any Loan Document after
         delivery thereof pursuant to Section 3.01 or Section 5.01(j) shall for
         any reason cease to be valid and binding on or enforceable against any
         Loan Party party to it, or any such Loan Party shall so state in
         writing; or

                  (i) any Collateral Document or financing statement after
         delivery thereof pursuant to Section 3.01 or Section 5.01(j) shall for
         any reason (other than pursuant to the terms thereof) cease to create a
         valid and perfected first priority lien (subject to any Liens permitted
         by the Loan Documents and imposed in accordance therewith) on and
         security interest in the Collateral purported to be covered thereby; or

                  (j) a Change of Control shall occur; or

                  (k) any ERISA Event shall have occurred with respect to a
         Plan and the sum (determined as of the date of occurrence of such ERISA
         Event) of the Insufficiency of such Plan and the Insufficiency of any
         and all other Plans with respect to which an ERISA Event shall have
         occurred and then exist (or the liability of the Loan Parties and the
         ERISA Affiliates related to such ERISA Event) exceeds U.S.$25,000,000;
         or

                  (l) any Loan Party or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that it has incurred
         Withdrawal Liability to such Multiemployer Plan in an amount that, when
         aggregated with all other amounts required to be paid to Multiemployer
         Plans by the Loan Parties and the ERISA Affiliates as Withdrawal
         Liability (determined as of the date of such notification), exceeds
         U.S.$25,000,000 or requires payments exceeding U.S.$5,000,000 per
         annum; or

                  (m) any Loan Party or any ERISA Affiliate shall have been
         notified by the sponsor of a Multiemployer Plan that such Multiemployer
         Plan is in reorganization or is being terminated, within the meaning of
         Title IV of ERISA, and as a result of such reorganization or
         termination the aggregate annual contributions of the Loan Parties and
         the ERISA Affiliates to all Multiemployer Plans that are then in
         reorganization or being

<PAGE>   118
                                      113

         terminated have been or will be increased over the amounts contributed
         to such Multiemployer Plans for the plan years of such Multiemployer
         Plans immediately preceding the plan year in which such reorganization
         or termination occurs by an amount exceeding U.S.$5,000,000;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the U.S.
Borrower, declare the Commitments of each Lender Party and the obligation of
each Lender Party to make Advances (other than Letter of Credit Advances by the
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing
Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b)) and of
the Issuing Bank to issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the U.S. Borrower, declare the
Advances and the Notes, all interest thereon and all other amounts payable under
this Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Advances and the Notes, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrowers, and; provided, however, that, in the event of an actual or
deemed entry of an order for relief with respect to any Borrower under the
Federal Bankruptcy Code, (x) the Commitments of each Lender Party and the
obligation of each Lender Party to make Advances (other than Letter of Credit
Advances by the Issuing Bank or a Revolving Credit Lender pursuant to Section
2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to Section
2.02(b)) and of the Issuing Bank to issue Letters of Credit shall automatically
be terminated and (y) the Advances and the Notes, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrowers.

                  SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any of the actions described in Section 6.01 shall have been taken,
the Administrative Agent may, or shall at the request of the Required Lenders,
make demand upon the U.S. Borrower to, and forthwith upon such demand the U.S.
Borrower will, pay to the Administrative Agent on behalf of the Lender Parties,
in same day funds at the Administrative Agent's office designated in such
demand, for deposit in the L/C Cash Collateral Account, an amount equal to the
aggregate Available Amount of all Letters of Credit then outstanding. If at any
time the Administrative Agent or the Collateral Agent determines that any funds
held in the L/C Cash Collateral Account are subject to any right or claim of any
Person other than the Agents and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the U.S. Borrower will, forthwith upon demand by the Administrative Agent or the
Collateral Agent, pay to the Collateral Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent or the Collateral Agent, as the case may be, determines to
be free and clear of any such right and claim. Upon the drawing of any Letter of
Credit for which funds

<PAGE>   119
                                      114

are on deposit in the L/C Cash Collateral Account, such funds shall be applied
to reimburse the Issuing Bank or Revolving Credit Lenders, as applicable, to the
extent permitted by applicable law.

                                   ARTICLE VII

                                   THE AGENTS

                  SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, the Swing Line Bank (if applicable), the Issuing
Bank (if applicable) and on behalf of itself and its Affiliates as potential
Hedge Banks) hereby appoints and authorizes each Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to such Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), no Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lender
Parties and all holders of Notes; provided, however, that no Agent shall be
required to take any action that exposes such Agent to personal liability or
that is contrary to this Agreement or applicable law. Each Agent agrees to give
to each Lender Party prompt notice of each notice given to it by the Borrowers
pursuant to the terms of this Agreement.

                  SECTION 7.02. Agents' Reliance, Etc. Neither any Agent nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each Agent:
(a) may treat the payee of any Note as the holder thereof until, in the case of
the Administrative Agent, the Administrative Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any
other Agent, such Agent has received notice from the Administrative Agent that
it has received and accepted such Assignment and Acceptance, in each case as
provided in Section 9.07; (b) may consult with legal counsel (including counsel
for any Loan Party), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender Party and shall
not be responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,

<PAGE>   120
                                      115

enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

                  SECTION 7.03. MSSF, CSFB and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, each of MSSF
and CSFB shall have the same rights and powers under the Loan Documents as any
other Lender Party and may exercise the same as though it were not an Agent; and
the term "Lender Party" or "Lender Parties" shall, unless otherwise expressly
indicated, include MSSF and CSFB in their respective individual capacities. MSSF
and CSFB and their respective affiliates may accept deposits from, lend money
to, act as trustee under indentures of, accept investment banking engagements
from and generally engage in any kind of business with, any Loan Party, any of
its Subsidiaries and any Person that may do business with or own securities of
any Loan Party or any such Subsidiary, all as if MSSF and CSFB were not Agents
and without any duty to account therefor to the Lender Parties.

                  SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.

                  SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Borrowers) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against such Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by such Agent under the Loan Documents
(collectively, the "INDEMNIFIED COSTS"); provided, however, that no Lender Party
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct as found in a
final, non-appealable judgment by a court of competent jurisdiction. Without
limitation of the foregoing, each Lender Party agrees to reimburse each Agent
promptly upon demand for its ratable share of any costs and expenses (including,
without limitation, fees and expenses of counsel) payable by the Borrowers under
Section 9.04, to the extent that such Agent is not promptly reimbursed for such
costs and expenses by the Borrowers. In the case of any

<PAGE>   121
                                      116

investigation, litigation or proceeding giving rise to any Indemnified Costs,
this Section 7.05 applies whether any such investigation, litigation or
proceeding is brought by any Lender Party or any other Person.

                  (b) Each Lender Party severally agrees to indemnify the
Issuing Bank (to the extent not promptly reimbursed by the U.S. Borrower) from
and against such Lender Party's ratable share (determined as provided below) of
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Issuing
Bank in any way relating to or arising out of the Loan Documents or any action
taken or omitted by the Issuing Bank under the Loan Documents; provided,
however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Issuing Bank's gross
negligence or willful misconduct as found in a final, non-appealable judgment by
a court of competent jurisdiction. Without limitation of the foregoing, each
Lender Party agrees to reimburse the Issuing Bank promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the U.S. Borrower under Section 8.04, to the
extent that the Issuing Bank is not promptly reimbursed for such costs and
expenses by the U.S. Borrower.

                  (c) For purposes of this Section 7.05, the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (ii) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (iii) the aggregate unused portions of their
respective Tranche A U.S. Term Commitments, Tranche A Euro Term Commitments and
Tranche B Term Commitments at such time and (iv) their respective Unused
Revolving Credit Commitments at such time; provided that the aggregate principal
amount of Swing Line Advances owing to the Swing Line Bank and the Letter of
Credit Advances owing to the Issuing Bank shall be considered to be owed to the
Revolving Credit Lenders ratably in accordance with their respective Revolving
Credit Commitments. The failure of any Lender Party to reimburse any Agent or
the Issuing Bank, as the case may be, promptly upon demand for its ratable share
of any amount required to be paid by the Lender Parties to such Agent or the
Issuing Bank, as the case may be, as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse such Agent or the Issuing
Bank, as the case may be, for its ratable share of such amount, but no Lender
Party shall be responsible for the failure of any other Lender Party to
reimburse such Agent or the Issuing Bank, as the case may be, for such other
Lender Party's ratable share of such amount. Without prejudice to the survival
of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05 shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.

<PAGE>   122
                                      117

                  SECTION 7.06. Successor Agents. Any Agent may resign as to any
or all of the Facilities at any time by giving written notice thereof to the
Lender Parties and the Borrowers and may be removed as to all of the Facilities
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent as to such of the Facilities as to which such Agent has resigned
or been removed with the consent of the Borrowers (which shall not be
unreasonably withheld and which shall not be required if a Default has occurred
or is continuing). If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lender Parties, with the consent of the Borrowers (which shall not be
unreasonably withheld and which shall not be required if a Default has occurred
or is continuing), appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least U.S.$250,000,000. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent as to all of the
Facilities and, in the case of a successor Collateral Agent, upon the execution
and filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under the Loan Documents. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent as to less than all of the
Facilities and, in the case of a successor Collateral Agent, upon the execution
and filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Agent as to such Facilities, other than with respect to funds
transfers and other similar aspects of the administration of Borrowings under
such Facilities, issuances of Letters of Credit (notwithstanding any resignation
as Administrative Agent with respect to the Letter of Credit Facility) and
payments by the Borrowers in respect of such Facilities, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement as to such Facilities, other than as aforesaid. If within 45 days
after written notice is given of the retiring Agent's resignation or removal
under this Section 7.06 no successor Agent shall have been appointed and shall
have accepted such appointment, then on such 45th day (a) the retiring Agent's
resignation or removal shall become effective, (b) the retiring Agent shall
thereupon be discharged from its duties and obligations under the Loan Documents
and (c) the Required Lenders shall thereafter perform all duties of the retiring
Agent under the Loan Documents until such time, if any, as the Required Lenders
appoint a successor Agent as provided above. After any retiring Agent's
resignation or removal hereunder as Agent as to any of the Facilities shall have
become effective, the provisions of this Article VII shall

<PAGE>   123
                                      118

inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent as to such Facilities under this Agreement.

                  SECTION 7.07. Collateral Agent acting as Joint Creditor. (a)
Each Secured Party and each Loan Party agrees that the Collateral Agent shall be
the joint creditor (together with each other relevant Secured Party) of each and
every payment obligation of each Loan Party towards each of the Secured Parties
under the Loan Documents and that accordingly the Collateral Agent will have its
own independent rights to demand payment by each Loan Party in satisfaction of
those obligations, provided that it is expressly acknowledged that any discharge
of any payment obligation to either of the Collateral Agent or the relevant
other Secured Parties shall to the same extent discharge the corresponding
obligation owing to the other.

                  (b) Without limiting or affecting the Collateral Agent's
rights against each Loan Party (whether under this Section 7.07 or under any
other provisions of the Loan Documents), the Collateral Agent agrees with each
other Secured Party, on a several and divided basis, that it will not exercise
its right as joint creditor with another Secured Party except with the prior
written consent of the relevant Secured Party. However, for the avoidance of
doubt, nothing in the previous sentence in any way limits the Collateral Agent's
rights to act in the protection or preservation of rights under or to enforce
any Collateral Document as contemplated by this Credit Agreement and the
relevant Collateral Documents. Any amount recovered by the Collateral Agent as a
result of the operation of this Section 7.07 shall be held for the benefit of
each Secured Party to be applied in accordance with the Loan Documents.

                  SECTION 7.08. Co-Documentation Agents and Syndication Agent.
The Co-Documentation Agents and the Syndication Agent shall not have any duty in
connection with this Agreement and the other Loan Documents.

                                  ARTICLE VIII

                                    GUARANTY

                  SECTION 8.01. Guaranty; Limitation of Liability. (a) Each
Guarantor and the U.S. Borrower, jointly and severally, hereby absolutely,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all Obligations of each other Loan Party
now or hereafter existing under or in respect of the Loan Documents (including,
without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or
indirect, absolute or contingent, and whether for principal, interest, premiums,
fees, indemnities, contract causes of action, costs, expenses or otherwise (such
obligations being the "GUARANTEED OBLIGATIONS"), and agrees to pay any and all
reasonable expenses (including, without limitation, reasonable fees and expenses
of counsel) incurred by the Administrative Agent or any other Secured Party in
enforcing any rights under this Guaranty or any other Loan Document provided,
however, that in the case of the U.S.

<PAGE>   124
                                      119

Borrower, this Guaranty shall only guarantee Obligations of the Euro Borrower.
Without limiting the generality of the foregoing, each Guarantor's liability and
the U.S. Borrower's liability shall extend to all amounts that constitute part
of the Guaranteed Obligations and would be owed by any other Loan Party to any
Secured Party under or in respect of the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other Loan Party.

                  (b) Each Guarantor and the U.S. Borrower, and by its
acceptance of this Guaranty, the Administrative Agent and each other Secured
Party, hereby confirms that it is the intention of all such Persons that this
Guaranty and the Obligations of each Subsidiary Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal or state law to the extent applicable to this
Guaranty and the Obligations of each Subsidiary Guarantor hereunder. To
effectuate the foregoing intention, the Administrative Agent, the other Lender
Parties, the U.S. Borrower and the Guarantors hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under this Guaranty at any time shall
be limited to the maximum amount as will result in the Obligations of such
Subsidiary Guarantor under this Guaranty not constituting a fraudulent transfer
or conveyance.

                  (c) Each Guarantor hereby unconditionally and irrevocably
agrees that in the event any payment shall be required to be made to any Secured
Party under this Guaranty or any other guaranty, such Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other Guarantor and
each other guarantor so as to maximize the aggregate amount paid to the Secured
Parties under or in respect of the Loan Documents.

                  SECTION 8.02. Guaranty Absolute. Each of the Guarantors and
the U.S. Borrower, as the case may be, guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of any Lender with
respect thereto. The obligations of each Guarantor and the U.S. Borrower, as the
case may be, under or in respect of this Guaranty are independent of the
Guaranteed Obligations or any other obligations of any other Loan Party under or
in respect of the Loan Documents, and a separate action or actions may be
brought and prosecuted against each Guarantor and the U.S. Borrower, as the case
may be, to enforce this Guaranty, irrespective of whether any action is brought
against any of the Borrowers or any other Loan Party or whether any of the
Borrowers or any other Loan Party is joined in any such action or actions. The
liability of each of the Guarantors under this Guaranty shall be irrevocable,
absolute and unconditional irrespective of, and each Guarantor and the U.S.
Borrower, as the case may be, hereby irrevocably waives any defenses it may now
have or hereafter acquire in any way relating to, any or all of the following:

                  (a) any lack of validity or enforceability of any Loan
         Document or any agreement or instrument relating thereto;

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                                      120

                  (b) any change in the time, manner or place of payment of,
         or in any other term of, all or any of the Guaranteed Obligations or
         any other obligations of any other Loan Party under or in respect of
         the Loan Documents, or any other amendment or waiver of or any consent
         to departure from any Loan Document, including, without limitation, any
         increase in the Guaranteed Obligations resulting from the extension of
         additional credit to any Loan Party or any of its Subsidiaries or
         otherwise;

                  (c) any taking, exchange, release or non-perfection of any
         collateral, or any taking, release or amendment or waiver of, or
         consent to departure from, any other guaranty, for all or any of the
         Guaranteed Obligations;

                  (d) any manner of application of Collateral any other
         collateral, or proceeds thereof, to all or any of the Guaranteed
         Obligations, or any manner of sale or other disposition of any
         collateral for all or any of the Guaranteed Obligations or any other
         obligations of any Loan Party under the Loan Documents or any other
         assets of any Loan Party or any of its Subsidiaries;

                  (e) any change, restructuring or termination of the
         corporate structure or existence of any Loan Party or any of its
         Subsidiaries;

                  (f) any failure of any Secured Party to disclose to any
         Loan Party any information relating to the business, condition
         (financial or otherwise), operations, performance, properties or
         prospects of any other Loan Party now or hereafter known to such
         Secured Parties (each Guarantor and the U.S. Borrower waiving any duty
         on the part of the Secured Parties to disclose such information);

                  (g) the failure of any other Person to execute or deliver
         this Guaranty, any Guaranty Supplement or any other guaranty or
         agreement or the release or reduction of liability of any Guarantor,
         the U.S. Borrower or other guarantor or surety with respect to the
         Guaranteed Obligations; or

                  (h) any other circumstance (including, without limitation,
         any statute of limitations), except payment, or any existence of or
         reliance on any representation by any Secured Party that might
         otherwise constitute a defense available to, or a discharge of, any
         Loan Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any Secured Party
or any other Person upon the insolvency, bankruptcy or reorganization of any of
the Borrowers or any other Loan Party or otherwise, all as though such payment
had not been made.

                  SECTION 8.03. Waivers and Acknowledgments. (a) Each of the
Guarantors and the U.S. Borrower hereby unconditionally and irrevocably waives
promptness, diligence,

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                                      121

notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that any Secured Party protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any Loan Party or any other Person or any Collateral.

                  (b) Each of the Guarantors and the U.S. Borrower hereby
unconditionally and irrevocably waives any right to revoke this Guaranty and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

                  (c) Each of the Guarantors and the U.S. Borrower hereby
unconditionally and irrevocably waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by any Secured Party that in
any manner impairs, reduces, releases or otherwise adversely affects the
subrogation, reimbursement, exoneration, contribution or indemnification rights
of such Guarantor or the U.S. Borrower other rights of such Guarantor to proceed
against any of the other Loan Parties, any other guarantor or any other Person
or any collateral and (ii) any defense based on any right of set-off or
counterclaim against or in respect of the Obligations of such Guarantor
hereunder.

                  (d) Each of the Guarantors and the U.S. Borrower hereby
unconditionally and irrevocably waives any duty on the part of any Secured Party
to disclose to such Guarantor or the U.S. Borrower any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of any other Loan Party or any of its
Subsidiaries now or hereafter known by such Secured Party.

                  (e) Each of the Guarantors and the U.S. Borrower acknowledges
that it will receive substantial direct and indirect benefits from the financing
arrangements contemplated by the Loan Documents and that the waivers set forth
in Section 8.02 and this Section 8.03 are knowingly made in contemplation of
such benefits.

                  SECTION 8.04. Subrogation. Each of the Guarantors and the U.S.
Borrower hereby unconditionally and irrevocably agrees not to exercise any
rights that it may now have or hereafter acquire against any of the Borrowers
(in the case of the U.S. Borrower, the Euro Borrower) or any other Loan Party or
any other inside guarantor that arise from the existence, payment, performance
or enforcement the Obligations of such Guarantor or the U.S. Borrower under or
in respect of this Guaranty or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any
Secured Party against any of the Borrowers (in the case of the U.S. Borrower,
the Euro Borrower), any other Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any of the Borrowers (in the case of the U.S. Borrower, the
Euro Borrower), any other Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off

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                                      122

or in any other manner, payment or security on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash, and the
Commitments shall have expired or been terminated. If any amount shall be paid
to any Guarantor or the U.S. Borrower, as the case may be, in violation of the
immediately preceding sentence at any time prior to the later of (a) the payment
in full in cash of the Guaranteed Obligations and all other amounts payable
under this Guaranty, and (b) the Termination Date, such amount shall be received
and held in trust for the benefit of the Secured Parties, shall be segregated
from other property and funds of such Guarantor or the U.S. Borrower, as the
case may be, and shall forthwith be paid or delivered to the Administrative
Agent in the same form as so received (with any necessary endorsement or
assignment) to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as collateral for
any Guaranteed Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor or the U.S. Borrower, as the case may
be, shall make payment to any Secured Party of all or any part of the Guaranteed
Obligations, (ii) all of the Guaranteed Obligations and all other amounts
payable under this Guaranty shall have been paid in full in cash, and (iii) the
Termination Date shall have occurred, the Secured Parties will, at such request
and expense of such Guarantor, execute and deliver to such Guarantor or the U.S.
Borrower, as the case may be, appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor or the U.S. Borrower, as the case may be, of an
interest in the Guaranteed Obligations resulting from such payment made by such
Guarantor or the U.S. Borrower, as the case may be, pursuant to this Guaranty.

                  SECTION 8.05. Guaranty Supplements. Upon the execution and
delivery by any Person of a guaranty supplement in substantially the form of
Exhibit H hereto (each, a "GUARANTY SUPPLEMENT"), (a) such Person shall be
referred to as an "ADDITIONAL GUARANTOR" and shall become and be a Guarantor
hereunder, and each reference in this Guaranty to a "GUARANTOR" shall also mean
and be a reference to such Additional Guarantor, and each reference in any other
Loan Document to a "SUBSIDIARY GUARANTOR" shall also mean and be a reference to
such Additional Guarantor, and (b) each reference herein to "THIS GUARANTY",
"HEREUNDER", "HEREOF" or words of like import referring to this Guaranty, and
each reference in any other Loan Document to the "GUARANTY", "THEREUNDER",
"THEREOF" or words of like import referring to this Guaranty, shall mean and be
a reference to this Guaranty as supplemented by such Guaranty Supplement.

                  SECTION 8.06. Continuing Guaranty; Assignments. This Guaranty
is a continuing guaranty and shall (a) remain in full force and effect until the
latest of (i) the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty and (ii) the Termination Date, (b) be
binding upon each of the Guarantors, the U.S. Borrower, their respective
successors and assigns and (c) inure to the benefit of and be enforceable by the
Secured Parties and their successors, transferees and assigns. Without limiting
the generality of clause (c) of the immediately preceding sentence, subject to
Section 9.07, any Secured Party may

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                                      123

assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or any portion of its
Commitments, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 9.07. Neither any
Guarantor nor the U.S. Borrower shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Secured Parties.

                  SECTION 8.07. Release of Guarantor. (a) In the event that all
of the Equity Interests held by the U.S. Borrower and its Subsidiaries in one or
more Guarantors is sold or otherwise disposed of (except to any of the Borrowers
or any of their Subsidiaries) or liquidated in compliance with the requirements
of this Agreement (or such sale or other disposition or liquidation has been
approved in writing by the Required Lenders) and the proceeds of such sale,
disposition or liquidation are applied as permitted or required by this
Agreement, each such Guarantor or Guarantors shall be released from this
Guaranty and this Guaranty shall, as to each such Guarantor or Guarantors,
terminate and have no further force or effect (it being understood and agreed
that the sale of Equity Interests in one or more persons that own, directly or
indirectly, all of such Equity Interests in any Guarantor shall be deemed to be
a sale of such Equity Interests in such Guarantor for the purposes of this
Section 8.08).

                  (b) Upon any sale, lease, transfer or other disposition of any
item of Collateral of any Guarantor in accordance with the terms of the Loan
Documents (other than sales of Inventory in the ordinary course of business),
the Collateral Agent is hereby authorized, by each Lender Party, at such
Guarantor's expense, to execute and deliver to such Guarantor such documents as
such Guarantor shall reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted under the
Collateral Documents, as more specifically set forth in the Collateral
Documents.

                  (c) Upon the later of (i) the payment in full in cash of all
principal, interest and fees in respect of the Secured Obligations (but not
including Secured Hedge Agreements) and (ii) the Termination Date, the pledge,
assignment and security interest granted pursuant to this Agreement or any other
Loan Document shall terminate and all rights to the Collateral shall revert to
the applicable Guarantor. Upon any such termination, the Collateral Agent will,
at the applicable Guarantor's expense, execute and deliver to such Guarantor
such documents as such Guarantor shall reasonably request to evidence such
termination.

                  SECTION 8.08. Payment. All payments made by the Guarantors or
the U.S. Borrower pursuant to this Article VIII shall be made in the Applicable
Currency in which the respective Guaranteed Obligations are then due and payable
(after giving effect, in the circumstances contemplated by Section 2.18, to any
conversion occurring pursuant thereto). All payments made by the Guarantors
pursuant to this Article VIII will be made without setoff, counterclaim or other
defense.

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                                      124

                                   ARTICLE IX

                                  MISCELLANEOUS

                  SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by any Loan Party therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(other than any Lender Party that is, at such time, a Defaulting Lender or any
Affiliate of any Loan Party), do any of the following at any time: (i) waive any
of the conditions specified in Section 3.01 or, in the case of the Initial
Extension of Credit, Section 3.02, (ii) change the number of Lenders or the
percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of
the Advances or (z) the aggregate Available Amount of outstanding Letters of
Credit that, in each case, shall be required for the Lenders or any of them to
take any action hereunder, (iii) reduce or limit the obligations of any
Guarantor under Section 8.01 or release such Guarantor or otherwise limit such
Guarantor's liability with respect to the Obligations owing to the Agents and
the Lender Parties, (iv) release all or substantially all of the Collateral in
any transaction or series of related transactions, (v) amend, modify or waive
Section 2.13 or this Section 9.01, or (vi) limit the liability of any Loan Party
under any of the Loan Documents, (b) no amendment, waiver or consent shall,
unless in writing and signed by the Required Lenders and each Lender (other than
any Lender that is, at such time, a Defaulting Lender) that has a Commitment
under the Tranche A U.S. Term Facility, Tranche A Euro Term Facility, Tranche B
Term Facility or Revolving Credit Facility if such Lender is directly affected
by such amendment, waiver or consent, (i) increase any Commitment of such
Lender, (ii) reduce the principal of, or interest on, the Notes held by such
Lender or Advances outstanding to such Lender or any fees or other amounts
payable hereunder to such Lender, (iii) postpone any date scheduled for any
payment of interest on the Notes held by such Lender or the Advances outstanding
to such Lender pursuant to Section 2.07 or any date fixed for payment of fees or
other amounts payable to such Lender hereunder (other than pursuant to Section
2.04), (iv) postpone the final maturity date of a Facility, or (v) change the
order of application of any prepayment set forth in Section 2.06 in any manner
that materially affects such Lender, and (c) no amendment, waiver or consent
shall, unless in writing and signed by the Supermajority Lenders of a Facility
(other than any such Lender that is, at such time, a Defaulting Lender or any
Affiliate of any Loan Party) that is directly affected by such amendment, waiver
or consent, amend the provisions of Section 2.04 relating to such Facility
(other than the final maturity date for such Facility); provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Bank or the Issuing Bank, as the case may be, in addition to the Lenders
required above to take such action, affect the rights or obligations of the
Swing Line Bank or the Issuing Bank, as the case may be, under this Agreement;
and provided further that no amendment, waiver or consent shall, unless in
writing

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                                      125

and signed by an Agent in addition to the Lenders required above to take such
action, affect the rights or duties of such Agent under this Agreement or the
other Loan Documents.

                  SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered, if to the U.S. Borrower, at its address at
2601 Beltline Road, Carrollton, Texas 75006, Attention: Frank P. Pittman; if to
the Euro Borrower, at its address at 12 Rue Leon Thyes, L-2636, Luxembourg,
Attention: Frank Pittman, with a copy to the U.S. Borrower at its address set
forth above; if to any Initial Lender Party, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender Party,
at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; if to the Administrative Agent, at
its address at 1633 Broadway, 26th Floor, New York, New York 10036, Attention:
James Morgan, with, in the case of any notices and other communications with
respect to the Tranche Euro Term Facility, a copy to the Administrative Agent,
located at 25 Cabot Square, Canary Wharf, London UK E 144 QA, Attention:
Jennifer Clark; and if to the Collateral Agent, at its address at 1633 Broadway,
26th floor, New York, New York 10036, Attention: James Morgan; or, as to any
Borrower or the Administrative Agent, at such other address as shall be
designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrowers and the Administrative Agent. All such notices
and other communications shall, when mailed, telegraphed, telecopied or telexed,
be effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively, except
that notices and communications to any Agent pursuant to Article II, III or VIII
shall not be effective until received by such Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of an original executed counterpart
thereof.

                  SECTION 9.03. No Waiver; Remedies. No failure on the part of
any Lender Party or any Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                  SECTION 9.04. Costs and Expenses. (a) The Borrowers jointly
and severally agree to pay on demand (i) all reasonable costs and expenses of
the Administrative Agent and Collateral Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for the
Administrative Agent and Collateral Agent with respect thereto, with respect to
advising such Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to

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                                      126

negotiations with any Loan Party or with other creditors of any Loan Party or
any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses of each
of the Agents and the Lender Parties in connection with the enforcement of the
Loan Documents, whether in any action, suit or litigation, or any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally
(including, without limitation, the reasonable fees and expenses of counsel for
each of the Agents and for the Lender Parties (as a group) with respect
thereto).

                  (b) The Borrowers jointly and severally agree to indemnify,
defend and save and hold harmless each Agent, each Lender Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "INDEMNIFIED PARTY") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Facilities, the actual
or proposed use of the proceeds of the Advances or the Letters of Credit, the
Loan Documents or any of the transactions contemplated thereby, or (ii) the
actual or alleged presence of Hazardous Materials on any property of any Loan
Party or any of its Subsidiaries or any Environmental Action relating in any way
to any Loan Party or any of its Subsidiaries, except to the extent such claim,
damage, loss, liability or expense results from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 9.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Loan Party, its directors, shareholders or
creditors or an Indemnified Party, whether or not any Indemnified Party is
otherwise a party thereto and whether or not the Transaction is consummated. The
Borrowers also agrees not to assert any claim against any Agent, any Lender
Party or any of their Affiliates, or any of their respective officers,
directors, employees, agents and advisors, on any theory of liability, for
special, indirect or consequential damages or (to the extent waiver thereof is
permitted by Law) for any punitive damages arising out of or otherwise relating
to the Facilities, the actual or proposed use of the proceeds of the Advances or
the Letters of Credit, the Transaction Documents or any of the transactions
contemplated by the Transaction Documents.

                  (c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by a Borrower to or for the account of a Lender
Party other than on the last day of the Interest Period for such Advance, as a
result of a payment or Conversion pursuant to Section 2.06, 2.10(b)(i) or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, or by an Eligible Assignee to a Lender Party other than on
the last day of the Interest Period for such Advance upon an assignment of
rights and obligations under this Agreement pursuant to Section 9.07 as a result
of a demand by a Borrower pursuant to

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                                      127

Section 9.07(a), or if a Borrower fails to make any payment or prepayment of an
Advance for which a notice of prepayment has been given or that is otherwise
required to be made, whether pursuant to Section 2.04, 2.06 or 6.01 or
otherwise, such Borrower shall, upon demand by such Lender Party (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party any amounts required to compensate such Lender
Party for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion or such failure to pay or prepay, as
the case may be, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender Party to fund or
maintain such Advance.

                  (d) Without prejudice to the survival of any other agreement
of any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrowers contained in Sections 2.10 and 2.12 and this
Section 9.04 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under any of the other Loan Documents.

                  SECTION 9.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and otherwise apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Agent or such Lender Party to or for the credit or the
account of a Borrower against any and all of the Obligations of such Borrower
now or hereafter existing under the Loan Documents, irrespective of whether such
Agent or such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such Obligations may be unmatured. Each Agent
and each Lender Party agrees promptly to notify the relevant Borrower after any
such set-off and application; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Agent and each Lender Party under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Agent and such Lender Party may have.

                  SECTION 9.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by each of the Borrowers and each
Agent and the Administrative Agent shall have been notified by each Initial
Lender Party that such Initial Lender Party has executed it and thereafter shall
be binding upon and inure to the benefit of each the Borrowers, each Agent and
each Lender Party and their respective successors and assigns, except that
neither Borrower shall have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender Parties.

                  SECTION 9.07. Assignments and Participations. (a) Each Lender
may and, so long as no Default shall have occurred and be continuing, if
demanded by a Borrower (following

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a demand by such Lender pursuant to Section 2.10 or 2.12) upon at least five
Business Days' notice to such Lender and the Administrative Agent, will assign
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a uniform,
and not a varying, percentage of all rights and obligations under and in respect
of one or more Facilities, (ii) except in the case of an assignment to a Person
that, immediately prior to such assignment, was a Lender, an Affiliate of any
Lender or an Approved Fund of any Lender or an assignment of all of a Lender's
rights and obligations under this Agreement, the aggregate amount of the
Commitments being assigned to such Eligible Assignee pursuant to such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than U.S.$1,000,000 (or such lesser amount
as agreed to by the Applicable Borrower and the Administrative Agent) (or the
Equivalent in Euros at such time), (iii) except in the case of an assignment to
a Person that, immediately prior to such assignment, was a Lender, an Affiliate
of any Lender or an Approved Fund of any Lender, such assignment shall be
approved by the Administrative Agent and, so long as no Default shall have
occurred and be continuing at the time of effectiveness of such assignment, the
Applicable Borrower (such approvals not to be unreasonably withheld or delayed),
(iv) each such assignment shall be to an Eligible Assignee (except as otherwise
provided in (iii) above), (v) each such assignment made as a result of a demand
by a Borrower pursuant to this Section 9.07(a) shall be arranged by such
Borrower after consultation with the Administrative Agent and shall be either an
assignment of all of the rights and obligations of the assigning Lender under
this Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under
this Agreement, (vi) no Lender shall be obligated to make any such assignment as
a result of a demand by a Borrower pursuant to this Section 9.07(a) unless and
until such Lender shall have received one or more payments from either such
Borrower or one or more Eligible Assignees in an aggregate amount at least equal
to the aggregate outstanding principal amount of the Advances owing to such
Lender, together with accrued interest thereon to the date of payment of such
principal amount and all other amounts payable to such Lender under this
Agreement, and (vii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with any Note or Notes subject
to such assignment. No processing or recordation fee shall be due.

                  (b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than its rights under Sections 2.10, 2.12 and 9.04 to the
extent any claim thereunder relates to an event arising prior to

<PAGE>   134
                                      129

such assignment) and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Lender's or Issuing Bank's rights and obligations under
this Agreement, such Lender or Issuing Bank shall cease to be a party hereto).

                  (c) By executing and delivering an Assignment and Acceptance,
each Lender Party assignor thereunder and each assignee thereunder confirm to
and agree with each other and the other parties thereto and hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such assigning
Lender Party makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any Agent, such assigning Lender Party
or any other Lender Party and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to such Agent by the terms
hereof and thereof, together with such powers and discretion as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender or Issuing Bank, as the
case may be.

                  (d) The Administrative Agent shall, acting for this purpose
(but only for this purpose) as the agent of the Borrowers, maintain at its
address referred to in Section 9.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each Lender
Party from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agents and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrowers or
any Agent or any Lender Party at any reasonable time and from time to time upon
reasonable prior notice.

<PAGE>   135
                                      130

                  (e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and approved as required by Section 9.07(a)
and is in substantially the form of Exhibit C hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrowers and each other Agent. Any
assignment of any Advance, whether or not evidenced by a Note, shall be
effective only upon appropriate entries with respect thereto. In the case of any
assignment by a Lender, within five Business Days after its receipt of such
notice, the Applicable Borrower, at its own expense, shall execute and deliver
to the Administrative Agent in exchange for the surrendered Note or Notes a new
Note to the order of such Eligible Assignee in an amount equal to the Commitment
assumed by it under each Facility pursuant to such Assignment and Acceptance
and, if any assigning Lender has retained a Commitment hereunder under such
Facility, a new Note to the order of such assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibit A-1,
A-2, A-3 or A-4 hereto, as the case may be.

                  (f) The Issuing Bank may assign to an Eligible Assignee all of
its rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment shall
be to an Eligible Assignee and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of U.S.$3,500 (except in the case of an
assignment to an Affiliate of a Lender or an Approved Fund).

                  (g) Each Lender Party may, without notice to or consent of the
Borrowers or the Administrative Agent, sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrowers, the Agents and the other Lender
Parties shall continue to deal solely and directly with such Lender Party in
connection with such Lender Party's rights and obligations under this Agreement
and (v) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, postpone any date fixed for any payment of
principal of, or interest on, the Notes

<PAGE>   136
                                      131

or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or release all or substantially all of the
Collateral.

                  (h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
Party by or on behalf of the Borrowers; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party as set forth in Section 9.10.

                  (i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.

                  (j) In the case of any Lender that is a fund that invests in
bank loans, such Lender may, without the consent of the Borrowers or the
Administrative Agent, assign or pledge all or any portion of its Notes or any
other instrument evidencing its rights as a Lender under this Agreement to any
trustee for, or any other representative of, holders of obligations owed or
securities issued, by such fund, as security for such obligations or securities;
provided that any foreclosure or similar action by such trustee or
representative shall be subject to the provisions of this Section 9.07
concerning assignments.

                  SECTION 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

                  SECTION 9.09. No Liability of the Issuing Bank. The U.S.
Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Issuing Bank nor any of its officers or directors shall be
liable or responsible for: (a) the use that may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by the Issuing
Bank against presentation of documents that do not comply substantially with the
terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit, except that the U.S. Borrower shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to the U.S. Borrower, to the extent

<PAGE>   137
                                      132

of any direct, but not consequential, damages suffered by the U.S. Borrower that
the U.S. Borrower proves were caused by (i) the Issuing Bank's willful
misconduct or gross negligence as determined in a final, non-appealable judgment
by a court of competent jurisdiction in determining whether documents presented
under any Letter of Credit comply with the terms of the Letter of Credit or (ii)
the Issuing Bank's willful failure to make lawful payment under a Letter of
Credit after the presentation to it of a draft and certificates strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.

                  SECTION 9.10. Confidentiality. Neither any Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the U.S. Borrower, other than (a) to such Agent's or such Lender
Party's Affiliates and their officers, directors, employees, agents and advisors
and to actual or prospective Eligible Assignees and participants, and then only
on a confidential basis as set forth in this Section 9.10, (b) as required by
any law, rule or regulation or judicial process, (c) as requested or required by
any state, Federal or foreign authority or examiner regulating such Lender Party
(including the National Association of Insurance Commissioners), (d) or to any
direct or indirect contractual counterparty in any swap, hedge or similar
agreement (or to any such contractual counterparty's professional advisor), so
long as such contractual counterparty (or such professional advisor) agrees to
be bound by the provisions of this Section 9.10 and (e) to any rating agency
when required by it, provided that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any Confidential
Information relating to the Loan Parties received by it from such Lender Party.

                  SECTION 9.11. Release of Collateral. (a) Upon any sale, lease,
transfer or other disposition of any item of Collateral of any Borrower in
accordance with the terms of the Loan Documents (other than sales of Inventory
in the ordinary course of business), the Collateral Agent is hereby authorized,
by each Lender Party, at such Borrower's expense, to execute and deliver to such
Borrower such documents as such Borrower shall reasonably request to evidence
the release of such item of Collateral from the assignment and security interest
granted under the Collateral Documents, as more specifically set forth in the
Collateral Documents.

                  (b) Upon the later of (i) the payment in full in cash of all
principal, interest and fees in respect of the Secured Obligations (but not
including Secured Hedge Agreements) and (ii) the Termination Date, the pledge,
assignment and security interest granted pursuant to this Agreement or any other
Loan Document shall terminate and all rights to the Collateral shall revert to
the Applicable Borrower. Upon any such termination, the Collateral Agent will,
at the applicable Borrower's expense, execute and deliver to such Borrower such
documents as such Borrower shall reasonably request to evidence such
termination.

                  SECTION 9.12. Judgment. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder in Dollars
into another currency, the parties hereto agree, to the fullest extent that they
may effectively do so, that the rate of exchange used

<PAGE>   138
                                      133

shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase Dollars with such other currency at the
Administrative Agent's principal office in New York City at 11:00 A.M. (New York
City time) on the Business Day preceding that on which final judgment is given.

                  (b) If for the purposes of obtaining judgment in any court it
is necessary to convert a sum due hereunder from another currency into Dollars,
the parties agree to the fullest extent that they may effectively do so, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase such other currency with Dollars at
the Administrative Agent's principal office in New York City at 11:00 A.M. (New
York City time) on the Business Day preceding that on which final judgment is
given.

                  (c) The obligation of each Borrower in respect of any sum due
from it in any currency (the "PRIMARY CURRENCY") to any Lender Party or the
Administrative Agent hereunder shall, notwithstanding any judgment in any other
currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or the Administrative Agent (as the case may be) of any
sum adjudged to be so due in such other currency, such Lender or the
Administrative Agent (as the case may be) may in accordance with normal banking
procedures purchase the applicable Primary Currency with such other currency; if
the amount of the applicable Primary Currency so purchased is less than such sum
due to such Lender or the Administrative Agent (as the case may be) in the
applicable Primary Currency, the Applicable Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such Lender or
the Administrative Agent (as the case may be) against such loss, and if the
amount of the applicable Primary Currency so purchased exceeds such sum due to
any Lender or the Administrative Agent (as the case may be) in the applicable
Primary Currency, such Lender or the Administrative Agent (as the case may be)
agrees to remit to the relevant Borrower such excess.

                  SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York state court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York state court or, to the fullest extent permitted by law, in such federal
court. Each Borrower hereby agrees that service of process in any such action or
proceeding brought in any such New York state court or in such federal court may
be made upon CT Corporation System at its offices at 111 Eighth Avenue, 13th
Floor, New York, New York 10011 (the "PROCESS AGENT") and each Borrower hereby
irrevocably appoints the Process Agent its authorized agent to accept such
service of process, and agrees that the failure of the Process Agent to give any
notice of any such service shall not impair or affect the validity of such
service or of any judgment rendered in any action or proceeding based thereon.
Each

<PAGE>   139
                                      134

Borrower hereby further irrevocably consents to the service of process in any
action or proceeding in such courts by the mailing thereof by any parties hereto
by registered or certified mail, postage prepaid, to such Borrower at its
address specified pursuant to Section 8.02. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any party may otherwise have to bring any action or proceeding relating to this
Agreement or any of the other Loan Documents in the courts of any jurisdiction.

                  (b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

                  SECTION 9.14. Substitution of Currency. If a change in any
currency (other than Dollars) occurs pursuant to any applicable law, rule or
regulation of any governmental, monetary or multi-national authority, this
Agreement (including, without limitation, the definitions of Euro Rate and
Eurodollar Rate) will be amended to the extent determined by the Administrative
Agent (acting reasonably and in consultation with the Applicable Borrower) to be
necessary to reflect the change in currency and to put the Lenders and such
Borrower in the same position, so far as possible, that they would have been in
if no change in such currency had occurred.

                  SECTION 9.15. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.

                  SECTION 9.16. Waiver of Jury Trial. Each of the Borrowers, the
Agents and the Lender Parties irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the
Advances, the Letters of Credit or the actions of any Agent or any Lender Party
in the negotiation, administration, performance or enforcement thereof.

<PAGE>   140

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

                                        DRESSER, INC., as U.S. Borrower

                                        By  /s/ JAMES A. NATTIER
                                           -----------------------------------
                                           Name:  James A. Nattier
                                           Title:

<PAGE>   141

                                        D.I. LUXEMBOURG S.A.R.L.,
                                        as Euro Borrower

                                        By  /s/ JAMES A. NATTIER
                                           -----------------------
                                           Name:  James A. Nattier
                                           Title:

<PAGE>   142

                                       DEG ACQUISITIONS, LLC, as Parent

                                       By First Reserve Corporation, its Manager

                                       By /s/ THOMAS R. DENISON
                                          ---------------------
                                       Name:  Thomas R. Denison
                                       Title: Managing Director

<PAGE>   143

                                        DRESSER INTERNATIONAL, INC.,
                                        as Subsidiary Guarantor

                                        By  /s/ JAMES A. NATTIER
                                           --------------------------------
                                           Name:   James A. Nattier
                                           Title:

<PAGE>   144

                                        DRESSER RE, INC.,
                                        as Subsidiary Guarantor

                                        By /s/ JAMES A. NATTIER
                                           --------------------------------
                                           Name:   James A. Nattier
                                           Title:

<PAGE>   145

                                        DRESSER RUSSIA, INC.,
                                        as Subsidiary Guarantor

                                        By  /s/ JAMES A. NATTIER
                                           --------------------------------
                                           Name:   James A. Nattier
                                           Title:

<PAGE>   146

                                        MORGAN STANLEY SENIOR FUNDING, INC.,
                                        as Administrative Agent

                                        By  /s/ HENRY F. D'ALESSANDRO
                                           -----------------------------
                                           Name:   Henry F. D'Alessandro
                                           Title:  Principal

<PAGE>   147

                                        MORGAN STANLEY & CO. INCORPORATED,
                                        as Collateral Agent

                                        By  /s/ HENRY F. D'ALESSANDRO
                                           ----------------------------
                                           Name:  Henry F. D'Alessandro
                                           Title: Principal

<PAGE>   148

                                        CREDIT SUISSE FIRST BOSTON,
                                        as Syndication Agent

                                        By  /s/ JAMES P. MORAN
                                           --------------------------
                                           Name:   James P. Moran
                                           Title:  Director

                                        By  /s/ WILLIAM S. LUTKINS
                                           --------------------------
                                           Name:  Williams S. Lutkins
                                           Title: Vice President

<PAGE>   149

                                        UBS WARBURG LLC,
                                        as Documentation Agent

                                        By  /s/ DAVID A. JUDGE
                                           -------------------------
                                           Name:  David A. Judge
                                           Title: Managing Director

                                        By  /s/ DANIEL W. LADD III
                                           -------------------------
                                           Name:  Daniel W. Ladd III
                                           Title: Executive Director
<PAGE>   150

                                        GENERAL ELECTRIC CAPITAL
                                        CORPORATION

                                        By /s/ WOODROW BROADERS, JR.
                                           -------------------------------------
                                           Name:  Woodrow Broaders, Jr.
                                           Title: Duly Authorized Signatory

<PAGE>   151

                                 INITIAL LENDERS

                                        MORGAN STANLEY SENIOR FUNDING, INC.

                                        By  /s/ HENRY F. D'ALESSANDRO
                                           ----------------------------
                                           Name:  Henry F. D'Alessandro
                                           Title: Principal

<PAGE>   152

                                        CREDIT SUISSE FIRST BOSTON

                                        By  /s/ JAMES P. MORAN
                                           --------------------------
                                           Name:   James P. Moran
                                           Title:  Director

                                        By  /s/ WILLIAM S. LUTKINS
                                           --------------------------
                                           Name:   William S. Lutkins
                                           Title:  Vice President

<PAGE>   153

                                        UBS AG, STAMFORD BRANCH

                                        By  /s/ WILFRED V. SAINT
                                           --------------------------
                                           Name:   Wilfred V. Saint
                                           Title:  Associate Director
                                                   Banking Products
                                                   Services U.S.

                                        By  /s/ DANIEL W. LADD III
                                           --------------------------
                                           Name:   Daniel W. Ladd III
                                           Title:  Executive Director

<PAGE>   154

                                        GENERAL ELECTRIC CAPITAL CORPORATION

                                        By  /s/ WOODROW BROADERS JR.
                                           -------------------------------------
                                           Name:  Woodrow Broaders Jr.
                                           Title: Duly Authorized Signatory

<PAGE>   155

                              INITIAL ISSUING BANK

                                        WELLS FARGO BANK, N.A.

                                        By  /s/ BRET C. WEST
                                           -------------------------------------
                                           Name:  Bret C. West
                                           Title: Vice President

<PAGE>   156

                                 SWING LINE BANK

                                        WELLS FARGO BANK TEXAS, N.A.

                                        By  /s/ BRET C. WEST
                                           -------------------------
                                           Name:   Bret C. West
                                           Title:  Vice President

<PAGE>   157

                                   SCHEDULE I

                   COMMITMENTS AND APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>
=========================================================================================================
                                TRANCHE A U.S.
   NAME OF INITIAL LENDER           TERM           TRANCHE A EURO     TRANCHE B TERM    REVOLVING CREDIT
PARTY / INITIAL ISSUING BANK     COMMITMENT       TERM COMMITMENT       COMMITMENT         COMMITMENT
---------------------------------------------------------------------------------------------------------
<S>                           <C>                <C>                 <C>                 <C>
Morgan Stanley Senior         US$61,580,987.60    E.52,314,016.45    US$437,000,000.00   US$37,321,810.66
Funding, Inc.

UBS AG, Stamford Branch       US$21,902,492.53    E.16,553,064.85                   --   US$13,274,237.90

---------------------------------------------------------------------------------------------------------

General Electric Capital      US$31,132,075.47                 --                   --   US$18,867,924.53
Corporation

---------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                            EURO
                                                         DOMESTIC              EURODOLLAR   RATE
   NAME OF INITIAL LENDER      LETTER OF CREDIT           LENDING               LENDING    LENDING
PARTY / INITIAL ISSUING BANK      COMMITMENT              OFFICE                 OFFICE    OFFICE
--------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>                          <C>         <C>
Morgan Stanley Senior                             Mark Cross / Dan Ryan           Same       Same
Funding, Inc.                                     1221 Avenue of the Americas
                                                  35th Floor
                                                  New York, NY 10020
                                                  t: (212) 762-6755 / 5802
                                                  f: (212) 762-762-9181

                                                  James Morgan
                                                  1633 Broadway - 26th Floor
                                                  New York, NY 10019
                                                  t: (212) 537-1470
                                                  f: (212) 537-1867 / 1866

UBS AG, Stamford Branch                           Vladimira Holeckova             Same       Same
                                                  Banking Products Services
                                                  677 Washington Blvd.
                                                  Stamford, CT 06901
                                                  t: (203) 719-6403
                                                  f: (203) 719-3748
--------------------------------------------------------------------------------------------------

General Electric Capital                          Alison Heely                    Same       Same
Corporation                                       260 Long Ridge Road
                                                  Stamford, CT 06927
                                                  t: (203) 357-6058
                                                  f: (203) 602-8345

                                                  Ken Brown
                                                  10 S. LaSalle Street
                                                  27th Floor
                                                  Chicago, IL 60603
--------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   158

<TABLE>
<CAPTION>

                                TRANCHE A U.S.
   NAME OF INITIAL LENDER           TERM           TRANCHE A EURO     TRANCHE B TERM    REVOLVING CREDIT
PARTY / INITIAL ISSUING BANK     COMMITMENT       TERM COMMITMENT       COMMITMENT         COMMITMENT
---------------------------------------------------------------------------------------------------------
<S>                           <C>                <C>                 <C>                <C>
Credit Suisse First Boston    US$50,384,444.40    E.42,802,377.10      US$18,000,000    US$30,536,026.91

---------------------------------------------------------------------------------------------------------

Wells Fargo Bank Texas, N.A.                 --                  --                 --                 --

---------------------------------------------------------------------------------------------------------

TOTAL COMMITMENTS:            US$165,000,000.00   E.111,669,458.40   US$455,000,000.00  US$100,000,000.00

---------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                                            EURO
                                                           DOMESTIC            EURODOLLAR   RATE
   NAME OF INITIAL LENDER      LETTER OF CREDIT             LENDING             LENDING    LENDING
PARTY / INITIAL ISSUING BANK      COMMITMENT                OFFICE               OFFICE    OFFICE
---------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>                          <C>         <C>
Credit Suisse First Boston                        James Moran                     Same       Same
                                                  11 Madison Avenue
                                                  10th Floor
                                                  New York, NY 10010-3629
                                                  t: (212) 325-9176
                                                  f: (212) 325-8615
---------------------------------------------------------------------------------------------------------

Wells Fargo Bank Texas, N.A.   US$50,000,000.00   Bret C. West                    Same       Same
                                                  1000 Louisiana Avenue
                                                  3rd Floor
                                                  MAC T5002-031
                                                  Houston, TX 77002
                                                  t: (713) 319-1371
                                                  f: (713) 739-1087
---------------------------------------------------------------------------------------------------------

TOTAL COMMITMENTS:             US$50,000,000.00                                   Same       Same

=========================================================================================================
</TABLE>

<PAGE>   159

                                   SCHEDULE II

                              SUBSIDIARY GUARANTORS

                  Dresser International, Inc.
                  Dresser RE, Inc.
                  Dresser Russia, Inc.

<PAGE>   160

                                  SCHEDULE III

                                ASSOCIATED COSTS

         1.       On the first day of each Interest Period (or as soon as
                  possible thereafter) the Administrative Agent shall determine:

                  (a)      for each Tranche A Euro Term Lender the percentage
                           rate per annum for such Interest Period which is the
                           applicable Additional Costs Rate (as defined in
                           paragraph 2 or 3 below); and

                  (b)      the "Associated Costs Rate" for such period, which
                           shall be the rate per annum which is the weighted
                           average of the Tranche A Euro Term Lenders'
                           Additional Costs Rates (weighted in proportion to the
                           percentage participation of each Tranche A Euro Term
                           Lender in the Tranche A Euro Term Advances to which
                           such Interest Period relates).

         2.       The Additional Costs Rate for a Tranche A Euro Term Lender
                  making Tranche A Euro Term Advances from a lending office
                  located in the Euro-zone shall be the percentage notified by
                  such Tranche A Euro Term Lender to the Administrative Agent as
                  the cost to such Tranche A Euro Term Lender of complying with
                  the minimum reserve requirements of the European Central Bank.

         3.       The Additional Costs Rate for a Tranche A Euro Term Lender
                  making Tranche A Euro Term Advances from a lending office
                  located in the United Kingdom shall be calculated as follows:

                  E x 0.01 percent per annum;
                  --------
                    300

                  where:

         "E"      is the rate of charge payable by that Tranche A Euro Term
                  Lender to the Financial Services Authority pursuant to the
                  Fees Regulations (but, for this purpose, ignoring any minimum
                  fee required pursuant to the Fees Regulations) and expressed
                  in pounds per L.1,000,000 of the Fee Base of that Tranche A
                  Euro Term Lender.

         4.       For the purposes of this Schedule:

                  (a)      "Fees Regulations" means the Banking Supervision
                           (Fees) Regulations 2000 or such other law or
                           regulation as may be in force from time to time

<PAGE>   161
                                       2

                           in respect of the payment of fees for banking
                           supervision in the United Kingdom; and

                  (b)      "Fee Base" has the meaning given to it, and will be
                           calculated in accordance with, the Fees Regulations.

         5.       Each Tranche A Euro Term Lender shall supply any information
                  required by the Administrative Agent for the purposes of
                  calculating the Additional Costs Rate, including the following
                  information which such Tranche A Euro Term Lender shall
                  provide to the Administrative Agent on or before the date on
                  which it becomes a Tranche A Euro Term Lender:

                  (a)      its jurisdiction of incorporation and the
                           jurisdiction of lending office for the Tranche A Euro
                           Term Advances made by such Tranche A Euro Term
                           Lender; and

                  (b)      any other information that the Administrative Agent
                           may reasonably require for such purpose;

                  and shall promptly notify the Administrative Agent in writing
                  of any change to the information provided by it pursuant to
                  this paragraph.

         6.       The percentages or rates of charge of each Tranche A Euro Term
                  Lender for the purpose of E above shall be determined by the
                  Administrative Agent based upon the information supplied to it
                  pursuant to paragraph 5 above.

         7.       The Administrative Agent shall have no liability to any Person
                  if any determination by it of an Additional Costs Rate and/or
                  an Associated Costs Rate overcompensates or undercompensates a
                  Tranche A Euro Term Lender and shall be entitled to assume
                  that the information provided by any Tranche A Euro Term
                  Lender pursuant to paragraphs 2 and 5 above is true and
                  correct in all respects.

         8.       The Administrative Agent shall distribute amounts received by
                  it in respect of any Interest Period and attributable to the
                  Associated Costs Rate to the Tranche A Euro Term Lenders on
                  the basis of the Additional Costs Rate for each such Interest
                  Period determined by the Administrative Agent pursuant to the
                  provisions of this Schedule.

         9.       Any determination by the Administrative Agent pursuant to this
                  Schedule in relation to a formula, an Additional Cost Rate or
                  an Associated Costs Rate or any amount payable to a Tranche A
                  Euro Term Lender shall, in the absence of manifest error, be
                  conclusive and binding on each Borrower and the Tranche A Euro
                  Term Lenders.

<PAGE>   162
                                       3

         10.      The Administrative Agent may from time to time, after
                  consultation with the Borrowers, the other Agents and the
                  Tranche A Euro Term Lenders specify any amendments which are
                  required to be made to this Schedule in order to comply with
                  any change in law, regulation or any requirements from time to
                  time imposed by the Bank of England, the Financial Services
                  Authority or the European Central Bank (or, in any case, any
                  other authority which replaces all or any of its functions)
                  and any such determination shall, in the absence of manifest
                  error, be conclusive and binding on the Borrowers, the Agents
                  and the Tranche A Euro Term Lenders.

<PAGE>   163

                                                                  EXECUTION COPY

                                U.S.$820,000,000

                                CREDIT AGREEMENT

                           Dated as of April 10, 2001

                                      Among

                                  DRESSER, INC.

                                as U.S. Borrower

                            D.I. LUXEMBOURG S.A.R.L.

                                as Euro Borrower

                              DEG ACQUISITIONS, LLC

                                    as Parent

                                       and

                  THE INITIAL LENDERS, INITIAL ISSUING BANK AND
                          SWING LINE BANK NAMED HEREIN

          as Initial Lenders, Initial Issuing Bank and Swing Line Bank

                                       and

                        MORGAN STANLEY & CO. INCORPORATED

                               as Collateral Agent

                                       and

                       MORGAN STANLEY SENIOR FUNDING, INC.

                             as Administrative Agent

                                       and

                CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH

                              as Syndication Agent

                                       and

                       MORGAN STANLEY SENIOR FUNDING, INC.

                                       and

                           CREDIT SUISSE FIRST BOSTON

                             as Joint Lead Arrangers

                                       and

                                 UBS WARBURG LLC

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION

                           as Co-Documentation Agents<PAGE>   1
                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                              AMENDED AND RESTATED

                               AGREEMENT AND PLAN

                               OF RECAPITALIZATION

                           DATED AS OF APRIL 10, 2001

                                      AMONG

                              HALLIBURTON COMPANY,

                            THE SELLER NAMED HEREIN,

                                       AND

                              DEG ACQUISITIONS, LLC

<PAGE>   2

                                     TABLE OF CONTENTS

<TABLE>
<S>             <C>                                                                                          <C>
                                                    ARTICLE I
                                                   DEFINITIONS

Section 1.01.   Definitions...................................................................................2
Section 1.02.   Rules of Construction.........................................................................2

                                                   ARTICLE II
                                                SALE AND PURCHASE

Section 2.01.   Sale and Purchase of Securities...............................................................2
Section 2.02.   Sale and Purchase of BV Companies.............................................................4
Section 2.03.   Cash Consideration............................................................................4
Section 2.04.   The Closings..................................................................................4
Section 2.05.   Pre-Closing Transactions......................................................................5
Section 2.06.   Transactions at the First Closing.............................................................5
Section 2.07.   Transactions at the Second Closing............................................................7
Section 2.08.   Adjustment of the Preliminary Purchase Price..................................................8
Section 2.09.   Procedures for Calculating the Purchase Price Adjustment......................................9
Section 2.10.   Adjustments to Net Equity....................................................................11
Section 2.11.   Allocation of Purchase Price Adjustment......................................................13
Section 2.12.   Amendments to Effect Recapitalization........................................................13
Section 2.13.   Delayed Purchases............................................................................13
Section 2.14.   Joint Ventures...............................................................................14

                                                   ARTICLE III
                     REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES

Section 3.01.   Organization and Qualification...............................................................15
Section 3.02.   Authorization of Agreement...................................................................15
Section 3.03.   Approvals....................................................................................16
Section 3.04.   No Violation.................................................................................16
Section 3.05.   No Brokers...................................................................................16
Section 3.06.   Title to Securities..........................................................................17

                                                   ARTICLE IV
                               REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

Section 4.01.   Organization.................................................................................17
Section 4.02.   Authorization of Agreement...................................................................17
Section 4.03.   Approvals....................................................................................18
Section 4.04.   No Violation.................................................................................18
Section 4.05.   Title to Securities..........................................................................18
</TABLE>

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                        i
<PAGE>   3

<TABLE>
<S>             <C>                                                                                          <C>
                                                    ARTICLE V
                     REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS OF THE COMPANY GROUPS

Section 5.01.   Organization; Subsidiaries...................................................................19
Section 5.02.   Organizational Documents; Authorization; No Violation........................................20
Section 5.03.   Capitalization...............................................................................20
Section 5.04.   Title to Properties..........................................................................21
Section 5.05.   Financial Statements.........................................................................22
Section 5.06.   Authorizations...............................................................................23
Section 5.07.   Compliance With Laws; Regulation of Businesses...............................................24
Section 5.08.   Taxes........................................................................................24
Section 5.09.   Principal Contracts..........................................................................26
Section 5.10.   Employees....................................................................................26
Section 5.11.   Environmental Matters........................................................................30
Section 5.12.   Litigation...................................................................................31
Section 5.13.   Material Adverse Changes.....................................................................31
Section 5.14.   Customers and Suppliers......................................................................32
Section 5.15.   Adequacy of Assets...........................................................................32
Section 5.16.   Full Disclosure..............................................................................32
Section 5.17.   Disclaimers..................................................................................32

                                                   ARTICLE VI
                                REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR

Section 6.01.   Organization and Qualification...............................................................33
Section 6.02.   Authorization of Agreement...................................................................33
Section 6.03.   Approvals....................................................................................34
Section 6.04.   No Violation.................................................................................34
Section 6.05.   Commitment Letters...........................................................................34
Section 6.06.   No Brokers...................................................................................34
Section 6.07.   Transitory Merger Sub........................................................................34

                                                   ARTICLE VII
                                 REPRESENTATIONS AND WARRANTIES REGARDING BUYERS

Section 7.01.   Organization.................................................................................35
Section 7.02.   Authorization of Agreement...................................................................35
Section 7.03.   Approvals....................................................................................35
Section 7.04.   No Violation.................................................................................35
Section 7.05.   Investment in Securities.....................................................................36
</TABLE>

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       ii
<PAGE>   4

<TABLE>
<S>             <C>                                                                                          <C>
                                                  ARTICLE VIII
                                             COVENANTS OF THE PARENT

Section 8.01.   Affirmative Covenants Regarding Operation of the Businesses..................................36
Section 8.02.   Negative Covenants Regarding the Operation of the Businesses.................................37
Section 8.03.   Access to Information........................................................................41
Section 8.04.   Insurance Benefits...........................................................................41
Section 8.05.   Compliance with Competition Laws Applicable to Designated Regulatory Assets..................42
Section 8.06.   Covenant Not to Compete......................................................................44
Section 8.07.   Nonsolicitation..............................................................................45
Section 8.08.   Accountants' Opinion and Consents............................................................46
Section 8.09.   Financing....................................................................................46
Section 8.10.   Financial Statements.........................................................................48
Section 8.11.   Assignments..................................................................................48
Section 8.12.   Release of Liens.............................................................................48
Section 8.13.   Environmental Schedules......................................................................48
Section 8.14.   Use of Dresser Name..........................................................................48

                                                   ARTICLE IX
                                            COVENANTS OF THE ACQUIROR

Section 9.01.   Confidentiality Agreement....................................................................49
Section 9.02.   Corporate Name...............................................................................49
Section 9.03.   Surety Arrangements..........................................................................49
Section 9.04.   Dresser Valve Division Contracts.............................................................49

                                                    ARTICLE X
                                                MUTUAL COVENANTS

Section 10.01.  Cooperation..................................................................................50
Section 10.02.  Ancillary Agreements.........................................................................52
Section 10.03.  Public Announcements.........................................................................53
Section 10.04.  Transfer Taxes...............................................................................53
Section 10.05.  Expenses.....................................................................................53
Section 10.06.  Tax Matters..................................................................................53
Section 10.07.  Offers to Employees..........................................................................56
Section 10.08.  Related Party Contracts......................................................................57
Section 10.09.  Litigation Support...........................................................................57
Section 10.10.  Post-Closing Matters.........................................................................58

                                                   ARTICLE XI
                                           CONDITIONS TO FIRST CLOSING

Section 11.01.  Conditions to Obligations of Each Party Under This Agreement.................................59
</TABLE>

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       iii
<PAGE>   5

<TABLE>
<S>             <C>                                                                                          <C>
Section 11.02.  Additional Conditions to the Parent's Obligations............................................60
Section 11.03.  Additional Conditions to the Acquiror's Obligations..........................................61

                                                   ARTICLE XII
                                                 INDEMNIFICATION

Section 12.01.  Survival of Representations, Warranties, Covenants and Agreements............................63
Section 12.02.  General Indemnification by the Parent........................................................64
Section 12.03.  General Indemnification by the Acquiror......................................................68
Section 12.04.  Procedures...................................................................................69
Section 12.05.  Special Environmental Indemnification Provisions.............................................72
Section 12.06.  Punitive Damages.............................................................................75
Section 12.07.  Failure of Acquiror to Close.................................................................75
Section 12.08.  No Right of Contribution.....................................................................75
Section 12.09.  Specific Performance.........................................................................75
Section 12.10.  Sole Remedy..................................................................................75

                                                  ARTICLE XIII
                                        TERMINATION, AMENDMENT AND WAIVER

Section 13.01.  Termination..................................................................................76
Section 13.02.  Effect of Termination........................................................................77
Section 13.03.  Amendment....................................................................................77
Section 13.04.  Waiver.......................................................................................77

                                                   ARTICLE XIV
                                                  MISCELLANEOUS

Section 14.01.  Notices......................................................................................77
Section 14.02.  Headings.....................................................................................79
Section 14.03.  Severability.................................................................................79
Section 14.04.  Entire Agreement.............................................................................79
Section 14.05.  Assignment...................................................................................80
Section 14.06.  Successors; Parties in Interest..............................................................80
Section 14.07.  Failure or Indulgence Not Waiver; Remedies Cumulative........................................80
Section 14.08.  Disclosure Letters...........................................................................80
Section 14.09.  Governing Law................................................................................80
Section 14.10.  Arbitration..................................................................................80
Section 14.11.  Confidentiality Agreements...................................................................81
Section 14.12.  Counterparts.................................................................................81
</TABLE>

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                        iv
<PAGE>   6

<TABLE>
<S>                      <C>      <C>
ANNEXES

         Annex A         --       Definitions.
         Annex B         --       Reorganization (Components and Procedure).
         Annex C         --       List of the Seller, Buyers and BV Companies and BV Allocable Purchase Price.
         Annex D         --       Allocation Procedures for Purchase Price Adjustment.

APPENDICES

         Appendix I      --       Form of Merger Agreement.
         Appendix II     --       Forms of Releases of Intercompany Indebtedness.
         Appendix III    --       Forms of Releases of Claims.
         Appendix IV     --       Form of Assignment of Name.
         Appendix V      --       Form of Highway 6 Lease Agreement.
         Appendix VI     --       Form of Employee Benefits Agreement.
         Appendix VII    --       Form of Transition Services Agreement.
         Appendix VIII   --       Form of Stockholders' Agreement.
         Appendix IX     --       Form of Category 2A Purchase and Sale Agreement.
         Appendix X      --       Form of Opinion of Acquiror's Counsel.
         Appendix XI     --       Form of Opinion of Parent's Counsel.
</TABLE>

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                        v
<PAGE>   7

                                                                  EXECUTION COPY

           AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION

         This AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION (this
"Agreement") dated as of April 10, 2001, is by and among Halliburton Company, a
Delaware corporation (the "Parent"), Dresser B.V., a Netherlands company and a
wholly owned indirect Subsidiary of the Parent (the "Seller") and DEG
Acquisitions, LLC, a Delaware limited liability company (the "Acquiror"). This
Agreement amends and restates in its entirety that certain Agreement and Plan of
Recapitalization dated as of January 30, 2001 by and among the Parent, the
Seller and the Acquiror, as amended by Amendatory Agreement No. 1 thereto, dated
March 2001, and Amendatory Agreement No. 2 thereto, dated March 2001. References
in this Agreement to the "date of this Agreement," or "the date hereof" shall
refer to January 30, 2001.

                                    RECITALS:

         The Parent has determined to redeploy a significant portion of its
assets. Accordingly, the Parent desires to sell, and the Acquiror has determined
to purchase, certain interests in the Parent's businesses relating to, among
other things, the design, manufacturing and marketing of engineered measurement,
flow control and power systems for customers primarily in the energy industry.

         In order to accomplish this transaction, the Parent will, in
consultation with the Acquiror and in the manner set forth herein, prior to the
First Closing effect the Reorganization described in Annex B of the various
legal entities that comprise the Dresser Equipment Group.

         After giving effect to the Reorganization, (a) the Parent desires to
cause Dresser Industries and DEGI to engage, and the Acquiror desires to engage,
and to cause Transitory Merger Sub to engage, in the transactions contemplated
by Article II herein at the First Closing and (b) immediately following the
First Closing, the Parent desires to cause the Seller to engage, and the
Acquiror desires to cause the Buyers to engage, in the transactions contemplated
by Article II herein at the Second Closing.

         On March 28, 2001, DEGI changed its legal name from "Dresser Equipment
Group, Inc." to "Dresser, Inc." References in this Agreement (including the
exhibits, annexes and schedules hereto) to "Dresser Equipment Group, Inc." shall
mean Dresser, Inc.

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

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION
<PAGE>   8

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01. Definitions. Capitalized and other terms used in this
Agreement are defined in Annex A attached hereto and are used herein with the
meanings ascribed to them therein.

         Section 1.02. Rules of Construction.

         (a)      Unless the context otherwise requires, as used in this
                  Agreement: (i) a term defined in Annex A has the meaning
                  ascribed to it in Annex A; (ii) an accounting term not defined
                  herein has the meaning ascribed to it in accordance with U.S.
                  GAAP; (iii) "or" is not exclusive; (iv) "including" means
                  "including without limitation;" (v) words in the singular
                  include the plural and vice versa; (vi) words applicable to
                  one gender shall be construed to apply to each gender; (vii)
                  the terms "hereof," "herein," "hereby," "hereto" and
                  derivative or similar words refer to this entire Agreement,
                  including the Annexes and Appendices hereto; (viii) the terms
                  "Article," "Section," "Annex" and "Appendix" shall refer to
                  the specified Article, Section, Annex or Appendix of or to
                  this Agreement; (ix) the term "Schedule" shall refer to the
                  appropriate Schedule to the Parent's Disclosure Letter or the
                  Acquiror's Disclosure Letter; and (x) the phrases "pursuant
                  to," "as described in" and "subject to the terms of," when
                  used with reference to a particular Section of this Agreement,
                  or words of similar import, shall refer to such Section and to
                  any Schedule of the Parent's Disclosure Letter or the
                  Acquiror's Disclosure Letter referenced therein.

         (b)      A reference to any Person includes such Person's successors
                  and permitted assigns.

         (c)      Any reference to "days" shall mean calendar days unless
                  "Business Days" (as defined in Annex A) are expressly
                  specified.

         (d)      Each Annex and Appendix identified in this Agreement is
                  incorporated herein by reference and made a part hereof for
                  all purposes.

         (e)      The Parent and the Acquiror, each represented by legal
                  counsel, have each participated in the negotiation and
                  drafting of this Agreement. If an ambiguity or question of
                  intent or interpretation should arise, this Agreement shall be
                  construed as if drafted jointly by such parties and no
                  presumption or burden of proof shall arise favoring or
                  burdening any party hereto by virtue of the authorship of any
                  of the provisions of this Agreement.

                                   ARTICLE II

                                SALE AND PURCHASE

         Section 2.01. Sale and Purchase of Securities. On the terms and subject
to the conditions contained in this Agreement, the Parent agrees to cause DEGI
and Dresser Industries to engage at the First Closing in the following
transactions, and the Acquiror agrees to engage and to cause the Transitory
Merger Sub to engage at the First Closing in the following transactions:

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       2
<PAGE>   9

                  (a)      The Acquiror shall purchase from Transitory Merger
                           Sub, upon original issue, common stock of Transitory
                           Merger Sub for cash in an amount in U.S. Dollars
                           (which the Acquiror estimates will be approximately
                           $400,000,000) equal to at least the Purchase Price,
                           plus fees and expenses incurred by the Acquiror in
                           connection with the transactions contemplated hereby
                           (other than fees or discounts related to the Loan)
                           less the Loan (the "Investment");

                  (b)      DEGI shall borrow an amount in cash in U.S. Dollars
                           equal to at least $970,000,000 (nine hundred seventy
                           million dollars) (the net proceeds to DEGI pursuant
                           to this clause (b), being the "Loan"), comprised of
                           (i) borrowings from a syndicate of Lenders on Terms
                           contemplated by the Commitment Letter Term Sheet
                           attached to the Bank Commitment Letter and (ii) the
                           proceeds from the issuance of senior subordinated
                           notes in a private placement of such notes or
                           borrowings from a syndicate of Lenders on the Terms
                           contemplated by the Commitment Letter Term Sheet
                           attached to the Bridge Commitment Letter; and

                  (c)      The Acquiror and the Parent shall cause the merger
                           (the "Merger") of Transitory Merger Sub with and into
                           DEGI, which shall be the corporation surviving the
                           Merger, to be effected through execution and delivery
                           of the Merger Agreement and the filing thereof with
                           the Secretary of State of Delaware, pursuant to
                           which:

                           (i)      All the issued and outstanding capital stock
                                    of Transitory Merger Sub shall be converted
                                    into an aggregate number of shares of common
                                    stock of DEGI ("DEGI Common Stock") equal to
                                    (i) the total number of shares of DEGI
                                    Common Stock outstanding immediately prior
                                    to the Merger multiplied by (ii) 0.949;

                           (ii)     subject to the provisions of clause (iii) of
                                    this subsection (c), the number of shares of
                                    DEGI Common Stock owned by Dresser
                                    Industries equal to (i) the total number of
                                    shares of DEGI Common Stock outstanding
                                    immediately prior to the Merger multiplied
                                    by (ii) 0.949 shall be converted into the
                                    right to receive cash in an aggregate amount
                                    equal to (A) the DEGI Group Preliminary
                                    Purchase Price Percentage times the
                                    Preliminary Purchase Price as adjusted by
                                    (B) a portion of the Purchase Price
                                    Adjustment determined in accordance with the
                                    Allocation Procedures (the "Merger
                                    Consideration") (with the balance of the
                                    shares of DEGI Common Stock owned by Dresser
                                    Industries to remain outstanding); and

                           (iii)    if any Management Shares are outstanding at
                                    the effective date of the Merger, then (A)
                                    the number of shares of DEGI Common Stock
                                    converted into the right to receive cash
                                    pursuant to clause (ii) of this subsection
                                    (c) shall be increased by a number equal to
                                    the number of

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       3
<PAGE>   10

                                    Management Shares and (B) the consideration
                                    payable to Dresser Industries in connection
                                    with the Merger shall be increased by the
                                    amount of the cash consideration received by
                                    DEGI against the issuance of such Management
                                    Shares.

                  (d)      Any Management Shares issued by DEGI prior to the
                           First Closing shall be sold to management employees
                           at a price per share not less than an amount equal to
                           the Merger Consideration plus the BV Consideration
                           divided by the number of shares of DEGI Common Stock
                           to be converted by Dresser Industries in the Merger
                           as determined pursuant to clause (ii) of subsection
                           2.01(c) before giving effect to clause (iii) of
                           subsection 2.01(c).

         Section 2.02. Sale and Purchase of BV Companies. On the terms and
subject to the conditions contained in this Agreement, the Parent agrees to
cause the Seller to engage at the Second Closing in the following transactions,
and the Acquiror agrees to cause each of the Buyers to engage at the Second
Closing in the following transactions: The Seller shall assign to the
appropriate Buyer as indicated on Annex C hereto, and such Buyer shall accept,
the Equity Securities of the BV Company whose name is set forth next to the name
of such Buyer on Annex C hereto. In consideration for such assignments, the
Buyers shall pay to the Seller cash in U.S. Dollars in an aggregate amount equal
to (a) the BV Preliminary Purchase Price Percentage times the Preliminary
Purchase Price as adjusted by (b) a portion of the Purchase Price Adjustment
determined in accordance with the Allocation Procedures (the "BV
Consideration").

         Section 2.03. Cash Consideration.

         (a)      The aggregate cash consideration to be paid to Dresser
                  Industries and the Seller for engaging in the transactions
                  contemplated by Sections 2.01 and 2.02 herein shall consist of
                  the Purchase Price. The "Purchase Price" shall be equal to the
                  Preliminary Purchase Price as adjusted by the Purchase Price
                  Adjustment in accordance with Sections 2.08 and 2.09.

         (b)      The parties hereto have agreed that the "Preliminary Purchase
                  Price" shall be equal to (i) U.S. $1,309,111,797 (one billion
                  three hundred nine million one hundred eleven thousand seven
                  hundred ninety-seven dollars) less (ii) the amount which, when
                  taken together with the aggregate consideration paid to
                  acquire the Management Shares, equals 5.1% of the Equity of
                  DEGI.

         Section 2.04. The Closings.

         (a)      The transactions contemplated by Section 2.01 shall be
                  consummated (the "First Closing") on the date and at the time
                  and place determined pursuant to this subsection (a). The
                  First Closing shall be held at the offices of Latham &
                  Watkins, 885 Third Avenue, New York, New York 10022 on the
                  Closing Date. The "Closing Date" shall be the fifteenth (15th)
                  Business Day following the date on which the Closing
                  Conditions (other than conditions that can be satisfied only
                  by delivery of

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       4
<PAGE>   11

                  certificates or other documents at the Closings and where such
                  delivery is in the control of a party hereto) have been
                  fulfilled or waived. If such date is not a Business Day, then
                  the Closing Date shall be the next succeeding Business Day.

         (b)      Upon fulfillment or waiver of the Closing Conditions to which
                  reference is made in subsection (a) of this Section, either
                  the Parent or the Acquiror may give the other notice thereof
                  (the "Closing Notice") and the date of receipt of such Closing
                  Notice determined in accordance with Section 14.01 shall be
                  the first Business Day of the time periods therein referenced.

         (c)      Immediately following the First Closing, the transactions
                  contemplated by Section 2.02 shall be consummated (the "Second
                  Closing"). The Second Closing shall be held at the same
                  location as the First Closing. The consummation of the Second
                  Closing shall be a condition subsequent to the consummation of
                  the First Closing, such that if the Second Closing shall not
                  occur immediately following the First Closing either the
                  Parent or the Acquiror shall be entitled to cause the
                  rescission of the transactions consummated at the First
                  Closing.

         Section 2.05. Pre-Closing Transactions.

         (a)      Prior to the First Closing, the Parent shall effect the
                  Reorganization described in Annex B. The Parent and the
                  Acquiror shall cooperate with each other with respect to the
                  implementation of the Reorganization described in Annex B,
                  including actions involving filings with Governmental
                  Authorities, the execution of agreements, transfer documents
                  and similar instruments and the issuance of securities. If the
                  Parent and the Acquiror consent in writing to any action that
                  is inconsistent with the transactions described on Annex B
                  hereto, then Annex B shall, automatically and without further
                  action by the parties hereto, be deemed to have been amended
                  to the extent necessary to permit such action.

         (b)      The Parent shall prior to the First Closing cause the
                  outstanding DEGI Common Stock to be subdivided pursuant to a
                  stock split on a basis that is mutually satisfactory to the
                  Acquiror and the Parent.

         (c)      In any case in which the Reorganization, as the Reorganization
                  may be amended as provided in subsection (a) of this Section
                  2.05 prior to the First Closing, requires that a member of a
                  Company Group be "formed" or otherwise implies that it must be
                  organized de novo, the parties hereto acknowledge that counsel
                  to, or other representatives of, the Parent or the Acquiror
                  may, in lieu of a legal entity organized de novo, use a
                  previously formed legal entity "off the shelf" for such
                  purpose ( herein called a "Shelf Entity").

         Section 2.06. Transactions at the First Closing. Subject to the terms
and conditions of this Agreement, the Parent shall at the First Closing cause
DEGI to do and perform the following actions

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       5
<PAGE>   12

and to deliver the following documents, and the Acquiror shall do and perform
the following actions and deliver the following documents. At the First Closing,
the following events shall occur, each event being (i) conditioned on the
occurrence or waiver of each other event and (ii) deemed to occur simultaneously
with each other event:

         (a)      Financial Transactions:

                  (i)      The Acquiror shall purchase from the Transitory
                           Merger Sub upon original issue shares of common stock
                           for cash in the amount of the Investment;

                  (ii)     DEGI shall execute and deliver the Loan Documents
                           against the funding of the full amount of the Loan to
                           DEGI by wire transfer of immediately available funds
                           to the wire transfer address of DEGI provided in
                           written instructions to the Acquiror not less than
                           three (3) Business Days prior to the Closing Date;
                           and

                  (iii)    the Parent and the Acquiror shall cause the Merger to
                           be effected in accordance with subsection (c) of
                           Section 2.01; provided, however, that the amount of
                           cash to be paid to Dresser Industries pursuant to the
                           Merger at the time of the First Closing (subject to
                           adjustment pursuant to Sections 2.08 and 2.09) shall
                           be an aggregate amount equal to the DEGI Group
                           Preliminary Purchase Price Percentage times the
                           Estimated Purchase Price. The consideration to be
                           received by Dresser Industries pursuant to the Merger
                           shall be paid to Dresser Industries by wire transfer
                           of immediately available funds to the wire transfer
                           address of Dresser Industries provided in written
                           instructions by the Acquiror not less than three (3)
                           Business Days prior to the Closing Date.

         (b)      Ancillary Agreements. The parties to each Ancillary Agreement
                  shall execute and deliver such Ancillary Agreement.

         (c)      Intercompany Indebtedness. Any Intercompany Indebtedness owed
                  at the Closing Date by any member of the Parent Group to any
                  member of the DEGI Group or by any member of the DEGI Group to
                  any member of the Parent Group shall be discharged, whether,
                  at the election of the Parent (provided, that the Parent shall
                  cooperate with the Acquiror to structure such discharge in the
                  manner that is most tax-efficient to all the parties), by
                  payment by the obligor or by release and forgiveness by the
                  obligee pursuant to a written release, in form and substance
                  substantially similar to the form thereof attached hereto as
                  Appendix II, executed and delivered at the First Closing. The
                  Intercompany Indebtedness has not been reflected in the
                  Initial Balance Sheet, and will not be reflected in the
                  Estimated or Closing Balance Sheet, as an asset or liability
                  and, consequently, shall have no effect on the calculation of
                  the Purchase Price Adjustment hereunder.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       6
<PAGE>   13

         (d)      The Parent shall at the First Closing execute, where
                  appropriate, and deliver to the Acquiror the following
                  documents:

                  (i)      A release, in form and substance substantially
                           similar to the form thereof attached hereto as
                           Appendix III, by the Parent on behalf of itself and
                           the Parent Group of all claims that they may have
                           against any member of the DEGI Group with respect to
                           the operation or conduct of the Businesses prior to
                           the Closing Date;

                  (ii)     A certificate in the form required by Treasury
                           Regulation Section 1.1445-2; and

                  (iii)    such other documents and instruments as shall
                           evidence fulfillment or waiver of the Closing
                           Conditions.

         (e)      The Acquiror shall at the First Closing execute, where
                  appropriate, and deliver to the Parent such documents and
                  instruments as shall evidence fulfillment or waiver of the
                  Closing Conditions.

         Section 2.07. Transactions at the Second Closing. Subject to the terms
of this Agreement and to the condition that the First Closing shall have been
effected, the Parent shall cause the Seller at the Second Closing to do and
perform the following actions and to deliver the following documents, and the
Acquiror shall do and perform the following actions and cause the Buyers at the
Second Closing to do and perform the following actions and to deliver the
following documents. At the Second Closing, the following events shall occur,
each event being (i) conditioned on the occurrence or waiver of each other event
and (ii) deemed, except as otherwise provided in subsection (b) of this Section,
to occur simultaneously with each other event:

         (a)      The Parent shall cause the Seller to deliver, in the sequence
                  provided on Annex C, to the appropriate Buyer the certificate
                  or certificates evidencing the Equity Securities of the BV
                  Companies to be sold by it at the Second Closing in accordance
                  with Annex C, which certificates shall be duly endorsed for
                  transfer or accompanied by duly executed stock transfer powers
                  or other appropriate instruments of assignment and transfer in
                  favor of the Buyer;

         (b)      The Acquiror shall cause the Buyers to deliver or cause to be
                  delivered to the Seller cash in the amount of the BV
                  Preliminary Purchase Price Percentage times the Estimated
                  Purchase Price. Such amount shall be paid in United States
                  Dollars by wire transfer of immediately available funds to the
                  wire transfer address of the Seller provided in written
                  instructions by the Seller not less than three (3) Business
                  Days prior to the Closing Date.

         (c)      Any Intercompany Indebtedness owed at the Closing Date by any
                  member of the Parent Group to any member of the BV Group or by
                  any member of the BV Group

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       7
<PAGE>   14

                  to any member of the Parent Group shall be discharged,
                  whether, at the election of the Parent (provided, that the
                  Parent shall cooperate with the Acquiror to structure such
                  discharge in the manner that is most tax-efficient to all the
                  parties), by payment by the obligor or by release and
                  forgiveness by the obligee pursuant to a written release, in
                  form and substance substantially similar to the form thereof
                  attached hereto as Appendix II, executed and delivered at the
                  Second Closing. The Intercompany Indebtedness has not been
                  reflected in the Initial Balance Sheet, and will not be
                  reflected in the Estimated or Closing Balance Sheet, as an
                  asset or liability and, consequently, shall have no effect on
                  the calculation of the Purchase Price Adjustment hereunder.

         (d)      The Parent shall at the Second Closing execute, where
                  appropriate, and deliver to the Acquiror, a release, in form
                  and substance substantially similar to the form thereof
                  attached hereto as Appendix III, by the Parent on behalf of
                  itself and the Parent Group of all claims that they may have
                  against any member of the BV Group with respect to the
                  operation or conduct of the Businesses prior to the Closing
                  Date.

         Section 2.08. Adjustment of the Preliminary Purchase Price.

         (a)      By no later than five (5) Business Days after the delivery of
                  a Closing Notice, the Parent shall deliver to the Acquiror on
                  a consolidated basis, (i) the balance sheet of the Businesses
                  as of December 31, 2000 and the related statement of results
                  of operations for the twelve months then ended (the "Year-End
                  Financial Statements") and (ii) the balance sheet (the
                  "Estimated Balance Sheet") as of the close of business on the
                  last day of the most recently completed calendar month for
                  which internal management financial statements are available
                  (the "Estimated Balance Sheet Date") and the related statement
                  of results of operations of the Businesses for the period
                  beginning on January 1, 2001 and ending on the Estimated
                  Balance Sheet Date (together with the Estimated Balance Sheet,
                  the "Estimated Financial Statements"). The Year End Financial
                  Statements and the Estimated Financial Statements shall be
                  prepared in accordance with U.S. GAAP applied consistently
                  with the Initial Financial Statements. The Year End Financial
                  Statements shall present fairly the financial position and the
                  results of operations of the Businesses as of the date and for
                  the period then ended and the Estimated Financial Statements
                  shall, to the extent reasonably practicable in light of the
                  purpose for which they were prepared and the time parameter
                  provided in this subsection, present fairly the financial
                  position and results of operations of the Businesses as of the
                  date and for the period then ended.

         (b)      The "Estimated Purchase Price" shall mean the Preliminary
                  Purchase Price adjusted by the Estimated Purchase Price
                  Adjustment. The Preliminary Purchase Price shall be increased
                  by a positive Estimated Purchase Price Adjustment and
                  decreased by a negative Estimated Purchase Price Adjustment.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       8
<PAGE>   15

         (c)      The "Estimated Purchase Price Adjustment" shall be an amount
                  equal to the increase (positive) or decrease (negative) in the
                  Net Equity as of the Initial Balance Sheet Date to the
                  Estimated Balance Sheet Date, determined, in accordance with
                  Section 2.10, by comparing the amount of Net Equity as of the
                  Initial Balance Sheet Date with the amount of Net Equity as of
                  the Estimated Balance Sheet Date; provided, however, that, if
                  the amount of such Estimated Purchase Price Adjustment is less
                  than U.S. $10,000,000 (ten million dollars), whether positive
                  or negative, the Estimated Purchase Price Adjustment shall be
                  deemed to be $0.

         (d)      For purposes of the determination of the Estimated Purchase
                  Price Adjustment and the Purchase Price Adjustment,
                  Intercompany Indebtedness shall be classified and reflected in
                  each of the Initial Balance Sheet, the Estimated Balance Sheet
                  and the Closing Balance Sheet neither as an asset nor a
                  liability.

         Section 2.09. Procedures for Calculating the Purchase Price Adjustment.

         (a)      Following the end of the calendar month in which the First
                  Closing shall occur, the Acquiror shall cause to be prepared
                  and delivered to the Parent, no later than ninety (90) days
                  following the end of such month, on a consolidated basis, the
                  Closing Financial Statements, prepared in accordance with U.S.
                  GAAP applied consistently with the Initial Financial
                  Statements which shall be certified by Arthur Andersen LLP as
                  presenting fairly the financial position of the Businesses as
                  of the Closing Date. Thereafter, the Acquiror shall promptly
                  provide to the Parent such supporting work papers or other
                  supporting information as may be reasonably requested by the
                  Parent, including access to the work papers of Arthur Andersen
                  LLP prepared in connection with the audit of the Initial
                  Financial Statements and the audit of the Closing Financial
                  Statements. To the extent that the judgment of management of
                  the Businesses is relied upon for any estimate used to prepare
                  the Closing Balance Sheet as required or permitted by U.S.
                  GAAP, such judgment shall not differ in any material respect
                  from the judgment relied upon for the same or any similar
                  estimate used to prepare the Initial Financial Statements
                  unless there has been a material change since the date of the
                  Initial Financial Statements in the facts upon which such
                  judgment is based.

         (b)      If the Parent shall have any objections to the Closing Balance
                  Sheet, the Parent shall within twenty (20) Business Days
                  following receipt of the Closing Balance Sheet so notify the
                  Acquiror, stating in reasonable detail the basis for any such
                  objections; provided, however, that the only bases for
                  objection shall be (i) non-compliance with the standards set
                  forth in subsection (a) of this Section for the preparation of
                  the Closing Balance Sheet and (ii) computational errors. If
                  the Parent fails to notify the Acquiror of any such objections
                  in writing within such twenty (20) Business Day period, the
                  Parent shall be deemed to have concurred with the Closing
                  Balance Sheet. Otherwise, following any such notification, the
                  Acquiror and the Parent shall endeavor in good faith for a
                  period not to exceed twenty (20) Business Days to

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       9
<PAGE>   16

                  resolve their differences (the "Differences"). If the parties
                  are unable to resolve all their Differences and have not
                  agreed in writing to extend the resolution period, either the
                  Parent or the Acquiror shall, if the aggregate amount of the
                  unresolved Differences does not exceed U.S. $10 million, be
                  entitled for a period of twenty (20) additional Business Days
                  to request the Accounting Firm to resolve the unresolved
                  Differences or, if the aggregate amount of the unresolved
                  Differences exceeds $10 million, to apply for arbitration
                  pursuant to the provisions of Section 14.10. If the parties
                  are unable to resolve all their Differences but neither party
                  shall apply to the Accounting Firm or for arbitration for
                  resolution of the remaining Differences, the determinations
                  set forth in the Closing Balance Sheet, as adjusted for those
                  Differences that the parties were able to resolve, shall be
                  deemed to be dispositive.

         (c)      If either party shall request the Accounting Firm to resolve
                  the unresolved Differences, both parties shall cooperate with
                  the Accounting Firm and its representatives by providing
                  access to all relevant Books and Records and access at
                  reasonable times to personnel having relevant information. The
                  Accounting Firm shall be requested to use all reasonable
                  efforts to resolve such Differences in favor of the Parent in
                  their entirety or in favor of the Acquiror in their entirety
                  within twenty (20) Business Days after the matter is referred
                  to it on the basis of the standards set forth in subsection
                  (a) of this Section or as soon thereafter as possible. Upon
                  completion of its task, the Accounting Firm shall notify each
                  party of its determination of the matters subject to the
                  Differences, which determination shall be conclusive. The fees
                  and expenses of the Accounting Firm shall be borne 50% by the
                  Parent and 50% by the Acquiror.

         (d)      If either party shall apply for arbitration to resolve the
                  unresolved Differences, or if the Accounting Firm is unable to
                  resolve the Differences, both parties shall cooperate with the
                  arbitration tribunal and its representatives by providing
                  access to all relevant Books and Records and access at
                  reasonable times to personnel having relevant information. The
                  arbitration tribunal shall be requested to use all reasonable
                  efforts to resolve such Differences in favor of the Parent in
                  their entirety or in favor of the Acquiror in their entirety
                  within twenty (20) Business Days after the matter is referred
                  to it on the basis of the standards set forth in subsection
                  (a) of this Section or as soon thereafter as possible. The
                  determination of the arbitration tribunal with respect to the
                  Differences shall be conclusive. Unless differently awarded by
                  the arbitration tribunal, the fees and expenses of arbitration
                  shall be borne 50% by the Parent and 50% by the Acquiror.

         (e)      The "Purchase Price Adjustment" shall mean an amount equal to
                  the increase (positive) or decrease (negative) in the Net
                  Equity of the Businesses from the Initial Balance Sheet Date
                  to the Closing Date in accordance with Section 2.10,
                  determined by comparing the amount of Net Equity as of the
                  Initial Balance Sheet Date with the amount of Net Equity as of
                  the Closing Date (based on the Closing Balance Sheet as
                  finally determined pursuant to subsections (a) through (d) of
                  this Section).

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       10
<PAGE>   17

         (f)      The result obtained by subtracting the Estimated Purchase
                  Price Adjustment from the Purchase Price Adjustment is
                  referred to as the "Post-Closing Payment Amount." The
                  Post-Closing Payment Amount shall be paid by the Acquiror to
                  the Parent if it is positive or by the Parent to the Acquiror
                  if it is negative, in cash in United States Dollars, by wire
                  transfer of immediately available funds to the wire transfer
                  address of the Acquiror provided in written instructions to
                  the Parent or to the wire transfer address of the Parent
                  provided in written instructions to the Acquiror, as
                  appropriate, on the third (3rd) Business Day following the
                  date on which the procedures in this Section 2.09 have been
                  completed. The Post-Closing Payment Amount shall bear simple
                  interest at the lowest interest rate applicable under the
                  revolving credit agreement referred to in the Commitment
                  Letter Term Sheets from the Closing Date to the date of such
                  payment, inclusive.

         (g)      If, notwithstanding the representations and warranties set
                  forth in subsection (a) of Section 5.05 herein, it shall be
                  determined that the Initial Financial Statements were not in
                  fact prepared in accordance with U.S. GAAP, the Closing
                  Financial Statements prepared pursuant to subsection (a) of
                  Section 2.09 need not be prepared consistently with the
                  Initial Financial Statements to the extent and only to the
                  extent that such Initial Financial Statements were not
                  prepared in accordance with U.S. GAAP. If the Closing
                  Financial Statements are not prepared consistently with the
                  Initial Financial Statements pursuant to this subsection (g)
                  of Section 2.09 and such inconsistency results in a decrease
                  in the amount of the Purchase Price Adjustment, any
                  indemnification to be paid by the Parent to the Acquiror with
                  respect to any such breach of the representations and
                  warranties in Section 5.05 that caused the Purchase Price
                  Adjustment shall be reduced by the amount of such decrease.

         Section 2.10. Adjustments to Net Equity. In determining the Estimated
Purchase Price Adjustment and the Purchase Price Adjustment pursuant to Sections
2.08 and 2.09, the Net Equity reflected in the Initial Balance Sheet, the
Estimated Balance Sheet and the Closing Balance Sheet shall be adjusted as
follows:

         (a)      Solely for the purpose of determining Net Equity in
                  calculating the Estimated Purchase Price Adjustment and the
                  Purchase Price Adjustment, the Net Equity reflected in each of
                  such Balance Sheets shall be adjusted to exclude the following
                  assets and liabilities in order that these assets and
                  liabilities shall have no effect on the Estimated Purchase
                  Price Adjustment or the Purchase Price Adjustment: (i) The
                  Highway 6 Real Property; (ii) the accumulated projected
                  benefit obligation for the postretirement medical and life
                  benefits; (iii) assets transferred in excess of liabilities
                  assumed of the DICON defined benefit retirement plan (Plan No.
                  164); (iv) reserves for uninsured litigation; and (v) the
                  self-insurance reserves for workers' compensation, general
                  liability, product liability and automobile liability. For the
                  purpose of clarity of identification of the foregoing items,
                  the amounts reflected on, or missing from, the Initial Balance
                  Sheet for each of the above listed items is as follows: (A)
                  Real Property subject to the Highway 6 Deed: $12.4 million,
                  (B) the

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       11
<PAGE>   18

                  accumulated projected benefit obligation for the
                  post-retirement medical and life benefits: $128.3 million, (C)
                  assets transferred in excess of liabilities assumed of the
                  DICON defined benefit retirement plan (Plan No. 164): $9.0
                  million, (D) reserves for uninsured litigation: $10 million,
                  and (E) the self-insurance reserves, including case reserves
                  and IBNR, for workers' compensation, general liability,
                  product liability and automobile liability: $21.7 million.

         (b)      The Initial Balance Sheet includes an asset in the amount of
                  $14,708,000 (fourteen million seven hundred and eight thousand
                  dollars) representing the assets in excess of liabilities of
                  the Dresser Canada Retirement Income Plan. This $14,708,000
                  asset is not an asset of a member of a Company Group and
                  should not have been included in the Initial Financial
                  Statements. In computing Net Equity at the Initial Balance
                  Sheet Date, the Net Equity shall be reduced by $14,708,000,
                  but this reduction shall not be made to the Net Equity to be
                  determined as of either the Estimated Balance Sheet Date or
                  the Closing Balance Sheet Date. The Parent shall not be
                  entitled to make further adjustments to Net Equity reflected
                  in the Initial Balance Sheet (other than those adjustments
                  identified in this Agreement) after the date hereof. If it is
                  determined by the Acquiror during the period from the date
                  hereof to the date on which the Closing Balance Sheet is
                  delivered to the Parent that any liabilities reflected in the
                  Initial Balance Sheet are not liabilities of a member of a
                  Company Group or that any assets of a member of a Company
                  Group are not reflected in the Initial Balance Sheet, then the
                  Net Equity determined by reference to the Initial Balance
                  Sheet shall be increased to exclude such liabilities or to
                  include such assets up to $14,780,000 in order that they shall
                  have no effect on the Estimated Purchase Price Adjustment or
                  the Purchase Price Adjustment.

         (c)      No adjustments will be recorded in the Estimated Balance Sheet
                  or the Closing Balance Sheet related to the allocation of the
                  purchase price in connection with the acquisition of NIMCO.

         (d)      Solely for the purpose of determining Net Equity in
                  calculating the Estimated Purchase Price Adjustment and the
                  Purchase Price Adjustment, cash and cash equivalents (net of
                  the aggregate amount of (i) outstanding checks and overdrafts
                  drawn on bank accounts of all members of the Company Groups
                  and (ii) any notes payable by any member of either Company
                  Group) ("Net Cash") shall be deemed to be $11.5 million on the
                  Initial Balance Sheet notwithstanding the $23 million in Net
                  Cash actually reflected in the Initial Balance Sheet. No
                  adjustment shall be made to the actual Net Cash on the
                  Estimated Balance Sheet or Closing Balance Sheet.

         (e)      To the extent that Net Cash reflected in the Estimated Balance
                  Sheet or Closing Balance Sheet exceeds $11.5 million in
                  compliance with Section 11.03 (f), such excess will contribute
                  positively to any Purchase Price Adjustment calculation to the
                  benefit of the Parent.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       12
<PAGE>   19

         No other adjustments will be made to the Net Equity reflected in each
of the Initial Balance Sheet, the Estimated Balance Sheet or the Closing Balance
Sheet for the purpose of computing the Estimated Purchase Price Adjustments or
the Purchase Price Adjustment. Accordingly, any changes in the amounts of other
assets or liabilities reflected in the Estimated Balance Sheet or the Closing
Balance Sheet as compared with the Initial Balance Sheet will have an effect on
the Estimated Purchase Price Adjustment or the Purchase Price Adjustment or
both.

         Section 2.11. Allocation of Purchase Price Adjustment. The Purchase
Price Adjustment shall be allocated among Dresser Industries and the Seller in
accordance with the Allocation Procedures of Annex D. Dresser Industries and the
Seller shall be deemed to hold that portion of the Purchase Price Adjustment
that it has theretofore received in constructive trust pending allocation of the
entire Purchase Price Adjustment in accordance with such Allocation Procedures.
Upon completion of the allocation, Dresser Industries and the Seller shall make
such payments of cash in U.S. Dollars as shall be necessary to give effect to
the allocation and the Parent shall, promptly after completion of the
allocation, provide to the Acquiror a copy of the allocation, together with
evidence, reasonably satisfactory to the Acquiror, of such payments.

         Section 2.12. Amendments to Effect Recapitalization. The parties
acknowledge that certain amendments to the structure of the transactions
contemplated hereby may be necessary in order to record such transactions as a
Recapitalization for financial reporting purposes, as well as amendments to
provide for the adjustment of the Purchase Price to account for the retention of
equity by the Parent and the rollover of management equity, and the parties
shall cooperate in good faith to effect such amendments.

         Section 2.13. Delayed Purchases. Notwithstanding any provisions to the
contrary herein,

         (a)      If at the time of the First Closing any of the Category 2A
                  Requirements applicable to the First Closing shall not have
                  been satisfied, the Acquiror may elect, in its sole
                  discretion, to delay the purchase of the Equity Securities of
                  the DEGI Group member located in such jurisdiction in which
                  such Category 2A Requirements shall not have been satisfied
                  until such time as such requirements have been satisfied;
                  provided that the Acquiror shall have given written notice to
                  the Parent of such election no later than ten (10) Business
                  Days prior to the Closing Date. In such event, (i) prior to
                  the First Closing, the Parent shall (A), if the assets subject
                  to delayed purchase have not theretofore been transferred to
                  the DEGI Group, cause a Retained Subsidiary to retain such
                  assets or, if the assets subject to delayed purchase have
                  theretofore been transferred to the DEGI Group, cause the
                  appropriate member of the DEGI Group to transfer such Equity
                  Securities to a member of the Parent Group; (ii) the
                  Preliminary Purchase Price and the Merger Consideration shall
                  be reduced by the dollar amount allocated to such Equity
                  Securities on Schedule 2.13 to the Parent's Disclosure Letter;
                  (iii) for any determination of Net Equity, the transfer of
                  such Equity Securities pursuant to this subsection (a) shall
                  be disregarded; and (iv) at the First Closing, the Acquiror
                  shall execute and deliver to the Parent a Purchase and Sale
                  Agreement, in form and substance substantially similar to the
                  form thereof attached hereto as Appendix IX.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       13
<PAGE>   20

         (b)      If at the time of the Second Closing any of the Category 2A
                  Requirements applicable to the Second Closing shall not have
                  been satisfied, the Acquiror may elect, in its sole
                  discretion, to delay the purchase of the Equity Securities of
                  the BV Group member located in such jurisdiction in which such
                  Category 2A Requirements shall not have been satisfied until
                  such time as such requirements have been satisfied; provided
                  that the Acquiror shall have given written notice to the
                  Parent of such election no later than ten (10) Business Days
                  prior to the Closing Date. In such event, (i) prior to the
                  Second Closing, the Parent shall (A), if the assets subject to
                  delayed purchase have not theretofore been transferred to the
                  BV Group, cause a Retained Subsidiary to retain such assets
                  or, if the assets subject to delayed purchase have theretofore
                  been transferred to the BV Group, cause the appropriate member
                  of the BV Group to transfer such Equity Securities to a member
                  of the Parent Group; (ii) the Preliminary Purchase Price and
                  the BV Consideration shall be reduced by the dollar amount
                  allocated to such Equity Securities on Schedule 2.13 to the
                  Parent's Disclosure Letter; (iii) for any determination of Net
                  Equity, the transfer of such Equity Securities pursuant to
                  this subsection (b) shall be disregarded; and (iv) at the
                  Second Closing, the Acquiror shall execute and deliver to the
                  Parent a Purchase and Sale Agreement, in form and substance
                  substantially similar to the form thereof attached hereto as
                  Appendix IX.

         (c)      If the Equity Securities of any member of the DEGI Group or
                  the BV Group are subject to delayed purchase pursuant to
                  subsection (a) or (b) of this Section 2.13 and the operations
                  of such member are conducted in more than one jurisdiction,
                  the Parent and the Acquiror shall cooperate in amending Annex
                  B to preserve the assets of such member that are located in
                  any jurisdiction other than the Category 2A Jurisdiction
                  resulting in the delayed purchase.

         Section 2.14. Joint Ventures.

         (a)      If prior to the First Closing, a third Person has, with
                  respect to its rights under any Contractual Transfer
                  Restrictions relating to any DEGI Joint Venture, (i) (A)
                  exercised a right to acquire the Equity Securities of the DEGI
                  Joint Venture owned indirectly by DEGI (giving effect to the
                  Reorganization), (B) failed to waive any such rights or (C)
                  failed to provide a required consent and (ii) consummation of
                  the transactions contemplated hereby would violate the terms
                  of such Contractual Transfer Restriction, then (x) such DEGI
                  Joint Venture shall be deemed not to be a member of the DEGI
                  Group; (y) the Preliminary Purchase Price and the Merger
                  Consideration shall be reduced by the dollar amount allocated
                  to such DEGI Joint Venture on Schedule 2.14 to the Parent's
                  Disclosure Letter; and (z) for any determination of Net
                  Equity, such DEGI Joint Venture shall be disregarded.

         (b)      If prior to the Second Closing, a third Person has, with
                  respect to its rights under any Contractual Transfer
                  Restrictions relating to any BV Joint Venture, (i) (A)
                  exercised a right to acquire the Equity Securities of the BV
                  Joint Venture owned indirectly by a BV Company (giving effect
                  to the Reorganization), (B) failed to waive any such

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       14
<PAGE>   21

                  rights or (C) failed to provide a required consent and (ii)
                  consummation of the transactions contemplated hereby would
                  violate the terms of such Contractual Transfer Restriction,
                  then (x) such BV Joint Venture shall be deemed not to be a
                  member of the BV Group; (ii) the Preliminary Purchase Price
                  and the BV Consideration shall be reduced by the dollar amount
                  allocated to such BV Joint Venture on Schedule 2.14 to the
                  Parent's Disclosure Letter; and (iii) for any determination of
                  Net Equity, such BV Joint Venture shall be disregarded.

                                   ARTICLE III

           REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER
                                   INDUSTRIES

         Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent represents and warrants
to the Acquiror that:

         Section 3.01. Organization and Qualification. The Parent is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Parent is duly qualified to do business as a foreign
corporation and is in good standing (in those jurisdictions in which the concept
of good standing is applicable) in each jurisdiction in which the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to affect materially and adversely the
Parent's ability to perform its obligations under this Agreement or any
Ancillary Agreement. Dresser Industries is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted and is duly qualified
to do business as a foreign corporation and is in good standing (in those
jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing could not reasonably be expected
to affect materially and adversely the Parent's ability to cause Dresser
Industries to consummate the transactions contemplated under this Agreement or
any Ancillary Agreement.

         Section 3.02. Authorization of Agreement. The Parent has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Parent of this Agreement and each
of the Ancillary Agreements to which it will be a party and the performance by
the Parent of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Parent.
No vote of, or consent by, the holders of any class or series of capital stock
or voting debt issued by the Parent is necessary to authorize the execution and
delivery by the Parent of this Agreement or any Ancillary Agreement to which it
will

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       15
<PAGE>   22

be a party or the performance by the Parent of its obligations hereunder or
thereunder. This Agreement has been, and each Ancillary Agreement to which the
Parent will be a party will at the First Closing have been, duly executed and
delivered by the Parent and (assuming due authorization, execution and delivery
hereof by the Acquiror and thereof by each other party thereto) constitutes or,
in the case of each such Ancillary Agreement, will at the First Closing
constitute the legal, valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms, except as enforcement hereof or
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
enforcement of creditors' rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).

         Section 3.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Parent from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Parent or
any of its Affiliates (excluding the Seller and the members of the Company
Groups) to permit the Parent to execute, deliver or perform this Agreement or
any Ancillary Agreement to which it will be a party or to permit the Parent to
consummate the transactions contemplated hereby or thereby.

         Section 3.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 3.03, neither the execution
and delivery by the Parent of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Parent of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to rights under any Contractual Transfer Restrictions under
(i) any Legal Requirement applicable to the Parent or Dresser Industries, (ii)
the Organizational Documents of the Parent or Dresser Industries, or (iii) any
contract or agreement to which the Parent or Dresser Industries is a party or by
which the Parent or Dresser Industries or any of their properties or assets is
bound (including any provision thereof requiring any Third Person Consents) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in clauses (a)(i) and (a)(iii) of this
Section that could not reasonably be expected, individually or in the aggregate,
to prevent the Parent from performing this Agreement or any Ancillary Agreement
to which it will be a party in all material respects or to have a Material
Adverse Effect on the Businesses.

         Section 3.05. No Brokers. No broker, finder or investment banker (other
than Morgan Stanley Dean Witter Incorporated) is entitled to any brokerage,
finder's or investment banking fee or commission in connection with the
transactions contemplated by this Agreement based upon

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       16
<PAGE>   23

arrangements made by or on behalf of the Parent or its Affiliates. All fees and
expenses of the Parent and its Affiliates incurred pursuant to the engagement of
Morgan Stanley Dean Witter Incorporated will be discharged by the Parent.

         Section 3.06. Title to Securities. Dresser Industries has, or after
giving effect to the Reorganization will have, directly or indirectly, good
title to the Equity Securities of each member of the DEGI Group indicated as
owned, directly or indirectly, by DEGI on Schedule 5.03(a) to the Parent's
Disclosure Letter, free and clear of any Liens, and there are no contracts,
agreements, commitments or arrangements of the Parent or any of its Subsidiaries
obligating Dresser Industries (other than pursuant to this Agreement and the
Reorganization) to sell or to offer to sell any Equity Securities of any such
member of the DEGI Group or to purchase or acquire, or to offer to purchase or
acquire, any outstanding Equity Securities of any such member of the DEGI Group.
Upon consummation of the transactions contemplated hereby, the Acquiror will
acquire good title to such Equity Securities to be acquired by Acquiror
hereunder directly or indirectly, free and clear of any such Liens (other than
any created by the Acquiror).

                                   ARTICLE IV

               REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER

         Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent and the Seller, jointly
and severally, represent and warrant to the Acquiror that:

         Section 4.01. Organization. The Seller is a legal entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization and has all requisite
organizational power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. The Seller is duly
qualified to do business as a foreign corporation and is in good standing (in
those jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary in order for the
Seller to perform this Agreement and any Ancillary Agreement to which it is a
party in all material respects.

         Section 4.02. Authorization of Agreement. The Seller has all requisite
organizational power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution and delivery by the Seller of this Agreement and each Ancillary
Agreement to which it will be a party and the performance by the Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite organizational action on the part of the Seller and, to the extent
required by Law, Regulation or the Seller's Organizational Documents, by the
holder of the Seller's Equity Securities. This Agreement has been, and any
Ancillary Agreement to which it will be a party will at the Second Closing have
been, duly executed and delivered by the Seller and (assuming due authorization,
execution and delivery hereof by the Acquiror and of any Ancillary Agreement by
each Buyer) constitutes or, in the case

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       17
<PAGE>   24

of any such Ancillary Agreement, will at the Second Closing constitute the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforcement hereof or thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting the enforcement of
creditors' rights generally and legal principles of general applicability
governing the availability of equitable remedies (whether considered in a
proceeding in equity or at law or under applicable legal codes).

         Section 4.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Seller to
permit the Seller to execute, deliver or perform this Agreement or any Ancillary
Agreement to which it will be a party or to consummate the transactions
contemplated hereby.

         Section 4.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 4.03, neither the execution
and delivery by the Seller of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Seller of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to any rights under (i) any Legal Requirement applicable to
the Seller, or (ii) the Organizational Documents of the Seller, or (iii) any
contract or agreement to which such Seller is a party or by which it or any of
its properties or assets is bound (including any provisions thereof requiring
any Third Person Consents) or (b), with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in clauses (a)(i) and (a)(iii) of this Section that could not
reasonably be expected, individually or in the aggregate, to prevent the Seller
from performing this Agreement or any Ancillary Agreement to which it will be a
party in all material respects or to have a Material Adverse Effect on the
Businesses.

         Section 4.05. Title to Securities. The Seller has, or after giving
effect to the Reorganization will have, good title to the Equity Securities of
each BV Company to be sold by the Seller hereunder as provided on Annex C, free
and clear of any Liens, and there are no contracts, agreements, commitments or
arrangements of any Person obligating the Seller (other than pursuant to this
Agreement and the Reorganization) to sell or to offer to sell any Equity
Securities of any such BV Company or to purchase or acquire, or to offer to
purchase or acquire, any outstanding Equity Securities of any such BV Company.
Upon consummation of the transactions contemplated hereby, each Buyer will
acquire good title to the Securities to be purchased by such Buyer hereunder as

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       18
<PAGE>   25

provided on Annex B, free and clear of any such Liens (other than any created by
the Acquiror or such Buyer).

                                    ARTICLE V

                    REPRESENTATIONS AND WARRANTIES REGARDING
                          MEMBERS OF THE COMPANY GROUPS

         Except for the representations and warranties set forth in Sections
5.01, 5.02, and 5.03, to the extent that any of the representations and
warranties set forth in this Article V is made with respect to any member of a
Company Group that is a Non-Controlled Entity, the representation and warranty
is qualified as being given only to the Knowledge of the Parent. Each of the
representations and warranties contained in this Article V, other than those
made in subsection (b) of Section 5.02 but including those that are made only as
of the date hereof, gives effect to the Reorganization as if the Reorganization
had been effected on the date of this Agreement. Subject to the preceding
provisions of this Article V, to the matters set forth in the Parent's
Disclosure Letter and to the limitations set forth in Section 12.01, the Parent
and the Seller, jointly and severally, represent and warrant to the Acquiror
that:

         Section 5.01. Organization; Subsidiaries.

         (a)      Each member of each Company Group is a legal entity duly
                  organized, validly existing and in good standing (in those
                  jurisdictions in which the concept of good standing is
                  applicable) under the Laws of its jurisdiction of
                  incorporation or organization and has all requisite
                  organizational power and authority to own, lease and operate
                  its properties and to carry on its business as it is now being
                  conducted, other than any matters that could not reasonably be
                  expected, individually or in the aggregate, to have a Material
                  Adverse Effect on the Businesses. Each member of each Company
                  Group is duly qualified to do business as a foreign
                  corporation or entity and is in good standing (in those
                  jurisdictions in which the concept of good standing is
                  applicable) in each jurisdiction in which the character of the
                  property owned or leased by it or the nature of its activities
                  makes such qualification necessary, except where any such
                  failure to be so qualified or in good standing, could not
                  reasonably be expected, individually or in the aggregate, to
                  result in a Material Adverse Effect on the Businesses.
                  Schedule 5.01 of the Parent's Disclosure Letter sets forth a
                  true and complete list, as of the date of this Agreement, of
                  the members of each Company Group, together with (a) a
                  specification of the nature of the legal organization of each
                  such entity, (b) the jurisdiction of incorporation or other
                  organization of each such entity, (c) the magnitude (expressed
                  as a percentage of the aggregate ordinary voting power of all
                  outstanding Equity Securities of such legal entity) of the
                  direct or indirect equity investment of the Parent (and, if
                  different, the economic interest) in each such entity and (d)
                  the identity of the Business to be conducted by each member of
                  each Company Group after giving effect to the Reorganization.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       19
<PAGE>   26

         (b)      To the extent that any member of a Company Group constitutes a
                  "Shelf Entity" in accordance with subsection (c) of Section
                  2.05, such Shelf Entity, immediately prior to the time it
                  became a member of a Company Group (i) was not a party to, and
                  had no liability or obligation under, any executory contract
                  or agreement, whether written or oral, and (ii) had no assets
                  or other liabilities or obligations (whether accrued, absolute
                  or otherwise).

         Section 5.02. Organizational Documents; Authorization; No Violation.

         (a)      The Parent has heretofore made available to the Acquiror
                  complete and correct copies of the Organizational Documents,
                  in each case as amended or restated to the date hereof, of
                  each member of each Company Group. None of the members of
                  either Company Group is in violation of any of the provisions
                  of its Organizational Documents, except for any such
                  violations that could not reasonably be expected, individually
                  or in the aggregate, to have a Material Adverse Effect on the
                  Businesses.

         (b)      At the time of the Reorganization, each member of each Company
                  Group will, to the extent required, have all requisite
                  organizational power and authority to consummate the
                  Reorganization and the other transactions contemplated to be
                  consummated by it by this Agreement, and the consummation of
                  the Reorganization and such other transactions will have been,
                  to the extent required, duly and validly authorized by all
                  requisite company action on the part of each such entity.

         (c)      The consummation of the Reorganization and the other
                  transactions contemplated by this Agreement will not (i)
                  violate or breach the terms of or cause a default or give rise
                  to rights under any Contractual Transfer Restrictions under
                  (A) any Legal Requirement applicable to any member of either
                  Company Group, (B) the Organizational Documents of any member
                  of either Company Group or (C) any contract or agreement to
                  which any member of either Company Group is a party or by
                  which it or its properties or assets are bound (including any
                  provision thereof requiring any Third Person Consent) or (ii),
                  with the passage of time, the giving of notice or the taking
                  of any action by a third Person, have any of the effects set
                  forth in clause (i) of this subsection (c), except for any
                  matters described in clauses (A) and (C) of clause (i) of this
                  subsection (c) that could not reasonably be expected,
                  individually or in the aggregate, to prevent any member of
                  either Company Group from consummating the Reorganization or
                  the other transactions contemplated by this Agreement in all
                  material respects or to have a Material Adverse Effect on the
                  Businesses.

         Section 5.03. Capitalization.

         (a)      The authorized Equity Securities of each member of each
                  Company Group, the total outstanding Equity Securities of each
                  such Company Group member and the name of the record holders
                  of all the outstanding Equity Securities of each such Company

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       20
<PAGE>   27

                  Group member, in each case as of the date of this Agreement,
                  are as set forth in Schedule 5.03(a) of the Parent's
                  Disclosure Letter.

         (b)      No Equity Securities of any member of either Company Group are
                  reserved for issuance, and there are no outstanding options,
                  warrants, calls, pre-emptive rights, subscriptions or other
                  rights, contracts, agreements, commitments or arrangements
                  obligating any such Company Group member to offer, sell, issue
                  or grant any of its Equity Securities or to redeem, purchase
                  or acquire, or offer to purchase or acquire, any of its
                  outstanding Equity Securities.

         (c)      Except as required by this Agreement and the Reorganization,
                  there are no options, warrants, calls, pre-emptive rights,
                  subscriptions or other rights, contracts, agreements,
                  commitments or arrangements obligating any such Company Group
                  member (A) to offer, sell, issue, grant, pledge, dispose of or
                  encumber any Equity Securities of any other Company Group
                  member or (B) to purchase or acquire, or offer to purchase or
                  acquire, any outstanding Equity Securities of any other
                  Company Group member or (C) to grant any Lien on any
                  outstanding Equity Securities of any other Company Group
                  member.

         (d)      All the issued and outstanding Equity Securities of each
                  member of each Company Group that are owned directly or
                  indirectly by the Parent have been duly authorized and are
                  validly issued and, with respect to capital stock, are fully
                  paid and nonassessable. All such issued and outstanding Equity
                  Securities that are owned directly or indirectly by the Parent
                  are owned free and clear of all Liens.

         (e)      Except for matters contemplated by this Agreement or the
                  Ancillary Agreements and for revocable proxies, if any,
                  granted by any member of either Company Group with respect to
                  the capital stock of another Company Group member, there are
                  no voting trusts, proxies or other agreements, commitments or
                  understandings of any character to which any member of either
                  Company Group is a party or by which it is bound with respect
                  to the voting of any Equity Securities of any Company Group
                  member.

         Section 5.04. Title to Properties.

         (a)      Schedule 5.04(a)(i) sets forth all of the Real Property owned
                  by any member of either Company Group and Schedule 5.04(a)(ii)
                  sets forth all of the Real Property leased by any member of
                  either Company Group other than any such leased Real Property
                  that is not individually or in the aggregate Material to the
                  Businesses. The appropriate member of each Company Group has
                  (i) good and marketable title to all of the Real Property
                  marked as "designated" (the "Designated Real Property") on
                  Schedule 5.04(a)(i) to the Parent's Disclosure Letter and (ii)
                  good and defensible title to the other properties reflected in
                  the Initial Financial Statements (other than, in the case of
                  this clause (ii), (A) any properties sold or otherwise
                  disposed of in the ordinary course of business since the
                  Initial Balance Sheet Date, and (B) any

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       21
<PAGE>   28

                  properties that are not material to the Businesses) free and
                  clear of Liens, other than (X) Liens securing debt, the
                  existence of which is reflected in the Initial Financial
                  Statements, (Y) Permitted Encumbrances and (Z) Liens that are
                  not, individually or in the aggregate, Material to the
                  Businesses. The appropriate member of each Company Group holds
                  under valid lease agreements (i) all Material Real Property
                  reflected in Schedule 5.04(a)(ii) to the Parent's Disclosure
                  Letter and (ii) all other properties reflected in the Initial
                  Financial Statements as being held under capitalized leases or
                  operating leases and enjoys peaceful and undisturbed
                  possession of such properties under such leases, other than,
                  in the case of clause (ii), (A) any properties as to which
                  such leases have terminated in the ordinary course of business
                  since the Initial Balance Sheet Date without any liability of
                  such Company Group member party thereto that is Material to
                  the Businesses and (B) any properties that are not,
                  individually or in the aggregate, Material to the Businesses.
                  Each such lease is valid and enforceable against the Company
                  Group member party thereto and, to the Knowledge of the
                  Parent, each other party thereto, in accordance with its terms
                  and there is not under any such lease any existing default by
                  the Company Group member party thereto or, to the Knowledge of
                  the Parent, any other party thereto, or any condition, event
                  or act which, with notice or lapse of time or action of a
                  third Person, would constitute such a default, except in each
                  case for matters that could not reasonably be expected,
                  individually or in the aggregate, to have a Material Adverse
                  Effect on the Businesses. Neither the Parent, the Seller nor
                  any Company Group member has received any written notification
                  of any adverse claim to the title to any properties owned by
                  such Company Group member or with respect to any lease under
                  which any properties are held by it, other than any claims
                  that could not reasonably be expected, individually or in the
                  aggregate, to have a Material Adverse Effect on the
                  Businesses.

         (b)      Schedule 5.04(b) to the Parent's Disclosure Letter sets forth,
                  as of the date hereof, to the extent material to a Business,
                  all Intellectual Property owned by or registered in the name
                  of any member of either Company Group or in which any such
                  entity has any rights including the name of the Company Group
                  member in whose name such Intellectual Property is registered
                  or which has such rights and the Business to which such
                  Intellectual Property relates. Except as could not reasonably
                  be expected to have a Material Adverse Effect on the
                  Businesses, as of the date hereof the members of the Company
                  Groups own, or have the valid right to use, all of the
                  Intellectual Property. Except as could not reasonably be
                  expected to have a Material Adverse Effect on the Businesses,
                  after giving effect to the Reorganization, the members of the
                  Company Groups which conduct each Business will own, or have
                  the valid right to use, all of the Intellectual Property used
                  in such Business.

         Section 5.05. Financial Statements.

         (a)      The Initial Financial Statements (i) are attached as Schedule
                  5.05 to the Parent's Disclosure Letter, (ii) have been
                  prepared in accordance with U.S. GAAP

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       22
<PAGE>   29

                  consistently applied, (iii) fairly present the combined
                  financial position of the Businesses as of the respective
                  dates thereof and the combined results of operations of the
                  Businesses for the periods indicated and (iv) reflect all
                  material "loss contingencies" as determined under Statement of
                  Financial Accounting Standards No. 5 other than those for
                  which, at the time of preparation of the Initial Financial
                  Statements, the members of the Parent Group were expected to
                  be responsible after giving effect to the transactions
                  contemplated hereby.

         (b)      There exist no liabilities, obligations or commitments,
                  whether direct or indirect, absolute or contingent, of the
                  members of either Company Group that are Material to the
                  Businesses and that would be required to be reflected or
                  reserved for under U.S. GAAP in an historical combined balance
                  sheet of the members of the Company Groups, other than (i)
                  liabilities or obligations that are reflected or reserved for
                  in the Initial Financial Statements, (ii) liabilities or
                  obligations excluded from the Initial Financial Statements as
                  described in note 2 to such Initial Financial Statements,
                  (iii) liabilities or obligations incurred in the ordinary
                  course of business of the Businesses since the Initial Balance
                  Sheet Date and (iv) liabilities or obligations incurred since
                  the Initial Balance Sheet Date of the nature of liabilities
                  that may be incurred after the date of this Agreement pursuant
                  to subsection (b) of Section 8.02. None of the liabilities
                  described in clauses (iii) and (iv) of the preceding sentence
                  has or could reasonably be expected to have, individually or
                  in the aggregate, a Material Adverse Effect on the Businesses.

         (c)      The books, records and accounts of the members of the Company
                  Groups, in reasonable detail, accurately and fairly reflect in
                  the aggregate the transactions and dispositions of the assets
                  of the Businesses. No member of either Company Group has
                  engaged in any Material transaction, maintained any Material
                  bank account or used any Material corporate funds except for
                  transactions, bank accounts and funds that have been and are
                  reflected in the normally maintained Books and Records of such
                  member of either Company Group.

         (d)      The notes to the Initial Financial Statements fairly reflect
                  in all material respects all transactions between or among any
                  member of either Company Group and any Affiliate thereof
                  (other than transactions solely between or among the members
                  of the Company Groups).

         Section 5.06. Authorizations. Each member of each Company Group has
obtained all Authorizations that are necessary to carry on the Business related
thereto as currently conducted, except for any such Authorizations that its
failure to possess, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Businesses. Each such
Authorization (i) is in full force and effect, (ii) has not been violated in any
respect and (iii) is not subject to any suspension, revocation or cancellation,
other than for matters, in any such case, that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Businesses. There is no action, proceeding or investigation pending or, to the
Knowledge of the Parent, threatened regarding suspension, revocation or
cancellation of any of such Authorizations, except in any circumstances in which
the suspension, revocation or cancellation of such

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       23
<PAGE>   30

Authorizations could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses.

         Section 5.07. Compliance With Laws; Regulation of Businesses. Each
member of each Company Group is and, to the extent that any noncompliance could
reasonably be expected to have current consequences, has been in compliance with
all applicable Laws and Regulations and any Orders applicable to any such
entity, other than Environmental Laws and, to the extent applicable to the
execution, delivery and performance of this Agreement, foreign competition Laws
and except such events of noncompliance or defaults that, individually or, with
respect to multiple events of noncompliance or defaults arising out of the same
facts or circumstances, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Businesses. To the Knowledge of the
Parent, each member of each Company Group has at all times been in compliance
with, and continues to comply with, the Foreign Corrupt Practices Act of 1977,
as amended.

         Section 5.08. Taxes. Except for any matter that could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Businesses:

         (a)      (i) all Tax Returns that were required to be filed by or with
                  respect to any member of a Company Group, or any member of the
                  Parent Group insofar as it affects any member of a Company
                  Group, have been duly and timely filed, (ii) all items of
                  income, gain, loss, deduction and credit or other items ("Tax
                  Items") required to be included in each such Tax Return have
                  been so included and all such Tax Items and any other
                  information provided in each such Tax Return are true, correct
                  and complete insofar as such items are related to or affect a
                  member of a Company Group, (iii) all Taxes shown as due on
                  each such Tax Return have been timely paid in full insofar as
                  such Taxes are related to or affect a member of a Company
                  Group, (iv) insofar as such items are related to or affect a
                  member of a Company Group, no penalty, interest or other
                  charge is or will become due with respect to the late filing
                  of any such Tax Return or late payment of any such Tax and (v)
                  all Tax withholding and deposit requirements imposed on or
                  with respect to any member of a Company Group, or any member
                  of the Parent Group insofar as it affects any member of a
                  Company Group, have been satisfied in full in all respects;

         (b)      no member of a Company Group (or the Parent Group insofar as
                  it affects any member of a Company Group) has in force any
                  waiver of any statute of limitations in respect of Taxes or
                  any extension of time with respect to a Tax assessment or
                  deficiency;

         (c)      there are no pending Tax audits or examinations and no
                  proposed deficiencies or other claims for unpaid Taxes of any
                  member of a Company Group for which written notice has been
                  received;

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       24
<PAGE>   31

         (d)      Schedule 5.08(d) to the Parent's Disclosure Letter contains a
                  list as of the date hereof of (i) all tax allocation or
                  sharing agreements to which any member of either Company Group
                  is a party and (ii) each member of a Company Group that has
                  any liability for the Taxes of any other Person (other than
                  members of its respective Company Group) under United States
                  Treasury Regulation section 1.1502-6 (or any similar provision
                  of state, local or foreign law);

         (e)      the aggregate unpaid Taxes of all members of the Company
                  Groups (computed with respect to each such member on the basis
                  of the income, operations and activities of such member
                  through the Closing Date as if the applicable taxable year of
                  such member ended on the Closing Date) did not, as of the date
                  of the Closing, exceed the amounts reserved for Tax liability
                  (as distinguished from any reserve for deferred taxes
                  established to reflect timing differences between book and tax
                  income) in the reserve for Taxes set forth on the face of
                  (rather than in any notes to) the Closing Financial
                  Statements;

         (f)      none of the assets of any member of any Company Group is
                  property required to be treated as being owned by any other
                  Person pursuant to the "safe harbor lease" provisions of
                  former Section 168(f)(8) of the Code;

         (g)      none of the assets of any member of any Company Group directly
                  or indirectly secures any debt the interest on which is
                  tax-exempt under Section 103(a) of the Code;

         (h)      none of the assets of any member of any Company Group is
                  "tax-exempt use property" within the meaning of Section 168(h)
                  of the Code;

         (i)      each member of each Company Group that is not a corporation is
                  properly classified for United States federal income tax
                  purposes as a partnership or a disregarded entity, and not as
                  an association or publicly traded partnership taxable as a
                  corporation. No member of a Company Group is a party to any
                  joint venture, partnership, limited liability company
                  agreement, or other arrangement or contract that could be
                  treated as a partnership for federal income tax purposes;

         (j)      the Parent is the common parent of the affiliated group within
                  the meaning of Section 1504(a) of the Code that includes
                  Dresser Industries and each member of the DEGI Group that is a
                  domestic corporation;

         (k)      the Parent is eligible to make an election under Section
                  338(h)(10) of the Code (and any comparable election under
                  state, local or foreign tax law) with respect to each member
                  of each Company Group that is a domestic corporation; and

         (l)      no claim has been made by a jurisdiction where any member of
                  any Company Group does not file Tax Returns or otherwise
                  comply with local taxation requirements (e.g.,

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                  through a withholding tax regime) that such member is or may
                  be subject to taxation in that jurisdiction.

         Section 5.09. Principal Contracts.

         (a)      Schedule 5.09(a) to the Parent's Disclosure Letter contains a
                  list as of the date hereof of all Principal Contracts, other
                  than Related Party Contracts and Surety Arrangements,
                  including the name of the Company Group member that is a party
                  thereto and the Business to which each such Principal Contract
                  relates. Each such Principal Contract is in full force and
                  effect, and neither the member or members of either Company
                  Group party thereto nor, to the Knowledge of Parent, any other
                  party thereto, has failed to perform its obligations
                  thereunder to date, other than any failure of a Principal
                  Contract to be in full force and effect or of any
                  nonperformance thereof that could not, individually or in the
                  aggregate, reasonably be expected to have a Material Adverse
                  Effect on the Businesses. To the Knowledge of the Parent, no
                  party to any such Principal Contract has given or received any
                  notice of cancellation or termination of such Principal
                  Contract.

         (b)      Schedule 5.09(b) to the Parent's Disclosure Letter contains a
                  list as of the date hereof of all Principal Contracts that are
                  Related Party Contracts, including the name of each Company
                  Group member that is a party thereto and the Business to which
                  each such Related Party Contract relates, and identifies each
                  Retained Subsidiary of the Parent that is the party to each
                  such Related Party Contract. Each Related Party Contract is in
                  full force and effect and each party thereto has performed its
                  obligations thereunder to date.

         (c)      Schedule 5.09(c) to the Parent's Disclosure Letter contains a
                  list as of the date hereof of all Surety Arrangements,
                  including the name of each Company Group member that is a
                  beneficiary thereof and the Business to which the Surety
                  Arrangement relates, and identifies each surety in such
                  arrangement, whether that be the Parent or a Retained
                  Subsidiary. To the Knowledge of the Parent, all such Surety
                  Arrangements are in full force and effect, no Parent or
                  Retained Subsidiary is in default thereunder and no party to
                  any Surety Arrangement has given or received any notice of
                  cancellation or termination of any Surety Arrangement.

         Section 5.10. Employees.

         (a)      Except for matters that could not reasonably be expected to
                  have a Material Adverse Effect on the Businesses, (i) no
                  collective bargaining or similar agreement is being negotiated
                  by any member of either Company Group, (ii) there is no
                  pending or, to the Knowledge of the Parent, threatened labor
                  dispute, strike, slowdown, lockout or work stoppage against
                  any member of either Company Group, (iii) none of the members
                  of the Company Groups is a party to or bound by any collective
                  bargaining or similar agreement with any union or work rules
                  or practices agreed to with any

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<PAGE>   33

                  labor organization or employee association applicable to
                  employees of any member of either Company Group, (iv) none of
                  the employees of any member of either Company Group is
                  represented by any labor organization and, to the Knowledge of
                  the Parent, there are no current union organizing activities
                  among the employees of any member of either Company Group and
                  (v), to the Knowledge of the Parent, no member of either
                  Company Group is engaged in any unfair labor practice in
                  connection with the operation of the related Business, which
                  unfair labor practice is actionable under applicable Laws and
                  Regulations. Except for matters that could not reasonably be
                  expected to have a Material Adverse Effect on the Businesses,
                  since January 1, 1998, none of the members of either Company
                  Group has (A), without fully complying with the notice and
                  other requirements of the WARN Act, effectuated (i) a "plant
                  closing" (as defined in the WARN Act) affecting any site of
                  employment or one or more facilities or operating units within
                  any site of employment or facility of any such Company Group
                  member covered by the WARN Act or (ii) a "mass layoff" (as
                  defined in the WARN Act) affecting any site of employment or
                  facility of any such Company Group member covered by the WARN
                  Act; or (B) engaged in layoffs or employment terminations
                  sufficient to imply application of any foreign, state or local
                  Laws or Regulations relating to plant closing or mass layoffs
                  and requiring notice to employees in the event thereof without
                  complying with such Laws and Regulations.

         (b)      Schedule 5.10(b) to the Parent's Disclosure Letter sets forth
                  as of the date hereof a true and complete list of the
                  Significant Benefit Plans. Schedule 5.10(b) to the Parent's
                  Disclosure Letter also identifies which of the Significant
                  Benefit Plans constitute Parent Benefit Plans. The Parent has
                  made available to the Acquiror copies of all Significant
                  Benefit Plans and, for each such Significant Benefit Plan,
                  copies of (i) the most recent annual report (if any) required
                  to be filed with an applicable Governmental Authority, (ii) a
                  copy of the most recent actuarial report and valuation of the
                  assets and liabilities subject thereto to the extent that any
                  such report or valuation is required to be prepared by
                  applicable Laws and Regulations, (iii) a copy of the
                  organizational documents relating to any funding vehicle
                  established thereunder and a copy of the summary plan
                  description (if any) therefor, (iv) where applicable, the most
                  recent determination letter issued by the Internal Revenue
                  Service, (v) a complete description of any unwritten
                  Significant Benefit Plans, and (vi) summary plan descriptions,
                  summaries of material modifications, and any other material
                  communications distributed to participants. Except for the
                  Parent Benefit Plans, no Person that is not a member of a
                  Company Group is a participating employer or sponsor of any
                  Significant Benefit Plan. The Parent has made available to the
                  Acquiror copies of any retention agreements with any
                  management employees of any member of either Company Group
                  that were executed in contemplation of the transactions that
                  are the subject of this Agreement.

         (c)      Except for matters that, individually or in the aggregate,
                  could not reasonably be expected to have a Material Adverse
                  Effect on the Businesses:

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                  (i)      no Benefit Plan is subject to section 412 of the
                           Code, section 302 of ERISA or Title IV of ERISA, and
                           each Benefit Plan intended to be qualified under
                           section 401(a) of the Code (A) satisfies in form the
                           requirements of such section except to the extent
                           amendments are not required by law to be made until a
                           date after the Closing Date and (B) has received a
                           favorable determination letter from the Internal
                           Revenue Service regarding such qualified status;

                  (ii)     each Benefit Plan has been operated and administered
                           in compliance with its governing documents and all
                           applicable Legal Requirements;

                  (iii)    each member of each Company Group has performed all
                           obligations, whether arising by Legal Requirement or
                           by contract, required to be performed by it in
                           connection with the Benefit Plans;

                  (iv)     there are no actions, suits or claims pending (other
                           than routine claims for benefits) or, to the
                           Knowledge of the Parent, threatened against, or with
                           respect to, any of the Benefit Plans or their assets;

                  (v)      all contributions required to be made to the Benefit
                           Plans pursuant to their terms and the provisions of
                           all applicable Legal Requirements have been timely
                           made;

                  (vi)     other than routine applications, filings and
                           amendments and modifications, there is no matter
                           pending with respect to any of the Benefit Plans
                           before any Governmental Authority;

                  (vii)    each member of each Company Group is in substantial
                           compliance with all applicable Legal Requirements
                           mandating benefits for their employees;

                  (viii)   the execution and delivery of this Agreement and the
                           consummation of the transactions contemplated hereby
                           will not (except as otherwise provided in this
                           Agreement or pursuant to the terms of a Benefit Plan
                           as in effect on the date of this Agreement) (A)
                           require any member of either Company Group to make a
                           larger contribution to, or pay greater benefits or
                           accelerate vesting or other rights or provide other
                           rights under, any Benefit Plan than it otherwise
                           would, whether or not some other subsequent action or
                           event would be required to cause such payment or
                           provision to be triggered or (B) create or give rise
                           to any additional vested rights or service credits or
                           accruals under any such Benefit Plan;

                  (ix)     in connection with the consummation of the
                           transactions contemplated by this Agreement, no
                           payment of money or other property, acceleration of
                           benefits or provision of other rights has been or
                           could be made under this Agreement, any Ancillary
                           Agreement, any Benefit Plan or otherwise that would
                           be reasonably likely to be nondeductible for United
                           States federal income tax purposes by any member of
                           either Company Group that is a United States person
                           (within the meaning of section 7701(a)(30) of the
                           Code) solely by virtue of section 162(m) or section
                           280G of the Code or that would be

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<PAGE>   35

                           reasonably likely to be an "excess parachute payment"
                           pursuant to Section 280G of the Code or that would be
                           an "excess parachute payment," but for the
                           application of Section 280G(b)(5) of the Code;

                  (x)      to the Knowledge of the Parent neither any member of
                           either Company Group nor any fiduciary of any Benefit
                           Plan has engaged in any transaction in violation of
                           Sections 404 or 406 of ERISA or any non-exempt
                           "prohibited transaction" as defined in Section
                           4975(c)(i) of the Code, or has otherwise violated the
                           provisions of Part 4 of Title I, Subtitle B of ERISA,
                           and, to the Knowledge of the Parent, no member of
                           either Company Group has knowingly participated in a
                           violation of Part 4 of Title I, Subtitle B of ERISA
                           by any fiduciary of a Benefit Plan (or other employee
                           benefit plan subject to ERISA) and, to the Knowledge
                           of the Parent, no member of either Company Group has
                           been assessed any civil penalty under Section 502(a)
                           of ERISA of a material amount which has not been paid
                           in full or accrued as a liability in the financial
                           statements;

                  (xi)     except pursuant to one or more of those Significant
                           Benefit Plans set forth on Schedule 5.10(b) to the
                           Parent's Disclosure Letter, none of the Parent,
                           either Company Group, or any Benefit Plan has any
                           present or future obligation to provide any benefits
                           to or make any payment with respect to any current or
                           former employee, director, officer, consultant or
                           agent of any Company Group pursuant to any
                           Significant Benefit Plan that is a retiree medical
                           benefit plan or other retiree welfare plan and no
                           condition exists that would prevent the Parent or
                           either Company Group from amending or terminating any
                           such plan;

                  (xii)    to the Knowledge of the Parent, each Benefit Plan
                           that is a "group health plan" has been operated in
                           all Material respects in compliance with the
                           provisions of Part 6 of Title I, Subtitle B;

                  (xiii)   to the Knowledge of the Parent, neither the Parent
                           nor any member of either Company Group nor any ERISA
                           Affiliate has announced, proposed, or agreed to any
                           changes to any Benefit Plan that would cause an
                           increase in benefits (or the creation of new
                           benefits) under any such Benefit Plan or that would
                           cause a material increase in the cost of maintaining
                           such Benefit Plan with respect to a Company Group;
                           and

                  (xiv)    to the Knowledge of the Parent, each Benefit Plan
                           that covers current or former employees, directors,
                           officers or consultants and that is not subject to
                           ERISA and the Code has been maintained in material
                           compliance with its

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<PAGE>   36

                           terms and with the requirements prescribed by any and
                           all applicable statutes, orders, rules and
                           regulations (including any special provisions
                           relating to the tax status of contributions to,
                           earnings of or distributions from such Benefit Plans
                           where each such Benefit Plan was intended to have tax
                           status) and has been maintained in good standing with
                           applicable statutes, orders, rules and regulations
                           (including any special provisions relating to the tax
                           status of contributions to, earnings of or
                           distributions from such Benefit Plans where each such
                           Benefit Plan was intended to have tax status) and has
                           been maintained in good standing with applicable
                           regulatory authorities.

         (d)      There does not now exist, nor do any circumstances exist that
                  could result in, any Controlled Group Liability of the Parent
                  or any of its ERISA Affiliates that could reasonably be
                  expected to become a liability of any member of either Company
                  Group following the First Closing. No liability under Title IV
                  of ERISA (including liabilities pursuant to Sections 4064,
                  4069 or 4204 of ERISA) has been incurred by any member of
                  either Company Group since the effective date of ERISA that
                  has not been satisfied in full and no such liability is
                  reasonably expected to arise with respect to any member of
                  either Company Group. To the extent that the representation in
                  the preceding sentence applies to any section of ERISA
                  pursuant to which either Controlled Group could have liability
                  with respect to an ERISA Affiliate, it is made not only with
                  respect to the Benefit Plans but also with respect to any
                  employee benefit plan subject to Title IV of ERISA to which
                  any member of either Company Group or any ERISA Affiliate
                  made, or was required to make, contributions during the
                  six-year period preceding the date of this Agreement. The
                  Pension Benefit Guaranty Corporation has not instituted
                  proceedings pursuant to section 4042 of ERISA to terminate any
                  of the Benefit Plans subject to Title IV of ERISA or, to the
                  Knowledge of the Parent, any plan maintained by any other
                  entity that would be considered a single employer with any
                  member of either Company Group pursuant to section 4001(b)(1)
                  of ERISA. As to any Benefit Plan subject to Title IV of ERISA,
                  there has been no "reportable event" (as defined in Section
                  4043(c) of ERISA and the regulations under such section and
                  for which the disclosure requirements of Regulation section
                  4043.1 et. seq., promulgated by the Pension Benefit Guaranty
                  Corporation, have not been waived) and no member of the
                  Company Groups nor Parent nor any ERISA Affiliate is subject
                  to Section 4043(b) of ERISA and no analogous event has
                  occurred under applicable foreign law. Within the past six
                  years, neither any Benefit Plan nor any other plan maintained
                  by any entity that would be considered a single employer with
                  any member of either Company Group pursuant to section
                  4001(b)(1) of ERISA is or was a "multiemployer plan" (as such
                  term is defined in section 3(37) of ERISA).

         Section 5.11. Environmental Matters. Notwithstanding anything to the
contrary in this Article V or in any other section of this Agreement, the
representations and warranties set forth in this Section 5.11 are the only
representations and warranties thereof of the Parent in any way relating to
environmental matters, including the Environmental Laws, Authorizations under
any Environmental Laws and Hazardous Materials, and the remaining
representations and warranties in

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<PAGE>   37

this Agreement shall be construed not to apply to such matters. Employee health
and safety matters are covered by Section 5.07. Except for matters that could
not reasonably be expected to have a Material Adverse Effect on the Businesses,
Schedule 5.11 to the Parent's Disclosure Letter sets forth:

         (a)      to the Knowledge of the Parent, all Hazardous Materials
                  Contamination on, about or under the Real Property as of the
                  date of this Agreement;

         (b)      to the Knowledge of the Parent, all Environmental Compliance
                  Matters related to the Businesses as of the date of this
                  Agreement;

         (c)      all existing, pending or, to the Knowledge of the Parent,
                  threatened actions, suits, investigations, CERCLA potentially
                  responsible party notices, inquiries and proceedings by or
                  before any Court or Governmental Authority under any
                  applicable Environmental Laws as of the date of this Agreement
                  against any member of either Company Group; and

         (d)      Schedule 5.11 to the Parent's Disclosure Letter includes a
                  listing of all the environmental site assessment reports
                  prepared in connection with the transactions contemplated
                  hereby, all of which have heretofore been delivered to the
                  Acquiror.

         Section 5.12. Litigation. There are no actions, suits, arbitrations,
proceedings or investigations pending or, to the Knowledge of the Parent,
threatened against the Parent, the Seller or any member of either Company Group,
including any involving a claim for indemnification pursuant to any statute,
Organizational Document or contract relating to any other action, suit,
arbitration, proceeding or investigation, in or before any Court or before or by
any Governmental Authority, except actions, suits, proceedings or investigations
as disclosed in the Parent's Disclosure Letter pursuant to Section 5.07, 5.10 or
5.11 or that, individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on the same or
substantially the same facts or occurrences, in the aggregate, could not
reasonably be expected, in the case of any member of either Company Group, to
have a Material Adverse Effect on the Businesses or, in the case of any of the
Parent or the Seller, to prevent, enjoin or delay materially the performance of
this Agreement, and the Parent has no Knowledge of any facts which could give
rise to any such action, suit, arbitration, proceeding or investigation. Neither
the Parent nor the Seller nor any member of either Company Group is subject to
any judgment, injunction, order, ruling or decree that could reasonably be
expected, individually or in the aggregate, in the case of any member of either
Company Group, to have a Material Adverse Effect on the Businesses or, in the
case of the Parent or the Seller, to prevent or enjoin or delay materially the
performance of this Agreement.

         Section 5.13. Material Adverse Changes.

         (a)      Since the Initial Balance Sheet Date, no event, condition or
                  circumstance has occurred resulting in any change in or effect
                  on any Business (except for (i) such changes or effects
                  resulting from changes in general economic, regulatory or
                  political conditions (including foreign exchange rate
                  movements or devaluations), (ii) such

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<PAGE>   38

                  changes or effects affecting generally the industry in which
                  such Business participates and (iii) any such changes or
                  effects disclosed in the Parent's Disclosure Letter pursuant
                  to any other representation or warranty contained in this
                  Article V) that has had or could reasonably be expected to
                  constitute or have a Material Adverse Effect on the
                  Businesses.

         (b)      During the period from the Initial Balance Sheet Date to the
                  date of this Agreement, no member of either Company Group has
                  engaged in any conduct that is proscribed during the period
                  from the date of this Agreement to the Closing Date by clauses
                  (i) through (xvi) of subsection (b) of Section 8.02.

         Section 5.14. Customers and Suppliers. Schedule 5.14 to the Parent's
Disclosure Letter sets forth a true and correct list of (a) the 20 largest
customers of each Business, in terms of sales during each of the fiscal years
ended December 31, 1999 and 2000, setting forth the total sales to each such
customer during such period and (b) the 10 largest suppliers of each Business,
in terms of purchases during each of the fiscal years ended December 31, 1999
and 2000, setting forth for each such supplier the total purchases from each
such supplier during such period. Since the Initial Balance Sheet Date, to the
Knowledge of the Parent, there has not been any change in the business
relationship of the relevant members of either Company Group with any customer
or supplier named in Schedule 5.14 to the Parent's Disclosure Letter that could
reasonably be expected to have a Material Adverse Effect on the Businesses.

         Section 5.15. Adequacy of Assets. The assets and properties of the
members of the Company Groups constitute all of the assets, rights and
properties that are necessary for the conduct of the Businesses as now
conducted.

         Section 5.16. Full Disclosure. The Acquiror shall be entitled to rely
upon, and shall not be deemed to have knowledge of facts other than those set
forth in, the representations and warranties of the Parent and the Seller made
in this Agreement (including the Schedules to the Parent's Disclosure Letter
related hereto) and in the certificates delivered by or on behalf of the Parent
and the Seller confirming the accuracy of such representations and warranties
and pursuant to any disclosures in writing made to the Acquiror pursuant to
Section 12.02(c).

         Section 5.17. Disclaimers. THE ACQUIROR ACKNOWLEDGES THAT EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT THE PARENT HAS NOT MADE, AND THE PARENT
HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY EXPRESSLY
WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE RELATING TO, AND THE ACQUIROR HEREBY EXPRESSLY WAIVES AND
RELINQUISHES ANY AND ALL RIGHTS, CLAIMS AND CAUSES OF ACTION AGAINST THE PARENT
AND ITS REPRESENTATIVES IN CONNECTION WITH, THE ACCURACY, COMPLETENESS OR
MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL),
HERETOFORE FURNISHED TO THE ACQUIROR AND ITS REPRESENTATIVES BY OR ON BEHALF OF
THE PARENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARENT EXPRESSLY
DISCLAIMS AND NEGATES, AND THE ACQUIROR HEREBY WAIVES, AS TO PERSONAL PROPERTY,
EQUIPMENT AND FIXTURES CONSTITUTING A PART OF THE ASSETS OWNED OR OPERATED BY
THE BUSINESSES, (I) ANY IMPLIED

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<PAGE>   39

OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANY IMPLIED OR EXPRESS WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (III) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (IV) ANY RIGHTS OF PURCHASERS
UNDER APPROPRIATE LEGAL REQUIREMENTS TO CLAIM DIMINUTION OF CONSIDERATION, (V)
ANY CLAIMS BY ACQUIROR FOR DAMAGES BECAUSE OF ANY LATENT OR PATENT DEFECTS OR
OTHER DEFECTS, WHETHER KNOWN OR UNKNOWN AND (VI) ANY AND ALL IMPLIED WARRANTIES
EXISTING UNDER APPLICABLE LEGAL REQUIREMENTS; IT BEING THE EXPRESS INTENTION OF
THE PARENT AND THE ACQUIROR THAT, EXCEPT AS EXPRESSLY PROVIDED ELSEWHERE IN THIS
AGREEMENT, THE TANGIBLE PROPERTY, INCLUDING REAL PROPERTY, IMMOVABLES, PERSONAL
PROPERTY, MOVABLES, EQUIPMENT AND FIXTURES OWNED BY OR IN THE POSSESSION OF THE
SELLER OR ANY MEMBER OF EITHER COMPANY GROUP ARE TO BE CONVEYED IN THEIR THEN
PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS" WITH ALL FAULTS.
THE PARENT AND THE ACQUIROR AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE
LEGAL REQUIREMENTS TO BE EFFECTIVE, THE DISCLAIMERS OF THE WARRANTIES CONTAINED
IN THIS SECTION ARE "CONSPICUOUS."

                                   ARTICLE VI

                REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR

         Subject to the matters set forth in the Acquiror's Disclosure Letter
and to the limitations set forth in Section 12.01, the Acquiror represents and
warrants to the Parent that:

         Section 6.01. Organization and Qualification. The Acquiror is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Acquiror is duly qualified to do business as a foreign
company and is in good standing (in those jurisdictions in which the concept of
good standing is applicable) in each jurisdiction in which the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to prevent the Acquiror from
performing this Agreement and each Ancillary Agreement in all material respects.

         Section 6.02. Authorization of Agreement. The Acquiror has all
requisite corporate power and authority to execute and deliver this Agreement
and each of the Ancillary Agreements, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by the Acquiror of this Agreement and each of the
Ancillary Agreements and the performance by the Acquiror of its obligations
hereunder and thereunder have been duly and validly authorized by all requisite
company action on the part of the Acquiror. This Agreement has been, and each
Ancillary Agreement will at the First Closing have been, duly executed and
delivered by the Acquiror and (assuming due authorization, execution and
delivery hereof by the Parent and thereof by each other party thereto)
constitutes or, in the case of the Ancillary Agreements, will at the First
Closing constitute the legal, valid and binding obligation of the Acquiror,
enforceable against the Acquiror in accordance with its terms, except as

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enforcement hereof or thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).

         Section 6.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Acquiror from performing this Agreement or the
Ancillary Agreements in all material respects, no filing or registration with,
no waiting period imposed by, and no Authorization of, any Governmental
Authority is required under any Legal Requirement applicable to the Acquiror to
permit the Acquiror to execute, deliver or perform this Agreement or the
Ancillary Agreements or to consummate the transactions contemplated hereby.

         Section 6.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, each Court and Governmental
Authority indicated as required pursuant to Section 6.03, neither the execution
and delivery by the Acquiror of this Agreement or any Ancillary Agreement nor
the performance by the Acquiror of its obligations hereunder or thereunder will
(a) violate or breach the terms of or cause a default under (i) any Legal
Requirement applicable to the Acquiror, (ii) the Organizational Documents of the
Acquiror or (iii) any contract or agreement to which the Acquiror or any of its
Subsidiaries is a party or by which it or any of its properties or assets is
bound (including any provision thereof requiring any Third Person Consent) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in this Section that could not
reasonably be expected to prevent the Acquiror from performing this Agreement
and the Ancillary Agreements in all material respects.

         Section 6.05. Commitment Letters. The Acquiror has delivered to the
Parent true and complete copies of the Commitment Letters. The Commitment
Letters have not been amended or modified and are in full force and effect.

         Section 6.06. No Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or investment banking fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Acquiror.

         Section 6.07. Transitory Merger Sub. Transitory Merger Sub is not and
has never been a party to any material agreements and has not conducted any
activities other than in connection with its organization, the negotiation and
execution of the Merger Agreement, the Loan, the Investment and the consummation
of the transactions contemplated hereby. Transitory Merger Sub has no
Subsidiaries.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       34
<PAGE>   41

                                   ARTICLE VII

                 REPRESENTATIONS AND WARRANTIES REGARDING BUYERS

         Each of the representations and warranties contained in this Article
VII gives effect to the Reorganization as if the Reorganization had been
effected on the date of this Agreement. Subject to the limitations set forth in
Section 12.01, each of the Parent and the Acquiror represents and warrants to
the other as of the Second Closing that:

         Section 7.01. Organization. Each Buyer is a legal entity duly
organized, validly existing and in good standing (if the concept of good
standing is applicable in that jurisdiction) under the Laws of its jurisdiction
of incorporation or organization, and has all requisite organizational power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted.

         Section 7.02. Authorization of Agreement. Each Buyer has all requisite
organizational power and authority to execute and deliver the Ancillary
Agreements, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by each Buyer of
each Ancillary Agreement to which it is a party and the performance by such
Buyer of its obligations thereunder have been duly and validly authorized by all
requisite organizational action on the part of such Buyer and, to the extent
required by Law, Regulation or such Buyer's Organizational Documents, by the
holder or holders of such Buyer's Equity Securities. Each Ancillary Agreement to
which it is a party will at the Second Closing have been duly executed and
delivered by each Buyer and (assuming due authorization, execution and delivery
thereof by each other party thereto) at the Second Closing each Ancillary
Agreement to which it is a party will constitute the legal, valid and binding
obligation of such Buyer, enforceable against such Buyer in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar Laws
relating to or affecting the enforcement of creditors' rights generally and
legal principles of general applicability governing the availability of
equitable remedies (whether considered in a proceeding in equity, at law or
under applicable legal codes).

         Section 7.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent any Buyer from performing any Ancillary Agreement to which
it is a party in all material respects, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority or
Court is required under any Legal Requirement applicable to such Buyer to permit
such Buyer to execute, deliver or perform each Ancillary Agreement to which it
is a party or to consummate the transactions contemplated thereby.

         Section 7.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       35
<PAGE>   42

Section 7.03, neither the execution and delivery by any Buyer of any Ancillary
Agreement to which it is a party nor the performance by the Buyer of its
obligations thereunder will (a) violate or breach the terms of or cause a
default under (i) any Legal Requirement applicable to such Buyer, (ii) the
Organizational Documents of such Buyer or (iii) any contract or agreement to
which such Buyer is a party or by which it or any of its properties or assets is
bound or (b), with the passage of time, the giving of notice or the taking of
any action by a third Person, have any of the effects set forth in clause (a) of
this Section 7.04, except in any such case for any matters described in this
Section 7.04 that could not reasonably be expected to prevent such Buyer from
performing each Ancillary Agreement to which it is a party in all material
respects.

         Section 7.05. Investment in Securities. Each Buyer is acquiring the
Securities to be purchased by it for its own account and not with a view to a
distribution thereof within the meaning of that term as used in the U.S.
Securities Act of 1933 (the "Securities Act").

                                  ARTICLE VIII

                             COVENANTS OF THE PARENT

         Section 8.01. Affirmative Covenants Regarding Operation of the
Businesses.

         (a)      The Parent and the Seller, jointly and severally, hereby
                  covenant and agree that, from the date hereof to the Closing
                  Date, except as set forth in Schedule 8.01(a) to the Parent's
                  Disclosure Letter, as otherwise contemplated by this Agreement
                  or as approved in writing by the Acquiror, they will cause
                  each member of each Company Group (other than any
                  Non-Controlled Entity):

                  (i)      to operate in the usual and ordinary course
                           consistent with past practices;

                  (ii)     to use all commercially reasonable efforts to
                           preserve substantially intact its business
                           organization and goodwill, to maintain its rights,
                           privileges and immunities, to retain the services of
                           its key employees (subject to work force requirements
                           and compliance with the Parent's normal employee
                           policies), to perform in all material respects the
                           Principal Contracts to which it is a party and to
                           maintain its relationships with its customers,
                           regulators, and suppliers;

                  (iii)    to use all commercially reasonable efforts consistent
                           with past practice to maintain and to keep its
                           properties and assets in as good repair and condition
                           as at present, ordinary wear and tear excepted, and
                           to maintain supplies and inventories in quantities
                           consistent with past practice;

                  (iv)     to use all commercially reasonable efforts to
                           maintain in full force and effect insurance,
                           performance bonds, bank guarantees and letters of
                           credit to the

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       36
<PAGE>   43

                           extent consistent with the ordinary course of
                           business consistent with past practice;

                  (v)      to use all commercially reasonable efforts to
                           maintain in full force and effect all existing
                           Authorizations pursuant to which they operate and to
                           obtain timely any additional Authorizations or
                           renewals thereof to the extent Material to its
                           ongoing operations; and

                  (vi)     to comply in all Material respects with all
                           applicable Legal Requirements;

         except for any matters that, individually or in the aggregate, could
         not reasonably be expected to have a Material Adverse Effect on the
         Businesses.

         (b)      The Parent and the Seller, jointly and severally, agree that,
                  from the date hereof to the Closing Date, except as otherwise
                  contemplated by this Agreement or as approved in writing by
                  the Acquiror, they will use all commercially reasonable
                  efforts to cause each Non-Controlled Entity to conduct its
                  business affairs in accordance with the provisions of clauses
                  (i) through (vi), inclusive, of subsection (a) of this
                  Section, except for any matters that, individually or in the
                  aggregate, could not reasonably be expected to have a Material
                  Adverse Effect on the Businesses. In this regard, the Acquiror
                  acknowledges that none of the Non-Controlled Entities is under
                  the direct or indirect control of the Parent.

         Section 8.02. Negative Covenants Regarding the Operation of the
Businesses.

         (a)      The Parent and the Seller, jointly and severally, covenant and
                  agree that, except as set forth in Schedule 8.02(a) to the
                  Parent's Disclosure Letter, as otherwise contemplated by this
                  Agreement (including the Reorganization), or as approved in
                  writing by the Acquiror, from the date of this Agreement until
                  the Closing Date, they will not directly or indirectly through
                  any of their Affiliates offer, issue, sell, transfer or
                  otherwise dispose of, or grant any Lien with respect to, any
                  Equity Securities of any member of either Company Group or
                  authorize any of the foregoing.

         (b)      The Parent and the Seller, jointly and severally, covenant and
                  agree that, except as set forth in Schedule 8.02(b) to the
                  Parent's Disclosure Letter, as otherwise contemplated by this
                  Agreement (including the Reorganization), or as approved in
                  writing by the Acquiror, from the date of this Agreement until
                  the Closing Date, they will not permit any member of a Company
                  Group (other than any Non-Controlled Entity) to do any of the
                  following:

                  (i)      (A) increase Significantly the compensation payable
                           to or to become payable to any director or officer
                           named in Schedule 8.02(b)(i) to the Parent's
                           Disclosure Letter, (B) except as otherwise provided
                           in clause (ii) of this subsection (b), grant any
                           severance or termination pay, (C) amend or take any

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       37
<PAGE>   44

                           other actions to increase Significantly the amount
                           of, or accelerate the payment or vesting of, any
                           benefit under any Benefit Plan or (D) contribute,
                           transfer or otherwise provide any Significant amount
                           of cash, securities or other property to any grantee,
                           trust, escrow or other arrangement that has the
                           effect of providing or setting aside assets for
                           benefits payable pursuant to any termination,
                           severance or other change in control agreement;
                           except (x) pursuant to the terms of any Principal
                           Contract of any member of a Company Group or any
                           Benefit Plan, contract, agreement or other legal
                           obligation existing at the Initial Balance Sheet Date
                           or (y) in the case of severance or termination
                           payments, pursuant to the severance policy of any
                           member of a Company Group existing at the Initial
                           Balance Sheet Date the terms of which are usual and
                           customary for similarly situated entities or any
                           Benefit Plan, contract, agreement or other legal
                           obligation existing at the Initial Balance Sheet
                           Date;

                  (ii)     (A) enter into any employment or severance agreement
                           with any director or executive officer of any member
                           of either Company Group, either individually or as
                           part of a class of similarly situated persons, or (B)
                           establish, adopt or enter into any new Benefit Plan;
                           except employment and severance agreements and
                           Benefit Plans for the benefit of any newly employed
                           or promoted officers or employees, in which case the
                           terms of such agreements and Benefit Plans shall be
                           reasonably consistent with those existing at the
                           Initial Balance Sheet Date, and except Benefit Plans
                           relating to health and life insurance benefits
                           established or adopted in the ordinary course of
                           business consistent with past practice;

                  (iii)    (A) redeem, purchase or acquire, or offer to purchase
                           or acquire, any of its outstanding Equity Securities
                           or those of any other member of a Company Group, (B)
                           effect any reorganization, liquidation, dissolution,
                           merger, consolidation, restructuring or
                           recapitalization, (C) split, combine or reclassify
                           any of its capital stock or other Equity Securities
                           or (D) declare, set aside or pay any dividend on or
                           make any other distribution in respect of its capital
                           stock or other Equity Securities, except (X)
                           dividends or distribution of cash by DEGI to Dresser
                           Industries in excess of the cash requirements set
                           forth in subsection (f) of Section 11.03 and (Y)
                           dividends by any direct or indirect wholly owned
                           Subsidiary of DEGI or any BV Company to DEGI or such
                           BV Company or to any other direct or indirect wholly
                           owned Subsidiary of DEGI or such BV Company;

                  (iv)     offer, sell, issue or grant, or authorize the
                           offering, sale, issuance or grant of, any of its
                           capital stock or other Equity Securities;

                  (v)      acquire on behalf of any member of either Company
                           Group, whether by purchasing an equity interest or
                           otherwise, any business or any corporation,

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       38
<PAGE>   45

                           partnership, association or other business
                           organization or division thereof other than any such
                           acquisition transaction that is not Material to the
                           Businesses;

                  (vi)     acquire or construct for its account or that of any
                           other member of either Company Group any assets or
                           properties other than (A) any assets and properties
                           that are not Material to the Businesses, (B) assets
                           and properties acquired or constructed by making
                           capital expenditures approved prior to the date
                           hereof and (C) the acquisition of assets from
                           suppliers or vendors in the ordinary course of
                           business and consistent with past practice;

                  (vii)    make any significant loan, advance or capital
                           contribution to, or any significant investment in,
                           any Person other than a direct or indirect wholly
                           owned Subsidiary of DEGI or any BV Company;

                  (viii)   sell, lease, license, exchange or otherwise dispose
                           of (including any disposition through any permitted
                           lapse of any Intellectual Property rights), or grant
                           any Lien with respect to, any of its assets, except
                           for dispositions of assets and inventories in the
                           ordinary course of business consistent with past
                           practice and purchase money Liens incurred in
                           connection with the original acquisition of assets
                           secured by such assets;

                  (ix)     adopt any amendments to its Organizational Documents;

                  (x)      (A) make any change in any of its methods of
                           accounting in effect at the Initial Balance Sheet
                           Date, except as may be required to comply with U.S.
                           GAAP, or seek any regulations or rulings from any
                           Governmental Authority regarding the same, (B) make
                           or rescind any election relating to any Taxes (other
                           than any election that must be made periodically and
                           that is made consistent with past practice) or change
                           any of its methods of reporting income or deductions
                           for income tax purposes from such methods adopted and
                           currently in effect prior to the date of this
                           Agreement, except as may be required by Law, or (C)
                           settle or compromise any claim, action, suit,
                           litigation, proceeding, arbitration, investigation,
                           audit or controversy relating to Taxes, except, in
                           each case, as may be required by Law or for matters
                           that could not reasonably be expected to be adverse
                           and Significant;

                  (xi)     incur any obligations for borrowed money or purchase
                           money indebtedness, whether or not evidenced by a
                           note, bond, debenture or similar instrument, except
                           Intercompany Indebtedness, purchase money
                           indebtedness as to which Liens may be granted
                           pursuant to clause (viii) of this subsection (b),
                           drawings under credit lines existing at the date of
                           this Agreement and borrowings evidenced by
                           obligations having a term of up to five years issued
                           in the ordinary course of business consistent with
                           past practice, or assume,

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       39
<PAGE>   46

                           guarantee, endorse or otherwise become liable or
                           responsible (whether directly, contingent, or
                           otherwise) for any Significant obligations of any
                           Person (other than a direct or indirect wholly owned
                           Subsidiary of DEGI or any BV Company);

                  (xii)    (A) except in connection with the elimination or
                           satisfaction of a Contractual Transfer Restriction
                           required in order to consummate the Reorganization,
                           pay, repay, discharge, purchase, repurchase or
                           satisfy any other obligation for a Significant amount
                           of indebtedness for borrowed money owed by it or any
                           other member of either Company Group except in
                           accordance with its scheduled maturities; or (B)
                           modify the terms of any obligation for a Significant
                           amount of indebtedness for borrowed money owed by it
                           or any member of either Company Group, other than
                           modifications of short term debt that are not, in the
                           aggregate, Material;

                  (xiii)   exclusive of those subject to clause (xii) of this
                           subsection and other than with respect to
                           Intercompany Indebtedness, pay, prepay, discharge, or
                           satisfy any claims, liabilities or obligations
                           (absolute, accrued, asserted or unasserted,
                           contingent or otherwise) that are Material to the
                           Businesses, other than in the ordinary course of
                           business consistent with past practice (including the
                           payment of final and unappealable judgments);

                  (xiv)    enter into any new Related Party Contract or any
                           Principal Contract with any third Person, other than
                           any distributorship or sales representation agreement
                           entered into in the ordinary course of business, that
                           provides that third Person with an exclusive
                           arrangement relating to a particular line of business
                           or geographic area;

                  (xv)     initiate any proceeding before any federal, national,
                           state, regional or local regulatory agency in any
                           country (other than with respect to any Regulatory
                           Transfer Restriction required by any applicable Law,
                           Regulation or Order), which proceeding could
                           reasonably be expected to have a Material Adverse
                           Effect on the Businesses except for proceedings
                           related to Taxes undertaken in the ordinary course of
                           business with respect to submitting or perfecting a
                           claim for refund or defending or preserving rights
                           with respect to an assessed deficiency; or

                  (xvi)    agree to do any of the foregoing.

         (c)      The Parent and the Seller, jointly and severally, hereby
                  covenant and agree that, prior to the Closing Date, except as
                  otherwise expressly contemplated by this Agreement or as
                  approved in writing by the Acquiror, they will use all
                  commercially reasonable efforts consistent with their
                  fiduciary obligations, if any, to prevent each Non-Controlled
                  Entity from taking any of the actions contemplated by clauses
                  (i)

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       40
<PAGE>   47

                  through (xvi) of subsection (b) of this Section. In this
                  regard, the Acquiror acknowledges that none of the
                  Non-Controlled Entities is under the direct or indirect
                  control of the Parent.

         Section 8.03. Access to Information.

         (a)      Subject to any limitations on disclosures to which the Parent
                  and the Acquiror agreed in the Confidentiality Agreement, the
                  Parent shall, prior to the Closing Date, cause each member of
                  each Company Group (or, in the case of any Company Group
                  member that is a Non-Controlled Entity, use commercially
                  reasonable efforts to cause such Non-Controlled Entity) (i) to
                  afford to the Acquiror and its Representatives access, at
                  reasonable times upon reasonable prior notice, to the
                  officers, employees, agents, properties, offices and other
                  facilities of the Company Group member and to its Books and
                  Records and (ii) to furnish promptly to the Acquiror and its
                  Representatives such information concerning the properties,
                  contracts, records and personnel (including financial,
                  operating and other data and information) related to the
                  Businesses as may be reasonably requested, from time to time,
                  by or on behalf of the Acquiror; provided, that Acquiror's
                  Representatives (i) comply with the provisions of the
                  Confidentiality Agreement, (ii) comply with all applicable
                  safety and other rules of conduct of such offices and
                  facilities and (iii) do not unreasonably interfere with the
                  operation of such offices or facilities or the personnel
                  involved. In this regard, the Acquiror acknowledges that none
                  of the Non-Controlled Entities is under the direct or indirect
                  control of the Parent.

         (b)      Subject to any limitations on disclosures to which the Parent
                  and the Acquiror agreed in the Confidentiality Agreement, the
                  Parent shall, at any time following the issuance of a press
                  release or similar disclosure announcing the execution of this
                  Agreement and prior to the Closing Date, cause each member of
                  each Company Group to afford to the Acquiror and its
                  Representatives access, at reasonable times and upon
                  reasonable prior notice, to the customers and suppliers of
                  such Company Group member.

         (c)      All information provided to the Acquiror and the Acquiror's
                  Representatives pursuant to the Parent's Disclosure Letter and
                  otherwise pursuant to subsection (a) of this Section shall be
                  deemed to be "Evaluation Material" as that term is defined in
                  the Confidentiality Agreement but subject to the exclusions
                  and exceptions described therein.

         Section 8.04. Insurance Benefits. If, with respect to any of the
Assumed Obligations or, to the extent that the Acquiror is not then entitled to
indemnification therefor pursuant to Article XII, any of the Excluded
Liabilities, the Parent has prior to the Closing Date carried one or more
policies of insurance for the benefit of a member of a Company Group that may
provide coverage for such Assumed Obligation, then after the Closing Date the
Parent shall assist the Acquiror and its relevant Subsidiary in making a claim
for the benefits of such insurance; provided, however, that the Parent

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       41
<PAGE>   48

shall have no liability with respect to the success or failure of such claim.
Neither the Acquiror nor, following the Closing Date, any Subsidiary of the
Acquiror shall have any rights as provided in this Section 8.04 with regard to
any insurance policies of the Parent that are in effect self insurance, such as
retrospectively rated, deductible or captive reinsured policies.

         Section 8.05. Compliance with Competition Laws Applicable to Designated
Regulatory Assets.

         (a)      Subject to the Acquiror's compliance with subsection (a) of
                  Section 10.01 and the satisfaction of the conditions contained
                  in subsection (b) of this Section, at any time after the
                  Closing Date and prior to the second anniversary of the
                  Closing Date, the Acquiror may elect to require, by giving
                  notice to the Parent of such election, the Parent or, if the
                  Parent so desires, an Affiliate of the Parent to repurchase
                  any Designated Regulatory Assets for cash consideration equal
                  to the value allocated to such Designated Regulatory Assets in
                  the column entitled "Allocated Dollar Amount" in Schedule 2.13
                  to the Parent's Disclosure Letter within 90 days after the
                  receipt of such notice by the Parent, and the Parent or, at
                  the election of the Parent, an Affiliate of the Parent shall
                  purchase such Designated Regulatory Assets for such cash
                  consideration within such period. To the extent that an amount
                  set forth in Schedule 2.13 to the Parent's Disclosure Letter
                  becomes the purchase price for any such entity as a Designated
                  Regulatory Asset, such amount shall be reduced by the amount
                  of any payment by the Parent to the Acquiror under Article XII
                  directly related to such entity.

         (b)      It shall be a condition to the Acquiror's right to exercise
                  the option with respect to any Designated Regulatory Assets as
                  provided in subsection (a) of this Section that:

                  (i)      such assets became Designated Regulatory Assets no
                           more than 90 days prior to the exercise of such
                           option;

                  (ii)     such Designated Regulatory Assets shall be
                           transferred to the Parent or an Affiliate of the
                           Parent, as applicable, free and clear of all Liens
                           (other than Liens in existence immediately prior to
                           the Closing) and shall not be subject to an aggregate
                           amount of liabilities materially in excess of the
                           aggregate liabilities to which such Designated
                           Regulatory Assets were subject immediately prior to
                           the Closing;

                  (iii)    the Acquiror shall agree, for a period of five years
                           from the date of the transfer of such Designated
                           Regulatory Assets to the Parent or an Affiliate of
                           the Parent, to provide or cause to be provided to or
                           to purchase or cause to be purchased from, as the
                           case may be, the Parent or an Affiliate of the
                           Parent, as applicable, such quantity and quality of
                           products, components, spare parts and services as the
                           other operations of the Businesses have historically
                           provided to, or purchased from, as the case may be,
                           such Designated

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       42
<PAGE>   49

                           Regulatory Assets at the applicable Adjusted Price
                           for such product, component, spare part or service
                           and

                  (iv)     at the dates of exercise of the option and at the
                           date of transfer of such Designated Regulatory
                           Assets, the Acquiror shall represent and warrant to
                           the Parent or an Affiliate of the Parent, as
                           applicable, that the matters set forth in clauses (i)
                           and (ii) of this subsection (b) are true and correct
                           and that since the Closing Date, the Acquiror or any
                           other Person owning, operating or managing such
                           Designated Regulatory Assets has, in all Material
                           respects:

                           (A)      operated such Designated Regulatory Assets
                                    in the usual and ordinary course consistent
                                    with past practices;

                           (B)      used all commercially reasonable efforts to
                                    preserve substantially intact the business
                                    organization and goodwill, if any,
                                    associated with such Designated Regulatory
                                    Assets, to maintain the rights, privileges
                                    and immunities, if any, of such Designated
                                    Regulatory Assets, to retain the services of
                                    any key employees of such Designated
                                    Regulatory Assets, to perform in all
                                    material respects the material contracts and
                                    agreements relating to such Designated
                                    Regulatory Assets and to maintain the
                                    relationships with customers, regulators and
                                    suppliers of such Designated Regulatory
                                    Assets;

                           (C)      used all commercially reasonable efforts
                                    consistent with past practice to maintain
                                    and to keep such Designated Regulatory
                                    Assets in as good repair and condition as at
                                    the Closing Date, ordinary wear and tear
                                    excepted, and to maintain supplies and
                                    inventories of such Designated Regulatory
                                    Assets in quantities consistent with past
                                    practice;

                           (D)      used all commercially reasonable efforts to
                                    maintain in full force and effect insurance,
                                    performance bonds, bank guarantees and
                                    letters of credit on behalf of or with
                                    respect to such Designated Regulatory Assets
                                    to the extent consistent with the ordinary
                                    course of business consistent with past
                                    practice;

                           (E)      used all commercially reasonable efforts to
                                    maintain in full force and effect all
                                    existing Authorizations pursuant to which
                                    such Designated Regulatory Assets operate
                                    and to obtain timely any additional
                                    Authorizations or renewals thereof to the
                                    extent material to the ongoing operations of
                                    such Designated Regulatory Assets; and

                           (F)      complied with all Legal Requirements
                                    applicable to such Designated Regulatory
                                    Assets.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       43
<PAGE>   50

         (c)      The Acquiror shall have 60 days from and after the repurchase
                  by a member of the Parent Group of Designated Regulatory
                  Assets under subsection (a) of this Section 8.05 to present
                  the Parent with a reasonably viable plan pursuant to which (i)
                  one or more members of a Company Group would again purchase
                  all or a portion of such Designated Regulatory Assets or (ii)
                  such member or members of a Company Group would enter into a
                  contractual relationship with one or more Subsidiaries of the
                  Parent that would provide to the Parent and the Acquiror
                  approximately the same economic benefits and obligations as
                  such a purchase of all or a portion of the Designated
                  Regulatory Assets which plan (x) is reasonably likely to be
                  acceptable to all Governmental Authorities having jurisdiction
                  over such Designated Regulatory Assets and (y) may be
                  accomplished in no more than 24 months from the date of
                  repurchase by the member of the Parent Group. The Parent and
                  the Acquiror agree to negotiate in good faith and pursue such
                  plan on commercially reasonable terms so long as it is
                  practicable to do so but in any event no longer than 90 days.

         Section 8.06. Covenant Not to Compete. For a period commencing on the
Closing Date and ending on the third anniversary of the Closing Date, the
Parent, the Seller and their respective Subsidiaries (whether now existing or
hereafter acquired or created and for so long as the Seller and such
Subsidiaries remain as Subsidiaries of the Parent) shall not directly or
indirectly engage in any geographical area in any business of the same type as
that conducted by any of the Businesses as of the Closing Date in that
geographical area (a "Competing Business"); provided, however, that the
foregoing shall not prohibit (a) the ownership by the Parent, the Seller or any
of their respective Subsidiaries (whether now existing or hereafter acquired or
created) of less than 5% of the outstanding stock of any publicly-traded
corporation engaged in a Competing Business, (b) activities by the Parent, the
Seller or their respective Affiliates that were existing activities of the
Parent, the Seller or their respective Affiliates as of the Closing Date other
than activities of the Businesses, (c) providing services similar to the
services provided by the Businesses to only the Parent, the Seller and their
Affiliates, provided, that the Parent and the Seller hereby represent that the
Parent, the Seller or any Affiliate thereof does not, as of the date hereof or
as of the Closing Date, have any current intention of providing any such
services, (d) the acquisition of the Parent, the Seller or any of their
Affiliates by a third party whose operations involve a Competing Business, (e)
the acquisition by the Parent, the Seller or any of their Affiliates of a third
party which engages in a Competing Business, provided that the primary purpose
of any such acquisition referred to in this clause (e) is not the acquisition of
such Competing Businesses, and provided further that such Competing Business
referred to in this clause (e) either (i), together with the revenues for any
prior acquisition exempted from the provisions of this Section 8.06 by this
clause (e)(i), accounts for less than U.S. $50,000,000 in revenues for the last
fiscal year of such third party for which financial statements are available or
(ii) is divested by the Acquiror within 270 days from the date it is acquired or
(f) the Parent or any of its Affiliates acquiring any Designated Regulatory
Assets pursuant to subsection (a) of Section 8.05; provided, however, that if
significant progress has been made and is continuing with respect to such
divestiture by the end of such period, the period shall be extended at the
request of the Parent for an additional ninety (90) days. If the final judgment
of a Court of competent jurisdiction declares that any term or provision of this
Section 8.06 is invalid or unenforceable, the parties agree that the Court
making the determination of invalidity or

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       44
<PAGE>   51
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid and unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed. The Parent and the Seller acknowledge that the
provisions of this Section 8.06 are reasonable in time and scope and necessary
to protect the legitimate interests of the Acquiror and each Buyer and that any
violation of this Section 8.06 will result in irreparable injury to the
Acquiror, each Buyer and to the Businesses, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such violation
would not be reasonable or adequate compensation to the Acquiror, the Buyers and
the Businesses. Accordingly, the Parent and the Seller agree that, if any of
them or any of their Subsidiaries (whether now existing or hereafter acquired or
created) violates this Section 8.06, the Acquiror, any of the Buyers and the
members of each Company Group (following consummation of the transactions
contemplated hereby) shall be entitled, in addition to any other remedy that may
be available at law or in equity, to specific performance and injunctive relief,
without posting bond or other security and without the necessity of proving
actual damages.

         Section 8.07. Nonsolicitation. The Parent hereby covenants and agrees
that, prior to the Closing Date, the Parent shall not and shall not permit the
Seller or any member of either Company Group, (whether directly or indirectly
through its officers, directors, advisors, agents or other intermediaries) to
(i) solicit, initiate or take any action to facilitate the submission of
inquiries, proposals or offers from any Person or group relating to (A) any
acquisition or purchase of any portion of any Business or any Securities, (B)
any merger, consolidation, recapitalization, sale of all or substantially all of
the assets, liquidation, dissolution or similar transaction involving any member
of either Company Group other than in connection with the Reorganization or
transactions contemplated by this Agreement or (C) any other transaction that,
if agreed to by the Parent or any of its Subsidiaries, would contractually
prohibit the Parent or the Seller from consummating all or any part of the
transactions contemplated by this Agreement (each such transaction described in
clauses (A), (B) and (C) being referred to herein as an "Acquisition Proposal"),
or agree to or endorse any Acquisition Proposal, (ii) enter into or participate
in any discussions or negotiations regarding any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other Person (other than any Buyer) to do or seek
any of the foregoing. The Parent shall, and shall cause the Seller and each
member of both Company Groups immediately (i) to cease and cause its officers,
directors, advisors, agents and other intermediaries to cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and (ii) to provide written
notification to the Acquiror of any submissions, proposals, offers or inquiries
relating to an Acquisition Proposal made prior to the Closing Date but shall not
be required to disclose the contents of such proposal or the identity of the
bidder. The Parent and the Seller hereby represent that they are not now engaged
in discussions or negotiations with any party other than Acquiror with respect
to any Acquisition Proposal. After the Closing Date, the Parent shall provide
the Acquiror with copies of all written submissions, proposals, offers and
inquiries relating to Acquisition Proposals except to the extent that the
provisions of such information would violate any contractual obligation of the
Parent or its Retained Subsidiaries.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       45
<PAGE>   52

         Section 8.08 Accountants' Opinion and Consents. The Parent shall use
all commercially reasonable efforts to cause Arthur Andersen LLP to provide the
Acquiror, at the Acquiror's expense, with all opinions and consents (including
audit reports) with respect to the consolidated financial statements of the
Businesses necessary for inclusion in any offering memoranda prepared in
connection with any offering of securities pursuant to Rule 144A promulgated
under the Securities Act, or for the completion of filings with the SEC under
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), until such time as such financial statements,
opinions and consents are no longer required to be included in such filings by
the Securities Act, the Securities Exchange Act or the rules and regulations
promulgated thereunder.

         Section 8.09. Financing.

         (a)      Subject to subsection (b) of this Section 8.09, prior to the
                  Closing Date, the Parent agrees to use all commercially
                  reasonable efforts to provide, and to cause the Seller and
                  each member of each Company Group, their advisers and the
                  personnel of each member of each Company Group to provide, all
                  necessary cooperation in connection with the arrangement of
                  any financing that is to be consummated contemporaneously with
                  the First Closing or within twelve months after the Closing
                  Date in respect of the transactions contemplated by this
                  Agreement, including participation in meetings, due diligence
                  sessions, road shows, the preparation of offering memoranda,
                  private placement memoranda, prospectuses and similar
                  documents ("Offering Documents"), completion of a 2000
                  year-end audit, the execution and delivery of any commitment
                  letters, underwriting or placement agreements, pledge and
                  security documents, other definitive financing documents, or
                  other requested certificates or documents, including a
                  certificate of the chief financial officer of each member of
                  each Company Group with respect to solvency matters, comfort
                  letters of accountants and legal opinions as may be reasonably
                  requested by the Acquiror, provided, however, that the
                  advisors and personnel of the Parent shall not be required to
                  participate in meetings, due diligence sessions, or road shows
                  after the six month anniversary of the Closing Date.

         (b)      The Acquiror agrees that it will provide the Parent with a
                  reasonable opportunity to review each Offering Document and
                  that it will not, and will cause its Affiliates and its and
                  their agents, advisors, underwriters and placement agents to
                  not, distribute such Offering Document to any investor or
                  potential investor in any of the securities offered or to be
                  offered pursuant to such Offering Document without obtaining
                  the prior written approval of the Parent (which approval shall
                  not be unreasonably withheld) of all information contained in
                  such Offering Document that relates in any way to the
                  Businesses.

         (c)      The Parent shall cooperate and shall cause the Seller and each
                  member of each Company Group to cooperate with any reasonable
                  requests of the Acquiror or the SEC related to the recording
                  of the transaction contemplated hereby as a Recapitalization
                  for financial reporting purposes, including assisting the
                  Acquiror

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       46
<PAGE>   53

                  and its Affiliates with any presentation to the SEC with
                  regard to such recording. Unless otherwise required by Law or
                  by any pronouncement of the SEC or by any authoritative
                  accounting association after the Closing Date, the Parent
                  agrees that it will not report the transaction contemplated
                  hereby for financial accounting or other public disclosure
                  purposes in a manner inconsistent with such recording.

         (d)      The Acquiror agrees to reimburse the Parent promptly for all
                  reasonable costs and expenses incurred by the Parent or any of
                  its Affiliates in connection with the Parent's obligations
                  under this Section 8.09.

                              HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       47
<PAGE>   54

         Section 8.10. Financial Statements.

         (a)      From the date hereof to the Closing Date, the Parent shall
                  provide the Acquiror with (i) monthly management reports on
                  the Businesses, (ii) an unaudited consolidated balance sheet
                  of the Businesses and the related consolidated statements of
                  operations of the Businesses for each calendar month within 20
                  days after the end of such calendar month and (iii) any other
                  financial reports prepared routinely by management of the
                  Company Groups.

         (b)      The Parent shall use all commercially reasonable efforts to
                  provide to the Acquiror, on or before February 28, 2001,
                  consolidated statements of assets contemplated for sale and
                  liabilities expected to be transferred of the Dresser
                  Equipment Group as of December 31, 2000 and December 31, 1999
                  and the related consolidated statements of revenues and
                  expenses and cash flows for the years ended December 31, 2000,
                  1999 and 1998, each prepared in accordance with U.S. GAAP
                  (including the related notes thereto) and audited by Arthur
                  Andersen, LLP.

         Section 8.11. Assignments. To the extent that any assets listed in the
Parent's Disclosure Letter or that are otherwise Material to the Businesses are
not held by a member of any Company Group, the Parent shall, prior to the
Closing, effect the assignment of such assets to a member of a Company Group
designated by the Acquiror. To the extent that time does not permit proper
recordation of such assignments, as for example in the case of certain
assignments of Intellectual Property, the Parent shall cause the assignment of
beneficial title to be effected prior to the Closings and, subsequent to the
Closings, will provide such assistance and cooperation as necessary to effect
recordable assignments of such assets.

         Section 8.12. Release of Liens. To the extent that any Liens exist with
respect to any assets and properties of any member of the Company Groups
securing debt of any member of the Parent Group, the Parent agrees to use all
commercially reasonable efforts to cause such Liens, to the extent they attach
to such assets and/or properties, to be released as soon as practicable.

         Section 8.13. Environmental Schedules. The Parent agrees that the
Parent will prepare and deliver to the Acquiror at the First Closing a revised
Schedule 5.11 to the Parent's Disclosure Letter to set forth all matters
described in clause (a), (c) and (e) of the definition of Indemnifiable
Environmental Matters as of the Closing Date, which Schedule 5.11 shall (a)
constitute a representation and warranty, which shall survive until the fifth
anniversary of the Closing Date, as to such matters as of the Closing Date
subject to the provisions of clause (i) of subsection (a) of Section 12.02 and
(ii) govern the matters subject to indemnification pursuant to the provisions of
Article XII as that Article applies to such Indemnifiable Environmental Matters.

         Section 8.14. Use of Dresser Name. Prior the Closing, the Parent agrees
that it will not directly or indirectly organize any new Subsidiary, or rename
any existing Subsidiary, using the name Dresser or any variation thereof.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       48
<PAGE>   55

                                   ARTICLE IX

                            COVENANTS OF THE ACQUIROR

         Section 9.01. Confidentiality Agreement. The parties hereto hereby
incorporate by reference the provisions of paragraphs 1 to 3, inclusive, and 8
to 11, inclusive of the Confidentiality Agreement (including any addenda
thereto).

         Section 9.02. Corporate Name. Neither the Acquiror nor any Buyer shall
acquire, and no member of either Company Group shall acquire or retain, any
rights to the name "Halliburton" (or any variation thereof) or any trademarks,
trade names or symbols related thereto. The Acquiror shall, as soon as
reasonably practicable after the Closing Date (and in any event, within 60 days
thereafter), cause each member of each Company Group to amend its Organizational
Documents to the extent necessary to remove the "Halliburton" name (and any
variations thereof) from the name of such company and to remove all trademarks,
trade names, logos and symbols related to such name from the properties and
assets (including all signs) of the members of the Company Groups.

         Section 9.03. Surety Arrangements. The Acquiror acknowledges the list
of Surety Arrangements set forth on Schedule 5.09(c) to the Parent's Disclosure
Letter. The Acquiror agrees to use all commercially reasonable efforts prior to
the Closing Date to substitute the credit of the Acquiror or a Subsidiary of the
Acquiror for that of the Parent or the Retained Subsidiary of the Parent in each
such Surety Arrangement, such substitution to take effect at the First Closing.
The Acquiror agrees that it will, from and after the Closing Date, indemnify and
hold the Parent and each Retained Subsidiary harmless from and against any and
all losses, claims and damages arising from any Surety Arrangement extant at the
First Closing and, to the extent that the Acquiror is not able to effect such a
substitution prior to the Closing Date, the Acquiror also agrees (a) to continue
to use, and to cause each Buyer to use, its commercially reasonable efforts
thereafter to effect such a substitution with respect to each Surety Arrangement
and (b) to provide to the Parent at the First Closing a letter of credit issued
by a responsible commercial bank reasonably acceptable to the Parent against
which the Parent and the Retained Subsidiaries may draw to the extent of any
loss or damage they may incur or suffer as a result of being required to perform
any obligations under any Surety Arrangements from and after the Closing Date.

         Section 9.04. Dresser Valve Division Contracts. From and after the
Closing Date, the Acquiror shall cause its Subsidiaries engaged in the Dresser
Valve Division Business to use their commercially reasonable efforts to amend
the executory alliance contracts, master purchase agreements and purchase orders
of the Dresser Valve Division Business that do not contain any provision
expressly prohibiting awards of consequential damages as a partial remedy for
breach of such contract to include such a provision prior to the first renewal
or extension thereof.

                              HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       49
<PAGE>   56

                                    ARTICLE X

                                MUTUAL COVENANTS

         Section 10.01. Cooperation. The covenants in this Section 10.01 shall
apply to the parties hereto from and after the date of this Agreement:

         (a)      Each of the Parent and the Acquiror shall use, and shall cause
                  each of its respective Affiliates to use, all commercially
                  reasonable efforts (i) to take, or to cause to be taken, all
                  actions, and to do, or to cause to be done, all things that,
                  in either case, are necessary, proper or advisable under
                  applicable Legal Requirements (other than foreign competition
                  Laws except those of the Category 1, 2A and 2B Jurisdictions)
                  or otherwise to consummate and make effective the transactions
                  contemplated by this Agreement, (ii) subject to the provisions
                  of clause (iii) of this subsection (a), to obtain from any
                  Governmental Authorities and Courts any Authorizations or
                  Orders required to be obtained by the Parent or the Acquiror
                  or any of their Affiliates in connection with the
                  authorization, execution, delivery and performance of this
                  Agreement and the Ancillary Agreements and the consummation of
                  the transactions contemplated hereby and (iii) to make all
                  necessary filings as expeditiously as reasonably practicable,
                  and thereafter to make promptly any other required
                  submissions, with respect to this Agreement, the Ancillary
                  Agreements and the transactions contemplated hereby and
                  thereby required under the HSR Act, any foreign competition
                  Laws of a Category 1 Jurisdiction, a Category 2A Jurisdiction
                  or a Category 2B Jurisdiction that are applicable to the
                  transactions contemplated by this Agreement and any other
                  applicable Legal Requirements (other than foreign competition
                  Laws). With respect to the Laws of the Covered Jurisdictions,
                  the Parent and the Acquiror shall furnish or cause to be
                  furnished all information required for any application or
                  other filing to be made pursuant to any such Laws or any
                  applicable Regulations in connection with the transactions
                  contemplated by this Agreement.

         (b)      Each of the Parent and the Acquiror shall timely give or cause
                  to be given any notices to third Persons, and use, and cause
                  its respective Affiliates to use, commercially reasonable
                  efforts to obtain any Third Person Consents (i) necessary,
                  proper or advisable for Parent or the Acquiror, as the case
                  may be, to consummate the transactions contemplated by this
                  Agreement or to satisfy any of the Closing Conditions, (ii) in
                  the case of the Parent and its Affiliates, otherwise required
                  under any Principal Contracts in connection with the
                  consummation of the transactions contemplated hereby or (iii)
                  in the case of the Parent and its Affiliates, required in
                  order to prevent a Material Adverse Effect on the Businesses
                  from occurring prior to or after the Closing Date; provided,
                  however, that, with respect to Third Person Consents set forth
                  on Schedule 5.02(c), the Parent shall use, and cause its
                  Affiliates to use, efforts that are deemed customary and usual
                  in the jurisdiction in which any such Third Person Consent is
                  required to obtain any such Third Person Consent;

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       50
<PAGE>   57

                  provided, further, that the Parent shall not be required to
                  expend an amount of money that would be unreasonable in light
                  of local custom and practice in order to obtain any such Third
                  Person Consent. The Parent and Acquiror shall cooperate with
                  each other in connection with the giving of all such notices
                  and the preparation of all consent or waiver requests or
                  agreement amendments. The Parent and the Acquiror shall
                  cooperate with each other in providing copies of all such
                  documents to the other party and its advisors, and, if
                  requested, shall accept all reasonable additions, deletions or
                  changes suggested in connection therewith. The Parent and
                  Acquiror shall furnish or cause to be furnished all
                  information requested by the other party in connection with
                  this subsection (b).

         (c)      Each of the Parent and the Acquiror shall give, and shall
                  cause its Affiliates to give, prompt notice to the other of
                  (i) any notice or other communication from any Person alleging
                  that the consent of such Person is or may be required in
                  connection with the transactions contemplated hereby, (ii) any
                  notice or other communication from any Governmental Authority
                  in connection with the transactions contemplated hereby, (iii)
                  any actions, suits, claims, investigations or proceedings
                  commenced or threatened in writing against, relating to or
                  involving or otherwise affecting the Parent, the Acquiror or
                  any member of a Company Group that relate to the consummation
                  of the transactions contemplated hereby and (iv) the
                  occurrence or nonoccurrence of any event the occurrence or
                  nonoccurrence of which would be reasonably likely (A) to cause
                  any Closing Condition relating to the obligations of the other
                  party not to be satisfied, (B) to cause a breach of the
                  covenants of such party under this Agreement or (C) to delay
                  or impede the ability of either the Parent or the Acquiror to
                  consummate the transactions contemplated by this Agreement or
                  to fulfill their respective obligations set forth herein. No
                  delivery of any notice pursuant to clause (iv) of this
                  subsection (c) shall cure any breach of any representation or
                  warranty of the party giving such notice contained in this
                  Agreement or otherwise limit or affect the remedies available
                  hereunder to the party receiving such notice.

         (d)      Each of the Parent and the Acquiror agree to cooperate and to
                  use, and to cause their Affiliates to cooperate and to use,
                  all commercially reasonable efforts, vigorously to contest and
                  to resist any action, including legislative, administrative or
                  judicial action, and to have vacated, lifted, reversed or
                  overturned any Order (whether temporary, preliminary or
                  permanent) of any Court or Governmental Authority that is in
                  effect and that restricts, prevents or prohibits the
                  consummation of the transactions contemplated by this
                  Agreement, including the vigorous pursuit of all available
                  avenues of administrative and judicial appeal and all
                  available legislative action. Each of the Parent and the
                  Acquiror also agree to use all commercially reasonable efforts
                  to take, or to cause to be taken, any and all actions,
                  including the disposition (by the Acquiror) or retention (by
                  the Parent) of assets or the withdrawal from doing business in
                  particular jurisdictions, required by any Court or
                  Governmental Authority as a condition to the granting of any
                  Authorization or Order

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       51
<PAGE>   58

                  necessary for the consummation of the transactions
                  contemplated hereby or as may be required to avoid, lift,
                  vacate or reverse any legislative, administrative or judicial
                  action to the extent that such action would otherwise cause
                  any condition to the First Closing not to be satisfied or
                  would restrict, prevent or prohibit the consummation of the
                  transactions contemplated hereby; provided, however, that in
                  no event shall the Parent be required to take, or cause to be
                  taken, any action that could reasonably be expected to have a
                  Material Adverse Effect on the Parent or on the Businesses or
                  shall the Acquiror be required to take, or cause to be taken,
                  any action that could reasonably be expected to have a
                  Material Adverse Effect on the Acquiror or on the Businesses.

         (e)      The Parent shall use its commercially reasonable efforts
                  consistent with its fiduciary obligations to cause any
                  Non-Controlled Entity in which it has a direct or indirect
                  ownership interest to take action consistent with its other
                  obligations under this Section 10.01 including (i), where
                  appropriate, voting, directly or indirectly, the Equity
                  Securities owned by it directly or indirectly in such
                  Non-Controlled Entity in a manner consistent with such
                  obligations and (ii) instructing each director or similar
                  official of such Non-Controlled Entity appointed, directly or
                  indirectly, by it to act in a manner consistent with such
                  obligations so long as any such action does not violate such
                  director's or official's fiduciary duties. In this regard, the
                  Acquiror acknowledges that none of the Non-Controlled Entities
                  in which the Parent has a direct or indirect ownership
                  interest is under the direct or indirect control of the
                  Parent.

         (f)      Nothing in this Section 10.01 shall be deemed to require
                  divestiture of any securities or other assets owned prior to
                  the Closing Date by the Acquiror, any direct or indirect
                  holder of Equity Securities in the Acquiror or any Affiliate
                  of the foregoing Persons.

         Section 10.02. Ancillary Agreements. The Parent and the Acquiror agree
to execute and deliver at the First Closing:

                  (i)      the Merger Agreement;

                  (ii)     the Assignment of Name;

                  (iii)    the Highway 6 Lease Agreement;

                  (iv)     the Employee Benefits Agreement;

                  (v)      the Transition Services Agreement; and

                  (vi)     the Stockholders' Agreement.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       52
<PAGE>   59

         Section 10.03. Public Announcements. Promptly following the execution
and delivery of this Agreement, the Parent and the Acquiror shall issue
concurrent press releases with respect to the subject matter of this Agreement.
Pending the Closing Date, the Acquiror and the Parent shall consult with, and
obtain the prior approval of, the other, which shall not be unreasonably
withheld, before issuing any other press release or otherwise making any public
statements with respect to the transactions contemplated hereby. Neither the
Parent nor the Acquiror shall permit any of its Affiliates to make any press
release or public statement with respect to the transactions contemplated
hereby. Notwithstanding the foregoing, this Section shall not preclude any party
from issuing such press releases, making such other public statements or making
such filings with or applications to Governmental Authorities, including a
filing of a Current Report on Form 8-K by the Parent with the SEC with respect
to the transactions contemplated hereby, as such party in good faith believes to
be required under applicable Legal Requirements.

         Section 10.04. Transfer Taxes. The Parent and the Acquiror shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, sales, use, and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes that become payable as a direct result of the
transactions contemplated hereby ("Transfer Taxes"). The Transfer Taxes that
become payable as a result of the transfers included in the Reorganization and
as a result of the sale of the Securities shall be paid 50% by the Acquiror and
50% by the Parent.

         Section 10.05. Expenses. Except as otherwise expressly provided herein,
all costs and expenses incurred by the Parent in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Parent, and all
costs and expenses incurred by the Acquiror in connection with this Agreement
and the transactions contemplated hereby shall be paid by the Acquiror.
Notwithstanding the foregoing, the Acquiror shall be responsible for and shall
pay or reimburse the Parent for (i) all expenses incurred in connection with
steps I-7, I-8, I-9, I-10, I-12, I-13, II-1, II-10, III-1, IV-1, IV-3, V-1,
V-2A, V-4, V-6, V-11, V-16, V-19, V-27 and V29 in the Reorganization described
in Annex B and any actions taken at the direction of the Acquiror or any
individual that the Acquiror has identified in written notice to the Parent and
(ii) any Taxes that would not have been incurred but for such actions and steps.
For the avoidance of doubt all costs incurred in the formation of DI France
S.A.S. are the responsibility of the Acquiror and all costs incurred in the
formation of DI Singapore Pte Ltd. are the responsibility of Parent.
Notwithstanding the foregoing, the Parent shall be responsible for, and shall
pay or reimburse the Acquiror for, the expenses incurred as a result of
recording assignments of Intellectual Property and Real Property pursuant to
Section 8.11, whether prior to or after the Closings.

         Section 10.06. Tax Matters.

         (a)      Within 240 days after the Closing Date, the Acquiror in its
                  sole discretion may cause to be made a timely and effective
                  election under section 338(g) of the Code (a "Section 338
                  Election") with respect to a qualified stock purchase (within
                  the meaning of Section 338 of the Code) of any member of a
                  Company Group that is a foreign corporation.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       53
<PAGE>   60

         (b)      The Acquiror shall indemnify and hold harmless the Parent and
                  each member of the affiliated group of which the Parent is the
                  common parent (within the meaning of section 1504 of the Code)
                  from and against any United States federal or state income or
                  franchise Tax Consequence arising solely by reason of any
                  Section 338 Election made. A "Tax Consequence" shall include
                  (by way of example and not limitation) a reduction in or
                  change in characterization of available foreign taxes under
                  sections 901 or 902 of the Code.

         (c)      The Parent and the Acquiror shall make a joint election under
                  section 338(h)(10) of the Code and any similar election under
                  the applicable income tax law of any state or political
                  subdivision of the United States (collectively, the "Section
                  338(h)(10) Elections") with respect to the Acquiror's purchase
                  of the Securities of DEGI and any deemed purchase of the
                  Securities of any Subsidiary of DEGI that is a domestic
                  corporation within the meaning of Section 7701 of the Code.
                  The Acquiror shall prepare and submit to the Parent a proposed
                  allocation of the aggregate deemed sales price (as defined in
                  Treasury Regulation Section 1.338-4T) for each member of the
                  DEGI Group among the assets of each such member as soon as
                  practicable but not later than 240 days after the Closing
                  Date. The Parent shall approve and agree to the proposed
                  allocation unless the Parent reasonably determines that the
                  proposed allocation is improper. Neither the Acquiror nor the
                  Parent shall take any action inconsistent with, or fail to
                  take any action necessary for, the validity of the Section
                  338(h)(10) Elections, and, if an allocation schedule is agreed
                  to by the Acquiror and the Parent, the Acquiror and the Parent
                  shall adopt and utilize the asset values as determined on the
                  allocation schedule for the purpose of all Tax Returns filed
                  by them unless otherwise required by applicable law. Not later
                  than 240 days after the Closing Date, the Acquiror shall
                  prepare and deliver to the Parent an Internal Revenue Service
                  Form 8023 and any similar form under applicable state income
                  tax law (the "Forms") with respect to the Section 338(h)(10)
                  Elections, together with any completed schedules required to
                  be attached thereto, which Forms shall have been duly executed
                  by an authorized person for the Acquiror. The Parent shall
                  cause the Forms to be duly executed by an authorized person
                  for the Parent and shall provide an executed copy of the Forms
                  to the Acquiror, whereupon each shall duly and timely file the
                  Forms as prescribed by Treasury Regulation 1.338(h)(10)-1T or
                  the corresponding provisions of the applicable income tax law
                  of any state or political subdivision of the United States.
                  Each such executed Form provided to the Parent shall be
                  accompanied by a certificate of the secretary of the Acquiror
                  that documents the authority of the signatory to make the
                  Section 338(h)(10) Election.

         (d)      The Parent shall cause to be included in the consolidated U.S.
                  federal income Tax Returns (and the U.S. state income Tax
                  Returns of any U.S. state that permits consolidated, combined
                  or unitary income Tax Returns, if any) of the affiliated group
                  of corporations of which the Parent is the common parent
                  corporation for all periods ending on or before the Closing
                  Date, all Tax Items of each member of each

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       54
<PAGE>   61

                  Company Group that are required to be included therein, shall
                  cause such Tax Returns to be timely filed with the appropriate
                  taxing authorities, and shall be responsible for the timely
                  payment (and entitled to any refund) of all Taxes due with
                  respect to the periods covered by such Tax Returns. To the
                  extent permitted by law or administrative practice, (A) the
                  taxable year of DEGI and each of its Subsidiaries (after
                  reflecting the Reorganization) that is a domestic corporation
                  that includes the Closing Date shall be treated as closing on
                  (and including) the Closing Date and (B) all transactions
                  occurring on the Closing Date but after the Closings shall
                  have occurred shall be reported on the Acquiror's consolidated
                  United States federal income tax return to the extent
                  permitted by Treasury Regulation Section
                  1.1502-76(b)(1)(ii)(B) and shall be similarly reported on
                  other Tax Returns of the Acquiror or its Affiliates.

         (e)      With respect to all Tax Returns required to be filed after the
                  Closing Date by or with respect to any member of a Company
                  Group other than those Tax Returns described in subsection (d)
                  of this Section, the Acquiror shall cause each such Tax Return
                  to be prepared, shall cause to be included in each such Tax
                  Return all Tax Items required to be included therein, shall
                  cause each such Tax Return to be timely filed with the
                  appropriate taxing authorities, and shall be responsible for
                  the timely payment (and entitled to any refund or credit) of
                  all Taxes due with respect to the period covered by each such
                  Tax Return. Any Tax Return to be prepared pursuant to the
                  provisions of this subsection (e) with respect to a taxable
                  year that includes any period on or before the Closing Date
                  shall be prepared in a manner consistent with practices
                  followed in prior years with respect to similar Tax Returns,
                  except for changes required by changes in law or fact.

         (f)      With respect to all Tax Returns filed by or with respect to
                  any member of a Company Group on or prior to the Closing Date,
                  the Parent shall be responsible for the payment of all Taxes
                  and shall be entitled to all refunds or credits of any Taxes
                  attributable to the periods covered by such Tax Returns and
                  shall have the right, at its sole cost and expense, to control
                  the defense, prosecution, settlement or compromise of any
                  proceeding involving any such Tax Return or the period covered
                  thereby, and the Acquiror shall take such action in connection
                  with any such proceeding as the Parent shall request from time
                  to time, including the selection of counsel and experts and
                  the execution of powers of attorney; provided, however, that
                  if Acquiror or any member of a Company Group would bear any
                  liability for Taxes at issue in such proceeding for which
                  Acquiror would not be indemnified pursuant to Article XII, or
                  if Acquiror or any member of a Company Group would be bound by
                  the results of such proceeding for Tax periods (or portions
                  thereof) beginning after the Closing Date, then (i) the
                  Acquiror may also participate in such proceeding at its own
                  expense and (ii) neither party may settle any such proceeding
                  without the written consent of the other party (which consent
                  shall not be unreasonably withheld). The Parent shall give
                  written notice to the Acquiror of, and the Acquiror shall, and
                  shall cause each member of a Company Group to, give written
                  notice to

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       55
<PAGE>   62
                  the Parent, of its receipt of any notice of any audit,
                  examination, claim or assessment for any Tax which could
                  result in any such proceeding, within 20 Business Days after
                  the receipt of such notice. Failure of the Acquiror or any BV
                  Company or Subsidiary to give the Parent written notice of any
                  such audit, examination, or assessment within such 20 Business
                  Day period shall cause the provisions of Article XII to be
                  inapplicable to any Losses realized with respect to such Tax
                  but only to the extent Parent was actually prejudiced by such
                  failure.

         (g)      The Acquiror and the Parent shall cooperate fully, as and to
                  the extent reasonably requested by the other party, in
                  connection with the filing of Tax Returns pursuant to this
                  Section 10.06 and any audit, litigation or other proceeding
                  with respect to Taxes. Such cooperation shall include the
                  retention and (upon the other party's request) the provision
                  of records and information which are reasonably relevant to
                  any such proceeding and making employees (including employees
                  of any member of a Company Group) available on a mutually
                  convenient basis to provide additional information and
                  explanation of any material provided hereunder. The Acquiror
                  and the Parent agree (i) to retain all Books and Records with
                  respect to Tax matters pertinent to the any member of a
                  Company Group relating to any taxable period beginning before
                  the Closing Date until the expiration of the statute of
                  limitations (and, to the extent notified by the Acquiror or
                  the Parent, any extensions thereof) of the respective taxable
                  periods, and to abide by all record retention agreements
                  entered into with any taxing authority, and (ii) to give the
                  other party reasonable written notice prior to transferring,
                  destroying or discarding any such Books and Records and, if
                  the other party so requests, the Acquiror or the Parent, as
                  the case may be, shall allow the other party to take
                  possession of such Books and Records. The Acquiror and the
                  Parent further agree, upon request, to use their best efforts
                  to obtain any certificate or other document from any
                  Governmental Authority or any other Person as may be necessary
                  to mitigate, reduce or eliminate any Tax that could be imposed
                  (including, but not limited to, with respect to the
                  transactions contemplated hereby). The Acquiror and the Parent
                  further agree, upon request, to provide the other party with
                  all information that either party may be required to report
                  pursuant to Section 6043 of the Code and the Treasury
                  Regulations promulgated thereunder.

         Section 10.07. Offers to Employees.

         (a)      The Parent has listed in Schedule 10.07(a) to the Parent's
                  Disclosure Letter the names and positions of certain of those
                  employees of the Parent or one of the Retained Subsidiaries
                  that have been seconded to members of the Company Groups. The
                  Acquiror agrees that, pending the Closing Date and for a
                  period of six (6) months thereafter, neither the Acquiror nor
                  any of its Subsidiaries, including the Buyers and (after the
                  Closing Date) their Subsidiaries, will make any offer of
                  employment or solicit any request for employment to or from
                  any of the employees so listed, except (i) for any such
                  employees included in an agreed list contained in a letter of
                  even date

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

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                  herewith from the Parent to the Acquiror or (ii) with the
                  prior written consent of the Parent. For purposes of the
                  preceding sentence, the term "employment" shall include an
                  employee/employer relationship and/or a consulting
                  relationship.

         (b)      The Parent and the Acquiror shall, and shall cause their
                  respective Subsidiaries to, use reasonable efforts to cause
                  each individual listed on Schedule 10.07(b) to enter into an
                  employment agreement with a member of a Company Group on terms
                  reasonably satisfactory to the Acquiror. In this regard, the
                  Acquiror agrees to offer terms of employment to such
                  individuals that are as good or better than their existing
                  terms of employment taken in the aggregate for each employee.

         Section 10.08. Related Party Contracts. Schedule 5.09(b) to the
Parent's Disclosure Letter provides a complete and accurate list of the Related
Party Contracts. To the extent that the Parent controls the parties to such
Related Party Contracts, the Parent agrees to cause such parties to terminate
each such Related Party Contract specified in Schedule 5.09(b) to the Parent's
Disclosure Letter prior to the Closing, such Related Party Contracts to be
replaced by the Transition Services Agreement and the Highway 6 Deed and the
Highway 6 Lease. Any contract that is between any member of the Parent Group and
any member of the Company Group but does not constitute a Principal Contract
shall terminate at the Closing.

         Section 10.09 Litigation Support.

         (a)      If and for so long as the Acquiror, any Buyer or any member of
                  either Company Group is actively contesting or defending
                  against any charge, complaint, claim or demand (a "Claim") or
                  any action, suit, proceeding, investigation or hearing (an
                  "Action") based thereon in connection with (i) any transaction
                  contemplated under this Agreement or (ii) any fact, situation,
                  circumstance, status, condition, activity, practice, plan,
                  occurrence, event, incident, action, failure to act or
                  transaction on or prior to the Closing Date involving any
                  member of either Company Group, the Parent and the Seller
                  shall, if neither the Parent nor any of its Subsidiaries is a
                  party to or involved in such Claim or Action, reasonably
                  cooperate with the contesting or defending party and its
                  counsel in the contest or defense, make reasonably available
                  their personnel and provide such testimony and reasonable
                  access to their Books and Records as shall be necessary in
                  connection with the contest or defense, the out-of-pocket
                  expense of which shall be for the account of the contesting or
                  defending party. The covenant contained in this subsection (a)
                  shall not apply to any matter that is subject to the
                  indemnification obligations of the parties under Article XII,
                  other than a Proceeding as to which an Indemnifying Party has
                  assumed the legal defense in accordance with subsection (d) of
                  Section 12.04 or under Section 12.05.

         (b)      If and for so long as the Parent, the Seller or any of their
                  respective Affiliates is actively contesting or defending
                  against any Claim or Action based thereon in connection with
                  (i) any transaction contemplated under this Agreement or (ii)
                  any fact, situation, circumstance, status, condition,
                  activity, practice, plan, occurrence, event, incident, action,
                  failure to act or transaction involving any of the Businesses,

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       57
<PAGE>   64

                  the Acquiror, each Buyer and each member of each Company Group
                  shall, if neither the Acquiror nor any of its Subsidiaries is
                  a party to or involved in such Claim or Action, reasonably
                  cooperate with the contesting or defending party and its
                  counsel in the contest or defense, make reasonably available
                  their personnel and provide such testimony and reasonable
                  access to their Books and Records as shall be necessary in
                  connection with the contest or defense, the out-of-pocket
                  expense of which shall be for the account of the contesting or
                  defending party. The covenant contained in this subsection (b)
                  shall not apply to any matter that is subject to the
                  indemnification obligations of the parties under Article XII,
                  other than a Proceeding as to which an Indemnifying Party has
                  assumed the legal defense in accordance with subsection (d) of
                  Section 12.04 or under Section 12.05.

         Section 10.10. Post-Closing Matters.

         (a)      From and after the Closing Date, each party hereto agrees to
                  execute such further instruments or documents as any other
                  party may from time to time reasonably request in order to
                  confirm or carry out the transactions contemplated by this
                  Agreement; provided, however, that no such instrument or
                  document shall increase a party's liability beyond that
                  contemplated hereby.

         (b)      From and after the Closing Date, the Acquiror and each Buyer
                  shall cause each member of each Company Group (other than any
                  Non-Controlled Entity), and shall use all commercially
                  reasonable efforts to cause each Non-Controlled Entity, to
                  maintain copies of all Books and Records in the possession of
                  such members of the Company Groups and the Non-Controlled
                  Entities at the Closing Date and shall prevent such members of
                  the Company Groups, and shall use all commercially reasonable
                  efforts to prevent each Non-Controlled Entity, from destroying
                  any of such Books and Records for a period of six years
                  following the Closing Date or, to the extent applicable, the
                  period specified in clause (i) of subsection 10.06(g). During
                  the period of retention of such Books and Records, the
                  Acquiror and the Buyers shall cause such members of each
                  Company Group, and shall use all commercially reasonable
                  efforts to cause each Non-Controlled Entity, (i) to grant to
                  the Parent or the appropriate Seller and its Representatives
                  reasonable cooperation, access and staff assistance at all
                  reasonable times and upon reasonable notice to all of such
                  Books and Records of such entities relating to the period
                  prior to the Closing Date (including workpapers and
                  correspondence with taxing authorities) that are not otherwise
                  protected by legal privilege, (ii) to afford the Parent or the
                  appropriate Seller and its Representatives the right, at the
                  Parent's expense, to take extracts therefrom and to make
                  copies thereof and (iii) to have access to the employees of
                  the members of the Company Groups, all to the extent
                  reasonably necessary or appropriate for general business
                  purposes, including the preparation of tax returns and the
                  handling of tax audits, disputes and litigation; provided,
                  however, that such requested cooperation, access and
                  assistance shall not unreasonably interfere with the normal
                  operations of the Businesses. In this regard, the Parent
                  acknowledges that the

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<PAGE>   65

                  Non-Controlled Entities will not be under the direct or
                  indirect control of the Acquiror.

         (c)      To the extent that the Acquiror shall, directly or indirectly,
                  sell or otherwise transfer its interests in any member of
                  either Company Group subsequent to the Closing Date, the
                  Acquiror agrees to use all reasonable efforts to obtain from
                  the transferee of such interests an obligation to comply with
                  the provisions of subsection (b) of this Section, which
                  obligation shall be enforceable by the Parent as a third party
                  beneficiary.

                                   ARTICLE XI

                           CONDITIONS TO FIRST CLOSING

         Section 11.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of the Parent and the Acquiror to
consummate the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the First Closing of the following conditions, any
or all of which may be waived by the parties hereto, in whole or in part, to the
extent permitted by applicable Law:

         (a)      No Governmental Authority or Court shall, following the date
                  of this Agreement, have enacted, issued, promulgated, enforced
                  or entered any Legal Requirement (other than any Legal
                  Requirement constituting or under foreign competition Laws)
                  (whether temporary, preliminary or permanent) that is in
                  effect and prohibits or renders illegal the transactions
                  contemplated hereby in a manner that is Material and adverse
                  to the Parent, the Acquiror or the Businesses.

         (b)      The waiting period under the HSR Act shall have expired or
                  been terminated and all Category 1 Requirements shall have
                  been satisfied.

         (c)      The parties hereto shall have obtained each Authorization
                  required under any applicable Regulatory Transfer Restriction
                  (other than any foreign competition Laws) required for
                  consummation of all or any part of the transactions
                  contemplated hereby.

         (d)      The Reorganization shall have been effected.

         (e)      The Parent shall have obtained each Third Person Consent
                  listed on Schedules 3.03 and 4.03 of the Parent's Disclosure
                  Letter, and the Acquiror shall have obtained each Third Party
                  Consent listed on Schedule 6.03 to the Acquiror's Disclosure
                  Letter.

         (f)      The Releases of Intercompany Indebtedness shall have been
                  executed and delivered as required by subsection (c) of
                  Section 2.06.

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                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       59
<PAGE>   66

         Section 11.02. Additional Conditions to the Parent's Obligations. The
obligations of the Parent to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Parent, in whole or in
part, to the extent permitted by applicable Law:

         (a)      Each of the representations and warranties of the Acquiror
                  contained in this Agreement that is qualified as to
                  Materiality shall be true and correct in all respects, and
                  each of such representations and warranties that is not so
                  qualified shall be true and correct in all Material respects,
                  as of the date of this Agreement and as of the Closing Date as
                  though made again on and as of the Closing Date (except to the
                  extent that any such representations or warranties were made
                  as of a specified date, in which event such representations
                  and warranties shall continue on the Closing Date to have been
                  true and correct at and as of such specified date). The Parent
                  shall have received a certificate of the Chief Executive
                  Officer or the President and the Chief Financial Officer of
                  the Acquiror, dated the Closing Date, to such effect.

         (b)      The Acquiror shall have performed or complied in all Material
                  respects with all agreements and covenants required by this
                  Agreement to be performed or complied with by it on or prior
                  to Closing Date. The Parent shall have received a certificate
                  of the Chief Executive Officer or the President and the Chief
                  Financial Officer of the Acquiror, dated the Closing Date, to
                  such effect.

         (c)      The Acquiror, the Transitory Merger Sub or another Subsidiary
                  of the Acquiror, as appropriate, shall have executed and
                  delivered the Ancillary Agreements.

         (d)      No action, suit, arbitration or investigation (other than any
                  action, suit, arbitration or investigation disclosed in the
                  Parent's Disclosure Letter) shall be pending or threatened in
                  writing against any member of the Parent Group that is based
                  on or arises out of the transactions contemplated by this
                  Agreement by:

                  (i)      any Governmental Authority that could reasonably be
                           expected to have a Material Adverse Effect on the
                           Parent Group and the success of which on the merits
                           is at least "reasonably possible" as that term is
                           used in Financial Accounting Standards Board's
                           Statement of Accounting Standards No. 5 ("FAS No.
                           5"); or

                  (ii)     any third Person who claims damages that are Material
                           and the success of which on the merits is at least
                           "reasonably possible" as that term is used in FAS No.
                           5.

         (e)      The Parent shall have received an opinion from outside counsel
                  (which may consist of opinions from more than one outside
                  counsel) to the Acquiror, dated the Closing Date and in form
                  and substance substantially similar to the form thereof
                  attached hereto as Appendix X.

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                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       60
<PAGE>   67

         Section 11.03. Additional Conditions to the Acquiror's Obligations. The
obligations of the Acquiror to effect the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the First Closing of the following
conditions, any or all of which may be waived by the Acquiror, in whole or in
part, to the extent permitted by applicable Law:

         (a)      (i)      Each of the representations and warranties of the
                           Parent and the Seller contained in this Agreement
                           that is qualified as to Materiality shall be true and
                           correct in all respects, and each of such
                           representations and warranties that is not so
                           qualified shall be true and correct in all Material
                           respects, as of the date of this Agreement and as of
                           the Closing Date as though made again on and as of
                           the Closing Date (except to the extent that any such
                           representations or warranties were made as of a
                           specified date, in which event such representations
                           and warranties shall continue on the Closing Date to
                           have been true and correct at and as of such
                           specified date). The Acquiror shall have received a
                           certificate of the Chief Executive Officer and the
                           Chief Financial Officer of the Parent, dated the
                           Closing Date, to such effect.

                  (ii)     All of the representations and warranties of the
                           Parent and the Seller contained in this Agreement
                           shall be true and correct at and as of the Closing
                           Date as though made again on and as of the Closing
                           Date (except to the extent that any such
                           representations or warranties were made as of a
                           specified date, in which event such representations
                           and warranties shall continue on the Closing Date to
                           have been true and correct as of such specified
                           date), except where any untruth and incorrectness of
                           such representations and warranties could not, singly
                           or in the aggregate, be reasonably expected to have
                           an adverse effect measured in monetary terms of U.S.
                           $50,000,000 or more. Solely for purposes of
                           determining the monetary effect to which reference is
                           made in the next preceding sentence of this clause
                           (ii) of this subsection (a), the representations and
                           warranties of the Parent and the Seller contained in
                           this Agreement shall be deemed to have been made
                           without any qualification as to materiality and,
                           accordingly, all references in such representations
                           and warranties to "Material," "Materially, "Material
                           Adverse Effect," and similar terms and phrases
                           (including references to the dollar thresholds
                           therein) shall be deemed to be deleted therefrom.

         (b)      The Parent and the Seller shall have performed or complied in
                  all Material respects with all agreements and covenants
                  required by this Agreement to be performed or complied with by
                  it on or prior to Closing Date. The Acquiror shall have
                  received a certificate of the Chief Executive Officer and the
                  Chief Financial Officer of each of the Parent and the Seller,
                  dated the Closing Date, to such effect.

         (c)      None of the Authorizations required in order to consummate the
                  transactions contemplated by this Agreement are subject to any
                  conditions that, individually or

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                     AGREEMENT AND PLAN OF RECAPITALIZATION

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<PAGE>   68

                  in the aggregate, have had or could reasonably be expected to
                  have a Material Adverse Effect on the Acquiror or the
                  Businesses.

         (d)      The Parent or a Retained Subsidiary, as appropriate, shall
                  have executed and delivered each of the Ancillary Agreements.

         (e)      No action, suit, arbitration or investigation (other than any
                  action, suit, arbitration or investigation disclosed in the
                  Parent's Disclosure Letter) shall be pending or threatened in
                  writing against any member of either Company Group by:

                  (i)      any Governmental Authority that could reasonably be
                           expected to have a Material Adverse Effect on the
                           Businesses and the success of which on its merits is
                           at least "reasonably possible" as that term is used
                           in FAS No. 5; or

                  (ii)     any third Person who claims damages that are Material
                           and the success of which on the merits is at least
                           "reasonably possible" as that term is used in FAS No.
                           5.

         (f)      After giving effect to the forgiveness of Intercompany
                  Indebtedness contemplated by subsection (c) of Section 2.06
                  and subsection (c) of Section 2.07, the members of the Company
                  Groups at the First Closing shall in the aggregate have not
                  less than U.S. $30,000,000 (thirty million dollars) in cash
                  and cash equivalents (net of the aggregate amount of (i)
                  outstanding checks and overdrafts drawn on bank accounts of
                  all members of the Company Groups and (ii) any notes payable
                  by any member of either Company Group) and the Acquiror shall
                  have received a certificate from the Chief Financial Officer
                  of the Parent to such effect.

         (g)      The Acquiror shall have obtained an aggregate of U.S. $970
                  million of debt financing from the lenders referred to in the
                  Commitment Letters on the terms and structure contemplated by
                  the Commitment Letter Term Sheets attached to the Commitment
                  Letters.

         (h)      A member of a Company Group shall have entered into an
                  employment agreement with at least 23 out of the 35 people
                  listed on Schedule 10.07(b) to the Parent's Disclosure Letter
                  on terms reasonably satisfactory to the Acquiror, and such
                  employment agreements shall remain in full force and effect on
                  the Closing Date and shall not have been amended, modified or
                  restated without the consent of the Acquiror.

         (i)      No authoritative pronouncement shall have been issued
                  subsequent to the date of this Agreement by the SEC or by a
                  self regulatory board of the U.S. accounting profession that
                  would prohibit the Acquiror from (A) recording the
                  transactions contemplated by this Agreement as a
                  Recapitalization for financial reporting purposes or (B)
                  restructuring such transactions in a manner that would
                  preserve the

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

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<PAGE>   69

                  economic effects of recording such transactions as a
                  Recapitalization for financial reporting purposes.

         (j)      The Parent shall have executed and delivered to the Acquiror
                  the Release contemplated by clause (i) of subsection 2.06(d)
                  and the Parent shall have prepared, executed and delivered to
                  the Acquiror the tax certificate referenced in clause (ii) of
                  subsection 2.06(d).

         (k)      The Parent shall have executed and delivered to the Acquiror
                  the Highway 6 Deed.

         (l)      The Acquiror shall have received an opinion from outside
                  counsel (which may consist of opinions from more than one
                  outside counsel) to the Parent, dated the Closing Date and in
                  form and substance substantially similar to the form thereof
                  attached hereto as Appendix XI.

         (m)      The Acquiror shall have received the financial statements
                  referred to in Section 8.10(b) prior to the First Closing.

                                   ARTICLE XII

                                 INDEMNIFICATION

         Section 12.01. Survival of Representations, Warranties, Covenants and
Agreements.

         (a)      Except as set forth in subsection (b) of this Section, the
                  representations, warranties, covenants and agreements of each
                  party hereto shall remain operative and in full force and
                  effect regardless of any investigation made by or on behalf of
                  any other party hereto, any Person controlling any such party
                  or any of their officers, directors, representatives or agents
                  whether prior to or after the execution of this Agreement.

         (b)      (i)      The representations and warranties of the Parent
                           contained in Articles III and IV and in Sections
                           5.01, 5.02 and 5.03 and those of the Acquiror
                           contained in Article VI shall survive the Closings
                           and any investigation by the parties with respect
                           thereto without contractual restriction, but the
                           representations and warranties of the Parent and the
                           Acquiror contained in Article VII shall terminate at
                           the Closing and be of no further force or effect.

                  (ii)     The representations and warranties of the Parent
                           contained in Article V (other than those in Sections
                           5.01, 5.02, 5.03, 5.08, 5.10, 5.11 and 5.12) shall
                           survive the Closings and any investigation by the
                           parties with respect thereto, but shall terminate and
                           be of no further force or effect on the date that is
                           90 days following the completion of an audit of the
                           Businesses or portions thereof for the calendar year
                           in which the Closing Date shall occur (but in any
                           event no later than June 30, 2002).

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

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                  (iii)    The representations and warranties of the Parent
                           contained in Section 5.10 and Section 5.08 shall
                           survive the Closings and any investigation by the
                           parties with respect thereto until the expiration of
                           the applicable statute of limitations (including
                           extensions thereof) plus 90 days.

                  (iv)     The representations and warranties of the Parent
                           contained in Section 5.11 shall survive the Closings
                           and any investigation by the parties with respect
                           thereto, but shall terminate and be of no further
                           force or effect on the fifth anniversary of the
                           Closing Date.

                  (v)      The representations and warranties of the Parent
                           contained in Section 5.12 shall survive the Closings
                           and any investigation by the parties with respect
                           thereto, but shall terminate and be of no further
                           force or effect on the third anniversary of the
                           Closing Date.

                  (vi)     Notwithstanding any of the foregoing clauses of this
                           subsection (b), any such representation or warranty
                           as to which a bona fide claim relating thereto is
                           asserted in writing (which states with specificity
                           the basis therefor) in accordance with Section 12.04
                           or Section 12.05 during such applicable survival
                           period shall, with respect only to such claim,
                           continue in force and effect beyond such applicable
                           survival period pending resolution of the claim. The
                           covenants and agreements in this Article XII shall
                           survive the Closings and shall remain in full force
                           and effect for such period as is necessary to resolve
                           any bona fide claim made with respect to any
                           representation or warranty contained in this
                           Agreement during the survival period thereof. The
                           remaining covenants and agreements of the parties
                           hereto contained in this Agreement shall survive the
                           Closings without any contractual limitation on the
                           period of survival.

         Section 12.02. General Indemnification by the Parent.

         (a)      If the transactions contemplated hereby to occur at the
                  Closings are effected and subject to the provisions of
                  subsection (b) of Section 12.01, the Parent and the Seller,
                  jointly and severally, hereby agree (each, in such capacity,
                  an "Indemnifying Party"), from and after the Closing Date, to
                  indemnify and hold harmless the Acquiror, the Buyers, their
                  Affiliates and the directors, officers and employees of such
                  Persons (each, in such capacity, an "Indemnified Party")
                  against any losses, claims, demands, damages, judgments,
                  settlements, liabilities, charges and deficiencies, in each
                  case whether arising out of third party claims or otherwise,
                  and any reasonable legal or other expenses incurred in
                  connection with investigating or defending against the
                  foregoing (collectively, "Losses") that such Indemnified Party
                  shall actually incur, to the extent that such Losses (or
                  actions, suits or proceedings in respect thereof and any
                  appeals therefrom ("Proceedings")):

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                  (i)      arise out of or result from the untruth or breach of
                           any representation or warranty made in Article III,
                           IV or V for the benefit of the Acquiror; or

                  (ii)     arise out of or result from the nonperformance in
                           accordance with its terms of any covenant or
                           agreement made herein for the benefit of the
                           Indemnified Party by the Indemnifying Party; or

                  (iii)    arise out of or result from the nonpayment or
                           nonperformance of any Excluded Liability; or

                  (iv)     arise out of any Taxes payable as a result of the
                           transactions contemplated by the Reorganization other
                           than in connection with the steps listed in, and
                           actions contemplated by, Section 10.05; provided,
                           however, that the Parent shall be entitled to any net
                           refunds of any such Taxes (including interest
                           thereon);

                  (v)      arise out of or result from any Indemnifiable
                           Environmental Matter to the extent that the Acquiror
                           has given notice to the Parent of any claim for
                           indemnification pursuant to Section 12.04(a) prior to
                           the fifth anniversary of the Closing Date; provided,
                           however, that the Indemnifying Parties shall not be
                           obligated to indemnify any Indemnified Party for that
                           portion of any Losses described in clause (a), (c) or
                           (e) of the definition of "Indemnifiable Environmental
                           Matters" that are incurred by an Indemnified Party as
                           a result of its own negligence; or

                  (vi)     arise out of the failure to obtain any Third Person
                           Consent that continues at the Closing Date to be
                           required under any Agreement identified on Schedule
                           5.02(c) to the Parent's Disclosure Letter.

                  Notwithstanding the foregoing, the Indemnifying Party shall be
                  liable to the Indemnified Party under this Section 12.02 only
                  if and to the extent that the amount of Losses incurred by the
                  Indemnified Party exceeds U.S. $15,000,000 (fifteen million
                  dollars) in the aggregate (the "Deductible Amount"); provided,
                  however, that:

                           (A)      no Loss subject to indemnification pursuant
                                    to clause (a), (c) or (e) of the definition
                                    of Indemnifiable Environmental Matters, no
                                    Loss subject to indemnification for breach
                                    of Section 5.11 pursuant to Section
                                    12.02(a)(i), and no Loss subject to
                                    indemnification as an Excluded Liability
                                    shall be subject to nor counted toward the
                                    Deductible Amount;

                           (B)      no Loss or aggregation of similar Losses
                                    based on the same or substantially similar
                                    facts and circumstances shall be subject to
                                    indemnification pursuant to clause (i) of
                                    subsection (a) of Section 12.02 unless it
                                    involves more than (1) U.S. $500,000 (five
                                    hundred

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                                    thousand dollars), in the case of any such
                                    Loss or Losses based on facts and
                                    circumstances of which officers of the
                                    Parent listed on Schedule 12.02(a)(B) to the
                                    Parent's Disclosure Letter had no actual
                                    knowledge on the date of this Agreement or
                                    (2) U.S. $100,000 (one hundred thousand
                                    dollars) in the case of any such Loss or
                                    Losses based on facts and circumstances of
                                    which officers of the Parent listed on
                                    Schedule 12.02(a)(B) to the Parent's
                                    Disclosure Letter had actual knowledge on
                                    the date of this Agreement;

                           (C)      the amount of such Losses that are subject
                                    to indemnification hereunder shall not
                                    exceed U.S.$950,000,000; and

                           (D)      the Losses incurred by an Indemnified Party
                                    shall, for purposes of determining the
                                    maximum amount or threshold level thereof in
                                    accordance with this sentence and otherwise
                                    with respect to the obligations of the
                                    Indemnifying Parties hereunder, be offset by
                                    (i) the proceeds of any insurance received
                                    directly or indirectly by the Indemnified
                                    Party with respect thereto and (ii) the
                                    amount of any income tax benefit actually
                                    realized by the Indemnified Party with
                                    respect thereto.

                  For purposes of clause (i) of this subsection (a), the
                  representations and warranties of the Parent contained in this
                  Agreement shall, except for each instance in which a
                  representation and warranty regarding the completeness or
                  accuracy of a list or Schedule to the Parent's Disclosure
                  Letter is qualified as to materiality, be deemed to have been
                  made without any qualification as to materiality and,
                  accordingly, all references in such representations and
                  warranties to "Material", "Materially," "Material Adverse
                  Effect" and similar terms and phrases (including references to
                  dollar thresholds therein) shall be deemed to be deleted
                  therefrom.

         (b)      Notwithstanding anything to the contrary in this Agreement,
                  the liability of the Parent as an Indemnifying Party under
                  this Agreement shall also be limited as follows:

                  (i)      The amount payable by the Parent in respect of any
                           Losses incurred by an entity partially owned,
                           directly or indirectly, by an Indemnified Party shall
                           be determined by multiplying the total amount that
                           would otherwise be payable in respect of such Losses
                           by a percentage equal to the percentage of the Equity
                           Securities of such entity transferred to the
                           Acquiror, directly or indirectly, pursuant to this
                           Agreement.

                  (ii)     The Parent shall not be liable for any Losses
                           resulting from a breach of any of the representations
                           and warranties set forth in Articles III, IV or V of
                           this Agreement to the extent that:

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                           (A)      the liability for such breach occurs or is
                                    increased as a result of the adoption or
                                    imposition of any Law, Regulation or Order
                                    not in force at the date of this Agreement
                                    or as a result of any increase in rates of
                                    taxation after the date of this Agreement;
                                    or

                           (B)      the Losses would not have arisen but for a
                                    change in accounting policy or practice of
                                    the Acquiror or any member of the Company
                                    Groups after the Closing Date (other than
                                    changes required for any such accounting
                                    policy or practice to comply with U.S. GAAP
                                    as in effect on the Closing Date).

                  (iii)    The Parent shall be liable for any Loss resulting
                           from a breach of any of the representations and
                           warranties set forth in Section 5.08 only if and to
                           the extent that such Loss is not offset by a deferred
                           Tax asset that would properly be reflected in the
                           Closing Financial Statements. Notwithstanding the
                           foregoing, if the amount of such Loss exceeds $20.0
                           million, the amount of such Loss shall only be offset
                           by the present value of any such deferred Tax asset,
                           which present value shall be determined (A) using a
                           discount rate equal to DEGI's average cost of capital
                           at the date of the Loss and (B) on the assumption
                           that the corresponding Tax benefit is utilized as
                           soon as possible and at the maximum rate of Tax under
                           applicable Laws, without regard to any limitations
                           arising from any Tax attributes of the taxpayer.

                  (iv)     The Parent shall not be liable for any Loss incurred
                           by the Acquiror, the Buyers or any member of either
                           Company Group that arises out of or results from the
                           implementation of the steps of the Reorganization
                           referred to in the last sentence of Section 10.05 or
                           from any action taken at the direction of the
                           Acquiror or any individual that the Acquiror had
                           identified in written notice to the Parent.

         (c)      Notwithstanding anything herein to the contrary, to the extent
                  that the Acquiror waives satisfaction of one or more
                  conditions set forth in subsection (a) or (b) of Section
                  11.03, which conditions were not satisfied due to one or more
                  events, conditions or circumstances that occurred after the
                  date of this Agreement and that were specifically disclosed in
                  writing to the Acquiror prior to the Closing Date, the Parent
                  shall not have any liability hereunder for such matter or
                  matters to the extent so disclosed.

         (d)      The procedures set forth in Section 12.04 shall govern the
                  disposition of claims for indemnification brought pursuant to
                  this Section 12.02 except that any claim for indemnification
                  regarding an Indemnifiable Environmental Matter shall, in
                  addition, be subject the provisions of Section 12.05. In the
                  event of a conflict between the provisions of Section 12.04
                  and Section 12.05, the provisions of the latter shall govern.

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                     AGREEMENT AND PLAN OF RECAPITALIZATION

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         Section 12.03. General Indemnification by the Acquiror.

         (a)      If the transactions contemplated hereby to occur at the
                  Closings are effected and subject to the provisions of
                  subsection (b) of Section 12.01, the Acquiror hereby agrees
                  (in such capacity, an "Indemnifying Party"), from and after
                  the Closing Date, to indemnify and hold harmless the Parent
                  and the Seller, their Affiliates, directors, officers and
                  employees (in such capacity, an "Indemnified Party") against
                  any Losses that such Indemnified Party shall actually incur,
                  to the extent that such Losses (or Proceedings):

                  (i)      arise out of or result from the untruth or breach of
                           any representation or warranty made in Article VI for
                           the benefit of the Parent; or

                  (ii)     arise out of or result from the nonperformance in
                           accordance with its terms of any covenant or
                           agreement made herein for the benefit of the
                           Indemnified Party by the Indemnifying Party; or

                  (iii)    arise out of or result from any acts or omissions to
                           act after the Closing Date by any Buyer or any member
                           of either Company Group hereunder; or

                  (iv)     arise out of or result from the nonpayment or
                           nonperformance of any of the Assumed Obligations; or

                  (v)      arise out of or result from the implementation of the
                           steps of the Reorganization referred to in the last
                           sentence of Section 10.05 or from any actions taken
                           at the direction of the Acquiror or any individual
                           that the Acquiror has identified in written notice to
                           the Parent; or

                  (vi)     arise out of or result from any matter set forth in
                           clause (i) through (vii), inclusive, of subsection
                           (d) of Section 12.05 arising after the Closing Date.

                  Notwithstanding the foregoing, the Indemnifying Party shall be
                  liable to the Indemnified Party under this Section 12.03 only
                  in the event and to the extent that the amount of Losses
                  incurred by the Indemnified Party exceeds the Deductible
                  Amount; provided, however, that:

                           (A)      no Loss subject to indemnification pursuant
                                    to clause (iii) or (iv) of this Section
                                    shall be subject to or counted toward the
                                    Deductible Amount;

                           (B)      the amount of such Losses that are subject
                                    to indemnification hereunder shall not
                                    exceed $950,000,000 (nine hundred fifty
                                    million dollars); and

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                           (C)      the Losses incurred by an Indemnified Party
                                    shall, for purposes of determining the
                                    maximum amount or threshold level thereof in
                                    accordance with this sentence and otherwise
                                    with respect to the obligations of the
                                    Indemnifying Parties hereunder, be offset by
                                    (i) the proceeds of any insurance received
                                    directly or indirectly by the Indemnified
                                    Party with respect thereto and (ii) the
                                    amount of any income tax benefit actually
                                    realized by the Indemnified Party with
                                    respect thereto.

                  For purposes of clause (i) of this subsection (a), the
                  representations and warranties of the Acquiror contained in
                  this Agreement shall, except for each instance in which a
                  representation and warranty regarding the completeness or
                  accuracy of a list or Schedule to the Acquiror's Disclosure
                  Letter is qualified as to materiality, be deemed to have been
                  made without any qualification as to materiality and,
                  accordingly, all references in such representations and
                  warranties to "Material", "Materially," "Material Adverse
                  Effect" and similar terms and phrases (including references to
                  dollar thresholds therein) shall be deemed to be deleted
                  therefrom.

         (b)      Notwithstanding anything to the contrary in this Agreement,
                  the Acquiror shall not be liable for any Losses resulting from
                  a breach of any of the representations and warranties set
                  forth in Article VI of this Agreement to the extent that the
                  liability for such breach occurs or is increased as a result
                  of the adoption or imposition of any Law, Regulation or Order
                  not in force at the date of this Agreement or as a result of
                  any increase in rates of taxation after the date of this
                  Agreement.

         (c)      Notwithstanding anything herein to the contrary, to the extent
                  that the Parent waives satisfaction of one or more conditions
                  set forth in subsection (a) or (b) of Section 11.02, which
                  conditions were not satisfied due to one or more events,
                  conditions or circumstances that occurred after the date of
                  this Agreement and that were specifically disclosed in writing
                  to the Parent prior to the Closing Date, the Acquiror shall
                  not have any liability hereunder for such matter or matters to
                  the extent so disclosed.

         (d)      The procedures set forth in Section 12.04 shall govern the
                  disposition of claims for indemnification brought pursuant to
                  this Section 12.03.

         Section 12.04. Procedures.

         (a)      Promptly after (i) discovery by an Indemnified Party hereunder
                  of a Loss or (ii) receipt by the Indemnified Party of notice
                  of the commencement of any Proceeding, in each case, against
                  which it believes it is indemnified under this Article, the
                  Indemnified Party shall, if a claim in respect thereto is to
                  be made against the Indemnifying Party under this Article,
                  notify the Indemnifying Party in writing of the discovery or
                  commencement thereof (the "Indemnification Notice"); provided,

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                  however, that the omission so to notify the Indemnifying Party
                  shall not relieve it from any liability that it may have to
                  the Indemnified Party to the extent that the Indemnifying
                  Party is not prejudiced by such omission; and provided,
                  further, that with respect to any Loss or Proceeding in
                  existence on the Closing Date with respect to an Excluded
                  Liability or with respect to any Indemnifiable Environmental
                  Matter to which reference is made in clause (a), (c) or (e) of
                  the definitions of that term, the Acquiror shall be deemed to
                  have given notice thereof to the Parent pursuant to this
                  subsection (a) and the Parent shall be deemed to have
                  responded to such notice in accordance with clause (ii) of
                  subsection (b) of this Section, all effective as of the
                  Closing Date.

         (b)      The Indemnifying Party shall, within thirty (30) days after
                  receipt of an Indemnification Notice, either (i) in writing
                  acknowledge liability, as between the Indemnifying Party and
                  the Indemnified Party, for such Loss or the amount in
                  controversy in such Proceeding and pay the Indemnified Party
                  the amount of such Loss or the amount in controversy in such
                  Proceeding in cash in immediately available funds (or
                  establish by agreement with the Indemnified Party an
                  alternative payment arrangement), (ii) in writing acknowledge
                  liability, as between the Indemnifying Party and the
                  Indemnified Party, for such Loss or the amount in controversy
                  in such Proceeding but disavow the validity of the Loss or
                  Proceeding or the amount thereof and, in the case of a
                  Proceeding to the extent that it shall so desire in accordance
                  with subsection (d) of this Section, assume the legal defense
                  thereof or (iii) in writing object (or reserve the right to
                  object until additional information is obtained) to the claim
                  for indemnification or the amount thereof and set forth the
                  grounds therefor in reasonable detail. If the Indemnifying
                  Party does not respond to the Indemnified Party as provided in
                  this subsection within such thirty (30) day period, the
                  Indemnifying Party shall be deemed to have acknowledged its
                  liability for such indemnification claim in accordance with
                  clause (i) of this subsection and the Indemnified Party may
                  exercise any and all of its rights under applicable Law to
                  collect such amount.

         (c)      An Indemnifying Party shall not, without the prior written
                  consent of the Indemnified Party (which consent shall not be
                  unreasonably withheld), settle or compromise or consent to the
                  entry of any judgment with respect to any pending or
                  threatened Proceeding in respect of which indemnification or
                  contribution is sought hereunder. If the Indemnifying Party
                  has responded to the Indemnified Party pursuant to clause (i)
                  of subsection (b) of this Section, the Indemnified Party may
                  settle or compromise or consent to the entry of any judgment
                  with respect to the Proceeding that was the subject of notice
                  to the Indemnifying Party pursuant to subsection (b) of this
                  Section without the consent of the Indemnifying Party (but no
                  such settlement, compromise or consent shall increase the
                  indemnification obligation of the Indemnifying Party to which
                  it has consented pursuant to clause (i) of subsection (b) of
                  this Section). Except as otherwise provided in the immediately
                  preceding sentence and in subsection (d) of this Section, an
                  Indemnified Party shall not, without the prior written consent
                  of the Indemnifying Party (which consent shall not be
                  unreasonably

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                  withheld), settle or compromise or consent to the entry of any
                  judgment with respect to any pending or threatened Proceeding,
                  but, if such Proceeding is settled or compromised or if there
                  is entered any judgment with respect to any such Proceeding,
                  in either case with the consent of the Indemnifying Party, or
                  if there be a final judgment for the plaintiff in any such
                  Proceeding, the Indemnifying Party shall indemnify and hold
                  harmless any Indemnified Party from and against any Loss by
                  reason of such settlement, compromise or judgment in
                  accordance with the other provisions of this Article XII.

         (d)      If a Proceeding shall be brought against an Indemnified Party
                  and it shall notify the Indemnifying Party thereof in
                  accordance with subsection (a) of this Section, the
                  Indemnifying Party shall, if it shall have responded to such
                  notice in accordance with clause (ii) of subsection (b) of
                  this Section, be entitled to assume the legal defense thereof
                  at the expense of the Indemnifying Party with counsel
                  reasonably satisfactory to the Indemnified Party. The
                  Indemnified Party shall have the right to employ separate
                  counsel in any such action and participate in the defense
                  thereof, but the fees and expenses of such counsel shall be at
                  the expense of the Indemnified Party unless (i) the employment
                  of such counsel shall have been specifically authorized in
                  writing by the Indemnifying Party or (ii) the Indemnifying
                  Party shall have failed to assume the defense of such action
                  or (iii) the named parties to any such Proceeding (including
                  any impleaded parties) include both the Indemnified Party and
                  the Indemnifying Party, and the Indemnified Party shall have
                  been advised by such counsel that there is one or more legal
                  defenses available to it that are different from or additional
                  to those available to the Indemnifying Party. In any such
                  case, the Indemnifying Party shall not, in connection with any
                  one action or separate but substantially similar or related
                  actions in the same jurisdiction arising out of the same
                  general allegations or circumstances, be liable for the fees
                  and expenses of more than one separate firm of attorneys (in
                  addition to any local counsel) for the Indemnified Party.
                  Except as aforesaid, after notice from the Indemnifying Party
                  to the Indemnified Party of its election to assume the defense
                  of such claim or such action, the Indemnifying Party shall not
                  be liable to the Indemnified Party under this Section for any
                  attorney's fees or other expenses (except reasonable costs of
                  investigation) subsequently incurred by the Indemnified Party
                  in connection with the defense thereof. If the Indemnifying
                  Party does not assume the defense of a Proceeding as to which
                  it has acknowledged liability, as between itself and the
                  Indemnified Party, pursuant to clause (ii) of subsection (b)
                  of this Section, the Indemnified Party may require the
                  Indemnifying Party to reimburse it on a current basis for its
                  reasonable expenses of investigation, reasonable attorney's
                  fees and expenses and reasonable out-of-pocket expenses
                  incurred in the defense thereof and the Indemnifying Party
                  shall be bound by the result obtained with respect thereto by
                  the Indemnified Party.

         (e)      In the case of a Loss as to which the Indemnifying Party shall
                  have responded pursuant to clause (iii) of subsection (b)
                  above, the parties shall attempt in good faith to resolve
                  their differences for a period of sixty (60) days following
                  receipt by the Indemnified Party of the response of the
                  Indemnifying Party pursuant to subsection

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                  (b) above and, if the parties are unable to resolve their
                  differences within such period, the Indemnified Party may
                  submit the matter to arbitration in accordance with the
                  provisions of Section 14.10.

         Section 12.05. Special Environmental Indemnification Provisions.

         (a)      The Parent shall have the sole and exclusive right to control
                  the defense, response, proceedings, settlement and resolution
                  of any Indemnifiable Environmental Matters, including any
                  investigations, removals, remediations, response actions,
                  enforcement actions or administrative proceedings; provided
                  that the Parent shall not agree to any response, settlement or
                  resolution that unreasonably interferes with any operations of
                  the Business. The Acquiror shall cooperate in all reasonable
                  ways with the Parent in the defense, contest, settlement of or
                  prosecution of any Indemnifiable Environmental Matters.

         (b)      With respect to any Indemnifiable Environmental Matters that
                  require corrective actions, the Parent's indemnification
                  obligations under clause (v) of subsection (a) of Section
                  12.02 shall be applicable to any investigation, removal,
                  remediation or other response action ("Environmental
                  Activities") only if and to the extent the conditions giving
                  rise to such matter require reporting to a Governmental
                  Authority and require corrective action under applicable
                  Environmental Laws or, if such conditions were known to a
                  Governmental Authority having jurisdiction over the matter,
                  the Governmental Authority would be entitled to bring an
                  enforcement action to require the Environmental Activities,
                  but then only to the extent necessary to bring the appropriate
                  member of a Company Group into compliance with the
                  requirements of applicable Environmental Laws in effect as of
                  the Closing Date. (The Acquiror shall be responsible for any
                  additional Environmental Activities which may be required by
                  Environmental Laws enacted or adopted after the Closing Date.)
                  The Parent, in its sole discretion, shall determine the
                  applicable cleanup standard for Covered Known Hazardous
                  Materials Contamination and Unknown Hazardous Materials
                  Contamination that are Indemnifiable Environmental Matters, in
                  consultation with the Agency. Neither the Acquiror, any Buyer
                  nor any member of a Company Group may use the properties of
                  any member of any Company Group for any residential, health
                  care, childcare or school purposes. The Acquiror acknowledges
                  and agrees that any title transfer documents relating to the
                  Real Property delivered to the Acquiror may contain
                  restrictions on the use of the Real Properties. The Acquiror
                  further agrees and binds itself to execute and file any and
                  all documents restricting the use of the properties of the
                  members of the Company Groups as may be required in connection
                  with the Environmental Activities. Notwithstanding anything in
                  this Section 12.05 to the contrary, no cleanup standards, use
                  restrictions or institutional controls shall be required that
                  unreasonably interfere with any operations of the Business.
                  The Acquiror shall not encourage or invite any Agency to
                  require any Environmental Activities or enforcement action;
                  provided, however, that the Acquiror may cause the Buyers and
                  the members of the Company

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                  Groups to comply with all applicable Environmental Laws in the
                  use, ownership or occupation of the Real Property or the
                  operations of the Businesses.

         (c)      The Acquiror acknowledges that, prior to the Closing Date, the
                  Parent may have initiated Environmental Activities as a result
                  of the Parent's obligation to applicable Agencies, and that
                  such Environmental Activities may continue after the Closing
                  Date. The Acquiror further acknowledges that any Environmental
                  Activities conducted after the Closing Date in accordance with
                  this Section 12.05 or continued from Environmental Activities
                  prior to the Closing Date may involve the filing of land use
                  and deed restrictions, institutional and engineering controls,
                  groundwater use restrictions, soil management requirements,
                  access and easement rights, and restrictive covenants
                  (including a prohibition against installation of water wells
                  on the properties of the members of the Company Groups). The
                  Acquiror shall at all times cooperate with the Parent in
                  obtaining and maintaining any necessary documents, permits or
                  conditions, and the Acquiror shall not take any action in
                  contravention of such land use or deed restrictions or other
                  requirements. The Acquiror further acknowledges that the
                  Parent's environmental obligations hereunder may include
                  sampling and excavating soil, the sampling, operation and
                  maintenance of groundwater monitoring and recovery wells,
                  associated piping, groundwater pumping and treatment equipment
                  and other facilities or equipment. The Acquiror shall, without
                  further compensation, costs or fees to the Parent, grant and
                  provide, after reasonable advance notice, all necessary access
                  to the Parent, the Parent's employees, agents, contractors,
                  subcontractors, representatives and Agency representatives to
                  enter onto the properties of the members of the Company Groups
                  after the Closing Date to undertake any Environmental
                  Activities. The Parent's rights of access to use the
                  properties of the members of the Company Groups are
                  non-exclusive and shall endure as long as is necessary to
                  complete the Environmental Activities. The Parent shall, to
                  the extent practicable and consistent with sound investigation
                  and remediation practices, undertake the Environmental
                  Activities in a manner that will not unreasonably interfere
                  with the use of the properties of the members of either of the
                  Company Groups and shall indemnify and hold harmless the
                  Acquiror against any Losses arising out of such rights of
                  access except for any such Losses that arise out of or result
                  from the negligence of the Acquiror or any Persons acting on
                  its behalf. The Acquiror shall cause the Buyers and the
                  members of the Company Groups to take all necessary
                  precautions to avoid any damage to or loss of any equipment or
                  facilities placed on the properties of the members of the
                  Company Groups by the Parent as part of the Environmental
                  Activities, and shall pay for all damages to or loss of such
                  equipment or facilities resulting from any negligent acts or
                  omissions of the Buyers or members of the Company Groups, or
                  their ownership, use or occupancy of their properties.

         (d)      The Parent's indemnity obligations with respect to
                  Indemnifiable Environmental Matters under clause (v) of
                  subsection (a) of Section 12.02 shall not apply to any Losses:
                  (i) caused by the Acquiror's inspection of the properties of
                  the members of the Company Groups; (ii) arising from the use
                  or occupancy of the properties of the

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                  members of the Company Groups by the Acquiror or any of its
                  Affiliates prior to the Closing Date; (iii) with respect to
                  any Indemnified Environmental Matter known to Acquiror,
                  arising from, caused by, or exacerbated by the use, occupancy
                  or ownership of the Real Property or the operation of the
                  Businesses or omissions of the Acquiror after the first
                  anniversary of Acquiror gaining such knowledge, (iv) arising
                  after the expiration of any applicable indemnity period, (v)
                  based on Hazardous Materials Contamination, Environmental
                  Compliance Matters or other conditions that did not exist as
                  of the Closing Date; (vi) that constitute Known Hazardous
                  Materials Contamination that is not Covered Known Hazardous
                  Materials Contamination; (vii) incurred in connection with the
                  management, removal or abatement of asbestos-containing
                  material from any structure or equipment during any demolition
                  or renovation of any facility or structure after the Closing
                  Date; or (viii) arising from the migration of Hazardous
                  Materials or Hazardous Materials Contamination onto the Real
                  Property of any members of any of the Company Groups from an
                  offsite source. The Parent, may at its own cost and option,
                  participate in the defense of any such claim.

         (e)      Except as set forth in this Article XII, the Acquiror
                  unconditionally releases the Parent from any and all Losses
                  arising out of or resulting from any Hazardous Materials or
                  Hazardous Materials Contamination, Environmental Compliance
                  Matters or related environmental conditions (including Known
                  Hazardous Materials Contamination, Unknown Hazardous Materials
                  Contamination Known Environmental Compliance Matters, Unknown
                  Environmental Compliance Matters and Indemnifiable
                  Environmental Matters, regardless of how or when discovered).
                  Provided that the Parent is in material compliance with its
                  obligations under this Article XII, the Acquiror hereby
                  covenants and agrees that neither the Acquiror nor any
                  Affiliate under its control will file suit or name the Parent
                  or any of its Affiliates in any lawsuit arising from any of
                  the foregoing. The Acquiror understands and expressly agrees
                  that releases set forth in this Section:

                  (i)      shall constitute releases of liability under all
                           applicable Environmental Laws, including the United
                           States Comprehensive Environmental Response,
                           Compensation and Liability Act, as currently in
                           effect, the United States Resource Conservation
                           Recovery Act, as currently in effect, and any similar
                           or equivalent laws in the jurisdiction of any
                           Governmental Authority in which any properties of any
                           member of a Company Group are located;

                  (ii)     shall constitute an assumption of future liabilities;

                  (iii)    are made with the knowledge of the prior commercial
                           or industrial use of the properties of the members of
                           the Company Groups and the possible presence of
                           Hazardous Materials on such properties; and

                  (iv)     are supported by separate consideration, the receipt
                           and sufficiency of which are expressly acknowledged
                           and confessed by the Acquiror.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       74
<PAGE>   81

         Section 12.06. Punitive Damages. Neither party to this Agreement nor
any of its Affiliates or Representatives shall be liable to any other party
hereto or any of its Affiliates or Representatives for claims for punitive,
special, exemplary or incidental damages, regardless of whether a claim is based
on contract, tort (including negligence), strict liability, violation of any
applicable deceptive trade practices act or similar Law or any other legal or
equitable principle. No party shall be entitled to rescission of this Agreement
as a result of breach of any other party's representations, warranties,
covenants or agreements, or for any other matter.

         Section 12.07. Failure of Acquiror to Close. The Parent and the
Acquiror have agreed that if the Acquiror shall fail to consummate the
transactions contemplated hereby for any reason under its control that does not
confer upon the Acquiror a right to terminate this Agreement under Section
13.01, the Acquiror shall pay to the Parent, on or before the fifth (5th)
Business Day following the date on which the Acquiror failed to consummate such
transactions in violation of the terms of this Agreement or, if such date is not
determinable, the Termination Date, an amount in cash in U.S. Dollars equal to
$20 million less professional fees and expenses incurred on behalf of the
Acquiror prior to, on or after the date hereof by wire transfer of immediately
available funds to the wire transfer address of Parent provided in written
instructions to the Acquiror. Such amount shall be deemed to be liquidated
damages and, in that regard, it is expressly stipulated by the parties that the
actual amount of any damages resulting from the Acquiror's failure to complete
the transactions contemplated by this Agreement would be difficult if not
impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Securities, the uncertainties of the
relevant markets in which the Businesses operate and differences of opinion with
respect to such matters, and that the liquidated damages provided for herein are
a reasonable estimate by the parties of such damages.

         Section 12.08. No Right of Contribution. After the Closing Date, no
member of either Company Group shall be obligated to indemnify either the
Acquiror, any Buyer, the Parent or the Seller on account of the breach of any
representation or warranty or the nonfulfillment of any covenant or agreement of
the Parent or the Seller; and neither Parent nor the Seller shall have any right
of contribution against any member of either Company Group for any such breach
or nonfulfillment.

         Section 12.09. Specific Performance. The Parent hereby agrees that
irreparable damage would occur to the Acquiror if the Parent failed to
consummate the transactions contemplated hereby in accordance with the terms of
this Agreement, and, accordingly, the Parent and the Acquiror agree that the
Acquiror shall be entitled to enforce specifically the performance of the
transactions contemplated hereby in the United States federal court for the
Southern District of New York or in any other court having jurisdiction without
posting bond or other security, this being in addition to any other remedy to
which it is entitled at law or in equity.

         Section 12.10. Sole Remedy. From and after the Closing Date, the
provisions of this Article XII shall, except as provided in subsection 2.09(g),
be the sole and exclusive remedy of each party hereto for (i) any breach of the
other party's representations or warranties contained in this

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       75
<PAGE>   82

Agreement or (ii) any breach of the other party's covenants or agreements
contained in this Agreement (other than any covenant or agreement to be
performed after the Closing Date).

                                  ARTICLE XIII

                        TERMINATION, AMENDMENT AND WAIVER

         Section 13.01. Termination. This Agreement may be terminated at any
time prior to the Closing Date:

         (a)      by mutual written consent of the Parent and the Acquiror;

         (b)      by the Parent, upon a breach of any representation, warranty,
                  covenant or agreement on the part of the Acquiror set forth in
                  this Agreement or if any representation or warranty of the
                  Acquiror shall have become untrue, in either case, such that
                  the conditions set forth in subsection (a) or (b) of Section
                  11.02 would not be satisfied (a "Terminating Acquiror
                  Breach"); provided, however, that, if such Terminating
                  Acquiror Breach is curable by the Acquiror through the
                  exercise of its reasonable efforts and for so long as the
                  Acquiror continues to exercise such reasonable efforts, the
                  Parent may not terminate this Agreement under this subsection
                  (b) until September 30, 2001;

         (c)      by the Acquiror, upon a breach of any representation,
                  warranty, covenant or agreement on the part of the Parent set
                  forth in this Agreement or if any representation or warranty
                  of the Parent shall have become untrue, in either case, such
                  that the conditions set forth in subsection (a) or (b) of
                  Section 11.03 would not be satisfied (a "Terminating Parent
                  Breach"); provided, however, that, if such Terminating Parent
                  Breach is curable by the Parent through the exercise of its
                  reasonable efforts and for so long as the Parent continues to
                  exercise such reasonable efforts, the Acquiror may not
                  terminate this Agreement under this subsection (c) until
                  September 30, 2001;

         (d)      by either the Parent or the Acquiror, if the Closing Date
                  contemplated hereby shall not have occurred on or before June
                  30, 2001 (the "Termination Date"); provided, however, that the
                  right to terminate this Agreement under this subsection (d)
                  shall not be available to either Party whose failure to
                  fulfill any obligation under this Agreement has been, directly
                  or indirectly, the cause of, or resulted in, the failure of
                  the Closing Date to occur on or before such date; provided,
                  further, that, if on the Termination Date the conditions to
                  the First Closing set forth in subsection (b) or (c) of
                  Section 11.01 shall not have been fulfilled but all other
                  conditions to the First Closing have been fulfilled or are
                  capable of being fulfilled, then the Termination Date shall be
                  extended to September 30, 2001.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       76
<PAGE>   83

         The right of any party hereto to terminate this Agreement pursuant to
this Section 13.01 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
Person controlling any such party or any of their Representatives, whether prior
to or after the execution of this Agreement.

         Section 13.02. Effect of Termination. If terminated pursuant to Section
13.01, this Agreement shall, except for Sections 9.01, 10.05, 10.07(a), 12.06,
12.07 and 12.09 of this Agreement, forthwith become void and (i) there shall be
no liability on the part of the Parent, the Seller, the Acquiror or any of their
respective officers or directors to any other party and (ii) all rights and
obligations of any party hereto shall cease; provided, however, that nothing
herein shall relieve the Parent, the Seller or the Acquiror from liability for
any misrepresentation of any representation and warranty or breach of any
covenant or agreement under this Agreement occurring prior to the date of such
termination.

         Section 13.03. Amendment. This Agreement may not be amended except by
an instrument in writing authorized by the Parent, the Seller and the Acquiror
and signed by the Parent, the Seller and the Acquiror.

         Section 13.04. Waiver. Either the Parent or the Acquiror hereto may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other parties with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby.

                                   ARTICLE XIV

                                  MISCELLANEOUS

         Section 14.01. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:

         If to the Parent, to:

                  Halliburton Company
                  4100 Clinton Drive
                  Houston, Texas 77020
                  Attention: Gary V. Morris
                           Executive Vice President
                           and Chief Financial Officer
                  Telephone: 713/676-4189
                  Telecopier: 713/676-7799

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       77
<PAGE>   84

         Copy to:
                  Lester L. Coleman
                  Executive Vice President
                  and General Counsel
                  Halliburton Company
                  3600 Lincoln Plaza
                  500 North Akard
                  Dallas, Texas 75201-3391
                  Telephone: 214/978-2634
                  Telecopier: 214/978-2658

         If to the Acquiror, to:

                  c/o First Reserve Corporation
                  411 West Putnam Avenue
                  Greenwich, CT 06830
                  Attention: William Macaulay
                  Telephone: (203) 625-2500
                  Telecopier: (203) 661-6729

                  Copy to:

                  Tom Denison
                  First Reserve Corporation
                  1801 California Street, #4110
                  Denver, CO 80202
                  Telephone: (303) 382-1271
                  Telecopier: (303) 382-1275

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       78
<PAGE>   85

                  and to:

                  Odyssey Investment Partners, LLC
                  280 Park Avenue
                  West Tower, 38th Floor
                  New York, NY 10017
                  Attention: Paul Barnett
                  Telephone: (212) 351-7900
                  Telecopier: (212) 351-7925

         Copy to:

                  Latham & Watkins
                  885 Third Avenue
                  New York, NY  10022
                  Attention:  Robert Kennedy
                  Telephone:  (212) 906-1200
                  Telecopier:  (212) 751-4864

or to such other address or telecopier number as the Parent or the Acquiror may,
from time to time, designate in a written notice given in a like manner. Notice
given by telecopier shall be deemed delivered on the day the sender receives
telecopier confirmation that such notice was received at the telecopier number
of the addressee. Notice given by mail as set out above shall be deemed to be
delivered on the fifth Business Day following deposit in the U.S. mail.

         Section 14.02. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         Section 14.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.

         Section 14.04. Entire Agreement. This Agreement (together with the
Ancillary Agreements, the Annexes and Appendices hereto, the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter) constitutes the entire agreement of
the parties, and supersedes all prior agreements, deliveries, disclosures and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       79
<PAGE>   86

         Section 14.05. Assignment. Without the prior written consent of the
other party hereto, the rights and obligations of a party hereto under this
Agreement may not be assigned except by operation of Law; provided, however,
that the Acquiror may (i) assign its rights and obligations hereunder without
the consent of any other party hereto to any wholly owned Subsidiary of the
Acquiror, in which event the Acquiror shall remain liable for all of its
obligations under this Agreement, and the assignee shall, together with the
Acquiror, be jointly and severally liable for such obligations and (ii) assign
as collateral its rights and obligations hereunder without the consent of any
other party hereto to the Lenders referred to in the Commitment Letters or a
collateral agent acting on their behalf.

         Section 14.06. Successors; Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.

         Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Except as set
forth in Section 12.10, all rights and remedies existing under this Agreement
are cumulative with, and not exclusive of, any rights or remedies otherwise
available.

         Section 14.08. Disclosure Letters. Each of the Parent's Disclosure
Letter and the Acquiror's Disclosure Letter have been arranged in paragraphs or
schedules corresponding to the relevant Sections of this Agreement. Any matter
disclosed by the Parent in the Parent's Disclosure Letter or by the Acquiror in
the Acquiror's Disclosure Letter pursuant to any Section of this Agreement shall
be deemed to have been disclosed by such party for purposes of each other
Section of this Agreement to which such disclosure would reasonably relate.

         Section 14.09. Governing Law. This Agreement shall be construed (both
as to validity and performance) and enforced in accordance with, and governed
by, the laws of the State of New York applicable to agreements made and to be
performed wholly within such jurisdiction. Any judicial proceeding brought
against any of the parties hereto with respect to this Agreement shall be
brought in the United States District Court for the Southern District of New
York sitting in New York County and any appellate court of that District Court
irrespective of where such party may be located at the time of such proceeding,
and by execution and delivery of this Agreement, each of the parties hereto
hereby consents to the exclusive jurisdiction of such court and waives any
defense or opposition to such jurisdiction.

         Section 14.10. Arbitration. Any dispute referenced in subsection (b) of
Section 2.09 or in subsection (e) of Section 12.04 shall be resolved by binding
arbitration under the Commercial Arbitration Rules (the "AAA Rules") of the
American Arbitration Association (the "AAA"). This arbitration provision is
expressly made pursuant to and shall be governed by the Federal Arbitration

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       80
<PAGE>   87

Act, 9 U.S.C. Sections 1 -14. The parties hereto agree that, pursuant to Section
9 of the Federal Arbitration Act, a judgment of a United States District Court
of competent jurisdiction shall be entered upon the award made pursuant to the
arbitration. Three arbitrators, who shall have the authority to allocate the
costs of any arbitration initiated under this paragraph, shall be selected in
accordance with the following sentence within ten (10) days of the submission to
the AAA of the response to the statement of claim or the date on which any such
response is due, whichever is earlier. The selection shall be made as follows:
one by the Parent, one by the Acquiror and one by the two so selected, provided,
however, that only the third arbitrator shall be required to be neutral. The
arbitrators shall conduct the arbitration in accordance with the Federal Rules
of Evidence. The arbitrators shall decide the amount and extent of pre-hearing
discovery which is appropriate. The arbitrators shall have the power to enter
any award of monetary or injunctive relief (including the power to issue
permanent injunctive relief and also the power to reconsider any prior request
for immediate injunctive relief by either of the parties and any order as to
immediate injunctive relief previously granted or denied by a court in response
to a request therefor by either of the parties), including the power to render
an award as provided in Rule 43 of the AAA Rules; provided, however, that the
arbitrators shall not have the power to award punitive or consequential damages
under any circumstances (whether styled as punitive, exemplary, or treble
damages, or any penalty or punitive type of damages) regardless of whether such
damages may be available under applicable Law, the parties hereby waiving their
rights, if any, to recover any such damages, whether in arbitration or
litigation. Unless differently awarded by the arbitration tribunal, the fees and
expenses of the arbitrators shall be paid 50% by the Acquiror and 50% by the
Parent. The arbitration award may be enforced in any court having jurisdiction
over the parties and the subject matter of the arbitration. The arbitration
shall be held in New York, New York.

         Section 14.11. Confidentiality Agreements. The Parent agrees that,
until the second anniversary of the Closing Date, it will not terminate, or
waive any provision of, any confidentiality agreement relating to information
regarding any of the Businesses entered into at any time during the period of
two years immediately preceding the date of this Agreement.

         Section 14.12. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       81
<PAGE>   88

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

                               PARENT

                               HALLIBURTON COMPANY

                               By:    /s/ DAVID A. REAMER
                                      ----------------------------------------
                               Name:      David A. Reamer
                                      ----------------------------------------
                               Title:     Senior Vice President of Halliburton
                                      ----------------------------------------

                               ACQUIROR

                               DEG ACQUISITIONS, LLC

                               By:    /s/ THOMAS R. DENISON
                                      ----------------------------------------
                               Name:      Thomas R. Denison
                                      ----------------------------------------
                               Title:     Manager
                                      ----------------------------------------

                               By:    /s/ PAUL D. BARNETT
                                      ----------------------------------------
                               Name:      Paul D. Barnett
                                      ----------------------------------------
                               Title:     Manager
                                      ----------------------------------------

                               SELLER

                               DRESSER B.V.

                               By:    /s/ DAVID A. REAMER
                                      ----------------------------------------
                               Name:      David A. Reamer
                                      ----------------------------------------
                               Title:     Attorney-in-fact
                                      ----------------------------------------

                               HALLIBURTON COMPANY
                     AGREEMENT AND PLAN OF RECAPITALIZATION

                                       82

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