DANIEL INDUSTRIES INC, 10-K, 1995-12-18

DANIEL INDUSTRIES INC
10-K, 1995-12-18
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

Previous: CUBIC CORP /DE/, PRE 14A, 1995-12-18

Next: DREYFUS LEVERAGE FUND INC /NY/, 497, 1995-12-18

<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _______________

Commission File No. 1-6098

DANIEL INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 74-1547355
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9753 PINE LAKE DRIVE
HOUSTON, TEXAS 77055
(Address of principal executive offices) (Zip code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (713) 467-6000

SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ----------------------------------- ------------------------
COMMON STOCK, $1.25 PAR VALUE NEW YORK STOCK EXCHANGE
RIGHTS TO PURCHASE PREFERRED SHARES NEW YORK STOCK EXCHANGE

SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: None

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[ ]

At November 30, 1995, the aggregate market value of Common Stock,
$1.25 par value, of the registrant held by non-affiliates of the registrant was
$129,552,008. As of that date, there were outstanding 12,083,485 shares of
Common Stock, $1.25 par value, of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

There is incorporated by reference in Part III of this Annual Report on
Form 10-K the information contained under the headings "Election of Directors",
"Company Executive and Subsidiary Officers", "Executive Compensation", "Certain
Relationships and Related Transactions" and "Principal Stockholders" in the
Registrant's Proxy Statement for the Company's Annual Meeting of Stockholders
proposed to be held February 1, 1996, which Proxy Statement shall be filed
within 120 days of the end of the registrant's fiscal year.
<PAGE> 2
P A R T I

ITEM 1. BUSINESS.

Daniel Industries, Inc. is engaged in providing products and systems
used to measure rates of flow and accumulated volumes of fluids, primarily oil
and natural gas. The Company manufactures a variety of measurement devices
including orifice, turbine, positive displacement, ultrasonic and oval gear
meters and a wide range of electronic instruments used in conjunction with flow
measurement products. The Company also designs, fabricates and assembles
large, automated flow measurement systems to meet specific needs and
applications. The Company's flow measurement products and systems are used
mainly by producers, refiners and transporters of oil and natural gas. The
Company is also engaged in the manufacture and sale of pipeline valves.

In connection with the Company's restructuring plan announced in
February 1995, the Company sold in November 1995, the net assets of its
fastener business which manufactured alloy stud bolts, ring joint gaskets and
industrial flanges, and in July 1995, sold its energy fabrication business
which manufactured large steam generators and water treatment equipment for
enhanced oil recovery operations and produced equipment for pipeline and
production facilities. (See NOTES 2 and 3 of NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.)

Daniel Industries, Inc. was incorporated under the laws of Delaware in
1988 as the successor to a business started in 1930. Unless the context
indicates otherwise, references herein to the "Company" refer to Daniel
Industries, Inc., its subsidiaries and their predecessors.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Company has two industry segments: flow measurement and energy
products. Financial information for the Company's industry segments is
presented in NOTE 15 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Such
information is hereby incorporated by reference herein.

FLOW MEASUREMENT

Since its inception in 1930, the Company has manufactured products
that employ a method known as differential orifice measurement to measure
fluids, primarily natural gas. These orifice measurement products cause a
decline in pressure as fluid flows through the device. This decline in
pressure is measured and used to determine rates of flow and accumulated
volumes of fluid. In addition to its orifice measurement products, the Company
manufactures flow measurement products using turbines whose frequency of
rotation indicates rates of flow and accumulated volumes of fluid. The Company
also manufactures positive displacement and oval gear meters for the
measurement of various liquid flows. Sales of all metering equipment worldwide
contributed 52%, 43% and 53% of this industry segment's revenues in fiscal
1995, 1994 and 1993, respectively.

The Company also manufactures a wide range of electronic instruments
used in conjunction with flow measurement products. Sales of electronic
products

1
<PAGE> 3
worldwide contributed approximately 26%, 20% and 24% of this industry segment's
revenues in fiscal 1995, 1994 and 1993, respectively. The Company's electronic
flow computers instantaneously compute and display the rate of flow and
accumulated volumes of fluid. The Company has developed several software
programs and has an in-house programming capability to meet specific customer
applications. Other electronic products manufactured by the Company include
chromatographs for analysis of natural gas to determine its BTU content and
ultrasonic flowmeters for nonintrusive gas flow measurement. In addition, the
Company designs and manufactures electronic products for the automation of
liquid petroleum loading facilities.

The Company designs, fabricates and assembles flow measurement
systems, including specialized electronic and control systems for the
automation of liquid petroleum product loading systems. Sales of all systems
worldwide contributed approximately 22%, 37% and 23% of this industry segment's
revenues in fiscal 1995, 1994 and 1993, respectively. A typical system is
mounted on one or more skids for ease of installation and contains various
mechanical equipment, electronic instruments, piping, supports and walkways. A
system can be operated manually or it can be completely automated through the
use of computers and other instrumentation supplied and programmed by the
Company. In the process of supplying a flow measurement system, the Company
first defines the total measurement requirements, and subsequently designs the
system. The Company then fabricates or supplies the various mechanical and
electronic components of the system. The system is assembled and tested at the
Company's Houston, Texas or Falkirk, Scotland plant. The Company also has the
capability to supervise on-site installation and start-up operations of the
system and to provide servicing for the system after installation.

The Company has sales offices in seven United States cities; Calgary,
Canada; Dammam, Saudi Arabia; Datchet, England; Falkirk, Scotland; Leiden,
Holland; Moscow, Russia; Potsdam-Babelsberg, Germany and Singapore through
which it sells its flow measurement products and systems. In addition, sales
are made domestically and in certain foreign countries through a system of
sales representatives and distributors working on a commission basis. Although
the Company's flow measurement products and systems have been used in water
handling and the chemical and power generation industries, sales are
principally to integrated oil companies, gas pipeline companies and other
concerns engaged in the production, transmission and marketing of oil and
natural gas. The geographic market for the Company's flow measurement products
and systems is worldwide.

In competing for the sale of systems, the Company may enter into
contracts which provide for the completion of the systems at specified prices
and in accordance with time schedules. These contracts may involve greater
risks as a result of unforeseen increases in the prices of raw materials and
other costs. In its financial statements, the Company accounts for systems
using the percentage-of-completion method, which requires recognition of
revenues and costs over the life of the contract, rather than solely at the
time the contract is completed.

The Company has not compiled detailed market information regarding its
competitive position in the flow measurement industry. However, the Company

2
<PAGE> 4
believes that, in terms of revenues, it is the largest United States producer
of orifice measurement products used to measure natural gas flows in custody
transfer. In addition, management considers the Company to be a major
international supplier of terminal automation equipment for terminal petroleum
product truck loading and of flow measurement systems, which are used to
measure crude oil flows. Among the other devices used for flow measurement are
turbine measurement products, but the Company has a less than dominant position
in the market for those products. In general, the flow measurement segment of
the Company has numerous competitors, none of which is considered to be
dominant. The principal competitive factors in this industry include,
singularly or in various combinations, price, design, service, efficiency and
the ability of the products or systems to measure and display rates of flow and
accumulated volumes of fluid accurately.

At September 30, 1995 and 1994, the Company's backlog of orders
believed to be firm for the flow measurement segment's products and systems was
approximately $30,800,000 and $27,400,000, respectively. The Company expects
that substantially all of the backlog at September 30, 1995, will be filled
during the fiscal year ending September 30, 1996.

ENERGY PRODUCTS

The Company is engaged in the manufacture of gate valves that range
from 2" to 84" in diameter. The bodies of the 8" to 84" valves are fabricated
from plate steel which is cut and welded, rather than from castings. The
Company's gate valve operation includes a line of cast gate valves ranging from
2" to 6" in diameter and a round body design, which incorporates a combination
of fabricated and cast valve components, for large diameter and high pressure
applications. The Company manufactures a line of forged-body trunnion ball
valves in 2" through 48" bore sizes. Their primary application is pipeline
block valves and on/off service in liquid and gas systems.

The Company's pipeline valves are marketed by three domestic sales
offices and offices in Calgary, Canada; Dammam, Saudi Arabia; Datchet, England;
Leiden, Holland; Moscow, Russia and Singapore. In addition, sales are made
worldwide through representatives working on a commission basis. The Company's
valves are sold primarily to pipeline contractors and transmission companies
for use in controlling liquid or gas pipeline flows.

The Company competes worldwide with numerous manufacturers of
fabricated, forged and cast valves. Ability to meet strict delivery
requirements, as well as price and quality of the valves sold, are considered
to be the principal competitive factors in the sale of pipeline valves.

3
<PAGE> 5
At September 30, 1995 and 1994, the Company's backlog of orders
believed to be firm for the energy products segment was approximately
$15,900,000 and $6,000,000, respectively. The Company expects that
substantially all of the backlog at September 30, 1995, will be filled during
the fiscal year ending September 30, 1996.

FOREIGN OPERATIONS

Approximately 18% of the Company's consolidated revenues for its
fiscal year ended September 30, 1995, was attributable to sales of flow
measurement products and systems manufactured or assembled at the Company's
plants in Falkirk, Scotland and Potsdam-Babelsberg, Germany. Sales of Company
products and systems for foreign installation or use outside the United States,
inclusive of the operations in Scotland and Germany, contributed approximately
49%, 60% and 52% of the Company's consolidated revenues in fiscal 1995, 1994
and 1993, respectively. The Company's operations outside the United States are
subject to the usual risks of such operations, including changes in
governmental policies, currency transfer restrictions and devaluation. The
Company endeavors to minimize these risks through the use of letters of credit,
United States dollar-denominated contracts and hedging of specific foreign
currency commitments.

Financial information about the Company's foreign and domestic
operations and export sales by geographic area is presented in NOTE 15 of NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS. Such information is hereby incorporated
by reference herein.

RAW MATERIALS

Raw materials and other supplies used by the Company in the
manufacture and fabrication of its products are purchased from suppliers and
other manufacturers. No purchases are made under long-term contracts, and the
Company does not consider that it is materially dependent upon any single
source of supply. From time to time, however, the Company encounters
difficulty in obtaining steel and steel castings.

CUSTOMERS

Occasionally, the Company's flow measurement segment is engaged to
supply one or more flow measurement systems for a single installation. A few
contracts to design and assemble such systems would be of material importance
to that industry segment's results of operations for a particular fiscal
period. However, the Company is not dependent on a few customers on a
continuing basis.

PATENTS AND RESEARCH

The Company has sought patent protection for products which appear to
have commercial importance. The Company does not consider that the patents
currently held by it are material to its operations as a whole.

The Company engages in research activities with a view to the
development of new products as well as the improvement of existing products.
The amounts spent during the fiscal years ended September 30, 1995, 1994 and
1993, on

4
<PAGE> 6
research and product development activities were approximately $2,700,000,
$4,100,000 and $5,300,000, respectively.

EMPLOYEES

At September 30, 1995, the Company employed approximately 1,200
persons, of whom approximately 940 were located in the United States,
approximately 160 were located in the United Kingdom and 100 were located in
other nations. Subsequent to the sale of the fastener business, the Company
employed approximately 1,050 persons.

ENVIRONMENTAL COMPLIANCE

Compliance with existing governmental regulations which have been
enacted or adopted regulating the discharge of materials into the environment,
or otherwise relating to the protection of the environment, does not have, nor
is expected to have, a material effect on the Company.

OTHER BUSINESS CONDITIONS AND REGULATIONS

The Company's business is largely dependent upon the level and nature
of the activities in the worldwide oil and natural gas industries. The level
of such activities may be influenced by numerous factors, including general
economic conditions, the demand for oil and/or natural gas, development of
alternative energy sources, taxation, price controls and other political and
economic conditions.

The business of the Company is moderately seasonal to the extent that
many of the Company's products and systems are installed and its services
provided out-of-doors. Consequently, sales attributable to these products and
services tend to increase somewhat during the summer months when the weather is
more favorable, and there are more daylight hours.

For a discussion of the Company's practices relating to working
capital, see "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS." - "Liquidity and Capital Resources."

5
<PAGE> 7
ITEM 2. PROPERTIES.

The principal offices and manufacturing facilities of the Company are
as follows:

<TABLE>
<CAPTION>
APPROX. AREA
LOCATION (SQ. FT.) TENURE UTILIZATION
-------- ------------ ------ -----------
<S> <C> <C> <C>
Flow Measurement Segment
- ------------------------

Houston, Texas(a) 428,000 Owned Manufacture of flow
Falkirk, Scotland 258,000 Owned measurement products and
design, fabrication and
testing of flow measure-
ment systems.

Potsdam-Babelsberg, 180,000 Owned Manufacture of flow measure-
Germany ment products.

Houston, Texas 54,000 Owned Fabrication of flow computers,
automation systems, gas
chromatographs and ultrasonic
flowmeters.

Calgary, Canada 15,000 Leased Manufacture and sales of flow
measurement products.

Houston, Texas 13,000 Owned The building is being held
for future use or possible
sale.

Waller County, Texas 321 acres Owned Land purchased for future
development.

Energy Products Segment
- -----------------------

Houston, Texas 189,000 Owned Manufacture of stud bolts,
ring joint gaskets and
industrial flanges. The
property was sold in November
1995 in conjunction with the
sale of the business.(b)

Houston, Texas 213,000 Owned Manufacture of pipeline
valves.

Matamoros, Mexico 35,000 Owned The building is leased to a
suitable tenant and is being
held for sale.
</TABLE>

(a) Includes Corporate headquarters.
(b) See NOTE 3 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

6
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Gardena, California 20,000 Leased Wholesale gaskets, bolts
and nuts. The lease was
assigned in November 1995 in
connection with the sale of
the business.(a)

Edmonton, Canada 16,000 Leased Wholesale gaskets, bolts
and nuts. The lease was
assigned in November 1995 in
connection with the sale of
the business.(a)
- ----------
</TABLE>

(a) See NOTE 3 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

ITEM 3. LEGAL PROCEEDINGS.

The Company is subject to legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amounts of
ultimate liability, if any, with respect to these actions will not materially
affect the financial position of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There was no matter during the fourth quarter of the fiscal year
covered by this Annual Report on Form 10-K submitted to a vote of security
holders, through the solicitation of proxies or otherwise.

P A R T II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.

The shares of common stock, $1.25 par value, of the Company are traded
on the New York Stock Exchange under the symbol DAN. At November 30, 1995, the
approximate number of holders of record of shares of common stock of the
Company was 1,224. The following table sets forth for each quarterly period
during the fiscal years ended September 30, 1995 and 1994 (i) the high and low
sales prices of shares of common stock of the Company and (ii) the amount of
cash dividends per share paid on the common stock of the Company. Such
dividends were declared and paid on a quarterly basis.

7
<PAGE> 9
<TABLE>
<CAPTION>
Price of Common Dividends
Stock Paid
----------------- ---------
High Low
------ ------
<S> <C> <C> <C>
Fiscal 1995 Quarter Ended:
December 31, 1994. . . . . . . . . . . . . $13 3/4 $11 5/8 $.045
March 31, 1995 . . . . . . . . . . . . . . 15 1/2 12 5/8 .045
June 30, 1995. . . . . . . . . . . . . . . 16 1/2 13 3/4 .045
September 30, 1995 . . . . . . . . . . . . 16 1/4 13 7/8 .045

Fiscal 1994 Quarter Ended:
December 31, 1993. . . . . . . . . . . . . 15 7/8 12 3/8 .045
March 31, 1994 . . . . . . . . . . . . . . 13 5/8 10 1/2 .045
June 30, 1994. . . . . . . . . . . . . . . 12 3/8 10 3/8 .045
September 30, 1994 . . . . . . . . . . . . 12 1/2 9 7/8 .045
</TABLE>

The Company is authorized by its Certificate of Incorporation to issue
up to 1,000,000 shares of serial preferred stock, $1 par value, but no shares
of serial preferred stock of the Company have been issued. Subject to the
rights of holders of serial preferred stock, the holders of shares of common
stock of the Company are entitled to receive dividends when and as declared by
the Board of Directors of the Company out of funds legally available therefor.

The Company has paid cash dividends on its common stock during each
year since 1948. The Company's future dividend policy with respect to its
common stock, including the frequency, type and amount of dividends, if any,
will be determined by its Board of Directors in light of the Company's results
of operations, its cash flow and anticipated capital requirements, possible
future issuances of serial preferred stock and the restrictions as to payment
of dividends contained in instruments pursuant to which the Company has issued
long-term debt. (See NOTE 11 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.)

ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . .$168,560 $203,766 $180,249 $210,362 $201,744
Net Income (Loss). . . . . (12,792) 1,324 5,025 8,373 (1,969)
Total Assets . . . . . . . 164,468 187,337 178,068 177,079 192,091
Long-Term Debt . . . . . . 8,572 11,429 14,286 17,143 20,000
Earnings (Loss) per
Share . . . . . . . . . (1.06) .11 .42 .70 (.18)
Cash Dividends per
Share . . . . . . . . . .18 .18 .18 .18 .18
Average Shares
Outstanding . . . . . . 12,048 12,030 11,991 11,960 10,925
</TABLE>

8
<PAGE> 10
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

OVERVIEW

In February 1995, the Company announced that its Board of Directors
approved and adopted a restructuring plan to improve the Company's overall
profitability through a greater focus on high margin and market leading product
lines, and through annual cost reductions in overhead and direct expenses of
approximately $8 to $10 million. As discussed in NOTES 2 and 3 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS, the Company recorded in fiscal 1995 the
following pretax charges:

<TABLE>
<CAPTION>
(in thousands)

<S> <C>
Restructuring and other charges . . . . . . . . $12,330
Losses on divestitures of assets. . . . . . . . 11,958
Inventory writedowns. . . . . . . . . . . . . . 3,785
-------
$28,073
=======
</TABLE>

For fiscal 1995, the Company reported a net loss of $12,792,000, or
$1.06 per share, compared to net income of $1,324,000, or $.11 per share, for
fiscal 1994. Exclusive of the charges mentioned above, the Company's
operations in fiscal 1995 benefitted from improvements in the domestic natural
gas markets and cost savings arising from the restructuring plan. Earnings
before depreciation, interest, and taxes for fiscal 1995 (exclusive of the
charges mentioned above) was 11% of revenues compared to 6% for the prior year.
The Company's backlog at September 30, 1995, of approximately $46,700,000,
represents an increase of 40% from the balance at September 30, 1994.

FISCAL 1995 VS. FISCAL 1994

Consolidated revenues decreased 17% to $168,560,000 in fiscal 1995
compared to $203,766,000 in fiscal 1994. Revenues in the flow measurement
segment were $114,966,000 in the current period compared to $145,657,000 last
year. Revenues from sales of flow measurement systems, which accounted for 22%
and 37% of this segment's revenues in the respective periods, declined
primarily due to the inclusion in the prior year of revenues related to the
construction of two large gas metering stations destined for the North Sea.
Revenues from sales of flow measurement products remained unchanged between the
two periods. Revenues in the energy products segment decreased 8% to
$53,320,000 for the current period compared to $57,739,000 last year.
Decreased sales of valve and fabricated energy products due to the competitive
foreign market for valves and the divestiture of the energy fabrication
business, respectively, were partially offset by increased revenues from sales
of fastener products due primarily to price increases allowed by improved
demand.

The consolidated gross profit margin for fiscal 1995 improved to 37%
of revenues compared to 34% of revenues in fiscal 1994. The gross profit
margin in the flow measurement segment improved to 41% of revenues in the
current period

9
<PAGE> 11
from 37% last year. This improvement is due to a change in product mix towards
sales of products which earn higher margins than sales of flow measurement
systems, partially offset by the $2,385,000 charge for inventory writedowns
recorded in the second quarter of fiscal 1995 in connection with the Company's
decision, as part of its strategic restructuring plan, to focus on core product
lines. The gross profit margin in the energy products segment increased to 28%
of revenues in the current period from 26% of revenues last year. Improved
margins on fastener products due primarily to price increases was partially
offset by lower margins on pipeline valve products due primarily to the
$1,400,000 charge for inventory writedowns.

Depreciation and amortization expense increased slightly to $7,545,000
in the current period from $7,483,000 last year due to the amortization of
intangibles associated with an acquisition (see NOTE 4 of NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS), partially offset by the discontinuation of depreciation
and amortization of assets held for sale.

Consolidated selling and administrative ("S&A") expenses declined 15%
to $45,031,000 in the current period. S&A expenses in the flow measurement
segment declined 9% to $29,229,000; expenses in the energy products segment
declined 25% to $10,241,000 and corporate expenses declined 24% to $5,561,000.
These declines are primarily attributable to the decreases in revenues and the
realization of benefits from the restructuring program.

The restructuring and other charges of $12,330,000 represent primarily
employee terminations and impairments of assets. (See NOTE 2 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.)

In fiscal 1995, the Company recorded losses aggregating $11,958,000
related to the divestitures of non-core product lines, primarily resulting from
the divestiture of the fastener business. (See NOTE 3 to NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.)

Interest expenses increased 5% to $2,028,000 in the current period due
to increased short-term borrowing levels partially offset by lower long-term
debt levels.

FISCAL 1994 VS. FISCAL 1993

Consolidated revenues increased 13% to $203,766,000 for fiscal 1994,
from $180,249,000 for fiscal 1993. The flow measurement segment posted a 32%
increase in revenues to $145,657,000 for the current year, from $110,009,000
for last year. Sales of flow measurement systems, which comprised 37% and 23%
of this segment's revenues in the respective periods, increased significantly
in the more recent period due primarily to construction of two gas metering
stations destined for the North Sea. Sales of flow measurement products
increased eight percent, reflecting increased demand for the Company's metering
and electronic products, primarily in foreign markets. The energy products
segment experienced a 17% decline in revenues to $57,739,000 for the current
year, compared to $69,424,000 for last year. Sales of pipeline valves, which
comprised approximately one-half of this segment's revenues in the respective
periods, decreased due to a more competitive worldwide market.

10
<PAGE> 12
Consolidated backlog at September 30, 1994, was approximately
$33,400,000, compared to $72,200,000 a year ago. The decline in backlog was
due to inclusion in the prior year of an unusually large order for a flow
measurement system in the amount of approximately $23,000,000.

The consolidated gross profit margin declined to 34% of revenues for
fiscal 1994, compared to 40% of revenues for fiscal 1993. The gross profit
margin in the flow measurement segment declined seven percentage points to 37%
of revenues primarily due to a shift in product mix towards sales of flow
measurement systems, which earn lower margins than sales of flow measurement
products. The gross profit margin in the energy products segment declined six
percentage points to 26% of revenues primarily as a result of current year
pricing pressures for pipeline valve and fastener products and declines in
operational efficiencies at both the valve and fastener operations.

Consolidated selling, general and administrative expenses increased to
$53,176,000 for fiscal 1994, from $49,120,000 for fiscal 1993. However, these
expenses, as a percentage of revenues, declined slightly between the two
periods. Within the flow measurement segment, selling expenses declined as a
percentage of revenues due to the change in product mix towards sales of flow
measurement systems, which have lower sales commissions than sales of flow
measurement products. General and administrative expenses also declined as a
percentage of revenues, resulting from the significant increase in sales. The
energy products segment's expenses increased as a percentage of revenues since
certain of these expenses are fixed and do not decrease proportionately with
sales. Corporate expenses increased 75% to $7,364,000 primarily due to
reductions of accruals in fiscal 1993 relating to settled litigation.

Research and development expenses decreased 23% to $4,094,000 for
fiscal 1994, compared to $5,343,000 for fiscal 1993, primarily due to
completion of certain electronics projects.

Consolidated depreciation and amortization expense increased 14% to
$7,483,000 for fiscal 1994 due to capital expenditures in fiscal 1993 in both
the flow measurement and energy products segments.

Consolidated interest expense decreased eight percent to $1,927,000
for fiscal 1994 due to lower long-term debt levels, partially offset by
increased short-term borrowing levels.

IMPACT OF INFLATION

An effect of inflation is to increase the prices of labor and raw
materials used to manufacture the Company's products, which may require
periodic increases in the prices for those products to maintain gross profit
margins. Although this principle impacts most manufacturers, management does
not consider the Company to have any unique difficulty in managing the effects
of inflation on the Company's business. With respect to the effect of
inflation on reported income, the Company applies the LIFO method to a majority
of its inventories to account for production costs.

11
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES

The primary sources of the Company's liquidity for the year ended
September 30, 1995, were internally generated funds, short-terms borrowings,
proceeds from divestitures of non-core product lines (see NOTE 3 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS), proceeds from sales of investment
securities and cash and cash equivalents available at the beginning of the
year. These funds were used primarily for the acquisition of a product line
(see NOTE 4 of NOTES TO CONSOLIDATED FINANCIAL STATEMENTS), capital
expenditures, payments on long-term debt and payments of dividends.

The Company's cash balance at September 30, 1995, was $3,895,000, an
increase of $1,375,000 from September 30, 1994. Working capital at September
30, 1995 of $65,386,000 was relatively unchanged from the balance of
$65,990,000 last year. The Company considers its financial position to be
strong, with a working capital ratio at September 30, 1995, of 2.5 to 1.0.

During fiscal 1995, the Company recorded pretax charges aggregating
$28,073,000 related to divestitures of non-core product lines, and to
restructuring and other charges. The non-cash portion of these charges was
$20,982,000. The cash portion of these charges represented employee
terminations and other costs aggregating $7,091,000, of which $4,556,000 was
paid in fiscal 1995, and $2,535,000 was accrued at September 30, 1995 to be
paid in fiscal 1996.

Working capital at September 30, 1995, included $43,871,000 in
inventory and deferred taxes on income which are not as liquid as other
current assets.

In fiscal 1995 and 1994, the Company relied upon short-term borrowings
under its bank lines of credit to supplement its working capital and other cash
requirements. At September 30, 1995, the Company had uncommitted short-term
lines of credit aggregating approximately $45,000,000. (See NOTE 8 of NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS.) At September 30, 1995 and December 14,
1995, borrowings under these lines were $10,000,000 and $5,200,000,
respectively, at weighted average interest rates of 6.41% and 6.40%,
respectively. While the Company expects its borrowing requirements to
generally decrease during the remainder of fiscal 1996 from current levels, the
timing of one or several major expenditures or receipts may affect the level of
borrowings at a particular point in time.

The Company anticipates capital expenditures in fiscal 1996 of
approximately $4,000,000. Capital expenditures for fiscal 1995 were
$4,794,000. The Company continues to seek acquisitions that would build upon
its expertise in the manufacturing and marketing of measurement and flow
control products and systems.

ITEM 8. FINANCIAL STATEMENTS.

The financial statements required to be filed under this item are
presented on pages 19 through 36 of this report. Such financial statements are
hereby incorporated by reference under this Item 8.

12
<PAGE> 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

P A R T III

ITEMS 10 TO 13 INCLUSIVE.

The information contained under the headings "Election of Directors",
"Company Executive and Subsidiary Officers", "Executive Compensation", "Certain
Relationships and Related Transactions" and "Principal Stockholders" in the
Company's Proxy Statement for the Company's Annual Meeting of Stockholders
proposed to be held February 1, 1996, which Proxy Statement shall be filed
within 120 days of the end of the Company's fiscal year, is hereby incorporated
by reference herein.

13
<PAGE> 15
P A R T IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(A) DOCUMENTS FILED AS A PART OF THIS REPORT

1. Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of independent accountants . . . . . . . . . . . . . . . . 18
Consolidated balance sheet at September 30, 1995 and 1994. . . . . 19
Consolidated statement of operations for the years ended
September 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . 20
Consolidated statement of stockholders' equity for the
years ended September 30, 1995, 1994 and 1993 . . . . . . . . 21
Consolidated statement of cash flows for the years
ended September 30, 1995, 1994 and 1993 . . . . . . . . . . . 22
Notes to consolidated financial statements . . . . . . . . . .23 - 36
</TABLE>

2. All financial statement schedules are omitted because they
are not applicable or the required information is shown in the financial
statements or notes thereto listed above in Item 14(a) 1.

3. Exhibits

<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C>
2.1 - Plan and Agreement of Merger dated as of January 22, 1988, by and between Daniel Industries, Inc., a
Texas corporation ("Daniel Texas"), and Daniel Industries, Inc., a Delaware corporation (the
"Company"), filed as Exhibit 2.1 to the Company's Registration of Securities of Certain Successor
Issuers on Form 8-B, and hereby incorporated by reference herein.

3.1 - Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company's Registration of
Securities of Certain Successor Issuers on Form 8-B dated May 5, 1988, and hereby incorporated by
reference herein.

3.2 - By-Laws of the Company, as amended through February 2, 1995.

3.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred
Stock filed as Exhibit 3.3 in the Company's Amendment to Application or Report on Form 8, and hereby
incorporated by reference herein.

</TABLE>

14
<PAGE> 16
<TABLE>
<S> <C> <C>
amount of $20,000,000) filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1988, and hereby incorporated by reference herein.

4.2 - Rights Agreement dated as of May 31, 1990, between the Company and Wachovia Bank and Trust Company,
N.A., as Rights Agent, filed as Exhibit 1 to the Company's Registration of Certain Classes of
Securities on Form 8-A filed June 5, 1990, and hereby incorporated by reference herein.

4.3 - Certificate of Designation, Powers, Preferences and Rights of Series A Junior Participating Preferred
Stock (included as Exhibit 3.3 hereto).

10.1 - 1977 Stock Option Plan, as amended and restated on December 16, 1993, filed as Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the year ended September 30, 1995, and hereby incorporated by
reference herein.

10.2 - 1981 Stock Option Plan, as amended and restated on December 31, 1986, filed as Exhibit 19.2 to Daniel
Texas's Quarterly Report on Form 10-Q for the quarter ended December 31, 1986, and hereby incorporated
by reference herein.

10.3 - Form of Director's Stock Option Agreements dated October 9, 1986, between Daniel Texas and the several
non-employee directors, filed as Exhibit 19.1 to Daniel Texas's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1987, and hereby incorporated by reference herein.

10.4 - Form of Change in Control Agreement dated as of March 15, 1995, between the Company and each of W. A.
Griffin, III, W. C. Clingman, H. G. Schopfer, III, T. L. Sivak and M. R. Yellin.

10.5 - Asset Purchase Agreement dated November 27, 1995, by and among DAN-LOC Bolt & Gasket, Inc., Daniel
Industrial, Inc., Daniel Industries Canada and the Company.

10.6 - Supplemental Executive Retirement Plan effective July 1, 1995.

10.7 - Written description of a Consulting Agreement between the Company and Ralph H. Clemons, Jr. effective
as of July 1, 1994.

10.8 - Written description of a Consulting Agreement between the Company and W. A. Griffin effective as of
February 3, 1995.

</TABLE>

15
<PAGE> 17
<TABLE>
<S> <C> <C>
10.9 - Written description of the Company's key employees' incentive compensation plan.

21 - Subsidiaries of the Company.

23 - Consent of Independent Accountants.

27 - Financial data schedule.
</TABLE>

(b) REPORTS ON FORM 8-K

The Company did not file any reports on Form 8-K during the fourth
quarter of its fiscal year ended September 30, 1995.

16
<PAGE> 18
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

DANIEL INDUSTRIES, INC.
(REGISTRANT)

DATE: DECEMBER 8, 1995 BY W. A. GRIFFIN, III
----------------------------------
W. A. GRIFFIN, III
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
RICHARD L. O'SHIELDS Chairman of the Board December 8, 1995
- ------------------------------
(Richard L. O'Shields)

W. A. GRIFFIN, III President and a Director December 8, 1995
- ------------------------------ (Chief Executive Officer)
(W. A. Griffin, III)

HENRY G. SCHOPFER, III Vice President, Finance December 8, 1995
- ------------------------------ (Chief Financial Officer)
(Henry G. Schopfer, III)

MARY R. BESHEARS Corporate Controller December 8, 1995
- ------------------------------ (Chief Accounting Officer)
(Mary R. Beshears)

RALPH H. CLEMONS, JR. Director December 8, 1995
- ------------------------------
(Ralph H. Clemons, Jr.)

GIBSON GAYLE, JR. Director December 8, 1995
- ------------------------------
(Gibson Gayle, Jr.)

W. A. GRIFFIN Chairman Emeritus and December 8, 1995
- ------------------------------ a Director
(W. A. Griffin)

RONALD C. LASSITER Director December 8, 1995
- ------------------------------
(Ronald C. Lassiter)

LEO E. LINBECK, JR. Director December 8, 1995
- ------------------------------
(Leo E. Linbeck, Jr.)

WILLIAM C. MORRIS Director December 8, 1995
- ------------------------------
(William C. Morris)

BRIAN E. O'NEILL Director December 8, 1995
- ------------------------------
(Brian E. O'Neill)
</TABLE>

17
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
DANIEL INDUSTRIES, INC.

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a) 1 on page 14 present fairly, in all material
respects, the financial position of Daniel Industries, Inc. and its
subsidiaries at September 30, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PRICE WATERHOUSE LLP

Houston, Texas
November 21, 1995

18
<PAGE> 20
DANIEL INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
September 30,
-----------------------
1995 1994
-------- --------
(in thousands)
ASSETS

<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 3,895 $ 2,520
Receivables, net of reserve of $98,000 and $243,000 . . . . . . . . . . 34,807 38,146
Costs in excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . 941 14,888
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,889 45,314
Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . 7,982 5,126
Net assets held for sale . . . . . . . . . . . . . . . . . . . . . . . 22,838
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,427 5,657
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 108,779 111,651
Property, plant and equipment at cost, net . . . . . . . . . . . . . . . 52,677 69,796
Intangibles and other assets . . . . . . . . . . . . . . . . . . . . . . 3,012 5,890
-------- --------
$164,468 $187,337
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000 $ 5,900
Current maturities of long-term debt . . . . . . . . . . . . . . . . . 2,857 2,857
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,702 16,946
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,834 19,958
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 43,393 45,661
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,572 11,429
Deferred taxes on income . . . . . . . . . . . . . . . . . . . . . . . . 3,183 8,367
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 55,148 65,457
-------- --------

Commitments and contingencies

Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 shares
authorized, 150,000 shares designated as Series A
junior participating preferred stock, no shares
issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $1.25 par value, 20,000,000 shares authorized,
12,083,485 and 12,032,470 shares issued . . . . . . . . . . . . . . . 15,104 15,041
Capital in excess of par value . . . . . . . . . . . . . . . . . . . . 90,247 89,675
Translation component . . . . . . . . . . . . . . . . . . . . . . . . . (295) (2,061)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,264 19,225
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 109,320 121,880
-------- --------
$164,468 $187,337
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

19
<PAGE> 21
DANIEL INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------
1995 1994 1993
---------- --------- ---------
(in thousands except per share amounts)
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $168,560 $203,766 $180,249
-------- -------- --------

Costs and expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . 105,524 134,966 109,032
Depreciation and amortization . . . . . . . . . . . . . . 7,545 7,483 6,584
Selling and administrative expenses . . . . . . . . . . . 45,031 53,176 49,120
Research and development expenses . . . . . . . . . . . . 2,659 4,094 5,343
Restructuring and other charges . . . . . . . . . . . . . 12,330
Losses on divestitures of assets . . . . . . . . . . . . 11,958
Interest expense . . . . . . . . . . . . . . . . . . . . 2,028 1,927 2,088
-------- -------- --------
187,075 201,646 172,167
-------- -------- --------

Income (loss) before income tax expense . . . . . . . . . . (18,515) 2,120 8,082

Income tax expense (benefit) . . . . . . . . . . . . . . . (5,723) 796 3,057
-------- -------- --------

Net income (loss) . . . . . . . . . . . . . . . . . . . . . $(12,792) $ 1,324 $ 5,025
======== ======== ========

Earnings (loss) per common share . . . . . . . . . . . . . $ (1.06) $ .11 $ .42
======== ======== ========

</TABLE>

The accompanying notes are an integral part of the financial statements.

20
<PAGE> 22
DANIEL INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT FOR SHARES)

Capital
Common Stock in Excess
------------ of Par Translation Retained
Shares Amount Value Component Earnings Total
---------- -------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1992 . 11,968,987 $14,961 $89,004 $ (739) $ 17,201 $120,427
Net income . . . . . . . . . 5,025 5,025
Cash dividends . . . . . . . (2,159) (2,159)
Exercise of stock options,
including tax benefits . . 57,463 72 560 632
Aggregate translation
adjustment for the year . . (2,875) (2,875)
---------- ------- ------- ------- ------- --------
Balance at September 30, 1993 . 12,026,450 15,033 89,564 (3,614) 20,067 121,050
Net income . . . . . . . . . 1,324 1,324
Cash dividends . . . . . . . (2,166) (2,166)
Exercise of stock options,
including tax benefits . . 6,020 8 111 119
Aggregate translation
adjustment for the year . . 1,553 1,553
---------- ------- ------- ------- ------- --------
Balance at September 30, 1994 . 12,032,470 15,041 89,675 (2,061) 19,225 121,880
Net loss . . . . . . . . . . (12,792) (12,792)
Cash dividends . . . . . . . (2,169) (2,169)
Exercise of stock options,
including tax benefits . . 51,015 63 572 635
Aggregate translation
adjustment for the year . . 1,766 1,766
---------- ------- ------- ------- ------- --------

Balance at September 30, 1995 . 12,083,485 $15,104 $90,247 $ (295) $ 4,264 $109,320
========== ======= ======= ======= ======= ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

21
<PAGE> 23
DANIEL INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------
1995 1994 1993
------ ------ ------
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $(12,792) $ 1,324 $ 5,025
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Non-cash portion of restructuring and other items . . . 11,124
Loss on divestitures of non-core product lines. . . . . 9,858
Depreciation and amortization . . . . . . . . . . . . . 7,545 7,483 6,584
Deferred income taxes . . . . . . . . . . . . . . . . . (8,040) (1,810) 468
Changes in operating assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . (1,164) (5,041) 1,521
Inventories . . . . . . . . . . . . . . . . . . . . . (9,896) (5,868) 1,122
Costs in excess . . . . . . . . . . . . . . . . . . . 13,947 (8,834) (3,150)
Accounts payable and accrued liabilities. . . . . . . (5,853) 2,079 4,698
Other assets/liabilities, net . . . . . . . . . . . . 976 1,223 (100)
-------- ------- -------
Net cash provided by (used in) operating activities . . . . . 5,705 (9,444) 16,168
-------- ------- -------
Cash flows from investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . (4,794) (13,631) (11,793)
Acquisition and related costs . . . . . . . . . . . . . . . (4,177)
Purchase of investment securities . . . . . . . . . . . . . (3,067)
Investment in license agreement . . . . . . . . . . . . . . (2,667)
Proceeds from sales of investment securities. . . . . . . . 2,039 1,000
Proceeds from sales of assets . . . . . . . . . . . . . . . 2,819(a) 304 375
-------- ------- -------

Net cash used in investing activities . . . . . . . . . . . . (4,113) (12,327) (17,152)
-------- ------- -------

Cash flows from financing activities:
Net borrowings on lines of credit . . . . . . . . . . . . . 4,100 5,900
Payments on long-term debt. . . . . . . . . . . . . . . . . (2,857) (2,857) (2,857)
Cash dividends paid, $.18 per share . . . . . . . . . . . . (2,169) (2,166) (2,159)
Activity under stock option plan . . . . . . . . . . . . . 635 119 632
-------- ------- -------

Net cash provided by (used in) financing activities . . . . . (291) 996 (4,384)
-------- ------- -------

Effect of exchange rate changes on cash and cash equivalents. 74 75 (661)
-------- ------- -------

Increase (decrease) in cash and cash equivalents . . . . . . 1,375 (20,700) (6,029)
Cash and cash equivalents, beginning of year. . . . . . . . . 2,520 23,220 29,249
-------- ------- -------
Cash and cash equivalents, end of year. . . . . . . . . . . . $ 3,895 $ 2,520 $23,220
======== ======= =======

Cash payments for (refunds of) income taxes . . . . . . . . . $ 5,036 $ 1,835 $ (199)
Cash payments for interest. . . . . . . . . . . . . . . . . . 2,152 2,022 2,136
</TABLE>

(a) Includes proceeds from sales of non-core assets of $2,680,000.

The accompanying notes are an integral part of the financial statements.

22
<PAGE> 24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.

TRANSLATION OF FOREIGN CURRENCIES
Gains and losses resulting from balance sheet translation of foreign
operations where a foreign currency is the functional currency are included as
a separate component of stockholders' equity. Gains and losses resulting from
balance sheet translation of foreign operations where the U. S. dollar is the
functional currency are included in the consolidated results of operations.

FAIR VALUE OF FINANCIAL INSTRUMENTS
Management has determined that the fair value of the Company's
financial instruments is equivalent to the carrying amount of such instruments
as presented or disclosed in the financial statements.

CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.

ACCOUNTS RECEIVABLE
A substantial portion of the Company's trade receivables are from
customers in the petroleum industry.

REVENUE RECOGNITION
Sales and cost of goods sold of systems contracts are recorded using
the percentage-of-completion method, based on the ratio of costs incurred to
date to total estimated costs on each contract. Losses, if any, to be incurred
on contracts in progress are charged to income in full as soon as they become
apparent, and estimated warranty costs are accrued as revenues are earned.
Sales and cost of goods sold of products are recorded when the customer takes
title to the products.

INVENTORIES
Inventories are valued at the lower of cost or market. Cost, which
includes material, labor and overhead, is determined principally by the
last-in, first-out (LIFO) method and by the average cost method.

INVESTMENTS
Marketable securities are carried at cost, which approximates fair
value. Effective October 1, 1994, the Company adopted Financial Accounting
Standards Board Statement No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". Adoption of this statement had an immaterial effect on
the Company's financial statements.

23
<PAGE> 25
PROPERTY, PLANT AND EQUIPMENT
Depreciation of plant and equipment is provided over the estimated
useful lives of the various classes of assets using the straight-line method.
Maintenance and repairs are charged to expense. Renewals and betterments are
capitalized. On retirement or sale of assets, the cost of such assets and
accumulated depreciation are removed from the accounts and the gain or loss, if
any, is credited or charged to income.

In connection with the determination of certain restructuring and
other charges recognized in the second quarter of fiscal 1995, the Company
elected early adoption of Financial Accounting Standards Board Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of".

INTANGIBLE ASSETS
Goodwill, representing the excess cost of purchased subsidiaries over
the fair value of net assets acquired, is amortized using the straight-line
method over a 40-year period. Other intangible assets are amortized using the
straight-line method over their estimated useful lives, none of which exceeds
12 years. At September 30, 1995 and 1994, accumulated amortization on
intangibles was approximately $3,000,000 and $2,600,000, respectively.

INCOME TAXES
Income tax expense (benefit) is computed based on pretax income (loss)
included in the Consolidated Statement of Operations. The asset and liability
approach is used to recognize deferred tax liabilities and assets for expected
future tax consequences of temporary differences between the carrying amounts
and the tax bases of the assets and liabilities.

The Company does not provide for U.S. income taxes on foreign
subsidiaries' undistributed earnings intended to be permanently reinvested in
foreign operations.

EARNINGS (LOSS) PER SHARE
Earnings (loss) per share are computed based on the average number of
shares outstanding during each year. Stock options outstanding have not been
included in the computation of earnings per share since the effect is not
significant.

NOTE 2 - RESTRUCTURING AND OTHER CHARGES

In February 1995, the Company announced that its Board of Directors
had approved and adopted a restructuring plan to improve the Company's overall
profitability through a greater focus on high margin and market leading product
lines, and cost through reductions in overhead and direct expenses.

24
<PAGE> 26
During fiscal 1995, the Company recorded pretax charges of $16,115,000
relating to restructuring and other charges as follows:

<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Recorded as restructuring:
Employee terminations . . . . . . . . . . $ 3,997

Recorded as other charges:
Impairments of property, plant
and equipment and other assets. . . . . 7,339
Expenses incurred in connection
with an unsolicited merger proposal . . 600
Other . . . . . . . . . . . . . . . . . . 394
-------
12,330
Recorded as cost of sales adjustments:
Inventory writedowns. . . . . . . . . . . 3,785
-------

Total charges . . . . . . . . . . . . . . . . . $16,115
=======
</TABLE>

Charges for asset impairments and writedowns are non-cash in nature.

At September 30, 1995, the Company's accrual for employee terminations
totaled $1,478,000; approximately two- thirds of the 245 planned terminations
(substantially all in the flow measurement segment) had occurred as of that
date.

NOTE 3 - DIVESTITURES OF ASSETS

As part of the restructuring plan, the Company announced its intention
to divest identified non-core product lines. In June 1995, the Company sold,
for approximately $1,500,000, the operating assets of its energy fabrication
subsidiary to a group consisting of the former president of the subsidiary and
a director of the Company. In conjunction with the sale, the Company entered
into a three-year lease agreement with the purchaser for certain real property.
Rental income recorded in fiscal 1995 was approximately $9,000. In August
1995, the Company's airplane was sold for cash. In November 1995, the net
assets of the fastener subsidiary, Daniel Industrial, Inc., were sold to an
investor group for $8,000,000 in cash and $9,500,000 in collaterized notes,
discounted to $8,600,000. In fiscal 1995, the Company recorded pretax charges
aggregating $11,958,000 representing the losses on divestitures of its non-core
product lines, primarily the fastener operation.

At September 30, 1995, the Company recorded a current asset of
$22,838,000 representing management's estimate of net realizable value of
assets held for sale. Subsequent to the sale of the fastener operation,
approximately $5,800,000 of net assets remained representing primarily
inventory and property, plant and equipment.

The results of operations for non-core product lines included in the
Consolidated Statement of Operations are shown below. Operating income (loss)
amounts have been determined based upon management's estimate of certain costs
and expenses which have been allocated to the non-core product lines. For
comparability, the fiscal 1995 operating income amount shown below includes

25
<PAGE> 27
depreciation expense of $985,000. Due to the discontinuation of depreciation
on assets held for sale, this depreciation was not included in the Company's
Consolidated Statement of Operations.

<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Revenues . . . . . . . . . . . $35,806 $35,443

Operating income (loss). . . . 2,067 (3,271)
</TABLE>

NOTE 4 - ACQUISITION

In October 1994, the Company acquired the orifice metering product
line assets of another company. Acquisition and related costs of $4,177,000
were paid in cash. The operations related to this acquisition, which was
accounted for under the purchase method, are not material to the Company's
results of operations.

NOTE 5 - CONTRACTS IN PROGRESS

Information with respect to contracts in progress accounted for under
the percentage-of-completion method is as follows:
<TABLE>
<CAPTION>
September 30,
-----------------
1995 1994
------ -------
(in thousands)
<S> <C> <C>
Cost and estimated earnings on contracts in progress $13,145 $47,017
Less billings applicable thereto . . . . . . . . . . 12,329 32,368
------- -------
$ 816 $14,649
======= =======
Presented in accompanying financial statements as:
Costs in excess . . . . . . . . . . . . . . . . . $ 941 $14,888
Billings in excess (included in
accrued expenses) . . . . . . . . . . . . . . . 125 239
------- -------
$ 816 $14,649
======= =======
</TABLE>

26
<PAGE> 28
NOTE 6 - INVENTORIES

<TABLE>
<CAPTION>
September 30,
-----------------
1995 1994
------- -------
(in thousands)
<S> <C> <C>
Inventories by valuation method are as follows:
Last-in, first-out (LIFO) . . . . . . . . . . . . $21,462 $25,286
Average cost . . . . . . . . . . . . . . . . . . 14,427 20,028
------- -------
$35,889 $45,314
======= =======

Major components of inventories include:
Raw materials . . . . . . . . . . . . . . . . . . $14,527 $16,412
Work in process . . . . . . . . . . . . . . . . . 10,752 8,854
Finished goods. . . . . . . . . . . . . . . . . . 15,751 27,490
------- -------
41,030 52,756
Less LIFO reserve . . . . . . . . . . . . . . . . 5,141 7,442
------- -------
$35,889 $45,314
======= =======
</TABLE>

The decrease in inventory is due primarily to the divestitures as
described in NOTE 3.

NOTE 7 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment and related accumulated depreciation are
summarized as follows:
<TABLE>
<CAPTION>

September 30, Estimated
-------------------- Useful Life
1995 1994 in Years
-------- -------- -----------
(in thousands)
<S> <C> <C> <C>
Land . . . . . . . . . . . . . . . . $ 6,927 $ 7,411
Buildings. . . . . . . . . . . . . . 30,835 34,881 10-45
Machinery and equipment. . . . . . . 36,655 48,975 3-12
Computer and peripheral equipment. . 6,725 8,603 3-5
Office furniture and equipment . . . 5,233 6,022 3-10
Automotive equipment . . . . . . . . 1,109 1,719 3-4
Other transportation equipment . . . 4,183 8-15
Other. . . . . . . . . . . . . . . . 9,171 13,308 5-20
-------- --------
96,655 125,102
Less accumulated depreciation. . . . 43,978 55,306
------- --------
$ 52,677 $ 69,796
======== ========
</TABLE>

The decrease in property, plant and equipment is due primarily to
divestitures as described in NOTE 3.

NOTE 8 - NOTES PAYABLE

At September 30, 1995, the Company had uncommitted short-term lines of
credit aggregating approximately $45,000,000. One of these lines contains

27
<PAGE> 29
restrictions regarding the amount of the line available for short-term
borrowings and the amount available for issuance of letters of credit. The
other lines are available for either short-term borrowings or the issuance of
letters of credit. Loans under these lines may be made in such amounts and at
such maturities and interest rates as may be offered by the banks and accepted
by the Company at the time of each borrowing. At September 30, 1995,
borrowings under these lines were $10,000,000, and $22,500,000 was available
for additional short-term borrowings. These borrowings were at a weighted
average interest rate of 6.41% and were due at varying dates through October
10, 1995.

NOTE 9 - ACCRUED EXPENSES

Accrued expenses are summarized as follows:

<TABLE>
<CAPTION>
September 30,
-------------------
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Other accrued expenses . . . . . . . . . . . . . . . $14,382 $14,873
Accrued taxes other than on income . . . . . . . . . 2,325 2,809
Salaries and wages . . . . . . . . . . . . . . . . . 2,127 2,276
------ -------
$18,834 $19,958
======= =======
</TABLE>

NOTE 10 - INCOME TAXES

Income tax expense (benefit) is as follows:

<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------
1995 1994 1993
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Federal:
Current . . . . . . . . . . . . . . . . $ 1,830 $ 1,327 $ 1,758
Deferred. . . . . . . . . . . . . . . . (5,180) (1,486) 281

Foreign:
Current . . . . . . . . . . . . . . . . 231 1,259 782
Deferred. . . . . . . . . . . . . . . . (2,742) (359) 187

State and local: . . . . . . . . . . . . . . 138 55 49
------- ------- -------
Income tax expense (benefit). . . . . . $(5,723) $ 796 $ 3,057
======= ======= =======
</TABLE>

The components of income (loss) before income tax expense (benefit)
are:

<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------
1995 1994 1993
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Domestic. . . . . . . . . . . . . . . . . . . . $(11,943) $ 421 $ 8,339
Foreign . . . . . . . . . . . . . . . . . . . . (6,572) 1,699 (257)
-------- ------ -------
$(18,515) $2,120 $ 8,082
======== ====== =======
</TABLE>

28
<PAGE> 30
The cumulative undistributed earnings of foreign subsidiaries, on
which U.S. taxes have not been provided, were approximately $11,600,000,
$12,700,000 and $10,100,000 at September 30, 1995, 1994 and 1993, respectively.
The U. S. income tax effect associated with the repatriation of these earnings
may be offset by foreign tax credits.

Components of the difference between the income tax expense (benefit)
computed at the U.S. statutory income tax rate and the income tax expense
(benefit) are as follows:

<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------
1995 1994 1993
------ ------ -------
(in thousands)
<S> <C> <C> <C>
Tax expense (benefit) of income (loss) at 34%. . $(6,295) $ 721 $2,748
Foreign Sales Corporation provisions . . . . . . (350) (373) (384)
Loss of foreign subsidiary with no
tax benefit . . . . . . . . . . . . . . . . . 171 375 737
Goodwill amortization/chargeoff. . . . . . . . . 667 40 41
Tax exempt interest. . . . . . . . . . . . . . . (14) (61) (179)
Non-deductible expenses. . . . . . . . . . . . . 103 197 156
State income taxes . . . . . . . . . . . . . . . 111 (5) 32
Foreign tax rates and other effects
of foreign operations . . . . . . . . . . . . (796) (53) (112)
Increase in valuation allowance. . . . . . . . . 765
Other, net . . . . . . . . . . . . . . . . . . . (85) (45) 18
------- ------ ------
Income tax expense (benefit) . . . . . . . . . . $(5,723) $ 796 $3,057
======= ====== ======
Effective tax expense (benefit) rate. . . . . (31%) 38% 38%
======= ====== ======
</TABLE>

29
<PAGE> 31
Deferred tax assets (liabilities) are as follows:
<TABLE>
<CAPTION>
September 30,
1995 1994
------- --------
(in thousands)
<S> <C> <C>
Gross deferred tax assets:
Restructuring and other charges and loss
on divestitures. . . . . . . . . . . . . . . . . $ 6,568
Operating loss carryforward from subsidiary . . . . 5,773 $ 3,648
Excess tax over book basis of inventories . . . . . 2,758 2,551
Insurance reserves. . . . . . . . . . . . . . . . . 780 673
Alternative minimum tax credit carryforward . . . . 653 263
Intercompany transfer pricing . . . . . . . . . . . 602 687
Other reserves. . . . . . . . . . . . . . . . . . . 483 479
Inventory reserves. . . . . . . . . . . . . . . . . 396 699
Vacation accruals . . . . . . . . . . . . . . . . . 260 270
Loss on sales of subsidiaries . . . . . . . . . . . 78 408
Other . . . . . . . . . . . . . . . . . . . . . . . 689 750
------- -------
19,040 10,428
------- -------

Gross deferred tax liabilities:
Excess book over tax basis of property
equipment. . . . . . . . . . . . . . . . . . . . . (8,589) (9,144)
Partnership income . . . . . . . . . . . . . . . . . (302) (312)
Property tax accrual . . . . . . . . . . . . . . . . (324) (291)
Other . . . . . . . . . . . . . . . . . . . . . . . . (1,578) (1,502)
------- -------
(10,793) (11,249)
------- -------

Deferred tax asset valuation allowance . . . . . . . . . (3,448) (2,420)
------- -------
$ 4,799 $(3,241)
======= =======
</TABLE>

Through September 30, 1995, the Company's German subsidiary generated
a tax loss carryforward of $11,065,000 which may be carried forward
indefinitely. The valuation allowance relates primarily to the amount of the
German loss carryforward which may not be realized.

NOTE 11 - LONG-TERM DEBT

Long-term debt includes the following:

<TABLE>
<CAPTION>
September 30,
-----------------
1995 1994
------- -------
(in thousands)
<S> <C> <C>
Payable to four insurance companies (unsecured); 11.5%;
principal payable in annual installments of $2,857,140;
interest payable semi-annually . . . . . . . . . . . $11,429 $14,286

Less portion due within one year. . . . . . . . . . . . 2,857 2,857
------- -------
$ 8,572 $11,429
======= =======
</TABLE>

In December 1988, four insurance companies purchased an aggregate of
$20,000,000 of the Company's unsecured 11.5% Senior Notes due 1998. Prepayment
of amounts in excess of scheduled maturities are subject to certain
restrictions

30
<PAGE> 32
and would be at a premium. The note purchase agreement related to the sale of
these notes requires the maintenance of a specified current ratio and a
specified amount of net worth and also includes restrictive covenants relating
to additional indebtedness and leases, creation of liens, payment of dividends,
mergers and disposition of assets. Retained earnings was unrestricted as to
the payment of dividends at September 30, 1995.

Long-term debt at September 30, 1995, matures as follows:

Year Ending September 30, Amount
------------------------- -------------
(in thousands)
<S> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . $2,857
1997 . . . . . . . . . . . . . . . . . . . . . . . 2,857
1998 . . . . . . . . . . . . . . . . . . . . . . . 2,857
1999 . . . . . . . . . . . . . . . . . . . . . . . 2,858

</TABLE>

NOTE 12 - STOCKHOLDERS' EQUITY, STOCK OPTIONS AND PROFIT SHARING AND SAVINGS
PLAN

On May 31, 1990, the Board of Directors declared a dividend of one
Preferred Share Purchase Right (the "Right") for each outstanding share of
common stock. Under certain conditions, each Right may be exercised to
purchase one one- hundredth share of a new series of junior participating
preferred stock at an exercise price of $60, subject to adjustment. The Rights
may only be exercised 10 days following a public announcement that a third
party has acquired 20% or more of the outstanding common shares or 10 days
following the commencement of, or announcement of an intention to make a tender
offer or exchange offer, the consummation of which would result in the
beneficial ownership by a third party of 20% or more of such outstanding common
shares. The Rights, which do not have voting rights, expire May 31, 2000, and
at the Company's option, may be redeemed by the Company prior to expiration for
$.01 per Right. In the event that the Company is acquired in a merger or other
business combination or 50% or more of its consolidated assets or earning power
are sold, provision shall be made so that each holder of a Right shall have the
right to receive, upon exercise thereof at the then current exercise price,
that number of shares of common stock of the surviving company which at the
time of such transaction would have a market value of two times the exercise
price of the Right.

EMPLOYEE STOCK OPTION PLANS

The Company maintains two stock option plans, the 1981 Plan and the
1977 Plan. Under the 1981 Plan, the exercise price may not be less than the
fair market value on the date of grant. Under both plans, options are granted
for a ten-year term and are exercisable either from the date of grant or at the
end of the first year of the term.

31
<PAGE> 33
A summary of stock option activity related to the plans are as
follows:

<TABLE>
<CAPTION>
Shares Price Range
------- --------------
<S> <C> <C>
Options outstanding, September 30, 1992 276,112 $7.00 - $18.43
Cancelled (10,000) 16.75
Exercised (57,463) 7.00 - 10.00
Granted 300,000 14.13
-------
Options outstanding, September 30, 1993 508,649 7.00 - 18.43
Cancelled (22,500) 14.13
Exercised (6,020) 7.00
-------
Options outstanding, September 30, 1994 480,129 7.00 - 18.43
Cancelled (94,000) 14.13 - 18.43
Exercised (51,015) 7.00 - 14.13
Granted 470,000 14.13
-------
Options outstanding, September 30, 1995 805,114 7.00 - 16.75
=======

Exercisable, September 30, 1995 335,114 7.00 - 16.75
=======
</TABLE>

There were 52,876 shares available for grants under the Plans at
September 30, 1995.

NON-EMPLOYEE DIRECTORS' STOCK OPTION AGREEMENTS

There were 10,000 shares available for grants at September 30, 1995.
Options are exercisable for six years from the date of grant.

A summary of stock option activity related to these agreements is as
follows:

<TABLE>
<CAPTION>
Shares Price Range
------- --------------
<S> <C> <C>
Options outstanding, September 30,
1992 and 1993 10,000 $12.75
Granted 10,000 11.00
-------
Options outstanding, September 30, 1994 20,000 $11.00 - 12.75
Cancelled (10,000) 12.75
-------
Options outstanding, September 30, 1995 10,000 11.00
=======
</TABLE>

PROFIT SHARING AND SAVINGS PLAN

The Company and its domestic subsidiaries have adopted a profit
sharing and savings plan in which substantially all employees are eligible to
participate. Annual contributions to the profit sharing portion of the plan are
discretionary, and are determined by the Company's Board of Directors.
Contributions to the savings portion of the plan are made on a monthly basis in
an amount as required by the plan. Expenses related to this plan were
approximately $1,200,000, $1,800,000 and $1,300,000 for the fiscal years 1995,
1994 and 1993, respectively.

32
<PAGE> 34
NOTE 13 - COMMITMENTS AND CONTINGENCIES

The Company is subject to legal proceedings and claims which arise in
the ordinary course of business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position of the Company. Additionally, in the ordinary course of
business, the Company has issued standby letters of credit and bank guarantees
as security for advances, progress payments and performance on long-term
contracts and, as a result, is contingently liable in the amount of
approximately $16,300,000 at September 30, 1995.

NOTE 14 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of unaudited quarterly financial data for
fiscal 1995 and 1994:
<TABLE>
<CAPTION>
Net Earnings
Gross Income (Loss)
Revenues Profit (Loss) Per Share
-------- ------ ------ ---------
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
Quarter Ended:
December 31, 1994 . . . . $42,298 $16,079 $ 601 $ .05
March 31, 1995 . . . . . 38,737 11,277 (9,705)(a) (.81)
June 30, 1995 . . . . . . 42,028 17,560 1,281 (b) .11
September 30, 1995 . . . 45,497 18,120 (4,969)(b) (.41)

Quarter Ended:
December 31, 1993 . . . . $40,575 $15,536 $ (841) $ (.07)
March 31, 1994 . . . . . 48,632 16,679 120 .01
June 30, 1994 . . . . . . 56,239 17,892 477 .04
September 30, 1994 . . . 58,320 18,693 1,568 .13
</TABLE>

- ----------

(a) Net loss for the quarter was affected by restructuring and other
charges, the effect of which is described in NOTE 2.

(b) Net income (loss) for the quarter was affected by losses on
divestitures of non-core assets, the effect of which is described in
NOTE 3.

NOTE 15 - INDUSTRY SEGMENTS

The Company has two principal industry segments: flow measurement and
energy products. The Flow Measurement segment manufactures and services
products and systems used to measure rates of flow and accumulated volumes of
fluids, primarily oil and natural gas. The energy products segment offers an
array of products and services to the energy markets. Operations of this
segment include the manufacture of pipeline valves used on both gas and liquid
pipelines, the production of fasteners for use in oil, gas and process
industries and energy recovery products.

33
<PAGE> 35
Intersegment transfers (primarily energy products to flow measurement)
and transfers to other geographic areas (primarily U.S. to U.K.) are not
significant to the operations of either segment or geographic area and are
accounted for as transfers at cost on the following schedules. Segment
operating income (loss) represents revenues less operating expenses and is not
reduced for interest expense, general corporate expenses and income taxes.
Identifiable assets are those tangible and intangible assets that are
identified with the operations of a particular industry segment or geographic
area.

34
<PAGE> 36
<TABLE>
<CAPTION>
INFORMATION ON INDUSTRY SEGMENTS
--------------------------------
(IN THOUSANDS)

Operating Identi- Capital Depreciation
Income fiable Expendi- and
Revenues (Loss)(a) Assets tures Amortization
-------- --------- ------ -------- ------------
<S> <C> <C> <C> <C> <C>
FISCAL 1995
- -----------

Flow measurement. . $114,966 $ 10,395 $109,836 $ 3,683 $5,526
Energy products . . 53,320 3,110 42,992 729 1,602
-------- -------- -------- ------- ------
Subtotal. . . . . 168,286 13,505 152,828 4,412 7,128

Corporate . . . . . 274 (5,704) 11,640 382 417
Other charges . . . (24,288)
Interest expense. . (2,028)
-------- -------- -------- ------- ------
Total . . . . . . $168,560 $(18,515) $164,468 $ 4,794 $7,545
======== ======== ======== ======= ======

FISCAL 1994
- -----------

Flow measurement. . $145,657 $ 13,454 $117,388 $ 8,416 $3,986
Energy products . . 57,739 (1,501) 54,193 5,002 2,588
-------- -------- -------- ------- ------
Subtotal. . . . . 203,396 11,953 171,581 13,418 6,574

Corporate . . . . . 370 (7,906) 15,756 213 909
Interest expense. . (1,927)
-------- -------- -------- ------- ------
Total . . . . . . $203,766 $ 2,120 $187,337 $13,631 $7,483
======== ======== ======== ======= ======

FISCAL 1993
- -----------

Flow measurement. . $110,009 $ 9,601 $ 97,909 $ 7,250 $3,561
Energy products . . 69,424 4,747 50,454 3,879 2,236
-------- -------- -------- ------- ------
Subtotal. . . . . 179,433 14,348 148,363 11,129 5,797

Corporate . . . . . 816 (4,178)(b) 29,705 664 787
Interest expense. . (2,088)
-------- -------- -------- ------- ------
Total . . . . . . $180,249 $ 8,082 $178,068 $11,793 $6,584
======== ======== ======== ======= ======
</TABLE>

- ----------

(a) Includes restructuring and other charges and losses on divestitures of
non-core assets (see NOTES 2 and 3).

(b) Includes pretax income of $1,500 from an insurance settlement.

35
<PAGE> 37
INFORMATION ON GEOGRAPHIC OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
United
States Europe Canada Consolidated
------ ------ ------ ------------
<S> <C> <C> <C> <C>
FISCAL 1995
- -----------

Revenues . . . . . . . . . . . . . $125,944 $29,795 $12,547 $168,286
======== ======= ======= ========

Operating income (loss) (a) . . . . $ 9,670 $ (485) $ 4,320 $ 13,505
======== ======= ======= ========

Identifiable assets at
September 30, 1995 . . . . . . . $107,926 $39,699 $ 5,203 $152,828
======== ======= ======= ========

FISCAL 1994
- -----------

Revenues . . . . . . . . . . . . . $134,904 $52,962 $15,530 $203,396
======== ======= ======= ========

Operating income . . . . . . . . . $ 4,553 $ 2,476 $ 4,924 $ 11,953
======== ======= ======= ========

Identifiable assets at
September 30, 1994 . . . . . . . $116,514 $48,851 $ 6,216 $171,581
======== ======= ======= ========

FISCAL 1993
- -----------

Revenues . . . . . . . . . . . . . $140,639 $29,133 $ 9,661 $179,433
======== ======= ======= ========

Operating income . . . . . . . . . $ 10,724 $ 675 $ 2,949 $ 14,348
======== ======= ======= ========

Identifiable assets at
September 30, 1993 . . . . . . . $106,526 $36,807 $ 5,030 $148,363
======== ======= ======= ========
</TABLE>

- ----------

(a) Includes restructuring and other charges (see NOTE 2) and losses on
divestitures of assets (see NOTE 3).

Included in United States revenues were export sales of $40,500,000,
$52,800,000 and $55,500,000 in fiscal 1995, 1994 and 1993, respectively. These
sales were primarily to Africa, the Far East, the Middle East, and South
America. At September 30, 1995, 1994 and 1993, the Company's investment in
consolidated foreign subsidiaries, primarily its U.K. subsidiary, approximated
$35,100,000, $40,200,000 and $30,100,000, respectively.

Foreign currency transaction gains and losses included in the
Consolidated Statement of Operations were immaterial in fiscal 1995, 1994 and
1993.

36
<PAGE> 38
INDEX TO EXHIBITS

Exhibit
Number
- ------

2.1 - Plan and Agreement of Merger dated as of January
22, 1988, by and between Daniel Industries, Inc.,
a Texas corporation ("Daniel Texas"), and Daniel
Industries, Inc., a Delaware corporation (the
"Company"), filed as Exhibit 2.1 to the Company's
Registration of Securities of Certain Successor
Issuers on Form 8-B, and hereby incorporated by
reference herein.

3.1 - Certificate of Incorporation of the Company, filed
as Exhibit 3.1 to the Company's Registration of
Securities of Certain Successor Issuers on Form 8-B
dated May 5, 1988, and hereby incorporated by
reference herein.

3.2 - By-Laws of the Company, as amended through February
2, 1995.

3.3 - Certificate of Designation, Powers, Preferences and
Rights of Series A Junior Participating Preferred
Stock filed as Exhibit 3.3 in the Company's Amendment
to Application or Report on Form 8, and hereby
incorporated by reference herein.

4.1 - Note Purchase Agreement dated as of December 5, 1988,
between the Company and The Variable Annuity Life
Insurance Company, The Mutual Benefit Life Insurance
Company, MONY Life Insurance Company of America
and MONY Legacy Life Insurance Company (including
the form of the Company's Senior Notes in the
aggregate in the principal amount of $20,000,000)
filed as Exhibit 4.3 to the Company's Annual Report
on Form 10-K for the year ended September 30, 1988,
and hereby incorporated by reference herein.

4.2 - Rights Agreement dated as of May 31, 1990, between
the Company and Wachovia Bank and Trust Company,
N.A., as Rights Agent, filed as Exhibit 1 to the
Company's Registration of Certain Classes of Securities
on Form 8-A filed June 5, 1990, and hereby incorporated
by reference herein.

4.3 - Certificate of Designation, Powers, Preferences and
Rights of Series A Junior Participating Preferred
Stock (included as Exhibit 3.3 hereto).
<PAGE> 39
INDEX TO EXHIBITS

Exhibit
Number
- ------

10.1 - 1977 Stock Option Plan, as amended and restated
on December 16, 1993, filed as Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the year
ended September 30, 1995, and hereby incorporated
by reference herein.

10.2 - 1981 Stock Option Plan, as amended and restated on
December 31, 1986, filed as Exhibit 19.2 to Daniel
Texas's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1986, and hereby incorporated
by reference herein.

10.3 - Form of Director's Stock Option Agreements dated
October 9, 1986, between Daniel Texas and the several
non-employee directors, filed as Exhibit 19.1 to
Daniel Texas's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1987, and hereby incorporated
by reference herein.

10.4 - Form of Change in Control Agreement dated as of
March 15, 1995, between the Company and each of
W. A. Griffin, III, W. C. Clingman, H. G. Schopfer,
III, T. L. Sivak and M. R. Yellin.

10.5 - Asset Purchase Agreement dated November 27, 1995,
by and among DAN-LOC Bolt & Gasket, Inc., Daniel
Industrial, Inc., Daniel Industries Canada and
the Company.

10.6 - Supplemental Executive Retirement Plan effective
July 1, 1995.

10.7 - Written description of a Consulting Agreement
between the Company and Ralph H. Clemons, Jr.
effective as of July 1, 1994.

10.8 - Written description of a Consulting Agreement
between the Company and W. A. Griffin effective
as of February 3, 1995.

<PAGE> 40
INDEX TO EXHIBITS

Exhibit
Number
- ------

10.9 - Written description of the Company's key employees'
incentive compensation plan.

21 - Subsidiaries of the Company.

23 - Consent of Independent Accountants.

27 - Financial data schedule.

<PAGE> 1
EXHIBIT 3.2

BY-LAWS
OF
DANIEL INDUSTRIES, INC.
(as amended through February 2, 1995)

ARTICLE I

MEETINGS OF STOCKHOLDERS

SECTION 1.1. PLACE OF MEETINGS. All meetings of stockholders shall
be held at such place, either within or without the State of Delaware, as shall
be determined from time to time by the Board of Directors.

SECTION 1.2. ANNUAL MEETINGS. The annual meeting of stockholders
shall be held at such date and time as shall be determined from time to time by
the Board of Directors. The annual meeting shall be held for the purpose of
electing directors in accordance with Article X of the Certificate of
Incorporation and transacting such other business as may be properly brought
before the meeting.

SECTION 1.3. SPECIAL MEETINGS. Special meetings of stockholders may
be called only by the Board of Directors. The Board of Directors shall
determine the date and time of each special meeting of stockholders. The
business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice of that meeting.

SECTION 1.4. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders, stating

1
<PAGE> 2
the time and place and purpose or purposes thereof, shall be given to each
stockholder entitled to vote at the meeting, within the time prescribed by
statute.

SECTION 1.5. QUORUM. The holders of a majority of the shares
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders except as otherwise provided
by statute. The holders of a majority of the shares entitled to vote thereat,
present in person or represented by proxy, whether or not a quorum is present,
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted that might have been
transacted at the meeting as originally notified.

SECTION 1.6. VOTING. When a quorum is present or represented at any
meeting of stockholders, the affirmative vote of the holders of a majority of
the shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders in
all matters, including the election of directors, unless the matter is one upon
which, by express provision of the statutes, of the Certificate of
Incorporation or of these by-laws, a different vote is required, in which case
such express provision shall govern and control the decision of that matter.
Every stockholder having the right to vote shall be entitled to vote in person,
or by proxy appointed by an instrument in writing subscribed by such
stockholder, bearing a date not more than three years prior to voting, unless
such instrument provides for a longer period, and filed with the Secretary of
the corporation before, or at the time of, the meeting. If such instrument
shall designate

2
<PAGE> 3
two or more persons to act as proxies, unless such instrument shall provide to
the contrary, a majority of such persons present at any meeting at which their
powers thereunder are to be exercised shall have and may exercise all the
powers of voting thereby conferred.

SECTION 1.7. CONSENTS OF STOCKHOLDERS. As provided in Article VI of
the Certificate of Incorporation, the right of stockholders of the corporation
to take action by a consent in writing is denied.

ARTICLE II

BOARD OF DIRECTORS

SECTION 2.1. POWERS. The business and affairs of the corporation
shall be managed under the direction of its Board of Directors, which may
exercise all powers of the corporation and do all lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these by-laws
required to be exercised or done by the stockholders.

SECTION 2.2. NUMBER AND CLASSIFICATION. The number of directors
shall be fixed in the manner provided by, and the directors shall be divided
into classes in accordance with, Article X of the Certificate of Incorporation.
The number of directors so fixed shall constitute the total number of directors
of the corporation. By the affirmative vote of not less than 80% of the number
of directors of the corporation in office at the time, the directors may
appoint advisory directors. Advisory directors will be entitled to attend and
participate at meetings of the Board of Directors but shall not be entitled to
vote on any matter submitted to directors or to exercise any other power vested
in a director. Advisory directors shall not constitute directors of the
corporation and shall have none of the duties of directors to the corporation.
Any advisory director may be removed without cause by the affirmative vote of
not less than 80% of the number of directors of the

3
<PAGE> 4
corporation in office at the time. Advisory directors shall be compensated in
accordance with Section 2.10 of these by-laws.

SECTION 2.3. CHAIRMAN OF THE BOARD. Annually the Board of Directors
shall elect from among its members a person to serve as Chairman of the Board
of Directors until his successor is elected and duly qualified. The Chairman
shall preside at all meetings of the Board of Directors, and he shall have such
other authority and perform such other duties as may be determined from time to
time by resolution of the Board of Directors not inconsistent with these by-
laws.

SECTION 2.4. REMOVAL. A director may not be removed except in
accordance with Article X of the Certificate of Incorporation.

SECTION 2.5. ANNUAL MEETINGS. The annual meeting of the Board of
Directors shall be held each year, without other notice than this by-law, at
the place of, and immediately following, the annual meeting of stockholders.
However, if a majority of the whole Board of Directors shall so consent in
writing, such regular meeting may be held at such time and place as shall be
fixed by such consent, and the Secretary shall give notice of such regular
meeting, stating such time and place, in the manner required by these by-laws.

SECTION 2.6. OTHER MEETINGS. Other meetings of the Board of
Directors may be called by the Chairman of the Board of Directors, the
President or any two directors. Except as provided in Section 2.5 of these
by-laws, notice of each meeting of the Board of Directors stating the time and
place of the meeting shall be given not less than seventy- two hours before the
time of the meeting, by or at the direction of the person or persons calling
the meeting, to each director. If the person or persons calling the meeting
shall instruct the Secretary or any Assistant Secretary to give such notice,
then the Secretary or such Assistant Secretary shall promptly do so in the
manner required by these

4
<PAGE> 5
by-laws.

SECTION 2.7. WAIVER OF NOTICE. The attendance of a director at any
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.

SECTION 2.8. QUORUM. A majority of the total number of directors,
determined in accordance with Section 2.2 of these by-laws, shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors, and the vote of a majority of the directors present at a meeting at
which there is a quorum shall be the act of the Board of Directors unless the
Certificate of Incorporation or these by-laws shall require a vote of a greater
number of directors. If a quorum shall not be present at any meeting of the
Board of Directors, a majority of the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

SECTION 2.9. ACTION BY CONSENT OF DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a consent in writing, setting forth the action so taken,
is signed by all of the directors.

SECTION 2.10. COMPENSATION OF DIRECTORS. The Board of Directors,
irrespective of any personal interest of any of its members, shall have
authority to fix the compensation of all directors for services to the
corporation as directors, as members of one or more committees of the Board of
Directors, as officers, or otherwise.

5
<PAGE> 6
ARTICLE III

COMMITTEES OF DIRECTORS

SECTION 3.1. DESIGNATION, POWERS AND NAME. The Board of Directors
may, by resolution passed by a majority of the whole Board of Directors,
designate one or more committees, including, if they shall so determine, an
Executive Committee, each such committee to consist of one or more of the
directors of the corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member.

SECTION 3.2. MEETINGS OF AND ACTION BY COMMITTEES. Except as
otherwise provided in the resolution pursuant to which a particular committee
of the Board of Directors was designated, (i) meetings of such committee may be
held within or without the State of Delaware and may be called by any member
thereof, (ii) notice of each meeting of such committee stating the time and
place of the meeting shall be given not less than forty-eight hours before the
time of the meeting, by or at the direction of the person or persons calling
the meeting, to each member of such committee, and if the person or persons
calling the meeting shall instruct the Secretary or any Assistant Secretary to
give such notice, then the Secretary or such Assistant Secretary shall promptly
do so in the manner required by these by-laws, (iii) attendance of a director
at any meeting of such committee shall constitute a waiver of notice of such
meeting, except where a director attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not

6
<PAGE> 7
lawfully called or convened, (iv) neither the business to be transacted at, nor
the purpose of, any meeting of such committee need be specified in the notice
or waiver of notice of such meeting, (v) at all meetings of such committee, a
majority of the number of directors comprising such committee, as fixed by such
resolution, shall constitute a quorum for the transaction of business, (vi) the
vote of a majority of the members present at a meeting of such committee at
which there is a quorum shall be the act of such committee, and (vii) if a
quorum shall not be present at any meeting of such committee, a majority of the
members present at such meeting may adjourn such meeting from time to time,
without notice other than announcement at such meeting, until a quorum shall be
present. The Board of Directors, by resolution adopted by a majority of the
whole Board of Directors may amend or repeal the resolution pursuant to which
any committee of the Board of Directors was designated, may remove any member
of any committee, and may fill any vacancy occurring on any committee. Each
committee of directors shall keep regular minutes of its proceedings and report
the same to the Board of Directors when requested to do so.

SECTION 3.3. ACTION BY CONSENT. Any action required or permitted to
be taken at any meeting of any committee of the Board of Directors may be taken
without a meeting if a consent in writing, setting forth the action so take, is
signed by all of the members of such committee.

ARTICLE IV

NOTICE

SECTION 4.1. METHODS OF GIVING NOTICE. Whenever under the provisions
of the statutes, the Certificate of Incorporation or these by-laws, notice is
required to be given to any director, member of any committee or stockholder,
such notice shall be in writing and delivered personally or mailed

7
<PAGE> 8
to such director, member or stockholder; provided that in the case of a
director or a member of any committee such notice may be given orally or by
telephone or telegram. If mailed, notice to a director, member of a committee
or stockholder shall be deemed to be given when deposited in the United States
mail first class in a sealed envelope, with postage thereon prepaid, addressed,
in the case of a stockholder, to the stockholder at the stockholder's address
as it appears on the records of the corporation or, in the case of a director
or a member of a committee, to such person at his business or home address. If
sent by telegraph, notice to a director or member of a committee shall be
deemed to be given when the telegram, so addressed, is delivered to the
telegraph company.

SECTION 4.2. WRITTEN WAIVER. Whenever any notice is required to be
given under the provisions of the statutes, the Certificate of Incorporation or
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.

ARTICLE V

OFFICERS

SECTION 5.1. OFFICERS. The officers of the corporation shall be a
President, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. The Board of Directors may
elect or appoint other officers and agents, including Assistant Secretaries and
Assistant Treasurers, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined by the
Board of Directors. Any two or more offices, other than the offices of
President and Secretary, may be held by the same person.

SECTION 5.2. TERM OF OFFICE. Each officer shall hold office until
his successor is elected by the Board of Directors or until his earlier death,
resignation or removal from office.

8
<PAGE> 9
SECTION 5.3. REMOVAL AND RESIGNATION. Any officer or agent elected or
appointed by the Board of Directors may be removed without cause by the Board
of Directors whenever, in its sole judgment, the best interests of the
corporation shall be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights. Any officer may resign at any time by giving written notice
to the corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein, and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.

SECTION 5.4. VACANCIES. Any vacancy occurring in any office of the
corporation by death, resignation or removal from office may be filled only by
the Board of Directors.

SECTION 5.5. SALARIES. The salaries of all officers of the
corporation shall be fixed by the Board of Directors or pursuant to its
direction. No officer shall be prevented from receiving a salary by reason of
his also being a director.

SECTION 5.6. CHIEF EXECUTIVE OFFICER. The President shall be the
Chief Executive Officer of the corporation. The Chief Executive Officer shall
be the principal executive officer of the corporation for the purposes of all
filings by the corporation with the United States Securities and Exchange
Commission, shall preside at all meetings of stockholders, shall have general
and active management of the business of the corporation, and shall see that
all resolutions of the Board of Directors are carried into effect.

SECTION 5.7. PRESIDENT. The President shall be the Chief Operating
Officer of the corporation, and he shall have general supervision of the
day-to-day operations of the corporation's several industry segments. Unless
the Board of Directors shall have designated a particular officer

9
<PAGE> 10
of the corporation as Chief Financial Officer, then the President shall be the
Principal Financial Officer of the corporation for purposes of all filings by
the corporation with the United States Securities and Exchange Commission. The
President shall have such other authority and perform such other duties as may
be determined from time to time by resolution of the Board of Directors not
inconsistent with these by-laws. If the President shall have been last
designated as Chief Executive Officer, then he also shall have the authority
and perform the duties appertaining to that designation, as specified in
Section 5.6 of these by-laws.

SECTION 5.8. VICE PRESIDENTS. The Vice Presidents shall have such
authority and perform such duties as may be determined from time to time by
resolution of the Board of Directors not inconsistent with these by-laws or as
the Chairman of the Board of Directors or the President may from time to time
delegate. The Board of Directors may, at the time of the election of any Vice
President of the corporation, designate such Vice President a "Senior Vice
President" or "Executive Vice President" of the corporation or designate such
Vice President by reference to a principal business function, such as "Finance"
or "Administration".

SECTION 5.9. SECRETARY. The Secretary shall attend all meetings of
the Board of Directors and all meetings of the stockholders and shall record
all of the proceedings of such meetings in minute books to be kept for that
purpose. If any member of any committee of the Board of Directors shall so
request, the Secretary shall perform like duties in respect of the proceedings
of meetings of such committee. If requested by any person or persons having
authority to call such a meeting, the Secretary shall give, or cause to be
given, notice of each meeting of the Board of Directors and notice of each
meeting of stockholders, such notice to be given promptly in the manner
required by these by-laws. The Secretary shall keep in safe custody the seal
of the corporation and, when authorized

10
<PAGE> 11
by the Board of Directors, shall affix the same to any instrument requiring it.
The Secretary shall have such other authority and perform such other duties as
may be determined from time to time by resolution of the Board of Directors not
inconsistent with these by-laws or as the Chief Executive Officer may from time
to time delegate.

SECTION 5.10. ASSISTANT SECRETARY. The Assistant Secretary shall, in
the absence or disability of the Secretary, have the authority and perform the
duties of the Secretary. He shall have such other authority and perform such
other duties as may be determined from time to time by resolution of the Board
of Directors not inconsistent with these by-laws or as the Secretary may from
time to time delegate.

SECTION 5.11. TREASURER. The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate accounts and
records of receipts, disbursements and other transactions in books belonging to
the corporation. He shall deposit all moneys and other valuable effects in the
name and to the credit of the corporation in such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as and when ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer and to the Board of Directors, when the Chief Executive Officer or the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the corporation. The Treasurer shall have
such other authority and perform such other duties as may be determined from
time to time by resolution of the Board of Directors not inconsistent with
these by-laws or as the Chief Executive Officer may from time to time delegate.

SECTION 5.12. ASSISTANT TREASURER. The Assistant Treasurer shall, in
the absence or disability of the Treasurer, have the authority and perform the
duties of the Treasurer. He shall have

11
<PAGE> 12
such other authority and perform such other duties as may be determined from
time to time by resolution of the Board of Directors not inconsistent with
these by-laws or as the Treasurer may from time to time delegate.

ARTICLE VI

CHECKS AND DEPOSITS

SECTION 6.1. CHECKS, ETC. All checks, demands, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as shall be determined
by the Board of Directors.

SECTION 6.2. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.

ARTICLE VII

CERTIFICATES OF STOCK

SECTION 7.1. ISSUANCE. Each stockholder of the corporation shall be
entitled to a certificate or certificates showing the number of shares of stock
registered in his name on the books of the corporation. The certificates shall
be in such form as may be determined by the Board of Directors, shall be issued
in numerical order and shall be entered in the books of the corporation as they
are issued. They shall exhibit the holder's name and number of shares and
shall be signed by the President or a Vice President and by the Secretary or an
Assistant Secretary, provided that such signatures may be facsimile. All
certificates surrendered to the corporation's transfer agent for transfer shall
be canceled, and no new certificate shall be issued until the former
certificate for a like number of shares

12
<PAGE> 13
shall have been surrendered and canceled, except that in the case of a lost,
stolen, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and with such indemnity, if any, to the corporation as the
Board of Directors may prescribe. Unless otherwise provided in the resolution
or resolutions of the Board of Directors providing for the issuance of shares
of Preferred Stock of the corporation of a particular series, certificates
shall not be issued representing fractional shares of stock.

SECTION 7.2. LOST CERTIFICATES. The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed, or both.

SECTION 7.3. REGISTERED STOCKHOLDERS. The corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of the State of Delaware.

13
<PAGE> 14
ARTICLE VIII

DIVIDENDS

SECTION 8.1. DECLARATION. Dividends upon the stock of the
corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property or in shares of stock.

SECTION 8.2. RESERVE. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the corporation.

ARTICLE IX

INDEMNIFICATION

SECTION 9.1. THIRD PARTY ACTIONS. The corporation shall indemnify
any natural person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director
or officer of the corporation, or is or was serving at the request of the
corporation as a director or officer or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgements, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonable believed to
be in or not opposed to the best interests of the corporation, and, with

14
<PAGE> 15
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
preceding by judgement, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.

SECTION 9.2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
corporation shall indemnify any natural person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

SECTION 9.3. DETERMINATION OF CONDUCT. The determination whether an
officer, director or agent has met the applicable standard of conduct set forth
in Sections 9.1 and 9.2 (unless

15
<PAGE> 16
indemnification is ordered by a court) shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such quorum is not
obtainable, or even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.

SECTION 9.4. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred by an
officer, director or agent in defending a civil or criminal action, suit or
proceeding for which such person may be entitled to indemnity under this
Article IX shall be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified under this
Article IX.

SECTION 9.5. DEFINITIONS. For purposes of this Article IX, references
to "the corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued would have had power and authority to indemnify its directors and
officers, so that any person who is or who was a director or officer of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article IX with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article IX, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a
person with respect to any employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a

16
<PAGE> 17
director or officer of the corporation that imposes duties on, or involves
services by, such director or officer with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the best interest of the participants
and beneficiaries in the employee benefit plan shall be deemed to have acted in
a manner "not opposed to the best interests of the corporation" as referred to
in this Article IX.

SECTION 9.6. INDEMNITY NOT EXCLUSIVE. The indemnification and
advancement of expenses provided by this Article IX shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any agreement, vote of
stockholders, vote of disinterested directors, insurance arrangement or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.

SECTION 9.7 CONTINUATION. The indemnification and advancement of
expenses provided by this Article IX shall continue as to a person who has
ceased to be a director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.

SECTION 9.8. NO FURTHER AUTHORIZATION REQUIRED. This Article IX is
intended to make mandatory the indemnification permitted by Section 145 of the
Delaware General Corporation Law. This Article IX shall be deemed to
constitute the authorization required by subsection (d) of said Section 145,
and no further authorization by the Board of Directors or the stockholders of
the corporation shall be necessary in any specific case if the indemnification
or advancement of expenses referred to in this Article IX is, by the terms of
this Article IX, required to be afforded in that case.

17
<PAGE> 18
ARTICLE X

BY-LAW AMENDMENTS: APPLICATION OF SECTION 203
OF THE DELAWARE GENERAL CORPORATION LAW

SECTION 10.1. CERTIFICATE OF INCORPORATION TO GOVERN. These by-laws
may not be adopted, amended or repealed otherwise than in accordance with
Article VI of the Certificate of Incorporation, provided that Section 10.2 of
these by-laws may not be further amended by the Board of Directors.

SECTION 10.2. NO APPLICATION OF SECTION 203. The corporation hereby
expressly elects not to be governed by Section 203 of the Delaware General
Corporation Law entitled "Business Combinations with Interested Stockholders".

<PAGE> 1
EXHIBIT 10.4

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT between Daniel Industries, Inc., a Delaware corporation
(the "Company"), and ________________________________________ (the "Employee")
is dated as of March 15, 1995 (the "Effective Date").

W I T N E S S E T H:

WHEREAS, the Company considers it to be in the best interests of its
stockholders to encourage the continued employment of key employees of the
Company; and

WHEREAS, the Employee is a key employee of the Company; and

WHEREAS, the Company believes that the possibility of the occurrence
of a Change in Control of the Company (as that phrase is defined in Section 2)
may result in the termination by the Employee of the Employee's employment by
the Company or in the distraction of the Employee from the performance of his
duties to the Company, in either case to the detriment of the Company and its
stockholders; and

WHEREAS, the Company recognizes that the Employee could suffer adverse
financial and professional consequences if a Change in Control of the Company
were to occur; and

WHEREAS, the Company wishes to enter into this Agreement to protect
the Employee if a Change in Control of the Company occurs, thereby encouraging
the Employee to remain in the employ of the Company and not be distracted from
the performance of his duties to the Company;

NOW, THEREFORE, the parties agree as follows:

Section 1. Other Employment Arrangements. Except as provided in
Section 15, this Agreement does not affect the Employee's existing or future
employment arrangements with the Company unless a Change in Control of the
Company shall have occurred before the expiration of the term of this
Agreement. The Employee's employment by the Company shall continue to be at
the will of the Board of Directors or, if the Employee is not an officer of the
Company at the time of the termination of the Employee's employment by the
Company, the will of the Chief Executive Officer of the Company, except that if
(i) a Change in Control of the Company shall have occurred before the
expiration of the term of this Agreement and (ii) the Employee's employment by
the Company is terminated (whether by the Employee or the Company or
automatically as provided in Section 3) after the occurrence of that Change in
Control of the Company, then the Employee shall be entitled to receive certain
benefits as provided in this Agreement.

Section 2. Change in Control of the Company. A "Change in
Control of the Company" shall have occurred if, after the Effective Date:

(i) a report on Schedule 13D shall be filed with the
Commission pursuant to Section 13(d) of the Exchange Act and that
report discloses that any person (within the meaning of Section 13(d)
of the Exchange Act), other than the Company (or one of its
subsidiaries) or any employee benefit plan sponsored by the Company
(or one of its subsidiaries), is the beneficial owner (as that term

<PAGE> 2
is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 20 percent or more of the outstanding Voting Stock;

(ii) any person (within the meaning of Section 13(d) of
the Exchange Act), other than the Company (or one of its subsidiaries)
or any employee benefit plan sponsored by the Company (or one of its
subsidiaries), shall purchase securities pursuant to a tender offer or
exchange offer to acquire any Voting Stock (or any securities
convertible into Voting Stock) and, immediately after consummation of
that purchase, that person is the beneficial owner (as that term is
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of 20 percent or more of the outstanding Voting Stock (such person's
beneficial ownership to be determined, in the case of rights to
acquire Voting Stock, pursuant to paragraph (d) of Rule 13d-3 under
the Exchange Act);

(iii) the stockholders of the Company shall approve (w) a
merger or consolidation of the Company with or into any other person,
unless the sole purpose of the merger is to change the Company's
domicile within the United States of America, (x) any sale, lease,
exchange or other transfer of all or substantially all the assets of
the Company and its consolidated subsidiaries, (y) the dissolution of
the Company, or (z) a transaction immediately after the consummation
of which any person (within the meaning of Section 13(d) of the
Exchange Act) would be the beneficial owner (as that term is defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50 percent of the outstanding Voting Stock; or

(iv) during any period of 12 consecutive months, the
individuals who at the beginning of that period constituted the Board
of Directors shall cease to constitute a majority of the Board of
Directors.

Section 3. Term of This Agreement. The term of this Agreement
shall begin on the Effective Date and, unless automatically extended pursuant
to the second sentence of this Section 3, shall expire on the first to occur
of:

(i) the Employee's death, the Employee's Disability or
the Employee's Retirement, the occurrence of any of which shall
automatically result in the termination of the Employee's employment
by the Company,

(ii) the termination by the Employee or the Company of the
Employee's employment by the Company, or

(iii) the end of the three-year period (the "Expiration
Date") beginning on (x) the Effective Date if no Change in Control of
the Company shall have occurred during that three-year period (or any
period for which the term of this Agreement shall have been
automatically extended) or (y) if one or more Changes in Control of
the Company shall have occurred during that three-year period (or any
period for which the term of this Agreement shall have been
automatically extended), the date on which the last Change in Control
of the Company occurred.

If (i) the term of this Agreement shall not have expired as a result of the
occurrence of one of the events described in clause (i) or (ii) of the
immediately preceding sentence and (ii) the Company shall not have given notice
to the Employee not fewer than 45 days before the

2
<PAGE> 3
Expiration Date that the term of this Agreement will expire on the Expiration
Date, then the term of this Agreement shall be automatically extended for
successive one-year periods (the first such period to begin on the day
immediately following the Expiration Date) unless the Company shall have given
notice to the Employee not fewer than 45 days before the end of any one-year
period for which the term of this Agreement shall have been automatically
extended that such term will expire at the end of that one-year period. The
expiration of the term of this Agreement shall not terminate this Agreement
itself or affect the right of the Employee or the Employee's legal
representative to enforce the payment of any amount or other benefit to which
the Employee was entitled before the expiration of the term of this Agreement
or to which the Employee became entitled as a result of the event (including
the termination, whether by the Employee or the Company or automatically as
provided in this Section 3, of the Employee's employment by the Company) that
caused the term of this Agreement to expire.

Section 4. Event of Termination for Cause. An "Event of
Termination for Cause" shall have occurred if, after the Effective Date, the
Employee shall:

(i) willfully and continuously fail to substantially
perform the Employee's duties to the Company (other than any failure
that results from the Employee's having become mentally or physically
disabled or any actual or anticipated failure that results from the
occurrence of an Event of Termination for Good Reason) within 30 days
after notice demanding substantial performance, which notice shall
specifically identify the duties that the Employee has failed to
substantially perform, is given to the Employee by the Company; or

(ii) willfully engages in conduct that the Employee knows
to be materially injurious to the Company.

Section 5. An Event of Termination for Good Reason. An "Event
of Termination for Good Reason" shall have occurred if, after the Effective
Date, the Company shall:

(i) assign to the Employee any duties inconsistent with
the Employee's position (including offices, titles and reporting
requirements), authority, duties or responsibilities with the Company
in effect immediately before the occurrence of the first Change in
Control of the Company;

(ii) remove the Employee from, or fail to re-elect or
appoint the Employee to, any position with the Company that was held
by the Employee immediately before the occurrence of the first Change
in Control of the Company, except that a nominal change in the
Employee's title shall not constitute such an event;

(iii) take any other action that results in a material
diminution in such position, authority, duties or responsibilities;

(iv) reduce the Employee's annual base salary as in effect
immediately before the occurrence of the first Change in Control of
the Company or as the Employee's annual base salary may be increased
from time to time after that occurrence (the "Base Salary");

3
<PAGE> 4
(v) relocate the Employee's principal office outside of
the metropolitan area of the City of Houston, Texas;

(vi) fail to (x) continue in effect any profit sharing,
savings, retirement or pension plan of the Company in which the
Employee was a participant immediately before the occurrence of the
first Change in Control of the Company (including the Company's
Employees' Profit Sharing and Savings Plan), or any substitute plan
adopted by the Board of Directors and in which the Employee was a
participant immediately before the occurrence of the last Change in
Control of the Company, unless an equitable arrangement (embodied in a
substitute or alternative plan) shall have been made with respect to
such profit sharing, savings, retirement or pension plan promptly
following the occurrence of the last Change in Control of the Company,
or (y) continue the Employee's participation in any such plan (or any
substitute or alternative plan) on substantially the same basis, both
in terms of the amount of benefits provided to the Employee and the
level of the Employee's participation relative to other participants,
as existed immediately before the occurrence of the first Change in
Control of the Company;

(vii) fail to continue to provide the Employee with
benefits substantially similar to those enjoyed by the Employee under
any of the Company's other employee benefit plans (the "Other Benefit
Plans"), including life insurance, medical, dental, health, accident
or disability plans, in which the Employee was a participant
immediately before the occurrence of the first Change in Control of
the Company;

(viii) take any action that would directly or indirectly
materially reduce any other benefits that were provided to the
Employee by the Company immediately before the occurrence of the first
Change in Control of the Company or deprive the Employee of any
material fringe benefit enjoyed by the Employee immediately before the
occurrence of the first Change in Control of the Company;

(ix) fail to provide the Employee with the number of paid
vacation days to which the Employee was entitled in accordance with
the Company's vacation policy in effect immediately before the
occurrence of the first Change in Control of the Company;

(x) fail to comply with Section 8; or

(xi) purport to terminate the Employee's employment by the
Company unless notice of that termination shall have been given to the
Employee pursuant to, and that notice shall meet the requirements of,
Section 6.

Section 6. Notice of Termination. If a Change in Control of the
Company shall have occurred before the expiration of the term of this
Agreement, any subsequent termination by the Employee or the Company of the
Employee's employment by the Company, or any determination of the Employee's
Disability, shall be communicated by notice to the other party that shall
indicate the specific paragraph of Section 7 pursuant to which the Employee is
to receive benefits as a result of the termination. If the notice states that
the Employee's employment by the Company has been automatically terminated as a
result of the Employee's Disability, the notice shall (i) specifically describe
the basis for the determination of the

4
<PAGE> 5
Employee's Disability and (ii) state the date of the determination of the
Employee's Disability, which date shall be not more than ten days before the
date such notice is given. If the notice is from the Company and states that
the Employee's employment by the Company is terminated by the Company as a
result of the occurrence of an Event of Termination for Cause, the notice shall
specifically describe the action or inaction of the Employee that the Company
believes constitutes an Event of Termination for Cause. If the notice is from
the Employee and states that the Employee's employment by the Company is
terminated by the Employee as a result of the occurrence of an Event of
Termination for Good Reason, the notice shall specifically describe the action
or inaction of the Company that the Employee believes constitutes an Event of
Termination for Good Reason. Each notice given pursuant to this Section 6
(other than a notice stating that the Employee's employment by the Company has
been automatically terminated as a result of the Employee's Disability) shall
state a date, which shall be not fewer than 30 days nor more than 60 days after
the date such notice is given, on which the termination of the Employee's
employment by the Company is effective. The date so stated in accordance with
this Section 6 shall be the "Termination Date". If a Change in Control of the
Company shall have occurred before the expiration of the term of this
Agreement, any subsequent purported termination by the Company of the
Employee's employment by the Company, or any subsequent purported determination
by the Company of the Employee's Disability, shall be ineffective unless that
termination or determination shall have been communicated by the Company to the
Employee by notice that meets the requirements of the foregoing provisions of
this Section 6 and the provisions of Section 9.

Section 7. Benefits Payable on Change in Control and
Termination. If (x) a Change in Control of the Company shall have occurred
before the expiration of the term of this Agreement and (y) the Employee's
employment by the Company is terminated (whether by the Employee or the Company
or automatically as provided in Section 3) after the occurrence of that Change
in Control of the Company, the Employee shall be entitled to the following
benefits:

(i) If the Employee's employment by the Company is
terminated (x) by the Company as a result of the occurrence of an
Event of Termination for Cause or (y) by the Employee before the
occurrence of an Event of Termination for Good Reason, then the
Company shall pay to the Employee the Base Salary accrued through the
Termination Date but not previously paid to the Employee.

(ii) If the Employee's employment by the Company is
automatically terminated as a result of the Employee's death, the
Employee's Disability or the Employee's Retirement, then (x) the
Company shall pay to the Employee the Base Salary accrued through the
date of the occurrence of that event but not previously paid to the
Employee and (y) the other benefits to be paid to the Employee as a
result of that occurrence shall be determined in accordance with the
Other Benefit Plans in effect at that date.

(iii) If the Employee's employment by the Company is
terminated (x) by the Company otherwise than as a result of the
occurrence of an Event of Termination for Cause or (y) by the Employee
after the occurrence of an Event of Termination for Good Reason, then
the Employee shall be entitled to the following benefits:

(1) the Company shall pay to the Employee the
Base Salary accrued through the Termination Date but not
previously paid to the Employee;

5
<PAGE> 6
(2) the Company shall pay to the Employee, as a
lump sum, an amount (the "Severance Payment") equal to two and
one-half times the sum of:

(A) the amount of the Base Salary that
would have been paid to the Employee during the
fiscal year of the Company in which the Termination
Date occurs based on the assumption that the
Employee's employment by the Company had continued
throughout that fiscal year at the Base Salary equal
to the greater of (I) the Base Salary in effect at
the beginning of that fiscal year and (II) the Base
Salary in effect immediately before any reduction in
the Base Salary that constituted an Event of
Termination for Good Reason, plus

(B) the amount of any cash bonus paid or
payable by the Company to the Employee for services
rendered during the immediately preceding fiscal
year, regardless of whether that bonus was paid, or
is payable, after the end of such immediately
preceding fiscal year, plus

(C) the amount of any income that (I) is
or was includable, for federal income tax purposes,
in the Employee's gross income for any period and
(II) is attributable to the exercise of options that
were (X) granted to the Employee pursuant to any of
the Company's existing or future stock option plans
and (Y) exercised at any time during the 365-day
period that ends on the day immediately following the
Termination Date.

provided that the amount of the Severance Payment shall be
subject to reduction pursuant to Section 11; and

(3) the Company (at its sole expense) shall take
the following actions:

(A) throughout the Relevant Period, the
Company shall maintain in effect, and not materially
reduce the benefits provided by, each of the Other
Benefit Plans in which the Employee was a participant
immediately before the Termination Date; and

(B) the Company shall arrange for the
Employee's uninterrupted participation throughout
the Relevant Period in each of such Other Benefit
Plans,

6
<PAGE> 7
provided that if the Employee's participation after the
Termination Date in any such Other Benefit Plan is not
permitted by the terms of that Other Benefit Plan, then
throughout the Relevant Period, the Company (at its sole
expense) shall provide the Employee with substantially the
same benefits that were provided to the Employee by that Other
Benefit Plan immediately before the Termination Date.

Upon payment by the Company to the Employee of the amounts and other benefits
required to be paid pursuant to the foregoing provisions of this Section 7, the
Company shall no longer be obligated to pay any other amounts or benefits to
the Employee, other than benefits that, at the time of termination of the
Employee's employment by the Company, had vested in the Employee as a result of
the Employee's participation in any profit sharing, savings, retirement, or
pension plan of the Company. If the Employee's employment by the Company shall
have been terminated as a result of the Employee's death, the benefits
otherwise required to be paid to the Employee pursuant to the foregoing
provisions of this Section 7 shall be paid to the executor or administrator of
the estate of the Employee. Each payment required to be made to the Employee
pursuant to the foregoing provisions of this Section 7 (i) shall be made by
check drawn on an account of the Company at a bank located in the United States
of America and (ii) shall be paid (x) if the Employee's employment by the
Company was terminated as a result of the Employee's death, the Employee's
Disability or the Employee's Retirement, not more than 30 days immediately
following the date of the occurrence of that event, and (y) if the Employee's
employment by the Company was terminated for any other reason, not more than 10
days immediately following the Termination Date.

Section 8. Successors. If a Change in Control of the Company
shall have occurred before the expiration of the term of this Agreement,

(i) the Company shall not, directly or indirectly,
consolidate with, merge into or sell or otherwise transfer its assets
as an entirety or substantially as an entirety to, any person, or
permit any person to consolidate with or merge into the Company,
unless immediately after such consolidation, merger, sale or transfer,
the Successor shall have assumed in writing the Company's obligations
under this Agreement, and

(ii) not fewer than 10 days before the consummation of any
consolidation of the Company with, merger by the Company into, or sale
or other transfer by the Company of its assets as an entirety or
substantially as an entirety to, any person, the Company shall give
the Employee notice of that proposed transaction.

Section 9. Notice. Notices required or permitted to be given by
either party pursuant to this Agreement shall be in writing and shall be deemed
to have been given when delivered personally to the other party or when
deposited with the United States Postal Service as registered mail with postage
prepaid and addressed:

(i) if to the Employee, at the Employee's address last
shown on the Company's records, and

(ii) if to the Company, at 9753 Pine Lake Drive, Houston,
Texas 77055, directed to the attention of the Chief Executive Officer,

7
<PAGE> 8
or, in either case, to such other address as the party to whom or which such
notice is to be given shall have specified by notice given to the other party.

Section 10. Withholding Taxes. The Company may withhold from all
payments to be paid to the Employee pursuant to this Agreement all taxes that,
by applicable federal or state law, the Company is required to so withhold.

Section 11. Conditional Reduction of Severance Payment. If all
or any portion of the amount of any Change in Control Payment would not be
deductible for federal income tax purposes by a Tax Affiliate (or other person
who made or is required to make such Change in Control Payment) by reason of
the application of section 280G of the Code, the Severance Payment shall be
reduced until (i) no portion of the total amount of all Change in Control
Payments is not deductible by a Tax Affiliate (or other person who made or is
required to make such Change in Control Payment) by reason of the application
of that section or (ii) the Severance Payment is reduced to zero. For purposes
of determining whether all or any portion of the amount of any Change in
Control Payment would not be deductible for federal income tax purposes by a
Tax Affiliate (or other person who made or is required to make such Change in
Control Payment) by reason of the application of that section,

(i) no portion of the total amount of all Change in
Control Payments the receipt or enjoyment of which the Employee shall
have effectively waived, for purposes of section 280G of the Code,
before the date of payment of the Severance Payment shall be taken
into account,

(ii) no portion of the total amount of all Change in
Control Payments shall be taken into account that, in the opinion of
tax counsel selected by the Company's independent accountants and
acceptable to the Employee (the "Tax Counsel"), does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the
Code,

(iii) no portion of the total amount of all Change in
Control Payments shall be taken into account that, in the opinion of
Tax Counsel, (x) constitutes reasonable compensation for services
rendered within the meaning of section 280G(B)(4) of the Code and (y)
is not considered in the calculation of a "parachute payment" or is
considered in that calculation but does not cause an excess "parachute
payment", and

(iv) the value of any noncash benefit or any deferred
payment or benefit included in the total amount of all Change in
Control Payments shall be determined by the Company's independent
accountants in accordance with sections 280G(d)(3) and 280G(d)(4) of
the Code.

Section 12. Expenses of Enforcement. If a Change in Control of
the Company shall have occurred before the expiration of the term of this
Agreement, then, upon demand by the Employee made to the Company, the Company
shall reimburse the Employee for the reasonable expenses (including attorneys'
fees and expenses) incurred by the Employee in enforcing or seeking to enforce
the payment of any amount or other benefit to which the Employee shall have
become entitled pursuant to this Agreement, except to the extent that the
reimbursement of such expenses would not be, or would cause any other portion
of the total amount of all Change in Control Payments not to be, deductible for
federal income tax purposes by a Tax Affiliate (or other person who made or is
required to make such Change in Control Payment) by reason of the application
of section 280G of the Code.

8
<PAGE> 9
Section 13. Employment by Subsidiaries. If, at the Effective
Date, the Employee is an employee of a subsidiary of the Company, references in
this Agreement to the Employee's employment by the Company shall be to the
Employee's employment by the subsidiary.

Section 14. No Obligation to Mitigate. The Employee shall not be
required to mitigate the amount of any payment or other benefit required to be
paid to the Employee pursuant to this Agreement, whether by seeking other
employment or otherwise, nor shall the amount of any such payment or other
benefit be reduced on account of any compensation earned by the Employee as a
result of employment by another person.

Section 15. Confidential Information. From the Effective Date
until the expiration of the term of this Agreement, the Employee shall hold in
a fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, that shall have been obtained by
the Employee during the Employee's employment by the Company or any of its
affiliated companies and that shall not have become public knowledge (other
than as a result of acts by the Employee in violation of this Section 15). The
Company shall not withhold or reduce any amount or other benefit payable to the
Employee pursuant to the terms of this Agreement or otherwise on the grounds
that the Employee has breached or threatened to breach the foregoing provisions
of this Section 15, and the sole remedy of the Company for a breach or
anticipated breach of those provisions shall be injunctive relief.

Section 16. Amendment and Waiver. No provision of this Agreement
may be amended or waived unless that amendment or waiver is by written
instrument signed by the parties hereto. No waiver by either party of any
breach of this Agreement shall be deemed a waiver of any other or subsequent
breach.

Section 17. Governing Law. The validity, interpretation,
construction and enforceability of this Agreement shall be governed by the laws
of the State of Texas.

Section 18. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

Section 19. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together will constitute the same instrument.

Section 20. Assignment. This Agreement shall inure to the
benefit of and be enforceable by the Employee's legal representative. The
Company may not assign any of its obligations under this Agreement unless (i)
such assignment is to a Successor and (ii) the requirements of Section 8 are
fulfilled.

Section 21. Arbitration. Any dispute between the parties arising
out of this Agreement, whether as to this Agreement's construction,
interpretation or enforceability or as to any party's breach or alleged breach
of any provision of this Agreement, shall be submitted to arbitration in
accordance with the following procedures:

(i) Either party may demand such arbitration by giving
notice of that demand to the other party. The notice shall state (x)
the matter in controversy and (y) the name of the arbitrator selected
by the party giving the notice.

9
<PAGE> 10
(ii) Not more than 15 days after such notice is given, the
other party shall give notice to the party who demanded arbitration of
the name of the arbitrator selected by the other party. If the other
party shall fail to timely give such notice, the arbitrator that the
other party was entitled to select shall be named by the Arbitration
Committee of the American Arbitration Association. Not more than 15
days after the second arbitrator is so named, the two arbitrators
shall select a third arbitrator. If the two arbitrators shall fail to
timely select a third arbitrator, the third arbitrator shall be named
by the Arbitration Committee of the American Arbitration Association.

(iii) The dispute shall be arbitrated at a hearing that
shall be concluded within 10 days immediately following the date the
dispute is submitted to arbitration unless a majority of the
arbitrators shall elect to extend the period of arbitration. Any
award made by a majority of the arbitrators (x) shall be made within
10 days following the conclusion of the arbitration hearing, (y) shall
be conclusive and binding on the parties, and (z) may be made the
subject of a judgment of any court having jurisdiction.

(iv) All expenses of the arbitration shall be borne by
the Company. The agreement of the parties contained in the foregoing
provisions of this Section 21 shall be a complete defense to any
action, suit or other proceeding instituted in any court or before any
administrative tribunal with respect to any dispute between the parties
arising out of this Agreement.

Section 22. Interpretation.

(a) As used in this Agreement, the following terms and phrases
have the indicated meanings:

(i) "Base Salary" has the meaning assigned to that term
in Section 5.

(ii) "Board of Directors" means the Board of Directors of
the Company.

(iii) "Change in Control of the Company" has the meaning
assigned to that phrase in Section 2.

(iv) "Change in Control Payment" means a payment or other
benefit, including the Severance Payment, received or to be received
by the Employee from any Tax Affiliate in connection with a Change in
Control of the Company or the termination of the Employee's employment
by the Company, whether that payment or other benefit has been paid or
is payable pursuant to this Agreement or otherwise.

(v) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.

(vi) "Commission" means the United States Securities and
Exchange Commission or any successor agency.

10
<PAGE> 11
(vii) "Company" has the meaning assigned to that term in
the recitals to this Agreement. The term "Company" shall also include
any Successor, whether the liability of such Successor under this
Agreement is established by contract or occurs by operation of law.

(viii) "Effective Date" has the meaning assigned to that
term in the recitals to this Agreement.

(ix) "Employee's Disability" means:

(x) if no Change in Control of the Company shall
have occurred before the date of determination, the physical
or mental disability of the Employee determined in accordance
with the disability policy of the Company at the time in
effect and generally applicable to its salaried employees; and

(y) if a Change in Control of the Company shall
have occurred at that date, the physical or mental disability
of the Employee determined in accordance with the disability
policy of the Company in effect immediately before the
occurrence of the first Change in Control of the Company and
generally applicable to its salaried employees.

The Employee's Disability, and the automatic termination of the
Employee's employment by the Company by reason of the Employee's
Disability, shall be deemed to have occurred on the date of
determination, provided that if (1) a Change in Control of the Company
shall have occurred before the expiration of the term of this
Agreement, (2) the Company shall have subsequently given notice
pursuant to Section 6 of the Company's determination of the Employee's
Disability and (3) the Employee shall have given notice to the Company
that the Employee disagrees with that determination, then (A) whether
the Employee's Disability shall have occurred shall be submitted to
arbitration pursuant to Section 21, and (B) if a majority of the
arbitrators decide that the Employee's Disability had not occurred at
the date of determination by the Company, then (I) the Employee's
Disability, and the automatic termination of the Employee's employment
by the Company by reason of the Employee's Disability, shall be deemed
not to have occurred and (II) on demand by the Employee made to the
Company, the Company shall reimburse the Employee for the reasonable
expenses (including attorneys' fees and expenses) incurred by the
Employee in obtaining that decision.

(x) "Employee's Retirement" means (x) if no Change in
Control of the Company shall have occurred before the date of the
Employee's proposed retirement, the retirement of the Employee in
accordance with the retirement policy of the Company at the time in
effect and generally applicable to its salaried employees and (y) if a
Change in Control of the Company shall have occurred at that date, the
retirement of the Employee from the employ of the Company in
accordance with the retirement policy of the Company in effect
immediately before the occurrence of the first Change in Control of
the Company and generally applicable to its salaried employees.

11
<PAGE> 12
(xi) "Event of Termination for Good Reason" has the
meaning assigned to that phrase in Section 5.

(xii) "Event of Termination for Cause" has the meaning
assigned to that phrase in Section 4.

(xiii) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.

(xiv) "Expiration Date" has the meaning assigned to that
term in Section 3.

(xv) "Other Benefit Plans" has the meaning assigned to
that term in Section 4.

(xvi) "person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, limited
partnership, limited liability company, trust, unincorporated
organization, government, or agency or political subdivision of any
government. When the context of this Agreement indicates, the term
"person" also has the meaning assigned to that term in Section 13(d)
of the Exchange Act.

(xvii) "Relevant Period" means a period beginning on the
Termination Date and ending on the first to occur of (x) the third
anniversary of the Termination Date, (y) the date on which the
Employee becomes a full time employee of another person and (z) the
Employee's normal retirement date, determined in accordance with the
retirement policy of the Company in effect on the Termination Date.

(xviii) "Severance Payment" has the meaning assigned to that
term in Section 7.

(xix) "Successor" means a person with or into which the
Company shall have been merged or consolidated or to which the Company
shall have transferred its assets as an entirety or substantially as
an entirety.

(xx) "Tax Affiliate" means the Company, any of its
successors pursuant to Section 8 or otherwise, any person whose
actions result in a Change in Control of the Company, and any person
"affiliated" or that, as a result of the completion of the
transactions that result in a Change in Control of the Company, will
become "affiliated" with the Company within the meaning of section
1504 of the Code.

(xxi) "Tax Counsel" has the meaning assigned to that term
in Section 7.

(xxii) "Termination Date" has the meaning assigned to that
term in Section 6.

(xxiii) "this Agreement" means this Change in Control
Agreement as it may be amended from time to time in accordance with
Section 16.

12
<PAGE> 13

(xxiv) "Voting Stock" means shares of capital stock of the
Company the holders of which are entitled to vote for the election of
directors of the Company, but excluding shares entitled to so vote
only upon the occurrence of a contingency unless that contingency
shall have occurred.

(b) In the event of the enactment of any successor provision to
any statute or rule cited in this Agreement, references in this Agreement to
such statute or rule shall be to such successor provision.

(d) References in this Agreement to any Section are to the
corresponding Section of this Agreement unless the context otherwise indicates.

IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the Effective Date.

DANIEL INDUSTRIES, INC.

By______________________________________
Chairman of the Board of Directors

[NAME OF EMPLOYEE]

By______________________________________

<PAGE> 1
EXHIBIT 10.5

ASSET PURCHASE AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II PURCHASE, SALE AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Purchased Assets and Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Allocation Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Accounts Receivable, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Mail Received After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE III LIABILITIES AND OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1 Obligations Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Liabilities Not Assumed by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1 Corporate Status and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Broker Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.7 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.8 Continuity Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Trademarks, Trade Names and Intellectual Property . . . . . . . . . . . . . . . . . . . . . 16
Section 4.11 All Assets of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.12 Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.13 Condition of Fixed Assets and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Employees and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.16 No Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.17 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.19 WARN Act Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.20 Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . 18
Section 4.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.22 Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.23 Safety Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4.24 Investment Intention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.25 Transactions with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.26 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.27 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.28 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.29 Change in Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.30 COBRA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.31 Warranty and Return Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.32 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.33 Houston Facility; Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.34 Future Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.35 Certificates of Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Corporate Status and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5 Broker Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Regular Course of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.3 Notices and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.4 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Further Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.6 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.7 Employee Termination; COBRA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.8 Transition Employees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.9 Representation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.10 Necessary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE VII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Seller's Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2 Buyer's Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.4 Arbitration of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.5 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.6 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.7 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

</TABLE>

ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.1 General Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.2 Reasons for Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE IX ACTIONS TO BE TAKEN AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.1 Actions to be Taken by Seller at the Closing . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.2 Actions to be Taken by Buyer at the Closing . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE X COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE XI GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.4 Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.7 Compliance with Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.9 Governing Law; Settlement of Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE XII COVENANTS NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.1 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.2 Relinquishment of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

</TABLE>

iii
<PAGE> 5
SCHEDULES

<TABLE>
<CAPTION>
Page
----
<S> <C>
Schedule 2.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 2.1(o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 3.2(r) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule 2.5(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule 3.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Schedule 3.3(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Schedule 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule 4.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Schedule 4.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule 4.32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule 6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

</TABLE>

iv
<PAGE> 6
EXHIBITS

<TABLE>
<S> <C>
Exhibit A-1 7-year Subordinated Secured Note and Security Agreement

Exhibit A-2 4-year Subordinated Inventory Note and Security Agreement

Exhibit B Environmental Remediation Agreement

Exhibit C Deed of Trust

Exhibit D Special Warranty Deed

Exhibit E Non-Competition Agreement

Exhibit F Subordination Agreement

Exhibit G Loan Agreement with Texas Commerce Bank

</TABLE>

v
<PAGE> 7
ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement ("Agreement") is made this 27th
day of November, 1995 by and among DAN-LOC Bolt & Gasket, Inc., a Texas
corporation ("Buyer"), Daniel Industrial, Inc., a Delaware corporation
("Seller"), Daniel Industries Canada, a partnership formed under the laws of
Alberta, Canada ("Dan Can"), and Daniel Industries, Inc., a Delaware
corporation and the sole shareholder of Seller ("Daniel"; Daniel, Dan Can and
Seller are collectively called the "Seller Parties").

WHEREAS, Seller is engaged in the business (the "Business") of
assembling, manufacturing, marketing, selling, servicing, and repairing bolts,
flanges, gaskets and related products; and

WHEREAS, Buyer wishes to purchase and assume from Seller, and
Seller wishes to sell, transfer, assign and deliver to Buyer, the Purchased
Assets (hereinafter defined) and the Assumed Liabilities (hereinafter defined);

NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants, indemnities and agreements stated
herein, the parties hereto agree as follows:

ARTICLE I

CLOSING

Section 1.1 Closing. The closing of the purchase and
sale provided for herein (the "Closing") shall take place at 9:30 a.m. Houston
time on November 28, 1995 at the offices of Winstead Sechrest & Minick P.C.,
Houston, Texas, or if the conditions to Closing set forth in Article VIII
hereof shall not have been satisfied or waived by such date, as soon as
practicable after such conditions shall have been satisfied or waived, or such
other date and time as shall be agreed upon in writing by the parties hereto.
The date on which the Closing actually occurs is referred to herein as the
"Closing Date".

ARTICLE II

PURCHASE, SALE AND DELIVERY

Section 2.1 Purchased Assets and Excluded Assets.
Subject to the terms and conditions of this Agreement, and on the basis of the
representations, warranties, covenants, indemnities and agreements hereinafter
set forth, at the Closing, Seller, Daniel, and Dan Can shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase from Seller and
Dan Can, the rights of Seller and Dan Can in and to the following assets and
properties (collectively, the "Purchased Assets"):
<PAGE> 8
(a) All inventories of finished products, work in
process, raw materials, supplies and packing and shipping material as
of the Closing Date, provided, in the case of Dan Can, such
inventories shall be limited to those located at or exclusively used
in connection with the Edmonton bolt, flange and gasket business of
Dan Can (collectively, the "Inventory"), a summary of such raw
materials, finished products and work in process as of September 30,
1995 (except with respect to Dan Can which would be as of October 31,
1995) is attached as Schedule 2.1(a) which such list shall be updated
as of the Closing Date in accordance with the terms hereof. A
complete list of finished goods, work in process and raw materials as
of the Closing Date will be provided, including a segregated list of
Inventory securing the 4-year Subordinated Inventory Note, hereinafter
defined;

(b) All accounts receivable of Seller and Dan Can for the
sale of finished Inventory as to which title has passed to the
purchaser thereof as of the Closing Date (the "Accounts Receivable"),
a listing of which as of September 30, 1995 (except with respect to
Dan Can which is as of October 31, 1995) is attached as Schedule
2.1(b), which such list shall be updated as of the Closing Date in
accordance with the terms hereof;

(c) All tools, equipment, machinery, dies, patterns,
furniture, fixtures, store equipment, automobiles, trucks, service
equipment, computer equipment and leasehold improvements and such
additional personal property, including, without limitation, equipment
records, racks and forklift maintained at the Jensen Drive location,
installations, fixtures, leasehold improvements, furniture and
carpeting, but excluding Inventory owned by Seller or owned by Dan Can
and located at or exclusively used in connection with the Edmonton
bolt, flange and gasket business of Dan Can (collectively, the "Fixed
Assets") with respect to, or for use in connection with, the operation
of the Business or located in or upon the Houston Facility, defined
below, or the manufacturing, warehouse and other facilities used by
Seller or Dan Can, located in Houston, Texas, Edmonton, Alberta,
Canada, and Los Angeles, California (the "Other Facilities" together
with the Houston Facility, the "Facilities"), a listing of which as of
September 30, 1995 is attached as Schedule 2.1(c), which such list
shall be updated as of the Closing Date in accordance with the terms
hereof;

(d) All contracts and agreements in existence on the
Closing Date (the "Contracts") relating to the Seller, the Purchased
Assets or the Business (including, without limitation, distribution
contracts, and agreements relating to the confidentiality of
information or limiting employees, former employees or others from
competing in any line of the Business), but excluding Purchase and
Sales Contracts and Leases, a listing of which as of September 30,
1995 is attached as Schedule 2.1(d), which such list shall be updated
as of the Closing Date in accordance with the terms hereof;

(e) Each purchase or sales order or other contract,
agreement or commitment for the purchase or sale of Inventory that was
entered into in the ordinary course of business before the Closing
Date and is unfilled as of the Closing Date ("Purchase and

2
<PAGE> 9
Sales Contracts"), a list of which (i) in effect as of the Closing
Date and (ii) involving $1,000 or more in effect as of Closing Date
shall be set forth on Schedule 2.1(e) and provided as of the Closing
Date.

(f) Express or implied warranties, if any, from the
suppliers of Seller or Dan Can, manufacturers or others with respect
to the Purchased Assets;

(g) All intellectual property, including patents,
trademarks, trade names, including without limitation the names
DAN-LOC Corporation and DAN-LOC Bolt & Gasket, Inc., copyrights,
blueprints, drawings, proprietary methods and know-how, computer
software and similar items, together with any goodwill associated
therewith and all rights of action on account of past, present, and
future unauthorized use or infringement thereof, provided, in the case
of Dan Can, such intellectual property shall be limited to property
rights as are located or exclusively used in connection with the
Edmonton office and the bolt, flange and gasket business of Dan Can.
A listing of such patents, trademarks, trade names, registered
copyrights and computer software is attached as Schedule 2.1(g) which
list shall be updated as of the Closing Date in accordance with the
terms hereof;

(h) The leases of real property (the "Leases") necessary
for the use and operation of the Business including leases on certain
of the Facilities, a listing of which is set forth on Schedule 2.1(h);

(i) The manufacturing, warehouse and other facilities of
Daniel located at 725 N. Drennan, Houston, Texas 77003, including the
real property described in Schedule 2.1(i), together with all
buildings, structures, installations, fixtures and other improvements
appurtenant thereto or situated thereon, and all other rights and
interests of Seller pertaining thereto (the "Houston Facility");

(j) Deposits, petty cash, and other current and prepaid
assets as they existed on the Closing Date, provided, in the case of
Dan Can, such items shall be limited to those relating to the bolt,
flange and gasket business of Dan Can, a listing of which as of
September 30, 1995 is attached hereto as Schedule 2.1(j) which list
shall be updated as of the Closing Date in accordance with the terms
hereof;

(k) All books, operating and financial records,
correspondence, files, customer and vendor lists and other data
(collectively "Business Records") pertaining primarily to the
Business, except that Buyer shall only be provided copies of all tax
records, the original of which will be maintained by Seller and Dan
Can; provided, however, for a period of ten years after the Closing
(or such later date as is necessary to finally resolve any claims of
any governmental agency) the Seller shall be given access during
regular business hours to the Business Records and shall have the
right to copy, at the Seller's expense, any such Business Records, and
Buyer shall have access during regular business

3
<PAGE> 10
hours to all original tax records. Seller further agrees not to
destroy any such tax records and shall turn such tax records over to
Buyer when no longer needed by Seller;

(l) To the extent transferable, all of Seller's and Dan
Can's rights in all governmental licenses, permits and authorizations
(and applications for any of the foregoing) necessary for the
operation of the Business, including those listed on Schedule 2.1(l);

(m) All property and other rights incident or
attributable to the foregoing interests, including, without
limitation, all of the Seller's right, title and interest in and to
originals (or, to the extent that originals are not available, copies)
of all books, records, reports, files, contracts, evidence of title,
surveys and similar documents or materials that relate to the
foregoing interests, including, without limitation, the construction,
use, maintenance, operation or administration thereof, or that would
constitute evidence of ownership thereof (collectively, the
"Records").

In addition, Daniel shall sell, transfer, convey, assign and deliver
to Buyer, and Buyer shall purchase from Daniel, the rights of Daniel in and to
the Houston Facility and the U.S. Trademark "DAN-LOC" (which shall be deemed a
part of the Purchased Assets).

It is hereby agreed that all items contained in any schedules set
forth in this Article II shall be updated by Seller within fifteen days after
the Closing Date to reflect their status as of the Closing Date.

Notwithstanding the foregoing, the Purchased Assets shall not include,
and Buyer will not purchase, (i) any insurance policies or insurance contracts,
(ii) the outstanding capital stock of Daniel Bolt & Gasket Ltd. and the
partnership interest of Daniel Bolt & Gasket Ltd. in Dan Can, (iii) any and all
rights to the name "Daniel", (iv) the minute books and stock records of Seller,
(v) notes or accounts receivable from employees or shareholders of Seller, (vi)
the assets listed on Schedule 2.1(o), including without limitation, certain of
Seller's assets used by Seller in connection with Seller's operations in the
United Kingdom or assets, the nature of which was not included in preparing the
Simmons Memorandum, defined below, and (vii) any rights to or obligation under
the employment/royalty agreements with Mr. Lamont Harrelson and Mr. Pat Bullard
(collectively, the "Excluded Assets").

Section 2.2 Purchase Price. The purchase price for the Purchased
Assets (the "Purchase Price") is $17,500,000, subject to adjustment pursuant to
Section 2.3 below. At the Closing, Buyer shall deliver to the Seller Parties:
(i) $8,000,000 (the "Cash Purchase Price") by wire transfer of immediately
available funds to the account designated in writing by Seller and (ii) two
promissory notes of Buyer, payable to Seller (the "Notes"), in substantially
the forms of Exhibits A-1 (the "7-year Subordinated Secured Note") in the
principal amount of $6,000,000 and A-2 (the "4-year Subordinated Inventory
Note"), in the principal amount of $3,500,000.

4
<PAGE> 11
Section 2.3 Price Adjustment. Following the Closing, the
Purchase Price shall be adjusted (the "Post-Closing Adjustment") if the Net
Assets as of the Closing Date, exclusive of changes in accumulated
depreciation and amortization, differs upwards or downwards, from $26,054,000,
which represents the Net Assets as of August 31, 1995, as set forth in the
revised Memorandum (the "Simmons Memorandum") prepared by Simmons & Company
(the "Benchmark Calculation"). In determining the Closing Date Balance Sheet,
any orders from Daniel or any of its affiliates constituting any portion of the
backlog would be repriced to reflect prices agreed to herein for each
particular contract constituting such portion of the backlog. Additionally,
Seller agrees to cause a reserve to be included in Accrued Liabilities on the
Closing Date Balance Sheet to (i) increase the profitability of Aramco Order
No. 242144 by $33,000 and (ii) provide for the repairs (the "Repairs") in the
aggregate amount of $79,246 (reduced by any amounts paid prior to the Closing
Date to complete the Repairs) in accordance with Schedule 3.2(r). "Net Assets"
is the Purchased Assets, less the Assumed Liabilities. The Post-Closing
Adjustment to the Purchase Price shall be effected as follows:

(a) As soon as practicable, but not later than 60
business days after the Closing Date, at Buyer's expense, Buyer (with
Seller having the right to participate at its expense) shall prepare a
balance sheet (the "Closing Date Balance Sheet") setting forth the Net
Assets as of the Closing Date, prepared consistently with principles
and practices used by Seller prior to Closing and used by Seller in
preparing the Simmons Memorandum which such principles and practices
shall be, except for valuation of inventory, in accordance with
generally accepted accounting principles consistently applied on a
going concern basis. The accrued personal property and real estate
taxes reflected on the Closing Date Balance Sheet for taxes to be paid
by Buyer will be based on a pro rata share of actual taxes for the
year. Buyer may, after Closing, conduct (with Seller having the right
to participate) a physical inventory as of the Closing Date of the
Inventory (or any part thereof) or any other Purchased Asset for this
purpose. Within 30 days following the delivery of the Closing Date
Balance Sheet, Seller shall notify Buyer whether it agrees or
disagrees with the determination set forth therein. If Seller
disagrees with such determination set forth therein and Buyer and
Seller do not resolve such disagreement within 30 days after Seller
notifies Buyer of its disagreement, either Buyer or Seller may cause
the Closing Date Balance Sheet to be audited, and the Net Assets as of
the Closing Date to be determined, by the Houston, Texas office of the
accounting firm of Ernst & Young or such other firm of independent
public accountants of national reputation mutually acceptable to Buyer
and Seller (the "Independent Accounting Firm"). Buyer and Seller
agree to cooperate with each other and each other's authorized
representatives and with the Independent Accounting Firm pursuant to
this Section 2.3(a) in order that any and all matters in dispute shall
be resolved as soon as practicable. The determination by such
Independent Accounting Firm shall be final and binding on Buyer and
Seller, and shall not be appealable to any court or otherwise, and the
fees and expenses of such accounting firm shall be borne equally by
Seller and Buyer. If the Net Assets as of the Closing Date, as
finally determined by this Section 2.3 is greater than $26,054,000,
(i) to the extent such excess is attributable to employee-related
expenses, such excess shall be paid in cash by Buyer to Seller; and
(ii)

5
<PAGE> 12
to the extent such excess is due to any other factor, then such excess
amount shall increase the principal due under the 7-year Subordinated
Secured Note. If the Net Assets as of the Closing Date, as finally
determined by this Section 2.3 is less than $26,054,000, then such
deficiency amount shall be refunded by Seller to Buyer in cash. In any
case when the principal amount on the 7-year Subordinated Secured Note
is adjusted pursuant to this Section 2.3(a), then the interest on such
7-year Subordinated Secured Note shall be calculated from the Closing
Date on the adjusted note amount. Any adjustment in the principal
amount of the 7-year Secured Subordinated Note or refunded in cash
contemplated by this Section 2.3 shall be made on or before the fifth
business day following the final determination of Net Assets as of the
Closing Date. If the principal amount of the 7-year Secured
Subordinated Note is increased, Buyer shall deliver to Seller a new
7-year Secured Subordinated Note in the increased principal amount in
exchange for the old 7-year Secured Subordinated Note, the principal
amount of which has been increased.

(b) Any payment required to be made by Seller or Buyer
pursuant to Section 2.3(a) hereof shall bear interest from the Closing
Date through the date of payment at the publicly announced prime
interest rate of Texas Commerce Bank in effect from time to time from
the Closing Date to the date of such payment.

(c) Buyer and Seller agree that the sole purpose of
preparing the Closing Date Balance Sheet shall be to implement the
adjustment contemplated in this Section 2.3, and neither the existence
of any liability or obligation reflected in the Closing Date Balance
Sheet nor any decline in the amount of Net Assets from that reflected
on the Benchmark Calculation shall in and of itself constitute a
breach by Seller of any of the representations and warranties
contained in Article IV. If any claim under any Section of Article IV
hereof arises and an adjustment to the Cash Purchase Price under this
Section 2.3 relating to or arising out of such claim has previously
been made with respect to such claim, then to the extent of such
adjustment, neither Buyer nor Seller shall be entitled to
indemnification under any of such Sections.

Section 2.4 Allocation Reporting. As soon as practicable after
the Closing, Buyer shall prepare or cause to be prepared a written statement
setting forth the allocation of the consideration (including the Cash Purchase
Price and any adjustments thereto and the principal amount of the Promissory
Notes) deemed to have been paid for federal income tax purposes by Buyer to
Seller pursuant to this Agreement. The Parties shall undertake in good faith
to agree on such allocation as soon as practicable; provided, that, in the
event Seller and Buyer shall be unable to agree on such allocation within 30
days after it is first submitted to Seller, the parties shall jointly engage
the Independent Accounting Firm to make its independent determination with
respect to the issues in dispute and the amounts related thereto. Each of
Seller and Buyer shall bear and pay one-half of the fees and other costs
charged therefor by the Independent Accounting Firm. For federal income tax
purposes (including Buyer's and Seller's compliance with the reporting
requirements of Section 1060 of the Internal Revenue Code), each of Seller and
Buyer hereby agree to use the allocation as so agreed to by them and to
cooperate in good

6
<PAGE> 13
faith with each other in connection with the preparation and filing of any
information required to be furnished to the Internal Revenue Service under
Section 1060 of the Internal Revenue Code and any applicable regulations
thereunder.

Section 2.5 Accounts Receivable, etc.

(a) Seller and Dan Can agree that on and after the Closing
Date, Buyer shall have the right and authority to collect all Accounts
Receivable, and, if necessary, to endorse with the name of Seller and
Dan Can any checks received on account of any such receivables or
other items. Seller and Dan Can will transfer to Buyer any cash or
other property which they may receive in respect of such Accounts
Receivable.

(b) On or subsequent to 90 days from the Closing Date,
Buyer shall give Seller and Dan Can written notice of those Accounts
Receivable previously transferred to Buyer pursuant to this Agreement
which have not been collected by Buyer or for which the obligor has
not made arrangements reasonably satisfactory to Buyer for payment in
full. The notice shall identify the account and the amount
outstanding for such account. Seller and Dan Can agree to pay to
Buyer, within 30 days of its receipt of such notice, an amount equal
to the aggregate amount of such identified accounts sold by Seller and
Dan Can, respectively to Buyer, net of any reserves included in the
Closing Date Balance Sheet. Upon receipt of such payment Buyer shall
assign and transfer such accounts to Seller, or Dan Can, as the case
may be, by instruments or documents reasonably satisfactory to Seller
and Dan Can, as the case may be. Any amounts thereafter received by
Buyer with respect to such transferred accounts shall be delivered to
Seller and Dan Can. Buyer agrees to use its reasonable efforts,
consistent with its own collection practices, to collect the Accounts
Receivable transferred to Buyer pursuant to this Agreement, and will
not write off any Accounts Receivable against the reserve set forth on
the Closing Date Balance Sheet during the first 90 days from the
Closing Date. Payments by the obligors of such receivables shall
first be applied to the oldest outstanding receivables of such
obligor, unless any such receivables are being disputed by such
obligors. In the event any Accounts Receivable are resold to Seller
or Dan Can pursuant to this provision, Buyer shall provide monthly
certificates to Seller and Dan Can with respect to amounts collected
by Buyer during the preceding calendar month from the obligors on any
such Accounts Receivable, together with an amount in cash equal to
such amounts so collected until such time as the full amount of any
such Account Receivable so returned to Seller and Dan Can shall have
been satisfied in full. Seller shall have such rights to inspect
Buyer's books and accounts as may be necessary to ensure that Buyer
has complied with the provisions of this Agreement.

(c) From and after the Closing, Buyer shall be paid all
amounts received at any and all lockboxes of Seller at the banks
listed on Schedule 2.5(c) ("Lockbox Banks"). Seller shall instruct
each Lockbox Bank to pay all such receipts to Buyer and to give
control over such lockbox to Buyer, provided that the amounts
attributable to Accounts Receivable repurchased by Seller shall be
remitted by Buyer to Seller.

7
<PAGE> 14
Section 2.6 Mail Received After Closing. Following the Closing,
Buyer may receive and open all mail addressed to Seller and, to the extent that
such mail and the contents thereof relate to the Business or the Purchased
Assets, deal with the contents thereof at its discretion. Buyer shall promptly
notify Seller of (and provide Seller complete copies of) any mail that on its
face obliges any Seller Party to take any action or indicates that action may
be taken against any of them and will promptly forward to Seller any mail
applicable solely to Seller or the Excluded Assets.

Section 2.7 Full Access. From and after the date hereof and
until the Closing or the termination of this Agreement, (1) Buyer and its
authorized representatives shall have full access during normal business hours
to all properties, personnel, books, records, contracts, and documents of the
Seller, and Seller and Daniel shall furnish or cause to be furnished to Buyer
and its authorized representatives all information with respect to the affairs
and business of the Seller as Buyer may reasonably request, and (2) the Seller
shall provide Buyer with an office at the Seller's Houston Facility. Until
Closing, Buyer agrees it will not direct the operations of the Business.

ARTICLE III

LIABILITIES AND OBLIGATIONS

Section 3.1 Obligations Assumed. As part of the consideration
for the Purchased Assets from and after the Closing Date, Buyer shall assume,
fully perform, and timely discharge (i) all debts, obligations and liabilities
of Seller or Dan Can under the trade accounts payable listed on the Closing
Date Balance Sheet (the "Accounts Payable"), (ii) the accrued liabilities
listed on the Closing Date Balance Sheet and of the same nature as the accrued
liabilities at August 31, 1995, as set forth on Schedule 3.1(a) hereto
including performance of the Repairs (the "Accrued Liabilities"), (iii) all
debts, obligations and liabilities of Seller or Dan Can that accrue or are
otherwise attributable to periods after the Closing Date under the Contracts
listed in Schedule 2.1(d) (as updated through the Closing Date), pursuant to
Purchase and Sales Contracts listed on Schedule 2.1(e), and under Leases listed
on Schedule 2.1(h), (iv) except with respect to products that have been
manufactured, assembled and tested prior to the Closing Date, all liabilities,
damages or obligations relating to any litigation, claim, suit or proceedings
with respect to the Business for product liability and product warranties, in
each case for products sold by the Business on or after the Closing Date (the
"Assumed Liabilities"), (v) any and all liabilities arising out of any
governmental compliance, enforcement or regulatory action, suit or claim or any
claim by any person or entity arising out of the operation of the Business or
the Purchased Assets on or after the Closing Date, and (vi) any liability under
agreements relating to Seller's employment of temporary employees, but only to
the extent such liability arises as a result of Buyer's employment of such
temporary employees..

Section 3.2 Liabilities Not Assumed by Buyer. Except for the
Assumed Liabilities, Seller shall pay and discharge in due course all of its
liabilities, debts and obligations, whether

8
<PAGE> 15
known or unknown, whether or not listed on any Schedule to this Agreement, now
existing or hereafter arising, contingent or liquidated (the "Retained
Liabilities"), and neither Buyer nor any of its Affiliates shall assume, or in
any way be liable or responsible for any of the Retained Liabilities. Without
limiting the generality of the foregoing, the Retained Liabilities shall
include the following:

(a) except to the extent included in Accrued Liabilities
on the Closing Date Balance Sheet, any liability or obligation for any
and all Taxes of, or pertaining or attributable to, (i) Seller or (ii)
the Business or the Purchased Assets for any period or portion thereof
that ends on or before the Closing Date for which liability is or may
be sought to be imposed on Buyer under any successor liability,
transferee liability or similar provision of any applicable federal,
foreign, state or local law;

(b) any and all liabilities arising from or under any
Environmental Laws, as hereafter defined, arising from events,
conditions, circumstances, acts or omissions: (i) on or prior to the
Closing Date with respect to the Purchased Assets or any Facility; and
(ii) on, prior to, or after the Closing Date with respect to the
Excluded Assets or any other assets or business of Seller;

(c) Any liability or claim with respect to accidents or
occurrences arising in connection with the operation of the Business
on or before the Closing Date.

(d) Any product liability claims relating to products
manufactured or sold in the Business on or before the Closing Date.

(e) Any claims (including severance claims) relating to
the termination of employment of any employee of Seller on or prior to
the Closing Date (including any such termination deemed to have
occurred upon the transfer of any such employee from Seller to Buyer.)

(f) Any claims made by any employee or former employee of
Seller who is not employed on or after the Closing Date by Buyer or
any Affiliate of Buyer.

(g) Except to the extent included in Accounts Payable or
Accrued Liabilities on the Closing Date Balance Sheet, the following
claims relating to employees or former employees of Seller:

(i) All liabilities incurred on or prior to the
Closing Date (including medical expenses) resulting from
workers' compensation claims brought by employees or former
employees of Seller, whether or not such employee or former
employee is later employed by Buyer;

(ii) all liabilities incurred on or prior to the
Closing Date to pay hospitalization, medical or dental
expenses of employees or former employees of

9
<PAGE> 16
Seller for services performed on or prior to the Closing Date
(whether or not such employee or former employee is later
employed by Buyer);

(iii) All liabilities relating to li):

to the Closing Date;

(iv) all liabilities incurred on or prior to the
Closing Date relating to any employee or former employee who
is certified on or prior to the Closing Date as being eligible
for long-term disability;

(v) liabilities and obligations of Seller as of
the Closing Date relating to employee compensation (whether or
not an employee or former employee is later employed by
Buyer), including any accrued but unearned vacation, and,
therefore, not paid by Seller on the Closing Date;

(vi) all liabilities resulting from
employment-related claims brought by employees or former
employees of Seller (whether or not such employee or former
employee is later employed by Buyer) if such
employment-related claims arise from occurrences or omissions
transpiring on or prior to the Closing Date, including,
without limitation, claims alleging violations of the
following: (1) employment discrimination law; (2) labor law;
(3) affirmative action, government contract or contract
compliance law; (4) occupational safety or health, safe work
place or employee right-to-know law; (5) unemployment
compensation law; (6) workers' compensation law; (7) laws
(including statutory and case law) prohibiting wrongful
discharge of employees, whether based on express or implied
contracts, public policy, bad faith, tort, illegal retaliation
or other theories; (8) laws governing wage and hour matters;
(9) immigration law; (10) common law employment-related tort
claims, including, without limitation, defamation, invasion of
privacy, intentional infliction of emotional distress, fraud
and misrepresentation and negligent hiring; (11) plant closing
and mass lay-off laws; (12) laws relating to an employee's
right to continued coverage under a group health insurance
plan; and (13) ERISA (as hereinafter defined);

(vii) post-retirement benefits provided under
Seller's benefit plans; and

(viii) all liabilities of Seller as of the Closing
Date related to the payroll and unemployment compensation
taxes of Seller.

(ix) Any liability under any employee benefit plan
maintained or contributed to by Seller.

(h) Any liability of Seller for income taxes, franchise
taxes or other liabilities for taxes.

10
<PAGE> 17
(i) Any cause of action or judicial or administrative
action, suit, proceeding or investigation arising out of the Business
and relating to periods prior to the Closing Date.

(j) Any and all liability arising out of any governmental
compliance, enforcement or regulatory action, suit or claim or any
claim by any person or entity arising out of the operation of the
Business or the Purchased Assets on or prior to the Closing Date.

(k) Any infringement of the rights of any other person or
entity arising out of the use of any of the Purchased Assets on or
prior to the Closing Date.

(l) Any liability or obligation arising out of Seller's
breach, nonperformance or defective performance of the Contracts on or
prior to the Closing Date.

(m) Except to the extent included in Accounts Payable or
Accrued Liabilities on the Closing Date Balance Sheet, bank overdrafts
and other liabilities to banks for money borrowed.

(n) Any amounts due to Messrs. Harrelson and Bullard for
royalties, non-compete provisions, employment or consulting contracts,
etc.

(o) Any liability or obligation arising out of any Seller
Party's failure to obtain any certificate of occupancy relating to any
Facility.

(p) Any liability arising out of agreements relating to
Seller's employment of temporary employees, provided, however, that
Seller shall not be liable for any amounts arising as a result of
Buyer's employment of such temporary employees.

(q) Except to the extent included in Accrued Liabilities
on the Closing Date Balance Sheet, any liability for commissions,
whether accrued or to be paid, arising out transactions by Seller
prior to the Closing Date and commissions relating to sales to Aramco
Services in connection with purchase orders in process at the Closing
Date and shipped thereafter.

Section 3.3 Warranty and Interim Period Benefit Plans.

(a) Seller represents that in the past, in addition to its
written policy concerning warranties, it has provided warranty work on
a case-by-case basis, using its business judgment in determining
whether such warranty work should be provided, including, without
limitation, evaluating the customer involved, the type and cause of
warranty work, and the effect of providing or not providing such
warranty work upon the Business. For the period during which the
existing warranty obligations of Seller are in effect, whether as a
result of written policies or Seller's past business practices, if any

11
<PAGE> 18
customer of Seller is entitled to, and does, seek warranty work,
pursuant to such obligations on any item sold by Seller prior to the
Closing Date, Buyer shall provide such warranty work on such item for
Seller's account. Buyer shall use its business judgment in determining
whether to provide such warranty work, utilizing similar considerations
as it would with respect to Inventory manufactured and sold by Buyer
after the Closing, as Seller utilized prior to the Closing Date,
provided that Buyer shall give written notice prior to performing any
such warranty work where the amount to be paid by Seller to Buyer for
such work is expected to exceed $5,000. Seller shall pay Buyer for
such work an amount equal to the actual out-of-pocket cost (the
calculation of which Seller shall have the right to review), including
salaries of employees actually performing work, of such work.

(b) For the period commencing on the Closing Date and
terminating at 12:01 A.M. on January 1, 1996 (the "Interim Period"),
Seller, and Dan Can shall make available to all of Buyer's employees
who were employed by Seller or Dan Can, as the case may be, prior to
the Closing, coverage pursuant to the health, life insurance, dental,
major medical and any and all other plans of Seller or Dan Can, as the
case may be related to an employee's health benefits (a schedule of
which is set forth on Schedule 3.3(b)). Buyer shall reimburse Seller
or Dan Can, as the case may be, for the costs of such benefits within
20 business days after receipt of Seller's or Dan Can's invoice for
costs incurred in maintaining such benefits for such employees during
the Interim Period.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES

The Seller Parties represent and warrant to Buyer the
following:

Section 4.1 Corporate Status and Good Standing. Each of the
Seller and Daniel is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, with full corporate
power and authority under its charter and by-laws to own and lease its
properties and to conduct business as the same exists. Dan Can is validly
existing as a partnership under the laws of the Province of Alberta with power
and authority (partnership and other) to own and lease its properties and to
conduct business as the same exists. Seller is duly qualified to do business
as a foreign corporation in all states in which the nature of the Business
requires such qualification and the failure to do so would have a material
adverse effect on the Purchased Assets.

Section 4.2 Authorization. Each of the Seller Parties has full
corporate or partnership power and authority under its charter and by-laws, or
partnership agreement and its board of directors and shareholders (to the
extent required), or, in the case of Dan Can, its partners have taken all
necessary action to authorize it, to execute and deliver this Agreement and the
exhibits

12
<PAGE> 19
and schedules hereto, to consummate the transactions contemplated herein, and to
take all actions required to be taken pursuant to the provisions hereof. This
Agreement constitutes the valid and binding obligation of each of the Seller
Parties enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, moratorium, reorganization or similar laws
affecting the rights of creditors generally.

Section 4.3 Non-Contravention. Except as set forth on Schedule
4.3, neither the execution and delivery of this Agreement or any documents
executed in connection herewith, nor the consummation of the transactions
contemplated herein, does or will violate or result in a breach of, or require
notice or consent under, any law, the charter or by-laws of any Seller Party or
any provision of any agreement or instrument to which any Seller Party is a
party.

Section 4.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which
question the validity of this Agreement, or any action taken or contemplated by
any Seller Party in connection with this Agreement.

Section 4.5 Broker Involvement. Except for Simmons & Company,
whose fees will be paid solely by Seller, no Seller Party has hired, retained
or dealt with any broker or finder in connection with the transactions
contemplated by this Agreement.

Section 4.6 Litigation. Except as set forth on Schedule 4.6,
there is no investigation, claim or proceeding or litigation of any type
pending or, to the best knowledge of the Seller Parties, threatened against the
Seller Parties involving any Purchased Asset or that might have a material
adverse effect on Seller, Dan Can or Buyer as the owner of any Purchased Asset,
and there is no judgment, order, writ, injunction or decree of any court,
government or governmental agency, or arbitral tribunal against Seller, Dan Can
or that might have a material adverse effect on Seller, Dan Can or Buyer as the
owner of any Purchased Asset.

Section 4.7 Title. Except as set forth on Schedule 4.7, and for
Permitted Liens (as defined below), Seller, Daniel or Dan Can is the true and
lawful owner of the Purchased Assets, free and clear of any and all liens,
encumbrances, mortgages, options, security interests, restrictions,
liabilities, pledges and assignments of any kind, and have the full right to
sell and transfer to Buyer good and indefeasible title to the Purchased Assets,
free and clear of any and all liens and encumbrances of any nature or
description. Except as set forth on Schedule 4.7 and for Permitted Liens, or
liens or encumbrances granted or effected by Buyer, the delivery to Buyer of
the instruments of transfer of ownership contemplated by this Agreement will
vest good and indefeasible title to the Purchased Assets in Buyer, free and
clear of all liens and encumbrances of any nature or description.

Buyer has heretofore obtained a commitment (the "Title Commitment")
for an Owner's Policy of Title Insurance in the form promulgated by the State
of Texas covering the Houston Facility, such Title Commitment issued by Chicago
Title Insurance Company, 909 Fannin, Suite 100, Houston, Texas (Attention:
Janet Karr, 695-1411) together with legible copies of all instruments
constituting exceptions and referenced in Schedule B and C of the Title

13
<PAGE> 20
Commitment. After the Survey (hereinafter defined) has been obtained, Seller
shall cause said Title Commitment to be revised to reflect matters shown on the
Survey to evidence the insurer's willingness to delete or limit to the
satisfaction of Buyer the standard exception for accuracy of Survey and to
commit to insure all easements benefitting the parcels. Seller shall pay the
costs for such title insurance commitment, as well as the costs of the Owner's
Policy of Title Insurance to be issued on the Closing Date, including the
additional premium associated with insuring the accuracy of the Survey.

Seller shall, at its expense, furnish Buyer at least two (2) days
prior to the Closing Date a current, accurate survey (the "Survey") of the
Houston Facility, which Survey shall have been prepared and certified by Bowes
& Assoc. Land Surveyors, Inc. as complying with the requirements for Category
1A, Condition II Land Title Survey showing access, the location and dimension
of all easements, buildings, improvements, encroachments, if any, together with
the legal descriptions of said real estate, certified to Buyer, Seller and
Lenders designated by Buyer, and to the title insurance company, and which
Survey shall otherwise be reasonably acceptable to Buyer and to the title
insurance company in form and substance.

Unless otherwise agreed by Seller and Buyer, the metes and bounds
description contained in the Survey shall be the legal description contained in
the Title Commitment and the documents employed to convey the Houston Facility
from Seller to Buyer.

Buyer shall have the period from the date on which the Survey is
furnished to it until (i) the Closing Date (as the same may be extended from
time to time), or (ii) two days thereafter, whichever is the earliest, within
which to notify Seller in writing of any objections which Buyer has to any
matters shown on Schedule B to the Title Commitment (as the same may be revised
following receipt of the Survey) or the Survey. Buyer shall not be required to
object to any matters shown on Schedule C to the Title Commitment, it being
understood that Buyer has objected to such matters set forth on said Schedule
C. In the event that Seller fails, by the Closing Date (as the same may be
extended), to cure any objections raised by Buyer, then Buyer shall be
permitted, at its option, to (i) waive such objections, (ii) extend the Closing
Date and/or extend the time in which Seller may cure such exceptions; provided,
however, that in no event shall Seller be required to cure such objections,
(iii) cure such objections and deduct the reasonable cost of doing so from the
Cash Purchase Price, up to but not to exceed $25,000, or (iv) terminate this
Agreement. Any objections waived by Buyer, as well as the standard exceptions,
and any matters shown on Schedule B to the Title Commitment which are not
objected to by Buyer, are herein collectively called the "Permitted
Encumbrances".

Section 4.8 Continuity Prior to Closing Date. Except as set
forth on Schedule 4.8 or as contemplated by this Agreement, from March 30, 1995
to and including the date hereof, the Seller has not, and as of the Closing
Date will not have, conducted the Business otherwise than in the usual and
customary manner and in the ordinary course of business, consistent with its
past practice, and there has not been:

<PAGE> 21
(a) except for liens or security interests arising
pursuant to after-acquired property provisions of existing loan or
security agreements, deeds of trust or mortgages, all of which will be
released as of the Closing Date, any sale, lease, distribution,
transfer, mortgage, pledge or subjection to lien of Seller's assets,
except sales of inventory and obsolete or surplus equipment in the
ordinary and usual course of business and the creation of liens for
taxes not yet due and payable, materialmen's, mechanic's, workmen's,
repairmen's or other like liens ("Permitted Liens") arising against
Seller, Dan Can or the Purchased Assets in the ordinary course of
business, in each case with respect to obligations or claims which are
either not delinquent, except in the case of accounts payable, or are
being contested in good faith and by appropriate proceedings conducted
with due diligence;

(b) any material transaction by Seller not in the
ordinary and usual course of business;

(c) any damage, destruction or loss to any of the
Purchased Assets used in the Business, having a fair market value of
$1,000 per item or $25,000 in the aggregate whether or not covered by
insurance;

(d) a termination, or a threatened termination, or
material modification by any third party, in each case not in the
ordinary course of business, of the relationship of Seller with any
customer or supplier, who accounted for in excess of $25,000 of sales
or purchases during Seller's last full fiscal year;

(e) any change by Seller in accounting methods or
principles or the application thereof or any change in Seller's
policies or practices with respect to items affecting working capital;

(f) any acceleration of shipments, sales or orders or
other similar action or any intercompany transaction not in the
ordinary course of business consistent with past practice;

(g) any bonus payments, salary increases, commission
increases or modifications, the execution of any employment agreement,
severance arrangement, consulting arrangement or similar document or
agreement, or other changes in employee benefits or other
compensation;

(h) any waiver by Seller of any rights that, singly or in
the aggregate, are material to the Business, the Purchased Assets or
the financial condition or results of operations of Seller;

(i) any labor strikes, union organizational activities or
other similar occurrence; or

15
<PAGE> 22

(j) any agreement or commitment by Seller to do or cause
to be done any of the foregoing.

Section 4.9 Contracts and Commitments. Schedule 4.9 lists all
agreements, commitments, contracts, undertakings or understandings not listed
on Schedules 2.1(d), 2.1(e) or 2.1(h) to which Seller is a party and which
relate to the Purchased Assets, including but not limited to trademark, trade
name or patent license agreements, service agreements, lease, purchase or sale
agreements, supply agreements, distribution or distributor agreements, purchase
orders, customer orders and equipment rental agreements. Seller is not in
breach of or default under any agreement, lease, contract or commitment listed
in Schedule 2.1(d), 2.1(e), 2.1(h) or 4.9 (collectively, the "Agreements").
Each Agreement is a valid, binding and enforceable agreement of Seller or Dan
Can and, to the knowledge of the Seller Parties, except as set forth on
Schedule 4.9 or as would not have a material adverse effect on the Purchased
Assets or the Business, there has not occurred any breach or default under any
Agreement on the part of the other parties thereto, and no event has occurred
which with the giving of notice or the lapse of time, or both, would constitute
a default under any Agreement. Except as set forth on Schedule 4.9 or as would
not have a material adverse effect on the Purchased Assets or the Business,
there is no dispute between the parties to any Agreement as to the
interpretation thereof or as to whether any party is in breach or default
thereunder, and no party to any Agreement has indicated its intention to, or
suggested it may evaluate whether to, terminate any Agreement. Seller is not a
party to any covenant or obligation of any nature limiting the freedom of
Seller to compete in any line of business that would be binding on Buyer after
the Closing.

Section 4.10 Trademarks, Trade Names and Intellectual Property.
Except for the Excluded Assets, Schedule 2.1(g) contains an accurate and
complete list of (i) all patents, pending patent applications and invention
memoranda of Seller relating to the Business or Purchased Assets, (ii) all
registered United States and foreign trademarks, trade names and logos owned or
used by Seller in connection with its Business or Purchased Assets, and all
registrations thereof, and (iii) all unregistered United States and foreign
trademarks, trade names and logos used by Seller in connection with its
business or Purchased Assets. Seller has the right to use all trademarks,
trade names, logos, patents, pending patent applications and invention
memoranda referred to herein. There is no pending or, to the knowledge of the
Seller Parties, threatened action or claim that would impair any such right of
Seller.

Section 4.11 All Assets of Business. The Purchased Assets
constitute all assets owned by Seller or used in Seller's Business (other than
the Excluded Assets) and are all of the assets needed to operate the Business.
All assets and items located on Seller's premises or used in Seller's Business
(other than those leased pursuant to the Contracts) are owned by Seller and
(other than the Excluded Assets) are being sold pursuant hereto.

Section 4.12 Financial Records. The financial statements of
Seller as of and for the year ended September 30, 1994, and the financial
statements for the year ended September 30, 1995 (such 1995 financial
statements being referred to herein as the "Financial Statements") were, except
for valuation of Inventory, prepared in accordance with generally accepted

16
<PAGE> 23
accounting principles applied on a consistent basis and fairly present the
financial condition and results of operations of Seller.

Section 4.13 Condition of Fixed Assets and Inventory. Except for
the Repairs, each of the Fixed Assets has been maintained in a manner
consistent with the prior three year's past practices, is in good operating
condition and repair, subject only to normal maintenance requirements and
normal wear and tear reasonably expected in the ordinary course of business.
Except as set forth on Schedule 4.13, items of Inventory are marketable or in
the case of raw materials, supplies and work in process suitable and useable
for the production or completion of marketable products, for sale in the
ordinary course of business at normal mark-ups, none of such items is below
standard quality, each item is reflected in the Financial Statements and such
Inventory is valued at the lower of cost or market in accordance with generally
accepted accounting principles. Schedule 4.13 sets forth a list of certain
inventory (the "Scheduled Inventory"). Seller represents that product classes
representing at least $3,000,000 of such Scheduled Inventory has had sales
since October 1, 1993, and can be sold in the ordinary course of business for
at least the aggregate of the lowest sales price for those products received by
Seller during the twelve months ending on the Closing Date (provided, however,
if there has not been a sale of a particular product in such twelve-month
period, it will be the lowest sales prices for such product since October 1,
1993) except for unforeseen price reductions originating with third parties in
the market place, and that the remaining Scheduled Inventory can be sold for at
least $500,000.

Section 4.14 No Undisclosed Liabilities. Except as set forth on
Schedule 4.14, Seller has no material liabilities of any nature, either direct
or indirect, matured or unmatured, absolute or contingent, or otherwise,
except:

(a) those liabilities set forth in the Financial
Statements (or set forth in the footnotes thereto) and not heretofore
paid or discharged;

(b) liabilities arising in the ordinary course of
business under any agreement, contract, lease or plan specifically
disclosed on any other Schedule or Exhibit or not required to be
disclosed hereunder; and

(c) those liabilities incurred, consistent with past
business practice, in or as a result of the normal and ordinary course
of business since September 30, 1995.

For purposes of this Section 4.14, the term "liabilities" shall
include, without limitation, any direct or indirect indebtedness, guaranty,
claim, loss, damage, deficiency, cost, expense, obligation or responsibility,
fixed or unfixed, liquidated or unliquidated, secured or unsecured.

Section 4.15 Employees and Related Matters. Schedule 4.15 is a
complete list of all employees of Seller and employees of Dan Can working out
of the Edmonton office and employed in the bolt, gasket and flange business of
Dan Can, in each case, listing the title or position held, base salary, most
recent salary increase (showing date and amount), any

17
<PAGE> 24
commissions or other compensation paid or payable during the fiscal year ended
September 30, 1995, and any terms of any oral or written agreement with any
Seller Party or any Affiliate thereof. Also set forth on Schedule 4.15 is a
list of contract employees of Seller and Dan Can as of the date hereof.

Section 4.16 No Material Change. Except to the extent reflected
in the Closing Date Balance Sheet, there has been no material adverse change in
the Purchased Assets or their value from August 31, 1995 to and including the
Closing Date, and no event has occurred of which Seller has knowledge which
could be expected to lead to or cause such a material adverse change.

Section 4.17 Ownership. Daniel owns all the issued and
outstanding capital stock of Seller. Seller has outstanding no options or
convertible securities or other rights or instruments evidencing, exchangeable
for or entitling the holder thereof to acquire any equity interest in Seller.

Section 4.18 Compliance With Law. Except as set forth in Schedule
4.18 or Schedule 4.28 and except to the extent any noncompliance or violation
would not have a material adverse effect on Seller or the Purchased Assets:
(i) Seller is not in violation of any provision of any law (including any
Environmental Law), decree, order, regulation, license, permit, consent,
approval, authorization or qualification, including, without limitation, those
relating to health, the environment or Hazardous Substances, and Seller has
received no notice of any alleged violation of such law, decree, order,
regulation, license, permit, consent, approval, authorization or qualification,
and (ii) the location, construction, occupancy, operation and use of the
Houston Facility and each other Facility does not violate any provision of any
law, decree, order, regulation, license, permit, consent, approval,
authorization or qualification, or any board of fire underwriters (or other
body exercising similar functions), or any restrictive covenant or deed
restriction (recorded or otherwise) affecting the Houston Facility and each
other Facility including, without limitation, those relating to zoning
ordinances, building codes, flood disaster laws, the environment or Hazardous
Substances, and Seller has not received any notice of any alleged violation of
such law, decree, order, regulation, license, permit, consent, approval,
authorization or qualification.

Section 4.19 WARN Act Notices. Any notice required under the
Federal Workers Adjustment and Retraining Notification Act ("WARN Act") that
is, has been, or will be, required of Seller to its employees or former
employees by reason of its obligations under the WARN Act resulting from the
transactions contemplated by this Agreement or other circumstances existing on
or prior to the Closing Date, has been or will be given by Seller.

Section 4.20 Government Licenses, Permits and Related Approvals.
Schedule 4.20 hereto sets forth a list of all licenses, permits, consents,
approvals, authorizations, qualifications, certificates of occupancy and orders
of governmental authorities (other than Environmental Permits) required for the
conduct of the Business by Seller or the ownership of any Facility, all of
which are either in full force and effect or have been applied for.

18
<PAGE> 25
Section 4.21 Taxes. Except as set forth on Schedule 4.21, Seller
has caused to be timely filed with appropriate federal, state, local and other
governmental authorities all tax returns, information returns or statements and
reports ("Tax Returns") required to be filed with respect to the Purchased
Assets, Seller's operations, or the conduct of the Business, and has paid or
caused to be paid all taxes due with respect thereto, except for taxes which
Seller is contesting in good faith. Seller has neither received nor has
knowledge of any notice of deficiency or assessment or proposed deficiency or
assessment with respect to any of the Purchased Assets, Seller's operations, or
the conduct of the Business from any taxing authority, and there are no
outstanding agreements or waivers that extend any statutory period of
limitations applicable to any federal, state or local income or franchise Tax
Returns that include or reflect the use and operation of the Purchased Assets,
Seller's operations, or the conduct of the Business. There are no assessments
against, or to the best knowledge of the Seller Parties, threatened audits of,
Seller with respect to taxes that may be asserted against Seller. Seller is
not a party to any action or proceeding by any governmental authority for the
collection or assessment of taxes. The transactions contemplated hereby
qualify as an "occasional sale" under Section 151.304 of the Texas Tax Code.

Section 4.22 Backlog. Schedule 4.22 sets forth a complete listing
of all sales backlog of the Business as of September 30, 1995, including
customers, ordered amounts and values of products and projected shipping dates.

Section 4.23 Safety Reports. Schedule 4.23 sets forth a complete
listing of all injury reports, worker's compensation reports and claims, safety
citations and reports by any governmental agency, OSHA reports and all
documents relating to any of the foregoing relating to the Business since
January 1, 1994.

Section 4.24 Investment Intention. The Seller Parties are
acquiring the Notes hereunder for investment, solely for their own account and
not with a view to, or for resale in connection with, the distribution or other
disposition thereof.

Section 4.25 Transactions with Certain Persons. Except as set
forth on Schedule 4.25, during the period from August 31, 1995 through November
20, 1995, Seller has not, directly or indirectly, purchased, leased or
otherwise acquired any property or obtained any services from, or sold, leased
or otherwise disposed of any property or furnished any services to (except with
respect to remuneration for services rendered as a director, officer or
employee of Seller), in the ordinary course of business or otherwise, any
Affiliate, hereinafter defined. At the Closing, Seller shall provide a revised
Schedule 4.25 for the period from November 20, 1995 through the Closing Date.
Seller does not owe any amount to, or have any contract with or commitment to,
any of its shareholders, directors, officers, employees or consultants (other
than compensation for current services not yet due and payable and
reimbursement of expenses (including travel advances) arising in the ordinary
course of business not in excess of $5,000 for any single individual), and none
of such persons owes any amount to Seller. The term "Affiliate" means, with
respect to any natural person, the spouse of such person, the children of such
person or such person's spouse, either parent of such person or of such
person's spouse,

19
<PAGE> 26
and any sibling of such person or such person's spouse, and with respect
to any corporation or other legal entity means any director or officer of such
corporation or other legal entity, and any other person, corporation or other
legal entity directly or indirectly controlling, controlled by, or under common
control with, such corporation or other legal entity. For the purpose of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, corporation or other legal entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, corporation or other
legal entity whether through the ownership of voting securities or by contract
or otherwise.

Section 4.26 Accounts Receivable. The Accounts Receivable of
Seller and Dan Can purchased by Buyer are valid and genuine, arise out of bona
fide sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, are owned free and clear and
not subject to any lien or encumbrance, and, except to the extent an allowance
has been provided for in the Closing Date Balance Sheet, are collectible.

Section 4.27 Disclosure. All schedules to this Agreement are
complete and accurate. No representation or warranty by any Seller Party in
this Agreement or in any Schedule or Exhibit to this Agreement, or in any
certificate or other document furnished to Buyer by any Seller Party pursuant
hereto, contains or will contain any untrue statement of a material fact or
omits or will omit a material fact necessary to make the statements therein not
misleading.

Section 4.28 Environmental Laws.

(a) Without limiting the scope of Section 4.18 above,
except as set forth on Schedule 4.28, which Schedule incorporates by
reference the matters disclosed in the Phase I Environmental Site
Assessment, Phase II Environmental Site Assessment, and Groundwater
Sampling Report prepared by Malcolm Pirnie, Inc. ("Environmental
Assessments") and except for matters that would not have a material
adverse effect on Seller or the Purchased Assets, neither the
Purchased Assets nor the Houston Facility are currently in violation
of or subject to (i) any existing, pending or, to the knowledge of
Seller, threatened investigation or inquiry by any governmental
authority or (ii) any remedial obligations under any Environmental
Law and this representation and warranty shall continue to be true and
correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if
any, known by Seller pertaining to the Houston Facility. Without
limiting the generality of the preceding sentence and subject to the
same qualifications, (i) Seller has obtained and is in compliance
with all of the terms and conditions of all Environmental Permits
required with respect to the Purchased Assets and (ii) all of the
Purchased Assets and the Houston Facility are free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene,
dioxins, and dibenzofurans.

20
<PAGE> 27
(b) Except as set forth on Schedule 4.28 (which Schedule
incorporates the matters disclosed in the Environmental Assessments),
and except for matters that would not have a material adverse effect
on Seller or the Purchased Assets:

(i) There are not present in, on or under any of
the Facilities any Hazardous Substances in such form or
quantities as to create any liability or obligation under any
Environmental Law, or any other liability for either Buyer or
Seller.

(ii) None of the Facilities is being used, or has
ever been used, in connection with the business of
manufacturing, storing, transporting, handling, disposing or
treating Hazardous Substances, except in compliance with
Environmental Law.

(iii) There are no unresolved requests, claims,
notices, investigations, demands, administrative proceedings,
hearings, or litigation, relating in any way to Seller or any
of the Facilities, alleging liability under, violation of, or
noncompliance with, any Environmental Law or any license,
permit or other authorization issued pursuant thereto, nor, to
the knowledge of any Seller Party, is any such matter
threatened or impending.

(iv) There are no judgments, orders, decrees,
stipulations, settlement agreements, liens or injunctions,
relating in any way to Seller or the Facilities and based in
whole or in part on any Environmental Law, which have not been
wholly and completely satisfied, complied with, and
discharged.

(v) All Environmental Permits necessary for the
lawful operation of Seller's Business at any of the Facilities
are in Seller's possession and are in full force and effect.

(vi) Seller is not aware of any threatened or
impending expiration, withdrawal, termination, revocation or
material change or limitation in any of the Environmental
Permits described in paragraph (v) above.

(vii) All reports, filings, applications and
requests required by any Environmental Law with respect to the
Facilities have been duly made.

(viii) There are not now, nor, to Seller's
knowledge, have there ever been in the past, any underground
or above-ground storage tanks on the Facilities which contain
or did contain any Hazardous Substances.

(ix) None of the Facilities is or, to the
knowledge of Seller, ever has been listed on the National
Priorities List, the Comprehensive Environmental

21
<PAGE> 28
Response, Compensation and Liability Information System
(CERCLIS), or any similar federal, state or local list,
schedule, log, inventory or database.

(x) Seller has made available to Buyer for
Buyer's inspection and review all reports, licenses, permits,
authorizations, disclosures and other documents which
describe the status of any of the Facilities with respect to
any Environmental Law.

As used in this Agreement, "Environmental Law" means any federal,
state, foreign, or local law, statute, ordinance, regulation or rule of common
law pertaining to human health, or environmental conditions, including, without
limitation (i) the Resource Conservation and Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984, ("RCRA") (42 U.S.C. Section 6901
et seq.), (ii) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the SuperFund Amendments and
Reauthorization Act of 1986 ("CERCLA") (42 U.S.C. Section 9601 et seq.), (iii)
the Clean Water Act (33 U.S.C. Section 1251 et seq.), (iv) the Toxic Substance
and Control Act (15 U.S.C. Section 2601 et seq.), (v) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (vi) the Texas Solid Waste Disposal Act (V.T.C.A.
Health and Safety Code, Section 361.001 et seq.), and Texas Water Code
(V.T.C.A. Water Code Section 26.001 et seq.), (vii) all regulations
promulgated under any of the foregoing, and (viii) any other federal, state,
local or foreign law (including any common law), statute, regulation, or
ordinance regulating, prohibiting, or otherwise restricting the placement,
discharge, release, threatened release, generation, treatment, or disposal upon
or into any environmental media of any substance, pollutant, or waste which is
now or hereafter classified or considered to be hazardous or toxic to human
heath or the environment. "Environmental Law" does not include the
Occupational Safety and Health Act or any other federal, state, foreign or
local law, statute, ordinance, regulation or rules of common law governing
worker safety or work place conditions.

As used in this Agreement, "Hazardous Substance" means any hazardous
or toxic chemical, waste, by-product, pollutant, contaminant, compound, product
or substance, the generation, storage, disposal, handling, recycling, release
(or threatened release), treatment, discharge, or emission of which is
regulated, prohibited or limited under any Environmental Law and shall also
include, without limitation, (i) gasoline, diesel fuel, fuel oil, motor oil,
waste oil, and any other petroleum hydrocarbon, including any additives or
other by-products associated therewith, (ii) asbestos and asbestos containing
materials in any form, (iii) polychlorinated biphenyls, (iv) any substance the
presence of which on real property (A) requires reporting or remediation under
any Environmental Law, (B) causes or threatens to cause a nuisance or poses or
threatens to cause a hazard to the health or safety of persons on the property
on which such Hazardous Substance is located or on property adjacent thereto or
(C) which, if it migrated from the property on which it is located, could
constitute a health or safety hazard to persons on adjacent property, (v)
radon, and (vi) urea formaldehyde foam insulation.

22
<PAGE> 29
Section 4.29 Change in Use. During each of the five (5) preceding
calendar years, the Houston Facility has not received the benefit of, nor been
subject to, any special assessments, valuations or tax rates resulting in a
reduction in ad valorem taxes that may be subject to recoupment following a
change in use or ownership of the Houston Facility.

Section 4.30 COBRA Notices. Seller has performed or will perform
all notice obligations which are COBRA Liabilities and which are required to be
performed prior to the Closing Date.

Section 4.31 Warranty and Return Obligations. Schedule 4.31 is a
true and complete description of Seller's warranty obligations, practices and
policies for items sold by Seller prior to Closing and Seller's obligations to
take returns of items sold by Seller prior to Closing. Seller has complied
with such obligations in all material respects for the past three years.

Section 4.32 Product Liability. Except as set forth on Schedule
4.32, Seller has no knowledge of any liability, or any basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against Seller giving rise to any liability arising out of any
injury to individuals or property damage as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by
the Seller.

Section 4.33 Houston Facility; Leases.

(a) Schedule 2.1 (i) gives a legal description of the Houston
Facility. With respect to the Houston Facility:

(i) subject to the Permitted Encumbrances, Daniel
has good and indefeasible title to the Houston Facility, free
and clear of any Lien (hereinafter defined), except for
Permitted Liens, easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value, or
the marketability of title, of the property subject thereto;

(ii) there are no pending or threatened
condemnation proceedings, lawsuits, or administrative actions
relating to the Houston Facility or other matters affecting
adversely the current use, occupancy, or value thereof;

(iii) the legal descriptions for the parcels
contained in the deeds thereof describe the Houston Facility
fully and adequately, the buildings and improvements are
located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements,
ordinances, or deed restrictions (and none of the properties
or buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which
may burden the land, and the land does not serve any adjoining
property for any purpose inconsistent with the use of the
land, and the property is not located

23
<PAGE> 30
within any flood plane or subject to any similar type
restriction for which any permits or licenses necessary
to the use thereof have not been obtained;

(iv) except as otherwise provided in Schedule 4.18
or Schedule 4.28, all facilities have received all approvals
of governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof
and have been operated and maintained in accordance with
applicable laws, rules, and regulations;

(v) there are no undisclosed leases, subleases,
licenses, concessions, or other similar agreements, written or
oral, granting to any party or parties the right of use or
occupancy of any portion of the Houston Facility;

(vi) there are no outstanding options or rights of
first refusal to purchase the Houston Facility, or any portion
thereof or interest therein;

(vii) there are no parties (other than the Seller
and its Affiliates) in possession of the Houston Facility;

(viii) all facilities located on the Houston
Facility are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm
sewer, all of which services are adequate in accordance with
all applicable laws, ordinances, rules, and regulations and
are provided via public roads or via permanent, irrevocable,
appurtenant easements benefitting the Houston Facility; and

(ix) each parcel of real property constituting the
Houston Facility abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of
real property, and access to the property is provided by
public right-of-way.

(b) Schedule 2.1(h) lists and describes briefly all real
property leased or subleased to any of the Seller and its Affiliates
necessary in the use and operation of the Business. The Seller has
delivered to the Buyer correct and complete copies of the leases and
subleases listed in Schedule 2.1 (h) (as amended to date). With
respect to each lease and sublease listed in Schedule 2.1(h):

(i) the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;

(ii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the
transactions contemplated hereby;

24
<PAGE> 31
(iii) no party to the lease or sublease is in
breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration
thereunder;

(iv) no party to the lease or sublease has
repudiated any provision thereof;

(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;

(vi) with respect to each sublease, the
representations and warranties set forth in subsections (i)
through (v) above are true and correct with respect to the
underlying lease;

(vii) none of the Seller and its Affiliates has
assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold;

(viii) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;

(ix) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for
the operation of said facilities;

(x) except as set forth on Schedules 4.7 and
4.14, the owner of the facility leased or subleased has good
and indefeasible title to the parcel of real property, free
and clear of any Lien, except for installments of special
easements not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of
title, of the property subject thereto; and

(xi) prior to the Closing Date Seller will obtain
from each lessor of each leased Facility, (i) the written
consent of such lessor to assign each such lease to Buyer or
Buyer's designated affiliate, and (ii) the written statement
of each such lessor that the lease of which it is lessor is in
full force and effect, and that the applicable Seller Party is
not in default under such lease.

As used in this Section, "Lien" means any lien, mortgage,
pledge, assignment, security interest, charge, claim, or encumbrance of any
kind (including any conditional sale or other title retention agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of the foregoing.

25
<PAGE> 32
Section 4.34 Future Business. Seller and Daniel agree that for a
period of four years subsequent to the Closing they will use their reasonable
efforts to purchase, and to require any affiliate of either to acquire, any
products required by any such person, that are sold by Buyer as of the Closing
Date, at the lowest price offered by Buyer to others.

Section 4.35 Certificates of Occupancy. Seller has applied, or
will apply prior to the Closing, for all certificates of occupancy relating to
each Facility.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

The Buyer represents and warrants to each Seller Party the
following:

Section 5.1 Corporate Status and Good Standing. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Texas, with full corporate power and authority under its Charter and
by-laws to conduct its business as the same exists on the date hereof and on
the Closing Date.

Section 5.2 Authorization. The Buyer has full corporate power
and authority under its Charter and by-laws, and its board of directors has
taken all necessary action to authorize the Buyer, to execute and deliver this
Agreement, and the Notes, the Deed of Trust, the Security Agreements, the
Subordination Agreement (herein collectively the "Note Documents") and the
other exhibits and schedules hereto, to consummate the transactions
contemplated herein and to take all actions required to be taken by the Buyer
pursuant to the provisions hereof and thereof, and this Agreement, the Notes,
the Deed of Trust, the Security Agreements, and the Subordination Agreement,
when executed and delivered will constitute the valid and binding obligation of
the Buyer enforceable in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, moratorium, reorganization or similar
laws affecting the rights of creditors generally.

Section 5.3 Non-Contravention. Neither the execution, delivery
and performance of this Agreement, the Note Documents or any documents executed
in connection herewith or therewith, nor the consummation of the transactions
contemplated herein or therein, does or will violate, or result in breach of or
require notice or consent under any law, the charter or bylaws of the Buyer, or
any provision of any agreement or instrument to which the Buyer is a party.

Section 5.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which
question the validity of this Agreement or the Note Documents or any action
taken or contemplated by the Buyer in connection with this Agreement.

Section 5.5 Broker Involvement. No investment banker, broker or
finder has acted directly or indirectly for Buyer or any Affiliate of Buyer in
connection with this Agreement or

26
<PAGE> 33
the transactions contemplated hereby. No investment banker, broker, finder or
other person is entitled to any brokerage or finder's fee or similar commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer or any of its Affiliates. Buyer
agrees to indemnify and hold Seller and its Affiliates harmless from and
against any and all claims, liabilities and obligations with respect to all
fees, commissions or expenses asserted by any person on the basis of any act,
statement, agreement or commitment alleged to have been made by Buyer or any of
its Affiliates with respect to any such fee, expense or commission.

ARTICLE VI

COVENANTS

Section 6.1 Regular Course of Business. From and after the date
hereof and until the occurrence of the Closing or the termination of this
Agreement, the Seller shall, subject to the terms of this Agreement, carry on
its business diligently and substantially in the same manner as it has been
carried on for the last twelve months and shall not make or institute any
unusual or material change in its methods of manufacture, purchase, sale,
management, marketing, accounting, investment of funds, or operations without
the prior written consent of Buyer which consent shall not be unreasonably
withheld. Unless otherwise consented to in writing by Buyer, which consent
shall not be unreasonably withheld, or except as contemplated by this
Agreement, the Seller shall:

(a) Continue its normal maintenance procedures with
respect to its assets;

(b) Maintain insurance upon the assets of the Seller with
respect to the conduct of the Business in amounts and kinds comparable
to that in effect on the date hereof;

(c) Use its reasonable efforts to preserve the present
business organization of the Seller intact, to keep available the
services of the present officers and employees, and to preserve the
present relationships of the Seller with customers, suppliers and
employees thereof;

(d) Maintain the books, accounts, and records of the
Seller in the usual, regular, and ordinary manner, on a basis
consistent with prior years, endeavor to comply with all laws, rules,
and regulations applicable to the Seller and to the conduct of its
business, and perform all of the obligations of the Seller without
default;

(e) Not make any amendment to the Articles of
Incorporation or Bylaws of the Seller, enter into any merger or
consolidation with any person or entity, or make any sale of the
assets of the Seller (except Inventory in the ordinary course of
business);

27
<PAGE> 34
(f) Not make any change in the number of shares of the
capital stock of the Seller issued and outstanding; not grant or issue
any option, warrant, call, right, or commitment with respect to such
stock; not issue any equity security of any kind; not enter into any
agreement of any kind obligating the Seller to issue any shares of its
capital stock; and not issue any other securities or evidences of
indebtedness convertible into capital stock of the Seller;

(g) Not declare, pay, or make any dividend or other
distribution or payment in respect of the shares of capital stock of
the Seller or redeem any of the shares of its capital stock;

(h) Except as required pursuant to existing or proposed
contracts or agreements described on Schedule 2.1(d), (i) not make any
increase in the compensation payable or to become payable by the
Seller to any director, officer, or employee of the Seller, (ii) not
make any amendment of any employee benefit plan of the Seller, except
as required by law, and (iii) not enter into any employment agreements
or other contracts or arrangements with respect to the performance of
personal services;

(i) Not make any investment of a capital nature outside
of the normal and ordinary course of business of the Seller as
presently conducted or consistent with past practices;

(j) Not enter into any contract or commitment or engage
in any transaction which is not in the normal and ordinary course of
business of the Seller as presently conducted or consistent with past
practices;

(k) Use its reasonable efforts not to permit any event to
occur which would result in any of the representations or warranties
contained in this Agreement not to be true and correct;

(l) Not make any material change in any of the Contracts
of the Seller except in the normal and ordinary course of business of
the Seller as presently conducted or consistent with past practices;

(m) Substantially perform all of the obligations of the
Seller required to be performed during such period under each of the
Contracts and commitments of the Seller;

(n) Not borrow any money, incur any liability or
indebtedness, or make any payment, except in the normal and ordinary
course of business of the Seller as presently conducted or consistent
with past practices;

28
<PAGE> 35

(o) Not dispose of or contract to dispose of any property
of the Seller except in the normal and ordinary course of business of
the Seller as presently conducted or consistent with past practices;

(p) Not enter into any lease or contract for the purchase
or lease of real estate;

(q) Not form or cause to be formed any subsidiary of the
Seller;

(r) Not issue, sell, or purchase any shares of stock,
bonds, notes, or other securities;

(s) Except in the normal and ordinary course of business
of the Seller as presently conducted or consistent with past
practices, not pay any obligation or liability other than current
liabilities, not waive or compromise any right or claim, and not
cancel, without full payment, any note, loan, or other obligation
owing to the Seller, or enter into any agreement or commitment to do
any of the foregoing; and

(t) Not offer, directly or indirectly, the Purchased
Assets for sale to any person other than Buyer nor enter into
negotiation with any other party for the disposition of the Purchased
Assets.

Section 6.2 Employees. At the Closing, Seller will pay its
employees all amounts due them (including, without limitation, on account of
vacation pay and severance), and shall pay all health claims incurred on or
before the Closing for such employees when and as the same become due. The
provisions of this Agreement are for the benefit of the Buyer only, and no
employee of any Seller Party or any other person shall have any rights
hereunder.

Section 6.3 Notices and Consents. The Seller will give any
notices to third parties, and the Seller will use reasonable efforts to obtain
any third party consents, that the Buyer may request in connection with the
matters referred to in this Agreement. Each of the parties will give any
notices to, make any filings with, and use reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in this Agreement.

Section 6.4 Third Party Consents. Seller and Buyer shall use
their reasonable efforts to obtain the consents of third parties as are
necessary for the assignment of the Purchased Assets to Buyer. To the extent
that any of the Purchased Assets are not assignable by the terms thereof or
consents to the assignment thereof cannot be obtained, such assets shall be
held by Seller in trust for Buyer and all benefits and obligations derived
thereunder shall be for the account of Buyer; provided that where entitlement
of Buyer to those Purchased Assets is not recognized by any third party, Seller
shall, at the request of Buyer, enforce in a reasonable manner, for the account
of Buyer, any and all rights of Seller against the third party.

29
<PAGE> 36
Section 6.5 Further Assistance. Seller shall execute and deliver
to Buyer, at Closing or thereafter, any other instrument which may be requested
by Buyer and which is reasonably appropriate to perfect or evidence any of the
sales, assignments, transfers or conveyances contemplated by this Agreement or
to transfer any Purchased Assets identified after Closing.

Section 6.6 Tax Returns. Seller shall duly file all tax returns
related to taxes of any nature with respect to the Business or the Purchased
Assets for all periods ending on or prior to the Closing Date and pay all taxes
due with respect to such periods. Seller shall remain responsible for, and pay
to Buyer upon receipt of invoice therefor, its pro-rata share of the personal
property and real estate taxes shown thereon for 1995 (other than any thereof
that are Accrued Liabilities). The parties agree to file an election under
Section 167 of the Excise Tax Act (Canada) such that no Goods and Services Tax
("GST") will be payable upon the transfer of the Canadian assets from Dan Can
to Purchaser.

Section 6.7 Employee Termination; COBRA Matters. On or prior to
January 1, 1996, Buyer agrees to secure, for the benefit of employees of Seller
and Dan Can who become employees of Buyer on or after the Closing Date, health,
life insurance, dental and major medical plans that provide substantially
similar benefits as those provided by the Seller's and Dan Can's plans referred
to in Section 3.3(b) hereof, which plans of Buyer shall have no exclusion or
minimum qualification period for pre-existing conditions. Buyer further agrees
to forward copies of such plans or specimen plan documents to Seller on or
prior to January 1, 1996. From the Closing Date to January 1, 1996, Buyer will
not terminate any of its employees who were employed by Seller or Dan Can
immediately prior to the Closing, except for cause and upon prior written
notice to Seller.

Section 6.8 Transition Employees, etc. For a period of two
months following the Closing Date, Seller shall make available to Buyer, at
Seller's expense, the services of the employees of Seller listed on Schedule
6.8 hereto (provided that they continue to be employees of Seller or Daniel)
during regular business hours, including physical visits by such persons to the
Houston Facilities, up to a maximum of 16 hours per week per individual. For a
three month period following the Closing Date, Seller agrees to cooperate with
Buyer with respect to providing information not included in the Purchased
Assets that is required by Buyer to operate the Purchased Assets; provided,
however, that any information or assistance requested by Buyer shall be
provided by Seller or its employees at Seller's reasonable convenience and
shall in no way unreasonably disrupt the ongoing operations of Seller or Daniel
or the day-to-day duties of their employees. Buyer shall be entitled to use
the assistance of employees and systems of Seller's computer services in Canada
for a period not to exceed six months following the Closing Date and will pay
in cash to Seller a mutually acceptable fee for such services. In addition,
until August 15, 1996, Buyer will be entitled to store Inventory at Seller's
leased facility on Jensen Drive, Houston, Texas, at no charge.

Section 6.9 Representation Agreements. Seller agrees that on or
before the Closing Date, it will give written notice of cancellation of all
agency and other representation agreements

30
<PAGE> 37
to which it is a party or otherwise bound with respect to sales of its
Inventory, except for the agreement relating to the representation of the
Seller's products with Mr. Jack Jerry of Jerry Co.

Section 6.10 Necessary Certificates. Seller shall be responsible
for the costs of obtaining any necessary permit, consent, approval,
authorization, qualification, or certificate of occupancy, required for the
conduct of the Business by Seller or its ownership or operation of the Business
at any Facility.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Seller's Indemnity Obligations.

(a) General. Each Seller Party, jointly and severally,
shall indemnify and hold Buyer (including its affiliates, controlling
persons, officers, directors, shareholders, employees and agents, and
their respective heirs, legal representatives, successors and assigns)
from and against any and all claims, actions, causes of action,
arbitrations, proceedings, losses, damages, liabilities, judgments and
expenses (including, without limitation, reasonable attorneys' fees)
("Indemnified Amounts") incurred by Buyer as a result of (1) any
error, inaccuracy, breach or misrepresentation in any of the
representations and warranties made by any Seller Party in this
Agreement, (2) any violation, breach or default by any Seller Party of
or under any covenant made or undertaken under the terms of this
Agreement, (3) any Retained Liability, (4) any product liability
claims with respect to (i) products sold by Seller prior to the
Closing Date or (ii) Inventory that has been manufactured, assembled
and tested as of the Closing, and (5) any debts, liabilities or
obligations of Seller, direct or indirect, fixed, contingent or
otherwise, that are not expressly assumed by Buyer in this Agreement;
provided, that the Seller Parties, collectively, shall not have any
obligation to indemnify Buyer from and against any Indemnified Amounts
for matters set forth in clauses (1), (2), (4) or (5) above until
Buyer has suffered losses by reason of (i) any such matter in excess
of $5,000 or (ii) all such matters in excess of $30,000 (after either
of which point the Seller Parties will be obligated to provide
indemnification from and against the full amount of Indemnified
Amounts).

(b) Environmental. The sole indemnity obligation of the
Seller Parties with respect to any Environmental Claim or any other
matter arising under or related to any Environmental Law is set forth
in this Section 7.1(b).

(i) Subject to paragraph (iii) below, the Seller
Parties, jointly and severally, shall protect, defend,
indemnify, and hold harmless Buyer (including its officers,
directors, shareholders, agents and employees and their
respective heirs, legal representatives, successors and
assigns. Buyer and all such other persons and entities being
referred to herein individually as an "Indemnitee" and

31
<PAGE> 38
collectively as "Indemnitees") from and against all Costs,
which at any time may be imposed upon any Facility, the
Indemnitees, or any of them, arising out of or in connection
with (1) any failure to comply with Requirements of
Environmental Law; (2) Environmental Claims; (3) the failure of
the Seller Parties, to obtain, maintain, or comply with any
Environmental Permit required for operation of any
Facility; (4) the failure of the Seller Parties to comply with
the terms and provisions of the Environmental Remediation
Agreement, in substantially the form attached hereto as Exhibit
"B"; and/or (5) any error, inaccuracy, breach or
misrepresentation in any of the representations and warranties
made by any Seller Party in Section 4.28 of this Agreement.

(ii) Without limiting the obligations of the
Seller Parties in subparagraph (i), in the event that any
investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the
"Remedial Work") is necessary or desirable as defined in this
Agreement, the Seller Parties shall commence and complete, at
the sole cost and expense of Seller Parties, all such Remedial
Work in a reasonable, timely and professional manner,
consistent with standard industry practices and in compliance
with applicable Requirements of Environmental Law. All
Remedial Work shall be performed by one or more contractors,
approved in advance in writing by Buyer, which approval shall
not be withheld unreasonably. Any Indemnitee, at its own cost
and expense, shall have the right to monitor or review such
Remedial Work. In the event the Seller Parties shall fail to
commence, or cause to be commenced, or fail to diligently
complete, such Remedial Work, Buyer may, but shall not be
required to, cause such Remedial Work to be performed and all
Costs shall become an Environmental Claim hereunder. As used
herein, Remedial Work shall be deemed "necessary or desirable"
if contamination of the soil, groundwater or other affected
media by a Hazardous Substance exceeds the concentration or
level of such Hazardous Substance which is permitted to remain
in the affected media under Risk Reduction Standard Number 2
as promulgated by the Texas Natural Resource Conservation
Commission ("TNRCC") (30 Tex. Admin. Code Sections 335.555
through 335.566 and other applicable provisions) as such
standard may be modified from time to time unless a different
or more stringent standard is imposed by the TNRCC or other
governmental authority having jurisdiction over the Remedial
Work. However, the use of Risk Reduction Standard Number 2 as
a standard under this Agreement for determining that Remedial
Work is "necessary or desirable" does not preclude the use of
either Risk Reduction Standard Number 1 or Risk Reduction
Standard Number 3 for purposes of completing the Remedial
Work, provided that Seller Parties shall remain responsible
for any and all post closure care, monitoring or engineering
controls required by the TNRCC in connection with a Risk
Reduction Standard Number 3 closure.

32
<PAGE> 39

(iii) Notwithstanding anything to the contrary set
forth in this Agreement, the liability of the Seller Parties
under this Agreement shall arise only from the matters
described in (i) above which occur or are in existence on or
prior to the Closing Date or which constitute a failure of the
Seller Parties to comply with the terms and provisions of the
Environmental Remediation Agreement.

(iv) This Indemnification, and all rights and
obligations hereunder shall survive (1) the Closing; (2)
acquisition of any Facility by Buyer; and (3) transfer of all
of Buyer's rights in any Facility.

(v) Nothing contained in this Agreement shall
prevent or in any way diminish or interfere with any rights or
remedies, including, without limitation, the right to
contribution, which any Indemnitee may have against the Seller
Parties or any other party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(codified at Title 42 U.S.C. Section 9601, et seq.), as it
may be amended from time to time, or any other applicable
federal, state, foreign or local laws, or the common law, all
such rights being hereby expressly reserved.

(vi) The obligation of the Seller Parties to
indemnify Buyer or any other Indemnitee for environmental
matters shall be limited to Costs arising out of or in
connection with (a) matters discovered by Buyer in connection
with the normal and customary operations of the Business
(including without limitation any expansion thereof), (b)
matters discovered as a result of environmental assessment
activities required by a third party, including any lender of
Buyer or (c) a claim or demand by a governmental authority or
third party, which claim or demand does not originate or
result from the actions of Buyer except as otherwise provided
in subsection (a) or (b) hereof.

(c) Binding Effect This Indemnification shall run with
each of the Facilities and constitute the binding obligation of all
parties having a legal ownership interest in any of the Facilities (as
distinguished from only an equitable or mortgage interest or any
interest of a secured creditor including as an owner). All such
parties shall be deemed a Seller under this Agreement. This Agreement
or a memorandum thereof, at Indemnitee's option, may be placed of
record against any of the Facilities to impart notice of this
Agreement to all parties in ownership of any of the Facilities.

(d) Liability of Seller. The liability of the Seller
Parties under this Agreement shall in no way be limited or impaired by
the provisions of any other documents executed in connection with this
transaction. In addition, the liability of the Seller Parties under
this Agreement shall in no way be limited or impaired by any sale,
assignment, or transfer of all or any part of any of the Facilities or
any interest therein.

33
<PAGE> 40
(e) Waiver. The Seller Parties agree that any payments
required to be made hereunder shall become due on demand. The Seller
Parties expressly waive and relinquish all rights and remedies
accorded by applicable law to indemnitors or guarantors, except any
rights of subrogation that the Seller Parties may have, provided that
the indemnity provided for hereunder shall neither be contingent upon
the existence of any such rights of subrogation nor subject to any
claims or defenses whatsoever that may be asserted in connection with
the enforcement or attempted enforcement of such subrogation
rights, including, without limitation, any claim that such subrogation
rights were abrogated by any acts or omissions of Buyer.

(f) Definitions. For purposes of this Indemnification,
the following terms shall have the following meanings:

(i) "Environmental Claim" shall mean a claim,
demand, action, cause of action, suit, loss, cost, damage,
fine, penalty, expense, liability, judgment, proceeding, or
injury asserted or incurred for (1) the presence of Hazardous
Substances at, on, under or within any Facility on the Closing
Date; (2) any Hazardous Substances at, on, under or within any
Facility as of the Closing Date which migrate from any
Facility after the Closing Date; (3) the removal, remediation
or containment of Hazardous Substances existing on the Closing
Date at, on or under or within any Facility or any property
located adjacent thereto onto which such Hazardous Substances
have migrated from the Facility; and (4) a third party claim
for personal injury or property damage arising from or related
to the use, release or disposal of Hazardous Substances at any
Facility or at an offsite disposal site occurring prior to the
Closing Date.

(ii) "Environmental Permit" means any permit,
license, approval, or other authorization with respect to any
activities, operations, or businesses conducted by Seller on
or in relation to the Facility under any applicable
Environmental Law.

(iii) Except as provided in the Environmental
Remediation Agreement in substantially the form attached as
Exhibit "B", "Costs" shall mean all liabilities, losses,
costs, damages, expenses, claims, attorneys' fees, experts'
fees, consultants' fees and disbursements of any kind or of
any nature whatsoever. For the purposes of this definition,
such losses, costs and damages shall include, without
limitation, remedial, removal, response, abatement, cleanup,
legal, investigative and monitoring costs and related costs,
expenses, losses, damages, penalties, fines, obligations,
defenses, judgments, suits, proceedings and disbursements.

(iv) "Requirements of Environmental Law" means all
requirements imposed under Environmental Law.

34
<PAGE> 41
Section 7.2 Buyer's Indemnity Obligations. Buyer shall indemnify
and hold each Seller Party (including their affiliates, controlling persons,
officers, directors, employees or agents) harmless from and against any and all
Indemnified Amounts incurred by such Seller Party as a result of (a) any error,
inaccuracy, breach or misrepresentation in any of the representations or
warranties made by Buyer in this Agreement, the Notes, the Security Agreements
or the Deed of Trust, (b) any violation, breach or default by Buyer of or under
any covenant made or undertaken by it under the terms of this Agreement, the
Notes, the Security Agreements or the Deed of Trust, (c) the presence,
remediation or clean-up of, or exposure to, Hazardous Substances relating to or
located at, on, within or under the Purchased Assets or any Facility or any
failure to comply with Requirements of Environmental Law to the extent that the
same is based upon any act or omission of any party except Seller Parties or
their contractors or agents occurring after the Closing Date, (d) any Assumed
Liabilities or (e) the operation of the Business or the Purchased Assets
following the Closing (except to the extent such claim or liability constitutes
a Retained Liability or is subject to indemnification by Seller hereunder);
provided, that Buyer shall not have any obligation to indemnify the Seller
Parties from and against any Indemnified Amounts for matters set forth in clause
(a), (b), (c) or (e) above until the Seller Parties shall have, collectively,
suffered losses by reason of (i) any such matter in excess of $5,000, or (ii)
all such matters in excess of $30,000 (after either of which point the Buyer
will be obligated to provide indemnification from and against the full amount of
Indemnified Amounts.)

Section 7.3 Indemnification Procedures. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:

(a) A party claiming indemnification under this Agreement
(an "Indemnified Party") shall with reasonable promptness (i) notify
the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") for which indemnification is
sought and (ii) transmit to the Indemnifying Party a copy of all
papers served with respect to such claim (if any) and a written notice
("Claim Notice") containing a description in reasonable detail of the
nature of the Third Party Claim, and the basis of the Indemnified
Party's request for indemnification under this Agreement.

Within 20 days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the
Indemnified Party whether the Indemnifying Party disputes its
potential liability to the Indemnified Party with respect to such
Third Party Claim.

If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party within the Election Period, the
Indemnified Party shall give the Indemnifying Party an opportunity to
control negotiations toward resolution of such claim without the
necessity of litigation, and if litigation ensues, to defend the same
with counsel reasonably acceptable to the Indemnified Party, at the
Indemnifying Party's expense, and the Indemnified Party shall extend
reasonable cooperation in connection with such

35
<PAGE> 42
defense. The Indemnified Party shall be entitled to participate in,
but not to control, the defense of any Third Party Claim resulting in
litigation, at its own cost and expense; provided, however, that if the
parties to any suit or proceeding shall include the Indemnifying
Party as well as the Indemnified Party and the Indemnified Party shall
have been advised by counsel that one or more legal defenses may be
available to it that may not be available to the Indemnifying Party
resulting in a conflict of interest, then the Indemnified Party shall
be entitled to participate in the defense of such suit or proceeding
along with the Indemnifying Party, but the Indemnifying Party shall be
obligated to bear the reasonable fees and expenses of one counsel of
the Indemnified Party, which shall be selected by the Indemnified
Party and reasonably acceptable to the Indemnifying Party. If the
Indemnifying Party does not dispute its potential liability to the
Indemnified Party within the Election Period and the Indemnifying Party
fails to assume control of the negotiations prior to litigation or to
defend such action within a reasonable time, the Indemnified Party
shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and the Indemnifying Party
shall be liable to the Indemnified Party for its expenses reasonably
incurred or amounts paid in connection therewith. If the Indemnifying
Party disputes its potential liability to the Indemnified Party within
the Election Period, then the Indemnified Party shall be entitled to
assume control of such negotiations or defense of action and the
liability for the expense thereof, as well as any liability with
respect to such Third Party Claim, shall be determined as provided in
Section 7.4 below. Neither the Indemnifying Party nor the Indemnified
Party shall settle, compromise, or make any other disposition of any
Third Party Claim which would or might result in any liability to the
other party under this Article VII without the written consent of such
other party.

(b) In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a
Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an estimate
of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does
not notify the Indemnified Party within 30 days from its receipt of
the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice
shall be deemed a liability of the Indemnifying Party hereunder.

Section 7.4 Arbitration of Disputes. If the Indemnifying Party
disputes, either as to the amount or liability, that any claim described in a
Claim Notice or an Indemnity Notice, as the case may be, is covered by such
Indemnifying Party's covenant to indemnify contained in this Article VII, then
the Indemnifying Party and the Indemnified Party agree to promptly negotiate in
good faith to resolve their differences and to mutually agree upon an amount
(an "Agreed Amount"), if any, owed to Indemnified Party by the Indemnifying
Party hereunder. If Indemnifying Party and Indemnified Party fail to agree
within 30 days thereafter, the dispute shall be resolved (a "Final
Determination") by binding and final arbitration conducted in

36
<PAGE> 43
Houston, Texas by three arbitrators in accordance with the rules of commercial
arbitration of the American Arbitration Association. Subject to the foregoing,
either Party may give notice of arbitration, which notice shall name an
arbitrator. Within ten days after the receipt of such notice, the other Party
shall name the second arbitrator, or failing to do so, the arbitrator named in
such notice shall name the second. The two arbitrators so appointed shall name
the third. Notwithstanding the foregoing, if the Parties mutually agree, any
dispute subject to arbitration hereunder may be heard and determined by a single
arbitrator selected by the Parties. Each arbitrator selected to act hereunder
shall be qualified by education and experience to pass on the particular
question in dispute. The arbitrators shall promptly hear and determine (after
due notice of hearing and giving the Parties a reasonable opportunity to be
heard) the question submitted and shall render their decision within 45 days
after appointment of the third arbitrator. If within such period a decision is
not rendered by the arbitrators, or a majority thereof, new arbitrators may be
named and shall act hereunder at the election of either Party. The decision of
the arbitrators, or a majority thereof, made in writing, shall be final and
binding upon the Parties hereto as to the questions submitted, and the Parties
hereto agree to abide by and comply with such decision. Any amount which is
described in a Claim Notice which is not disputed by the Indemnifying Party
shall be paid promptly (in cash or by offset, if applicable) upon receipt of the
Claim Notice by the Indemnifying Party.

Section 7.5 General. The rights of the parties to
indemnification under this Article VII shall not be limited due to any
investigations heretofore or hereafter made by such parties or their
representatives.

Section 7.6 Right of Offset. Each of the Notes is subject to
offset in whole or in part by any amounts due from any Seller Party to Buyer,
based on any Final Determination or any non-disputed Claim Notice, in
accordance with the terms of this Agreement. Any sale or assignment or other
transfer of either of the Notes shall be expressly subject to Buyer's rights of
offset, each of such Notes shall bear an appropriate legend referencing Buyer's
rights of offset pursuant hereto, and any such buyer, assignee or other
transferee of either of the Notes shall execute an agreement satisfactory to
Buyer in the exercise of its reasonable judgment agreeing to Buyer's continued
right of offset.

Section 7.7 Survival of Representations.

(a) The representations and warranties of the Seller
Parties in Sections 4.1, 4.3, 4.4, 4.6, 4.8, 4.10, 4.11, 4.12, 4.14,
4.15, 4.16, 4.19, 4.20, 4.21, 4.23, 4.24, 4.26, 4.27, 4.30, 4.31,
4.32, and 4.35 shall expire upon the second anniversary of the Closing
Date. All other representations and warranties shall survive for the
maximum period permitted by applicable law, provided that if a claim
has been made with respect to a breach of a representation or warranty
prior to the expiration thereof, and such claim has not been finally
resolved as of the expiration thereof, such representation or warranty
shall survive until the final resolution of such claim.

37
<PAGE> 44
(b) The representations and warranties of the Buyer in
Sections 5.1, 5.3 and 5.4, shall survive Closing and will expire upon
the second anniversary of the Closing Date. All other representations
and warranties shall survive for the maximum period permitted by
applicable law, provided that if a claim has been made with respect to
a breach of a representation or warranty prior to the expiration
thereof, and such claim has not been finally resolved as of the
expiration thereof, such representation or warranty shall survive
until the final resolution of such claim.

ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING: TERMINATION

Section 8.1 General Conditions Precedent.

(a) Conditions to Obligation of Buyer to Close. The
obligation of Buyer to effect the closing of the transactions
contemplated by this Agreement is subject to the satisfaction prior to
or at the Closing of the following conditions:

(i) Representations and Warranties. The
representations and warranties of each Seller Party under this
Agreement shall be true and correct in all material respects
as of the Closing Date with the same effect as though made on
and as of the Closing Date.

(ii) Observance and Performance. Each Seller
Party shall have performed and complied in all material
respects with all covenants and agreements required by this
Agreement to be performed and complied with by either of them
prior to or as of the Closing Date.

(iii) No Adverse Change. There shall have occurred
no material adverse change in the Purchased Assets as a whole
or in the Business, financial condition, prospects, operations
of the Business or results of operations since September 30,
1995.

(iv) Officers' Certificate. Each Seller Party
shall have delivered to Buyer a certificate, dated the Closing
Date, executed by the President and the senior financial
officer of Seller and certifying to the satisfaction of the
conditions specified in Sections 8.1(a) (i), (ii), and (iii).

(v) Consents of Third Parties. Buyer shall have
received duly executed copies of all material consents and
agreements necessary to effect the transfer of the Purchased
Assets to Buyer. Buyer hereby agrees to use reasonable
efforts to assist Seller in obtaining such consents and
agreements.

38
<PAGE> 45
(vi) Legal Opinion. Buyer shall have received an
opinion, dated the Closing Date, from Thomas L. Sivak, counsel
to the Seller, to the effect that:

(1) Each of the Seller and Daniel is
duly organized, validly existing, and in good
standing under the laws of the state of their
respective incorporation and each has all corporate
power to own all of its properties and assets and to
carry on its business as it is now being conducted;

(2) This Agreement has been duly
authorized, executed, and delivered by the Seller and
Daniel and constitutes the valid and binding
obligation of Seller and Daniel, subject to
applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar
laws affecting creditors' rights generally, and the
effect of general principles of equity, whether
applied by a court of law or equity;

(3) To his best knowledge, no order,
authorization, consent, or approval of, or
registration, declaration, or filing with, any
governmental authority is required in connection with
the consummation by the Seller, Daniel of the
transactions contemplated by this Agreement;

(4) The execution, delivery, and
performance of this Agreement by the Seller and
Daniel and the consummation of the transactions
contemplated hereby will not constitute a breach or
violation of or default under the Articles of
Incorporation or Bylaws of such parties;

(5) Upon consummation of the
transactions which are the subject of this Agreement
in accordance with its terms, Buyer will be vested
with good and indefeasible title to all of the
Purchased Assets, except the Houston Facility, free
and clear of any claims, liens, charges, or
encumbrances whatsoever, except such liens created by
Buyer as a result of the transactions set forth
herein and Permitted Liens; and

(6) Such counsel knows of no suit or
proceeding pending or threatened against the Seller
other than those listed on Schedule 4.6 which would
materially and adversely affect the financial
condition, business, or operations of the Seller
taken as a whole.

(vii) Copies of Documents. Buyer shall have
received, to the extent reasonably requested by Buyer, copies
of all documents and instruments listed in any of the Exhibits
or Schedules to this Agreement.

(viii) Closing Documents. Buyer shall have received
such bills of sale, assignments and other documents of
transfer reasonably required to transfer to

39
<PAGE> 46
Buyer the interests of Seller in the Purchased Assets and the
Business consistent with the terms of this Agreement.

(ix) No Legal Actions. No court or governmental
authority of competent jurisdiction shall have issued an
order, not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and no action or proceeding
shall have been instituted, which shall not have been
subsequently dismissed, seeking to restrain, enjoin or
prohibit the consummation of the transactions contemplated by
this Agreement or seeking damages in respect thereof.

(x) Proceedings and Documents. All corporate and
other proceedings and actions taken, and all certificates,
opinions, agreements, instruments and documents to be
delivered, in connection with the transactions contemplated
hereby shall be reasonably satisfactory in form and substance
to Buyer and its counsel.

(xi) Real Property Matters. The Buyer shall have
received the Title Commitment described in Section 4.7, copies
of all instruments referred to in the Title Commitment, and
shall have been satisfied that the issuer of the Title
Commitment has been paid by Seller to issue, and is
irrevocably committed to issue, on the policy of Chicago Title
Insurance Company, a Texas Standard Form Owner's Title
Insurance Policy, dated as of the Closing Date, subject only
to the Permitted Encumbrances and taxes for 1995.

(xii) Termination of Financing Statements. If
requested by Buyer, Seller shall have received properly
executed terminations of all financing statements filed by any
person as secured party against Seller as debtor.

(xiii) Remediation Agreement. Seller and Buyer
shall have entered into an Environmental Remediation Agreement
in substantially the form attached hereto as Exhibit "B".

(xiv) Governmental Approvals. Each party shall
have obtained and made all governmental or other
authorizations, approvals, consents, waivers and filings, the
lack of which prior to the Closing, under any applicable law,
rule or regulation (i) would render legally impermissible the
purchase hereunder by Buyer, or the sale hereunder by Seller,
of the Purchased Assets or (ii) have a material adverse effect
on the Purchased Assets or Buyer.

40
<PAGE> 47
(b) Conditions to Obligation of Seller to Close.

(i) Representations and Warranties. The
representations and warranties of Buyer under this Agreement
shall be true and correct as of the Closing Date with the same
effect as though made on and as of the Closing Date.

(ii) Observance and Performance. Buyer shall have
performed and complied with all covenants and agreements
required by this Agreement to be performed and complied with
by it prior to or as of the Closing Date.

(iii) Officers' Certificate. Buyer shall have
delivered to Seller a certificate, dated the Closing Date,
executed by the President and the senior financial officer of
Buyer and certifying to the satisfaction of the conditions
specified in Sections 8(b)(i) and (ii) hereof.

(iv) Legal Opinion. Seller shall have received an
opinion, dated the Closing Date, from Winstead Sechrest &
Minick P.C., counsel to Buyer, to the effect that:

(1) Buyer is duly organized, validly
existing, and in good standing under the laws of the
State of Texas and has all corporate power to own its
properties and to conduct its business as it is now
being conducted;

(2) This Agreement, the Notes, the
Security Agreements, the Deed of Trust and the
Subordination Agreement (the "Purchase Documents")
have been duly authorized, executed and delivered by
Buyer and constitute the valid and binding obligation
of Buyer, enforceable against Buyer in accordance
with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors'
rights generally, and the effect of general
principles of equity, whether applied by a court of
law or equity;

(3) To such counsel's knowledge, no
order, authorization, consent or approval of, or
registration, declaration or filing with, any
governmental authority is required in connection with
the consummation by Buyer of the transactions
contemplated by this Agreement;

(4) The execution, delivery and
performance by Buyer of the Purchase Documents, the
borrowings by Buyer pursuant thereto and the granting
of the Liens contemplated thereby, do not violate,
result in a breach of, or constitute a default under,
the Articles of Incorporation or

41
<PAGE> 48
by-laws of Buyer or, to such counsel's knowledge,
any agreement to which Buyer is a party;

(5) The Security Agreements grant the
Seller Parties a valid security interest in the
"Collateral" (as defined therein). The filing of
Buyer's financing statements in the Office of the
Secretary of State of Texas perfects the security
interest of the Seller Parties in the Collateral that
consists of accounts, general intangibles, inventory,
mobile goods and equipment, excluding certificated
motor vehicles (as each term is defined in Section
9.105 of the Texas Business and Commerce Code) on the
date of the filing of such financing statements;

(6) Such counsel knows of no suit or
proceeding pending or threatened against or affecting
the Buyer which would materially and adversely
affect the financial condition, business, or
operations of Buyer upon completion of the
transactions contemplated by this Agreement.

(v) No Legal Actions. No court or governmental
authority of competent jurisdiction shall have issued an
order, not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and no action or proceeding
shall have been instituted, which shall not have been
subsequently dismissed, seeking to restrain, enjoin or
prohibit the consummation of the transactions contemplated by
this Agreement or seeking damages in respect thereof.

(vi) Governmental Approvals. Each party shall
have obtained and made all governmental or other
authorizations, approvals, consents, waivers and filings, the
lack of which prior to the Closing, under any applicable law,
rule or regulation (i) would render legally impermissible the
purchase hereunder by Buyer, or the sale hereunder by Seller,
of the Purchased Assets or (ii) have a material adverse effect
on the Purchased Assets or Seller.

(vii) Other Documents and Instruments. Buyer and
the other parties thereto shall have executed and delivered to
Seller the Notes and the Security Agreements, in substantially
the form of each of which is set forth in Exhibit "A" hereto,
the Deed of Trust, in substantially the form of which is set
forth in Exhibit "C" hereto, the Subordination Agreement in
substantially the form of which is set forth in Exhibit "F"
hereto and such other financial statements and security
documents as may be, in Seller's reasonable opinion, necessary
or advisable to effect and perfect Seller's security interest
in the Purchased Assets.

(viii) Proceedings and Documents. All corporate and
other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates,
opinions, agreements, instruments and documents mentioned
herein

42
<PAGE> 49
or incident to any such transaction shall be reasonably
satisfactory in form and substance to Seller and its counsel.

(ix) Credit Agreements. Buyer and its bank lender
shall have entered into a Loan Agreement, in substantially the
form set forth in Exhibit "G" hereto.

Section 8.2 Reasons for Termination. This Agreement may be
terminated and abandoned upon prompt notice to the other party or parties:

(a) By mutual written consent of the parties hereto at
any time prior to the Closing;

(b) By the Buyer if any of the conditions precedent to
Buyer's obligations hereunder as provided in Section 8.1(a) hereof
have not been satisfied and have not been waived in writing by Buyer,
upon written notice of such termination to the Seller;

(c) By Seller if any of the conditions precedent to the
obligations of the Seller as provided in Section 8.1(b) hereof have
not been satisfied on or prior to the Closing Date and have not been
waived in writing by Seller, upon written notice of such termination
to Buyer.

(d) By either Buyer or Seller if the Closing has not
occurred on or before December 10, 1995, provided, however, that no
party hereto can so terminate this Agreement if the Closing has failed
to occur because of a material default hereunder by such party, or if
the parties have not received any required governmental approval.
.
(e) By either Buyer or any Seller Party if any court or
governmental agency shall have issued an order, judgment or decree or
taken any other action materially challenging, delaying, restraining,
enjoining, prohibiting or invalidating the consummation of any of the
transactions contemplated herein.

Section 8.3 Effect of Termination. In the event this Agreement
is terminated pursuant to Section 8.2, all further obligations of the parties
hereunder shall terminate, except that the obligations set forth in Section
11.1 and this Article VIII shall survive; provided, however, that if this
Agreement is so terminated by one party pursuant to Section 8.2(b) or 8.2(c)
because one or more of the conditions to such party's obligations hereunder is
not satisfied as a result of the other party's failure to comply with its
obligations under any provision of this Agreement, it is expressly agreed and
understood that an aggrieved party's right to pursue all legal remedies for
breach of contract or otherwise, including, without limitation, damages
relating thereto, shall also survive such termination unimpaired. The remedies
specifically provided in this Article VIII shall constitute the exclusive
remedies under this Agreement or otherwise for any failure to close or for any
termination of this Agreement.

43
<PAGE> 50

ARTICLE IX

ACTIONS TO BE TAKEN AT CLOSING

Section 9.1 Actions to be Taken by Seller at the Closing. Seller
shall take the following actions and shall deliver to Buyer at the Closing:

(a) copies certified by its Secretary of resolutions duly
adopted by the boards of directors of each of the Seller and Daniel
and the partners of Dan Can, and where required, by the shareholders
of Seller, authorizing and approving the execution and delivery of
this Agreement, including the Exhibits and Schedules hereto, and the
consummation of the transactions contemplated herein.

(b) bills of sale, in form and substance satisfactory to
Buyer, for all personal property constituting a part of the Purchased
Assets;

(c) assignments, in form and substance satisfactory to
Buyer, of all intangibles constituting a part of the Purchased Assets
and all contracts, licenses, appurtenances and other rights of Seller
relating to the Facilities;

(d) with respect to the Houston Facility, a special
warranty deed, a form of which is included as Exhibit "D", subject
only to the Permitted Encumbrances hereto;

(e) with respect to the Houston Facility, a title policy
obtained at Seller's sole cost and expense and in Buyer's name, in the
form described in Section 4.7 hereof, dated the Closing Date, in the
amount reasonably allocable to such parcel (as determined by Buyer),
showing Buyer to be the owner in fee simple subject only to Permitted
Encumbrances and other exceptions acceptable to Buyer in Buyer's sole
discretion, together with any certificate or affidavits required by
the title company issuing the title policy, including, without
limiting the foregoing, a certificate of non-foreign status and Seller
shall deliver such instruments, documents, payments, indemnities,
releases and agreements as the title company shall reasonably require
in order to issue said policies and endorsements;

(f) such other instrument or instruments of transfer as
shall be necessary or appropriate to vest in Buyer good and
indefeasible title to the Purchased Assets;

(g) such keys, lock and safe combinations, back-up
computer files, and other similar items as Buyer shall require to
obtain full occupation, possession and control of the Houston Facility
and the Purchased Assets;

(h) an assignment of Leases covering certain of the
Facilities, as set forth on Schedule 2.1(h);

44
<PAGE> 51

(i) estoppel certificates and consents in form and
substance reasonably satisfactory to Buyer executed by the landlords
under each of the Leases and by the other parties to the Contracts to
the extent received as of the Closing Date; and

(j) Pursuant to Article XII hereof, Seller and Daniel
shall execute and deliver a Non-Competition Agreement
("Non-Competition Agreement") with Buyer in form mutually satisfactory
to Buyer and Seller.

Section 9.2 Actions to be Taken by Buyer at the Closing. The
Buyer shall take the following actions at the Closing:

(a) The Buyer shall deliver to Seller a copy certified by its
Secretary of resolutions duly adopted by its boards of directors
authorizing and approving the execution and delivery of this
Agreement, the Note Documents and the other exhibits and schedules
hereto, the issuance of the Notes, and the consummation of the
transactions contemplated herein.

(b) Buyer shall make the payment of funds specified for
payment at Closing under Section 2.2 above.

(c) Buyer shall execute and deliver to Seller the Notes,
the Security Agreements, the Deed of Trust, the Subordination
Agreement and such other financing statements and security documents
as may be, in Seller's reasonable opinion, necessary or advisable to
effect and perfect Seller's security interest in the Purchased Assets.

Section 9.3 Further Assurances. At and after the Closing, at the
request of Buyer, Seller shall deliver such further instruments of transfer and
take all commercially reasonable action as may be necessary or appropriate (i)
to vest in Buyer good and indefeasible title to the Purchased Assets, and (ii)
to transfer to Buyer all licenses, agreements and permits necessary for the
operation of the Business, and (iii) to aid and assist Buyer in collecting and
reducing to possession any or all of the Purchased Assets (including Accounts
Receivable).

ARTICLE X

COVENANTS OF BUYER

The parties hereto acknowledge that, in connection with the
transactions contemplated by this Agreement, Buyer will enter into a loan
agreement (the "Loan Agreement") and promissory note, security agreement, deed
of trust, and subordination agreement in favor of Texas Commerce Bank National
Association. Buyer agrees with the Seller Parties that it will fully comply
with all covenants and agreements undertaken by Buyer in the Loan Agreement and
related agreements, as any of such may be amended, modified, waived or
otherwise enforced hereinafter.

45
<PAGE> 52

ARTICLE XI

GENERAL PROVISIONS

Section 11.1 Confidentiality. After the Closing, Seller will not,
directly or indirectly, disclose or provide to any other person any non-public
information of a confidential nature concerning the Business or the Purchased
Assets, except as is required in governmental filings or judicial,
administrative or arbitration proceedings; provided that Seller may disclose or
provide such information to its agents, accountants and attorneys who need to
know such information; and provided, further, that Seller shall be liable for
any breach of such confidentiality obligations by any such agent, accountant or
attorney.

Section 11.2 Expenses. Except as otherwise provided herein, the
Buyer and Seller shall pay their own respective expenses, including the fees
and disbursements of their respective counsel in connection with the
negotiation, preparation and execution of this Agreement and the consummation
of the transactions contemplated herein. Buyer shall pay for all filing fees
in connection with the transactions contemplated herein.

Section 11.3 Entire Agreement. This Agreement, including all
schedules and exhibits hereto, constitutes the entire agreement of the parties
with respect to the subject matter hereof, and may not be modified, amended or
terminated except by a written instrument specifically referring to this
Agreement signed by all the parties hereto.

Section 11.4 Waivers and Consents. All waivers and consents given
hereunder shall be in writing. No waiver by any party hereto of any breach or
anticipated breach of any provision hereof by any other party shall be deemed a
waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar.

Section 11.5 Notices. Any notice or communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given upon delivery, if delivered in person or by any expedited delivery
service which provides proof of delivery, upon telecopy, facsimile or similar
telecommunication or on the third business day after mailing, if mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows, or in such other manner or to such other address as any
party shall hereafter designate by notice in writing to the other parties
hereto, viz:

(a) If to Buyer to: DAN-LOC Bolt & Gasket, Inc.
725 N. Drennan
Houston, Texas 77003

and

46
<PAGE> 53

P.O. Box 292
Houston, Texas 77001-0292

Attn: Russell E. Ginn

With copies to: (i) Winstead Sechrest & Minick P.C.
910 Travis, Suite 1700
Houston, Texas 77002

Attn: Arthur S. Berner

(ii) CCG Venture Partners, LLC
14450 T.C. Jester Boulevard,
Suite 170
Houston, Texas 77014

Attn: Mark E. Leyerle

(b) If to any Seller
Party, to: Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055

Attn: W.A. Griffin III

With a copy to: Daniel Industries, Inc.
9753 Pine Lake Drive
Houston, Texas 77055

Attn: Thomas L. Sivak

Section 11.6 Successors and Assigns. No party to this agreement
may assign or delegate any of its rights or obligations under this Agreement or
any part hereof without the prior written consent of the non-assigning party.
Any assignment or delegation without any consent contemplated by this Section
11.6 shall be void. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective permitted successors,
legal representatives and assigns. No third party shall have any rights under
any provision hereof.

Section 11.7 Compliance with Bulk Sales Laws. Buyer and Seller
waive compliance with the requirements of any applicable bulk sales laws of any
jurisdiction. Each Seller Party shall indemnify Buyer against any and all
liabilities or expenses Buyer may incur as a result of any noncompliance by
Seller with any bulk sales laws as they relate to this transaction. Buyer will
discharge the liabilities it assumes hereunder.

47
<PAGE> 54
Section 11.8 Captions. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.

Section 11.9 Governing Law; Settlement of Disputes. This
Agreement and the other documents delivered pursuant hereto and the legal
actions between the parties shall be governed and construed in accordance with
the laws of the State of Texas, without giving effect to principles of
conflicts of laws. All disputes arising out of this Agreement shall be
resolved in accordance with the procedure set forth in Section 7.4 hereof.

Section 11.10 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 hereto. 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 hereto as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

Section 11.11 Further Assurances. Each party 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.

Section 11.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an
original but all of which together shall constitute one and the same
instrument.

ARTICLE XII

COVENANTS NOT TO COMPETE

Section 12.1 Agreements.

(a) Seller and Daniel shall each enter into a
Non-Competition Agreement in the form attached as Exhibit "E" hereto.

(b) Mr. Pat Bullard shall not compete with Buyer for as
long as Bullard is an employee or consultant with or for any of the
Seller Parties or their Affiliates.

Section 12.2 Relinquishment of Name. From the Closing, the Seller
Parties each agree to forever forego conducting business operations under the
name of "Daniel Industrial, Inc." and "Daniel Bolt & Gasket, Inc." The Seller
Parties also agree that Buyer shall be entitled to

48
<PAGE> 55
provide general, and specific notification, that it has acquired certain assets
related to the Business of Daniel Industrial, Inc., Daniel Bolt & Gasket, Inc.,
and the bolt, flange and gasket business of Daniel Bolt & Gasket Ltd. and Daniel
Industries Canada.

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

DAN-LOC BOLT & GASKET, INC.

By: ______________________________
Name: Russell E. Ginn
Title: President

DANIEL INDUSTRIES, INC.

By: ______________________________
Name: W. A. Griffin, III
Title: President

DANIEL INDUSTRIAL, INC.

By: ______________________________
Name: H. G. Schopfer, III
Title: Vice President

DANIEL INDUSTRIES CANADA

By: Daniel Bolt & Gasket, Ltd.
Daniel Flow Products, Ltd.
Partners

By: ____________________________________
Name: W. A. Griffin, III
Authorized Signatory

<PAGE> 1
Exhibit 10.6

DANIEL INDUSTRIES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE 1

PURPOSE

The purpose of this Deferred Compensation Plan (the "Plan") is to
provide a means whereby Daniel Industries, Inc., a Delaware corporation (the
"Company"), may afford additional financial security to a select group of key
management employees of the Company who have rendered and continue to render
valuable services to the Company, constituting an important contribution
towards the Company's continued growth and success, by providing for additional
future compensation to such employees so that they may be retained and their
productive efforts encouraged.

The Plan is intended to qualify for the exemptions under Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") for
plans that are unfunded and maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees

1
<PAGE> 2
ARTICLE 2

DEFINITIONS AND CERTAIN PROVISIONS

Actual Contribution. "Actual Contribution" means for each
Participant, the product of the Participant's Target Contribution multiplied by
the Employer Contribution and divided by four times the Target Aggregate
Contribution.

Age at Enrollment. "Age at Enrollment" means a Participant's age
nearest (rounded to the nearest whole number) at the beginning of the first
Plan Year for which the Participant is a Participant.

Average Compensation. "Average Compensation" means the average of the
Participant's Compensation over the most recent 36 Months of Plan
Participation, or if a Participant has less than 36 Months of Plan
Participation, the average of the Participant's Compensation since the
Participant became a Participant.

Board. "Board" means the board of directors of the Company.

Compensation. "Compensation" means a Participant's cash compensation
including base salary and any cash bonus or cash incentive. Calculation of
"Compensation" for this Plan shall

2
<PAGE> 3
be prior to any reduction for, or deferral to the Company's 401(k) Plan.

Declared Rate. "Declared Rate" means with respect to any Plan Year
the interest rate used to calculate the amount of interest that will be
credited during such Plan Year to a Participant's Deferral Account prior to
Retirement. The Declared Rate for each Plan Year shall be determined by the
Committee, in its complete and sole discretion, and will be announced on or
before January 1 of the applicable Plan Year (except in the initial Plan Year
when the Declared Rate shall be 7.5%).

Deferral Account. "Deferral Account" means the account maintained on
the books of account of the Company for each Participant pursuant to Section
4.2.

Eligible Employee. "Eligible Employee" means each of those key
management Employees selected by the Company to participate in the Plan.

Employee. "Employee" means any person employed by the Employer on a
regular full-time salaried basis, including officers of the Employer, other
than employees covered by a collective bargaining agreement between the
Employer and a union.

3
<PAGE> 4
Employer. "Employer" means the Company and any subsidiary or
affiliate of the Company.

Employer Contribution. "Employer Contribution" means the credit to a
Participant's Deferral Account pursuant to Section 4.2. The amount of the
Employer Contribution for all Participants shall be determined by the Board, in
its complete and sole discretion, and will be announced on or before January 1
of the applicable Plan Year (except in the initial Plan Year when the Employer
Contribution shall be $290,046.62).

Participant. "Participant" means an Eligible Employee participating
in the Plan in accordance with the provisions of Article 4.

Plan Year. "Plan Year" means the calendar year, except that the
initial Plan Year shall begin July 1, 1995, and end December 31, 1995.

Retirement. "Retirement" means the termination of a Participant's
employment with the Employer, for reasons other than death or disability, on or
after the date as of which the Participant has both attained age 65 and has 10
or more Years of Plan Participation.

4
<PAGE> 5
Retirement Rate. "Retirement Rate" means with respect to any Plan
Year the rate of interest used to calculate the payments to the Participants
whose benefits begin in such Plan Year. The Retirement Rate for each Plan Year
shall be the average of the Declared Rate for the ten (10) immediately
preceding Plan Years, or the total number of Plan Years if less than ten (10).

Target Aggregate Contribution. "Target Aggregate Contribution" means
the sum of the Target Contributions for all Participants.

Target Contribution. "Target Contribution" means for each
Participant, the product of the Participant's Compensation for the calendar
quarter and the Participant's Target Percentage.

Target Percentage. "Target Percentage" means for each Participant,
the Percentage on the attached Schedule A which corresponds to the
Participant's Age at Enrollment.

Termination. "Termination" means the termination of employment with
the Employer for reasons other than Retirement, death, or disability.

Vested Percentage. "Vested Percentage" means the percentage to be
multiplied by the Deferral Account, such product to be

5
<PAGE> 6
used to adjust the value of the Deferral Account upon Termination of the
Participant. A Participant's Vested Percentage shall be determined by dividing
the Participant's Months of Plan Participation by the number of months from the
time the Participant became a Participant until the Participant would have been
eligible for Retirement, including the month in which the Participant attains
eligibility for Retirement.

Months of Plan Participation. "Months of Plan Participation" means
the number of consecutive months during which a Participant is employed by the
Employer after being designated as a Participant.

Years of Plan Participation. "Years of Plan Participation" means the
number of consecutive Plan Years during which a Participant is employed by the
Employer after being designated as a Participant.

ARTICLE 3

ADMINISTRATION OF THE PLAN

The Board shall appoint a plan administration committee (the
"Committee") composed of not less than three (3) members which shall administer
the Plan. Subject to the provisions of the foregoing sentence, the Board may
fix or change the number of members of the Committee at any time at its
discretion. Each

6
<PAGE> 7
member of the Committee shall serve until he resigns, retires or becomes unable
to serve due to death or disability, or until he is removed by the Board. The
Committee shall establish, adopt, or revise such rules and regulations as it
may deem necessary or advisable for the administration of the Plan. All
decisions of the Committee shall be by vote of a majority of its members and
shall be final and binding unless the Board should determine otherwise.
Members of the Committee who are otherwise Eligible Employees shall be eligible
to participate in the Plan while serving as a member of the Committee, but a
member of the Committee shall not vote or act upon any matter which relates
solely to such member as a Participant.

ARTICLE 4

PARTICIPATION

4.1 Participation. As soon as practical following adoption of the
Plan, the Board shall designate those Employees who shall be Participants in
the initial Plan Year. Then, any Eligible Employee will automatically be a
Participant in the Plan beginning with the Plan Year following the
Participant's designation as an Eligible Employee. Each Participant shall
complete an enrollment agreement which shall be in a form prescribed by the
Committee.

7
<PAGE> 8
4.2 Deferral Account. The Committee shall establish and maintain a
separate Deferral Account for each Participant. An amount equal to the Actual
Contribution shall be credited by the Employer to the Participant's Deferral
Account no later than the last day of each calendar quarter following a
Participant's enrollment in the Plan and such Deferral Account shall be debited
by the amount of any payments made by the Employer to the Participant or the
Participant's beneficiary pursuant to this Plan.

4.3 Pre-Retirement Interest. The Deferral Account of a Participant
shall be deemed to bear interest from the date such Deferral Account was
established through the date his employment with the Company terminates, at a
rate equal to the Declared Rate as in effect from time-to-time. Such interest
shall be credited each month at one-twelfth (1/12) of the Declared Rate on the
balance in the Participant's Deferral Account as of the beginning of the Plan
Year plus the Employer Contributions made to the Participant's Deferral Account
during such Plan Year, and prior to the beginning of the month. Interest will
be compounded annually.

4.4 Valuation of Accounts. The value of a Deferral Account as of any
date shall equal the amounts theretofore credited and debited to such account
plus the interest deemed to be earned

8
<PAGE> 9
on such account in accordance with Section 4.3 through the day preceding such
date.

4.5 Statement of Accounts. The Committee shall submit to each
Participant, within a reasonable period of time after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in his Deferral Account.

ARTICLE 5

BENEFITS

5.1 Retirement Benefit. Upon Retirement, the Employer shall pay a
Participant's benefits in a lump sum amount, or in equal installments, the
amount, timing and duration of which will be determined based upon the
retirement option selected by such Participant pursuant to Section 5.2.

5.2 Retirement Option. If no other valid election is made, then
following Retirement a Participant shall receive equal monthly payments for 180
months, the present value of which, discounted using the Retirement Rate equals
the value of the Participant's Deferral Account upon Retirement. The
Participant may elect with respect to the manner of payment of his benefits at
Retirement one of the following options, such

9
<PAGE> 10
election to be made no later than the first day of the Plan Year preceding the
Plan Year in which Retirement occurs:

(a) To receive equal monthly payments for a fixed period
of not less than one (1) year nor more than twenty (20) years, the
present value of which, discounted using the Retirement Rate, equals
the value of the Participant's Deferral Account upon Retirement.

(b) To receive payment in a lump sum equal to the value
of the Participant's Deferral Account upon Retirement.

(c) To receive payment in any other manner that is the
actuarial equivalent of the value of the Participant's Deferral
Account upon Retirement and that is approved by the Committee.

5.3 Termination Benefit. In the event of any termination of a
Participant's employment prior to eligibility for Retirement other than by
reason of death or disability, the Employer shall maintain a Deferral Account
for such terminated Participant in an amount equal to the value of his Deferral
Account as of the date of termination multiplied by the Vested Percentage based
on the Participant's completed months of Plan Participation, until such
Participant would have been eligible to receive a Retirement benefit. During
this period, interest will be credited at the rate of sixty percent (60%) of
the Declared Rate for each Plan Year following termination until Retirement
eligibility is attained. At that time, the Employer

10
<PAGE> 11
will pay to the Participant a Retirement benefit as described in Article 5.1.
Following termination of employment a Participant shall not be eligible for any
other benefits.

5.4 Survivor Benefits.
(a) If at the time of his enrollment, a Participant is
found to be insurable at rates acceptable to the Company, then:

If the Participant dies prior to commencement of payment of
any Retirement Benefit under the Plan, the Employer will pay to the
Participant's beneficiary, beginning on the first day of the month
following the month of death (i) a monthly benefit equal to one
hundred percent (100%) of the Participant's monthly Average
Compensation at the time of death, payable for twelve (12) months,
followed by (ii) a monthly benefit equal to fifty percent (50%) of the
Participant's Average Compensation at the time of death, payable for
one hundred sixty-eight (168) months.

If the present value of the payments determined in this
Section 5.4(a), discounted using the Retirement Rate, is less than the
Participant's Deferral Account as of the date of the Participant's
death, then the amount of such payments shall be increased by the
amount necessary to cause the present value of the increased payments,
discounted using the Retirement Rate, to equal the value of the
Participant's Deferral Account as of the date of the Participant's
death.

11
<PAGE> 12
(b) If at the time of his enrollment, a Participant is
found not to be insurable at a rate acceptable to the Company, then:

If the Participant dies prior to commencement of payment of
any Retirement Benefit under the Plan, the Employer will pay to the
Participant's beneficiary a benefit as if the Participant had been
eligible for Retirement and retired on the date of his death. The
Participant shall be 100% vested at the time of his death. However,
the Board, in its sole discretion, may at any time after the
Participant's enrollment choose to extend the Survivor Benefit
described in Section 5.4(a) to the Participant.

(c) If a Participant dies after the commencement of the
payment of any Retirement Benefit under the Plan, the payments, if any
to be made to the Participant's beneficiary shall be a continuation of
the payments that otherwise would have been made to the Participant.

5.5 Disability. If a Participant is deemed to be disabled pursuant
to the Daniel Industries, Inc. Long Term Disability Plan, he will be deemed to
have incurred a disability for purposes of this Plan. During any period that a
Participant is considered to be disabled, the Committee shall have the
discretion to distribute the Participant's vested account balance to the
Participant. If the vested account balance is not distrib-

12
<PAGE> 13
uted, the Employer shall maintain a Deferral Account for such disabled
Participant in an amount equal to the value of his Deferral Account as of the
date on which the disability commenced, and such Deferral Account shall
continue to be credited with interest in accordance with the provisions of
Section 4.3 of the Plan. However, except as herein specifically provided, no
Employer Contributions shall be made to a Participant's Deferral Account during
any period that such Participant is considered to be disabled.

A Participant will cease to be disabled under this Plan, upon the
happening of the earliest of the following:

(a) the Participant's recovery from disability as
determined under the Daniel Industries, Inc. Long Term Disability
Plan;

(b) the Participant's death;

If a Participant's disability terminates pursuant to (a) above, the
Participant shall be treated as terminating employment with the Employer on the
date of his recovery unless within sixty (60) days thereafter he returns to
status as an Employee. Upon return to status as an Employee, the Employer

13
<PAGE> 14
shall resume crediting to the Deferral Account the Employer's Contribution
pursuant to Section 4.2.

If a Participant's disability terminates by reason of his death, the
rights of his beneficiary shall be determined pursuant to Section 5.4.

If the Participant's disability terminates by reason of (c) above, the
Participant shall be treated as having retired with respect to the Plan on the
date of termination of disability and shall be entitled to a Retirement Benefit
determined pursuant to Section 5.1.

5.6 Withholding; Unemployment Taxes. To the extent required by the
law in effect at the time payments are made, the Employer shall withhold from
payments made hereunder the taxes required to be withheld by the federal or any
state or local government.

5.7 Non-vested Benefits. Notwithstanding anything in Article 5 to
the contrary, any amount credited to the Participant's Deferral Account which
is not vested pursuant to the provisions of the Plan at the date a
Participant's employment is terminated, for a reason other than Retirement,
death or disability, shall be forfeited.

14
<PAGE> 15
ARTICLE 6

BENEFICIARY DESIGNATION

Each Participant shall have the right, at any time, to designate any
person or persons as his beneficiary or beneficiaries to whom payment under
this Plan shall be paid in the event of his death prior to complete
distribution to the Participant of the benefits due him under the Plan. Each
beneficiary designation shall become effective only when filed in writing with
the Committee during the Participant's lifetime on a form prescribed by the
Committee.

The filing of a new beneficiary designation form will cancel all
beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a beneficiary designation form shall revoke such designation. The
spouse of a married Participant domiciled in community property jurisdiction
shall join in any designation of beneficiary or beneficiaries other than the
spouse.

If a Participant fails to designate a beneficiary as provided above,
or if his beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated beneficiaries
predecease the Participant, then in the event of the Participant's death prior

15
<PAGE> 16
to the complete distribution of the benefits due him under the Plan, the
Committee shall direct the distribution of such benefits to the Participant's
spouse, if living, or if not, the executor, administrator or other personal
representative of the Participant's estate.

If any beneficiary who is receiving benefits under the terms of the
Plan dies prior to receiving all of the benefits due him, then any remaining
benefits due him shall be paid to his estate.

Notwithstanding any provision of this Plan to the contrary, any
beneficiary designation may be changed by a Participant by the written filing
of such change on a form prescribed by the Committee.

ARTICLE 7

AMENDMENT AND TERMINATION OF PLAN

7.1 Amendment. The Board, in its discretion, may at any time amend
the Plan in whole or in part, provided, however, that no amendment shall be
effective to decrease the benefits then in pay status under the Plan as of the
date of such amendment or if not in pay status, to less than the Termination
Benefit, pursuant to Section 5.3, as of such date. Written

16
<PAGE> 17
notice of any amendment shall be given each Employee then participating in the
Plan.

7.2 Termination.

(a) Employer's Right to Terminate. The Board may, in its
discretion, at any time terminate the Plan.

(b) Payments Upon Termination. Upon any termination of
the Plan under this Section 7.2, the Participants who are not
receiving benefit payments under the Plan will be deemed to have
terminated employment for purposes of the Plan as of the date of such
termination. The Employer will pay to each such Participant in one
lump sum the Participant's Vested Percentage of the value of the
Participant's Deferral Ac count, determined as if such Participant
had terminated employment on the date of termination of the Plan
(except that the Vested Percentage of a Participant who is eligible
for Retirement or who is disabled shall be 100%). In the case,
however, of Participants or their beneficiaries who are receiving
benefit payments under the Plan on the date of any termination of the
Plan, the Committee, in its sole discretion, shall have the option of
either (1) continuing the unpaid installments to the Participants or
their beneficiaries as though the Plan had not been terminated or (2)
making a lump sum payment to each Participant or his beneficiary that
is the actuarial equivalent of the unpaid installments due such
Participant or beneficiary.

17
<PAGE> 18
ARTICLE 8

MISCELLANEOUS

8.1 Unsecured General Creditor. Participants and their
beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, interest, or claims in any property or assets of the Employer, and
shall be unsecured general creditors of the Employer with respect to amounts
claimed under the Plan. Any and all of the Employer's assets shall be, and
remain, the general unpledged, unrestricted assets of the Employer. The
Employer's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Employer to pay money in the future.

8.2 Obligations to Employer. If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an amount
owing to the Employer, then the Employer may offset such amount owing it
against the amount of benefits otherwise distributable. Such determination
shall be made by the Committee.

8.3 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer,

18
<PAGE> 19
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to which are,
expressly declared to be unassignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.

8.4 Employment Not Guaranteed. Nothing contained in this Plan nor
any action taken hereunder shall be construed as a contract of employment or as
giving any Employee any right to be retained in the employ of the Employer.

8.5 Protective Provisions. A Participant will cooperate with the
Employer by furnishing any and all information requested by the Employer, in
order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Employer may deem necessary and taking such other relevant
action as may be requested by the Employer. If a Participant refuses to so
cooperate, the Committee shall have no further obligation to the Participant
under the Plan. If a Participant commits suicide during the two (2) year
period beginning on the later of (a) the effective date of this Plan or (b) the
first day of the first Plan Year of such Participant's participation

19
<PAGE> 20
in the Plan, or if the Participant makes any material misstatement of
information or nondisclosure of medical history, then no benefits will be
payable hereunder to such Participant or his beneficiary. However, in the
Committee's sole discretion, benefits may be payable in reduced amount.

8.6 Gender, Singular and Plural. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular.

8.7 Captions. The captions of the articles, sections, and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.

8.8 Validity. In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.

8.9 Notice. Any notice or filing required or permitted to be given
to the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Employer,

20
<PAGE> 21
directed to the attention of the President of the Employer. Such notice shall
be deemed given as of the date of delivery or, if delivery is made by mail, as
of the date shown on the postmark or receipt for registration or certification.

8.10 Arbitration. Any controversy or claim arising out of or
relating to the Plan, or the breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association, and judgment
on the award rendered may be entered in any court having jurisdiction thereof.

8.11 Applicable Law. This Plan shall be governed and construed in
accordance with the laws of the State of Texas.

8.12 Claims Procedure. If a Participant believes that he has not
received all benefits to which he is entitled under the Plan, he may make a
claim for such benefits by filing a written claim with the Committee. The
Committee will respond to the claim within a reasonable period of time, but not
later than ninety days after the claim is filed (or one hundred eighty days if
special circumstances cause a delay). If the claim is denied or reduced for
any reason, the Committee will notify the claimant in writing, setting forth
the specific reasons for denial or reduction of the claim, and any additional
information which is necessary to perfect the claim. The notification

21
<PAGE> 22
will also inform the claimant as to the steps necessary to submit the claim for
further review. Any claim for review must be submitted within sixty days after
receipt of the written notification. A claimant must be given the opportunity
for a full hearing and review. The Committee must render a decision in writing
within sixty days (or one hundred twenty days if special circumstances cause a
delay) after the hearing or request for a review.

Executed this _____ day of ___________________, 1995.

Daniel Industries, Inc.

by:
-----------------------------------

22
<PAGE> 23
Schedule A

<TABLE>
<CAPTION>
Age at Enrollment Target Percentage
<S> <C>
35 9.04%
36 9.53%
37 10.06%
38 10.64%
39 11.26%
40 11.93%
41 12.66%
42 13.46%
43 14.34%
44 15.30%
45 16.36%
46 17.54%
47 18.86%
48 20.34%
49 20.98%
50 23.80%
51 26.63%
52 29.45%
53 32.28%
54 35.10%
55 and older 37.93%
</TABLE>

<PAGE> 1
EXHIBIT 10.7

WRITTEN DESCRIPTION OF CONSULTING AGREEMENT
BETWEEN THE COMPANY AND R. H. CLEMONS, JR.

Effective July 1, 1994, R. H. Clemons, Jr. entered into a two-year Consulting
Agreement with the Company under which he provides services primarily in the
area of product development and marketing. Under the Consulting Agreement, the
Company pays Mr. Clemons, Jr. a fee of $85,000 per year and reimburses him for
certain expenses.

<PAGE> 1
EXHIBIT 10.8

WRITTEN DESCRIPTION OF CONSULTING AGREEMENT
BETWEEN THE COMPANY AND W. A. GRIFFIN

Effective February 3, 1995, W. A. Griffin entered into a two-year Consulting
Agreement with the Company under which he provides services and advice on
business matters as requested by the Chief Executive Officer. Under the
Consulting Agreement the Company pays a fee of $135,000 per year and
reimburses him for certain expenses.

<PAGE> 1
EXHIBIT 10.9

DANIEL INDUSTRIES, INC.
KEY EMPLOYEES' INCENTIVE COMPENSATION PLAN

Incentive compensation in the form of cash bonuses and stock options is
generally linked to the achievement of key financial and operational objectives
by the Company, but amounts awarded for any fiscal year are not based on the
application of any formula. The Board of Directors recently approved the Stock
Award Plan pursuant to which awards of Company Common Stock, with limitations
on vesting and transferability, may be awarded in lieu of a portion of the
cash bonus.

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF THE COMPANY
---------------------------

Jurisdiction of
Name of Subsidiary Incorporation
------------------ ---------------

Daniel Bolt and Gasket, Ltd. Canada

Daniel de Mexico, S.A. Mexico

Daniel En-Fab Systems, Inc. Delaware

Daniel Flow Products, Inc. Delaware

Daniel Flow Products, Ltd. Canada

Daniel Industrial, Inc. Delaware

Daniel Industries Foreign Sales Corporation U.S. Virgin Islands

Daniel Industries Limited United Kingdom

Daniel Messtechnik GmbH Babelsberg Germany

Daniel Valve Company Delaware

Danmasa, S.A. de C.V. Mexico

<PAGE> 1

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in (i) the Registration
Statement on Form S-8 (SEC File No. 2- 65288), (ii) the Registration Statement
on Form S-8 (SEC File No. 2-79399), (iii) the Registration Statement on Form
S-8 (SEC File No. 2-79660), (iv) the Registration Statement on Form S-8 (SEC
File No. 33-000162) and (v) the Registration Statement on Form S-8 (SEC File
No. 33-63063), including all Post-Effective Amendments thereto filed prior to
the date of this consent, of Daniel Industries, Inc. of our report dated
November 21, 1995, appearing on page 18 of this Annual Report on Form 10-K.

PRICE WATERHOUSE LLP

Houston, Texas
December 14, 1995

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

EXHIBIT 27

<ARTICLE> 5
<CIK> 000026821
<NAME> DANIEL INDUSTRIES
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 3,895
<SECURITIES> 0
<RECEIVABLES> 34,905
<ALLOWANCES> 98
<INVENTORY> 35,889
<CURRENT-ASSETS> 108,779
<PP&E> 52,677
<DEPRECIATION> 0
<TOTAL-ASSETS> 164,468
<CURRENT-LIABILITIES> 43,393
<BONDS> 0
<COMMON> 15,104
0
0
<OTHER-SE> 94,216
<TOTAL-LIABILITY-AND-EQUITY> 164,468
<SALES> 168,560
<TOTAL-REVENUES> 168,560
<CGS> 105,524
<TOTAL-COSTS> 105,524
<OTHER-EXPENSES> 79,525<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,028
<INCOME-PRETAX> (18,515)
<INCOME-TAX> (5,723)
<INCOME-CONTINUING> (12,792)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,792)
<EPS-PRIMARY> (1.06)
<EPS-DILUTED> (1.06)
<FN>
<F1>Amount is comprised of restructuring and other charges, losses on divestitures of
non-core assets, depreciation and amortization, and research and development
expenses.
</FN>

</TABLE>