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<SEC-DOCUMENT>0000950123-01-500254.txt : 20010320
<SEC-HEADER>0000950123-01-500254.hdr.sgml : 20010320
ACCESSION NUMBER:		0000950123-01-500254
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010319

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HARSCO CORP
		CENTRAL INDEX KEY:			0000045876
		STANDARD INDUSTRIAL CLASSIFICATION:	FABRICATED STRUCTURAL METAL PRODUCTS [3440]
		IRS NUMBER:				231483991
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-03970
		FILM NUMBER:		1570867

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 8888
		CITY:			CAMP HILL
		STATE:			PA
		ZIP:			17001-8888
		BUSINESS PHONE:		7177637064

	MAIL ADDRESS:	
		STREET 1:		PO BOX 8888
		CITY:			CAMP HILL
		STATE:			PA
		ZIP:			17001-8888
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>y46501me10-k405.txt
<DESCRIPTION>HARSCO CORPORATION
<TEXT>

<PAGE>   1
                                    FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended December 31, 2000     Commission file number    1-3970

                               HARSCO CORPORATION
             (Exact name of registrant as specified in its charter)

           Delaware                                    23-1483991
(State or other jurisdiction of          (I.R.S. employer identification number)
 incorporation or organization)

        Camp Hill, Pennsylvania                        17001-8888
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code         717-763-7064

Securities registered pursuant to Section 12(b) of the Act:

                                                    Name of each exchange
         Title of each class                         on which registered
Common stock, par value $1.25 per share            New York Stock Exchange
                                                    Pacific Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                                      NONE
                                (Title of class)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section229.405 of this chapter) 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. [x]

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 [ ]

The aggregate market value of the Company's voting stock held by non-affiliates
of the Company as of February 28, 2001 was $1,098,753,571.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

           Classes                            Outstanding at February 28, 2001
Common stock, par value $1.25 per share                 39,809,912
Preferred stock purchase rights                         39,809,912


                       Documents Incorporated by Reference

Selected portions of the Notice of 2001 Meeting and Proxy Statement are
Incorporated by Reference in Part III of this Report.

The Exhibit index (Item No. 14) is located on pages 84 to 91.
<PAGE>   2
                   HARSCO CORPORATION AND SUBSIDIARY COMPANIES

                         INFORMATION REQUIRED IN REPORT

                                     PART I

Item 1.       Business:

(a)    Description of Business:

Harsco Corporation ("the Company") is a diversified, multinational provider of
industrial services and engineered products. The principal lines of business
are: scaffolding, forming and shoring and other access services to the worldwide
industrial maintenance and non-residential construction markets; outsourced,
on-site mill services that are provided to steel and non-ferrous metal producers
in over 30 countries; railway track maintenance services and equipment that are
provided to railroad customers worldwide, gas control and containment products
for customers worldwide; and several other lines of business including, but not
limited to, industrial grating and bridge decking, industrial pipe fittings,
slag abrasives and roofing granules. The Company's operations fall into three
operating segments: Infrastructure, Mill Services and Gas and Fluid Control. The
Company has over 400 locations in 38 countries, including the United States.

In 2000, the Company acquired or divested the following businesses:

On June 16, 2000 the Company received all required regulatory approvals and
declared its offer to acquire SGB Group Plc (SGB) wholly unconditional. Harsco
took majority ownership in SGB and subsequently acquired 100% of the shares.
SGB, based in the United Kingdom (UK), is one of Europe's largest suppliers of
scaffolding, forming and related access products and services. SGB also has
operations in North America, the Middle East and the Asia Pacific region. SGB
had 1999 sales of 283 million British pounds sterling (approximately $423
million using a December 31, 2000 exchange rate).

In May 2000, the Company completed the acquisitions of Bergslagens Stalservice
AB and Bergslagens Suomi Oy (collectively Bergslagens). The two companies
provide specialized slag processing and metal recovery services to steel mills
in Sweden and Finland, respectively. The two organizations together recorded
1999 sales of nearly $10 million.

In June 2000, the Company completed the sales of Gunness Wharf Limited and
Flixborough Wharf Limited, and in March 2000 completed the sale of its natural
gas vehicle automotive valve product line.

On April 6, 2000, the Company agreed to invest $20 million for a 49% interest in
S3Networks, LLC, a start-up company providing internet and e-business
infrastructure consulting services primarily to Fortune 1000 companies. Since
the Company is principal provider of initial capital for S3 Network, LLC, the
Company records 100% of the net losses to the extent of its initial $20 million
investment. As of December 31, 2000 the Company has invested $10 million in
S3Networks. There is no obligation for the Company to fund the venture beyond
its $20 million investment.

The Company reports information about its operating segments using the
"management approach". The management approach is based on the way management
organizes the segments within the enterprise for making operating decisions and
assessing performance. The Company's reportable segments are identified based
upon differences in products, services, and markets served.

                                     - 2 -
<PAGE>   3
The operations of the Company in any one country, except the United States, did
not account for more than 10% of sales in 1999 and 1998. In 2000, with the
acquisition of SGB, the UK contributed sales of $286.5 million equal to 14% of
total sales. No single customer represented 10% or more of the Company's sales
during 2000, 1999, and 1998. There are no significant intersegment sales.

(b)    Financial Information about Industry Segments:

Financial information concerning Industry Segments is included in Note 14 to the
Consolidated Financial Statements under Item 8, "Financial Statements and
Supplementary Data".

(c)    Narrative Description of Business:

         (1)      A narrative description of the businesses by operating segment
                  is as follows:

Infrastructure

Major product classes in this segment are access services and equipment, railway
track maintenance services and equipment, and industrial grating and bridge
decking products.

The June 2000 acquisition of SGB expands the Company's access services and
equipment business to a worldwide level. SGB pioneered the introduction of
traditional scaffolding in the UK and is the UK's largest supplier. The Company
serves the non-residential construction, infrastructure, and industrial
maintenance markets throughout Europe, the Middle East, and Asia with a full
range of scaffolding, concrete formwork, shoring, and other construction-related
services and products. SGB complements our Patent Construction Systems
division's market leadership in North America to deliver total access solutions
to customers on a worldwide basis, with increased geographic coverage and one of
the broadest portfolios of services and equipment in the industry. Along with
steel and aluminum support systems, the Company also provides design engineering
services, on-site installation, and equipment management services.

The Company's railway track maintenance services provide high technology
comprehensive track maintenance and new track construction support to railroad
customers worldwide. The railway track maintenance equipment product class
includes specialized track maintenance equipment used by private and
government-owned railroads and urban transit systems worldwide. The equipment
manufactured by the Company includes a comprehensive range of specially-designed
systems used in the construction and maintenance of track and railbeds.

Included within this segment is the manufacture of a varied line of industrial
grating products at several plants in North America. The Company produces a full
range of riveted, pressure-locked and welded grating in steel, aluminum and
fiberglass, used mainly in industrial flooring, safety, and security
applications for power, paper, chemical, refining and processing applications.
The Company also produces bridge decking and related products for bridge
surfaces. The precast and prefabricated panels can arrive at the bridge site
ready to be installed, minimizing traffic disruption.

This segment also produces commercial and industrial boilers and hot water
heaters, and blenders, dryers and mixers for the chemical and food processing
industries.

For 2000, the Infrastructure Segment's percentage of consolidated net sales was
35%.
                                     - 3 -
<PAGE>   4
Mill Services

This segment includes Heckett MultiServ the world's largest provider of
outsourced, on-site mill services to the international steel and metals
industry. Heckett MultiServ's experience, financial resources, and broad
geographic coverage are important qualities to leading metals producers, who
increasingly look to Heckett MultiServ's specialized services and technologies
to enhance their productivity, product quality, environmental compliance and
commercial competitiveness. Heckett MultiServ provides its services on a
long-term contract basis, supporting each stage of the metal-making process from
initial raw material handling to post-production by-product processing and
recycling. Working exclusively as a specialized, high-value services provider,
Heckett MultiServ does not trade steel or scrap, or take ownership of its
customers' raw materials or finished products. The company's multi-year
contracts, with estimated future revenues of $3.5 billion at December 31, 2000,
provide Harsco with a substantial financial base of long-term revenues. Heckett
MultiServ's geographic reach, more than 160 mills in over 30 countries, and its
increasing range of services, provide financial and operating balance.

The Company's flame and on-site recycling technologies along with computerized
scrap handling are several examples of the specialized services the Company
provides. These highly specialized services and technologies include: scarfing,
ferrocut, carbofer, briquetting and scrap management. The Company provides
in-plant transportation and other specialized services, including slab
management systems, general plant services, and other recycling technology.
Other services provided include metal reclamation; slag processing, marketing
and utilization; raw material management and handling; by-product recovery and
recycling; and finished product handling and transport. Highly specialized
recovery and cleaning equipment, installed and operated on the property of steel
producers, together with standard material handling equipment are employed to
reclaim metal and handle material. The customer uses this reclaimed metal in its
steel production process. The nonmetallic residual slag is graded into various
sizes at on-site Company-owned processing facilities and then sold commercially.
It is used as an aggregate material in asphalt paving applications, railroad
ballast and building blocks. Similar services are also provided to non-ferrous
metal industries, such as aluminum, copper, and nickel.

This segment also provides roofing granules and slag abrasives. The Company's
slag abrasives and roofing granules are produced from utility coal slag and
natural rock materials at a number of locations throughout the United States.
The Company's Black Beauty(TM) abrasives are used for industrial surface
preparation, such as rust removal and cleaning of bridges, ship hulls, and
various structures. Roofing granules are sold to residential roofing shingle
manufacturers.

For 2000, the Mill Services Segment's percentage of consolidated net sales was
38%.

Gas and Fluid Control

The segment's manufacturing and service facilities in the United States, Europe,
Australia, Malaysia, and China comprise an integrated manufacturing network for
gas containment and control products. This global operating presence and product
breadth provide economies of scale and multiple code production capability,
enabling the operating group to serve as a single source to the world's leading
industrial gas producers and distributors, as well as regional and local
customers on a worldwide basis.

                                     - 4 -
<PAGE>   5
Gas containment products include cryogenic gas storage tanks, high pressure and
acetylene cylinders, propane tanks and composite vessels for industrial and
commercial gases and other products. Gas control products include valves and
regulators serving a variety of markets, including the industrial gas,
commercial refrigeration, life support, and outdoor recreation industries.
Products are used in applications such as scuba diving equipment and outdoor
barbecue grills.

The segment also provides custom-designed and manufactured air-cooled heat
exchangers, for the oil and gas industry, focusing on natural gas compressor,
engine, and turbine applications for both domestic and international locations.

This segment is also a major supplier of industrial pipe fittings and related
products for the plumbing, hardware and energy industries.

For 2000, the Gas and Fluid Control Segment's percentage of consolidated net
sales was 27%.

   (1) (i) The products and services of Harsco include a number of classes. The
product classes that contributed 10% or more as a percentage of consolidated net
sales in any of the last three fiscal years are set forth in the following
table:

                                                    2000      1999       1998
                                                    ----      ----       ----
         Mill Services                               35%       39%        40%
         Gas Control and Containment Equipment       27%       24%        21%
         Access Services and Equipment               21%       10%         9%

   (1) (ii) New products and services are added from time to time; however, in
2000 none required the investment of a material amount of the Company's assets.

   (1) (iii) The manufacturing requirements of the Company's operations are such
that no unusual sources of supply for raw materials are required. The raw
materials used by the Company include principally steel and to a lesser extent
aluminum which usually are readily available.

   (1) (iv) While Harsco has a number of trademarks, patents and patent
applications, it does not consider that any material part of its business is
dependent upon them.

   (1) (v) Harsco furnishes building products and materials and certain
industrial services that are seasonal in nature. In 2000, such operations
accounted for 6% of total sales.

   (1) (vi) The practices of the Company relating to working capital items are
similar to those practices of other service providers or manufacturers servicing
mainly industrial and commercial markets.

   (1) (vii) No material part of the business of the Company is dependent upon a
single customer or a few customers, the loss of any one of which would have a
material adverse effect upon the Company.


                                     - 5 -
<PAGE>   6
   (1) (viii) Backlog of orders was $258.9 million and $231.6 million as of
December 31, 2000 and 1999, respectively. It is expected that approximately 26%
of the total backlog at December 31, 2000, will not be filled during 2001. There
is no significant seasonal aspect to the Company's backlog. Backlog for
scaffolding, shoring and forming services, and for roofing granules and slag
abrasives is not included in the total backlog, because it is generally not
quantifiable due to the nature of the products and services provided. Contracts
for the Mill Services Segment are also excluded from the total backlog. These
contracts have estimated future revenues of $3.5 billion at December 31, 2000.

   (1)(ix) At December 31, 2000, the Company had no material contracts that were
subject to renegotiation of profits or termination at the election of the U.S.
Government.

   (1) (x) The various businesses in which the Company operates are highly
competitive and the Company encounters active competition in all of its
activities from both larger and smaller companies who produce the same or
similar products or services or who produce different products appropriate for
the same uses.

   (1) (xi) The expense for product development activities was $5,714,000,
$7,759,000 and $6,977,000 in 2000, 1999, and 1998, respectively.

   (1) (xii) The Company has become subject, as have others, to increasingly
stringent air and water quality control legislation. In general, the Company has
not experienced substantial difficulty in complying with these environmental
regulations in the past and does not anticipate making any major capital
expenditures for environmental control facilities. While the Company expects
that environmental regulations may expand, and its expenditures for air and
water quality control will continue, it cannot predict the effect on its
business of such expanded regulations. For additional information regarding
environmental matters see Note 10 to the Consolidated Financial Statements
included in Item 8, "Financial Statements and Supplementary Data".

   (1)   (xiii)   As of December 31, 2000, the Company had approximately 19,700
employees.


(d)    Financial Information about Foreign and
       Domestic Operations and Export Sales:

Financial information concerning foreign and domestic operations is included in
Note 14 to the Consolidated Financial Statements under Item 8, "Financial
Statements and Supplementary Data". Export sales totaled $104.6 million and
$110.0 million in 2000 and 1999, respectively.

                                     - 6 -
<PAGE>   7
Item 2.       Properties:

Information as to the principal plants owned and operated by the Company is
summarized in the following table:
<TABLE>
<CAPTION>

                                                       Floor Space
Location                                               (Sq. Ft.)                Principal Products
- --------                                               ---------                ------------------
<S>                                                      <C>                    <C>

Infrastructure:

   E. Syracuse, New York                                  48,000                Railroad Equipment
   Ludington, Michigan                                   159,000                Railroad Equipment
   Fairmont, Minnesota                                   312,000                Railroad Equipment
   West Columbia, South Carolina                         224,000                Railroad Equipment
   Brendale, Australia                                    20,000                Railroad Equipment

   Nashville, Tennessee                                  246,000                Grating
   Charlotte, North Carolina                              23,000                Grating
   Madera, California                                     48,000                Grating
   Leeds, Alabama                                         51,000                Grating
   Cheswick, Pennsylvania                                 56,000                Grating
   Channelview, Texas                                     86,000                Grating
   Marlboro, New Jersey                                   30,000                Grating
   Queretaro, Mexico                                      63,000                Grating

   Marion, Ohio                                          135,000                Construction Equipment

   Dosthill, England                                     468,000                Forms
   Thame, England                                        340,000                Cabins and Temporary Buildings

   East Stroudsburg, Pennsylvania                        161,000                Process Equipment

Mill Services:

   Moundsville, West Virginia                             12,000                Roofing Granules/Abrasives
   Drakesboro, Kentucky                                   41,000                Roofing Granules
   Gary, Indiana                                          19,000                Roofing Granules/Abrasives
   Ione, California                                       33,000                Roofing Granules
</TABLE>


                                     - 7 -
<PAGE>   8
Item 2.       Properties (continued):
<TABLE>
<CAPTION>

                                                       Floor Space
Location                                               (Sq. Ft.)                Principal Products
- --------                                               ---------                ------------------
<S>                                                      <C>                    <C>

Gas and Fluid Control:

   West Jefferson, Ohio                                  148,000                Pipe Fittings
   Crowley, Louisiana                                    172,000                Pipe Fittings
   Houston, Texas                                         26,000                Pipe Fittings
   Chicago, Illinois                                      35,000                Pipe Fittings
   Hamden, Connecticut                                    47,000                Pipe Fittings
   Vanastra, Ontario, Canada                              55,000                Pipe Fittings

   Port of Catoosa, Oklahoma                             131,000                Heat Exchangers
   Sapulpa, Oklahoma                                      83,000                Heat Exchangers

   Lockport, New York                                    104,000                Valve Manufacturing
   Niagara Falls, New York                                66,000                Valve Manufacturing
   Washington, Pennsylvania                              112,000                Valve Manufacturing

   Jesup, Georgia                                         87,000                Propane Tanks
   Jesup, Georgia                                         65,000                Propane Tanks
   Jesup, Georgia                                         63,000                Cryogenic Storage Vessels
   Bloomfield, Iowa                                       48,000                Propane Tanks
   West Jordan, Utah                                      36,000                Propane Tanks
   Fremont, Ohio                                          69,000                Propane Tanks
   Pomona, California                                     56,000                Composite Pressure Vessels
   Gardena, California                                    26,000                Composite Pressure Vessels
   Long Beach, California                                 31,000                Natural Gas Vehicle Systems
   Harrisburg, Pennsylvania                              245,000                Cylinders
   Huntsville, Alabama                                   220,000                Acetylene Tanks
   Theodore, Alabama                                     305,000                Cryogenic Storage Vessels
   Husum, Germany                                         61,000                Cryogenic Storage Vessels
   Shah Alam, Malaysia                                    34,000                Cryogenic Storage Vessels
   Shah Alam, Malaysia                                    29,000                Cylinders
   Beijing, China                                        134,000                Cryogenic Storage Vessels

</TABLE>


                                     - 8 -
<PAGE>   9
The Company also operates the following plants which are leased:
<TABLE>
<CAPTION>

                                                                                                           Expiration
                                          Floor Space             Principal                                  Date of
Location                                     (Sq. Ft.)            Products                                    Lease
- --------                                  ------------            --------                                 ----------
<S>                                       <C>                    <C>                                       <C>

Infrastructure:

   Nottingham, England                           30,000           Railroad Equipment                        10/23/01

   Danbury, Connecticut                          16,000           Railroad Equipment                        11/30/01

   Cosley, England                              145,000           Steel Access Products                     03/24/19

   Maldon, England                              348,000           Aluminum Access Products                  09/28/17

   DeLimiet, Netherlands                         42,000           Powered Access Equipment                  12/31/04

   Tulsa, Oklahoma                               10,000           Grating                                   04/28/01

Gas and Fluid Control:

   Lansing, Ohio                                 67,000           Pipe Fittings                             01/31/03

   Cleveland, Ohio                               50,000           Brass Castings                            09/30/05
</TABLE>


The Company operates from a number of other plants, branches, warehouses and
offices in addition to the above. The Company has over 160 locations related to
mill services in over thirty countries, however since these facilities are on
the property of the steel mill being serviced they are not listed. The Company
considers all of its properties, at which operations are currently performed, to
be in satisfactory condition.


Item 3.       Legal Proceedings:

Information regarding legal proceedings is included in Note 10 to the
Consolidated Financial Statements under Item 8, "Financial Statements and
Supplementary Data".


Item 4.       Submission of Matters to a
       Vote of Security Holders:

There were no matters that were submitted during the fourth quarter of the year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.


                                     - 9 -
<PAGE>   10
                                     PART II


Item 5.       Market for the Registrant's Common Stock
              and Related Stockholder Matters:

Harsco common stock is traded on the New York, Pacific, Boston, and Philadelphia
Stock Exchanges under the symbol HSC. At the end of 2000, there were 39,805,172
shares outstanding. In 2000, the stock traded in a range of $31 5/8 - $17 11/16
and closed at $24 11/16 at year-end. At December 31, 2000 there were
approximately 18,000 shareholders. For additional information regarding Harsco
common stock market price and dividends declared, see the Common Stock Price and
Dividend Information under Part II, Item 8, "Financial Statements and
Supplementary Data".


                                     - 10 -
<PAGE>   11
Item 6.       Selected Financial Data

FIVE-YEAR STATISTICAL SUMMARY
(ALL DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>


                                                           2000 (a)      1999          1998         1997             1996
INCOME STATEMENT INFORMATION                               -------       ----          ----         ----             ----
<S>                                                   <C>            <C>           <C>          <C>              <C>
Net sales (b)                                         $  2,003,387   $ 1,749,888   $ 1,765,546  $ 1,659,729      $ 1,586,108


Income from continuing
   operations before interest,
   income taxes, and minority
   interest                                                192,708       169,736       191,901      179,888          166,057

Income from continuing
operations                                                  96,803        90,713       107,513      100,400           83,903

Income from discontinued defense
business                                                        --            --            --       28,424(c)        35,106

Gain on disposal of discontinued
defense business                                                --            --            --      150,008               --

Net income                                                  96,803        90,713       107,513      278,832          119,009

FINANCIAL POSITION AND CASH FLOW
    INFORMATION

Working capital                                       $    190,236   $   182,439   $   112,619  $   341,160      $   214,519


Total assets                                             2,180,948     1,659,823     1,623,581    1,477,188        1,324,419

Long-term debt                                             774,450       418,504       309,131      198,898          227,385

Total debt                                                 836,745       455,111       363,738      225,375          253,567

Depreciation and amortization                              159,099       135,853       131,381      116,539          109,399

Capital expenditures                                       180,048       175,248       159,816      143,444          150,294

Cash provided by operating activities                      259,448       213,953       189,260      148,541          217,202

Cash provided (used) by investing activities              (459,052)     (194,674)     (233,490)     196,545         (153,225)

Cash provided (used) by financing activities               210,746        (8,928)     (134,324)    (167,249)         (92,944)

RATIOS

Return on net sales (1)                                        4.8%          5.2%          6.1%         6.0%             5.3%

Return on average equity (2)                                  14.7%         13.9%         14.3%        15.1%            14.0%

Return on average assets (3)                                  10.0%         10.7%         12.9%        14.3%            13.7%

Current ratio                                                1.4:1         1.4:1         1.2:1        1.9:1            1.7:1

Total debt to total capital (4)                               55.4%         41.2%         34.7%        22.4%            27.1%

PER SHARE INFORMATION (d)

Diluted - Income from continuing operations           $       2.42   $      2.21   $      2.34  $      2.04      $      1.67


        - Income from discontinued defense business             --            --            --          .58(c)           .70

        - Gain on disposal of discontinued defense
           business                                             --            --            --         3.05               --

 .       - Net income                                          2.42          2.21          2.34         5.67             2.37

Book value                                                   16.94         16.22         16.22        16.64            13.73

Cash dividends declared                                        .945          .91           .885         .82              .77

OTHER INFORMATION

Basic average number of shares outstanding (d)          39,964,228    40,882,153    45,568,256   48,754,212       49,894,515

Diluted average number of shares outstanding (d)        40,021,803    41,017,067    45,910,531   49,191,872       50,317,664

Number of employees                                         19,700        15,700        15,300       14,600           14,200

Backlog (e)                                           $    258,858   $   231,557   $   188,594  $   225,575      $   211,734
</TABLE>


                                     - 11 -
<PAGE>   12
FIVE-YEAR STATISTICAL SUMMARY

(a)  Includes SGB Group Plc since date of acquisition.

(b)  In order to comply with EITF Issue No. 00-10, all shipping and handling
     costs have been classified as cost of services sold or as cost of products
     sold rather than as reductions of sales. Sales for the five years have been
     reclassified to reflect this change.

(c)  Includes income through August 1997 (the measurement date) from the
     discontinued defense business.

(d)  Reflects two-for-one stock split to shareholders of record January 15,
     1997.

(e)  Excludes the estimated amount of long-term mill service contracts, which
     had estimated future revenues of $3.5 billion at December 31, 2000.


 (1)  "Return on net sales" is calculated by dividing income from continuing
      operations by net sales.

 (2)  "Return on average equity" is calculated by dividing income from
      continuing operations by quarterly weighted average equity.

 (3)  "Return on average assets" is calculated by dividing income from
     continuing operations before interest expense, income taxes, and minority
     interest by quarterly weighted average assets.

 (4)  "Total debt to total capital" is calculated by dividing the sum of debt
     (short-term borrowings and long-term debt including current maturities) by
     the sum of equity and debt.

                                     - 12 -
<PAGE>   13
Item 7.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations:

LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>

                                           DECEMBER 31               DECEMBER 31
(DOLLARS ARE IN MILLIONS)                     2000                      1999                    INCREASE
________________________________________________________________________________________________________
<S>                                        <C>                       <C>                        <C>
Current Assets                             $     726.4               $     612.9                $  113.5
Current Liabilities                              536.2                     430.5                   105.7
________________________________________________________________________________________________________
Working Capital                            $     190.2               $     182.4                $    7.8

Current Ratio                                    1.4:1                     1.4:1

Notes Payable and
   Current Maturities                      $      62.3               $      36.6               $    25.7
Long-term Debt                                   774.4                     418.5                   355.9
________________________________________________________________________________________________________
Total Debt                                       836.7                     455.1                   381.6
Total Equity                                     674.2                     650.1                    24.1
________________________________________________________________________________________________________
Total Capital                              $   1,510.9               $   1,105.2                $  405.7
Total Debt to
   Total Capital                                  55.4%                     41.2%
________________________________________________________________________________________________________
</TABLE>

The change in the components of the Company's working capital during 2000 is due
principally to the strategic acquisition of SGB Group Plc (SGB) in June 2000.
Current assets and current liabilities at December 31, 2000 include SGB amounts
of $150.9 million and $110.6 million, respectively.

The Company is continuing its strategic focus on the reduction of capital
employed including inventory and receivable levels. As a result of this focus,
excluding acquisitions, in 2000 the Company reduced accounts receivable by $15.9
million and inventories by $9.4 million.

Long-term debt increased in 2000 principally as a result of financing the
acquisitions of SGB, Bergslagens Stalservice AB and Bergslagens Suomi Oy
(collectively Bergslagens), and to a lesser extent, capital investments. In
October 2000, the Company financed the SGB acquisition with 200 million of
British pound sterling 7.25% notes issued at 98.463% (approximately $294.1
million using the December 31, 2000 foreign exchange rate). The Bergslagens
acquisition was financed by a private placement bond issued in June 2000.

Capital investments in 2000 were a record $180.0 million. These investments were
made for new mill services contracts, for SGB access equipment, other business
growth initiatives and for productivity improvements.

The strategic acquisitions, capital investments and cash dividends, paid at the
same or increased rates for the 203rd consecutive quarter in February 2001,
demonstrate the Company's continued commitment to creating shareholder value.

                                     - 13 -
<PAGE>   14
<TABLE>
<CAPTION>

                                                          FOR THE YEAR ENDED DECEMBER 31
CASH UTILIZATION:                                         ------------------------------
(IN MILLIONS)                      2000           1999           1998           1997        1996
________________________________________________________________________________________________
<S>                               <C>           <C>             <C>          <C>         <C>
Strategic Acquisitions            $302.5        $  48.9         $158.3       $    8.5    $  21.1
Share Repurchases                    7.9           71.9          169.3          113.2       30.7
Cash Dividends                      37.6           37.0           40.3           39.1       37.9
Capital Investments                180.0          175.2          159.8          143.4      150.3
________________________________________________________________________________________________
Total                             $528.0         $333.0         $527.7         $304.2     $240.0
________________________________________________________________________________________________
</TABLE>

The Company's debt as a percent of total capital increased as a result of the
debt incurred to finance the strategic acquisitions. Also contributing to the
change is a $28.3 million decrease in equity from foreign currency translation
adjustments. These adjustments are principally due to a 6% decrease in the
translated value of the euro, an 8% decrease in the British pound sterling and a
19% decrease in the South African rand from December 31, 1999 to December 31,
2000. To improve the debt to capital ratio, the Company has initiated a debt
reduction program that is further described later in this section.

FINANCIAL STATISTICS FOR THE YEAR ENDED DECEMBER 31
<TABLE>
<CAPTION>

                                                                 2000                            1999
                                                                 ----                            ----
<S>                                                         <C>                             <C>
Harsco stock price high-low                                 $31.63 - $17.69                 $34.38 - $23.06

Return on average equity                                        14.7%                           13.9%
Return on average assets                                        10.0%                           10.7%
Return on average capital                                        9.6%                           10.0%
</TABLE>

Higher return on average equity is due to increased income in 2000 compared with
1999. Lower returns on average assets and average capital are due to the effect
of the recent SGB acquisition which increased total assets and capital. The
company's book value per share increased to $16.94 per share at December 31,
2000 from $16.22 at December 31, 1999 due principally to an increase in retained
earnings resulting from increased income that was partially offset by foreign
currency translation adjustments. These adjustments are recorded as part of
other comprehensive income (expense).

In the first quarter of 2001, the Company engaged Stern Stewart & Co. to assist
in the implementation of the Economic Value Added (EVA(R)) measurement and
management system. The EVA(R) program will result in a worldwide focus by
employees to add shareholder value by increasing the return on capital.

                                     - 14 -
<PAGE>   15
<TABLE>
<CAPTION>



(IN MILLIONS)                            2000          1999         1998
- ------------                             ----          ----         ----
<S>                                     <C>           <C>          <C>
NET CASH PROVIDED BY OPERATIONS:        $259.4        $214.0       $189.3
</TABLE>

Cash provided by operations in 2000 was a record $259.4 million, $45.4 million
greater than in 1999. The increase in cash is due principally to the timing of
receipts and payments for accounts receivable and accounts payable of $46.0
million and $11.4 million, respectively. Also affecting cash from operations was
an increase in income before depreciation and amortization of $29.3 million and
a $22.6 million increase in deferred income taxes. Partially offsetting these
favorable variances was a $46.2 million use of cash related to other assets and
liabilities and a $15.0 million variance related to the timing of payments for
inventories. The decrease in other assets and liabilities is principally due to
decreases in accrued taxes, payments related to facilities discontinuance and
reorganizations including acquisitions, reduction of advance payments on
contracts, and decreases in other current liabilities.

The Company has a U.S. commercial paper borrowing program under which it can
issue up to $350 million of short-term notes in the U.S. commercial paper
market. In addition, the Company has a three billion Belgian franc commercial
paper program, equivalent to approximately U.S. $70 million at December 31,
2000. The Belgian program provides the capacity for the Company to borrow euros
to fund its European operations more efficiently. The Company limits the
aggregate commercial paper and syndicated credit facility borrowings at any one
time to a maximum $350 million. At December 31, 2000, the Company had $216.8
million of U.S. commercial paper debt outstanding, and $52.0 million of
commercial paper debt outstanding under the Belgian program.

In September 2000, the Company renewed its revolving credit facility in the
amount of $350 million through a syndicate of 13 banks. This facility serves as
back-up to the Company's U.S. commercial paper program. The facility is in two
parts. One part amounts to $131,250,000 and is referred to as a 364-day credit
agreement that extends maturity of any borrowings for up to two years. The
second part is for $218,750,000 and is referred to as a 5-year credit agreement,
that extends the maturity date of the facility for up to five years. As of
December 31, 2000, there were no borrowings outstanding under this facility.

Subsequent to December 31, 2000, the Company executed two $50 million credit
facility agreements with European-based banks. Borrowings under these
facilities, which expire in December 2001 and January 2002, are available in
Eurocurrencies or U.S. dollars and will be primarily used to finance the
Company's European operations. Borrowings outstanding at expiration may be
repaid over the succeeding 4 years. Interest rates are based upon LIBOR plus a
margin.

A Form S-3 shelf registration is on file with the Securities and Exchange
Commission for the possible issuance of up to an additional $200 million of new
debt securities, preferred stock or common stock.


                                     - 15 -
<PAGE>   16
Due to the Company's increased debt level resulting from the SGB acquisition,
Standard & Poor's and Fitch lowered the Company's credit ratings slightly.
Moody's ratings were unchanged. The Company's outstanding long-term notes are
now rated A- by Standard & Poor's, A- by Fitch and A-3 by Moody's. The Company
has undertaken a debt reduction program that includes working capital reductions
through process improvements and the use of software tools, divestitures of
non-core businesses and non-performing assets, and a complete reevaluation of
the capital expenditure program. These actions are expected to enable the
company to reduce debt levels in 2001.

The Company's financial position and debt capacity should enable it to meet
current and future requirements. As additional resources are needed, the Company
should be able to obtain funds readily and at competitive costs. The Company is
positioned to continue to invest strategically in high-return projects and
acquisitions, and to pay cash dividends as a means to enhance shareholder value.
In the near-term, the Company intends to use future discretionary cash flow
principally for debt reduction.

RESULTS OF OPERATIONS
2000 COMPARED WITH 1999
<TABLE>
<CAPTION>
                                                                               AMOUNT           PERCENT
(DOLLARS ARE IN MILLIONS, EXCEPT PER SHARE)      2000             1999         INCREASE        INCREASE
- ------------------------------------------       ----             ----         --------         --------
<S>                                            <C>              <C>            <C>                <C>
Revenues                                       $2,004.7         $1,751.0        $253.7            14%
Operating income                                  194.7            166.7          28.0            17
Net income                                         96.8             90.7           6.1             7
Diluted earnings per common share                  2.42             2.21           .21            10
</TABLE>

SUMMARY ANALYSIS OF RESULTS

The Company's revenues, operating income, operating income margin, net income
and diluted earnings per share improved in 2000 compared with 1999. Results
improved despite the negative impact on sales and earnings of the foreign
currency translation effect of the strong U.S. dollar, the sale of six non-core
businesses in 1999 and 2000 and the unfavorable effect of higher energy costs.
On a comparative basis with 1999, the unfavorable effects of foreign currency
translation reduced the Company's 2000 revenues and net income by approximately
$45 million and $4.8 million, respectively. Net income in 2000 benefited from a
lower effective income tax rate, principally on international earnings.

Sales and operating income for 2000 benefited significantly from the results of
the SGB acquisition in the second quarter of 2000 and the Pandrol Jackson
acquisition in the fourth quarter of 1999. Increased sales and income were due
in part to increased demand for services from the Company's worldwide mill
services business, which generates approximately 75% of its revenues from
outside the United States. Improved performance from the non-U.S. mill services
operations allowed the Company to post increased results in 2000, despite a
second half slowdown in the domestic steel industry. Additionally, increased
demand for services and products in the domestic non-residential construction
market favorably affected sales and income.

Sales for most product lines in the Gas and Fluid Control Segment were below
1999 levels due to reduced demand and competitive pricing restraints due to a
significant slowdown in the

                                     - 16 -
<PAGE>   17
manufacturing sector in the fourth quarter of 2000. Additionally, the
disposition of three non-core businesses contributed to the decrease in sales.
The decrease in sales, as well as higher product cost of sales, resulted in
lower operating income for the Gas and Fluid Control Segment.

Interest expense in 2000 was significantly greater than in 1999, principally as
a result of increased debt used to finance the SGB and Pandrol Jackson
acquisitions. This increase offset a significant portion of the operating income
increase.

COMPARATIVE ANALYSIS OF CONSOLIDATED RESULTS

REVENUES

Revenues for 2000 were significantly above those recorded in 1999. Sales
increased principally due to the addition of acquired companies. The improvement
also resulted from increased demand in mill services and non-residential
construction markets in the United States. Sales decreased in the United States
for railway track maintenance contract services and equipment (excluding
acquisitions) as well as for products in the Gas and Fluid Control Segment.
These decreases principally resulted from softening demand due to high energy
costs and the unfavorable effects of a fourth quarter 2000 economic slowdown in
the United States manufacturing sector. Excluding the unfavorable foreign
currency translation effect of the strengthening U.S. dollar, particularly
relative to the euro, revenues increased by more than 17%.

COST OF SALES AND SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Cost of services and products sold increased, but at a lower rate than the
increase in revenues, despite a significant increase in energy costs. Selling,
general and administrative expenses increased due to the costs related to
acquired companies. The Company's continuing cost reduction, process improvement
and reorganization efforts slowed the growth rate of these costs. Excluding the
net effects of business acquisitions and dispositions, selling, general and
administrative expenses decreased approximately 3%.

On a comparative basis, 2000 was unfavorably affected by higher product costs of
$8 million due to LIFO inflation. This was offset by a one-time employee benefit
plan change that reduced pre-tax costs by approximately $5.3 million, and by
lower pension costs.

OTHER INCOME AND EXPENSES

In 2000, the Company incurred $1.3 million of net other expenses compared to $6
million in 1999. This income statement classification principally includes
impaired asset write-downs, employee termination benefit costs and costs to exit
activities, offset by net gains on the disposal of non-core assets. The
decreased net expenses for 2000 principally results from a $3.8 million increase
in net gains from asset disposals.

INTEREST EXPENSE

Interest expense in 2000 was higher than in 1999 due principally to additional
borrowings as a result of business acquisitions, principally SGB and Pandrol
Jackson. Higher interest rates also contributed to the increase.

PROVISION FOR INCOME TAXES

The effective income tax rate for 2000 was 31.5% versus 35% for 1999. The
reduction in the income tax rate is due principally to lower rates on
international earnings.


                                     - 17 -
<PAGE>   18
NET INCOME AND EARNINGS PER SHARE

Net income of $96.8 million and diluted earnings per share of $2.42 were above
1999 due to the factors previously disclosed.

SEGMENT ANALYSIS

INFRASTRUCTURE SEGMENT
<TABLE>
<CAPTION>
                                                                                  AMOUNT       PERCENT
(DOLLARS ARE IN MILLIONS)                     2000                1999           INCREASE     INCREASE
 -----------------------                      ----                ----           --------     --------
<S>                                          <C>                 <C>             <C>          <C>
Sales                                        $703.6              $432.5            $271.1       63%
Operating income                               62.3                41.2              21.1       51
Segment net income                             26.1                22.5               3.6       16
</TABLE>

The significant increase in sales and operating income of the Infrastructure
Segment for 2000 is due to the acquisition of SGB in the second quarter of 2000
and Pandrol Jackson in the fourth quarter of 1999. The acquisitions resulted in
increased sales of scaffolding, shoring, and forming services and railway track
maintenance contracting services and equipment.

Excluding acquisitions, the operating income of the Infrastructure Segment
decreased by $7.7 million in 2000. The decrease reflects reduced demand for
railway track maintenance contracting services and equipment. This was
experienced particularly in the United States where the Company's customers were
confronted with a manufacturing sector economic slowdown in the fourth quarter
of 2000 as well as significantly higher energy costs. Railroad customers delayed
the purchase of equipment and deferred their maintenance programs for most of
the year. Additionally, a pre-tax non-recurring asset write-down of $3.0 million
was incurred in the third quarter of 2000 for the railway track maintenance
business. Despite higher sales, operating income for the grating product line
decreased due to higher material costs. The decrease in the Segment's operating
income excluding acquisitions was partially offset by improved income for
scaffolding services due to a continuing strong United States non-residential
construction market.

Net income of the Infrastructure Segment increased due to the conditions
previously discussed.

MILL SERVICES SEGMENT
<TABLE>
<CAPTION>
                                                                               AMOUNT            PERCENT
(DOLLARS ARE IN MILLIONS)               2000                  1999            INCREASE          INCREASE
 -----------------------                ----                  ----            --------          --------
<S>                                  <C>                     <C>                <C>               <C>
Sales                                $  757.4                $737.8             $19.6               3%
Operating income                         92.6                  78.2              14.4              18
Segment net income                       58.5                  45.1              13.4              30
</TABLE>

Sales of the Mill Services Segment in 2000 were above 1999 despite the
unfavorable effect of foreign exchange translation and the disposition of two
non-core businesses. Excluding these factors and the effects of an acquisition,
sales increased by 10% in 2000. However, by year-end 2000 an oversupply of steel
in the United States and Canada, due principally to a high level of imports,
unfavorably affected prices, shipments and the profitability of many steel
mills; consequently the demand for mill services began to decline and sales
began to decrease. Economic conditions in the steel industry are forecasted to
improve by the second half of 2001.

                                     - 18 -
<PAGE>   19
Operating income of the Mill Services Segment for 2000 was significantly above
1999. The increase reflects the improved operating and economic environment for
mill services in the first half of 2000 and the favorable effects of continuous
process improvement programs and reorganization efforts that more than offset
significantly higher energy costs. Excluding the unfavorable foreign currency
translation effect of the strong U. S. dollar, the disposition of two non-core
businesses and a business acquisition, operating income increased by
approximately 28%.

Net income of the Harsco Mill Services Segment for 2000 was also significantly
above 1999. The increase reflects the conditions previously discussed.
Additionally, a lower effective income tax rate in 2000 favorably affected
international earnings.

GAS AND FLUID CONTROL SEGMENT
<TABLE>
<CAPTION>
                                                                                  AMOUNT            PERCENT
(DOLLARS ARE IN MILLIONS)                2000                  1999             (DECREASE)        (DECREASE)
 -----------------------                 ----                  ----              --------          --------
<S>                                     <C>                   <C>                <C>               <C>
Sales                                   $542.4                $579.6               $(37.2)           (6)%
Operating income                          41.1                  47.5                 (6.4)          (13)
Segment net income                        23.9                  27.0                 (3.1)          (11)
</TABLE>

The decrease in 2000 sales of the Harsco Gas and Fluid Control Segment is due
principally to reduced demand and to competitive pricing restraints for most
product lines, as well as the disposition of three non-core businesses. The
decreases in operating income and net income reflect the unfavorable effect of
lower sales which more than offset net gains associated with the sale of
non-core businesses. Additionally higher manufacturing production costs
contributed to the decrease in income.

                                     - 19 -
<PAGE>   20
SERVICES AND ENGINEERED PRODUCTS ANALYSIS

The Company is a diversified services and engineered products company. Over the
last several years management has transformed the Company into a global services
company. This is evidenced by recent acquisitions of service companies and
related capital equipment. Sales, operating income and EBITDA for 2000 and 1999
are presented in the following table:



<TABLE>
<CAPTION>

(DOLLARS ARE IN MILLIONS)                                            2000                                 1999
- ------------------------                                    AMOUNT         PERCENT               AMOUNT         PERCENT
                                                            ------         ------                ------         ------
<S>                                                    <C>                  <C>             <C>                <C>
SALES
Services                                               $    1,140.9          57%            $      866.8          50%

Engineered products                                           862.5          43                    883.1          50
                                                         ----------          --               ----------        ----

    Total sales                                        $    2,003.4         100%            $    1,749.9         100%
                                                        ===========         ====             ===========        ====

OPERATING INCOME
Services                                               $      122.7          63%            $       84.9          51%

Engineered products                                            73.3          37                     82.0          49
                                                         ----------          --               ----------          --

    Total segment operating income                     $      196.0         100%            $      166.9         100%
                                                        ===========         ====             ===========        ====

EBITDA*
Services                                               $      248.0          71%            $      191.1          63%

Engineered products                                           103.3          29                    110.3          37
                                                         ----------        -----              ----------        ----

    Total segment EBITDA                               $      351.3         100%            $      301.4         100%
                                                        ===========         ====             ===========         ====
</TABLE>

*  Earnings before interest, income taxes, depreciation and amortization
   (EBITDA) is not a measure of performance under generally accepted accounting
   principles, however, the Company and the investment community consider it an
   important calculation.

Service sales, operating income and EBITDA in 2000 increased significantly from
1999. The increase reflects the effects of acquired companies, principally SGB
and Pandrol Jackson, as well as improved economic conditions in certain markets
served by the company.

Operating income for 2000 for engineered products was down from 1999 due to
reduced margins for certain products, principally grating and industrial
fittings.


                                     - 20 -
<PAGE>   21
RESULTS OF OPERATIONS
1999 COMPARED WITH 1998

<TABLE>
<CAPTION>

                                                                                                       AMOUNT             PERCENT
(DOLLARS ARE IN MILLIONS, EXCEPT PER SHARE)                           1999             1998          (DECREASE)         (DECREASE)
 -----------------------------------------                            ----             ----           --------           --------
<S>                                                                 <C>               <C>             <C>                 <C>
Revenues                                                            $1,751.0          $1,766.1          $(15.1)           (1)%
Operating income                                                       166.7             190.5           (23.8)           (12)
Net income                                                              90.7             107.5           (16.8)           (16)
Diluted earnings per common share                                        2.21              2.34            (.13)           (6)
</TABLE>

SUMMARY ANALYSIS OF RESULTS

Despite improving conditions in the steel industry during the last six months of
1999, the Company's results for the full year of 1999 reflect the adverse
effects of a steel industry affected by overcapacity, reduced prices and weak
demand in certain parts of the world. These problems contributed to reduced
steel production and financial stress at several steel mills. Certain customers
in the United States were forced to file for bankruptcy protection. In the
second half of 1999, increased levels of domestic steel production and capacity
utilization favorably affected the Company's results. Second half net income and
earnings per share for 1999 exceeded the same period of 1998.

Soft market conditions in the industrial gas and oil industries contributed to
lower results for 1999. However, the significant increase in crude oil prices
that was experienced in late 1999 contributed to improved results for the second
half. The Company's order backlog in the Gas and Fluid Control Segment as of
December 31, 1999 was 27% higher than as of December 31, 1998, reflecting
improved business conditions.

In 1999, the strong U.S. dollar adversely impacted the foreign currency
translation effect on results of operations in many countries in which the
Company operates.

Additionally, pre-tax pension expense for 1999, calculated in accordance with
SFAS No. 87, was $10.6 million higher than 1998. The increase unfavorably
impacted cost of services and products sold as well as selling, general, and
administrative expenses.

COMPARATIVE ANALYSIS OF CONSOLIDATED RESULTS

REVENUES
Revenues for 1999 were $1.75 billion, slightly below 1998. The decrease reflects
principally the unfavorable effects of market conditions in the steel, oil and
gas industries during the first six months of 1999. Improvements in market
conditions in the second half of 1999, as well as higher sales from
acquisitions, net of dispositions of non-core businesses, partially offset the
lower sales reported in the first six months of 1999. Excluding the adverse
foreign exchange translation effect of the strengthening U.S. dollar,
particularly relative to the Brazilian real, the euro, the South African rand
and the British pound, revenues exceeded 1998.


                                     - 21 -
<PAGE>   22
COST OF SALES AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Costs of services and products sold for 1999 approximated that of 1998. As a
result of divesting certain non-core businesses and the Company's continuing
cost reduction, process improvement, and reorganization efforts, selling,
general, and administrative expenses decreased despite the inclusion of acquired
companies. The total of cost of sales plus selling, general, and administrative
expenses was lower than 1998, despite a significant increase in pension expense.

OTHER INCOME AND EXPENSES

In 1999, the Company incurred $6.0 million of other expenses compared to $4.3
million of other income in 1998. This income statement classification
principally includes impaired asset write-downs, employee termination benefit
costs and costs to exit activities, offset by net gains on the disposal of
non-core assets.

Expenses for 1999 included $2.9 million of impaired asset write-downs,
principally for the Company's investment in Bio-Oxidation Services Inc. which is
included in the Gas and Fluid Control Segment. Additionally, $2.9 million of
expense was incurred for employee termination benefits principally in the Mill
Services Segment related to arrangements which included operations in France and
the United Kingdom. In 1999, the Company did not benefit from any large gains
related to either the sale of non-core businesses or redundant facilities or
equipment.

Other income for 1998 included a pre-tax net gain of $27 million recorded on the
October 1998 sale of the Nutter Engineering unit of the Gas and Fluid Control
Segment. This was substantially offset by $14.4 million of impaired asset
write-downs including $6.1 million for the Company's investment in Bio-Oxidation
Services Inc., as well as $6.1 million for principally buildings and equipment
in the Mill Services Segment related primarily to the Company's operation in
Russia. Also during 1998, $6.5 million of employee termination benefit expense
was incurred principally in the Mill Services Segment, primarily in South
Africa, United States, France and Germany.

EMPLOYEE TERMINATION BENEFIT COSTS AND PAYMENTS
<TABLE>
<CAPTION>

(IN MILLIONS)                                                   SUMMARY OF ACTIVITY
- ------------                                                    -------------------
<S>                                                             <C>            <C>
Original reorganization action period                           1999           1998

Employee termination benefits expense                           $2.9            $6.5

Disbursements:
       In 1998                                                      -           (2.4)
       In 1999 (1)                                               (1.8)          (3.3)
             Total disbursements                                 (1.8)          (5.7)
       Other                                                       -            (0.4)
             Remaining payments as of
             December 31, 1999 (2)                               $1.1           $0.4
</TABLE>

(1)    - Disbursements in 1999 are categorized according to the original
       reorganization action period to which they relate (1999 or 1998).

(2)    - Remaining payments are categorized according to the original
       reorganization action period to which they relate (1999 or 1998).

                                     - 22 -
<PAGE>   23
EMPLOYEE TERMINATIONS - NUMBER OF EMPLOYEES
<TABLE>
<CAPTION>

                                                                  SUMMARY OF ACTIVITY
                                                                  -------------------
<S>                                                                <C>           <C>
Original reorganization action period                              1999          1998

Employees affected by new reorganization actions                    220            670

Employee terminations:

       In 1998                                                        -           (349)
       In 1999                                                     (172)          (352)
             Total terminations                                    (172)          (701)
       Other                                                         (9)            35
             Remaining terminations as of
             December 31, 1999                                       39              4
</TABLE>

INTEREST EXPENSE

The Company's defense business was sold in the fourth quarter of 1997. This
resulted in $344 million of pre-tax cash proceeds. The availability of a
substantial portion of this cash in 1998 resulted in additional interest income,
as well as reduced interest expense compared to 1999. Additionally, interest
expense for 1999 was higher than 1998 as a result of increased borrowings for
record capital investments, the Company's share repurchase program and an
acquisition in the fourth quarter of 1999. Capital investments, $175.2 million
in 1999, were made for new mill services contracts, other business growth
initiatives, information technology, new processes, and productivity
improvements.

PROVISION FOR INCOME TAXES

The effective income tax rate for 1999 was 35% versus 37.5% for 1998. The
reduction in the income tax rate is due principally to lower effective income
tax rates on domestic earnings.

NET INCOME AND EARNINGS PER SHARE

Net income of $90.7 million was below 1998. Diluted earnings per common share
were $2.21, down from $2.34 in 1998.

SEGMENT ANALYSIS

INFRASTRUCTURE SEGMENT
<TABLE>
<CAPTION>
                                                                                                AMOUNT            PERCENT
(DOLLARS ARE IN MILLIONS)                                    1999             1998             INCREASE          INCREASE
 -----------------------                                     ----             ----             --------          --------
<S>                                                       <C>             <C>                    <C>                  <C>
Sales                                                     $   432.5       $   399.2              $33.3                8%
Operating income                                               41.2            32.9                8.3               25
Segment net income                                             22.5            18.6                3.9               21
</TABLE>

The Infrastructure Segment's sales for 1999 exceeded 1998 due to increased sales
of scaffolding, shoring and forming services, as well as sales of railway track
maintenance equipment and contracting services which included the effect of an
acquisition in the fourth quarter of 1999.


                                     - 23 -
<PAGE>   24
Operating income of the Infrastructure Segment was significantly above 1998.
Excluding other income and expenses, operating income was $41.2 million compared
to $34.8 million in 1998. The increase was due principally to improved margins
on sales of grating products and, to a lesser extent, higher income for
scaffolding, shoring and forming services. Additionally, the fourth quarter of
1998 included $2.9 million of principally inventory valuation adjustments due to
a reorganization of the grating products business.

Segment net income was above 1998 due principally to improved margins on sales
of grating products. Additionally, increased income was recorded for
scaffolding, shoring and forming services. Excluding other income and expenses,
net income in 1999 was $22.5 million compared to $19.9 million in 1998.



MILL SERVICES SEGMENT
<TABLE>
<CAPTION>
                                                                                                  AMOUNT            PERCENT
                                                                                                INCREASE          INCREASE
(DOLLARS ARE IN MILLIONS)                                      1999              1998           (DECREASE)        (DECREASE)
 -----------------------                                       ----              ----            --------          --------
<S>                                                           <C>              <C>               <C>               <C>
Sales                                                           $737.8         $ 761.1           $(23.3)               (3)%
Operating income                                                  78.2            82.9             (4.7)               (6)
Segment net income                                                45.1            43.3              1.8                 4
</TABLE>

Sales of the Mill Services Segment were below 1998. The inclusion of sales from
an acquired company for the full year 1999 was partially offset by the 1998
disposition of a non-core business. The decrease also reflects the unfavorable
effects of foreign exchange translation and overcapacity in the steel industry
which adversely affected worldwide steel prices and production. This is
particularly true in the United States where the steel industry filed complaints
with the government due to alleged unfairly low-priced imports. Lower steel
production adversely affected volume and margins at most steel mills in the
United States including many of the Company's customers. However, during the
last six months of 1999, steel production and capacity utilization in the United
States trended upwards reflecting the highest levels since the second quarter of
1998. Additionally, certain other key countries in which the Company conducts
business also experienced upward trends in steel production in 1999. The Mill
Services Segment fourth quarter 1999 results reflected this trend as revenues
and income, excluding other income and expenses, exceeded the same period of
1998.

Operating income of the Mill Services Segment was below 1998. Results in 1998
included other expenses of $6.5 million of pre-tax, non-cash write-downs of
assets, principally property, plant and equipment and $4.9 million of employee
termination benefit costs. Excluding other income and expenses, operating income
was $81.5 million in 1999 compared to $95.0 million in 1998.

The decrease in income for 1999 reflected the adverse effects of lower steel
production and prices in the first half of 1999. Results for 1999 include a
foreign currency transaction gain in Brazil, while in 1998, net foreign currency
translation exchange losses were incurred. The transaction gain in Brazil
partially offset the net unfavorable foreign currency impact associated with
translation of the results of operations of the Mill Services Segment.

Net income of the Mill Services Segment was above 1998. Excluding other income
and expenses, net income in 1999 was $47.3 million compared to $50.8 million in
1998, reflecting the conditions previously disclosed.


                                     - 24 -
<PAGE>   25
GAS AND FLUID CONTROL SEGMENT
<TABLE>
<CAPTION>


                                                                                                AMOUNT            PERCENT
(DOLLARS ARE IN MILLIONS)                                     1999             1998           (DECREASE)         DECREASE)
 -----------------------                                      ----             ----            --------          --------
<S>                                                           <C>              <C>               <C>                 <C>
Sales                                                         $579.6           $605.2            $(25.6)             (4)%
Operating income                                                47.5             72.3             (24.8)            (34)
Segment net income                                              27.0             40.9             (13.9)            (34)
</TABLE>

Sales of the Gas and Fluid Control Segment decreased from 1998. The inclusion of
a full year's sales of three acquired companies was more than offset by lower
sales of process equipment due in part to the disposition of three non-core
businesses. Reduced sales of gas control and containment equipment and process
equipment also reflected decreased demand in the industrial gas and oil
industries. In late 1999, these industries were favorably affected by rising
crude oil prices.

Operating income of the Gas and Fluid Control Segment was below 1998 principally
due to the inclusion in 1998 of gains on the disposal of two businesses.
Excluding other income and expenses, operating income was $50.0 million in 1999
compared to $54.1 million in 1998. The decrease reflected the adverse effects of
reduced demand from customers in the industrial gas and oil industries.

Segment net income was below 1998 principally due to the inclusion in 1998 of
gains on the disposal of two businesses. Net income for 1999 was adversely
affected, but to a lesser extent than 1998, by valuation provisions related to
the write-down of assets held for disposal. Excluding other income and expenses,
net income in 1999 was $28.6 million compared to $30.0 million in 1998.

SERVICES AND ENGINEERED PRODUCTS ANALYSIS

In addition to the segment reporting previously presented, the Company is a
services and engineered products company. Total service sales include mill
services, as well as scaffolding, shoring, and forming services and railway
track maintenance services. Engineered products principally include product
sales of the Infrastructure and the Gas and Fluid Control Segments.
<TABLE>
<CAPTION>

(DOLLARS ARE IN MILLIONS)                                        1999                                  1998
- ------------------------                                         ----                                  ----
                                                         AMOUNT          PERCENT               AMOUNT          PERCENT
SALES                                                    ------          -------               ------          -------
- -----
<S>                                                 <C>                       <C>          <C>                     <C>
Services                                            $      866.8              50%          $       870.0           49%

Engineered Products                                        883.1              50                   895.5           51
                                                        --------        --------               ---------     --------

    Total sales                                        $ 1,749.9             100%          $     1,765.5          100%
                                                        ========        ========                 =======     ========

OPERATING INCOME
Services                                            $       84.9              51%          $        78.8           42%

Engineered Products                                         82.0              49                   109.3           58
                                                        --------        --------               ---------     --------

    Total segment operating income                  $      166.9             100%          $       188.1          100%
                                                      ==========        ========             ===========     ========
</TABLE>


                                     - 25 -
<PAGE>   26
Services operating income in 1999 was $84.9 million compared with $78.8 million
in 1998. Excluding losses and impaired asset write-downs associated with the
medical waste disposal service business, services operating income was $87.2
million and $88.6 million for 1999 and 1998, respectively.

Operating income for engineered products in 1998 included a pre-tax net gain of
$27 million.

ECONOMIC ENVIRONMENT

The Company has currency exposures for its international operations which are
subject to volatility, such as the foreign exchange fluctuations relative to the
U.S. dollar experienced for the euro and British pound sterling in 2000 and for
the Brazilian real and the euro in 1999. Such exposures may result in reduced
sales, income, and cash flows. The aforementioned situations are not expected to
have a material adverse impact on the Company's financial position or results of
operations. However, these and similar risks could result in a material impact
on the Company's financial position or results of operations in the future, if
the currencies would continue to weaken in relation to the U.S. dollar. Balance
sheet translation adjustments for the European and Brazilian operations
generally do not affect results of operations.

In the second half of 2000 the worldwide steel industry experienced selling
price reductions and production curtailments at many steel producers,
particularly in the United States. The United States steel industry was
unfavorably affected by imports of low-priced foreign steel and a worldwide
oversupply of steel. In 2000, United States steel imports were second only to
the crisis year of 1998. Certain steel producers, including certain Company
customers, were forced to file for bankruptcy protection. There is a risk that
the Company's future results of operations or financial condition could be
adversely affected if the steel industry's problems were to continue. This risk
is mitigated since approximately 75% of the Company's mill services sales are
generated outside the United States. The Mill Services Segment provides services
at steel mills throughout the world. The future financial impact on the Company
associated with these risks cannot be estimated.

RESEARCH AND DEVELOPMENT

The Company invested $5.7 million in internal research and development programs
in 2000. Internal funding for the Infrastructure Segment amounted to $3.0
million, principally for railway track maintenance equipment and services.
Expenditures for the Mill Services and Gas and Fluid Control Segments were $2.0
million and $0.7 million, respectively.

BACKLOG

As of December 31, 2000, the Company's order backlog, exclusive of long-term
mill services contracts, was $258.9 million compared with $231.6 million as of
December 31, 1999, a 12% increase. The Infrastructure Segment order backlog at
December 31, 2000 was $181.7 million, an increase of 20% over the December 31,
1999 backlog of $151.6 million. This increase is principally due to an increase
in railway track maintenance equipment and services. Backlog for scaffolding,
shoring and forming services of the Infrastructure Segment is excluded from the
reported amounts. These amounts are generally not quantifiable due to the nature
of the products and services provided.

Mill services contracts have estimated future revenues of $3.5 billion at
December 31, 2000, which is slightly below the $3.6 billion at December 31,
1999, principally due to the effect of foreign currency translations.


                                     - 26 -
<PAGE>   27
DIVIDEND ACTION

The Company paid four quarterly cash dividends of $.235 per share in 2000, for
an annual rate of $.94. This is an increase of 4.4% from 1999. At the November
2000 meeting, the Board of Directors increased the dividend 2.1% to an annual
rate of $.96 per share. The Board normally reviews the dividend rate
periodically during the year and annually at its November meeting. There are no
material restrictions on the payment of dividends.

The Company is proud of its history of paying dividends. The Company has paid
dividends each year since 1939. The February 2001 payment marked the 203rd
consecutive quarterly dividend paid at the same or at an increased rate. During
the five-year period ended December 31, 2000, dividends paid were increased five
times. In 2000, the dividend payout rate was 39%. The Company is philosophically
committed to maintaining or increasing the dividend at a sustainable level.

FORWARD LOOKING STATEMENTS

The nature of the Company's operations and the many countries in which it
operates subject it to changing economic, competitive, regulatory, and
technological conditions, risks, and uncertainties. In accordance with the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company provides the following cautionary remarks regarding important factors
which, among others, could cause future results to differ materially from the
forward-looking statements, expectations, and assumptions expressed or implied
herein. These include statements about our management confidence and strategies
for performance; expectations for new and existing products, technologies, and
opportunities; and expectations for market segment and industry growth, sales,
earnings, and other financial performance measures.

These factors include, but are not limited to: (1) changes in the worldwide
business environment in which the Company operates, including general economic
conditions, particularly in the mill services, infrastructure and industrial gas
markets; currency exchange rates; interest rates; and capital costs; (2) changes
in governmental laws and regulations, including taxes; (3) market and
competitive changes, including pricing pressures, market demand and acceptance
for new products, services, and technologies; (4) effects of unstable
governments and business conditions in emerging economies; and (5) other risk
factors listed from time to time in the Company's SEC reports. The Company does
not intend to update this information and disclaims any legal liability to the
contrary.

Item 7A.  Quantitative And Qualitative Disclosures About Market Risk

The Company is exposed to foreign currency risk in its international operations.
The Company conducts business in thirty-eight countries and approximately 42%,
36% and 37% of the Company's net revenues for the years ended December 31, 2000,
1999 and 1998, respectively, were derived from the Company's operations outside
the United States. The June 2000 SGB acquisition has increased the Company's
foreign currency exposure. In 2000, the British pound sterling decreased 8% and
the euro declined 6% in relation to the U.S. dollar. These and other foreign
currency exposures increase the risk of income statement, balance sheet and cash
flow volatility.

To illustrate the effect of foreign currency exchange rate changes due to the
strengthening of the U.S. dollar, in 2000 sales would have been approximately
2.2% or $45 million greater using the average exchange rates for the year 1999.
A similar comparison for the year 1999 would

                                     - 27 -
<PAGE>   28
have increased sales approximately 2.5% if the average exchange rates for 1998
would have remained the same in 1999.

The Company seeks to reduce exposures to foreign currency fluctuations through
the use of forward exchange contracts. At December 31, 2000, these contracts
amounted to $3.1 million and all mature within 2001. The Company does not hold
or issue financial instruments for trading purposes, and it is the Company's
policy to prohibit the use of derivatives for speculative purposes.

The Company's cash flows and earnings are subject to changes in interest rates.
Total debt of $836.7 million as of December 31, 2000 had interest rates ranging
from 3.7% to 12.1%, of which approximately 54% were at fixed rates of interest.
The weighted average interest rate of total debt was approximately 6.7%. At
current debt levels, a one percentage increase in interest rates would increase
interest expense by approximately $3.8 million per year.

For additional information, see Note 13, Financial Instruments, to the
Consolidated Financial Statements under Item 8, "Financial Statements and
Supplementary Data."

On April 6, 2000, the Company agreed to invest $20 million for a 49% interest in
S3Networks, LLC, a start-up company providing internet and e-business
infrastructure consulting services primarily to Fortune 1000 companies. This
investment is subject to market risks inherent in any start-up company. Such
risks include the ability to develop a revenue base sufficient to offset fixed
expenses; the ability to hire and retain qualified employees; the ability to
secure market share from established companies, etc. Since the Company is the
principal provider of initial capital for S3Network, LLC, the Company records
100% of the net losses to the extent of its initial $20 million investment. The
Company recorded $3.4 million of such pre-tax losses during 2000. There is no
obligation for the Company to fund the venture beyond its $20 million
investment.

The Company is also exposed to risks related to changing economic conditions and
their effect on the markets it serves and on the Company's supply chain, and
related costs. For additional information, see "Economic Environment" under Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations."



                                     - 28 -
<PAGE>   29
                                     PART II

Item 8.       Financial Statements and Supplementary Data:

Index to Consolidated Financial Statements and Supplementary Data

<TABLE>
<CAPTION>
                Consolidated Financial Statements of
                  Harsco Corporation:                                                          Page
                                                                                               ----

<S>                                                                                           <C>
                  Report of Independent Accountants                                             30

                  Consolidated Balance Sheet
                    December 31, 2000 and 1999                                                  31

                  Consolidated Statement of Income
                    for the years 2000, 1999, and 1998                                          32

                  Consolidated Statement of Cash Flows
                     for the years 2000, 1999, and 1998                                         33

                  Consolidated Statement of Shareholders'
                    Equity for the years 2000, 1999, and 1998                                   34

                  Consolidated Statement of Comprehensive
                    Income for the years 2000, 1999, and 1998                                   35

                  Notes to Consolidated Financial Statements                                   36-77

                Supplementary Data:

                  Two-Year Summary of Quarterly Results (Unaudited)                             78

                  Common Stock Price and Dividend Information                                   79
</TABLE>


                                     - 29 -
<PAGE>   30
                                                                          REPORT
                                                      OF INDEPENDENT ACCOUNTANTS




To the Shareholders of Harsco Corporation:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity, comprehensive income
and cash flows present fairly, in all material respects, the financial position
of Harsco Corporation and Subsidiary Companies at December 31, 2000 and 1999,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. 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
auditing standards generally accepted in the United States of America, 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 our opinion.




PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 30, 2001


                                     - 30 -
<PAGE>   31
HARSCO CORPORATION
CONSOLIDATED BALANCE SHEET


(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31                                                                         2000               1999
                                                                                -----------        -----------
<S>                                                                             <C>                <C>
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                  $    56,422        $    51,266
     Accounts receivable, net                                                       413,654            331,123
     Inventories                                                                    199,117            172,198
     Other current assets                                                            57,222             58,368
                                                                                -----------        -----------
              TOTAL CURRENT ASSETS                                                  726,415            612,955
                                                                                -----------        -----------

Property, plant and equipment, net                                                  896,781            671,546
Cost in excess of net assets of businesses acquired, net                            369,199            258,698
Other assets                                                                        188,553            116,624
                                                                                -----------        -----------
              TOTAL ASSETS                                                      $ 2,180,948        $ 1,659,823
                                                                                ===========        ===========

LIABILITIES
CURRENT LIABILITIES
     Short-term borrowings                                                      $    47,676        $    32,014
     Current maturities of long-term debt                                            14,619              4,593
     Accounts payable                                                               192,148            132,394
     Accrued compensation                                                            46,591             46,615
     Income taxes                                                                    34,783             44,154
     Dividends payable                                                                9,553              9,417
     Other current liabilities                                                      190,809            161,329
                                                                                -----------        -----------
              TOTAL CURRENT LIABILITIES                                             536,179            430,516
                                                                                -----------        -----------

Long-term debt                                                                      774,450            418,504
Deferred income taxes                                                                88,480             52,932
Insurance liabilities                                                                46,988             37,097
Other liabilities                                                                    60,672             70,653
                                                                                -----------        -----------
              TOTAL LIABILITIES                                                   1,506,769          1,009,702
                                                                                -----------        -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock, Series A junior participating cumulative preferred stock                --                 --
Common stock, par value $1.25, issued 66,309,651 and 66,221,544
     shares as of December 31, 2000 and 1999, respectively                           82,887             82,777
Additional paid-in capital                                                           90,000             88,101
Accumulated other comprehensive expense                                            (109,377)           (80,538)
Retained earnings                                                                 1,214,659          1,155,586
                                                                                -----------        -----------
                                                                                  1,278,169          1,245,926
Treasury stock, at cost (26,504,479 and 26,149,759 shares, respectively)           (603,990)          (595,805)
                                                                                -----------        -----------
              TOTAL SHAREHOLDERS' EQUITY                                            674,179            650,121
                                                                                -----------        -----------
              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                        $ 2,180,948        $ 1,659,823
                                                                                ===========        ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                     - 31 -
<PAGE>   32
HARSCO CORPORATION
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31                                     2000               1999               1998
                                                         -----------        -----------        -----------
REVENUES
<S>                <C>                                   <C>                <C>                <C>
     Service sales (1)                                   $ 1,140,922        $   866,839        $   869,987
     Product sales (1)                                       862,465            883,049            895,559
     Other                                                     1,354              1,119                582
                                                         -----------        -----------        -----------
         TOTAL REVENUES                                    2,004,741          1,751,007          1,766,128
                                                         -----------        -----------        -----------

COSTS AND EXPENSES
     Cost of services sold                                   840,501            669,364            670,389
     Cost of products sold                                   688,385            693,368            689,041
     Selling, general, and administrative expenses           274,079            207,765            213,438
     Research and development expenses                         5,714              7,759              6,977
     Other (income) and expenses                               1,334              6,019             (4,264)
                                                         -----------        -----------        -----------
         TOTAL COSTS AND EXPENSES                          1,810,013          1,584,275          1,575,581
                                                         -----------        -----------        -----------

         OPERATING INCOME                                    194,728            166,732            190,547

Equity in income (loss) of affiliates, net (2)                (2,020)             3,004              1,354
Interest income                                                5,987              4,662              8,378
Interest expense                                             (50,104)           (26,968)           (20,504)
                                                         -----------        -----------        -----------

         INCOME BEFORE INCOME TAXES
              AND MINORITY INTEREST                          148,591            147,430            179,775

Provision for income taxes                                    46,805             51,599             67,361
                                                         -----------        -----------        -----------

         INCOME BEFORE MINORITY INTEREST                     101,786             95,831            112,414

Minority interest in net income                                4,983              5,118              4,901
                                                         -----------        -----------        -----------

NET INCOME                                               $    96,803        $    90,713        $   107,513
                                                         ===========        ===========        ===========

BASIC EARNINGS PER COMMON SHARE                          $      2.42        $      2.22        $      2.36
                                                         ===========        ===========        ===========

Average shares of common stock outstanding                    39,964             40,882             45,568
                                                         ===========        ===========        ===========

DILUTED EARNINGS PER COMMON SHARE                        $      2.42        $      2.21        $      2.34
                                                         ===========        ===========        ===========

Diluted average shares of common stock outstanding            40,022             41,017             45,911
                                                         ===========        ===========        ===========
</TABLE>

See accompanying notes to consolidated financial statements.

(1) In order to comply with Emerging Issues Task Force (EITF) Issue No. 00-10,
    all shipping and handling costs have been classified as cost of services
    sold or as cost of products sold rather than as reductions of sales. The
    income statements for the twelve months ended December 31, 1999 and 1998
    have been reclassified to reflect this change. The reclassification has no
    effect on previously reported operating income or net income for the twelve
    months ended December 31, 1999 and 1998.

(2) Equity in income (loss) of affiliates is now separately reported. Previously
    these amounts were included in operating income as other revenues. Amounts
    previously reported as operating income for the twelve months ended December
    31, 1999 and 1998 were $169,736 and $191,901, respectively.


                                     - 32 -
<PAGE>   33
HARSCO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
(IN THOUSANDS)
YEARS ENDED DECEMBER 31                                                          2000             1999             1998
                                                                               ---------        ---------        ---------
<S>                                                                            <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                  $  96,803        $  90,713        $ 107,513
   Adjustments to reconcile net income to net cash provided by operating
     activities:
       Depreciation                                                              141,128          122,777          119,044
       Amortization                                                               17,971           13,076           12,337
       Equity in (income) loss of affiliates, net                                  2,020           (3,004)          (1,354)
       Dividends or distributions from affiliates                                  1,729            3,369            1,494
       Deferred income taxes                                                      22,806              193            3,893
       Other (income) and expenses                                                 3,397            6,019           24,843
       Gain on sale of businesses                                                 (2,226)              --          (29,107)
       Other, net                                                                  1,422            5,205            5,260
       Changes in assets and liabilities, net of acquisitions
          and dispositions of businesses:
           Accounts receivable                                                    17,811          (28,157)         (15,718)
           Inventories                                                               966           15,934          (24,991)
           Accounts payable                                                       10,193           (1,238)           8,379
           Net disbursements related to discontinued
              defense business                                                   (12,012)         (14,605)         (13,642)
           Other assets and liabilities                                          (42,560)           3,671           (8,691)
                                                                               ---------        ---------        ---------
       NET CASH PROVIDED BY OPERATING ACTIVITIES                                 259,448          213,953          189,260
                                                                               =========        =========        =========

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property, plant and equipment                                   (180,048)        (175,248)        (159,816)
   Purchase of businesses, net of cash acquired*                                (302,461)         (48,907)        (158,291)
   Proceeds from sale of businesses                                               11,512           17,718           39,500
   Proceeds from sale of property, plant and equipment                            10,957           14,381           13,033
   Investments available-for-sale: Maturities                                         --               --           40,000
   Investments held-to-maturity: Maturities                                           --               --            4,010
   Other investing activities                                                        988           (2,618)         (11,926)
                                                                               ---------        ---------        ---------
       NET CASH (USED) BY INVESTING ACTIVITIES                                  (459,052)        (194,674)        (233,490)
                                                                               =========        =========        =========

CASH FLOWS FROM FINANCING ACTIVITIES
   Short-term borrowings, net                                                    146,552          (10,546)          16,131
   Current maturities and long-term debt:  Additions                             562,993          214,133          172,709
                                           Reductions                           (448,366)        (103,410)        (116,163)
   Cash dividends paid on common stock                                           (37,594)         (37,022)         (40,287)
   Common stock issued-options                                                     1,792            2,272            3,885
   Common stock acquired for treasury                                             (7,917)         (71,860)        (169,258)
   Other financing activities                                                     (6,714)          (2,495)          (1,341)
                                                                               ---------        ---------        ---------
       NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                          210,746           (8,928)        (134,324)
                                                                               =========        =========        =========

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                           (5,986)            (647)          (1,449)
                                                                               ---------        ---------        ---------
   Net increase (decrease) in cash and cash equivalents                            5,156            9,704         (180,003)
   Cash and cash equivalents at beginning of year                                 51,266           41,562          221,565
                                                                               ---------        ---------        ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                       $  56,422        $  51,266        $  41,562
                                                                               =========        =========        =========
*PURCHASE OF BUSINESSES, NET OF CASH ACQUIRED
   Working capital, other than cash                                            $ (20,249)       $  18,078        $  11,159
   Property, plant and equipment                                                (215,065)         (36,417)         (89,182)
   Other noncurrent assets and liabilities, net                                  (67,147)         (30,568)         (80,268)
                                                                               ---------        ---------        ---------
       NET CASH USED TO ACQUIRE BUSINESSES                                     $(302,461)       $ (48,907)       $(158,291)
                                                                               =========        =========        =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                     - 33 -
<PAGE>   34
HARSCO CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         ACCUMULATED OTHER
                                                                                                   COMPREHENSIVE INCOME (EXPENSE)
                                                                                     --------------------------------------------
                                                                         ADDITIONAL                NET UNREALIZED
                                                    COMMON STOCK          PAID-IN                    INVESTMENT      PENSION
                                                ----------------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)              ISSUED     TREASURY     CAPITAL    TRANSLATION    GAINS (LOSSES)  LIABILITY
                                                ----------  ----------   ----------  -----------   ---------------  ----------

<S>                                             <C>         <C>          <C>         <C>           <C>              <C>
BALANCES, JANUARY 1, 1998                       $   82,318  $ (362,772)  $   79,360   $  (49,677)     $      (28)   $   (1,269)
                                                ----------  ----------   ----------   ----------      ----------    ----------
Net income
Cash dividends declared, $.885 per share
Translation adjustments                                                                   (1,714)
Unrealized investment gains, net of ($18)
   deferred income taxes                                                                                      28
Pension liability adjustments, net of $1,544
   deferred income taxes                                                                                                (2,385)
Acquired during the year, 4,989,483 shares                    (168,405)
Stock options exercised, 221,293 shares                276                    5,913
Restricted stock, net, 40,324 shares                             1,649          110
Other, 1,658 shares                                                 66            1
                                                ----------  ----------   ----------   ----------      ----------    ----------
BALANCES, DECEMBER 31, 1998                         82,594    (529,462)      85,384      (51,391)             --        (3,654)
                                                ----------  ----------   ----------   ----------      ----------    ----------
Net income
Cash dividends declared, $.91 per share
Translation adjustments                                                                  (27,273)
Pension liability adjustments, net of ($1,277)
   deferred income taxes                                                                                                 1,780
Acquired during the year, 2,326,798 shares                     (66,441)
Stock options exercised, 146,164 shares                183                    2,740
Other, 2,497 shares                                                 98          (23)
                                                ----------  ----------   ----------   ----------      ----------    ----------
BALANCES, DECEMBER 31, 1999                         82,777    (595,805)      88,101      (78,664)             --        (1,874)
                                                ----------  ----------   ----------   ----------      ----------    ----------
Net income
Cash dividends declared, $.945 per share
Translation adjustments                                                                  (28,327)
Pension liability adjustments, net of $295
   deferred income taxes                                                                                                  (512)
Acquired during the year, 355,695 shares                        (8,209)
Stock options exercised, 88,107 shares                 110                    1,900
Other, 975 shares                                                   24           (1)
                                                ----------  ----------   ----------   ----------      ----------    ----------
BALANCES, DECEMBER 31, 2000                     $   82,887  $ (603,990)  $   90,000   $ (106,991)     $       --    $   (2,386)
                                                ==========  ==========   ==========   ==========      ==========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                ACCUMULATED OTHER
                                                COMPREHENSIVE INCOME (EXPENSE)
                                                -----------------------------

                                                                                RETAINED

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)                                TOTAL       EARNINGS
                                                                  ----------   ----------

<S>                                                               <C>          <C>
BALANCES, JANUARY 1, 1998                                         $  (50,974)  $1,033,770
                                                                  ----------   ----------
Net income                                                                        107,513
Cash dividends declared, $.885 per share                                          (39,455)
Translation adjustments                                               (1,714)
Unrealized investment gains, net of ($18)
   deferred income taxes                                                  28
Pension liability adjustments, net of $1,544
   deferred income taxes                                              (2,385)
Acquired during the year, 4,989,483 shares
Stock options exercised, 221,293 shares
Restricted stock, net, 40,324 shares
Other, 1,658 shares
                                                                  ----------   ----------
BALANCES, DECEMBER 31, 1998                                          (55,045)   1,101,828
                                                                  ----------   ----------
Net income                                                                         90,713
Cash dividends declared, $.91 per share                                           (36,955)
Translation adjustments                                              (27,273)
Pension liability adjustments, net of ($1,277)
   deferred income taxes                                               1,780
Acquired during the year, 2,326,798 shares
Stock options exercised, 146,164 shares
Other, 2,497 shares
                                                                  ----------   ----------
BALANCES, DECEMBER 31, 1999                                          (80,538)   1,155,586
                                                                  ----------   ----------
Net income                                                                         96,803
Cash dividends declared, $.945 per share                                          (37,730)
Translation adjustments                                              (28,327)
Pension liability adjustments, net of $295
   deferred income taxes                                                (512)
Acquired during the year, 355,695 shares
Stock options exercised, 88,107 shares
Other, 975 shares
                                                                  ----------   ----------
BALANCES, DECEMBER 31, 2000                                       $ (109,377)  $1,214,659
                                                                  ==========   ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                     - 34 -
<PAGE>   35
HARSCO CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



<TABLE>
<CAPTION>
(IN THOUSANDS)
YEARS ENDED DECEMBER 31                                                2000             1999             1998
                                                                     ---------        ---------        ---------

<S>                                                                  <C>              <C>              <C>
Net Income                                                           $  96,803        $  90,713        $ 107,513
                                                                     ---------        ---------        ---------

Other comprehensive income (expense):
   Foreign currency translation adjustments                            (28,327)         (27,273)          (1,714)
   Unrealized investment gains, net of deferred income taxes                --               --               28
   Pension liability adjustments, net of deferred income taxes            (512)           1,780           (2,385)
                                                                     ---------        ---------        ---------
Other comprehensive expense                                            (28,839)         (25,493)          (4,071)
                                                                     ---------        ---------        ---------

Total comprehensive income                                           $  67,964        $  65,220        $ 103,442
                                                                     =========        =========        =========
</TABLE>


See accompanying notes to consolidated financial statements.


                                     - 35 -
<PAGE>   36
HARSCO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION
The consolidated financial statements include the accounts of Harsco Corporation
and its majority-owned subsidiaries (the "Company"). Investments in
unconsolidated entities (all of which are 20-50% owned) are accounted for under
the equity method.

CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits, and short-term
investments which are highly liquid in nature and have an original maturity of
three months or less.

INVENTORIES
Inventories are stated at the lower of cost or market. Inventories in the United
States are accounted for using principally the last-in, first-out (LIFO) method.
Other inventories are accounted for using the first-in, first-out (FIFO) or
average cost methods.

DEPRECIATION
Property, plant and equipment is recorded at cost and depreciated over the
estimated useful lives of the assets using principally the straight-line method.
When property is retired from service, generally the cost of the retirement is
charged to the allowance for depreciation to the extent of the accumulated
depreciation and the balance is charged to income. Long-lived assets to be
disposed are not depreciated while they are held for disposal.

INTANGIBLE ASSETS
Intangible assets consist principally of cost in excess of net assets of
businesses acquired, which is amortized on a straight line basis over a period
not to exceed 30 years. Accumulated amortization was $91.0 and $74.9 million at
December 31, 2000 and 1999, respectively.

IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, including cost in excess of net assets of businesses acquired
and other intangible assets, used in the Company's operations are reviewed for
impairment when events and circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company's policy is to record an impairment
loss when it is determined that the carrying amount of the asset exceeds the sum
of the expected undiscounted future cash flows resulting from use of the asset
and its eventual disposition. Impairment losses are measured as the amount by
which the carrying amount of the asset exceeds its fair value. Long-lived assets
to be disposed are reported at the lower of the carrying amount or fair value
less cost to sell.

REVENUE RECOGNITION
Revenue is recognized for product sales generally when title and risk of loss
transfer. Service sales are generally recognized over the contractual period or
as services are performed. Both product sales and service revenues are
recognized when they our realized or realizable and when earned. Revenue
generally is realized or realizable and earned when all of the following
criteria are met: persuasive evidence of an arrangement

                                     - 36 -
<PAGE>   37
exists, delivery has occurred or services have been rendered, the Company's
price to the buyer is fixed or determinable and collectibility is reasonably
assured.

INCOME TAXES
United States federal and state income taxes and non-U.S. income taxes are
provided currently on the undistributed earnings of international subsidiaries
and unconsolidated affiliated entities, giving recognition to current tax rates
and applicable foreign tax credits, except when management has specific plans
for reinvestment of undistributed earnings which will result in the indefinite
postponement of their remittance. Deferred taxes are provided using the asset
and liability method for temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.

ACCRUED INSURANCE AND LOSS RESERVES
The Company retains a significant portion of the risk for workers' compensation,
automobile, general, and product liability losses. Reserves have been recorded
which reflect the undiscounted estimated liabilities including claims incurred
but not reported. Changes in the estimates of the reserves are included in net
income in the period determined. Amounts estimated to be paid within one year
have been classified as Other current liabilities, with the remainder included
in Insurance liabilities.

FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's subsidiaries outside the United
States, except for those subsidiaries located in highly inflationary economies,
are principally measured using the local currency as the functional currency.
Assets and liabilities of these subsidiaries are translated at the exchange
rates as of the balance sheet date. Resulting translation adjustments are
recorded in the cumulative translation adjustment, a separate component of Other
comprehensive income (expense). Income and expense items are translated at
average monthly exchange rates. Gains and losses from foreign currency
transactions are included in net income. For subsidiaries operating in highly
inflationary economies, gains and losses on foreign currency transactions and
balance sheet translation adjustments are included in net income.

The functional currency for the Company's operations in Mexico was the U.S.
dollar for 1997 and 1998. Effective January 1999, the three-year cumulative rate
of inflation fell below 100%. As of January 1, 1999, the Company measures the
financial statements of its Mexican entities using the Mexican new peso as the
functional currency.

Effective January 1998, the Company's operations in Brazil were no longer
accounted for as a highly inflationary economy, because the three-year
cumulative rate of inflation fell below 100%. The Company measures the financial
statements of its Brazilian entities using the Brazilian real as the functional
currency.


                                     - 37 -
<PAGE>   38
FINANCIAL INSTRUMENTS AND HEDGING
The Company has subsidiaries principally operating in North America, South
America, Europe, and Asia-Pacific. These operations are exposed to fluctuations
in related foreign currencies in the normal course of business. The Company
seeks to reduce exposure to foreign currency fluctuations through the use of
forward exchange contracts. The Company does not hold or issue financial
instruments for trading purposes, and it is the Company's policy to prohibit the
use of derivatives for speculative purposes. The Company has a Foreign Currency
Risk Management Committee that meets periodically to monitor foreign currency
risks.

The Company executes foreign currency forward exchange contracts to hedge
transactions of its non-U.S. subsidiaries for firm purchase commitments, to
hedge variable cash flows of forecasted transactions and for export sales
denominated in foreign currencies. These contracts generally are for 90 to 180
days or less. For those contracts that hedge an identifiable transaction, gains
or losses are deferred and accounted for as part of the underlying transaction.
The cash flows from these contracts are classified consistent with the cash
flows from the transaction being hedged. The Company also enters into foreign
currency forward exchange contracts for intercompany foreign currency
commitments. These forward exchange contracts do not qualify as hedges.
Therefore, gains and losses are recognized in income based on fair market value.

OPTIONS FOR COMMON STOCK
The Company uses the intrinsic value method to account for options granted to
employees for the purchase of common stock. No compensation expense is
recognized on the grant date, since at that date, the option price equals the
market price of the underlying common stock. The Company discloses the pro forma
effect of accounting for stock options under the fair value method.

EARNINGS PER SHARE
Basic earnings per share is calculated using the average shares of common stock
outstanding, while diluted earnings per share reflects the potential dilution
that could occur if stock options were exercised.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

RECLASSIFICATIONS
Certain reclassifications have been made to prior years' amounts to conform with
current year classifications.


                                     - 38 -
<PAGE>   39
NEW FINANCIAL ACCOUNTING STANDARDS ISSUED
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133), with
an amended date effective for fiscal years beginning after June 15, 2000. SFAS
No. 133 was amended by SFAS No. 138 (SFAS 138). SFAS 133 requires that an entity
recognize all derivative instruments as either assets or liabilities on its
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction,
and, if it is, the type of hedge transaction. The Company has adopted SFAS 133
and SFAS 138 as of January 1, 2001. Due to the Company's limited use of
derivative instruments, SFAS 133 and SFAS 138 did not have a material effect on
the financial position or results of operations of the Company. The net
cumulative effect adjustment as of January 1, 2001 was an expense of $21
thousand.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (SFAS 140),
which replaces SFAS No. 125 (SFAS 125) with the same title. It revises the
standards for securitizations and other transfers of financial assets and
collateral and requires additional disclosures, but otherwise retains most of
SFAS 125's provisions. The Company will adopt SFAS 140 in the second quarter of
2001. The adoption of SFAS 140 is not expected to have a material effect on the
Company's financial position or results of operations.

NEW STAFF ACCOUNTING BULLETIN ISSUED
In December 1999, the Securities and Exchange Commission (the "Commission")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB 101), which provides guidance on the recognition, presentation,
and disclosure of revenue in financial statements filed with the Commission. The
Company adopted SAB 101 in the fourth quarter of 2000 with no material effect on
revenue.

NEW EMERGING ISSUES TASK FORCE (EITF) CONSENSUS
In July and September 2000, the EITF reached a consensus in EITF Issue No.
00-10, "Accounting for Shipping and Handling Fees and Costs", by agreeing that
shipping and handling fees billed to a customer in a sales transaction must be
classified as revenues and that shipping costs should not be netted against
sales. The EITF also requires that all costs incurred for shipping and handling
be classified as expenses, preferably in cost of sales.

It was determined that certain operations of the Company had previously recorded
shipping and handling costs by netting them against revenues. The Company has
reclassified these costs to cost of services sold or cost of products sold, as
applicable. As a result, $34 million, $33 million and $32 million of shipping
and handling costs associated with the sales of the Company's products and
services for 2000, 1999 and 1998, respectively, have been reclassified. Pre-tax
income, net income and earnings per share are not affected by this change.


                                     - 39 -
<PAGE>   40
2.       DISCONTINUED DEFENSE BUSINESS

On August 25, 1997, the Company and FMC Corporation signed an agreement to sell
United Defense, L.P. for $850 million, and the sale was completed on October 6,
1997. Prior to the sale, FMC had been the managing general partner and 60% owner
of United Defense, L.P., while the Company owned the balance of 40% as the
limited partner. United Defense supplies ground combat and naval weapons systems
for the U.S. and military customers worldwide.

Disbursements related to the discontinued defense business, principally claim
settlements and legal fees, are shown separately on the Consolidated Statement
of Cash Flows for 2000, 1999 and 1998.


                                     - 40 -
<PAGE>   41
3.     ACQUISITIONS AND DISPOSITIONS


ACQUISITIONS
On June 16, 2000 the Company received all required regulatory approvals and
declared its offer to acquire SGB Group Plc (SGB) wholly unconditional. Harsco
took majority ownership in SGB and subsequently acquired 100% of the shares.
SGB, based in the UK, is one of Europe's largest suppliers of scaffolding,
forming and related access products and services. SGB also has operations in
North America, the Middle East and the Asia -Pacific region. SGB had 1999 sales
of 283 million British pound sterling (approximately $423 million using a
December 31, 2000 exchange rate).

The acquisition of SGB has been accounted for using the purchase method of
accounting, and accordingly, the operating results of SGB have been included in
the consolidated results of the Company since the date of acquisition. The
purchase price allocation is based upon appraisal values and management
estimates.

  The purchase price of SGB has been allocated as follows:

<TABLE>
<S>                                                                          <C>
         (IN MILLIONS)
         Working capital, other than cash                                    $      21.3
         Property, plant and equipment                                             211.6
         Other assets                                                               45.3
         Cost in excess of net assets acquired                                     127.1
         Non-current liabilities                                                  (133.4)
                                                                             -----------
         Purchase price, net of cash received                                $     271.9
                                                                             ===========
</TABLE>

The purchase price allocation was reclassified in the fourth quarter of 2000.
The reclassification was due principally to the netting of deferred income taxes
in the countries of origin. Additionally, cost in excess of net assets acquired
increased by $14.2 million since September 30, 2000 due principally to a
decrease in pension assets based upon an actuarial study.

In May 2000, the Company completed the acquisitions of Bergslagens Stalservice
AB and Bergslagens Suomi Oy (collectively Bergslagens). The two companies
provide specialized slag processing and metal recovery services to steel mills
in Sweden and Finland, respectively. The two organizations together recorded
1999 sales of nearly $10 million.

In October 1999, the Company acquired Charter plc's Pandrol Jackson railway
track maintenance business. The transaction was completed for approximately $48
million in cash plus assumption of liabilities, for a total consideration of
approximately $65 million. Pandrol Jackson manufactures and markets worldwide a
wide range of equipment and services used in railway track maintenance. In
December 1999, the Company completed the sale of the railway switch, crossing
and transit grinding business obtained as part of the Pandrol Jackson railway
maintenance acquisition. This business with annual sales of approximately $6
million was divested in accordance with an agreement with the Department of
Justice as a condition to the acquisition of Pandrol Jackson.

                                     - 41 -
<PAGE>   42
3.     ACQUISITIONS AND DISPOSITIONS (CONTINUED)

In July 1999 and February 1999, respectively, the Company acquired certain
assets and assumed certain liabilities of Structural Accessories, Inc. and
Natural Gas Vehicle Systems, Inc. The purchase prices for these acquisitions
approximated $2 million and $3 million, respectively.

All acquisitions have been accounted for using the purchase method of accounting
with cost in excess of net assets of businesses acquired totaling $137.0 million
in 2000 and $9.4 million in 1999. Results of operations are included in income
since the dates of acquisition.

The following unaudited pro forma consolidated net sales, net income, and
earnings per share data are presented as if the above businesses had been
acquired at the beginning of the periods presented.

<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA INFORMATION FOR YEARS ENDED DECEMBER 31          2000            1999
                                                        ---------       ---------
<S>                                                     <C>             <C>
       Net sales                                        $   2,208       $   2,220

       Net income                                              93             101

       Basic earnings per share                              2.27            2.47

       Diluted earnings per share                            2.27            2.47
                                                        ---------       ---------
</TABLE>

The unaudited pro forma information is not necessarily indicative of the results
of operations that would have occurred had the purchases been made at the
beginning of the periods presented, or of the future results of the combined
operations.

The unaudited pro forma information includes the actual results of the acquired
businesses prior to the acquisition dates, which includes for the year 2000
approximately $4 million of non-tax deductible costs incurred by SGB in defense
of the acquisition. These results do not reflect the effect of reorganization
actions, synergies, cost reductions and other benefits resulting from the
combinations. Additionally, the unaudited pro-forma information reflects
amortization of the cost in excess of net assets acquired and interest expense
on assumed borrowings for acquisitions for the full periods presented.

                                     - 42 -
<PAGE>   43
3.     ACQUISITIONS AND DISPOSITIONS (CONTINUED)

In April 2000, the Company agreed to invest $20 million for a 49 percent
ownership interest in S3Networks, LLC, a start-up company providing internet and
e-business infrastructure consulting services primarily to Fortune 1000
corporations. Cash of $10 million has been invested through December 31, 2000
with an additional $10 million due to be paid over a period not to exceed
fifteen months from the initial investment date. The investment is being
accounted for under the equity method. Since the Company is the principal
provider of initial capital for S3Networks, LLC, the Company is recording 100%
of net losses to the extent of its initial $20 million investment. However, the
Company will also record 100% of subsequent net income until the entire initial
investment amount is reinstated. Subsequent to reinstatement of the initial
investment amount, the company will record net income to the extent of its
ownership percentage of S3Networks, LLC.


DISPOSITIONS
In June 2000, the Company completed the sales of Gunness Wharf Limited and
Flixborough Wharf Limited, and in March 2000 completed the sale of its natural
gas vehicle automotive valve product line. The Company completed the sales of
the Manchester truck dealership in September 1999; the pavement marking and
vegetation control business of Chemi-Trol in August 1999; and Astralloy Wear
Technology in March 1999.

PENDING DIVESTITURES
The Company announced on September 27, 2000 that its Board of Directors had
approved plans to divest three non-core operations as part of Harsco's
continuing strategic repositioning as a leading worldwide industrial services
company.

The operations include Capitol Manufacturing, which produces pipe fittings and
related products for the industrial plumbing, electrical, and other markets;
Patterson-Kelley, a manufacturer of industrial and commercial boilers, water
heaters, and blenders; and Faber Prest Distribution, a UK-based materials
transport business which Harsco acquired in 1998 as part of mill services
provider Faber Prest Plc.

In the first quarter of 2001, due to changing economic conditions, the Company
reversed its decision to divest Capitol Manufacturing.

                                     - 43 -
<PAGE>   44
4.   ACCOUNTS RECEIVABLE AND INVENTORIES

Accounts receivable are net of an allowance for doubtful accounts of $26.1
million and $13.3 million at December 31, 2000 and 1999, respectively. The
acquisition of SGB increased the allowance for doubtful accounts by $15.8
million as of December 31, 2000.

Inventories consist of:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                 2000           1999
                                             --------       --------

<S>                                          <C>            <C>
     Finished goods                          $ 68,519       $ 37,715
     Work-in-process                           36,751         37,198
     Raw materials and purchased parts         73,265         76,911
     Stores and supplies                       20,582         20,374
                                             --------       --------
                                             $199,117       $172,198
                                             ========       ========

Valued at lower of cost or market:
     LIFO basis                              $124,189       $132,366
     FIFO basis                                12,898         16,483
     Average cost basis                        62,030         23,349
                                             --------       --------
                                             $199,117       $172,198
                                             ========       ========
</TABLE>

Inventories valued on the LIFO basis at December 31, 2000 and 1999 were
approximately $33.2 million and $28.4 million, respectively, less than the
amounts of such inventories valued at current costs.

As a result of reducing certain inventory quantities valued on the LIFO basis,
net income increased from that which would have been recorded under the FIFO
basis of valuation by $0.03 million, $1.1 million and $0.2 million in 2000, 1999
and 1998, respectively.


                                     - 44 -
<PAGE>   45
5.     PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of:

<TABLE>
<CAPTION>
(IN THOUSANDS)                         2000             1999
                                    ----------       ----------

<S>                                 <C>              <C>
Land and improvements               $   46,609       $   28,847
Buildings and improvements             168,719          147,742
Machinery and equipment              1,489,906        1,243,437
Uncompleted construction                66,260           79,797
                                    ----------       ----------
                                     1,771,494        1,499,823
Less accumulated depreciation          874,713          828,277
                                    ----------       ----------
                                    $  896,781       $  671,546
                                    ==========       ==========
</TABLE>

The estimated useful lives of different types of assets are generally:


<TABLE>
<S>                                                      <C>
Land improvements                                        5 to 20 years

Buildings and improvements                               10 to 50 years

Certain plant, buildings and installations               3 to 10 years
       (Principally Mill Services Segment)

Machinery and equipment                                  3 to 20 years
</TABLE>


                                     - 45 -
<PAGE>   46
6.     DEBT AND CREDIT AGREEMENTS

On October 27, 2000, the Company issued 200 million British pound sterling (U.S.
$294 million) 7.25% notes due 2010. The interest payable annually commences on
October 27, 2001. The net proceeds of the issue were used to refinance certain
bank debt that was used to fund the acquisition of SGB Group.

The Company has a $350 million credit facility through a syndicate of 13 banks.
Borrowings under this agreement are available in U.S. dollars or Eurocurrencies
and the credit facility serves as back-up to the Company's U.S. commercial paper
program. The facility is in two parts. The first part, referred to as the
364-day credit agreement, permits borrowings up to $131 million and expires in
September 2001. Borrowings outstanding at expiration may be repaid over the
succeeding 12 months. The second part, referred to as the five-year credit
agreement, permits borrowings up to $219 million and expires in September 2005.
All borrowings under the five-year credit agreement are due at expiration.
Interest rates are either negotiated, based upon the U.S. federal funds
interbank market, prime, or based upon the London Interbank Offered Rate (LIBOR)
plus a margin. The Company pays a facility fee (.0825% per annum as of December
31, 2000) that varies based upon its credit ratings. Prior to renegotiating the
terms of its credit facility in September 2000, the Company formerly had a $400
million facility that would have matured in July 2001. At December 31, 2000 and
1999, there were no borrowings outstanding under either facility.

The Company can also issue up to $350 million of short-term notes in the U.S.
commercial paper market. In addition, the Company has a three billion Belgian
franc commercial paper program (approximately U.S. $70 million at December 31,
2000) which is used to fund the Company's international operations. The Company
limits the aggregate commercial paper and credit facility borrowings at any one
time to a maximum of $350 million. Commercial paper interest rates, which are
based on market conditions, have been lower than comparable rates available
under the credit facility. At December 31, 2000 and 1999, $268.8 million and
$233.7 million of commercial paper was outstanding, respectively. Commercial
paper is classified as long-term debt at December 31, 2000 and 1999, because the
Company has the ability and intent to refinance it on a long-term basis through
existing long-term credit facilities.

Subsequent to December 31, 2000 the Company executed two $50 million credit
facility agreements with European-based banks. Borrowings under these
facilities, which expire in December 2001 and January 2002, are available in
Eurocurrencies or U.S. dollars and will be primarily used to finance the
Company's European operations. Borrowings outstanding at expiration may be
repaid over the succeeding 4 years. Interest rates are based upon LIBOR plus a
margin.

Short-term debt amounted to $47.7 million and $32.0 million at December 31, 2000
and 1999, respectively. The weighted average interest rate for short-term
borrowings at December 31, 2000 and 1999 was 5.7% and 4.6%, respectively.


                                     - 46 -
<PAGE>   47
6.     DEBT AND CREDIT AGREEMENTS (CONTINUED)

Long-term debt consists of:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                     2000           1999
                                                                 --------       --------
<S>                                                              <C>            <C>
7.25% notes due October 27, 2010                                 $294,087       $     --
6.0% notes due September 15, 2003                                 150,000        150,000
Commercial paper borrowings, with a weighted
     average interest rate of 7.0% as of December 31, 2000        268,794        233,746
Faber Prest loan notes due October 31, 2008 with interest
     based on Sterling LIBOR minus .75% (5.5% at
     December 31, 2000)                                            12,898         16,285
Industrial development bonds, payable in varying
     amounts from 2001 to 2010 with a weighted
     average interest rate of 6.2% as of December 31, 2000         13,400         11,400
Other financing payable in varying
     amounts to 2007 with a weighted
     average interest rate of 5.8% as of December 31, 2000         49,890         11,666
                                                                 --------       --------
                                                                  789,069        423,097
Less: current maturities                                           14,619          4,593
                                                                 --------       --------
                                                                 $774,450       $418,504
                                                                 ========       ========
</TABLE>

The credit facility and certain notes payable agreements contain covenants
restricting, among other things, the amount of debt, as defined in the
agreement, that can be issued. At December 31, 2000, the Company was in
compliance with these covenants.

The maturities of long-term debt for the four years following December 31, 2001
are:

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S>                      <C>              <C>            <C>
         2002            $ 71,321         2004           $  7,517
         2003            $154,870         2005           $226,442
</TABLE>

Cash payments for interest on all debt were (in millions) $44.7 , $25.0, and
$20.0 in 2000, 1999 and 1998, respectively. Capitalized interest was (in
thousands) $2, $893, and $10 in 2000, 1999, and 1998, respectively.

The Company has on file with the Securities and Exchange Commission a Form S-3
shelf registration for the possible issuance of up to an additional $200 million
of new debt securities, preferred stock, or common stock.


                                     - 47 -
<PAGE>   48
7.     LEASES

The Company leases certain property and equipment under noncancelable operating
leases. Rental expense under such operating leases was (in millions) $30.3,
$16.9, and $17.6 in 2000, 1999 and 1998, respectively. Approximately $9.3
million of the increase for 2000 is due to the inclusion of the SGB acquisition
as of June 2000.

Future minimum payments under operating leases with noncancelable terms are:


(IN THOUSANDS)

<TABLE>
<S>                                        <C>
         2001                              $33,142

         2002                               27,056

         2003                               21,051

         2004                               21,808

         2005                                6,509

         After 2005                         23,816
</TABLE>


                                     - 48 -
<PAGE>   49
8.       EMPLOYEE BENEFIT PLANS

PENSION BENEFITS
The Company has pension and profit sharing retirement plans, most of which are
noncontributory, covering substantially all of its employees. The benefits for
salaried employees generally are based on years of service and the employee's
level of compensation during specified periods of employment. Plans covering
hourly employees generally provide benefits of stated amounts for each year of
service. The multi-employer plans in which the Company participates provide
benefits to certain unionized employees. The Company's funding policy for
qualified plans is consistent with statutory regulations and customarily equals
the amount deducted for income tax purposes. The Company's policy is to amortize
prior service costs over the average future service period of active plan
participants.

A change to the pension information presented for 2000 is the inclusion of SGB
pension income, obligations and pension assets acquired in June 2000.

<TABLE>
<CAPTION>
(IN THOUSANDS)                                     U. S. PLANS                              INTERNATIONAL PLANS
                                    ----------------------------------------        ----------------------------------------
                                      2000            1999            1998            2000            1999            1998
<S>                                 <C>             <C>             <C>             <C>             <C>             <C>
PENSION EXPENSE
Defined benefit plans:
  Service cost                      $  8,017        $  9,514        $  7,971        $  8,559        $  6,369        $  5,814
  Interest cost                       12,069          11,427          10,339          18,727          11,622          11,027
  Expected return on plan assets     (22,448)        (20,012)        (21,227)        (30,054)        (16,836)        (18,632)
  Recognized prior service costs       1,368           1,309           1,219             949             742              88
  Recognized (gains) or losses        (1,853)            272          (2,026)           (953)              5          (2,008)
  Amortization of transition asset    (1,834)         (1,834)         (1,834)           (567)           (613)           (618)
  Curtailment losses                     360              --             542              --              --              --
                                    --------        --------        --------        --------        --------        --------
                                      (4,321)            676          (5,016)         (3,339)          1,289          (4,329)
Multi-employer plans                   4,334           3,853           3,011           1,039           1,069           1,043
Defined contribution plans             1,401           1,165           2,673           4,386           3,301           3,370
                                    --------        --------        --------        --------        --------        --------
  Pension expense                   $  1,414        $  5,694        $    668        $  2,086        $  5,659        $     84
                                    ========        ========        ========        ========        ========        ========
</TABLE>


                                     - 49 -
<PAGE>   50
8.     EMPLOYEE BENEFIT PLANS (CONTINUED)

The change in the financial status of the pension plans and amounts recognized
in the Consolidated Balance Sheet at December 31, 2000 and 1999 are:


<TABLE>
<CAPTION>
PENSION BENEFITS                                             U. S. PLANS                  INTERNATIONAL PLANS
                                                     --------------------------        --------------------------
(IN THOUSANDS)                                          2000             1999             2000             1999
<S>                                                  <C>              <C>              <C>              <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year              $ 159,055        $ 170,167        $ 203,913        $ 201,287
Service cost                                             8,017            9,514            8,558            6,368
Interest cost                                           12,069           11,427           18,728           11,621
Plan participants' contributions                            --               --            2,673            1,887
Amendments                                               1,127            1,076              298            4,340
Actuarial (gain)                                       (10,692)         (35,638)          (2,044)          (6,828)
Curtailment loss                                           360               --               --               --
Benefits paid                                           (6,672)          (6,065)         (12,952)          (9,164)
Obligations of acquired companies                           --            8,574          229,608               --
Effect of foreign currency                                  --               --          (14,931)          (5,598)
                                                     ---------        ---------        ---------        ---------

    Benefit obligation at end of year                $ 163,264        $ 159,055        $ 433,851        $ 203,913
                                                     =========        =========        =========        =========

CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year       $ 239,030        $ 211,785        $ 276,899        $ 246,456
Actual return on plan assets                             6,506           24,522           38,420           43,170
Employer contributions                                   2,709              731            2,629              694
Plan participants' contributions                            --               --            2,673            1,887
Benefits paid                                           (6,672)          (6,065)         (12,808)          (9,038)
Plan assets of acquired companies                           --            8,057          269,787               --
Effect of foreign currency                                  --               --          (20,738)          (6,270)
                                                     ---------        ---------        ---------        ---------
    Fair value of plan assets at end of year         $ 241,573        $ 239,030        $ 556,862        $ 276,899
                                                     =========        =========        =========        =========

FUNDED STATUS:
Funded status at end of year                         $  78,310        $  79,975        $ 123,011        $  72,985
Unrecognized net (gain)                                (42,621)         (49,724)         (49,173)         (43,092)
Unrecognized transition (asset)                         (8,244)         (10,078)          (2,262)          (3,144)
Unrecognized prior service cost                         10,900           11,142           12,683           14,392
                                                     ---------        ---------        ---------        ---------
    Net amount recognized                            $  38,345        $  31,315        $  84,259        $  41,141
                                                     =========        =========        =========        =========

AMOUNTS RECOGNIZED IN THE CONSOLIDATED
    BALANCE SHEET CONSIST OF
Prepaid benefit cost                                 $  47,235        $  40,066        $  89,171        $  45,848
Accrued benefit liability                              (14,416)         (13,639)          (5,825)          (5,268)
Intangible asset                                         2,178            2,027              539              561
Accumulated other comprehensive income                   3,348            2,861              374               --
                                                     ---------        ---------        ---------        ---------
    Net amount recognized                            $  38,345        $  31,315        $  84,259        $  41,141
                                                     =========        =========        =========        =========
</TABLE>

Plan assets include equity and fixed-income securities. At December 31, 2000 and
1999, 732,640 shares of the Company's common stock with a fair market value of
$18.1 million and $23.3 million, respectively, are included in plan assets.
Dividends paid on such stock amounted to $0.7 million in both 2000 and 1999.


                                     - 50 -
<PAGE>   51
8.       EMPLOYEE BENEFIT PLANS (CONTINUED)

The actuarial assumptions used for the defined benefit pension plans are:

<TABLE>
<CAPTION>
                                                             U. S. PLANS                           INTERNATIONAL PLANS
                                                   -------------------------------         ------------------------------
                                                   2000         1999          1998         2000         1999         1998
                                                   ----         ----          ----         ----         ----         ----
<S>                                                 <C>         <C>           <C>           <C>          <C>         <C>
Weighted average assumed discount rates             8.0%        7.75%         6.75%         6.2%         6.2%        6.0%
Weighted average expected long-term rates of        9.5%        9.50%         9.50%         7.9%         7.5%        7.1%
   return on plan assets
Rates of compensation increase                      4.0%        4.00%         4.50%         4.4%         4.4%        4.2%
</TABLE>

For the U.S. plans, the projected benefit obligation, accumulated benefit
obligation, and fair value of plan assets for pension plans with accumulated
benefit obligations in excess of plan assets were $22.7 million, $21.9 million,
and $9.0 million, respectively, as of December 31, 2000, and $24.8 million,
$24.7 million, and $12.3 million, respectively, as of December 31, 1999.

For the international plans, the projected benefit obligation, accumulated
benefit obligation, and fair value of plan assets for pension plans with
accumulated benefit obligations in excess of plan assets were $9.8 million, $8.8
million, and $3.9 million, respectively, as of December 31, 2000, and $8.9
million, $7.7 million, and $3.4 million, respectively, as of December 31, 1999.


                                     - 51 -
<PAGE>   52
8.     EMPLOYEE BENEFIT PLANS (CONTINUED)

POSTRETIREMENT BENEFITS
The Company has postretirement life insurance benefits for a number of
employees, and postretirement health care benefits for a limited number of
employees mainly under plans related to acquired companies. The cost of life
insurance and health care benefits are accrued for current and future retirees
and are recognized as determined under the projected unit credit actuarial
method. Under this method, the Company's obligation for postretirement benefits
is to be fully accrued by the date employees attain full eligibility for such
benefits. The Company's postretirement health care and life insurance plans are
unfunded.

The postretirement benefit expense (health care and life insurance) was $0.7
million in 2000, $0.4 million in 1999, and $0.3 million in 1998. The components
of these expenses are not shown separately as they are not material.

The changes in the postretirement benefit liability recorded in the Consolidated
Balance Sheet are:

<TABLE>
<CAPTION>
POSTRETIREMENT BENEFITS
(IN THOUSANDS)                                                 2000            1999
                                                             --------        --------
<S>                                                          <C>             <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year                      $ 10,304        $  6,421
Service cost                                                      182             129
Interest cost                                                     761             466
Actuarial loss                                                    231             319
Plan participants contributions                                    32              --
Benefits paid                                                    (660)           (325)
Plan amendments                                                   403              --
Obligation of acquired company                                     --           3,294
                                                             --------        --------
    Benefit obligation at end of year                        $ 11,253        $ 10,304
                                                             ========        ========

FUNDED STATUS:
Funded status at end of year                                 $(11,253)       $(10,304)
Unrecognized prior service cost                                   367             (39)
Unrecognized net actuarial (gain)                                (902)         (1,328)
                                                             --------        --------
    Net amount recognized as accrued benefit liability       $(11,788)       $(11,671)
                                                             ========        ========
</TABLE>


                                     - 52 -
<PAGE>   53
8.     EMPLOYEE BENEFIT PLANS (CONTINUED)

The actuarial assumptions used for postretirement benefit plans are:

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)                                                 2000            1999            1998
                                                                     --------        --------        --------
<S>                                                                  <C>             <C>             <C>
Assumed discount rate                                                    8.00%           7.75%           6.75%
Health care cost trend rate                                              7.50%           7.50%           8.30%
Decreasing to ultimate rate                                              6.50%           6.50%           5.50%

Effect of one percent increase in health care cost trend rate:
         On cost components                                          $     41        $     21        $     21
         On accumulated benefit obligation                           $    510        $    415        $    185
                                                                     --------        --------        --------
</TABLE>

For 2000, a one percent decrease in the health care cost trend rate would
decrease the cost component by $43 thousand and decrease the accumulated benefit
obligation by $480 thousand.

It is anticipated that the health care cost trend rate will decrease from 7.5%
in 2001 to 6.5% in the year 2003.

SAVINGS PLAN
The Company has a 401(k) savings plan which covers substantially all U.S.
employees with the exception of employees represented by a collective bargaining
agreement, unless the agreement expressly provides otherwise. Employee
contributions are generally determined as a percentage of covered employee's
compensation. The expense for contributions to the plan by the Company was (in
millions) $4.9, $4.4, and $4.8 for 2000, 1999, and 1998, respectively.

OTHER EMPLOYEE BENEFIT PLANS
The Company offers various other benefit plans to its employees. In 2000, the
Company amended certain plans in the United States which resulted in a one-time
pre-tax cost reduction of approximately $5.3 million.


                                     - 53 -
<PAGE>   54
8.     EMPLOYEE BENEFIT PLANS (CONTINUED)

EXECUTIVE INCENTIVE COMPENSATION PLAN
Under the 1995 Executive Incentive Compensation Plan, the Management Development
and Compensation Committee awarded 60% of the value of any earned annual
incentive compensation award to be paid to participants in the form of cash and
40% in the form of restricted shares of the Company's common stock. Upon the
request of the participant, the Committee was authorized to make the incentive
award payable all in cash, subject to a 25% reduction in the total amount of the
award. Awards were made in February of the following year. The Company accrued
amounts based on performance reflecting the value of cash and common stock which
was anticipated to be earned for the year. Compensation expense relating to
these awards was (in millions) $5.6, $3.8, and $3.7 in 2000, 1999 and 1998,
respectively.

Effective January 1, 1999, the restricted stock portion of the compensation plan
was discontinued and the terms of the plan were amended to provide for payment
of the incentive compensation all in cash. On January 6, 1999, the Company
repurchased from the participants, at the original award value, the restricted
shares awarded in 1998. For all other shares, the restrictions were removed
effective January 6, 1999.

                                     - 54 -
<PAGE>   55
9.     INCOME TAXES

Income before income taxes and minority interest in the Consolidated Statement
of Income consists of:

<TABLE>
<CAPTION>
(IN THOUSANDS)                          2000             1999             1998
                                      ---------        ---------        ---------

<S>                                   <C>              <C>              <C>
     United States                    $  68,000        $  78,689        $ 121,091
     International                       80,591           68,741           58,684
                                      ---------        ---------        ---------
                                      $ 148,591        $ 147,430        $ 179,775
                                      =========        =========        =========

Provision for income taxes:
     Currently payable:
         Federal                      $   5,113        $  22,474        $  37,297
         State                             (536)           1,743            2,835
         International                   21,803           25,203           23,468
                                      ---------        ---------        ---------
                                         26,380           49,420           63,600

     Deferred federal and state          17,375            3,890            6,552
     Deferred international               3,050           (1,711)          (2,791)
                                      ---------        ---------        ---------
                                      $  46,805        $  51,599        $  67,361
                                      =========        =========        =========
</TABLE>

Cash payments for income taxes were (in millions) $19.3, $50.7, and $38.8, for
2000, 1999, and 1998, respectively. Approximately $5.4 million of the taxes paid
in 1998 are related to the gain on the disposal of the defense business.

                                     - 55 -
<PAGE>   56
9.     INCOME TAXES (CONTINUED)

The following is a reconciliation of the normal expected statutory U.S. federal
income tax rate to the effective rate as a percentage of Income before income
taxes and minority interest as reported in the Consolidated Statement of Income:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                  ------         ------         ------
<S>                                               <C>            <C>            <C>
U.S. federal income tax rate                        35.0%          35.0%          35.0%
State income taxes, net of federal
     income tax benefit                               .4            1.6            1.6
Export sales corporation benefit                     (.3)           (.5)           (.6)
Losses for which no tax benefit
     was recorded                                    1.3             .3            1.3
Difference in effective tax rates on
     international earnings and remittances         (5.7)          (1.9)          (1.3)
Nondeductible acquisition costs                      1.9            2.1            2.0
Other, net                                          (1.1)          (1.6)           (.5)
                                                  ------         ------         ------

Effective income tax rate                           31.5%          35.0%          37.5%
                                                  ======         ======         ======
</TABLE>

The tax effects of the primary temporary differences giving rise to the
Company's deferred tax assets and liabilities for the years ended December 31,
2000 and 1999 are:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                2000                          1999
                                     ------------------------       ------------------------
DEFERRED INCOME TAXES                 ASSET         LIABILITY        ASSET         LIABILITY
                                     --------       ---------       --------       ---------
<S>                                  <C>             <C>            <C>             <C>
Depreciation                         $     --        $ 48,918       $     --        $ 36,580
Expense accruals                       29,796              --         34,975              --
Inventories                             3,224              --          5,294              --
Provision for receivables               2,211              --          3,867              --
Postretirement benefits                 2,975              --          4,221              --
Deferred revenue                           --           4,181             --           4,196
Unrelieved foreign tax credits          6,566              --          1,264              --
Unrelieved foreign tax losses           4,749              --          6,694              --
Unrelieved domestic tax losses          2,085              --          2,424              --
Pensions                                   --          37,653             --          22,923
Other                                     459              --             --           1,913
                                     --------        --------       --------        --------
                                       52,065          90,752         58,739          65,612
Valuation allowance                   (11,659)             --         (5,309)             --
                                     --------        --------       --------        --------
Total deferred income taxes          $ 40,406        $ 90,752       $ 53,430        $ 65,612
                                     ========        ========       ========        ========
</TABLE>

At December 31, 2000 and 1999, Other current assets included deferred income tax
benefits of $29.8 million and $35.0 million, respectively.


                                     - 56 -
<PAGE>   57
9.     INCOME TAXES (CONTINUED)

At December 31, 2000, certain of the Company's subsidiaries had total available
net operating loss carryforwards ("NOLs") of approximately $27.1 million, of
which approximately $14.8 million may be carried forward indefinitely and $12.3
million have varying expiration dates. Included in the total are $10.7 million
of preacquisition NOLs.

At December 31, 2000, certain of the Company's subsidiaries had total available
foreign tax credit carryforwards of approximately $6.6 million, of which
approximately $5.3 million may be carried forward five years and $1.3 million
have varying expiration dates.

During 2000 and 1999, $1.0 million and $2.3 million, respectively, of
preacquisition NOLs were utilized by the Company, resulting in tax benefits of
$0.4 million and $0.8 million, respectively.

The valuation allowance of $11.7 million and $5.3 million at December 31, 2000
and 1999, respectively, relates principally to cumulative unrelieved foreign tax
credits and tax losses which are uncertain as to realizability. To the extent
that the preacquisition NOLs are utilized in the future and the associated
valuation allowance reduced, the tax benefit will be allocated to reduce the
cost in excess of net assets of businesses acquired.

The change in the valuation allowances for 2000 and 1999 results primarily from
the utilization of international tax loss carryforwards, generation of foreign
tax credit carryforwards and the release of valuation allowances in certain
international jurisdictions based on the Company's revaluation of the
realizability of future benefits. The release of valuation allowances in certain
jurisdictions was allocated to reduce the cost in excess of net assets of
businesses acquired by $0.2 million, and $0.3 million in 2000 and 1999,
respectively.

                                     - 57 -
<PAGE>   58
10. COMMITMENTS AND CONTINGENCIES

DISCONTINUED DEFENSE BUSINESS - CONTINGENCIES

FEDERAL EXCISE TAX AND OTHER MATTERS RELATED TO THE FIVE-TON TRUCK CONTRACT In
1995, the Company, the United States Army ("Army"), and the United States
Department of Justice concluded a settlement of Harsco's previously reported
claims against the Army relating to Federal Excise Tax ("FET") arising under a
completed 1986 contract for the sale of five-ton trucks to the Army. On
September 27, 1995, the Army paid the Company $49 million in accordance with the
settlement terms. The Company released the Army from any further liability for
those claims, and the Department of Justice released the Company from a
threatened action for damages and civil penalties based on an investigation
conducted by the Department's Commercial Litigation Branch that had been pending
for several years.

The settlement preserves the rights of the parties to assert claims and defenses
under the Internal Revenue Code, and rights of the Army and the Company to claim
certain amounts that may be owed by either party to reconcile possible
underpayments or overpayments on the truck contract as part of the formal
contract close-out process.

The settlement does not resolve the claim by the Internal Revenue Service
("IRS") that, contrary to the Company's position, certain cargo truck models
sold by the Company should be considered to have gross vehicle weights in excess
of the 33,000 pound threshold under FET law, are not entitled to an exemption
from FET under any other theory, and therefore are taxable. In 1999, the IRS
assessed an increase in FET of $30.4 million plus penalties of $9.3 million and
applicable interest currently estimated to be $53.7 million. In October 1999,
the Company posted an $80 million bond required as security by the IRS. This
increase in FET takes into account offsetting credits of $9.2 million, based on
a partial allowance of the Company's $31.9 million claim that certain truck
components are exempt from FET. The IRS disallowed in full the Company's
additional claim that it is entitled to the entire $52 million of FET (plus
applicable interest currently estimated by the Company to be $48.2 million) the
Company has paid on the five-ton trucks, on the grounds that such trucks qualify
for the FET exemption applicable to certain vehicles specially designed for the
primary function of off-highway transportation. In the event that the Company
ultimately receives from the IRS a refund of tax (including applicable interest)
with respect to which the Company has already received reimbursement from the
Army, the refund would be allocated between the Company and the Army. In August
2000, the Company filed legal action against the Government in the U.S. Court of
Federal Claims challenging the assessment and seeking a refund of all FET that
the Company has paid on five-ton trucks. That action is proceeding. Although
there is risk of an adverse outcome, both the Company and the Army believe that
the cargo trucks are not taxable. No recognition has been given in the
accompanying financial statements for the Company's claims with the IRS.


                                      -58-
<PAGE>   59
COMMITMENTS AND CONTINGENCIES (CONTINUED)

The settlement agreement with the Army preserved the Company's right to seek
reimbursement of after-imposed tax from the Army in the event that the cargo
trucks are determined to be taxable, but the agreement limited the reimbursement
to a maximum of $21 million. Additionally, in an earlier contract modification,
the Army accepted responsibility for $3.6 million of the potential tax, bringing
its total potential responsibility up to $24.6 million. As of September 30,
2000, the Army paid Harsco this entire amount and Harsco paid those funds to the
IRS, subject to its pending refund claim. Thus, the Company has satisfied a
portion of the disputed tax assessment. If the Company succeeds in its refund
claim against the IRS, it will owe the Army the amount recovered that
corresponds to the $24.6 million.

Even if the cargo trucks are ultimately held to be taxable, the Army's
contribution of $24.6 million toward payment of the tax (but not interest or
penalty, if any), would result in a net maximum liability for the Company of
$5.8 million plus penalties and applicable interest currently estimated to be
$11.5 million and $53.7 million, respectively. The Company believes it is
unlikely that resolution of this matter will have a material adverse effect on
the Company's financial position; however, it could have a material effect on
quarterly or annual results of operations.

OTHER DEFENSE BUSINESS LITIGATION
In 1992, the United States Government through its Defense Contract Audit Agency
commenced an audit of certain contracts for sale of tracked vehicles by the
Company to foreign governments, which were financed by the United States
Government through the Defense Security Assistance Agency. The U.S. Attorney's
Office then commenced an investigation of those contracts. In December 1999, the
Company announced that it reached agreement with the U.S. Government on behalf
of its former BMY-Combat Systems Division (BMY) to settle the matter. Under the
agreement, BMY pled guilty to a one-count misdemeanor relating to submitting
advance payment certifications which resulted in BMY receiving a portion of the
payments for the contract prematurely. In accordance with the settlement, Harsco
paid the Government a $200,000 fine in June 2000 and in July 2000 paid the $10.8
million in damages for a total of $11 million. The settlement ends the
Government's investigation and releases Harsco and BMY from further liability
for the issues under investigation. Harsco charged the payment against an
existing liability, resulting in no charge to the Company's earnings.


                                      -59-
<PAGE>   60
COMMITMENTS AND CONTINGENCIES (CONTINUED)

ENVIRONMENTAL
The Company is involved in a number of environmental remediation investigations
and clean-ups and, along with other companies, has been identified as a
"potentially responsible party" for certain waste disposal sites. While each of
these matters is subject to various uncertainties, it is probable that the
Company will agree to make payments toward funding certain of these activities
and it is possible that some of these matters will be decided unfavorably to the
Company. The Company has evaluated its potential liability, and its financial
exposure is dependent upon such factors as the continuing evolution of
environmental laws and regulatory requirements, the availability and application
of technology, the allocation of cost among potentially responsible parties, the
years of remedial activity required and the remediation methods selected. The
Consolidated Balance Sheet at December 31, 2000 and 1999 includes an accrual of
$3.5 million and $3.0 million, respectively, for environmental matters. The
amounts affecting pre-tax earnings related to environmental matters totaled $1.8
million of expense in 2000, $0.7 million of income in 1999, and $0.8 million of
expense in 1998.

The liability for future remediation costs is evaluated on a quarterly basis.
Actual costs to be incurred at identified sites in future periods may vary from
the estimates, given inherent uncertainties in evaluating environmental
exposures. The Company does not expect that any sum it may have to pay in
connection with environmental matters in excess of the amounts recorded or
disclosed above would have a material adverse effect on its financial position
or results of operations.

In the first quarter of 2000 the U.S. Environmental Protection Agency issued a
Notice of Violation to the Company for violations of the Clean Air Act arising
from slag dust emissions at one of the Company's mill services locations. The
Agency is seeking abatement of dust emissions at the site and has advised that
it is seeking financial penalties which exceed $100,000. The Company is
cooperating with the mill and the Agency to abate the dust emissions and is in
settlement discussions with the Agency.

OTHER
The Company is subject to various other claims, legal proceedings, and
investigations covering a wide range of matters that arose in the ordinary
course of business. In the opinion of management, all such matters are
adequately covered by insurance or by accruals, and if not so covered, are
without merit or are of such kind, or involve such amounts, as would not have a
material adverse effect on the financial position or results of operations of
the Company.


                                      -60-
<PAGE>   61
11. CAPITAL STOCK

The authorized capital stock consists of 150,000,000 shares of common stock and
4,000,000 shares of preferred stock, both having a par value of $1.25 per share.
The preferred stock is issuable in series with terms as fixed by the Board of
Directors. None of the preferred stock has been issued. On June 24, 1997, the
Company adopted a revised Shareholder Rights Plan. Under the new Plan, the Board
declared a dividend to shareholders of record on September 28, 1997, of one
right for each share of common stock. The rights may only be exercised if, among
other things, a person or group has acquired 15% or more, or intends to commence
a tender offer for 20% or more, of the Company's common stock. Each right
entitles the holder to purchase 1/100th share of a new Harsco Junior
Participating Cumulative Preferred Stock at an exercise price of $150. Once the
rights become exercisable, if any person acquires 20% or more of the Company's
common stock, the holder of a right will be entitled to receive common stock
calculated to have a value of two times the exercise price of the right. The
rights, which expire on September 28, 2007, do not have voting power, and may be
redeemed by the Company at a price of $.05 per right at any time until the 10th
business day following public announcement that a person or group has
accumulated 15% or more of the Company's common stock. At December 31, 2000,
750,000 shares of $1.25 par value preferred stock were reserved for issuance
upon exercise of the rights.

In January 1999, the Board of Directors authorized the purchase, over a one-year
period, of 2,000,000 shares of the Company's common stock. In January 2000, the
Board of Directors extended the share purchase authorization through January 25,
2001 for the 856,354 shares remaining on the original authorization. In 2000,
351,200 shares were purchased under this authorization. In January 2001, the
Board of Directors extended the share purchase authorization through January 22,
2002 for the 505,154 shares still remaining as of December 31, 2000 from the
original authorization.

In 2000, additional purchases of 3,520 shares, net of issues, were made
principally as part of the 1995 Executive Compensation Plan.

<TABLE>
<CAPTION>
                                   COMMON STOCK SUMMARY
- --------------------------------------------------------------------------------
                          SHARES            TREASURY              SHARES
BALANCES                  ISSUED             SHARES             OUTSTANDING
- --------------------------------------------------------------------------------

<S>                     <C>                <C>                  <C>
December 31, 1997       65,854,087         18,877,957           46,976,130
December 31, 1998       66,075,380         23,825,458           42,249,922
December 31, 1999       66,221,544         26,149,759           40,071,785
DECEMBER 31, 2000       66,309,651         26,504,479           39,805,172
- --------------------------------------------------------------------------------
</TABLE>


                                      -61-
<PAGE>   62
11. CAPITAL STOCK (CONTINUED)

The following is a reconciliation of the average shares of common stock used to
compute basic earnings per common share to the shares used to compute diluted
earnings per common share as shown on the Consolidated Statement of Income:

<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)                           2000             1999                1998
- --------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                <C>                 <C>
Net Income                                                        $    96,803        $    90,713         $   107,513
- --------------------------------------------------------------------------------------------------------------------
Average shares of common stock outstanding used to
    compute basic earnings per common share                            39,964             40,882              45,568

Additional common shares to be issued assuming exercise
    of stock options, net of shares assumed reacquired                     58                135                 343
- --------------------------------------------------------------------------------------------------------------------
Shares used to compute dilutive effect of stock options                40,022             41,017              45,911
- --------------------------------------------------------------------------------------------------------------------
Basic earnings per common share                                   $      2.42         $     2.22          $     2.36
- --------------------------------------------------------------------------------------------------------------------
Diluted earnings per common share                                 $      2.42         $     2.21          $     2.34
</TABLE>


                                      -62-
<PAGE>   63
12. STOCK-BASED COMPENSATION

The Company's net income and net income per common share would have been reduced
to the pro forma amounts indicated below if compensation cost for the Company's
stock option plan had been determined based on the fair value at the grant date
for awards in accordance with the provisions of SFAS No. 123.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE)                           2000                   1999                  1998
- ---------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                  <C>                   <C>
Net income:
      As reported                                        $ 96,803             $  90,713             $  107,513
      Pro forma                                            94,395                89,113                105,736
Basic earnings per share:
      As reported                                           2.42                  2.22                   2.36
      Pro forma                                             2.36                  2.18                   2.32
Diluted earnings per share:
      As reported                                           2.42                  2.21                   2.34
      Pro forma                                             2.36                  2.17                   2.30
- --------------------------------------------------------------------------------------------------------------
</TABLE>

The fair value of the options granted during 2000, 1999 and 1998 is estimated on
the date of grant using the binomial option pricing model. The weighted-average
assumptions used and the estimated fair value are as follows:

<TABLE>
<CAPTION>
                                     2000            1999            1998
- ----------------------------------------------------------------------------
<S>                                <C>              <C>              <C>
Expected term                      4 YEARS          4 years          4 years
Expected stock volatility             30.5%           25.0%            16.0%
Risk-free interest rate               6.44%           4.65%            5.65%
Dividend                              $ .94          $  .91           $  .88
Rate of dividend increase                5%              5%               5%
Fair value                            $7.13           $5.18            $6.68
- ----------------------------------------------------------------------------
</TABLE>

The Company has granted stock options to officers, certain key employees, and
directors for the purchase of its common stock under two shareholder-approved
plans. The 1995 Executive Incentive Compensation Plan authorizes the issuance of
up to 4,000,000 shares of the Company's common stock for use in paying incentive
compensation awards in the form of stock options. The 1995 Non-Employee
Directors' Stock Plan authorizes the issuance of up to 300,000 shares of the
Company's common stock for stock option awards. Options are granted at fair
market value at date of grant and become exercisable commencing one year later.
The options expire ten years from the date of grant. Upon shareholder approval
of these two plans in 1995, the Company terminated the use of the 1986 stock
option plan for granting of stock option awards. At December 31, 2000, there
were 2,368,060 and 206,000 shares available for granting stock options under the
1995 Executive Incentive Compensation Plan and the 1995 Non-Employee Directors'
Stock Plan, respectively.


                                      -63-
<PAGE>   64
12. STOCK-BASED COMPENSATION (CONTINUED)
- --------------------------------------------------------------------------------
Changes during 2000, 1999, and 1998 in options outstanding were:

<TABLE>
<CAPTION>
                                          SHARES UNDER       WEIGHTED AVERAGE
                                             OPTION           EXERCISE PRICE
- --------------------------------------------------------------------------------
<S>                                         <C>               <C>
Outstanding, January 1, 1998                1,085,461         $ 26.06
Granted                                       275,100           38.30
Exercised                                    (221,293)          24.93
Terminated and expired                        (16,500)          35.73
- --------------------------------------------------------------------------------
Outstanding, December 31, 1998              1,122,768           29.14
Granted                                       428,400           26.92
Exercised                                    (146,164)          19.06
Terminated and expired                        (68,400)          31.36
- --------------------------------------------------------------------------------
Outstanding, December 31, 1999              1,336,604           28.97
Granted                                       539,247(1)        28.18
Exercised                                     (88,107)          22.11
Terminated and expired                       (105,052)          33.01
- --------------------------------------------------------------------------------
OUTSTANDING, DECEMBER 31, 2000              1,682,692         $ 29.18
================================================================================
</TABLE>

(1) Included in the 2000 grant are 61,097 options granted to SGB key
    employees as part of the Company's acquisition of SGB. These options
    are not a part of the 1995 Executive Incentive Plan, or the 1995
    Non-Employee Directors' Stock Plan.


                                      -64-
<PAGE>   65
12. STOCK-BASED COMPENSATION (CONTINUED)

Options to purchase 1,162,947 shares, 932,704 shares and 857,168 shares were
exercisable at December 31, 2000, 1999, and 1998, respectively. The following
table summarizes information concerning outstanding and exercisable options at
December 31, 2000.

<TABLE>
<CAPTION>
                                           OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                          -----------------------------------------------------      -------------------------------
                                               REMAINING
      RANGE OF              NUMBER         CONTRACTUAL LIFE    WEIGHTED AVERAGE        NUMBER       WEIGHTED AVERAGE
 EXERCISABLE PRICES       OUTSTANDING          IN YEARS         EXERCISE PRICE       EXERCISABLE     EXERCISE PRICE
<S>                       <C>              <C>                <C>                   <C>             <C>
$  14.10 - $21.00             127,480            5.4              $  19.63               77,480         $ 18.78
   21.63 -  30.49           1,107,356            7.5                 27.39              637,611           26.09
   32.81 -  46.16             447,856            6.6                 36.31              447,856           36.31
- -------------------------------------------------------------------------------------------------------------------
                            1,682,692                                                 1,162,947
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

During 2000, 1999, and 1998, the Company had non-cash transactions related to
stock option exercises of $0.1 million, $0.5 million, and $1.6 million,
respectively, whereby old shares were exchanged for new shares.


                                      -65-
<PAGE>   66
12. STOCK-BASED COMPENSATION (CONTINUED)

As of January 1, 1999, the restricted stock portion of the 1995 Executive
Incentive Compensation Plan was discontinued.

The following table summarizes the restricted stock activity for 1998:

<TABLE>
<CAPTION>
                                                               1998
- --------------------------------------------------------------------------------
<S>                                                           <C>
Restricted shares awarded                                     40,702
Restricted shares forfeited                                      378
Weighted average market value of stock on grant date          $43.22
- --------------------------------------------------------------------------------
</TABLE>

During 1998, the Company recorded $.1 million in compensation expense related to
restricted stock.


                                      -66-
<PAGE>   67
13. FINANCIAL INSTRUMENTS

OFF-BALANCE SHEET RISK

As collateral for performance and to ceding insurers, the Company is
contingently liable under standby letters of credit and bonds in the amount of
$181.6 million and $165.9 million at December 31, 2000 and 1999, respectively.
These standby letters of credit and bonds are generally in force for up to three
years. Certain issues have no scheduled expiration date. The Company pays fees
to various banks and insurance companies that range from 0.08 to 1.9 percent per
annum of their face value. If the Company were required to obtain replacement
standby letters of credit and bonds as of December 31, 2000 for those currently
outstanding, it is the Company's opinion that the replacement costs would not
vary significantly from the present fee structure.

At December 31, 2000 and 1999, the Company had $3.1 million and $19.2 million,
respectively, of foreign currency forward exchange contracts outstanding. These
contracts are part of a worldwide program to minimize foreign currency exchange
operating income and balance sheet exposure. The unsecured contracts mature
within 12 months and are with major financial institutions. The Company is
exposed to credit loss in the event of non-performance by the other parties to
the contracts. The Company evaluates the credit worthiness of the
counterparties' financial condition and does not expect default by the
counterparties.

FOREIGN EXCHANGE RISK MANAGEMENT

The Company generally has currency exposures in 38 countries. The Company's
primary foreign currency exposures are in United Kingdom, France, Canada, South
Africa, Brazil, Germany, Australia, and Mexico.

Foreign currency forward exchange contracts are used to hedge commitments, such
as foreign currency debt, firm purchase commitments, and foreign currency cash
flows for certain export sales transactions.


                                      -67-
<PAGE>   68
13. FINANCIAL INSTRUMENTS (CONTINUED)

The following tables summarize by major currency the contractual amounts of the
Company's forward exchange contracts in U.S. dollars as of December 31, 2000 and
1999. The "Buy" amounts represent the U.S. dollar equivalent of commitments to
purchase foreign currencies, and the "Sell" amounts represent the U.S. dollar
equivalent of commitments to sell foreign currencies.

<TABLE>
<CAPTION>
(IN THOUSANDS)                                   AS OF DECEMBER 31, 2000
- --------------------------------------------------------------------------------------------------------------
                                          U.S. DOLLAR                              RECOGNIZED       UNREALIZED
                               TYPE       EQUIVALENT            MATURITY          GAIN (LOSS)      GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------
Forward exchange
contracts:
<S>                            <C>            <C>            <C>                        <C>             <C>
British pounds                  Buy           $1,938         Various in 2001            $(74)           $ --
British pounds                 Sell              501         Various in 2001              (2)             --
Australian dollars              Buy              199         Various in 2001              --               2
Japanese yen                    Buy              186         January 4, 2001              --             (12)
Euros                           Buy              160         January 4, 2001              --               7
British pounds                 Sell               70         January 4, 2001              --               2
- -------------------------------------------------------------------------------------------------------------
                                              $3,054                                    $(76)          $  (1)
=============================================================================================================
</TABLE>

At December 31, 2000, the Company had executed forward exchange contracts in
British pounds, which were used to hedge certain future payments between the
Company and its various subsidiaries. These forward contracts do not qualify as
hedges for financial reporting purposes. At December 31, 2000, the Company had
recorded net losses of $0.1 million on these contracts. The Company also had
forward exchange contracts in British pounds, Japanese yen, euros and Australian
dollars, which were used to hedge equipment purchases. Since these contracts
hedge identifiable foreign currency firm commitments, the losses were deferred
and will be accounted for as part of the underlying transactions.

<TABLE>
<CAPTION>
(IN THOUSANDS)                                   AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------------------------------------
                                          U.S. DOLLAR                              RECOGNIZED       UNREALIZED
                               TYPE       EQUIVALENT            MATURITY          GAIN (LOSS)      GAIN (LOSS)
- --------------------------------------------------------------------------------------------------------------
Forward exchange
contracts:

<S>                             <C>          <C>            <C>                        <C>            <C>
Euros                           Buy          $17,339        January 18, 2000           $(661)         $    -
British pounds                  Buy            1,506         Various in 2000              79               -
French francs                   Buy              229         Various in 2000               -             (13)
British pounds                  Buy               93         Various in 2000               -              (2)
- -------------------------------------------------------------------------------------------------------------
                                             $19,167                                   $(582)           $(15)
=============================================================================================================
</TABLE>


                                      -68-
<PAGE>   69
13. FINANCIAL INSTRUMENTS (CONTINUED)

At December 31, 1999, the Company had executed forward exchange contracts in
euros and British pounds, which were used to hedge certain future payments
between the Company and its various subsidiaries. These forward contracts did
not qualify as hedges for financial reporting purposes. At December 31, 1999,
the Company had recorded net losses of $0.6 million on these contracts. In
January 2000, the euro contract was extended to March 18, 2000. The Company also
had forward exchange contracts in French francs and British pounds, which were
used to hedge equipment purchases. Since these contracts hedge identifiable
foreign currency firm commitments, the losses were deferred and were accounted
for as part of the underlying transactions.

CONCENTRATIONS OF CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist principally of cash and cash equivalents, investments,
and accounts receivable. The Company places its cash and cash equivalents with
high quality financial institutions and, by policy, limits the amount of credit
exposure to any one institution. Concentrations of credit risk with respect to
accounts receivable are limited due to the Company's large number of customers
and their dispersion across different industries and geographies. The Company
generally does not require collateral or other security to support customer
receivables.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The major methods and assumptions used in estimating the fair values of
financial instruments are:

       CASH AND CASH EQUIVALENTS
       The carrying amount approximates fair value due to the relatively short
       period to maturity of these instruments.

       LONG-TERM DEBT
       The fair value of the Company's long-term debt is estimated based on the
       quoted market prices for the same or similar issues or on the current
       rates offered to the Company for debt of the same remaining maturities.

       FOREIGN CURRENCY EXCHANGE CONTRACTS
       The fair value of foreign currency exchange contracts are estimated by
       obtaining quotes from brokers.

The carrying amounts and estimated fair values of the Company's financial
instruments as of December 31, 2000 and 1999 are:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                       2000                             1999
- --------------------------------------------------------------------------------------------------
                                            CARRYING         FAIR         CARRYING          FAIR
                                             AMOUNT          VALUE         AMOUNT           VALUE
- --------------------------------------------------------------------------------------------------
<S>                                     <C>            <C>             <C>            <C>
Cash and cash equivalents               $     56,422   $     56,422    $     51,266   $     51,266
Long-term debt                               789,069        790,070         423,097        416,925
Foreign currency exchange contracts            3,054          2,973          19,167         18,571
- --------------------------------------------------------------------------------------------------
</TABLE>


                                      -69-
<PAGE>   70
14. INFORMATION BY SEGMENT AND GEOGRAPHIC AREA

The Company reports information about its operating segments according to the
"management approach". This approach is based on the way management organizes
the segments within the enterprise for making operating decisions and assessing
performance.

The Company's reportable segments are identified based upon differences in
products, services, and markets served. The Company's business units are
aggregated into three reportable segments. These segments and the type of
products and services offered include:

INFRASTRUCTURE

Major products and services include scaffolding, powered access equipment,
shoring, concrete forming products, erection and dismantling services and a
variety of other access equipment; railway track maintenance equipment and
services; industrial grating and bridge decking; process equipment, including
industrial blenders, dryers, mixers, water heaters and boilers.

Products and services are provided to the oil, chemical and petrochemical
industries; commercial and industrial construction firms; public utilities;
industrial plants; private and government-owned railroads worldwide; urban mass
transit operators; process industries; bridge repair companies; and
infrastructure repair and maintenance markets. Other customers include the
chemical, food processing and pharmaceutical industries; and the institutional
building and retrofit markets.

MILL SERVICES

This segment provides mill services, principally for the global steel industry.
Mill services include slag processing, marketing, and disposal; metal
reclamation; slab management systems; materials handling and scrap management
programs; in-plant transportation; and a variety of other services. Similar
services are provided to non-ferrous metallurgical industries, such as aluminum,
nickel, and copper. Also, slag recovery services are provided to electric
utilities from which granules for asphalt roofing shingles and slag abrasives
for industrial surface preparation are derived.

GAS AND FLUID CONTROL

Major products and services are gas containment cylinders and tanks including
cryogenic equipment; valves, regulators, and gauges, including scuba and life
support equipment; industrial pipe fittings; and air-cooled heat exchangers.

Major customers include various industrial markets; hardware, plumbing, and
petrochemical sectors; natural gas and process industries; propane, compressed
gas, life support, scuba, and refrigerant gas industries; gas equipment
companies; welding distributors; medical laboratories; beverage carbonation
users; and the animal husbandry industry.


                                      -70-
<PAGE>   71
14. INFORMATION BY SEGMENT AND GEOGRAPHIC AREA (CONTINUED)

OTHER INFORMATION
The measurement basis of segment profit or loss is net income. Interest income
is recorded by each segment as incurred. Interest expense is allocated to the
segments based on actual interest expense incurred by international operations
and based on internal borrowings at estimated weighted average interest rates
for domestic operations. Income taxes are allocated to the segments based on
actual income tax expense incurred, or where aggregated for tax purposes, based
on the effective income tax rates for the countries in which they operate. Sales
of the Company in the United States and the United Kingdom exceed 10% of
consolidated sales with 58% and 14%, respectively. No single customer
represented 10% or more of the Company's sales during 2000, 1999, or 1998. There
are no significant inter-segment sales.

Corporate assets include principally cash, investments, prepaid pension costs,
and United States deferred taxes. Assets in the United Kingdom represent 26% of
total segment assets as of December 31, 2000, and 12% of total segment assets as
of December 31, 1999, and are disclosed separately in the geographic area
information.

SEGMENT INFORMATION

<TABLE>
<CAPTION>
(IN MILLIONS)                                           INFRA-               GAS AND      S3
                                                        STRUCT      MILL      FLUID      NETWORKS  GENERAL    CONSOLIDATED
TWELVE MONTHS ENDED DECEMBER 31, 2000                    (4)      SERVICES   CONTROL      LLC     CORPORATE       TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>        <C>         <C>        <C>       <C>
Net sales to unaffiliated customers (1)              $   703.6   $  757.4   $  542.4    $   --     $   --    $   2,003.4
- -------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                              $    62.3   $   92.6   $   41.1    $   --     $ (1.3)   $     194.7
Equity in income (loss) of affiliates, net (2)             0.6        0.8         --      (3.4)        --           (2.0)
Interest income                                            1.3        4.5        0.1        --        0.1            6.0
Interest expense                                         (24.1)     (10.7)      (3.6)       --      (11.7)         (50.1)
Income tax (expense) benefit                             (13.8)     (23.9)     (13.7)      1.2        3.4          (46.8)
Minority interest in net (income) loss                    (0.2)      (4.8)        --        --         --           (5.0)
- -------------------------------------------------------------------------------------------------------------------------
Segment net income (loss)                            $    26.1   $   58.5   $   23.9    $ (2.2)    $ (9.5)    $     96.8
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
(IN MILLIONS)                                                               GAS AND       S3
                                                         INFRA-    MILL       FLUID    NETWORKS   GENERAL     CONSOLIDATED
Twelve Months Ended December 31, 1999 (3)                STRUC   SERVICES   CONTROL      LLC      CORPORATE        TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>         <C>        <C>       <C>           <C>      <C>
Net sales to unaffiliated customers (1)              $   432.5   $  737.8   $  579.6  $    --       $   --   $   1,749.9
- --------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                              $    41.2   $   78.2   $   47.5  $    --       $ (0.2)  $     166.7
Equity in income of affiliates, net (2)                     --        3.0         --       --           --           3.0
Interest income                                            0.2        4.3        0.1       --          0.1           4.7
Interest expense                                          (6.3)     (10.8)      (4.8)      --         (5.1)        (27.0)
Income tax (expense) benefit                             (12.6)     (24.4)     (15.9)      --          1.3         (51.6)
Minority interest in net (income) loss                      --       (5.2)       0.1       --           --          (5.1)
- --------------------------------------------------------------------------------------------------------------------------
Segment net income (loss)                            $    22.5  $   45.1   $   27.0  $     --      $ (3.9)  $       90.7
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -71-
<PAGE>   72
14. INFORMATION BY SEGMENT AND GEOGRAPHIC AREA (CONTINUED)


<TABLE>
<CAPTION>
(IN MILLIONS)                                                               GAS AND       S3
                                                       INFRA-      MILL      FLUID     NETWORKS     GENERAL    CONSOLIDATED
Twelve Months Ended December 31, 1998 (3)             STRUCT    SERVICES    CONTROL      LLC       CORPORATE       TOTAL
- ----------------------------------------------------------------------------------------------------------------------------

<S>                                                 <C>         <C>          <C>        <C>          <C>          <C>
Net sales to unaffiliated customers (1)             $   399.2   $  761.1     $ 605.2    $  --        $  --        $  1,765.5
- ----------------------------------------------------------------------------------------------------------------------------
Operating income                                    $    32.9   $   82.9    $  72.3    $   --       $  2.4       $    190.5
Equity in income of affiliates, net (2)                    --        1.4         --        --           --              1.4
Interest income                                           0.4        4.8        0.2        --          3.0              8.4
Interest expense                                         (5.4)     (11.0)      (4.1)       --           --            (20.5)
Income tax expense                                       (9.3)     (29.9)     (27.5)       --         (0.7)           (67.4)
Minority interest in net income                            --       (4.9)        --        --           --             (4.9)
- -----------------------------------------------------------------------------------------------------------------------------
Segment net income                                  $    18.6   $    43.3    $  40.9    $  --       $  4.7       $    107.5
=============================================================================================================================
</TABLE>

(1)    In order to comply with Emerging Issues Task Force (EITF) Issue No.
       00-10, all shipping and handling costs have been classified as cost of
       services sold or as cost of products sold rather than as reductions of
       sales. The income statement for the twelve months ended December 31, 1999
       and 1998 have been reclassified to reflect this change. The
       reclassification had no effect on previously reported operating income or
       net income for the twelve months ended December 31, 1999 and 1998.

(2)    Equity in income (loss) of affiliates is now separately reported. In
       prior years these amounts were classified in operating income. Amounts
       previously reported as operating income for the twelve months ended
       December 31, 1999 and 1998 were $81.2 million and $84.3 million,
       respectively for Mill Services Segment and a consolidated total of $169.7
       million and $191.9 million, respectively. Reported operating income
       amounts for the other segments are unchanged.

(3)    Segment information reflects the first quarter 1999 reorganization of the
       Patterson-Kelley division. Segment information for 1998 has been
       reclassified to reflect this change. The reorganization resulted in the
       realignment of the heat transfer and industrial blending equipment
       product lines from the Gas and Fluid Control Segment to the
       Infrastructure Segment. Sales of these product lines were $27.3 million,
       $26.9 million, and $29.2 million for the years 2000, 1999, and 1998,
       respectively.

(4)    The SGB scaffolding and access service business was acquired in June 2000
       and is included as part of the Infrastructure Segment.


<TABLE>
<CAPTION>
SEGMENTS                            ASSETS                DEPRECIATION AND AMORTIZATION        CAPITAL EXPENDITURES
- -----------------------------------------------------------------------------------------------------------------------
(IN MILLIONS)             2000       1999       1998       2000       1999       1998       2000       1999       1998
- -----------------------------------------------------------------------------------------------------------------------
<S>                     <C>        <C>        <C>         <C>       <C>         <C>        <C>        <C>       <C>
Infrastructure (a) (b)  $ 906.4    $ 325.7    $ 241.1     $ 38.0    $ 17.0      $ 15.9     $ 53.8     $ 17.9    $  26.1

Mill Services(c)          900.9      934.6      922.7       97.7       99.5       98.2      116.5      134.9      102.7

Gas and Fluid Control     312.3      347.9      380.9       19.6       18.1       16.1        9.4       21.4       30.6
- -----------------------------------------------------------------------------------------------------------------------

Segment totals          2,119.6    1,608.2    1,544.7      155.3      134.6      130.2      179.7      174.2      159.4

Corporate                  61.3       51.6       78.9        3.8        1.3        1.2        0.3        1.0        0.4
- -----------------------------------------------------------------------------------------------------------------------
     Total            $ 2,180.9  $ 1,659.8  $ 1,623.6  $   159.1    $ 135.9    $ 131.4    $ 180.0    $ 175.2    $ 159.8
=======================================================================================================================
</TABLE>

(a)    The Pandrol Jackson railway track maintenance business was acquired in
       October 1999 and is included as part of the Infrastructure Segment.

(b)    The SGB scaffolding and access service business was acquired in June 2000
       and is included as part of the Infrastructure Segment.

(c)    A non-cash amount of $26.6 million of loan notes was issued for the Faber
       Prest acquisition related to the Mill Services Segment in 1998.


                                      -72-
<PAGE>   73
14. INFORMATION BY SEGMENT AND GEOGRAPHIC AREA (CONTINUED)

INFORMATION BY GEOGRAPHIC AREA (1)

<TABLE>
<CAPTION>
GEOGRAPHIC AREA         NET SALES TO UNAFFILIATED CUSTOMERS            SEGMENT ASSETS
- ----------------------------------------------------------------------------------------------
(IN MILLIONS)           2000 (2)(3)   1999 (3)   1998 (3)          2000 (2)    1999       1998
- ----------------------------------------------------------------------------------------------
<S>                   <C>          <C>        <C>                <C>      <C>        <C>
United States         $ 1,152.6    $ 1,126.4  $ 1,114.6          $ 810.6  $   797.1  $   721.2

United Kingdom            286.5        156.6      128.2            558.6      186.2      180.7

All Other                 564.3        466.9      522.7            750.4      624.9      642.8
- ----------------------------------------------------------------------------------------------
     Segment Totals   $ 2,003.4    $ 1,749.9  $ 1,765.5        $ 2,119.6  $ 1,608.2  $ 1,544.7
==============================================================================================
</TABLE>
(1)    Revenues are attributed to individual countries based on the location of
       the facility generating the revenue.
(2)    Included in above amounts are sales and assets of SGB Group that was
       acquired in June 2000 with a major portion of sales and assets located in
       the United Kingdom.
(3)    In order to comply with EITF Issue No. 00-10, all shipping and handling
       costs have been classified as cost of services sold or as cost of
       products sold rather than as reductions of sales. Sales for 1999 and 1998
       have been reclassified to reflect this change.


                                      -73-
<PAGE>   74
15.    OTHER (INCOME) AND EXPENSES

In the years 2000, 1999, and 1998, the Company recorded Other (income) and
expenses of $1.3 million, $6.0 million, and $(4.3) million, respectively:

<TABLE>
<CAPTION>
                                         OTHER (INCOME) AND EXPENSES
- ---------------------------------------------------------------------------------------------
(IN THOUSANDS)                           2000                  1999               1998
- ---------------------------------------------------------------------------------------------

<S>                                   <C>                  <C>                <C>
Net gains                             $   (4,325)          $     (560)        $   (29,107)

Impaired asset write-downs                 1,876                2,878              14,410

Employee termination benefit costs         3,854                2,889               6,543

Costs to exit activities                     590                  502               2,792

Other                                       (661)                 310               1,098
- --------------------------------------------------------------------------------------------

Total                                 $    1,334           $    6,019         $    (4,264)
============================================================================================
</TABLE>

NET GAINS
Net gains for 2000 reflect gains in all three operating segments recorded
principally on the sales of non-core product lines and redundant properties,
primarily land, buildings and related equipment. Net gains for 1998 consist
principally of a pre-tax net gain of $27 million recorded on the October 1998
sale of the Nutter Engineering unit of the Gas and Fluid Control Segment. Such
gains are reflected as adjustments to reconcile net income to net cash provided
by operating activities in the Consolidated Statement of Cash Flows. Total
proceeds associated with these gains are included in Proceeds from the sale of
businesses and Proceeds from sale of property, plant and equipment in the
investing activities section of the Consolidated Statement of Cash Flows. Total
proceeds associated with 1998 gains were $42.9 million. Other related
information concerning dispositions is discussed in Note 3, Acquisitions and
Dispositions.

IMPAIRED ASSET WRITE-DOWNS
Impaired asset write-downs for 2000, 1999 and 1998 include $1.9 million, $1.9
million and $6.1 million, respectively, of pre-tax, non-cash, write-downs of the
Company's investment in Bio-Oxidation Services Inc., which is held for disposal.
Bio-Oxidation Services Inc. is included in the Gas and Fluid Control Segment.
The write-down amounts were measured on the basis of the lower of carrying
amount or fair value less costs to sell. Fair value was determined using
available information based upon the estimated amount at which the assets could
be sold in a current transaction between willing parties. The investment
carrying values were $4.4 million, $6.6 million and $7.6 million as of December
31, 2000, 1999 and 1998, respectively. For the years 2000, 1999 and 1998,
Bio-Oxidation Services Inc. recorded pre-tax losses of $1.9 million, $2.3
million and $9.8 million, respectively. The Company estimates that disposal will
occur during 2001.


                                      -74-

<PAGE>   75
15. OTHER (INCOME) AND EXPENSES (CONTINUED)

Impaired asset write-downs for 1998 also include a $6.1 million pre-tax,
non-cash, write-down of assets, principally property, plant and equipment in the
Mill Services Segment. The write-down became necessary as a result of
significant adverse changes in the international economic environment and the
steel industry. The impairment loss was measured as the amount by which the
carrying amount of assets exceeded their estimated fair value. Fair value was
estimated based upon the expected future realizable net cash flows. In September
1999, assets associated with a substantial portion of this provision were sold
in conjunction with the termination settlement of a contract in Russia.

Non-cash impaired asset write-downs are included in Other (income) and expenses
in the Consolidated Statement of Cash Flows as adjustments to reconcile net
income to net cash provided by operating activities.

EMPLOYEE TERMINATION BENEFIT COSTS

Employee termination benefit costs consist principally of severance arrangements
to employees terminated as a result of management reorganization actions. Under
these reorganization actions, the Company's management has established and
approved specific plans of termination. Details of the termination benefit plans
have been communicated to the affected employees prior to recognition of related
provisions. Non-cash charges for employee termination benefit costs are included
as adjustments to reconcile net income to net cash provided by operating
activities in the Consolidated Statement of Cash Flows.

During 2000, $3.9 million of employee termination benefit costs were incurred,
principally in the Mill Services Segment, primarily in Holland, Belgium and
Italy. Additionally, termination benefit costs were incurred in the United
States in the Gas and Fluid Control Segment as well as at corporate
headquarters. In 2000, approximately 294 employees were included in employee
termination arrangements initiated by the Company and approximately $3.3 million
of cash payments were made under such arrangements. The payments are reflected
as uses of operating cash in the Consolidated Statement of Cash Flows.

During 1999, $2.9 million of expense related to employee termination benefits
was incurred, principally in the Mill Services Segment, primarily in France and
the United Kingdom. In 1999, approximately 220 employees were included in
employee termination arrangements initiated by the Company, and approximately
$1.8 million of cash payments were made under such arrangements. An additional
$0.8 million was disbursed in 2000 for the 1999 reorganization actions.



                                      -75-
<PAGE>   76
15. OTHER (INCOME) AND EXPENSES (CONTINUED)

During 1998, $6.5 million of expense related to employee termination benefits
was incurred, principally in the Mill Services Segment primarily in South
Africa, United States, France, and Germany. In 1998, approximately 670 employees
were included in employee termination arrangements initiated by the Company and
approximately $2.4 million of cash payments were made under such arrangements.
An additional $0.2 million and $3.3 million were disbursed in 2000 and 1999,
respectively, for the 1998 reorganization actions.


EMPLOYEE TERMINATION BENEFIT COSTS AND PAYMENTS


<TABLE>
<CAPTION>
(IN MILLIONS)                                    SUMMARY OF ACTIVITY
- --------------------------------------------------------------------------------
Original reorganization action period         2000        1999        1998
- --------------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>
Employee termination benefits expense        $ 3.9       $ 2.9       $ 6.5
- --------------------------------------------------------------------------------
Disbursements:(1)
      In 1998                                   --          --        (2.4)
      In 1999                                   --        (1.8)       (3.3)
      In 2000                                 (3.3)       (0.8)       (0.2)
- --------------------------------------------------------------------------------
           Total disbursements                (3.3)       (2.6)       (5.9)

      Other                                    0.3        (0.3)       (0.4)
- --------------------------------------------------------------------------------
           Remaining payments as of
           December 31, 2000(2)              $ 0.9       $  --       $ 0.2
================================================================================
</TABLE>

(1) - Disbursements are categorized according to the original reorganization
      action period to which they relate (2000, 1999 or 1998). Cash severance
      payments in 2000 occurred principally in the Mill Services Segment
      primarily in Europe. Cash severance payments in 1999 occurred principally
      in the Mill Services Segment in South Africa principally for 1998
      reorganization actions.

(2) - Remaining payments are categorized according to the original
      reorganization action period to which they relate (2000 or 1998).



                                      -76-
<PAGE>   77
15. OTHER (INCOME) AND EXPENSES (CONTINUED)

EMPLOYEE TERMINATIONS - NUMBER OF EMPLOYEES

<TABLE>
<CAPTION>
                                                       SUMMARY OF ACTIVITY
- --------------------------------------------------------------------------------
Original reorganization action period                2000      1999      1998
- --------------------------------------------------------------------------------
<S>                                                  <C>       <C>       <C>
Employees affected by new reorganization actions      294       220       670
- --------------------------------------------------------------------------------
Employee terminations:
    In 1998                                            --        --      (349)
    In 1999                                            --      (172)     (352)
    In 2000                                          (282)      (39)       (1)
- --------------------------------------------------------------------------------
         Total terminations                          (282)     (211)     (702)

    Other                                              --        (9)       35
- --------------------------------------------------------------------------------
         Remaining terminations as of
         December 31, 2000                             12        --         3
================================================================================
</TABLE>

COSTS TO EXIT ACTIVITIES

Costs to exit activities consist of incremental direct costs of reorganization
actions and lease run-out costs. Such costs are recorded when a specific exit
plan is approved by management. Relocation expenses, such as employee moving
costs, are classified as exit costs and are expensed as incurred. Other costs
classified in this category are generally expensed as incurred.

During 1998, $1.0 million and $0.8 million of exit costs, principally relocation
expenses, were included in the Mill Services and Infrastructure Segments,
respectively.



                                      -77-
<PAGE>   78
TWO-YEAR SUMMARY OF QUARTERLY RESULTS
(UNAUDITED)

<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                   2000
- --------------------------------------------------------------------------------
    QUARTERLY                             FIRST     SECOND    THIRD     FOURTH
- --------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>       <C>
    Net sales(1)                          $457.5    $465.6    $541.4    $538.9
    Gross profit(2)                         92.6     108.7     133.0     133.2
    Net income                              20.2      28.2      22.3      26.1
    Diluted earnings per share               .50       .70       .56       .65
</TABLE>

<TABLE>
<CAPTION>
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)                   1999
- --------------------------------------------------------------------------------
    QUARTERLY                             FIRST     SECOND    THIRD     FOURTH
- --------------------------------------------------------------------------------
<S>                                       <C>       <C>       <C>       <C>
    Net sales(1)                          $412.1    $438.8    $432.1    $466.9
    Gross profit(2)                         82.8      94.7      93.7     102.2
    Net income                              14.8      23.8      26.1      26.0
    Diluted earnings per share               .35       .58       .64       .65
</TABLE>


Notes:
    (1) In order to comply with EITF Issue No. 00-10, all shipping and handling
        costs have been classified as cost of services sold or as cost of
        products sold rather than as reductions of sales. Sales for the first
        three quarters of 2000 and for the year 1999 have been reclassified to
        reflect this change.

    (2) Gross profit is defined as Net sales less Cost of sales, Other (income)
        and expenses, and Research and development expenses.



                                      -78-
<PAGE>   79
COMMON STOCK PRICE AND DIVIDEND INFORMATION

<TABLE>
<CAPTION>
                                   MARKET PRICE PER SHARE
                                 -------------------------    DIVIDENDS DECLARED
                                   HIGH            LOW            PER SHARE
- --------------------------------------------------------------------------------
<S>                              <C>            <C>           <C>
2000
First Quarter                    $ 31 5/8       $ 24               $ .235
Second Quarter                     30             25 31/64           .235
Third Quarter                      29 7/8         21 1/4             .235
Fourth Quarter                     26 3/4         17 11/16           .24

1999
First Quarter                    $ 33           $ 25               $ .225
Second Quarter                     34 3/8         23 1/16            .225
Third Quarter                      32 5/16        25 3/8             .225
Fourth Quarter                     31 7/8         26                 .235
- --------------------------------------------------------------------------------
</TABLE>



                                      -79-
<PAGE>   80
Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure:

        None.






                                      -80-
<PAGE>   81
                                    PART III


Item 10. Directors and Executive Officers of the Registrant:


(a)      Identification of Directors:

Information regarding the identification of directors and positions held is
incorporated by reference to the 2001 Proxy Statement.

(b)      Identification of Executive Officers:

Set forth below, as of March 2, 2001, are the executive officers (this excludes
one corporate officer who is not deemed an "executive officer" within the
meaning of applicable Securities and Exchange Commission regulations) of the
Company and certain information with respect to each of them. The executive
officers were elected to their respective offices on April 27, 2000, or at
various times during the year as noted. All terms expire on April 25, 2001.
There are no family relationships between any of the officers.

<TABLE>
<CAPTION>
Name                   Age    Principal Occupation or Employment
- ----                   ---    ----------------------------------
<S>                    <C>    <C>

Corporate Officers:

D. C. Hathaway         56     Chairman, President and Chief Executive Officer
                              since July 31, 2000. Chairman and Chief Executive
                              Officer from January 1, 1998 to July 31, 2000.
                              Served as Chairman, President and Chief Executive
                              Officer from April 1, 1994 to December 31, 1997,
                              and President and Chief Executive Officer from
                              January 1, 1994 to April 1, 1994. Director since
                              1991. From 1991 to 1993, served as President and
                              Chief Operating Officer. From 1986 to 1991 served
                              as Senior Vice President-Operations of the
                              Corporation. Served as Group Vice President from
                              1984 to 1986 and as President of the Dartmouth
                              Division of the Corporation from 1979 until 1984.

G. D. H. Butler        55     Senior Vice President - Operations of the
                              Corporation effective September 26, 2000.
                              Concurrently serves as President of the Heckett
                              MultiServ-East Division and President of the SGB
                              Division. Was President of the Heckett
                              MultiServ-East Division from July 1, 1994, to
                              September 26, 2000. Served as Managing Director -
                              Eastern Region of the Heckett MultiServ Division
                              from January 1, 1994 to June 30, 1994. Served in
                              various officer positions within MultiServ
                              International, N. V. prior to 1994 and prior to
                              Harsco's acquisition of that corporation in
                              August, 1993.
</TABLE>



                                      -81-
<PAGE>   82
<TABLE>
<CAPTION>
Name                   Age    Principal Occupation or Employment
- ----                   ---    ----------------------------------
<S>                    <C>    <C>
P. C. Coppock          50     Senior Vice President, Chief Administrative
                              Officer, General Counsel and Secretary of the
                              Corporation effective January 1, 1994. Served as
                              Vice President, General Counsel and Secretary of
                              the Corporation from May 1, 1991 to December 31,
                              1993. From 1989 to 1991 served as Secretary and
                              Corporate Counsel and as Assistant Secretary and
                              Corporate Counsel from 1986 to 1989. Served in
                              various Corporate Attorney positions for the
                              Corporation since 1981.

S. D. Fazzolari        48     Senior Vice President, Chief Financial Officer and
                              Treasurer of the Corporation effective August 24,
                              1999. Served as Senior Vice President and Chief
                              Financial Officer from January 1998 to August
                              1999. Served as Vice President and Controller from
                              January 1994 to December 1997 and as Controller
                              from January 1993 to January 1994. Previously
                              served as Director of Auditing from 1985 to 1993,
                              and served in various auditing positions from 1980
                              to 1985.

R. W. Kaplan           49     Senior Vice President-Operations of the
                              Corporation effective July 1, 1998. Concurrently
                              serves as President of the Harsco Gas & Fluid
                              Control Group and was President of the
                              Taylor-Wharton Gas Equipment Division from
                              February 1, 1994 to November 16, 1999. Served as
                              Vice President and Treasurer of the Corporation
                              from January 1992 to February 1994. Served as
                              Treasurer of the Corporation from May 1991 to
                              December 1992. Previously served as Vice President
                              and General Manager of the Plant City
                              Steel/Taylor-Wharton Division from 1987 to 1991
                              and Vice President and Controller of the Division
                              from 1985 to 1987. Previously served in various
                              Corporate treasury/financial positions since 1979.

S. J. Schnoor          47     Vice President and Controller of the Corporation
                              effective May 15, 1998. Served as Vice President
                              and Controller of the Patent Construction Systems
                              Division from February 1996 to May 1998 and as
                              Controller of the Patent Construction Systems
                              Division from January 1993 to February 1996.
                              Previously served in various auditing positions
                              for the Corporation from 1988 to 1993.
</TABLE>


                                      -82-
<PAGE>   83
(c)     Beneficial Ownership Reporting Compliance

        Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is incorporated by reference to the section entitled
"Section 16(a) Beneficial Ownership Reporting Compliance" of the 2001 Proxy
Statement.

Item 11. Executive Compensation:

Information regarding compensation of executive officers and directors is
incorporated by reference to the sections entitled "Executive Compensation and
Other Information" and "Directors' Compensation" of the 2001 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management:

Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the section entitled "Share Ownership
of Management" of the 2001 Proxy Statement.

Item 13. Certain Relationships and Related Transactions:

Information regarding certain relationships and related transactions is
incorporated by reference to the section entitled "Employment Agreements with
Officers of the Company" of the 2001 Proxy Statement.






                                      -83-
<PAGE>   84
                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K:

(a)  1.  The Consolidated Financial Statements are listed in the index to Item
         8, "Financial Statements and Supplementary Data," on page 29.

(a)  2.  The following financial statement schedule should be read in
         conjunction with the Consolidated Financial Statements (see Item 8,
         "Financial Statements and Supplementary Data"):

<TABLE>
<CAPTION>
                                                    Page
                                                    ----
<S>                                                  <C>
          Report of Independent Accountants
             on Financial Statement Schedule         85
          Schedule II - Valuation and
             Qualifying Accounts for the years
             2000, 1999 and 1998                     86
</TABLE>

         Schedules other than those listed above are omitted for the reason that
         they are either not applicable or not required or because the
         information required is contained in the financial statements or notes
         thereto.

         Condensed financial information of the registrant is omitted since
         there are no substantial amounts of "restricted net assets" applicable
         to the Company's consolidated subsidiaries.

         Financial statements of 50% or less owned unconsolidated companies are
         not submitted inasmuch as (1) the registrant's investment in and
         advances to such companies do not exceed 20% of the total consolidated
         assets, (2) the registrant's proportionate share of the total assets of
         such companies does not exceed 20% of the total consolidated assets,
         and (3) the registrant's equity in the income from continuing
         operations before income taxes of such companies does not exceed 20% of
         the total consolidated income from continuing operations before income
         taxes.




                                      -84-
<PAGE>   85
                      REPORT OF INDEPENDENT ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE


To the Board of Directors of
Harsco Corporation:


Our audits of the consolidated financial statements referred to in our report
dated January 30, 2001 appearing on page 30 of this Form 10-K also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.




PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 30, 2001




                                      -85-
<PAGE>   86
                 SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
                             (dollars in thousands)



<TABLE>
<CAPTION>
            COLUMN A                 COLUMN B     COLUMN C            COLUMN D              COLUMN E
            --------                 --------     --------            --------              --------
                                                  Additions    (Deductions) Additions
                                                  ----------   ----------------------
                                                               Due to
                                     Balance at   Charged to   Currency                      Balance at
                                     Beginning    Cost and     Translation                   End of
           Description               of Period    Expenses     Adjustments   Other(1)        Period
           -----------               ---------    --------     -----------   --------        ------
<S>                                  <C>          <C>          <C>           <C>             <C>
For the year 2000:
    Deducted from Receivables:
       Uncollectible accounts        $ 13,339     $  3,997     $   (494)     $  9,236 (2)    $ 26,078
                                     ========     ========     ========      ========        ========
    Deducted from Inventories:
       Inventory valuations          $ 10,684     $  2,121     $   (284)     $ (3,483)(3)    $  9,038
                                     ========     ========     ========      ========        ========
    Other Reorganization and
    Valuation Reserves               $ 17,080     $  2,116     $   (666)     $  5,318 (4)    $ 23,848
                                     ========     ========     ========      ========        ========

For the year 1999:
    Deducted from Receivables:
       Uncollectible accounts        $ 13,602     $  4,844     $   (153)     $ (4,954)       $ 13,339
                                     ========     ========     ========      ========        ========
    Deducted from Inventories:
       Inventory valuations          $  5,777     $  6,383     $   (132)     $ (1,344)       $ 10,684
                                     ========     ========     ========      ========        ========
    Other Reorganization and
    Valuation Reserves               $ 25,316     $  5,206     $   (389)     $(13,053)(5)    $ 17,080
                                     ========     ========     ========      ========        ========

For the year 1998:
    Deducted from Receivables:
       Uncollectible accounts        $  6,834     $  9,166     $      9      $ (2,407)       $ 13,602
                                     ========     ========     ========      ========        ========
    Deducted from Inventories:
       Inventory valuations          $  3,687     $  6,871     $    (30)     $ (4,751)       $  5,777
                                     ========     ========     ========      ========        ========
    Other Reorganization and
    Valuation Reserves               $  3,102     $ 16,423     $     93      $  5,698 (6)    $ 25,316
                                     ========     ========     ========      ========        ========
</TABLE>

(1)  Amounts charged to valuation account during the year.

(2)  Includes $18,791 increase due to opening balance sheet receivable reserves
     of SGB Group and $5,630 charged against those reserves.

(3)  Includes $3,309 increase due to opening balance sheet inventory reserves of
     SGB Group.

(4)  Includes $15,602 increase due to opening balance sheet reorganization
     reserves of SGB Group and $2,338 charged against those reserves.

(5)  Includes $5,942 of charges against the opening balance sheet reorganization
     reserves of Faber Prest acquired in 1998.

(6)  Includes $12,328 increase due to opening balance sheet reorganization
     reserves for companies acquired in 1998.



                                      -86-
<PAGE>   87
(a)  3.  Listing of Exhibits Filed with Form 10-K:

<TABLE>
<CAPTION>
Exhibit
Number                   Data Required                       Location in 10-K
- ------                   -------------                       ----------------
<S>        <C>                                               <C>
3(a)           Articles of Incorporation as                  Exhibit volume, 1990 10-K
                amended April 24, 1990

3(b)           Certificate of Amendment of                   Exhibit volume, 1999 10-K
                Articles of Incorporation filed
                June 3, 1997

3(c)           Certificate of Designation filed              Exhibit volume, 1997 10-K
                September 25, 1997

3(d)           By-laws as amended April 25, 1990             Exhibit volume, 1990 10-K

4(a)           Harsco Corporation Rights                     Incorporated by reference to
                Agreement dated as of September               Form 8-A, filed September 26, 1997
                28, 1997, with Chase Mellon
                Shareholder Services L.L.C.

4(b)           Registration of Preferred Stock               Incorporated by reference to
                Purchase Rights                                Form 8-A dated October 2, 1987

4(c)           Current Report on dividend                    Incorporated by reference to
                distribution of Preferred                      Form 8-K dated October 13, 1987
                Stock Purchase Rights

4(d)           Debt Securities Registered                    Incorporated by reference to
                under Rule 415 (6% Notes)                      Form S-3, Registration No.
                                                               33-42389 dated August 23, 1991

4(e)           6% 1993 Notes due September 15,               Incorporated by reference to the
                2003 described in Prospectus                   Prospectus Supplement dated
                Supplement dated September 8,                  September 8, 1993 to Form S-3,
                1993 to Form S-3 Registration under            Registration No. 33-42389
                Rule 415 dated August 23, 1991                 dated August 23, 1991

4(f)           Debt and Equity Securities Registered         Incorporated by reference to
                                                               Form S-3, Registration No.
                                                               33-56885 dated December 15,
                                                               1994, effective date
                                                               January 12, 1995
</TABLE>


                                      -87-
<PAGE>   88
(a) 3. Listing of Exhibits Filed with Form 10-K (continued):

<TABLE>
<CAPTION>
Exhibit
Number                   Data Required                       Location in 10-K
- ------                   -------------                       ----------------
<S>        <C>                                               <C>
4(g)           Harsco Finance B. V.                          Exhibit to 10-Q for the period
                L200 million, 7.25%                            ended September 30, 2000
                Guaranteed Notes due 2010


4(h)           Cash Offer for SGB Group PLC                  Exhibit to 10-Q for the period
                                                               ended June 30, 2000

           Material Contracts - Credit facility

10(a)          $50,000,000 Facility agreement dated          Exhibit volume, 2000 10-K
                15 December 2000

10(b)          $50,000,000 Facility agreement dated          Exhibit volume, 2000 10-K
                12th January 2001

10(c)          Commercial Paper Payment Agency               Exhibit volume, 2000 10-K
                Agreement Dated October 1, 2000,
                Between Salomon Smith Barney Inc.
                and Harsco Corporation

10(d)          Commercial Paper Dealer Agreement             Exhibit volume, 1994 10-K
                Dated October 11, 1994, Between
                Lehman Brothers, Inc. and Harsco
                Corporation

10(e)          Issuing and Paying Agency Agreement,          Exhibit volume, 1994 10-K
                Dated October 12, 1994, Between
                Morgan Guaranty Trust Company
                of New York and Harsco Corporation

10(f)          Commercial Paper Agreement with               Exhibit to 10-Q for the period
                Banque Bruxelles Lambert S.A./Bank              ended September 30, 1996
                Brussel Lambert N.V. dated
                September 25, 1996.

10(g)          364-Day Credit Agreement                      Exhibit to 10-Q for the period
                                                               ended September 30, 2000

10(h)          Five Year Credit Agreement                    Exhibit to 10-Q for the period
                                                               ended September 30, 2000
</TABLE>



                                      -88-
<PAGE>   89
(a) 3. Listing of Exhibits Filed with Form 10-K (continued):

<TABLE>
<CAPTION>
Exhibit
Number                   Data Required                       Location in 10-K
- ------                   -------------                       ----------------
<S>        <C>                                               <C>
           Material Contracts - Underwriting

10(i)          Commercial Paper Placement Agency             Exhibit volume, 1998 10-K
                Agreement dated November 6, 1998,
                between Chase Securities, Inc. and
                Harsco Corporation

10(j)          Underwriting Agreement for                    Exhibit volume, 1987 10-K
                Debt Securities dated
                October 22, 1987

           Material Contracts - Management Contracts and Compensatory Plans

10(k)          Harsco Corporation Supplemental               Exhibit volume, 1997 10-K
                Retirement Benefit Program as
                amended January 27, 1998

10(l)          Trust Agreement between Harsco                Exhibit volume, 1987 10-K
                Corporation and Dauphin Deposit
                Bank and Trust Company dated
                July 1, 1987 relating to the
                Supplemental Retirement Benefit
                Plan

10(m)          Harsco Corporation Supplemental               Exhibit volume, 1991 10-K
                Executive Retirement Plan as
                amended

10(n)          Trust Agreement between Harsco                Exhibit volume, 1988 10-K
                Corporation and Dauphin
                Deposit Bank and Trust Company
                dated November 22, 1988 relating
                to the Supplemental Executive
                Retirement Plan

10(o)          1995 Executive Incentive Compensation         Proxy Statement dated March 22,
                Plan                                           1995 on Exhibit A pages A-1
                                                               through A-12
</TABLE>



                                      -89-
<PAGE>   90
(a) 3. Listing of Exhibits Filed with Form 10-K (continued):

<TABLE>
<CAPTION>
Exhibit
Number                   Data Required                       Location in 10-K
- ------                   -------------                       ----------------
<S>        <C>                                               <C>
10(p)          Authorization, Terms and Conditions of        Exhibit volume, 2000 10-K
                the Annual Incentive Awards, as
                amended and Restated January 1,
                2001, under the 1995 Executive Incentive
                Compensation Plan

               Employment Agreements -

10(q)          D. C. Hathaway                                Exhibit volume, 1989 10-K
                                                               Uniform agreement, the same
                                                               as shown for J. J. Burdge
   "           L. A. Campanaro                                    "             "
   "           P. C. Coppock                                      "             "
   "           S. D. Fazzolari                                    "             "
   "           R. W. Kaplan                                       "             "

10(r)          Special Supplemental Retirement               Exhibit Volume, 1988 10-K
                Benefit  Agreement for
                D. C. Hathaway

10(s)          Settlement Agreement with                     Exhibit to 10-Q for the period
                Leonard A. Campanaro                           ended June 30, 2000

               Director Indemnity Agreements -

10(t)          R. F. Nation                                  Exhibit volume, 1989 10-K
                                                               Uniform agreement, same as
                                                               shown for J. J. Burdge
   "           A. J. Sordoni, III                                 "             "
   "           R. C. Wilburn                                      "             "
   "           D. C. Hathaway                                     "             "
   "           J. I. Scheiner                                     "             "
   "           C. F. Scanlan                                      "             "
   "           J. J. Jasinowski                                   "             "
   "           J. P. Viviano                                      "             "

10(u)          Harsco Corporation Deferred                   Exhibit volume, 2000 10-K
                Compensation Plan for
                Non-Employee Directors, as
                amended and restated June 27, 2000
</TABLE>


                                      -90-
<PAGE>   91
(a) 3. Listing of Exhibits Filed with Form 10-K (continued):

<TABLE>
<CAPTION>
Exhibit
Number                   Data Required                       Location in 10-K
- ------                   -------------                       ----------------
<S>        <C>                                               <C>
10(v)          Harsco Corporation 1995 Non-Employee          Proxy Statement dated
                Directors' Stock Plan                          March 22, 1995 on Exhibit B
                                                               pages B-1 through B-6

12             Computation of Ratios of                      Exhibit volume, 2000 10-K
                Earnings to Fixed Charges

21             Subsidiaries of the Registrant                Exhibit volume, 2000 10-K

23             Consent of Independent Accountants            Exhibit volume, 2000 10-K

27             Financial Data Schedule                       Exhibit volume, 2000 10-K
</TABLE>


Exhibits other than those listed above are omitted for the reason that they are
either not applicable or not material.

The foregoing Exhibits are available from the Secretary of the Company upon
receipt of a fee of $10 to cover the Company's reasonable cost of providing
copies of such Exhibits.

(b)      Reports on Form 8-K:

No reports on Form 8-K were filed during the quarter ended December 31, 2000.






                                      -91-
<PAGE>   92
                                   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.

                                        HARSCO CORPORATION

Date   3-15-01                          By  /S/  Salvatore D. Fazzolari
      ------------                          ----------------------------------
                                        Salvatore D. Fazzolari
                                        Senior Vice President, Chief Financial
                                        Officer and Treasurer

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                               CAPACITY                                DATE

<S>                                     <C>                                     <C>
/S/  Derek C. Hathaway                  Chairman, President and Chief            3-15-01
- ----------------------------------                                              ---------
     (Derek C. Hathaway)                Executive Officer

/S/  Salvatore D. Fazzolari             Senior Vice President, Chief             3-15-01
- ----------------------------------                                              ---------
     (Salvatore D. Fazzolari)           Financial Officer and Treasurer
                                        (Principal Financial Officer)

/S/  Stephen J. Schnoor                 Vice President and Controller            3-15-01
- ----------------------------------                                              ---------
     (Stephen J. Schnoor)               (Principal Accounting Officer)

/S/  Jerry J. Jasinowski                Director                                 3-15-01
- ----------------------------------                                              ---------
     (Jerry J. Jasinowski)

/S/  Robert F. Nation                   Director                                 3-15-01
- ----------------------------------                                              ---------
     (Robert F. Nation)

/S/  Carolyn F. Scanlan                 Director                                 3-15-01
- ----------------------------------                                              ---------
     (Carolyn F. Scanlan)

/S/  James I. Scheiner                  Director                                 3-15-01
- ----------------------------------                                              ---------
     (James I. Scheiner)

/S/  Andrew J. Sordoni III              Director                                 3-15-01
- ----------------------------------                                              ---------
     (Andrew J. Sordoni III)

/S/  Joseph P. Viviano                  Director                                 3-15-01
- ----------------------------------                                              ---------
     (Joseph P. Viviano)

/S/  Dr. Robert C. Wilburn              Director                                 3-15-01
- ----------------------------------                                              ---------
     (Dr. Robert C. Wilburn)
</TABLE>




                                      -92-
<PAGE>   93
HARSCO CORPORATION FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

Item 14(a) 3. Exhibits

<TABLE>
<CAPTION>
Exhibit                                                                                               Document
Number                                                                                                Pages

<S>                      <C>                                                                           <C>
10(a)                    $50,000,000 Facility Agreement dated
                           15 December 2000                                                            1 - 60

10(b)                    $50,000,000 Facility Agreement dated
                           12th January 2001                                                           1 - 58

10(c)                    Commercial Paper Payment Agency
                           Agreement dated October 1, 2000,
                           Between Salomon Smith Barney Inc.
                           and Harsco Corporation                                                      1 - 16

10(p)                    Authorization, Terms and Conditions of
                           The Annual Incentive Awards, as
                           Amended and Restated January 1, 2001,
                           Under the 1995 Executive Incentive
                           Compensation Plan                                                           1 - 10

10(u)                    Harsco Corporation Deferred Compensation
                           Plan for Non-Employee Directors, as
                           Amended and Restated June 27, 2000                                          1 - 12

12                       Computation of Ratios of Earnings
                           to Fixed Charges                                                               1

21                       Subsidiaries of the Registrant                                                 1 - 5

23                       Consent of Independent Accountants                                               1
</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.A
<SEQUENCE>2
<FILENAME>y46501mex10-a.txt
<DESCRIPTION>$50,000,000.00 FACILITY AGREEMENT DATE 12/15/2000
<TEXT>

<PAGE>   1

                                                                   Exhibit 10(a)




                         $50,000,000 FACILITY AGREEMENT

                             dated 15 December 2000




                                       for



                               HARSCO FINANCE B.V.

                                       and

                            HARSCO INVESTMENT LIMITED

                                  as Borrowers


                                       and

                               HARSCO CORPORATION

                                  as Guarantor




                                      with



                          NATIONAL WESTMINSTER BANK PlC
                                acting as Lender











                                   LINKLATERS
                                   & ALLIANCE

                                   LINKLATERS


                                 Ref: JOBS/PHPS
<PAGE>   2
                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                    PAGE
<S>         <C>                                                           <C>
1.          Definitions and interpretation...............................    1
2.          The Facility.................................................   10
3.          Purpose......................................................   10
4.          Conditions of Utilisation....................................   10
5.          Utilisation..................................................   11
6.          Optional Currencies..........................................   12
7.          Repayment....................................................   13
8.          Prepayment and cancellation..................................   14
9.          Interest.....................................................   15
10.         Interest Periods.............................................   16
11.         Changes to the calculation of interest.......................   17
12.         Fees.........................................................   17
13.         Tax gross up and indemnities.................................   18
14.         Increased costs..............................................   20
15.         Other indemnities............................................   21
16.         Mitigation by the Lender.....................................   22
17.         Costs and expenses...........................................   23
18.         Guarantee and indemnity......................................   23
19.         Representations..............................................   25
20.         Information undertakings.....................................   30
21.         Financial covenants..........................................   32
22.         General undertakings.........................................   33
23.         Events of Default............................................   37
24.         Changes to the Lender........................................   40
25.         Changes to the Obligors......................................   41
26.         Conduct of business by the Lender............................   42
27.         Lender's Management Time.....................................   42
28.         Payment mechanics............................................   42
29.         Set-off......................................................   44
30.         Notices......................................................   44
31.         Calculations and certificates................................   45
32.         Partial invalidity...........................................   45
33.         Remedies and waivers.........................................   45
34.         Amendments and waivers.......................................   45
35.         Counterparts.................................................   46
36.         Governing law................................................   46
37.         Enforcement..................................................   46
</TABLE>


<PAGE>   3
<TABLE>
<CAPTION>
SCHEDULE                                                                  PAGE
<S>                                                                       <C>
SCHEDULE 1 Conditions Precedent..........................................   47
SCHEDULE 2 Requests......................................................   49
SCHEDULE 3 Mandatory Cost Formulae.......................................   52
SCHEDULE 4 Existing Liens................................................   54
SCHEDULE 5 Existing Indebtedness.........................................   55
</TABLE>



<PAGE>   4
THIS AGREEMENT is dated 15 December 2000 between:

(1)      HARSCO FINANCE B.V. (a private limited liability company with its
         corporate seat in Amsterdam) and HARSCO INVESTMENT LIMITED (a private
         limited company incorporated in England and Wales with company number
         03985379) (the "BORROWERS" and each a "BORROWER");

(2)      HARSCO CORPORATION (a corporation incorporated in the State of
         Delaware) (the "GUARANTOR"); and

(3)      NATIONAL WESTMINSTER BANK Plc as lender (the "LENDER").



IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         "AFFILIATE" means, in relation to any person, a Subsidiary of that
         person or a Holding Company of that person or any other Subsidiary of
         that Holding Company.

         "AUTHORISATION" means an authorisation, consent, approval, resolution,
         licence, exemption, filing or registration.

         "AVAILABILITY PERIOD" means the period from and including the date of
         this Agreement to and including the Business Day before the Final
         Maturity Date specified in paragraph (a) of that definition.

         "AVAILABLE COMMITMENT" means the Lender's Commitment minus:

         (a)      the Base Currency Amount of any outstanding Loans; and

         (b)      in relation to any proposed Utilisation, the Base Currency
                  Amount of any Loans that are due to be made on or before the
                  proposed Utilisation Date other than any Loans that are due to
                  be repaid or prepaid on or before the proposed Utilisation
                  Date.

         "BASE CURRENCY" or "$" means Dollars.

         "BASE CURRENCY AMOUNT" means, in relation to a Loan, the amount
         specified in the Utilisation Request delivered by a Borrower for that
         Loan (or, if the amount requested is not denominated in the Base
         Currency, that amount converted into the Base Currency at the Lender's
         Spot Rate of Exchange on the date which is three Business Days before
         the Utilisation Date or, if later, on the date the Lender receives the
         Utilisation Request) adjusted to reflect any repayment.

         "BOARD" means the Board of Governors of the Federal Reserve System of
         the USA (or any successor).

         "BREAK COSTS" means the amount (if any) by which:

         (a)      the interest which the Lender should have received for the
                  period from the date of receipt of all or any part of a Loan
                  or Unpaid Sum to the last day of the current Interest

                                      -1-
<PAGE>   5
                  Period in respect of that Loan or Unpaid Sum had the principal
                  amount or Unpaid Sum received been paid on the last day of
                  that Interest Period;

                  exceeds:

         (b)      the amount which the Lender would be able to obtain by placing
                  an amount equal to the principal amount or Unpaid Sum received
                  by it on deposit with a leading bank in the Relevant Interbank
                  Market for a period starting on the Business Day following
                  receipt or recovery and ending on the last day of the current
                  Interest Period.

         "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
         banks are open for general business in London and:

         (a)      (in relation to any date for payment or purchase of a currency
                  other than euro) the principal financial centre of the country
                  of that currency; or

         (b)      (in relation to any date for payment or purchase of euro) any
                  TARGET Day.

         "CAPITAL LEASE OBLIGATIONS" of any person means the obligations of such
         person to pay rent or other amounts under any lease of (or other
         arrangement conveying the right to use) real or personal property, or a
         combination thereof, which obligations are required to be classified
         and accounted for as capital leases on a balance sheet of such person
         under GAAP and, for the purposes of this Agreement, the amount of such
         obligations at any time shall be the capitalised amount thereof at such
         time determined in accordance with GAAP.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
         time.

         "COMMITMENT" means $50,000,000, to the extent not cancelled, reduced or
         transferred by the Lender under this Agreement.

         "COMPLIANCE CERTIFICATE" means a certificate in form and substance
         satisfactory to the Lender.

         "DEFAULT" means an Event of Default or any event or circumstance
         specified in Clause 23 (Events of Default) which would (with the expiry
         of a grace period, the giving of notice, the making of any
         determination under the Finance Documents or any combination of any of
         the foregoing) be an Event of Default.

         "DOLLARS" and "$" mean the lawful currency of the USA.

         "DOMESTIC SUBSIDIARIES" means any Subsidiary organised or incorporated
         under the laws of one of the States of the United States, the laws of
         the District of Columbia or the Federal laws of the United States.

         "ENVIRONMENT" means living organisms including the ecological systems
         of which they form part and the following media:

         (a)      air (including air within natural or man-made structures,
                  whether above or below ground);

         (b)      water (including territorial, coastal and inland waters, water
                  under or within land and water in drains and sewers); and

         (c)      land (including land under water).

                                      -2-
<PAGE>   6
         "ENVIRONMENTAL LAW" means all laws and regulations of any relevant
         jurisdiction which:

         (a)      have as a purpose or effect the protection of, and/or
                  prevention of harm or damage to, the Environment;

         (b)      provide remedies or compensation for harm or damage to the
                  Environment; or

         (c)      relate to Hazardous Substances or health and safety matters.

         "ENVIRONMENTAL LICENCE" means any Authorisation required at any time
         under Environmental Law.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
         amended from time to time.

         "ERISA AFFILIATE" means any trade or business (whether or not
         incorporated) that is a member of a group of which the US Obligor is a
         member and which is treated as a single employer under Section 414 of
         the Code.

         "EVENT OF DEFAULT" means any event or circumstance specified as such in
         Clause 23 (Events of Default).

         "FACILITY" means the revolving or, after the Term-Out Date, the term
         loan facility made available under this Agreement as described in
         Clause 2 (The Facility).

         "FACILITY OFFICE" means the office or offices notified by the Lender to
         the Guarantor and the Borrowers in writing as the office or offices
         through which it will perform its obligations under this Agreement.

         "FEE LETTER" means any letter or letters dated on or about the date of
         this Agreement between the Lender and the Guarantor setting out fees
         payable in relation to the Facility.

         "FINAL MATURITY DATE" means:

         (a)      in relation to a Revolving Loan not converted into a Term Loan
                  pursuant to Clause 7.2 (Term-Out), the date which is 364 days
                  from the date of this Agreement or, if extended in accordance
                  with Clause 7.3 (Extension), the date provided for in Clause
                  7.3 (Extension); or

         (b)      in relation to a Term Loan, the date provided for in Clause
                  7.2 (Term-Out).

         "FINANCE DOCUMENT" means this Agreement, any Fee Letter and any other
         document designated as such by the Lender and the Guarantor.

         "FINANCIAL OFFICER" of any person means the Chief Financial Officer,
         principal accounting officer, Treasurer or Controller of such person.

         "GAAP" means the generally accepted accounting principles, standards
         and practices in the United States.

         "GOVERNMENTAL AUTHORITY" means any Federal, state, local or foreign
         court or governmental agency, authority, instrumentality or regulatory
         body.

         "GROUP" means the Guarantor and its consolidated Subsidiaries for the
         time being.

                                      -3-
<PAGE>   7
         "GUARANTOR'S AUDITORS" means PricewaterhouseCoopers or such other
         auditors as may be appointed to the Group in accordance with Clause
         22.11 (Guarantor's Auditors).

         "HAZARDOUS SUBSTANCE" means any waste, pollutant, contaminant or other
         substance (including any liquid, solid, gas, ion, living organism or
         noise) that may be harmful to human health or other life or the
         Environment or a nuisance to any person or that may make the use or
         ownership of any affected land or property more costly.

         "HOLDING COMPANY" means, in relation to a company or corporation, any
         other company or corporation in respect of which it is a Subsidiary.

         "INDEBTEDNESS" of any person means, without duplication:

         (a)      all obligations of such person for borrowed money or with
                  respect to deposits or advances of any kind;

         (b)      all obligations of such person evidenced by bonds, debentures,
                  notes or similar instruments;

         (c)      all obligations of such person upon which interest charges are
                  customarily paid;

         (d)      all obligations of such person under conditional sale or other
                  title retention agreements relating to property or assets
                  purchased by such person;

         (e)      all obligations of such person issued or assumed as the
                  deferred purchase price of property or services;

         (f)      all Indebtedness of others secured by (or for which the holder
                  of such Indebtedness has an existing right, contingent or
                  otherwise, to be secured by) any Lien on property owned or
                  acquired by such person, whether or not the obligations
                  secured thereby have been assumed;

         (g)      all guarantees by such person of Indebtedness of others;

         (h)      all Capital Lease Obligations of such person;

         (i)      all obligations of such person in respect of interest rate
                  protection agreements, foreign currency exchange agreements or
                  other interest or exchange rate hedging arrangements; and

         (j)      all obligations of such person as an account party in respect
                  of letters of credit and bankers' acceptances,

         provided, however, that Indebtedness shall not include trade accounts
         payable in the ordinary course of business. The Indebtedness of any
         person shall include the Indebtedness of any partnership in which such
         person is a general partner.

         "INTEREST PERIOD" means, in relation to a Loan, each period determined
         in accordance with Clause 10 (Interest Periods) and, in relation to an
         Unpaid Sum, each period determined in accordance with Clause 9.3
         (Default interest).

         "LENDER'S SPOT RATE OF EXCHANGE" means the Lender's spot rate of
         exchange for the purchase of the relevant currency with the Base
         Currency in the London foreign exchange market at or about 11:00 a.m.
         on a particular day.

                                      -4-
<PAGE>   8
         "LIBOR" means, in relation to any Loan:

         (a)      the applicable Screen Rate; or

         (b)      (if no Screen Rate is available for the currency or period of
                  that Loan) the rate quoted by the Lender to leading banks in
                  the London interbank market,

         as of 11:00 a.m. on the Quotation Day for the offering of deposits in
         the currency of that Loan and for a period comparable to the Interest
         Period for that Loan.

         "LIEN" means, with respect to any asset:

         (a)      any mortgage, deed of trust, lien, pledge, encumbrance, charge
                  or security interest in or on such asset;

         (b)      the interest of a vendor or a lessor under any conditional
                  sale agreement, capital lease or title retention agreement
                  relating to such asset; and

         (c)      in the case of securities, any purchase option, call or
                  similar right of a third party with respect to such
                  securities.

         "LOAN" means a Revolving Loan or a Term Loan or the principal amount
         outstanding for the time being of that Revolving Loan or, as the case
         may be, Term Loan.

         "MANDATORY COST" means the percentage rate per annum calculated by the
         Lender in accordance with Schedule 3 (Mandatory Cost Formulae).

         "MARGIN" means:

         (a)      during any period on or before the first anniversary of the
                  date of this Agreement, 0.425 per cent. per annum; and

         (b)      to the extent the Facility continues in accordance with this
                  Agreement, during any period after the first anniversary of
                  the date of this Agreement, 0.525 per cent. per annum.

         "MARGIN STOCK" means margin stock or "Margin Security" within the
         meaning of Regulations T, U and X.

         "MATERIAL ADVERSE EFFECT" means:

         (a)      a materially adverse effect on the business, assets,
                  operations, prospects or condition, financial or otherwise, of
                  the Group taken as a whole; or

         (b)      a material impairment of the ability of any Obligor to perform
                  any of its respective obligations under any Finance Document
                  to which it is or becomes a party.

         "MONTH" means a period starting on one day in a calendar month and
         ending on the numerically corresponding day in the next calendar month,
         except that:

         (a)      if the numerically corresponding day is not a Business Day,
                  that period shall end on the next Business Day in that
                  calendar month in which that period is to end if there is one,
                  or if there is not, on the immediately preceding Business Day;
                  and

         (b)      if there is no numerically corresponding day in the calendar
                  month in which that period is to end, that period shall end on
                  the last Business Day in that calendar month.

                                      -5-
<PAGE>   9
         The above rules will only apply to the last Month of any period.

         "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
         4001(a)(3) of ERISA to which the US Obligor or any ERISA Affiliate
         (other than one considered an ERISA Affiliate only pursuant to
         subsection (m) or (o) of Section 414 of the Code) is making or accruing
         an obligation to make contributions, or has within any of the preceding
         five years made or accrued an obligation to make contributions.

         "NET WORTH" has the meaning given to it in Clause 21 (Financial
         covenants).

         "OBLIGOR" means a Borrower or the Guarantor.

         "OPTIONAL CURRENCY" means a currency (other than the Base Currency)
         which complies with the conditions set out in Clause 4.3 (Conditions
         relating to Optional Currencies).

         "ORIGINAL FINANCIAL STATEMENTS" means:

         (a)      in relation to the Guarantor, the consolidated balance sheet
                  of the Group as at 31 December 1999 and the related
                  consolidated statements of income, cash flows and changes in
                  shareholders' equity of the Group for the fiscal year ended on
                  such date, with the opinion thereon of the Guarantor's
                  Auditors;

         (b)      in relation to the Guarantor, the unaudited consolidated
                  balance sheet of the Group as at 30 September 2000 and the
                  related consolidated statements of income and cash flows of
                  the Group for the nine-month period ended on such date; and

         (c)      in relation to each Borrower, its unaudited financial
                  statements for the nine-month period ended 30 September 2000.

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

         "PARTY" means a party to this Agreement and includes its successors in
         title, permitted assigns and permitted transferees.

         "PBGC" means the Pension Benefit Guaranty Corporation of the USA
         established pursuant to Section 4002 of the ERISA or any entity
         succeeding to all or any of its functions under ERISA.

         "PLAN" means any employee pension benefit plan as defined in Section
         3(2) of ERISA (other than a Multiemployer Plan) subject to the
         provisions of Title IV of ERISA or Section 412 of the Code which is
         maintained for current or former employees, or any beneficiary thereof,
         of the US Obligor or any ERISA Affiliate.

         "QUALIFYING LENDER" has the meaning given to it in Clause 13 (Tax
         gross-up and indemnities).

         "QUOTATION DAY" means, in relation to any period for which an interest
         rate is to be determined:

         (a)      (if the currency is Sterling or Dollars) the first day of that
                  period;

         (b)      (if the currency is euro) two TARGET Days before the first day
                  of that period; or

         (c)      (for any other currency) two Business Days before the first
                  day of that period,

                                      -6-
<PAGE>   10
         unless market practice differs in the London interbank market for a
         currency, in which case the Quotation Day will be determined by the
         Lender in accordance with market practice in the Relevant Interbank
         Market (and if quotations for that currency and that period would
         normally be given by leading banks in the Relevant Interbank Market on
         more than one day, the Quotation Day will be the last of those days).

         "REGULATION T" means Regulation T of the Board as from time to time in
         effect and all official rulings and interpretations thereunder or
         thereof.

         "REGULATION U" means Regulation U of the Board as from time to time in
         effect and all official rulings and interpretations thereunder or
         thereof.

         "REGULATION X" means Regulation X of the Board as from time to time in
         effect and all official rulings and interpretations thereunder or
         thereof.

         "RELEVANT AGREEMENT" means the $50,000,000 facility agreement dated on
         or about the date of this Agreement between the Borrowers, the
         Guarantor and Citibank, N.A.

         "RELEVANT INTERBANK MARKET" means, in relation to euro, the European
         interbank market and, in relation to any other currency, the London
         interbank market.

         "REPEATING REPRESENTATIONS" means each of the representations set out
         in Clauses 19.1 (Status) to 19.4 (Power and authority), 19.6 (Dutch
         provisions), 19.9 (No default), 19.10(b) (True and complete
         disclosure), 19.11 (a) and (b) (Financial statements), 19.12 (Pari
         passu ranking), 19.14 (Environment laws and licences) to 19.18
         (Investment Company Act and Public Utility Holding Company Act).

         "REPORTABLE EVENT" means any reportable event as defined in Section
         4043(c) of ERISA or the regulations issued thereunder with respect to a
         Plan (other than a Plan maintained by an ERISA Affiliate that is
         considered an ERISA Affiliate only pursuant to a subsection (m) or (o)
         of Section 414 of the Code).

         "REVOLVING LOAN" means a revolving loan made or to be made under the
         Facility and which has not been converted into a Term Loan or the
         principal amount outstanding for the time being of that loan.

         "ROLLOVER LOAN" means one or more Loans:

         (a)      made or to be made on the same day that one or more maturing
                  Loans is or are due to be repaid;

         (b)      the aggregate amount of which is equal to or less than the
                  maturing Loan(s) (unless it is more than the maturing Loan(s)
                  solely because it arose as a result of the operation of Clause
                  6.2 (Unavailability of a currency));

         (c)      in the same currency as the maturing Loan(s) (unless it arose
                  as a result of the operation of Clause 6.2 (Unavailability of
                  a currency)); and

         (d)      made or to be made to the same Borrower for the purpose of
                  refinancing the maturing Loan(s).

                                      -7-
<PAGE>   11
         "SCREEN RATE" means the British Bankers' Association Interest
         Settlement Rate for the relevant currency and period displayed on the
         appropriate page of the Telerate screen. If the agreed page is replaced
         or service ceases to be available, the Lender may specify another page
         or service displaying the appropriate rate after consultation with the
         Guarantor.

         "SELECTION NOTICE" means a notice substantially in the form set out in
         Part II of Schedule 2 (Requests) given in accordance with Clause 10
         (Interest Periods) in relation to the Facility after the Term-Out Date.

         "STERLING" means the lawful currency of the United Kingdom.

         "SUBSIDIARY" means, in relation to any person (referred to in this
         definition as the "PARENT"), any corporation, partnership, association
         or other business entity:

         (a)      of which securities or other ownership interests representing
                  more than 50 per cent. of the equity or more than 50 per cent.
                  of the ordinary voting power or more than 50 per cent. of the
                  general partnership interests are, at the time any
                  determination is being made, owned, controlled or held; or

         (b)      which is, at the time any determination is made, otherwise
                  controlled by the parent or one or more Subsidiaries of the
                  parent or by the parent and one or more Subsidiaries of the
                  parent.

         In this definition, one person being controlled by another means that
         the other (whether directly or indirectly and whether by the ownership
         of share capital, the possession of voting power, contract or
         otherwise) has the power to appoint and/or remove all or the majority
         of the members of the Board of Directors or other governing body of
         that person or otherwise controls or has the power to control the
         affairs and policies of that person.

         "TARGET" means Trans-European Automated Real-time Gross Settlement
         Express Transfer payment system.

         "TARGET DAY" means any day on which TARGET is open for the settlement
         of payments in euro.

         "TAX" means any tax, levy, impost, duty or other charge or withholding
         of a similar nature (including any penalty or interest payable in
         connection with any failure to pay or any delay in paying any of the
         same).

         "TAXES ACT" means the Income and Corporation Taxes Act 1988.

         "TERM LOAN" means a Revolving Loan which has been converted into a term
         loan on the Term-Out Date pursuant to Clause 7.2 (Term-Out), a loan
         made or to be made on the Term-Out Date or the principal amount
         outstanding for the time being of that loan.

         "TERM-OUT DATE" has the meaning given to it in Clause 7.2(a)
         (Term-Out).

         "TERM-OUT NOTICE" means a notice substantially in the form set out in
         Part III of Schedule 2 (Requests).

         "TERM-OUT OPTION" has the meaning given to it in Clause 7.2(a)
         (Term-Out).

         "TOTAL CAPITAL" has the meaning given to it in Clause 21 (Financial
         covenants).

                                      -8-
<PAGE>   12
         "TOTAL DEBT" has the meaning given to it in Clause 21 (Financial
         covenants).

         "UNPAID SUM" means any sum due and payable but unpaid by an Obligor
         under the Finance Documents.

         "USA" or "US" or "UNITED STATES" means the United States of America.

         "US OBLIGOR" means the Guarantor to the extent incorporated in any
         state of the USA.

         "UTILISATION" means a utilisation of the Facility.

         "UTILISATION DATE" means the date of a Utilisation, being the date on
         which the relevant Loan is to be made.

         "UTILISATION REQUEST" means a notice substantially in the form set out
         in Part I of Schedule 2 (Requests).

         "VAT" means value added tax as provided for in the Value Added Tax Act
         1994 and any other tax of a similar nature.

1.2      CONSTRUCTION

(a) Any reference in this Agreement to:

         (i)      "ASSETS" includes present and future properties, revenues and
                  rights of every description;

         (ii)     a "CHANGE OF CONTROL" shall be deemed to have occurred if (a)
                  any person or group (within the meaning of Rule 13d-5 of the
                  Securities and Exchange commission as in effect on the date of
                  this Agreement) shall own directly or indirectly, beneficially
                  or of record, shares representing more than 20 per cent. of
                  the aggregate ordinary voting power represented by the issued
                  and outstanding capital stock of the Guarantor; or (b) a
                  majority of the seats (other than vacant seats) on the board
                  of directors of the Guarantor shall at any time have been
                  occupied by persons who were neither (i) nominated by the
                  board of directors of the Guarantor, nor (ii) appointed by
                  directors so nominated; or (c) any person or group shall
                  otherwise directly or indirectly control the Guarantor.

         (iii)    the "EUROPEAN INTERBANK MARKET" means the interbank market for
                  euro operating in Participating Member States;

         (iv)     a "FINANCE DOCUMENT" or any other agreement or instrument is a
                  reference to that Finance Document or other agreement or
                  instrument as amended or novated;

         (v)      a "GUARANTEE" of or by any person means any obligation,
                  contingent or otherwise, of such person guaranteeing or having
                  the economic effect of guaranteeing any Indebtedness of any
                  other person (the "PRIMARY OBLIGOR") in any manner, whether
                  directly or indirectly, and including any obligation of such
                  person, direct or indirect, (a) to purchase or pay (or advance
                  or supply funds for the purchase or payment of) such
                  Indebtedness or to purchase (or to advance or supply funds for
                  the purchase of) any security for the payment of such
                  Indebtedness, (b) to purchase property, securities or services
                  for the purpose of assuring the owner of such Indebtedness of
                  the payment of such Indebtedness or (c) to maintain working
                  capital, equity capital or other financial statement condition
                  or liquidity of the primary obligor so as to enable the
                  primary obligor


                                      -9-
<PAGE>   13
                  to pay such Indebtedness; provided, however, that the term
                  guarantee shall not include endorsements for collection or
                  deposit, in either case in the ordinary course of business;

         (vi)     a "PERSON" includes any person, firm, company, corporation,
                  government, state or agency of a state or any association,
                  trust or partnership (whether or not having separate legal
                  personality) or two or more of the foregoing;

         (vii)    a "REGULATION" includes any regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law) of any governmental, intergovernmental or
                  supranational body, agency, department or regulatory,
                  self-regulatory or other authority or organisation;

         (viii)   a provision of law is a reference to that provision as amended
                  or re-enacted; and

         (ix)     unless a contrary indication appears, a time of day is a
                  reference to London time.

(b) Section, Clause and Schedule headings are for ease of reference only.

(c) Unless a contrary indication appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance Document
has the same meaning in that Finance Document or notice as in this Agreement.

(d) A Default (other than an Event of Default) is "CONTINUING" if it has not
been remedied or waived and an Event of Default is "CONTINUING" if it has not
been waived or otherwise cured.

1.3      THIRD PARTY RIGHTS

         A person who is not a party to this Agreement has no right under the
         Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the
         benefit of any term of this Agreement.

2.       THE FACILITY

         Subject to the terms of this Agreement, the Lender makes available to
         the Borrowers a multicurrency 364-day renewable revolving loan facility
         with a term-out option in an aggregate amount equal to the Commitment.

3.       PURPOSE

3.1      PURPOSE

         Each Borrower shall apply all amounts borrowed by it under the Facility
         towards (i) the financing of the Group's working capital requirements
         or (ii) supporting issues by the Group of commercial paper.

3.2      MONITORING

        The Lender is not bound to monitor or verify the application of any
amount borrowed pursuant to this Agreement.

4.       CONDITIONS OF UTILISATION

4.1      INITIAL CONDITIONS PRECEDENT

         No Borrower may deliver a Utilisation Request unless the Lender has
         received all of the documents and other evidence listed in Schedule 1
         (Conditions Precedent) in form and

                                      -10-
<PAGE>   14
         substance satisfactory to the Lender. The Lender shall notify the
         Guarantor promptly upon being so satisfied.

4.2      FURTHER CONDITIONS PRECEDENT

         The Lender will only be obliged to comply with Clause 5.4 (Availability
         of Loans) if on the date of the Utilisation Request and on the proposed
         Utilisation Date:

         (a)      in the case of a Rollover Loan, no Event of Default is
                  continuing or would result from the proposed Loan and, in the
                  case of any other Loan, no Default is continuing or would
                  result from the proposed Loan; and

         (b)      the Repeating Representations to be made by each Obligor are
                  true in all material respects.

4.3      CONDITIONS RELATING TO OPTIONAL CURRENCIES

(a) A currency will constitute an Optional Currency in relation to a Loan if:

         (i)      it is readily available in the amount required and freely
                  convertible into the Base Currency in the Relevant Interbank
                  Market on the Quotation Day and the Utilisation Date for that
                  Loan; and

         (ii)     it has been approved by the Lender on or prior to receipt by
                  the Lender of the relevant Utilisation Request for that Loan.

(b)      If the euro constitutes an Optional Currency at any time, a Loan will
         only be made available in the euro unit or any other units of the euro
         agreed by the Lender.

4.4      MAXIMUM NUMBER OF LOANS/CURRENCIES

         A Borrower may not deliver a Utilisation Request if as a result of the
         proposed Utilisation more than six Loans would be outstanding. Loans
         may not be outstanding in more than three currencies at any one time.

5.       UTILISATION

5.1      DELIVERY OF A UTILISATION REQUEST

         A Borrower may utilise the Facility by delivery to the Lender of a duly
         completed Utilisation Request not later than 3:00 p.m. one Business Day
         before the Utilisation Date, in the case of Loans in Sterling or
         Dollars, and not later than 3:00 p.m. three Business Days before the
         Utilisation Date, in any other case.

5.2      COMPLETION OF A UTILISATION REQUEST

(a)      Each Utilisation Request is irrevocable and will not be regarded as
         having been duly completed unless:

         (i)      the proposed Utilisation Date is a Business Day within the
                  Availability Period;

         (ii)     the currency and amount of the Utilisation comply with Clause
                  5.3 (Currency and amount);

         (iii)    the proposed Interest Period complies with Clause 10 (Interest
                  Periods); and

                                      -11-
<PAGE>   15
         (iv)     it specifies the account and bank (which must be in the
                  principal financial centre of the country of the currency of
                  the Utilisation or, in the case of euro, the principal
                  financial centre of a Participating Member State in which
                  banks are open for general business on that day or London) to
                  which the proceeds of the Utilisation are to be credited.

(b) Only one Loan may be requested in each Utilisation Request.

5.3      CURRENCY AND AMOUNT

(a)      The currency specified in a Utilisation Request must be the Base
         Currency or an Optional Currency.

(b)      The amount of the proposed Loan must be an amount which is not more
         than the Available Commitment and which is a minimum of $5,000,000 (and
         integral multiples of $1,000,000) or, if less, the Available
         Commitment.

5.4      AVAILABILITY OF LOANS

         If the conditions set out in this Agreement have been met, the Lender
         shall make each Loan available through its Facility Office.

6.       OPTIONAL CURRENCIES

6.1      SELECTION OF CURRENCY

        A Borrower shall select the currency of a Loan in the Utilisation
Request.

6.2      UNAVAILABILITY OF A CURRENCY

         If before 3.00 p.m. on any Quotation Day:

         (a)      the Optional Currency requested is not readily available to
                  the Lender in the amount required; or

         (b)      compliance with the Lender's obligation to make available a
                  Loan in the proposed Optional Currency would contravene a law
                  or regulation applicable to it;

         the Lender will give notice to the relevant Borrower to that effect by
         5.00 p.m. on that day. In this event, the Lender will be required to
         make the Loan available in the Base Currency (in an amount equal to the
         Base Currency Amount or, in respect of a Rollover Loan, an amount equal
         to the Base Currency Amount of the maturing Loan that is due to be
         repaid).

6.3      EXCHANGE RATE MOVEMENTS

(a)      In respect of successive Interest Periods of a Term Loan denominated in
         a currency (other than the Base Currency), the Lender shall calculate
         the amount of the Term Loan in that currency for the next following
         Interest Period (by calculating the amount of that currency equal to
         the Base Currency Amount of that Term Loan at the Lender's Spot Rate of
         Exchange three Business Days before the next following Interest Period
         and (subject to paragraph (b) below):

         (i)      if the amount calculated is less than the existing amount of
                  that Term Loan in the relevant currency during the then
                  current Interest Period, promptly notify the relevant Borrower
                  that the Borrower shall pay, on the last day of that Interest
                  Period, an amount equal to the difference; or



                                      -12-
<PAGE>   16
         (ii)     if the amount calculated is more than the existing amount of
                  that Term Loan in the relevant currency during the then
                  current Interest Period, the Lender shall, if no Event of
                  Default is continuing, on the last day of that Interest
                  Period, pay an amount equal to the difference.

(b)     If the calculation made by the Lender pursuant to paragraph (a) above
        shows that the amount of the Term Loan in the relevant currency has
        increased or decreased by less than 5 per cent. compared to its Base
        Currency Amount, no notification shall be made by the Lender and no
        payment shall be required under paragraph (a) above.

7.       REPAYMENT

7.1      REPAYMENT OF LOANS

(a)      Subject to Clause 7.2 (Term-Out), each Loan drawn by a Borrower shall
         be repaid on the last day of its Interest Period.

(b)      Each Term Loan that a Borrower has drawn following an exercise of the
         Term-Out Option shall be repaid on the Final Maturity Date (as
         determined in accordance with Clause 7.2 (Term-Out)).

(c)      Any Term Loan which is repaid may not be reborrowed.

7.2      TERM-OUT

(a)      A Borrower may on or prior to the Final Maturity Date specified in
         paragraph (a) of that definition (the "TERM-OUT Date") convert all or
         part of the Revolving Loans advanced to it and outstanding at the close
         of business on the Term-Out Date into Term Loans (in the same currency
         as the Revolving Loan from which they are being converted) and/or draw
         further Term Loans (the "TERM-OUT OPTION") by delivery to the Lender
         of:

         (i)      a Term-Out Notice at least 5 days' prior to the Term-Out Date;
                  and

         (ii)     a duly completed Utilisation Request in relation to each Loan
                  being converted pursuant to this Clause 7.2 and any further
                  Term Loan the Borrower may request, in each case in accordance
                  with Clause 5.1 (Delivery of a Utilisation Request).

(b)      In the Term-Out Notice, the relevant Borrower shall specify:

         (i)      the date to which the Final Maturity Date for each Term Loan
                  converted from a Revolving Loan is to be extended, which date
                  shall be no later than the date falling 5 years after the date
                  of this Agreement;

         (ii)     the extent to which the Revolving Loans are to be converted,
                  if the Borrower does not intend to convert all Revolving
                  Loans;

         (iii)    any further Term Loan to be requested; and

         (iv)     the Final Maturity Date for any further Term Loan requested,
                  which date shall be no later than the date falling 5 years
                  after the date of this Agreement.

(c)      If a Borrower has exercised the Term-Out Option, on the Term-Out Date:

         (i)      any part of Revolving Facility which remains undrawn at close
                  of business on that date shall be cancelled;

                                      -13-
<PAGE>   17
         (ii)     to the extent that it is not to be converted into a Term Loan,
                  the Borrower shall repay each Revolving Loan;

         (iii)    save as provided in paragraph (c) (ii) above, each Revolving
                  Loan shall be converted into a Term Loan; and

         (iv)     the then Final Maturity Date shall be extended as provided in
                  Clause 7.2(b)(i) and, if applicable, (iv).

7.3      EXTENSION

(a)      The Guarantor may, not earlier than 30 and not later than 15 days prior
         to the end of the Availability Period by notice to the Lender request
         an extension to the Availability Period subject to the provisions of
         this Clause 7.3.

(b)      Upon receipt of any such request, the Lender shall undertake a full
         credit assessment of the Obligors. The Lender shall not be under any
         obligation to extend the Availability Period.

(c)      If the Guarantor requests an extension of the Availability Period the
         Lender shall, at its absolute discretion, have the option to:

         (i)      subject to paragraph (d) below, extend the Availability Period
                  for a further period of 364 days from the date on which the
                  Availability Period is then due to expire; or

         (ii)     decline such request, in which event the Commitment shall be
                  cancelled on the date the Availability Period is then due to
                  expire.

(d)      The Availability Period may be extended more than once pursuant to this
         Clause 7.3 provided that no extension of the Availability Period shall
         be made if the Term-Out Option has been exercised.

8.       PREPAYMENT AND CANCELLATION

8.1      ILLEGALITY

         If it becomes unlawful in any jurisdiction for the Lender to perform
         any of its obligations as contemplated by this Agreement or to fund any
         Loan:

         (a)      the Lender shall promptly notify the Guarantor upon becoming
                  aware of that event;

         (b)      upon the Lender notifying the Guarantor, the Commitment will
                  be immediately cancelled; and

         (c)      each Borrower shall repay the Loans made to that Borrower on
                  the last day of the Interest Period for each Loan occurring
                  after the Lender has notified the Guarantor or, if earlier,
                  the date specified by the Lender in the notice delivered to
                  the Guarantor (being no earlier than the last day of any
                  applicable grace period permitted by law).

8.2      VOLUNTARY CANCELLATION

         The Guarantor may, if it gives the Lender not less than 10 Business
         Days' prior notice, cancel the whole or any part (being a minimum
         amount of $10,000,000 and integral multiples thereof) of the Available
         Commitment.

                                      -14-
<PAGE>   18
8.3      VOLUNTARY PREPAYMENT OF LOANS

         The relevant Borrower to which a Loan has been made may, if it gives
         the Lender not less than 10 Business Days' prior notice, prepay the
         whole or any part of a Loan (but, if in part, being an amount that
         reduces the Base Currency Amount of the Loan by a minimum amount of
         $5,000,000 and integral multiples thereof).

8.4      RESTRICTIONS

(a)      Any notice of cancellation or prepayment given by any Party under this
         Clause 8 shall be irrevocable and, unless a contrary indication appears
         in this Agreement, shall specify the date or dates upon which the
         relevant cancellation or prepayment is to be made and the amount of
         that cancellation or prepayment.

(b)      Any prepayment under this Agreement shall be made together with accrued
         interest on the amount prepaid and, subject to any Break Costs, without
         premium or penalty.

(c)      Unless a contrary indication appears in this Agreement, any part of the
         Facility which is prepaid may be reborrowed in accordance with the
         terms of this Agreement.

(d)      The Borrowers shall not repay or prepay all or any part of the Loans
         and the Guarantor shall not cancel all or any part of the Commitment
         except at the times and in the manner expressly provided for in this
         Agreement.

(e)      No amount of the Commitment cancelled under this Agreement may be
         subsequently reinstated.

9.       INTEREST

9.1      CALCULATION OF INTEREST

         The rate of interest on each Loan for each Interest Period is the
         percentage rate per annum which is the aggregate of the applicable:

         (a)      Margin;

         (b)      LIBOR; and

         (c)      Mandatory Cost, if any.

9.2      PAYMENT OF INTEREST

         The Borrower to which a Loan has been made shall pay accrued interest
         on each Loan on the last day of each Interest Period (and, if the
         Interest Period is longer than three Months, on the dates falling at
         three monthly intervals after the first day of the Interest Period).

9.3      DEFAULT INTEREST

(a)      If an Obligor fails to pay any amount payable by it under a Finance
         Document on its due date, interest shall accrue on the overdue amount
         from the due date up to the date of actual payment (both before and
         after judgment) at a rate which is the sum of one per cent. and the
         rate which would have been payable if the overdue amount had, during
         the period of non-payment, constituted a Loan in the currency of the
         overdue amount for successive Interest Periods, each of a duration
         selected by the Lender (acting reasonably).

(b)      However if the overdue amount is principal of a Loan and became due on
         a day other than the last day of an Interest Period relating to that
         Loan, the first Interest Period applicable to that

                                      -15-
<PAGE>   19
         overdue amount shall be of a duration equal to the unexpired portion of
         that Interest Period and the rate of interest on that overdue amount
         for that Interest Period shall be the sum of one per cent. and the rate
         applicable to it immediately before it became due.

(c)      Any interest accruing under this Clause 9.3 shall be immediately
         payable by the relevant Obligor on demand by the Lender.

(d)      Default interest (if unpaid) arising on an overdue amount will be
         compounded with the overdue amount at the end of each Interest Period
         applicable to that overdue amount but will remain immediately due and
         payable.

9.4      NOTIFICATION OF RATES OF INTEREST

         The Lender shall promptly notify the relevant Borrower of the
         determination of a rate of interest under this Agreement.

10.      INTEREST PERIODS

10.1     SELECTION OF INTEREST PERIODS

(a)      A Borrower (or the Guarantor on behalf of a Borrower) may select an
         Interest Period for a Loan in the Utilisation Request for that Loan or
         (in relation to a Term Loan that has already been borrowed) in a
         Selection Notice.

(b)      Each Selection Notice for a Term Loan is irrevocable and must be
         delivered to the Lender by a Borrower (or the Guarantor on behalf of a
         Borrower) not later than 3:00 p.m. one Business Day before the first
         day of the relevant Interest Period, in the case of Loans in Sterling
         or Dollars, and not later than 3:00 p.m. three Business Days before the
         first day of the relevant Interest Period, in any other case.

(c)      If the Borrower (or the Guarantor on behalf of a Borrower) does not
         deliver a Selection Notice to the Lender in accordance with paragraph
         (b) above, the relevant Interest Period will be three Months.

(d)      Subject to this Clause 10, a Borrower (or the Guarantor) may select an
         Interest Period of one, two or three Months other period not exceeding
         12 months agreed between the Borrower and the Lender.

(e)      An Interest Period for a Loan shall not extend beyond the Final
         Maturity Date.

(f)      A Revolving Loan has one Interest Period only.

(g)      Each Interest Period for a Term Loan shall start on the Term-Out Date
         or (if already made) the last day of its preceding Interest Period.

10.2     NON-BUSINESS DAYS

         If an Interest Period would otherwise end on a day which is not a
         Business Day, that Interest Period will instead end on the next
         Business Day in that calendar month (if there is one) or the preceding
         Business Day (if there is not).

                                      -16-
<PAGE>   20
11.      CHANGES TO THE CALCULATION OF INTEREST

11.1     MARKET DISRUPTION

(a)      If a Market Disruption Event occurs in relation to a Loan for any
         Interest Period, then the rate of interest on that Loan for the
         Interest Period shall be the rate per annum which is the sum of:

         (i)      the Margin;

         (ii)     the rate notified to the relevant Borrower by the Lender as
                  soon as practicable and in any event before interest is due to
                  be paid in respect of that Interest Period, to be that which
                  expresses as a percentage rate per annum the cost to the
                  Lender of funding that Loan from whatever source it may
                  reasonably select; and

         (iii)    the Mandatory Cost, if any, applicable to that Loan.

(b)      In this Agreement "MARKET DISRUPTION EVENT" means:

         (i)      at or about noon on the Quotation Day for the relevant
                  Interest Period the Screen Rate is not available and the
                  Lender is unable to provide a quotation to determine LIBOR for
                  the relevant currency and period; or

         (ii)     before close of business in London on the Quotation Day for
                  the relevant Interest Period, the relevant Borrower receives
                  notification from the Lender that the cost to it of obtaining
                  matching deposits in the Relevant Interbank Market would be in
                  excess of LIBOR.

11.2     ALTERNATIVE BASIS OF INTEREST OR FUNDING

(a)      If a Market Disruption Event occurs and the Lender or the relevant
         Borrower so requires, the Lender and the relevant Borrower shall enter
         into negotiations (for a period of not more than 30 days) with a view
         to agreeing a substitute basis for determining the rate of interest.

(b)      Any alternative basis agreed pursuant to paragraph (a) above shall,
         with the prior consent of the Lender and the relevant Borrower, be
         binding on all Parties.

11.3     BREAK COSTS

(a)      Each Borrower shall, within three Business Days of demand by the
         Lender, pay to the Lender its Break Costs attributable to all or any
         part of a Loan or Unpaid Sum being paid by that Borrower on a day other
         than the last day of an Interest Period for that Loan or Unpaid Sum.

(b)      The Lender shall, as soon as reasonably practicable after a demand by
         the relevant Borrower, provide a certificate confirming the amount of
         its Break Costs for any Interest Period in which they accrue.

12.      FEES

12.1     COMMITMENT FEE

(a)      The Guarantor shall pay to the Lender a commitment fee in Dollars
         computed at the rate of 0.15 per cent. per annum on the Available
         Commitment from day to day during the Availability Period.

(b)      The accrued commitment fee is payable in arrears quarterly from the
         date of this Agreement and on the Final Maturity Date in respect of the
         Revolving Loan or any earlier date on which the Lender's Commitment is
         reduced to zero.

                                      -17-
<PAGE>   21
12.2     UTILISATION FEE

(a)      The Guarantor shall pay to the Lender a utilisation fee in Dollars
         computed at the rate of 0.10 per cent. per annum on the aggregate
         amount of the Loans outstanding payable in respect of each day that the
         Base Currency Amount of all Loans exceeds 33 per cent. of the
         Commitment on that day.

(b)      The accrued utilisation fee is payable on the last day of each
         successive period of three Months commencing on the date of this
         Agreement and on the Final Maturity Date.

13.      TAX GROSS UP AND INDEMNITIES

13.1     DEFINITIONS

(a)      In this Clause 13:

         "QUALIFYING LENDER" means a person which is (on the date a payment
         falls due) within the charge to United Kingdom corporation tax as
         respects that payment and was a bank (as defined for the purpose of
         section 349 of the Taxes Act in section 840A of the Taxes Act) at the
         time the relevant Loan was made.

         "TAX CREDIT" means a credit against, relief or remission for, or
         repayment of any Tax.

         "TAX DEDUCTION" means a deduction or withholding for or on account of
         Tax from a payment under a Finance Document.

         "TAX PAYMENT" means an increased payment made by an Obligor to the
         Lender under Clause 13.2 (Tax gross-up) or a payment under Clause 13.3
         (Tax indemnity).

         "TREATY LENDER" means a person which is (on the date a payment falls
         due) entitled to that payment under a double Taxation agreement in
         force on that date (subject to the completion of any necessary
         procedural formalities) without a Tax Deduction.

(b)      In this Clause 13 a reference to "DETERMINES" or "DETERMINED" means a
         determination made in the absolute discretion of the person making the
         determination.

13.2     TAX GROSS-UP

(a)      Each Obligor shall make all payments to be made by it without any Tax
         Deduction, unless a Tax Deduction is required by law.

(b)      The Guarantor or the Lender shall promptly upon becoming aware that an
         Obligor must make a Tax Deduction (or that there is any change in the
         rate or the basis of a Tax Deduction) notify the other party
         accordingly.

(c)      If a Tax Deduction is required by law to be made by an Obligor the
         amount of the payment due from that Obligor shall, subject to
         paragraphs (d) and (e) below, be increased to an amount which (on a net
         after Tax basis) leaves an amount equal to the payment which would have
         been due if no Tax Deduction had been required.

(d)      In the case of a Tax Deduction required by law to be made by Harsco
         Investment Limited, paragraph (c) shall only apply if the Lender:

                                      -18-
<PAGE>   22
         (i)      is a Qualifying Lender or a Treaty Lender, unless Harsco
                  Investment Limited is able to demonstrate the Tax Deduction is
                  required to be made as a result of the Lender (as a Treaty
                  Lender) failing to comply with paragraph (h) below; or

         (ii)     is not or has ceased to be a Qualifying Lender or, as the case
                  may be, Treaty Lender to the extent that this altered status
                  results from any change after the date of this Agreement in
                  (or in the interpretation, administration, or application of)
                  any law or double Taxation agreement or any published practice
                  or published concession of any relevant Taxing authority.

(e)      In the case of a Tax Deduction for or on account of US Federal
         withholding tax required by law to be made by the US Obligor, paragraph
         (c) shall only apply if the Lender is:

         (i)      a Treaty Lender unless the US Obligor is able to demonstrate
                  the Tax Deduction is required to be made as a result of the
                  Lender failing to comply with paragraph (h) below; or

         (ii)     is not or has ceased to be a Treaty Lender to the extent that
                  this altered status results from any change after the date of
                  this Agreement in (or in the interpretation, administration or
                  application of) any law or double Taxation agreement or any
                  published practice or published concession of any relevant Tax
                  authority.

(f)      If an Obligor is required to make a Tax Deduction, that Obligor shall
         make that Tax Deduction and any payment required in connection with
         that Tax Deduction within the time allowed and in the minimum amount
         required by law.

(g)      Within 30 days of making either a Tax Deduction or any payment required
         in connection with that Tax Deduction, the Obligor making that Tax
         Deduction shall deliver to the Lender evidence reasonably satisfactory
         to the Lender that the Tax Deduction has been made or (as applicable)
         any appropriate payment paid to the relevant taxing authority.

(h)      The Lender as a Treaty Lender and each Obligor which makes a payment to
         which the Lender as a Treaty Lender is entitled shall co-operate in
         completing any procedural formalities necessary for that Obligor to
         obtain authorisation to make that payment without a Tax Deduction.

13.3     TAX INDEMNITY

(a)      If the Lender is or will be, for or on account of Tax, subject to any
         liability or required to make any payment in relation to a sum received
         or receivable (or any sum deemed for the purposes of Tax to be received
         or receivable) under a Finance Document, then the Guarantor shall
         (within three Business Days of demand by the Lender) pay to the Lender
         an amount equal to the loss, liability or cost which the Lender
         determines will be or has been (directly or indirectly) suffered by it
         for or on account of Tax.

(b)      Paragraph (a) above shall not apply with respect to any Tax assessed on
         the Lender:

         (i)      under the law of the jurisdiction in which the Lender is
                  incorporated or, if different, the jurisdiction (or
                  jurisdictions) in which the Lender is treated as resident for
                  tax purposes; or

                                      -19-
<PAGE>   23
         (ii)     under the law of the jurisdiction in which the Lender's
                  Facility Office is located in respect of amounts received or
                  receivable in that jurisdiction,

         if that Tax is imposed on or calculated by reference to the net income
         received or receivable (but not any sum deemed to be received or
         receivable) by the Lender.

(c)      If the Lender makes, or intends to make, a claim pursuant to paragraph
         (a) above, it shall promptly notify the Guarantor of the event which
         will give, or has given, rise to the claim.

13.4     TAX CREDIT

         If an Obligor makes a Tax Payment and the Lender determines that:

         (i)      a Tax Credit is attributable to that Tax Payment; and

         (ii)     the Lender has obtained, utilised and retained that Tax
                  Credit,

         the Lender shall pay an amount to the Obligor which the Lender
         determines will leave it (after that payment) in the same after-Tax
         position as it would have been in had the Tax Payment not been made by
         the Obligor.

13.5     STAMP TAXES

         The Guarantor shall pay and, within three Business Days of demand,
         indemnify the Lender against any cost, loss or liability the Lender
         incurs in relation to all stamp duty, registration and other similar
         Taxes payable in respect of any Finance Document.

13.6     VALUE ADDED TAX

(a)      All consideration payable under a Finance Document by an Obligor to the
         Lender shall be deemed to be exclusive of any VAT. If VAT is
         chargeable, the Obligor shall pay to the Lender (in addition to and at
         the same time as paying the consideration) an amount equal to the
         amount of the VAT.

(b)      Where a Finance Document requires an Obligor to reimburse the Lender
         for any costs or expenses, that Obligor shall also at the same time pay
         and indemnify the Lender against all VAT incurred by the Lender in
         respect of the costs or expenses.

14.      INCREASED COSTS

14.1     INCREASED COSTS

(a)      Subject to Clause 14.3 (Exceptions) the Guarantor shall, within three
         Business Days of a demand by the Lender, pay the Lender the amount of
         any Increased Costs incurred by the Lender or any of its Affiliates as
         a result of (i) the introduction of or any change in (or in the
         interpretation or application of) any law or regulation or (ii)
         compliance with any law or regulation made after the date of this
         Agreement.

(b)      In this Agreement "INCREASED COSTS" means:

         (i)      a reduction in the rate of return from the Facility or on the
                  Lender's (or its Affiliate's) overall capital;

         (ii)     an additional or increased cost; or

         (iii)    a reduction of any amount due and payable under any Finance
                  Document,

                                      -20-
<PAGE>   24
                  which is incurred or suffered by the Lender or any of its
                  Affiliates to the extent that it is attributable to the Lender
                  having entered into its Commitment or funding or performing
                  its obligations under any Finance Document.

14.2     INCREASED COST CLAIMS

(a)      If the Lender intends to make a claim pursuant to Clause 14 .1
         (Increased costs) it shall notify the Guarantor of the event giving
         rise to the claim.

(b)      The Lender shall, as soon as practicable after a demand by the
         Guarantor, provide a certificate confirming the amount of its Increased
         Costs.

14.3     EXCEPTIONS

(a)      Clause 14.1 (Increased costs) does not apply to the extent any
         Increased Cost is:

         (i)      attributable to a Tax Deduction required by law to be made by
                  an Obligor;

         (ii)     compensated for by Clause 13.3 (Tax indemnity) (or would have
                  been compensated for under Clause 13.3 (Tax indemnity) but was
                  not so compensated solely because one of the exclusions in
                  paragraph (b) of Clause 13.3 (Tax indemnity) applied);

         (iii)    compensated for by the payment of the Mandatory Cost; or

         (iv)     attributable to the wilful breach, or breach resulting from
                  gross negligence, by the Lender or its Affiliates of any law
                  or regulation.

(b)      In this Clause 14.3, a reference to a "TAX DEDUCTION" has the same
         meaning given to the term in Clause 13.1 (Definitions).

15.      OTHER INDEMNITIES

15.1     CURRENCY INDEMNITY

(a)      If any sum due from an Obligor under the Finance Documents (a "SUM"),
         or any order, judgment or award given or made in relation to a Sum, has
         to be converted from the currency (the "FIRST CURRENCY") in which that
         Sum is payable into another currency (the "SECOND CURRENCY") for the
         purpose of:

         (i)      making or filing a claim or proof against that Obligor;

         (ii)     obtaining or enforcing an order, judgment or award in relation
                  to any litigation or arbitration proceedings,

         that Obligor shall as an independent obligation, within three Business
         Days of demand, indemnify the Lender against any cost, loss or
         liability arising out of or as a result of the conversion including any
         discrepancy between (A) the rate of exchange used to convert that Sum
         from the First Currency into the Second Currency and (B) the rate or
         rates of exchange available to that person at the time of its receipt
         of that Sum.

(b)      Each Obligor waives any right it may have in any jurisdiction to pay
         any amount under the Finance Documents in a currency or currency unit
         other than that in which it is expressed to be payable.

                                      -21-
<PAGE>   25
15.2     OTHER INDEMNITIES

         The Guarantor shall, within three Business Days of demand, indemnify
         the Lender against any cost, loss or liability incurred by the Lender
         as a result of:

         (a)      the occurrence of any Event of Default;

         (b)      a failure by an Obligor to pay any amount due under a Finance
                  Document on its due date;

         (c)      funding, or making arrangements to fund, a Loan requested by a
                  Borrower in a Utilisation Request but not made by reason of
                  the operation of any one or more of the provisions of this
                  Agreement (other than by reason of default or negligence by
                  the Lender alone); or

         (d)      a Loan (or part of a Loan) not being prepaid in accordance
                  with a notice of prepayment given by a Borrower or the
                  Guarantor.

15.3     INDEMNITY TO THE LENDER

         The Guarantor shall promptly indemnify the Lender against any cost,
         loss or liability incurred by the Lender (acting reasonably) as a
         result of:

(a)      investigating any event which it reasonably believes is a Default;

(b)      entering into or performing any foreign exchange contract for the
         purposes of Clause 6 (Optional Currencies); or

(c)      acting or relying on any notice, request or instruction which it
         reasonably believes to be genuine, correct and appropriately
         authorised.

16.      MITIGATION BY THE LENDER

16.1     MITIGATION

(a)      The Lender shall, in consultation with the Guarantor, take all
         reasonable steps to mitigate any circumstances which arise and which
         would result in any amount becoming payable under, or cancelled
         pursuant to, any of Clause 8.1 (Illegality), Clause 13 (Tax gross-up
         and indemnities) or Clause 14 (Increased costs) including (but not
         limited to) transferring its rights and obligations under the Finance
         Documents to another Affiliate or Facility Office.

(b)      Paragraph (a) above does not in any way limit the obligations of any
         Obligor under the Finance Documents.

16.2     LIMITATION OF LIABILITY

(a)      The Guarantor shall indemnify the Lender for all costs and expenses
         reasonably incurred by the Lender as a result of steps taken by it
         under Clause 16.1 (Mitigation).

(b)      The Lender is not obliged to take any steps under Clause 16.1
         (Mitigation) if, in its opinion (acting reasonably), to do so might be
         prejudicial to it.

                                      -22-
<PAGE>   26
17.      COSTS AND EXPENSES

17.1     TRANSACTION EXPENSES

         The Guarantor shall promptly on demand pay the Lender the amount of all
         costs and expenses (including legal fees) reasonably incurred by it in
         connection with the negotiation, preparation, printing and execution
         of:

         (a)      this Agreement and any other documents referred to in this
                  Agreement; and

         (b)      any other Finance Documents executed after the date of this
                  Agreement.

17.2     AMENDMENT COSTS

         If (a) an Obligor requests an amendment, waiver or consent or (b) an
         amendment is required pursuant to Clause 28.8 (Change of currency), the
         Guarantor shall, within three Business Days of demand, reimburse the
         Lender for the amount of all costs and expenses (including legal fees)
         reasonably incurred by the Lender in responding to, evaluating,
         negotiating or complying with that request or requirement.

17.3     ENFORCEMENT COSTS

         The Guarantor shall, within three Business Days of demand, pay to the
         Lender the amount of all costs and expenses (including legal fees)
         incurred by the Lender in connection with the enforcement of, or the
         preservation of any rights under, any Finance Document.

18.      GUARANTEE AND INDEMNITY

18.1     GUARANTEE AND INDEMNITY

         The Guarantor irrevocably and unconditionally:

         (a)      guarantees to the Lender punctual performance by each Borrower
                  of all that Borrower's obligations under the Finance
                  Documents;

         (b)      undertakes with the Lender that whenever a Borrower does not
                  pay any amount when due under or in connection with any
                  Finance Document, the Guarantor shall immediately on demand
                  pay that amount as if it was the principal obligor; and

         (c)      indemnifies the Lender immediately on demand against any cost,
                  loss or liability suffered by the Lender if any obligation
                  guaranteed by it is or becomes unenforceable, invalid or
                  illegal. The amount of the cost, loss or liability shall be
                  equal to the amount which the Lender would otherwise have been
                  entitled to recover.

18.2     CONTINUING GUARANTEE

         This guarantee is a continuing guarantee and will extend to the
         ultimate balance of sums payable by any Obligor under the Finance
         Documents, regardless of any intermediate payment or discharge in whole
         or in part.

18.3     REINSTATEMENT

         If any payment by an Obligor or any discharge given by the Lender
         (whether in respect of the obligations of any Obligor or any security
         for those obligations or otherwise) is avoided or reduced as a result
         of insolvency or any similar event:


                                      -23-
<PAGE>   27
         (a)      the liability of each Obligor shall continue as if the
                  payment, discharge, avoidance or reduction had not occurred;
                  and

         (b)      the Lender shall be entitled to recover the value or amount of
                  that security or payment from each Obligor, as if the payment,
                  discharge, avoidance or reduction had not occurred.

18.4     WAIVER OF DEFENCES

         The obligations of the Guarantor under this Clause 18 will not be
         affected by an act, omission, matter or thing which, but for this
         Clause, would reduce, release or prejudice any of its obligations under
         this Clause 18 (without limitation and whether or not known to it or
         the Lender) including:

         (a)      any time, waiver or consent granted to, or composition with,
                  any Obligor or other person;

         (b)      the release of the Guarantor or any other person under the
                  terms of any composition or arrangement with any creditor of
                  any member of the Group;

         (c)      the taking, variation, compromise, exchange, renewal or
                  release of, or refusal or neglect to perfect, take up or
                  enforce, any rights against, or security over assets of, any
                  Obligor or other person or any non-presentation or
                  non-observance of any formality or other requirement in
                  respect of any instrument or any failure to realise the full
                  value of any security;

         (d)      any incapacity or lack of power, authority or legal
                  personality of or dissolution or change in the members or
                  status of an Obligor or any other person;

         (e)      any amendment (however fundamental) or replacement of a
                  Finance Document or any other document or security;

         (f)      any unenforceability, illegality or invalidity of any
                  obligation of any person under any Finance Document or any
                  other document or security; or

         (g)      any insolvency or similar proceedings.

18.5     IMMEDIATE RECOURSE

         The Guarantor waives any right it may have of first requiring the
         Lender (or any trustee or agent on its behalf) to proceed against or
         enforce any other rights or security or claim payment from any person
         before claiming from the Guarantor under this Clause 18. This waiver
         applies irrespective of any law or any provision of a Finance Document
         to the contrary.

18.6     APPROPRIATIONS

         Until all amounts which may be or become payable by the Obligors under
         or in connection with the Finance Documents have been irrevocably paid
         in full, the Lender (or any trustee or agent on its behalf) may:

         (a)      refrain from applying or enforcing any other moneys, security
                  or rights held or received by the Lender (or any trustee or
                  agent on its behalf) in respect of those amounts, or apply and
                  enforce the same in such manner and order as it sees fit
                  (whether against those amounts or otherwise) and the Guarantor
                  shall not be entitled to the benefit of the same; and

                                      -24-

<PAGE>   28
         (b)      hold in an interest-bearing suspense account any moneys
                  received from the Guarantor or on account of the Guarantor's
                  liability under this Clause 18.

18.7     DEFERRAL OF GUARANTOR'S RIGHTS

         Until all amounts which may be or become payable by the Obligors under
         or in connection with the Finance Documents have been irrevocably paid
         in full and unless the Lender otherwise directs, the Guarantor will not
         exercise any rights which it may have by reason of performance by it of
         its obligations under the Finance Documents:

         (a)      to be indemnified by a Borrower;

         (b)      to claim any contribution from any other guarantor of the
                  Borrowers' obligations under the Finance Documents; and/or

         (c)      to take the benefit (in whole or in part and whether by way of
                  subrogation or otherwise) of any rights of the Lender under
                  the Finance Documents or of any other guarantee or security
                  taken pursuant to, or in connection with, the Finance
                  Documents by the Lender.

18.8     ADDITIONAL SECURITY

         This guarantee is in addition to and is not in any way prejudiced by
         any other guarantee or security now or subsequently held by the Lender.

19.      REPRESENTATIONS

         Each Obligor makes the representations and warranties set out in this
         Clause 19 to the Lender on the date of this Agreement.

19.1     STATUS

(a)      It is a company or corporation, duly organised, validly existing and in
         good standing under the law of its jurisdiction of incorporation.

(b)      It and each of its Subsidiaries has the power to own its assets and
         carry on its business as it is being conducted.

19.2     BINDING OBLIGATIONS

         The obligations expressed to be assumed by it in each Finance Document
         are, except as such enforceability may be limited by (a) bankruptcy,
         insolvency, reorganisation, moratorium or similar laws of general
         applicability affecting the enforcement of creditors' rights and (b)
         the application of general principles of equity (regardless of whether
         such enforceability is considered in a proceeding in equity or at law),
         legal, valid, binding and enforceable obligations.

19.3     NON-CONFLICT WITH OTHER OBLIGATIONS

         The entry into and performance by it of, and the transactions
         contemplated by, the Finance Documents do not and will not conflict
         with:

(a)      any law or regulation applicable to it;

(b)      the constitutional documents of any member of the Group; or

(c)      any agreement or instrument binding upon it or any member of the Group
         or any of its or any member of the Group's assets.


                                      -25-
<PAGE>   29
19.4     POWER AND AUTHORITY

         It has the power to enter into, perform and deliver, and has taken all
         necessary action to authorise its entry into, performance and delivery
         of, the Finance Documents to which it is a party and the transactions
         contemplated by those Finance Documents.

19.5     VALIDITY AND ADMISSIBILITY IN EVIDENCE All Authorisations required or
         desirable:

         (a)      to enable it lawfully to enter into, exercise its rights and
                  comply with its obligations in the Finance Documents to which
                  it is a party; and

         (b)      to make the Finance Documents to which it is a party
                  admissible in evidence in its jurisdiction of incorporation,

          have been obtained or effected and are in full force and effect.

19.6     DUTCH PROVISIONS

         Harsco Finance B.V. meets the criteria set out in the Regulation of the
         Dutch Minister of Finance of 4 February 1993 (Stcrt. 1993, 29) and will
         not therefore qualify as a credit institution (kredietinstelling)
         within the meaning of the Dutch 1992 Act on the Supervision of the
         Credit System (Wet toezicht kredietwezen 1992).

19.7     DEDUCTION OF TAX

         It is not required under the law of its jurisdiction of incorporation
         or organisation (as the case may be) (or, in the case of the US
         Obligor, under the law of the USA or any state thereof) to make any
         deduction for or on account of Tax from any payment it may make under
         any Finance Document.

19.8     TAXES

         (a)      As of the date of this Agreement, the Guarantor and its
                  Domestic Subsidiaries are members of an affiliated group of
                  corporations filing consolidated returns for Federal income
                  tax purposes, of which the Guarantor is the "common parent"
                  (within the meaning of Section 1504 of the Code) of such
                  group. The Guarantor and its Subsidiaries have filed all
                  Federal income tax returns and all other material tax returns
                  that are required to be filed by them and have paid all Taxes
                  due pursuant to such returns or pursuant to any assessment
                  received by the Guarantor or any of its Subsidiaries. The
                  charges, accruals and reserves on the books of the Guarantor
                  and its Subsidiaries in respect of Taxes and other
                  governmental charges are, in the opinion of the Guarantor,
                  adequate. The Guarantor has not been given or been requested
                  to give a waiver of the statute of limitations relating to the
                  payment of Federal, state, local and foreign Taxes or other
                  impositions.

         (b)      Under the law of its jurisdiction of incorporation or
                  organisation (as the case may be) (or, in the case of the US
                  Obligor, under the law of the USA or any state thereof) it is
                  not necessary that the Finance Documents be filed, recorded or
                  enrolled with any court or other authority in that
                  jurisdiction or that any stamp, registration or similar tax be
                  paid on or in relation to the Finance Documents or the
                  transactions contemplated by the Finance Documents.


                                      -26-
<PAGE>   30
19.9     NO DEFAULT

(a)      No Event of Default is continuing or might reasonably be expected to
         result from the making of any Utilisation.

(b)      No other event or circumstance is outstanding which constitutes a
         default under any other agreement or instrument which is binding on it
         or any of its Subsidiaries or to which its (or its Subsidiaries')
         assets are subject which might have a Material Adverse Effect.

19.10    TRUE AND COMPLETE DISCLOSURE

(a)      The information, reports, financial statements, exhibits and schedules
         furnished in writing by or on behalf of the Guarantor to the Lender in
         connection with the negotiation, preparation or delivery of the Finance
         Documents or included therein or delivered pursuant thereto, when taken
         as a whole, do not contain any untrue statement of material fact or
         omit to state any material fact necessary to make the statements herein
         or therein, in light of the circumstances under which they were made,
         not misleading.

(b)      All written information furnished after the date of this Agreement by
         the Guarantor and its Subsidiaries to the Lender in connection with the
         Finance Documents and the transactions contemplated thereby will be
         true, complete and accurate in every material respect, or (in the case
         of projections) based on reasonable estimates, on the date as of which
         such information is stated or certified. There is no fact known to the
         Guarantor that could have a Material Adverse Effect that has not been
         disclosed herein or in a report, financial statement, exhibit,
         schedule, disclosure letter or other writing furnished to the Lender
         for use in connection with the transactions contemplated hereby.

19.11    FINANCIAL STATEMENTS

(a)      Its Original Financial Statements were prepared in accordance with GAAP
         consistently applied.

(b)      Its Original Financial Statements fairly represent, in all material
         respects, its financial condition (consolidated in the case of the
         Guarantor) as at such dates and the results of its operations for the
         fiscal year and three-month period ended on such dates (subject, in the
         case of the financial statements as at 30 September 2000 to normal
         year-end audit adjustments) unless expressly disclosed to the contrary
         in those financial statements or in writing by the Guarantor to the
         Lender before the date of this Agreement.

(c)      There has been no material adverse change in its business or financial
         condition (or the business or consolidated financial condition of the
         Group, in the case of the Guarantor) since 31 December 1999.

19.12    PARI PASSU RANKING

         Its payment obligations under the Finance Documents rank at least pari
         passu with the claims of all its other unsecured and unsubordinated
         creditors, except for obligations mandatorily preferred by law applying
         to companies generally.

19.13    NO PROCEEDINGS PENDING OR THREATENED

         Except as disclosed in note 10 of the audited annual consolidated
         financial statements of the Guarantor included in the Guarantor's Form
         10-K dated 16 March 2000 and in the notes to the unaudited quarterly
         consolidated financial statements of the Guarantor included in the


                                      -27-
<PAGE>   31
         Guarantor's Form 10-Q dated 14 November 2000 and filed with the
         Securities and Exchange Commission, there are no legal or arbitral
         proceedings, or any proceedings by or before any Governmental
         Authority, now pending or (to the knowledge of the Guarantor)
         threatened against it or any of its Subsidiaries that, if adversely
         determined, could (either individually or in the aggregate) have a
         Material Adverse Effect.

19.14    ENVIRONMENTAL LAWS AND LICENCES

         (a)      Except as disclosed in the notes to the unaudited quarterly
                  consolidated financial statements of the Guarantor included in
                  the Guarantor's Form 10-Q dated 14 November 2000 and filed
                  with the Securities and Exchange Commission, it and each of
                  its Subsidiaries has:

                  (i)      complied with all Environmental Laws to which it is
                           subject;

                  (ii)     obtained all Environmental Licences required in
                           connection with its business; and

                  (iii)    complied with the terms of those Environmental
                           Licences, in each case where failure to do so might
                           have a Material Adverse Effect.

         (b)      Since the date of this Agreement, there has been no change in
                  the status of the matters disclosed in the notes to the
                  unaudited quarterly consolidated financial statements of the
                  Guarantor included in the Guarantor's Form 10-Q dated 14
                  November 2000 and filed with the Securities and Exchange
                  Commission that, individually or in the aggregate, has
                  resulted in, or materially increased the likelihood of, a
                  Material Adverse Effect.

19.15    ENVIRONMENTAL RELEASES

         Except as disclosed in the notes to the audited annual and unaudited
         quarterly consolidated financial statements of the Guarantor included
         in the Guarantor's Form 10-K dated 16 March 2000 and 10-Q dated 14
         November 2000 and filed with the Securities and Exchange Commission,
         no:

         (a)      property currently or previously owned, leased, occupied or
                  controlled by it or any of its Subsidiaries (including any
                  offsite waste management or disposal location utilised by it
                  or any of its Subsidiaries) is contaminated with any Hazardous
                  Substance; and

         (b)      discharge, release, leaching, migration or escape of any
                  Hazardous Substance into the Environment has occurred or is
                  occurring on, under or from that property,

         in each case in circumstances where this might have a Material Adverse
         Effect.

19.16    PLANS

         (a)      Each Plan, and, to the knowledge of the US Obligor, each
                  Multiemployer Plan, is in compliance in all material respects
                  with, and has been administered in all material respects in
                  compliance with, the applicable provisions of ERISA, the Code
                  and any other Federal or state law of the United States, and
                  no event or condition has occurred and is continuing as to
                  which the US Obligor would be under an obligation to furnish a
                  report to the Lender under Clause 20.5 (Information: ERISA).

         (b)      Except as do not have and could not be reasonably expected to
                  have a Material Adverse Effect, the US Obligor has not and no
                  ERISA Affiliate has incurred any liability




                                      -28-
<PAGE>   32
                  to or could be reasonably expected to incur any liability to,
                  or on account of, a Multiemployer Plan as a result of
                  violation of Section 515 of ERISA or otherwise pursuant to
                  Section 4201, 4204 or 4212(c) of ERISA.

         (c)      There are no actions, suits or claims pending against or with
                  respect to any Plan or Multiemployer Plan (other than routine
                  claims for benefits) or, to its knowledge or the knowledge of
                  any ERISA Affiliate (in each case after due inquiry),
                  threatened against or with respect to any Plan or
                  Multiemployer Plan which has or could reasonably be expected
                  to have a Material Adverse Effect.

         (d)      Except as could not reasonably be expected to have a Material
                  Adverse Effect, the US Obligor has not and no ERISA Affiliate
                  has ceased operations at a facility so as to become subject to
                  the provisions of Section 4063 of ERISA, withdrawn as a
                  substantial employer so as to become subject to the provisions
                  of Section 4062 of ERISA or ceased making contributions to any
                  Plan subject to Section 4064(a) of ERISA to which it made
                  contributions.

19.17    U.S. FEDERAL RESERVE REGULATION

         (a)      The proceeds of the Loan will not be used, directly or
                  indirectly, in whole or in part, for any purpose which might
                  (whether immediately, incidentally or ultimately) cause the
                  Loan (or any part thereof) to be a "purpose credit" within the
                  meaning of Regulation T, Regulation U or Regulation X.
                  Following the application of the proceeds of the Loan, not
                  more than 25 per cent. of the value of the assets of the Group
                  (on a consolidated basis) will be Margin Stock.

         (b)      Neither any Obligor nor any agent acting on its behalf has
                  taken or will take any action which could cause any of the
                  Finance Documents or any of the documents or instruments
                  delivered pursuant thereto to violate any regulation of the
                  Board (including Regulations T, U and X) or to violate the US
                  Securities Exchange Act of 1934 or any applicable US federal
                  or state securities laws.

19.18    INVESTMENT COMPANY ACT AND PUBLIC UTILITY HOLDING COMPANY ACT

         (a)      The US Obligor has not and none of its Subsidiaries is subject
                  to regulation under the US Public Utility Holding Company Act
                  of 1935, the US Federal Power Act or the US Investment Company
                  Act of 1940 or to any US federal or state statute or
                  regulation limiting its ability to incur Indebtedness.

         (b)      It is not an "investment company", or an "affiliated person"
                  of, or "promoter" or "principal underwriter" for, an
                  "investment company", as such terms are defined in the US
                  Investment Company Act of 1940.

         (c)      None of the transactions contemplated by the Finance Documents
                  does or will violate any of such Acts, any applicable US
                  federal or state laws and regulations.

19.19    LIENS AND EXISTING INDEBTEDNESS

         (a)      Schedule 4 (Existing Liens) is a complete and correct list, as
                  of the date of this Agreement, of each Lien securing
                  Indebtedness of any person, the aggregate principal or face
                  amount of which equals or exceeds (or may equal or exceed)
                  $5,000,000 (or its



                                      -29-
<PAGE>   33
                  equivalent) and covering any property of the Guarantor or any
                  of its Subsidiaries, and the aggregate Indebtedness secured
                  (or that may be secured) by each such Lien and the property
                  covered by each such Lien is correctly described in Schedule 4
                  (Existing Liens); and

         (b)      Schedule 5 (Existing Indebtedness) is a complete and correct
                  list, as of the date of this Agreement, of each credit
                  agreement, loan agreement, indenture, guarantee, letter of
                  credit or other arrangement providing for or otherwise
                  relating to any Indebtedness or any extension of credit (or
                  commitment for any extension of credit) to, or guarantee by,
                  the Guarantor or any of its Subsidiaries, the aggregate
                  principal or face amount of which equals or exceeds (or may
                  equal or exceed) $5,000,000 (or its equivalent), and the
                  aggregate principal or face amount outstanding or that may
                  become outstanding under each such arrangement is correctly
                  described in Schedule 5 (Existing Indebtedness).

19.20    REPETITION

         The Repeating Representations are deemed to be made by each Obligor by
         reference to the facts and circumstances then existing on the date of
         each Utilisation Request and the date of the Term-Out Notice, on each
         date on which a Loan is made and the first day of each Interest Period.

20.      INFORMATION UNDERTAKINGS

         The undertakings in this Clause 20 remain in force from the date of
         this Agreement for so long as any amount is outstanding under the
         Finance Documents or any Commitment is in force.

20.1     FINANCIAL STATEMENTS

         The Guarantor shall supply to the Lender:

         (a)      as soon as the same become available, but in any event within
                  90 days after the end of each of its fiscal years:

                  (i)      its consolidated balance sheets and related
                           statements of income, changes in stockholders' equity
                           and cash flows, showing the financial condition of
                           the Guarantor and its Subsidiaries as of the close of
                           such fiscal year and the results of its operations
                           and the operations of its Subsidiaries during such
                           year, all audited by the Guarantor's Auditors and
                           accompanied by an opinion of such auditors (which
                           shall not be qualified in any material respect) to
                           the effect that such consolidated financial
                           statements fairly present the financial condition and
                           results of operations of the Guarantor on a
                           consolidated basis in accordance with GAAP
                           consistently applied; and

                  (ii)     the unaudited financial statements of each Borrower
                           for that fiscal year; and

         (b)      as soon as the same become available, but in any event within
                  45 days after the end of each of the first three fiscal
                  quarters of each of its fiscal years, its consolidated balance
                  sheets and related statements of income, changes in
                  stockholders' equity and cash flows, showing the financial
                  condition of the Guarantor and its Subsidiaries as of the
                  close of such fiscal quarter and the results of its operations
                  and the operations of its



                                      -30-
<PAGE>   34
                  Subsidiaries during such fiscal quarter and the then elapsed
                  portion of such fiscal year, all certified by one of its
                  Financial Officers as fairly presenting the financial
                  condition and results of operations of the Guarantor on a
                  consolidated basis in accordance with GAAP consistently
                  applied, subject to normal year-end audit adjustments.

20.2     COMPLIANCE CERTIFICATE

(a)      The Guarantor shall supply to the Lender, with each set of financial
         statements delivered pursuant to paragraph (a)(i) or (b) of Clause 20.1
         (Financial statements), a Compliance Certificate setting out (in
         reasonable detail) computations as to compliance with Clause 21
         (Financial covenants) as at the date as at which those financial
         statements were drawn up.

(b)      Each Compliance Certificate shall be signed by a Financial Officer of
         the Guarantor or, if required to be delivered with the financial
         statements delivered pursuant to paragraph (a) of Clause 20.1
         (Financial statements), by the Guarantor's Auditors (which certificate,
         when furnished by the Guarantor's Auditors, may be limited to
         accounting matters and disclaim responsibility for legal
         interpretations).

20.3     REQUIREMENTS AS TO FINANCIAL STATEMENTS

         Each set of financial statements delivered by the Guarantor pursuant to
         Clause 20.1 (Financial statements) shall be certified by a Financial
         Officer of the relevant company as fairly representing its (or, as the
         case may be, its consolidated) financial condition and operations as at
         the end of and for the period in relation to which those financial
         statements were drawn up.

20.4     INFORMATION: MISCELLANEOUS

         The Guarantor shall supply to the Lender:

         (a)      promptly after the same becoming publicly available, copies of
                  all periodic and other reports, proxy statements and other
                  materials filed by it with the Securities and Exchange
                  Commission, or any Governmental Authority succeeding to any of
                  or all the functions of such Commission, or with any national
                  securities exchange, or distributed to its shareholders or
                  creditors generally, as the case may be;

         (b)      promptly upon becoming aware of such, the filing or
                  commencement of, or any threat or notice of intention of any
                  person to file or commence, any action, suit or proceeding,
                  whether at law or in equity or by or before any Governmental
                  Authority, against the Guarantor or any Affiliate thereof
                  which, if adversely determined, could have a Material Adverse
                  Effect; and

         (c)      promptly, from time to time, such other information regarding
                  the operations, business affairs and financial condition of
                  the Guarantor or any Subsidiary, or compliance with the terms
                  of any Finance Document, as the Lender may reasonably request.

20.5     INFORMATION: ERISA

         The Guarantor shall supply to the Lender:

         (a)      as soon as possible, and in any event within 30 days after the
                  US Obligor or any ERISA Affiliate either knows or has reason
                  to know that any Reportable Event has occurred that alone or
                  together with any other Reportable Event could reasonably be
                  excepted to result in liability of the US Obligor to the PGBC
                  in an aggregate amount exceeding




                                      -31-
<PAGE>   35
                  $5,000,000, a statement of a Financial Officer setting forth
                  details as to such Reportable Event and the action proposed to
                  be taken with respect thereto, together with a copy of the
                  notice, if any, of such Reportable Event given to or received
                  from the PGBC;

         (b)      promptly after receipt thereof, a copy of any notice the US
                  Obligor or any ERISA Affiliate may receive from the PBGC
                  relating to the intention of the PGBC to terminate any Plan or
                  Multiemployer Plan (other than a Plan maintained by an ERISA
                  Affiliate which is considered an ERISA Affiliate only pursuant
                  to subsection (m) or (o) of Section 414 of the Code) or to
                  appoint a trustee to administer any Plan or Multiemployer
                  Plan; and

         (c)      within 10 days after the due date for filing with the PGBC
                  pursuant to Section 412(n) of the Code of a notice of failure
                  to make a required instalment or other payment with respect to
                  a Plan, a statement of a Financial Officer setting forth
                  details as to such failure and the action proposed to be taken
                  with respect thereto, together with a copy of such notice
                  given to the PBGC.

20.6     NOTIFICATION OF DEFAULT

(a)      Each Obligor shall notify the Lender of any Default (and the steps, if
         any, being taken to remedy it) promptly upon becoming aware of its
         occurrence (unless that Obligor is aware that a notification has
         already been provided by another Obligor).

(b)      Promptly upon a request by the Lender, the Guarantor shall supply to
         the Lender a certificate signed by one of its Financial Officers or
         directors on its behalf certifying that no Default is continuing (or if
         a Default is continuing, specifying the Default and the steps, if any,
         being taken to remedy it).

21.      FINANCIAL COVENANTS

21.1     FINANCIAL CONDITION

         The Guarantor shall ensure that:

         (a)      Net Worth will not at any time be less than $475,000,000; and

         (b)      the ratio of Total Debt to Total Capital will not at any time
                  be greater than 0.60 to 1.00.

21.2     FINANCIAL COVENANT CALCULATIONS

(a)      Net Worth, Total Capital and Total Debt shall be calculated and
         interpreted on a consolidated basis in accordance with GAAP and shall
         be expressed in Dollars.

21.3   DEFINITIONS

         In this Agreement:

         "NET WORTH" means, as at any date, the sum for the Group (determined on
         a consolidated basis without duplication in accordance with GAAP) of
         the following:

         (a)      the amount of common stock; plus

         (b)      the amount of any preferred stock that does not have any
                  requirement for the Guarantor to purchase, redeem, retire or
                  otherwise acquire the same; plus


                                      -32-
<PAGE>   36
         (c)      the amount of additional paid-in capital and retained earnings
                  (or, in the case of an additional paid-in capital or retained
                  earnings deficit, minus the amount of such deficit); plus

         (d)      cumulative translation adjustments (or, in the case of
                  negative adjustments, minus the amount of such adjustments);
                  plus

         (e)      cumulative pension liability adjustments (or; in the case of
                  negative adjustments, minus the amount of such adjustments);
                  minus

         (f)      the cost of treasury stock.

         "TOTAL CAPITAL" means, at any time, Net Worth plus Total Debt.

         "TOTAL DEBT" means, at any time, the aggregate outstanding principal
         amount of all Indebtedness of the Group at such time (other than
         Indebtedness described in paragraphs (i) or (j) of the definition of
         the term "Indebtedness") determined on a consolidated basis (without
         duplication) in accordance with GAAP provided that the term "Total
         Debt" shall include any preferred stock that provides for the mandatory
         purchase, retirement, redemption or other acquisition of the same by
         the Guarantor or any Subsidiary (other than preferred stock held by the
         Guarantor or any Subsidiary).

22.      GENERAL UNDERTAKINGS

         The undertakings in this Clause 22 remain in force from the date of
         this Agreement for so long as any amount is outstanding under the
         Finance Documents or any Commitment is in force.

22.1     AUTHORISATIONS

         Each Obligor shall promptly:

         (a)      obtain, comply with and do all that is necessary to maintain
                  in full force and effect; and

         (b)      supply certified copies to the Lender of,

         any Authorisation required under any law or regulation of its
         jurisdiction of incorporation or organisation (as the case may be) to
         enable it to perform its obligations under the Finance Documents and to
         ensure the legality, validity, enforceability or admissibility in
         evidence in its jurisdiction of incorporation of any Finance Document.

22.2     EXISTENCE AND COMPLIANCE WITH LAWS

(a)      Each Obligor shall (and the Guarantor shall ensure that each other
         member of the Group will) preserve and maintain its corporate
         existence, rights (charter and statute) and material franchises, except
         as otherwise permitted by Clause 22.5 (Merger), provided, however, that
         the Guarantor shall not be required to preserve any such right or
         franchise if (i) the Guarantor shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of the
         Guarantor and (ii) the loss of any such right or franchise is not
         disadvantageous in any material respect to the Lender.

(b)      Each Obligor shall comply in all respects with all laws to which it may
         be subject, if failure so to comply would materially impair its ability
         to perform its obligations under the Finance Documents.


                                      -33-
<PAGE>   37
22.3     NEGATIVE PLEDGE

(a)      No Obligor shall (and the Guarantor shall ensure that no other member
         of the Group will) create incur, assume or suffer to exist any Lien
         upon any of its property, whether now owned or hereafter acquired,
         except:

         (i)      Liens in existence on the date of this Agreement which are
                  listed in Schedule 4 (Existing Liens);

         (ii)     Liens imposed by any Governmental Authority for Taxes,
                  assessments or charges not yet due or that are being contested
                  in good faith and by appropriate proceedings if adequate
                  reserves with respect thereto are maintained on the books of
                  the Guarantor or the affected Subsidiaries, as the case may
                  be, in accordance with GAAP;

         (iii)    carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's or other like Liens arising in the ordinary course
                  of business that are not overdue for a period of more than 30
                  days or that are being contested in good faith and by
                  appropriate proceedings and Liens securing judgements but only
                  to the extent for an amount and for a period not resulting in
                  an Event of Default under Clause 23.6(c) (Insolvency and
                  Insolvency Proceedings);

         (iv)     pledges or deposits under worker's compensation, unemployment
                  insurance and other social security legislation;

         (v)      deposits to secure the performance of bids, trade contracts
                  (other than for Indebtedness), leases, statutory obligations,
                  surety and appeal bonds, performance bonds and other
                  obligations of a like nature incurred in the ordinary course
                  of business;

         (vi)     easements, rights-of-way, restrictions and other similar
                  encumbrances incurred in the ordinary course of business and
                  encumbrances consisting of zoning restrictions, easements,
                  licenses, restrictions on the use of property or minor
                  imperfections in title thereto that, in the aggregate, are not
                  material in amount, and that do not in any case materially
                  detract from the value of the property subject thereto or
                  interfere with the ordinary conduct of the business of the
                  Guarantor or any of its Subsidiaries;

         (vii)    Liens on property of any corporation that becomes a Subsidiary
                  of the Guarantor after the date of this Agreement, provided
                  that such Liens are in existence at the time such corporation
                  becomes a Subsidiary of the Guarantor and were not created in
                  anticipation thereof;

         (viii)   Liens upon real and/or tangible personal property acquired
                  after the date of this Agreement (by purchase, construction or
                  otherwise) by the Guarantor or any of its Subsidiaries, each
                  of which Liens either (A) existed on such property before the
                  time of its acquisition and was not created in anticipation
                  thereof or (B) was created solely for the purpose of securing
                  Indebtedness representing, or incurred to finance, refinance
                  or refund, the cost (including the cost of construction) of
                  such property, provided that no such Lien shall extend to or
                  cover any property of the Guarantor or such Subsidiary other
                  than the property so acquired and improvements thereon;


                                      -34-
<PAGE>   38
         (ix)     additional Liens upon real and/or personal property created
                  after the date of this Agreement, provided that the aggregate
                  Indebtedness secured thereby and incurred on and after the
                  date hereof shall not exceed $25,000,000 (or its equivalent as
                  reasonably determined by the Lender) in the aggregate at any
                  one time outstanding; and

         (x)      any extension, renewal or replacement of the foregoing,
                  provided that the Liens permitted hereunder shall not be
                  spread to cover any additional Indebtedness or property (other
                  than a substitution of like property).

22.4     SALE AND LEASE-BACK TRANSACTIONS

         No Obligor shall (and the Guarantor shall ensure that no other member
         of the Group will) enter into any arrangement, directly or indirectly,
         with any person whereby it shall sell or transfer any property, real or
         personal, used or useful in its business, whether now owned or
         hereafter acquired, and thereafter rent or lease such property or other
         property which it intends to use for substantially the same purpose or
         purposes as the property being sold or transferred (such an arrangement
         being a "SALE AND LEASE-BACK TRANSACTION"), other than:

         (i)      Sale and Lease-Back Transactions capitalised on the books of
                  the Guarantor in an aggregate capitalised amount not in excess
                  of $25,000,000 entered into in connection with the financing
                  of an aircraft to be used in connection with the Guarantor's
                  business; and

         (ii)     Sale and Lease-Back Transactions capitalised on the books of
                  the Guarantor (other than a Sale and Lease-Back Transaction
                  permitted by Clause 22.4(i)) if the capitalised amount of all
                  such Sale and Lease-Back Transactions shall not exceed
                  $20,000,000 in aggregate amount at any time outstanding.

22.5     MERGER

         (a)      No Obligor shall consolidate or merge with or into any other
                  person or sell, convey, transfer or lease its properties and
                  assets substantially as an entirety to any person, unless;

                  (i)      the company or corporation formed by such
                           consolidation or merger or the person which acquires
                           by sale, conveyance or transfer, or which leases, the
                           properties and assets of such Obligor substantially
                           as an entirety shall be a company or corporation
                           organised and existing under the laws of a
                           jurisdiction acceptable to the Lender and shall
                           expressly assume, by an agreement supplemental
                           hereto, executed and delivered in favour of the
                           Lender, in form satisfactory to the Lender, the due
                           and punctual payment of the principal of and interest
                           on the Loans and all other obligations of such
                           Obligor under the Finance Documents and the
                           performance or observance of every covenant of this
                           Agreement on the part of such Obligor to be performed
                           or observed;

                  (ii)     immediately after giving effect to such transaction,
                           no Default shall have occurred and be continuing; and

                  (iii)    the Guarantor shall have delivered to the Lender an
                           officers' certificate and an opinion or, as may be
                           required by the Lender, opinions of counsel, each
                           stating


                                      -35-
<PAGE>   39
                           that such consolidation, merger, sale, conveyance,
                           transfer or lease and such supplemental agreement
                           comply with this Clause 22.5(a) and that all
                           conditions precedent in this Agreement provided for
                           relating to such transaction and any other documents
                           which the Lender requests to be delivered at such
                           time have been complied with.

         (b)      Upon any consolidation by any Obligor with or merger by any
                  Obligor into any other corporation or any sale, conveyance,
                  transfer or lease of the properties and assets of any Obligor
                  substantially as an entirety in accordance with Clause
                  22.5(a), the successor corporation formed by such
                  consolidation or into which such Obligor is merged or to which
                  such sale, conveyance, transfer or lease is made shall succeed
                  to, and be substituted for, and may exercise every right and
                  power of, the applicable Obligor under the Finance Documents
                  with the same effect as if such successor corporation had been
                  named as an Obligor herein, and thereafter, the predecessor
                  corporation shall be relieved of all obligations and covenants
                  under the Finance Documents.

         (c)      This Clause 22.5 is without prejudice to the provisions of
                  Clause 23.14 (Change of Control).

22.6     LINES OF BUSINESS; FISCAL YEAR

         The Guarantor shall not (and the Guarantor shall ensure that no other
         member of the Group will) engage or invest in operations engaging to
         any substantial extent in any line or lines of business activity other
         than the business of manufacturing, providing, distributing and selling
         such diverse goods and industrial services, principally for industrial,
         commercial, construction and defence applications, the same or similar
         to those goods and services as are manufactured, provided, distributed
         and sold by the Guarantor on the date of this Agreement. In the case of
         the Guarantor, the Guarantor shall not change its fiscal year end from
         that in effect at 31 December 1999.

22.7     TRANSACTIONS WITH AFFILIATES

         The Guarantor shall not (and the Guarantor shall ensure that no other
         member of the Group will) sell or transfer any property or assets to,
         or purchase or acquire any property or assets from, or otherwise engage
         in any other transactions with, any of its Affiliates, except that as
         long as no Default shall have occurred and be continuing, the Guarantor
         or any Subsidiary may engage in any of the foregoing transactions in
         the ordinary course of business at prices and on terms and conditions
         not less favourable to the Guarantor or such Subsidiary than could be
         obtained on an arm's-length basis from unrelated third parties.

22.8     PROPERTIES AND INSURANCE

         (a)      Each Obligor shall (and the Guarantor shall ensure that each
                  other member of the Group will) maintain and preserve all of
                  its properties which are used in the conduct of its business
                  in good working order and condition, ordinary wear and tear
                  excepted, to the extent that any failure to do so would result
                  in a Material Adverse Effect and except for dispositions
                  thereof permitted by Clause 22.4 (Sale and Lease-Back
                  Transactions).

         (b)      Each Obligor shall (and the Guarantor shall ensure that each
                  other member of the Group will) maintain insurance with
                  financially sound and reputable insurance


                                      -36-
<PAGE>   40
         companies (which insurance companies shall, in any event, have an A.M.
         Best rating of "B+" or better), and with respect to property and risks
         of a character usually maintained by corporations engaged in the same
         or similar business similarly situated, against loss, damage and
         liability of the kinds and in the amounts customarily maintained by
         such corporations.

22.9     ENVIRONMENTAL UNDERTAKINGS

         Each Obligor shall (and the Guarantor shall ensure that each other
         member of the Group will):

         (a)      comply with all Environmental Laws to which it is subject;

         (b)      obtain all Environmental Licences required in connection with
                  its business;

         (c)      comply with the terms of all those Environmental Licences; and

         (d)      promptly notify the Lender of any claim, notice or other
                  communication received by it in respect of any actual or
                  alleged breach of or liability under Environmental Law,

         in each case where failure to do so might have a Material Adverse
         Effect.

22.10    US MATTERS

         Each Obligor shall:

         (a)      comply in all material respects with the applicable provisions
                  of ERISA and the Code;

         (b)      ensure that neither it nor any of its ERISA Affiliates shall
                  engage in a complete or partial withdrawal, within the meaning
                  of Sections 4203 and 4205 of ERISA, from any Multiemployer
                  Plan without the prior written consent of the Lender unless
                  such withdrawal could not reasonably by expected to have a
                  Material Adverse Effect; and

         (c)      use the proceeds of, or made available by virtue of, the
                  Facilities without violating any of Regulations U, T and X or
                  any applicable US federal or state laws and regulations.

22.11    GUARANTOR'S AUDITORS

         The Company will retain a firm of recognised international standing as
         auditors to the Group as it shall notify to the Lender from time to
         time.

23.      EVENTS OF DEFAULT

         Each of the events or circumstances set out in Clause 23 is an Event of
         Default.

23.1     NON-PAYMENT

(a)      There is a default made in the payment of any principal of any Loan
         when and as the same shall become due and payable, whether at the due
         date thereof or at a date fixed for prepayment thereof or by
         acceleration thereof or otherwise; or

(b)      there is a default made in the payment of any interest on any Loan or
         any fee or any other amount (other than an amount referred to in Clause
         23.1(a)) due under any Finance Document, when and as the same shall
         become due and payable, and such default shall continue unremedied for
         a period of five days.

23.2     FINANCIAL COVENANTS

         Any requirement of Clause 21 (Financial covenants) is not satisfied.


                                      -37-
<PAGE>   41
23.3     OTHER OBLIGATIONS

(a)      There is a default made in the due observance or performance by any
         Obligor or any Subsidiary of any covenant, condition or agreement
         contained in Clause 20.4(b) (Information: miscellaneous), 20.6
         (Notification of Default), 22.2(a) (Existence and Compliance with
         laws), 22.3 (Negative Pledge), 22.4 (Sale and Lease-Back Transactions),
         22.5 (Merger), 22.6 (Lines of business; Fiscal Year) or 22.7
         (Transactions with Affiliates); or

(b)      there is a default made in the due observance or performance by any
         Obligor or any Subsidiary of any covenant, condition or agreement
         contained in any Finance Document (other than those specified in
         Clauses 23.1 (Non-payment), 23.2 (Financial covenants), or 23.3(a)
         (Other obligations)) and such default shall continue unremedied for a
         period of 30 days after notice thereof from the Lender to the
         Guarantor.

23.4     MISREPRESENTATION

         Any representation or warranty made or deemed made in or in connection
         with any Finance Document or the borrowings hereunder, or any
         representation, warranty, statement or information contained in any
         report, certificate, financial statement or other instrument furnished
         in connection with or pursuant to any Finance Document, shall prove to
         have been false or misleading in any material respect when so made,
         deemed made or furnished.

23.5     CROSS DEFAULT

(a)      The Guarantor or any Subsidiary shall (A) fail to pay any principal or
         interest, regardless of amount, due in respect of any Indebtedness in a
         principal amount in excess of (I) $20,000,000 (or its equivalent in any
         other currency or currencies), in the case of any single obligation, or
         (II) $20,000,000 (or its equivalent in any other currency or
         currencies), in the case of all obligations in the aggregate, in each
         case, when and as the same shall become due and payable; or (B) fail to
         observe or perform any other term, covenant, condition or agreement
         contained in any agreement or instrument evidencing or governing any
         Indebtedness in an aggregate principal amount in excess of $20,000,000
         (or its equivalent in any other currency or currencies) and such
         failure shall continue beyond any applicable grace period; or

(b)      Indebtedness of the Guarantor and its Subsidiaries, or any of them, in
         a principal amount in excess of (A) $20,000,000 (or its equivalent in
         any other currency or currencies), in the case of any single
         obligation, or (B) $20,000,000 (or its equivalent in any other currency
         or currencies), in the case of all obligations in the aggregate, shall
         be declared due and payable or required to be prepaid prior to its
         stated maturity.

23.6     INSOLVENCY AND INSOLVENCY PROCEEDINGS

(a)      An involuntary proceeding shall be commenced or an involuntary petition
         shall be filed in a court of competent jurisdiction seeking (i) relief
         in respect of any Obligor or any Subsidiary, or of a substantial part
         of the property or assets of any Obligor or a Subsidiary, under Title
         11 of the United States Code, as now constituted or hereafter amended,
         or any other Federal or state bankruptcy, insolvency, receivership or
         similar law (or similar statute or law in any other jurisdiction), (ii)
         the appointment of a receiver, trustee, custodian, sequestrator,
         conservator or similar official for any Obligor or any Subsidiary or
         for a substantial part of the property or assets of any Obligor or a
         Subsidiary or (iii) the winding-up or liquidation of any Obligor or any


                                      -38-
<PAGE>   42
         Subsidiary; and such proceeding or petition shall continue undismissed
         for 30 days or an order or decree approving or ordering any of the
         foregoing shall be entered;

(b)      any Obligor or any Subsidiary shall (i) voluntarily commence any
         proceeding or file any petition seeking relief under Title 11 of the
         United States Code, as now constituted or hereafter amended, or any
         other Federal or state bankruptcy, insolvency, receivership or similar
         law (or similar statute or law in any other jurisdiction), (ii) consent
         to the institution of, or fail to contest in a timely and appropriate
         manner, any proceeding or the filing of any petition described in
         Clause 23.6(a), (iii) apply for or consent to the appointment of a
         receiver, trustee, custodian, sequestrator, conservator or similar
         official of any Obligor or any Subsidiary or of a substantial part of
         the property or assets of any Obligor or any Subsidiary, (iv) file an
         answer admitting the material allegations of a petition filed against
         it in any such proceeding, (v) make a general assignment for the
         benefit of creditors, (vi) become unable, admit in writing its
         inability or fail generally to pay its debts as they become due or
         (vii) take any action for the purpose of effecting any of the
         foregoing; or

(c)      one or more judgments for the payment of money in an aggregate amount
         in excess of $10,000,000 (or its equivalent in any other currency or
         currencies) (exclusive of amounts fully covered by insurance where the
         insurer has admitted liability in respect of such judgment) or in
         excess of $20,000,000 (or its equivalent in any other currency or
         currencies) (regardless of insurance coverage) shall be rendered
         against any Obligor, any Subsidiary or any combination thereof and the
         same shall remain undischarged for a period of 60 consecutive days
         during which 60 days execution shall not be effectively stayed, or
         otherwise being appropriately contested in good faith, or any action
         shall be legally taken by a judgment creditor to levy upon assets or
         properties of any Obligor or any Subsidiary to enforce any such
         judgment.

23.7     RELEVANT AGREEMENT

         An "Event of Default" shall have occurred as defined under the Relevant
         Agreement.

23.8     CREDITORS' PROCESS

         Any expropriation, attachment, sequestration, distress or execution
         affects any asset or assets of a member of the Group which the Lender
         determines could have a Material Adverse Effect and is not discharged
         within 5 Business Days.

23.9     OWNERSHIP OF THE BORROWERS

         A Borrower is not or ceases to be a Subsidiary of the Guarantor.

23.10    UNLAWFULNESS

         It is or becomes unlawful for an Obligor to perform any of its material
         obligations under the Finance Documents.

23.11    REPUDIATION

         An Obligor repudiates a Finance Document or evidences in writing an
         intention to repudiate a Finance Document.

23.12    INVALIDITY OF GUARANTEE

         The obligations of the Guarantor under this Agreement become
         ineffective, invalid, unenforceable or unlawful for any reason.


                                      -39-
<PAGE>   43
23.13    ERISA MATTERS

         A Reportable Event or Reportable Events, or a failure to make a
         required instalment or other payment (within the meaning of Section
         412(n)(l) of the Code), shall have occurred with respect to any Plan or
         Multiemployer Plan that reasonably could be expected to result in
         liability of any Obligor to the PBGC or to a Plan or Multiemployer Plan
         in an aggregate amount exceeding $5,000,000 and, within 30 days after
         the reporting of any such Reportable Event to the Lender or after the
         receipt by the Lender of the statement required pursuant to Clause 20.5
         (Information: ERISA), the Lender shall have notified such Obligor in
         writing that (a) it has made a determination that, on the basis of such
         Reportable Event or Reportable Events or the failure to make a required
         payment, there are reasonable grounds (i) for the termination of such
         Plans or Multiemployer Plans by the PBGC, (ii) for the appointment by
         the appropriate United States District Court of a trustee to administer
         such Plans or Multiemployer Plan(s) or (iii) for the imposition of a
         Lien in favour of a Plan or Multiemployer Plan and (b) as a result
         thereof an Event of Default exists or a trustee shall be appointed by a
         United States District Court to administer any such Plan or
         Multiemployer Plan or the PBGC shall institute proceedings to terminate
         any Plan or Multiemployer Plan.

23.14    CHANGE OF CONTROL

         There shall have been a Change of Control.

23.15    ACCELERATION

         On and at any time after the occurrence of an Event of Default the
         Lender may, by notice to the Guarantor:

         (a)      cancel the Commitment whereupon it shall immediately be
                  cancelled;

         (b)      declare that all or part of the Loans, together with accrued
                  interest, and all other amounts accrued under the Finance
                  Documents be immediately due and payable, whereupon they shall
                  become immediately due and payable; and/or

         (c)      declare that all or part of the Loans be payable on demand,
                  whereupon they shall immediately become payable on demand by
                  the Lender.

         Notwithstanding the foregoing, if an Event of Default specified in
         Clauses 23.6 (Insolvency and Insolvency proceedings), or 23.8
         (Creditors' process) occurs with respect to the US Obligor, then
         notwithstanding anything to the contrary in Clause 18 (Guarantee and
         indemnity), each amount expressed by that Clause 18 (Guarantee and
         indemnity) to be payable by the US Obligor upon demand shall be
         immediately due and payable by the Guarantor without need for any
         demand or other claim on the US Obligor and notwithstanding that the
         obligations of the Borrowers payable by the US Obligor under Clause 18
         (Guarantee and indemnity) are not then due and payable.

24.      CHANGES TO THE LENDER

24.1     ASSIGNMENTS AND TRANSFERS BY THE LENDER

         Subject to this Clause 24, the Lender (the "EXISTING LENDER") may:

         (a)      assign any of its rights; or


                                      -40-
<PAGE>   44
         (b)      transfer by novation any of its rights and obligations, to
                  another bank or financial institution (the "NEW LENDER").

24.2     CONDITIONS OF ASSIGNMENT OR TRANSFER

(a)      The consent of the Guarantor is required for an assignment or transfer
         by the Lender, unless the assignment or transfer is to an Affiliate of
         the Lender or an Event of Default is continuing.

(b)      The consent of the Guarantor to an assignment or transfer must not be
         unreasonably withheld or delayed. The Guarantor will be deemed to have
         given its consent five Business Days after the Lender has requested it
         unless consent is expressly refused by the Guarantor within that time.

(c)      The consent of the Guarantor to an assignment or transfer must not be
         withheld solely because the assignment or transfer may result in an
         increase to the Mandatory Cost.

(d)      If:

         (i)      the Lender assigns or transfers any of its rights or
                  obligations under the Finance Documents or changes its
                  Facility Office; and

         (ii)     as a result of circumstances existing at the date the
                  assignment, transfer or change occurs, an Obligor would be
                  obliged to make a payment to the New Lender or the Lender
                  acting through its new Facility Office under Clause 13 (Tax
                  gross-up and indemnities) or Clause 14 (Increased costs), then
                  the New Lender or the Lender acting through its new Facility
                  Office is only entitled to receive payment under those Clauses
                  to the same extent as the Existing Lender or the Lender acting
                  through its previous Facility Office would have been if the
                  assignment, transfer or change had not occurred.

24.3     DISCLOSURE OF INFORMATION

         The Lender may disclose to any of its Affiliates and any other person:

         (a)      to (or through) whom the Lender assigns or transfers (or may
                  potentially assign or transfer) all or any of its rights and
                  obligations under this Agreement;

         (b)      with (or through) whom the Lender enters into (or may
                  potentially enter into) any sub-participation in relation to,
                  or any other transaction under which payments are to be made
                  by reference to, this Agreement or any Obligor; or

         (c)      to whom, and to the extent that, information is required to be
                  disclosed by any applicable law or regulation, any information
                  about any Obligor, the Group and the Finance Documents as the
                  Lender shall consider appropriate if, in relation to
                  paragraphs (a) and (b) above, the person to whom the
                  information is to be given has entered into a confidentiality
                  undertaking substantially in a recommended form of the Loan
                  Market Association or in any other form agreed between the
                  Guarantor and the Lender.


                                      -41-
<PAGE>   45
25.      CHANGES TO THE OBLIGORS

         No Obligor may assign any of its rights or transfer any of its rights
         or obligations under the Finance Documents.

26.      CONDUCT OF BUSINESS BY THE LENDER

         No provision of this Agreement will:

         (a)      interfere with the right of the Lender to arrange its affairs
                  (tax or otherwise) in whatever manner it thinks fit;

         (b)      oblige the Lender to investigate or claim any credit, relief,
                  remission or repayment available to it or the extent, order
                  and manner of any claim; or

         (c)      oblige the Lender to disclose any information relating to its
                  affairs (tax or otherwise) or any computations in respect of
                  Tax.

27.      LENDER'S MANAGEMENT TIME

         Any amount payable to the Lender under Clause 15.3 (Indemnity to the
         Lender) and Clause 17 (Costs and expenses) shall include the cost of
         utilising the Lender's management time or other resources and will be
         calculated on the basis of such reasonable daily or hourly rates as the
         Lender may notify to the Guarantor.

28.      PAYMENT MECHANICS

28.1     PAYMENTS TO THE LENDER

(a)      On each date on which an Obligor is required to make a payment under a
         Finance Document, that Obligor shall make the same available to the
         Lender for value on the due date at the time and in such funds
         specified by the Lender as being customary at the time for settlement
         of transactions in the relevant currency in the place of payment.

(b)      Payment shall be made to such account in the principal financial centre
         of the country of that currency (or, in relation to euro, in the
         principal financial centre in a Participating Member State or London)
         with such bank as the Lender may notify to that Obligor by not less
         than five Business Days' notice.

28.2     PAYMENTS BY THE LENDER

(a)      On each date on which the Lender is required to make a payment under a
         Finance Document, the Lender shall make the same available to the
         relevant Borrower for value on the due date at the time and in such
         funds specified by the Lender as being customary at the time for
         settlement of transactions in the relevant currency in the place of
         payment.

(b)      Payment shall be made to such account in the principal financial centre
         of the country of that currency (or, in relation to euro, in the
         principal financial centre in a Participating Member State or London)
         with such bank as the relevant Borrower may notify to the Lender in the
         relevant Utilisation Request.


                                      -42-
<PAGE>   46
28.3     DISTRIBUTIONS TO AN OBLIGOR

         The Lender may (with the consent of the Obligor or in accordance with
         Clause 29 (Set-off)) apply any amount received by it for that Obligor
         in or towards payment (on the date and in the currency and funds of
         receipt) of any amount due from that Obligor under the Finance
         Documents or in or towards purchase of any amount of any currency to be
         so applied.

28.4     PARTIAL PAYMENTS

(a)      If the Lender receives a payment that is insufficient to discharge all
         the amounts then due and payable by an Obligor under the Finance
         Documents, the Lender shall apply that payment towards the obligations
         of that Obligor under the Finance Documents in any order selected by
         the Lender.

(b)      Paragraph (a) above will override any appropriation made by an Obligor.

28.5     NO SET-OFF BY OBLIGORS

         All payments to be made by an Obligor under the Finance Documents shall
         be calculated and be made without (and free and clear of any deduction
         for) set-off or counterclaim.

28.6     BUSINESS DAYS

(a)      Any payment which is due to be made on a day that is not a Business Day
         shall be made on the next Business Day in the same calendar month (if
         there is one) or the preceding Business Day (if there is not).

(b)      During any extension of the due date for payment of any principal or an
         Unpaid Sum under this Agreement interest is payable on the principal or
         Unpaid Sum at the rate payable on the original due date.

28.7     CURRENCY OF ACCOUNT

(a)      Subject to paragraphs (b) to (e) below, the Base Currency is the
         currency of account and payment for any sum due from an Obligor under
         any Finance Document.

(b)      A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum
         shall be made in the currency in which that Loan or Unpaid Sum is
         denominated on its due date.

(c)      Each payment of interest shall be made in the currency in which the sum
         in respect of which the interest is payable was denominated when that
         interest accrued.

(d)      Each payment in respect of costs, expenses or Taxes shall be made in
         the currency in which the costs, expenses or Taxes are incurred.

(e)      Any amount expressed to be payable in a currency other than the Base
         Currency shall be paid in that other currency.

28.8     CHANGE OF CURRENCY

(a)      Unless otherwise prohibited by law, if more than one currency or
         currency unit are at the same time recognised by the central bank of
         any country as the lawful currency of that country, then:

         (i)      any reference in the Finance Documents to, and any obligations
                  arising under the Finance Documents in, the currency of that
                  country shall be translated into, or paid in, the currency or
                  currency unit of that country designated by the Lender (after
                  consultation with the Guarantor); and



                                      -43-
<PAGE>   47
         (ii)     any translation from one currency or currency unit to another
                  shall be at the official rate of exchange recognised by the
                  central bank for the conversion of that currency or currency
                  unit into the other, rounded up or down by the Lender (acting
                  reasonably).

(b)      If a change in any currency of a country occurs, this Agreement will,
         to the extent the Lender (acting reasonably and after consultation with
         the Guarantor) specifies to be necessary, be amended to comply with any
         generally accepted conventions and market practice in the Relevant
         Interbank Market and otherwise to reflect the change in currency.

29.      SET-OFF

         Following an Event of Default which is continuing, the Lender may set
         off any matured obligation due from an Obligor under the Finance
         Documents (to the extent beneficially owned by the Lender) against any
         matured obligation owed by the Lender to that Obligor, regardless of
         the place of payment, booking branch or currency of either obligation.
         If the obligations are in different currencies, the Lender may convert
         either obligation at a market rate of exchange in its usual course of
         business for the purpose of the set-off.

30.      NOTICES

30.1     COMMUNICATIONS IN WRITING

         Any communication to be made under or in connection with the Finance
         Documents shall be made in writing and, unless otherwise stated, may be
         made by fax or letter.

30.2     ADDRESSES

         The address and fax number (and the department or officer, if any, for
         whose attention the communication is to be made) of each Party for any
         communication or document to be made or delivered under or in
         connection with the Finance Documents is that identified with its name
         below or any substitute address, fax number or department or officer as
         the Party may notify to the other Parties by not less than five
         Business Days' notice.

30.3     DELIVERY

(a)      Any communication or document made or delivered by the Lender to
         another Party under or in connection with the Finance Documents will
         only be effective:

         (i)      if by way of fax, when received in legible form; or

         (ii)     if by way of letter, when it has been left at the relevant
                  address or five Business Days after being deposited in the
                  post postage prepaid in an envelope addressed to it at that
                  address, and, if a particular department or officer is
                  specified as part of its address details provided under Clause
                  30.2 (Addresses), if addressed to that department or officer.

(b)      Any communication or document to be made or delivered to the Lender
         will be effective only when actually received by the Lender and then
         only if it is expressly marked for the attention of the department or
         officer identified with the Lender's signature below (or any substitute
         department or officer as the Lender shall specify for this purpose).


                                      -44-
<PAGE>   48
(c)      Any communication or document made or delivered to the Guarantor in
         accordance with this Clause will be deemed to have been made or
         delivered to each of the Obligors.

30.4     ENGLISH LANGUAGE

(a)      Any notice given under or in connection with any Finance Document must
         be in English.

(b)      All other documents provided under or in connection with any Finance
         Document must be:

         (i)      in English; or

         (ii)     if not in English, and if so required by the Lender,
                  accompanied by a certified English translation and, in this
                  case, the English translation will prevail unless the document
                  is a constitutional, statutory or other official document.

31.      CALCULATIONS AND CERTIFICATES

31.1     ACCOUNTS

         In any litigation or arbitration proceedings arising out of or in
         connection with a Finance Document, the entries made in the accounts
         maintained by the Lender are, in the absence of manifest error, prima
         facie evidence of the matters to which they relate.

31.2     CERTIFICATES AND DETERMINATIONS

         Any certification or determination by the Lender of a rate or amount
         under any Finance Document is, in the absence of manifest error,
         conclusive evidence of the matters to which it relates.

31.3     DAY COUNT CONVENTION

         Any interest, commission or fee accruing under a Finance Document will
         accrue from day to day and is calculated on the basis of the actual
         number of days elapsed and a year of 360 days or, in any case where the
         practice in the Relevant Interbank Market differs, in accordance with
         that market practice.

32.      PARTIAL INVALIDITY

         If, at any time, any provision of the Finance Documents is or becomes
         illegal, invalid or unenforceable in any respect under any law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions nor the legality, validity or enforceability of
         such provision under the law of any other jurisdiction will in any way
         be affected or impaired.

33.      REMEDIES AND WAIVERS

         No failure to exercise, nor any delay in exercising, on the part of the
         Lender, any right or remedy under the Finance Documents shall operate
         as a waiver, nor shall any single or partial exercise of any right or
         remedy prevent any further or other exercise or the exercise of any
         other right or remedy. The rights and remedies provided in this
         Agreement are cumulative and not exclusive of any rights or remedies
         provided by law.


                                      -45-
<PAGE>   49
34.      AMENDMENTS AND WAIVERS

         No term of any of the Finance Documents may be amended or waived
         without the prior consent of the Lender and the Obligors and any such
         amendment or waiver will be binding on all Parties.

35.      COUNTERPARTS

         Each Finance Document may be executed in any number of counterparts,
         and this has the same effect as if the signatures on the counterparts
         were on a single copy of the Finance Document.

36.      GOVERNING LAW

         This Agreement is governed by English law.

37.      ENFORCEMENT

37.1     JURISDICTION OF ENGLISH COURTS

(a)      The courts of England have exclusive jurisdiction to settle any dispute
         arising out of or in connection with this Agreement (including a
         dispute regarding the existence, validity or termination of this
         Agreement) (a "DISPUTE").

(b)      The Parties agree that the courts of England are the most appropriate
         and convenient courts to settle Disputes and accordingly no Party will
         argue to the contrary.

(c)      This Clause 37.1 is for the benefit of the Lender only. As a result,
         the Lender shall not be prevented from taking proceedings relating to a
         Dispute in any other courts with jurisdiction. To the extent allowed by
         law, the Lender may take concurrent proceedings in any number of
         jurisdictions.

37.2     SERVICE OF PROCESS

(a)      Without prejudice to any other mode of service allowed under any
         relevant law, each Obligor (other than Harsco Investment Limited):

         (i)      irrevocably appoints Harsco Investment Limited as its agent
                  for service of process in relation to any proceedings before
                  the English courts in connection with any Finance Document;
                  and

         (ii)     agrees that failure by a process agent to notify the relevant
                  Obligor of the process will not invalidate the proceedings
                  concerned.

(b)      Harsco Investment Limited hereby accepts its appointment as agent for
         service of process of each Obligor not incorporated in England and
         Wales.

THIS AGREEMENT HAS BEEN ENTERED INTO ON THE DATE STATED AT THE BEGINNING OF THIS
AGREEMENT.


                                      -46-
<PAGE>   50
                                   SCHEDULE 1

                              CONDITIONS PRECEDENT

1.       OBLIGORS

(a)      A copy of the constitutional documents of each Obligor.

(b)      A copy of a resolution of the board of directors of each Obligor:

         (i)      approving the terms of, and the transactions contemplated by,
                  the Finance Documents to which it is a party and resolving
                  that it execute the Finance Documents to which it is a party;

         (ii)     authorising a specified person or persons to execute the
                  Finance Documents to which it is a party on its behalf; and

         (iii)    authorising a specified person or persons, on its behalf, to
                  sign and/or despatch all documents and notices (including, if
                  relevant, any Utilisation Request) to be signed and/or
                  despatched by it under or in connection with the Finance
                  Documents to which it is a party.

(c)      A specimen of the signature of each person authorised by the resolution
         referred to in paragraph (b) above.

(d)      A certificate of the Guarantor (signed by the Guarantor's Senior Vice
         President, Chief Financial Officer and Treasurer) confirming that
         borrowing or guaranteeing, as appropriate, the Commitment would not
         cause any borrowing, guaranteeing or similar limit binding on any
         Obligor to be exceeded.

(e)      A certificate of an authorised signatory of the relevant Obligor
         certifying that each copy document relating to it specified in this
         Schedule 1 is correct, complete and in full force and effect as at a
         date no earlier than the date of this Agreement.

2.       LEGAL OPINIONS

(a)      A legal of Paul C. Coppock, Esq., Senior Vice President, Chief
         Administrative Officer, General Counsel and Secretary of the Guarantor,
         substantially in the form agreed by the Lender prior to signing this
         Agreement.

(b)      A legal opinion of Kirkpatrick & Lockhart LLP, legal advisers to the
         Guarantor, substantially in the form agreed by the Lender prior to
         signing this Agreement.

(c)      A legal opinion of Boekel De Neree, legal advisers to Harsco Finance
         B.V. in The Netherlands, substantially in the form agreed by the Lender
         prior to signing this Agreement.

3.       OTHER DOCUMENTS AND EVIDENCE

(a)      A copy of any other Authorisation or other document, opinion or
         assurance which the Lender considers to be necessary or desirable (if
         it has notified the Guarantor accordingly) in connection with the entry
         into and performance of the transactions contemplated by any Finance
         Document or for the validity and enforceability of any Finance
         Document.

(b)      The Original Financial Statements of each Obligor.


                                      -47-
<PAGE>   51
(c)      Evidence that the fees, costs and expenses then due from the Guarantor
         pursuant to the Fee Letter and Clause 17 (Costs and expenses) have been
         paid or will be paid by the first Utilisation Date.

(d)      The Fee Letter duly signed by the Guarantor.


                                      -48-
<PAGE>   52
                                   SCHEDULE 2
                                    REQUESTS

                                     PART I

                               UTILISATION REQUEST

From:         [Borrower]

To:           [Lender]

Dated:

Dear Sirs

                         $50,000,000 FACILITY AGREEMENT

                DATED 15 DECEMBER 2000 (THE "FACILITY AGREEMENT")

1.       We wish to borrow a Loan on the following terms:

        Proposed Utilisation Date: [           ]  (or, if that is not a Business
                                    -----------   Day, the next Business Day)

        Currency of Loan:          [           ]
                                    -----------

        [Amount:] *                [           ]  or, if less, the Available
                                    -----------   Commitment

        Interest Period:           [           ]
                                    -----------

        [Amount of Revolving
        Loan to be converted:] *   [           ]
                                    -----------

2.       We confirm that each condition specified in Clause 4.2 (Further
         conditions precedent) is satisfied on the date of this Utilisation
         Request.

3.       The proceeds of this Loan should be credited to [account].

4.       This Utilisation Request is irrevocable.

5.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Utilisation Request.

                                Yours faithfully

                         --------------------------------------
                            authorised signatory for

                               [ name of Borrower]

- --------------------------------------------------------------------------------

*   Delete as appropriate


                                      -49-
<PAGE>   53
                                    PART II

                                SELECTION NOTICE

                            APPLICABLE TO A TERM LOAN

From:         [Borrower]

To:           [Lender]

Dated:

Dear Sirs

                         $50,000,000 FACILITY AGREEMENT

                DATED 15 DECEMBER 2000 (THE "FACILITY AGREEMENT")

1.       We refer to the following Term Loan(s) in [identify currency] with an
         Interest Period ending on [                   ].*
                                    -------------------

2.       We request that the next Interest Period for the above Term Loan(s) is
         [                   ]
          -------------------

3.       This Selection Notice is irrevocable.

4.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Selection Notice.



                                Yours faithfully

                     ---------------------------------------

                            authorised signatory for

                               [name of Borrower]

- --------------------------------------------------------------------------------

*   Insert details of all Term-Out Loans in the same currency which have an
    Interest Period ending on the same date.


                                      -50-
<PAGE>   54
                                    PART III

                                 TERM-OUT NOTICE

From:         [Borrower]

To:           [Lender]

Dated:

Dear Sirs

                        US$50,000,000 FACILITY AGREEMENT

                DATED 15 DECEMBER 2000 (THE "FACILITY AGREEMENT")

1.       We wish to exercise the Term-Out Option under the Facility Agreement
         with effect from the Term-Out Date being [         ].

2.       We wish the following Revolving Loan(s) to be converted to Term Loans
         in the same currency as the Revolving Loan to be converted and in the
         amount(s) stated below and to have the following revised Final Maturity
         Date(s):

            LOAN               AMOUNT CONVERTED           FINAL MATURITY DATE
         [        ]            [              ]           [                  ]


3.       [In addition, we wish to make [a] further Term Loan(s) in the following
         amounts with the following Final Maturity Date(s):

              LOAN                                   FINAL MATURITY DATE
          [          ]                             [                      ]]*

4.       A Utilisation Request in respect of [each of] the above Loan(s) shall
         be delivered in due course.

5.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Term-Out Notice.



                                Yours faithfully

                    -------------------------------------------
                            authorised signatory for

                               [Name of Borrower]
- --------------------------------------------------------------------------------
* Delete as appropriate


                                      -51-
<PAGE>   55
                                   SCHEDULE 3

                             MANDATORY COST FORMULAE

1.       The Mandatory Cost is an addition to the interest rate to compensate
         the Lender for the cost of compliance with (a) the requirements of the
         Bank of England and/or the Financial Services Authority (or, in either
         case, any other authority which replaces all or any of its functions)
         or (b) the requirements of the European Central Bank.

2.       On the first day of each Interest Period (or as soon as possible
         thereafter) the Lender shall calculate, as a percentage rate, the
         Mandatory Cost, in accordance with the paragraphs set out below.

3.       If the Lender is lending from a Facility Office in a Participating
         Member State, the Mandatory Cost will be the percentage notified by the
         Lender to the Guarantor as the cost of complying with the minimum
         reserve requirements of the European Central Bank.

4.       If the Lender is lending from a Facility Office in the United Kingdom,
         the Mandatory Cost will be calculated by the Lender as follows:

(a)      in relation to a Sterling Loan:

                            AB + C(B-D) + E x 0.01
                            ----------------------   per cent. per annum.
                                 100 - (A + C)

(b)      in relation to a Loan in any currency other than Sterling:

                              E x 0.01
                           --------------  per cent. per annum.
                                300

        Where:

        A         is the percentage of Eligible Liabilities (assuming these to
                  be in excess of any stated minimum) which the Lender is from
                  time to time required to maintain as an interest free cash
                  ratio deposit with the Bank of England to comply with cash
                  ratio requirements.

        B         is the percentage rate of interest (excluding the Margin and
                  the Mandatory Cost) payable for the relevant Interest Period
                  on the Loan.

        C         is the percentage (if any) of Eligible Liabilities which the
                  Lender is required from time to time to maintain as interest
                  bearing Special Deposits with the Bank of England.

        D         is the percentage rate per annum payable by the Bank of
                  England to the Lender on interest bearing Special Deposits.

        E         is the rate of charge payable by the Lender to the Financial
                  Services Authority pursuant to the Fees Regulations (but, for
                  this purpose, ignoring any minimum fee required pursuant to
                  the Fees Regulations) and expressed in pounds per L1,000,000
                  of the Fee Base of the Lender.

5.     For the purposes of this Schedule:


                                      -52-
<PAGE>   56
         (a)      "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them from time to time under or pursuant to
                  the Bank of England Act 1998 or (as may be appropriate) by the
                  Bank of England;

         (b)      "FEES REGULATIONS" means the Banking Supervision (Fees)
                  Regulations 2000 or such other law or regulation as may be in
                  force from time to time in respect of the payment of fees for
                  banking supervision; and

         (c)      "FEE BASE" has the meaning given to it in, and will be
                  calculated in accordance with, the Fees Regulations.

6.       In application of the above formulae, A, B, C and D will be included in
         the formulae as percentages (i.e. 5 per cent. will be included in the
         formula as 5 and not as 0.05). A negative result obtained by
         subtracting D from B shall be taken as zero. The resulting figures
         shall be rounded to four decimal places.

7.       Any determination by the Lender pursuant to this Schedule in relation
         to a formula, the Mandatory Cost or any amount payable to the Lender
         shall, in the absence of manifest error, be conclusive and binding on
         all Parties.

8.       The Lender may from time to time, after consultation with the
         Guarantor, determine and notify to all Parties any amendments which are
         required to be made to this Schedule in order to comply with any change
         in law, regulation or any requirements from time to time imposed by the
         Bank of England, the Financial Services Authority or the European
         Central Bank (or, in any case, any other authority which replaces all
         or any of its functions) and any such determination shall, in the
         absence of manifest error, be conclusive and binding on all Parties.


                                      -53-
<PAGE>   57
                                   SCHEDULE 4
                                 EXISTING LIENS

1.       Lien on the property and assets of Harsco Corporation's facility in
         Drakesboro, Kentucky securing $6,500,000 indebtedness from a loan
         agreement dated 15 September 1987, between Harsco Corporation and the
         County of Muhlenberg, Kentucky due 1 September 2001.

2.       Lien on Falcon 50 aircraft pursuant to a lease between Harsco
         Corporation and General Electric Credit Corporation dated 22 December
         1994.

3.       Lien on Hawker 800XP aircraft pursuant to a lease between Harsco
         Corporation and Mellon Leasing Corporation dated 9 November 1999.

4.       Liens on various power access equipment pursuant to a master rental
         agreement dated 30 May 1998 between SGB Services PLC and Genie
         Financial Services Europe Limited.



                                      -54-
<PAGE>   58
                                   SCHEDULE 5

                              EXISTING INDEBTEDNESS

1.       CREDIT AGREEMENTS

1.1      $6,500,000 loan agreement dated 15 September 1987 between Harsco
         Corporation and the County of Muhlenberg, Kentucky, due 1 September
         2001. Payments of both principal and interest under the Note are
         irrevocably assigned to Norwest Bank Minnesota, N.A. pursuant to an
         indenture of trust dated 13 September 1987 between the County of
         Muhlenberg, Kentucky, and Norwest Bank Minnesota N.A.

1.2      L20,000,000 master credit facility agreement effective 10 May 1998
         between the National Westminster Bank PLC and the following
         Subsidiaries: Heckett Limited, Heckett MultiServ PLC, Heckett MultiServ
         (UK) Limited, Harsco Europa BV, Heckett International Services Limited,
         Quipco Limited, Harsco (UK) Limited, The Permanent Way Equipment
         Company Limited, Heckett MultiServ Investment Limited, Faber Prest
         Limited, Faber Prest Distribution Limited, Faber Prest (Australia)
         Limited, Faber Prest (Overseas) Limited, Faber Prest (Pacific) Limited,
         Flixborough Warf Limited, Slag Reduction Overseas Limited and Otis
         Transport Services Limited.

1.3      CAD 12,000,000 Harsco Canada Limited short-term credit facility
         agreement with the Canadian Imperial Bank of Commerce dated 24 April
         1992.

1.4      DEM 15,000,000 Harsco G.m.b.H. short-term credit facility agreement
         with Commerzbank AG dated 1 July 1994.

1.5      $15,000,000 multicurrency credit facility agreement dated 4 February
         1999 between Svenska Handelsbanken, Harsco Europa B.V. and Heckett
         MultiServ PLC.

1.6      $20,000,000 multicurrency credit facility agreement dated 8 July 1998
         between Harsco Europa B.V. and Bank Brussels Lambert.

1.7      ZAR 39,000,000 overdraft and other credit facilities agreement between
         Heckett MultiServ (Pty.) Ltd, Heckett MultiServ (SR) (Pty.) Ltd., SRV
         Mill Services (Pty.) Ltd., Heckett MultiServ (FS) (Pty.) Ltd.,
         SteelServ (Pty.) Ltd. and Standard Bank of South Africa Limited.

1.8      $11,000,000 multicurrency credit facility agreement dated 8 May 2000
         between Heckett MultiServ (Sweden) A.B. and Svenska Handelsbanken.

1.9      NLG 18,000,000 multicurrency credit facility dated 13 August 1997
         between Harsco Europa B.V., Heckett MultiServ (Holland) B.V., Heckett
         MultiServ International B.V., Heckett MultiServ Far East B.V., Heckett
         MultiServ China B.V. and ING Bank N.V.

1.10     NLG 14,000,000 credit facility dated 1 September 1997 between
         Bologginsmaatschappij Bouwtmatorieel Europe B.V., Stalen Steigers
         Holland/Handep B.V. and SGB North Europe Central Sales B.V. and ABN
         Amro Bank N.V.

1.11     $218,750,000 five-year credit facility dated 29 September 2000 between
         Harsco Corporation, the banks named therein and The Chase Manhattan
         Bank.


                                      -55-
<PAGE>   59
1.12     $131,250,000 364-day facility dated 29 September 2000 between Harsco
         Corporation, the banks named therein and The Chase Manhattan Bank.

1.13     The Relevant Agreement.

2.       LOAN AGREEMENTS

         Dealer agreement dated June 2000 between Heckett MultiServ (Sweden) AB
         and Svenska Handelsbanken for the distribution of up to SEK 100,000,000
         of bond loans (private placement Swedish Kroner bonds).

3.       INDENTURES

3.1      $150,000,000 Notes issued under an Indenture dated 1 May 1985 between
         Harsco Corporation and The Chase Manhattan Bank and due 15 September
         2003.

3.2      L200,000,000 Guaranteed Notes issued under a Trust Indenture dated 27
         October 2000 between Harsco Finance B.V., Harsco Corporation and The
         Chase Manhattan Trustees Limited and due 27 October 2010.

4.       GUARANTEES

4.1      Guarantee dated 5 May 1998 by Harsco Corporation in favour of the
         National Westminster Bank PLC in respect of the bank's GBP 20,000,000
         master credit facility extended to certain Subsidiaries (see 1.2
         above).

4.2      Guarantee dated 1 May 1992 by Harsco Corporation in favour of Canadian
         Imperial Bank of Commerce in respect of the bank's CAD 12,000,000
         short-term credit facility extended to Harsco Canada Limited (see 1.3
         above).

4.3      Guarantee dated 30 June 1994 by Harsco Corporation in favor of
         Commerzbank AG in respect of the bank's DEM 15,000,000 short-term
         credit facility extended to Harsco G.m.b.H. (see 1.4 above).

4.4      Guarantee dated 22 February 1999 by Harsco Corporation in favour of
         Svenska Handelsbanken in respect of the bank's $15,000,000
         multicurrency credit facility extended to Harsco Europa B.V. and
         Heckett MultiServ PLC (see 1.5 above).

4.5      Guarantee dated 8 February 1999 by Harsco Corporation in favour of Bank
         Brussels Lambert in respect of the bank's $20,000,000 multicurrency
         credit facility extended to Harsco Europa B.V. (see 1.6 above).

4.6      Suretyship dated 23 November 1999 by Harsco Corporation in favour of
         Standard Bank of South Africa Limited in respect of the bank's ZAR
         39,000,000 overdraft and other credit facilities extended to certain
         Subsidiaries (see 1.7 above).

4.7      Guarantee dated 9 May 2000 by Harsco Corporation in favour of Svenska
         Handelsbanken for $11,000,000 in respect of the bank's multicurrency
         credit facility extended to Heckett MultiServ (Sweden) AB (see 1.8
         above).

4.8      Guarantee dated 23 December 1997 by Harsco Corporation in favour of ING
         Bank N.V for NLG 18,000,000 in respect of the bank's multicurrency
         credit facility extended to certain Subsidiaries (see 1.9 above).


                                      -56-
<PAGE>   60
4.9      Guarantee dated 11 November 1997 by Harsco Corporation in favour of
         Svenska Handelsbanken for up to $27,240,736.50 in respect of the bank's
         issuing letters of credit for the account of Fortuna Insurance Limited
         (see 5.2 below).

4.10     Guarantee dated 13 June 2000, by Harsco Corporation in favour of
         Svenska Handelsbanken as representative for the bondholders in
         conjunction with the issuance of up to SEK 100,000.000 bond loans up
         (private placement Swedish Kroner bonds) by Heckett MultiServ (Sweden)
         AB (see 2 above).

4.11     Guarantee dated 25 September 1996 by Harsco Corporation in favour of
         Banque Brussels Lambert for up to BEF 3,000,000,000 in respect of the
         bank's placement of commercial paper for the account of Harsco Europa
         B.V. (see 6.4 below).

5.       LETTERS OF CREDIT

5.1      $19,271,859 standby letter of credit dated 8 December 1997, issued by
         Svenska Handelsbanken in favour of ACE Property & Casualty Insurance
         Company and certain of its subsidiaries and for the account of Harsco
         Corporation expiring on 31 December 2000.

5.2      $11,355,027 standby letter of credit dated 9 April 1997, issued by
         Svenska Handelsbanken in favor of ACE Property & Casualty Insurance
         Company and certain of its subsidiaries and for the account of Fortuna
         Insurance Limited expiring on 31 December 2000.

6.       OTHER ARRANGEMENTS

6.1      Commercial paper placement agency agreement dated 6 November 1998
         between Chase Securities, Inc. and Harsco Corporation for the issuance
         of Harsco Corporation's commercial paper under its $350,000,000
         commercial paper programme.

6.2      Commercial paper placement agency agreement dated 1 October 2000
         between Salomon Smith Barney, Inc. and Harsco Corporation under its
         $350,000,000 commercial paper programme.

6.3      Commercial paper placement agency agreement dated 11 October 1994
         between Lehman Brothers, Inc. and Harsco Corporation for the issuance
         of Harsco Corporation's commercial paper under its $350,000,000
         commercial paper programme.

6.4      Commercial paper placement agency agreement dated 25 September 1996
         between Banque Brussels Lambert and Harsco Europa B.V. for the
         placement of Harsco Europa B.V.'s commercial paper up to BEF
         3,000,000,000 or the equivalent in another currency.

6.5      $80,000,000.00 performance surety bond dated 29 October 1999, issued by
         CNA Insurance Company in favour of the United States Treasury and for
         the account of Harsco Corporation expiring on 25 October 2000.

6.6      Lease dated 22 December 1994, originally valued at $13,897,000 between
         Harsco Corporation and General Electric Credit Corporation for the
         lease of a Falcon 50 aircraft expiring 22 December 2004.

6.7      Lease dated 9 November 1999, originally valued at $12,122,784 between
         Harsco Corporation and Mellon Leasing Corporation for the lease of
         Hawker 800XP aircraft expiring 22 November 2014.


                                      -57-
<PAGE>   61
6.8      Master rental agreement dated 30 May 1998 between SGB Services PLC and
         Genie Financial Services Europe Limited for the lease of certain power
         access equipment whose principal value is presently L18,058,000.


                                      -58-
<PAGE>   62
THE GUARANTOR

HARSCO CORPORATION

Address:          P.O. Box 8888,
                  Camp Hill,
                  Pennsylvania 17001-8888

Fax No:           001 717 763 6424

Attention:        Salvatore D. Fazzolari

By:               SALVATORE D. FAZZOLARI
                  Senior Vice President
                  Chief Financial Officer & Treasurer

THE BORROWERS

HARSCO FINANCE B.V.

Address:          Wenckebachstraat 1
                  1951 JZ Velsen-Noord
                  Postbus 83
                  1970 AB Ijmudien

Fax No:           +31 251 22 83 12

Attention:        Financial Manager

and

Fax No:           +44 207 314 1491

Attention:        Graham T. Goulding

By:               DEREK C. HATHAWAY
                  Director

By:               SALVATORE D. FAZZOLARI
                  Director

HARSCO INVESTMENT LIMITED

Address:          Commonwealth House
                  2 Chalkhill Road
                  London W6 8DW

Fax No:           + 44 20 7314 1491

Attention:        Graham T. Goulding

By:               SALVATORE D. FAZZOLARI
                  Director



                                      -59-
<PAGE>   63
THE LENDER

NATIONAL WESTMINSTER BANK PLC

Address:          Level 8
                  135 Bishopsgate
                  London EC2M 3UR

Fax No:           + 44 20 7375 8745

Attention:        Douglas I. Kerr

By:               DOUGLAS I. KERR


                                      -60-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.B
<SEQUENCE>3
<FILENAME>y46501mex10-b.txt
<DESCRIPTION>$50,000,000.00 FACILITY AGREEMENT DATE 01/12/2001
<TEXT>

<PAGE>   1

                                                                   Exhibit 10(b)




                         $50,000,000 FACILITY AGREEMENT

                             dated 12th January 2001




                                       for



                               HARSCO FINANCE B.V.

                                       and

                            HARSCO INVESTMENT LIMITED

                                  as Borrowers


                                       and

                               HARSCO CORPORATION

                                  as Guarantor




                                      with



                                 CITIBANK, N.A.
                                acting as Lender











                                   LINKLATERS
                                   & ALLIANCE

                                   LINKLATERS


                                 Ref: JOBS/PHPS
<PAGE>   2
                                    CONTENTS
<TABLE>
<CAPTION>
CLAUSE                                                                     PAGE
<S>                                                                        <C>
1.          Definitions and interpretation ..............................     2
2.          The Facility ................................................    11
3.          Purpose .....................................................    11
4.          Conditions of Utilisation ...................................    11
5.          Utilisation .................................................    12
6.          Optional Currencies .........................................    12
7.          Repayment ...................................................    13
8.          Prepayment and cancellation .................................    15
9.          Interest ....................................................    15
10.         Interest Periods ............................................    16
11.         Changes to the calculation of interest ......................    17
12.         Fees ........................................................    18
13.         Tax gross up and indemnities ................................    18
14.         Increased costs .............................................    20
15.         Other indemnities ...........................................    21
16.         Mitigation by the Lender ....................................    22
17.         Costs and expenses ..........................................    22
18.         Guarantee and indemnity .....................................    23
19.         Representations .............................................    25
20.         Information undertakings ....................................    30
21.         Financial covenants .........................................    32
22.         General undertakings ........................................    32
23.         Events of Default ...........................................    36
24.         Changes to the Lender .......................................    39
25.         Changes to the Obligors .....................................    41
26.         Conduct of business by the Lender ...........................    41
27.         Lender's Management Time ....................................    41
28.         Payment mechanics ...........................................    41
29.         Set-off .....................................................    43
30.         Notices .....................................................    43
31.         Calculations and certificates ...............................    44
32.         Partial invalidity ..........................................    44
33.         Remedies and waivers ........................................    44
34.         Amendments and waivers ......................................    44
35.         Counterparts ................................................    44
36.         Governing law ...............................................    45
37.         Enforcement .................................................    45
</TABLE>


<TABLE>
<CAPTION>
SCHEDULE                                                                   PAGE
<S>                                                                        <C>
SCHEDULE 1 Conditions Precedent .........................................    46
SCHEDULE 2 Requests .....................................................    48
SCHEDULE 3 Mandatory Cost Formulae ......................................    51
SCHEDULE 4 Existing Liens ...............................................    53
SCHEDULE 5 Existing Indebtedness ........................................    54
</TABLE>
<PAGE>   3
THIS AGREEMENT is dated 12th January 2001 between:

(1)     HARSCO FINANCE B.V. (a private limited liability company with its
        corporate seat in Amsterdam) and HARSCO INVESTMENT LIMITED (a private
        limited company incorporated in England and Wales with company number
        03985379) (the "BORROWERS" and each a "BORROWER");

(2)     HARSCO CORPORATION (a corporation incorporated in the State of Delaware)
        (the "GUARANTOR"); and

(3)     CITIBANK, N.A. as lender (the "LENDER").


IT IS AGREED as follows:

1.      DEFINITIONS AND INTERPRETATION

1.1     DEFINITIONS
        In this Agreement:

        "AFFILIATE" means, in relation to any person, a Subsidiary of that
        person or a Holding Company of that person or any other Subsidiary of
        that Holding Company.

        "AUTHORISATION" means an authorisation, consent, approval, resolution,
        licence, exemption, filing or registration.

        "AVAILABILITY PERIOD" means the period from and including the date of
        this Agreement to and including the Business Day before the Final
        Maturity Date specified in paragraph (a) of that definition.

        "AVAILABLE COMMITMENT" means the Lender's Commitment minus:

        (a)     the Base Currency Amount of any outstanding Loans; and

        (b)     in relation to any proposed Utilisation, the Base Currency
                Amount of any Loans that are due to be made on or before the
                proposed Utilisation Date other than any Loans that are due to
                be repaid or prepaid on or before the proposed Utilisation Date.

        "BASE CURRENCY" or "$" means Dollars.

        "BASE CURRENCY AMOUNT" means, in relation to a Loan, the amount
        specified in the Utilisation Request delivered by a Borrower for that
        Loan (or, if the amount requested is not denominated in the Base
        Currency, that amount converted into the Base Currency at the Lender's
        Spot Rate of Exchange on the date which is three Business Days before
        the Utilisation Date or, if later, on the date the Lender receives the
        Utilisation Request) adjusted to reflect any repayment.

        "BOARD" means the Board of Governors of the Federal Reserve System of
        the USA (or any successor).

        "BREAK COSTS" means the amount (if any) by which:

        (a)     the interest which the Lender should have received for the
                period from the date of receipt of all or any part of a Loan or
                Unpaid Sum to the last day of the current Interest Period in
                respect of that Loan or Unpaid Sum had the principal amount or
                Unpaid Sum received been paid on the last day of that Interest
                Period;

                                      -2-
<PAGE>   4
        exceeds:

        (b)     the amount which the Lender would be able to obtain by placing
                an amount equal to the principal amount or Unpaid Sum received
                by it on deposit with a leading bank in the Relevant Interbank
                Market for a period starting on the Business Day following
                receipt or recovery and ending on the last day of the current
                Interest Period.

        "BUSINESS DAY" means a day (other than a Saturday or Sunday) on which
        banks are open for general business in London and:

        (a)     (in relation to any date for payment or purchase of a currency
                other than euro) the principal financial centre of the country
                of that currency; or

        (b)     (in relation to any date for payment or purchase of euro) any
                TARGET Day.

        "CAPITAL LEASE OBLIGATIONS" of any person means the obligations of such
        person to pay rent or other amounts under any lease of (or other
        arrangement conveying the right to use) real or personal property, or a
        combination thereof, which obligations are required to be classified and
        accounted for as capital leases on a balance sheet of such person under
        GAAP and, for the purposes of this Agreement, the amount of such
        obligations at any time shall be the capitalised amount thereof at such
        time determined in accordance with GAAP.

        "CODE" means the Internal Revenue Code of 1986, as amended from time to
        time.

        "COMMITMENT" means $50,000,000, to the extent not cancelled, reduced or
        transferred by the Lender under this Agreement.

        "COMPLIANCE CERTIFICATE" means a certificate in form and substance
        satisfactory to the Lender.

        "DEFAULT" means an Event of Default or any event or circumstance
        specified in Clause 23 (Events of Default) which would (with the expiry
        of a grace period, the giving of notice, the making of any determination
        under the Finance Documents or any combination of any of the foregoing)
        be an Event of Default.

        "DOLLARS" and "$" mean the lawful currency of the USA.

        "DOMESTIC SUBSIDIARIES" means any Subsidiary organised or incorporated
        under the laws of one of the States of the United States, the laws of
        the District of Columbia or the Federal laws of the United States.

        "ENVIRONMENT" means living organisms including the ecological systems of
        which they form part and the following media:

        (a)     air (including air within natural or man-made structures,
                whether above or below ground);

        (b)     water (including territorial, coastal and inland waters, water
                under or within land and water in drains and sewers); and

        (c)     land (including land under water).

        "ENVIRONMENTAL LAW" means all laws and regulations of any relevant
        jurisdiction which:

        (a)     have as a purpose or effect the protection of, and/or prevention
                of harm or damage to, the Environment;

        (b)     provide remedies or compensation for harm or damage to the
                Environment; or

                                      -3-
<PAGE>   5
        (c)     relate to Hazardous Substances or health and safety matters.

        "ENVIRONMENTAL LICENCE" means any Authorisation required at any time
        under Environmental Law.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
        amended from time to time.

        "ERISA AFFILIATE" means any trade or business (whether or not
        incorporated) that is a member of a group of which the US Obligor is a
        member and which is treated as a single employer under Section 414 of
        the Code.

        "EVENT OF DEFAULT" means any event or circumstance specified as such in
        Clause 23 (Events of Default).

        "FACILITY" means the revolving or, after the Term-Out Date, the term
        loan facility made available under this Agreement as described in Clause
        2 (The Facility).

        "FACILITY OFFICE" means the office or offices notified by the Lender to
        the Guarantor and the Borrowers in writing as the office or offices
        through which it will perform its obligations under this Agreement.

        "FEE LETTER" means the letter dated 8th January 2001 from the Lender,
        accepted and agreed by the Guarantor on 12th January 2001, setting out
        fees payable in relation to the Facility.

        "FINAL MATURITY DATE" means:

        (a)     in relation to a Revolving Loan not converted into a Term Loan
                pursuant to Clause 7.2 (Term-Out), the date which is 364 days
                from the date of this Agreement or, if extended in accordance
                with Clause 7.3 (Extension), the date provided for in Clause 7.3
                (Extension); or

        (b)     in relation to a Term Loan, the date provided for in Clause 7.2
                (Term-Out).

        "FINANCE DOCUMENT" means this Agreement, any Fee Letter and any other
        document designated as such by the Lender and the Guarantor.

        "FINANCIAL OFFICER" of any person means the Chief Financial Officer,
        principal accounting officer, Treasurer or Controller of such person.

        "GAAP" means the generally accepted accounting principles, standards and
        practices in the United States.

        "GOVERNMENTAL AUTHORITY" means any Federal, state, local or foreign
        court or governmental agency, authority, instrumentality or regulatory
        body.

        "GROUP" means the Guarantor and its consolidated Subsidiaries for the
        time being.

        "GUARANTOR'S AUDITORS" means PricewaterhouseCoopers or such other
        auditors as may be appointed to the Group in accordance with Clause
        22.11 (Guarantor's Auditors).

        "HAZARDOUS SUBSTANCE" means any waste, pollutant, contaminant or other
        substance (including any liquid, solid, gas, ion, living organism or
        noise) that may be harmful to human health or other life or the
        Environment or a nuisance to any person or that may make the use or
        ownership of any affected land or property more costly.

                                      -4-
<PAGE>   6
        "HOLDING COMPANY" means, in relation to a company or corporation, any
        other company or corporation in respect of which it is a Subsidiary.

        "INDEBTEDNESS" of any person means, without duplication:

        (a)     all obligations of such person for borrowed money or with
                respect to deposits or advances of any kind;

        (b)     all obligations of such person evidenced by bonds, debentures,
                notes or similar instruments;

        (c)     all obligations of such person upon which interest charges are
                customarily paid;

        (d)     all obligations of such person under conditional sale or other
                title retention agreements relating to property or assets
                purchased by such person;

        (e)     all obligations of such person issued or assumed as the deferred
                purchase price of property or services;

        (f)     all Indebtedness of others secured by (or for which the holder
                of such Indebtedness has an existing right, contingent or
                otherwise, to be secured by) any Lien on property owned or
                acquired by such person, whether or not the obligations secured
                thereby have been assumed;

        (g)     all guarantees by such person of Indebtedness of others;

        (h)     all Capital Lease Obligations of such person;

        (i)     all obligations of such person in respect of interest rate
                protection agreements, foreign currency exchange agreements or
                other interest or exchange rate hedging arrangements; and

        (j)     all obligations of such person as an account party in respect of
                letters of credit and bankers' acceptances,

        provided, however, that Indebtedness shall not include trade accounts
        payable in the ordinary course of business. The Indebtedness of any
        person shall include the Indebtedness of any partnership in which such
        person is a general partner.

        "INTEREST PERIOD" means, in relation to a Loan, each period determined
        in accordance with Clause 10 (Interest Periods) and, in relation to an
        Unpaid Sum, each period determined in accordance with Clause 9.3
        (Default interest).

        "LENDER'S SPOT RATE OF EXCHANGE" means the Lender's spot rate of
        exchange for the purchase of the relevant currency with the Base
        Currency in the London foreign exchange market at or about 11:00 a.m. on
        a particular day.

        "LIBOR" means, in relation to any Loan:

        (a)     the applicable Screen Rate; or

        (b)     (if no Screen Rate is available for the currency or period of
                that Loan) the rate quoted by the Lender to leading banks in the
                London interbank market,

        as of 11:00 a.m. on the Quotation Day for the offering of deposits in
        the currency of that Loan and for a period comparable to the Interest
        Period for that Loan.

        "LIEN" means, with respect to any asset:

                                      -5-
<PAGE>   7
        (a)     any mortgage, deed of trust, lien, pledge, encumbrance, charge
                or security interest in or on such asset;

        (b)     the interest of a vendor or a lessor under any conditional sale
                agreement, capital lease or title retention agreement relating
                to such asset; and

        (c)     in the case of securities, any purchase option, call or similar
                right of a third party with respect to such securities.

        "LOAN" means a Revolving Loan or a Term Loan or the principal amount
        outstanding for the time being of that Revolving Loan or, as the case
        may be, Term Loan.

        "MANDATORY COST" means the percentage rate per annum calculated by the
        Lender in accordance with Schedule 3 (Mandatory Cost Formulae).

        "MARGIN" means:

        (a)     during any period on or before the first anniversary of the date
                of this Agreement, 0.425 per cent. per annum; and

        (b)     to the extent the Facility continues in accordance with this
                Agreement, during any period after the first anniversary of the
                date of this Agreement, 0.525 per cent. per annum.

        "MARGIN STOCK" means margin stock or "Margin Security" within the
        meaning of Regulations T, U and X.

        "MATERIAL ADVERSE EFFECT" means:

        (a)     a materially adverse effect on the business, assets, operations,
                prospects or condition, financial or otherwise, of the Group
                taken as a whole; or

        (b)     a material impairment of the ability of any Obligor to perform
                any of its respective obligations under any Finance Document to
                which it is or becomes a party.

        "MONTH" means a period starting on one day in a calendar month and
        ending on the numerically corresponding day in the next calendar month,
        except that:

        (a)     if the numerically corresponding day is not a Business Day, that
                period shall end on the next Business Day in that calendar month
                in which that period is to end if there is one, or if there is
                not, on the immediately preceding Business Day; and

        (b)     if there is no numerically corresponding day in the calendar
                month in which that period is to end, that period shall end on
                the last Business Day in that calendar month.

        The above rules will only apply to the last Month of any period.

        "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
        4001(a)(3) of ERISA to which the US Obligor or any ERISA Affiliate
        (other than one considered an ERISA Affiliate only pursuant to
        subsection (m) or (o) of Section 414 of the Code) is making or accruing
        an obligation to make contributions, or has within any of the preceding
        five years made or accrued an obligation to make contributions.

        "NET WORTH" has the meaning given to it in Clause 21 (Financial
        covenants).

        "OBLIGOR" means a Borrower or the Guarantor.

        "OPTIONAL CURRENCY" means a currency (other than the Base Currency)
        which complies with the conditions set out in Clause 4.3 (Conditions
        relating to Optional Currencies).

                                      -6-
<PAGE>   8
        "ORIGINAL FINANCIAL STATEMENTS" means:

        (a)     in relation to the Guarantor, the consolidated balance sheet of
                the Group as at 31 December 1999 and the related consolidated
                statements of income, cash flows and changes in shareholders'
                equity of the Group for the fiscal year ended on such date, with
                the opinion thereon of the Guarantor's Auditors;

        (b)     in relation to the Guarantor, the unaudited consolidated balance
                sheet of the Group as at 30 September 2000 and the related
                consolidated statements of income and cash flows of the Group
                for the nine-month period ended on such date; and

        (c)     in relation to each Borrower, its unaudited financial statements
                for the nine-month period ended 30 September 2000.

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

        "PARTY" means a party to this Agreement and includes its successors in
        title, permitted assigns and permitted transferees.

        "PBGC" means the Pension Benefit Guaranty Corporation of the USA
        established pursuant to Section 4002 of the ERISA or any entity
        succeeding to all or any of its functions under ERISA.

        "PLAN" means any employee pension benefit plan as defined in Section
        3(2) of ERISA (other than a Multiemployer Plan) subject to the
        provisions of Title IV of ERISA or Section 412 of the Code which is
        maintained for current or former employees, or any beneficiary thereof,
        of the US Obligor or any ERISA Affiliate.

        "QUALIFYING LENDER" has the meaning given to it in Clause 13 (Tax
        gross-up and indemnities).

        "QUOTATION DAY" means, in relation to any period for which an interest
        rate is to be determined:

        (a)     (if the currency is Sterling or Dollars) the first day of that
                period;

        (b)     (if the currency is euro) two TARGET Days before the first day
                of that period; or

        (c)     (for any other currency) two Business Days before the first day
                of that period,

        unless market practice differs in the London interbank market for a
        currency, in which case the Quotation Day will be determined by the
        Lender in accordance with market practice in the Relevant Interbank
        Market (and if quotations for that currency and that period would
        normally be given by leading banks in the Relevant Interbank Market on
        more than one day, the Quotation Day will be the last of those days).

        "REGULATION T" means Regulation T of the Board as from time to time in
        effect and all official rulings and interpretations thereunder or
        thereof.

        "REGULATION U" means Regulation U of the Board as from time to time in
        effect and all official rulings and interpretations thereunder or
        thereof.

        "REGULATION X" means Regulation X of the Board as from time to time in
        effect and all official rulings and interpretations thereunder or
        thereof.

        "RELEVANT AGREEMENT" means the $50,000,000 facility agreement dated 15
        December 2000 between the Borrowers, the Guarantor and National
        Westminster Bank Plc.

                                      -7-
<PAGE>   9
        "RELEVANT INTERBANK MARKET" means, in relation to euro, the European
        interbank market and, in relation to any other currency, the London
        interbank market.

        "REPEATING REPRESENTATIONS" means each of the representations set out in
        Clauses 19.1 (Status) to 19.4 (Power and authority), 19.6 (Dutch
        provisions), 19.9 (No default), 19.10(b) (True and complete disclosure),
        19.11 (a) and (b) (Financial statements), 19.12 (Pari passu ranking),
        19.14 (Environment laws and licences) to 19.18 (Investment Company Act
        and Public Utility Holding Company Act).

        "REPORTABLE EVENT" means any reportable event as defined in Section
        4043(c) of ERISA or the regulations issued thereunder with respect to a
        Plan (other than a Plan maintained by an ERISA Affiliate that is
        considered an ERISA Affiliate only pursuant to a subsection (m) or (o)
        of Section 414 of the Code).

        "REVOLVING LOAN" means a revolving loan made or to be made under the
        Facility and which has not been converted into a Term Loan or the
        principal amount outstanding for the time being of that loan.

        "ROLLOVER LOAN" means one or more Loans:

        (a)     made or to be made on the same day that one or more maturing
                Loans is or are due to be repaid;

        (b)     the aggregate amount of which is equal to or less than the
                maturing Loan(s) (unless it is more than the maturing Loan(s)
                solely because it arose as a result of the operation of Clause
                6.2 (Unavailability of a currency));

        (c)     in the same currency as the maturing Loan(s) (unless it arose as
                a result of the operation of Clause 6.2 (Unavailability of a
                currency)); and

        (d)     made or to be made to the same Borrower for the purpose of
                refinancing the maturing Loan(s).

        "SCREEN RATE" means the British Bankers' Association Interest Settlement
        Rate for the relevant currency and period displayed on the appropriate
        page of the Telerate screen. If the agreed page is replaced or service
        ceases to be available, the Lender may specify another page or service
        displaying the appropriate rate after consultation with the Guarantor.

        "SELECTION NOTICE" means a notice substantially in the form set out in
        Part II of Schedule 2 (Requests) given in accordance with Clause 10
        (Interest Periods) in relation to the Facility after the Term-Out Date.

        "STERLING" means the lawful currency of the United Kingdom.

        "SUBSIDIARY" means, in relation to any person (referred to in this
        definition as the "parent"), any corporation, partnership, association
        or other business entity:

        (a)     of which securities or other ownership interests representing
                more than 50 per cent. of the equity or more than 50 per cent.
                of the ordinary voting power or more than 50 per cent. of the
                general partnership interests are, at the time any determination
                is being made, owned, controlled or held; or

                                      -8-
<PAGE>   10
        (b)     which is, at the time any determination is made, otherwise
                controlled by the parent or one or more Subsidiaries of the
                parent or by the parent and one or more Subsidiaries of the
                parent.

        In this definition, one person being controlled by another means that
        the other (whether directly or indirectly and whether by the ownership
        of share capital, the possession of voting power, contract or otherwise)
        has the power to appoint and/or remove all or the majority of the
        members of the Board of Directors or other governing body of that person
        or otherwise controls or has the power to control the affairs and
        policies of that person.

        "TARGET" means Trans-European Automated Real-time Gross Settlement
        Express Transfer payment system.

        "TARGET DAY" means any day on which TARGET is open for the settlement of
        payments in euro.

        "TAX" means any tax, levy, impost, duty or other charge or withholding
        of a similar nature (including any penalty or interest payable in
        connection with any failure to pay or any delay in paying any of the
        same).

        "TAXES ACT" means the Income and Corporation Taxes Act 1988.

        "TERM LOAN" means a Revolving Loan which has been converted into a term
        loan on the Term-Out Date pursuant to Clause 7.2 (Term-Out), a loan made
        or to be made on the Term-Out Date or the principal amount outstanding
        for the time being of that loan.

        "TERM-OUT DATE" has the meaning given to it in Clause 7.2(a) (Term-Out).

        "TERM-OUT NOTICE" means a notice substantially in the form set out in
        Part III of Schedule 2 (Requests).

        "TERM-OUT OPTION" has the meaning given to it in Clause 7.2(a)
        (Term-Out).

        "TOTAL CAPITAL" has the meaning given to it in Clause 21 (Financial
        covenants).

        "TOTAL DEBT" has the meaning given to it in Clause 21 (Financial
        covenants).

        "UNPAID SUM" means any sum due and payable but unpaid by an Obligor
        under the Finance Documents.

        "USA" or "US" or "UNITED STATES" means the United States of America.

        "US OBLIGOR" means the Guarantor to the extent incorporated in any state
        of the USA.

        "UTILISATION" means a utilisation of the Facility.

        "UTILISATION DATE" means the date of a Utilisation, being the date on
        which the relevant Loan is to be made.

        "UTILISATION REQUEST" means a notice substantially in the form set out
        in Part I of Schedule 2 (Requests).

        "VAT" means value added tax as provided for in the Value Added Tax Act
        1994 and any other tax of a similar nature.

                                      -9-
<PAGE>   11
1.2    CONSTRUCTION

(a)     Any reference in this Agreement to:

        (i)     "ASSETS" includes present and future properties, revenues and
                rights of every description;

        (ii)    a "CHANGE OF CONTROL" shall be deemed to have occurred if (a)
                any person or group (within the meaning of Rule 13d-5 of the
                Securities and Exchange commission as in effect on the date of
                this Agreement) shall own directly or indirectly, beneficially
                or of record, shares representing more than 20 per cent. of the
                aggregate ordinary voting power represented by the issued and
                outstanding capital stock of the Guarantor; or (b) a majority of
                the seats (other than vacant seats) on the board of directors of
                the Guarantor shall at any time have been occupied by persons
                who were neither (i) nominated by the board of directors of the
                Guarantor, nor (ii) appointed by directors so nominated; or (c)
                any person or group shall otherwise directly or indirectly
                control the Guarantor.

        (iii)   the "EUROPEAN INTERBANK MARKET" means the interbank market for
                euro operating in Participating Member States;

        (iv)    a "FINANCE DOCUMENT" or any other agreement or instrument is a
                reference to that Finance Document or other agreement or
                instrument as amended or novated;

        (v)     a "GUARANTEE" of or by any person means any obligation,
                contingent or otherwise, of such person guaranteeing or having
                the economic effect of guaranteeing any Indebtedness of any
                other person (the "PRIMARY OBLIGOR") in any manner, whether
                directly or indirectly, and including any obligation of such
                person, direct or indirect, (a) to purchase or pay (or advance
                or supply funds for the purchase or payment of) such
                Indebtedness or to purchase (or to advance or supply funds for
                the purchase of) any security for the payment of such
                Indebtedness, (b) to purchase property, securities or services
                for the purpose of assuring the owner of such Indebtedness of
                the payment of such Indebtedness or (c) to maintain working
                capital, equity capital or other financial statement condition
                or liquidity of the primary obligor so as to enable the primary
                obligor to pay such Indebtedness; provided, however, that the
                term guarantee shall not include endorsements for collection or
                deposit, in either case in the ordinary course of business;

        (vi)    a "PERSON" includes any person, firm, company, corporation,
                government, state or agency of a state or any association, trust
                or partnership (whether or not having separate legal
                personality) or two or more of the foregoing;

        (vii)   a "REGULATION" includes any regulation, rule, official
                directive, request or guideline (whether or not having the force
                of law) of any governmental, intergovernmental or supranational
                body, agency, department or regulatory, self-regulatory or other
                authority or organisation;

        (viii)  a provision of law is a reference to that provision as amended
                or re-enacted; and

        (ix)    unless a contrary indication appears, a time of day is a
                reference to London time.

(b)     Section, Clause and Schedule headings are for ease of reference only.

(c)     Unless a contrary indication appears, a term used in any other Finance
        Document or in any notice given under or in connection with any Finance
        Document has the same meaning in that Finance Document or notice as in
        this Agreement.

                                      -10-
<PAGE>   12
(d)     A Default (other than an Event of Default) is "CONTINUING" if it has not
        been remedied or waived and an Event of Default is "CONTINUING" if it
        has not been waived or otherwise cured.

1.3     THIRD PARTY RIGHTS

        A person who is not a party to this Agreement has no right under the
        Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the
        benefit of any term of this Agreement.

2.      THE FACILITY

        Subject to the terms of this Agreement, the Lender makes available to
        the Borrowers a multicurrency 364-day renewable revolving loan facility
        with a term-out option in an aggregate amount equal to the Commitment.

3.      PURPOSE

3.1     PURPOSE

        Each Borrower shall apply all amounts borrowed by it under the Facility
        towards (i) the financing of the Group's working capital requirements
        (which, for the avoidance of doubt, shall exclude an acquisition by a
        member of the Group which is not recommended by the relevant acquiree or
        its shareholders) or (ii) supporting issues by the Group of commercial
        paper.

3.2     MONITORING

        The Lender is not bound to monitor or verify the application of any
        amount borrowed pursuant to this Agreement.

4.      CONDITIONS OF UTILISATION

4.1     INITIAL CONDITIONS PRECEDENT

        No Borrower may deliver a Utilisation Request unless the Lender has
        received all of the documents and other evidence listed in Schedule 1
        (Conditions Precedent) in form and substance satisfactory to the Lender.
        The Lender shall notify the Guarantor promptly upon being so satisfied.

4.2     FURTHER CONDITIONS PRECEDENT

        The Lender will only be obliged to comply with Clause 5.4 (Availability
        of Loans) if on the date of the Utilisation Request and on the proposed
        Utilisation Date:

        (a)     in the case of a Rollover Loan, no Event of Default is
                continuing or would result from the proposed Loan and, in the
                case of any other Loan, no Default is continuing or would result
                from the proposed Loan; and

        (b)     the Repeating Representations to be made by each Obligor are
                true in all material respects.

4.3     CONDITIONS RELATING TO OPTIONAL CURRENCIES

(a)     A currency will constitute an Optional Currency in relation to a Loan
        if:

        (i)     it is readily available in the amount required and freely
                convertible into the Base Currency in the Relevant Interbank
                Market on the Quotation Day and the Utilisation Date for that
                Loan; and

                                      -11-
<PAGE>   13
        (ii)    it has been approved by the Lender on or prior to receipt by the
                Lender of the relevant Utilisation Request for that Loan.

(b)     If the euro constitutes an Optional Currency at any time, a Loan will
        only be made available in the euro unit or any other units of the euro
        agreed by the Lender.

4.4     MAXIMUM NUMBER OF LOANS/CURRENCIES

        A Borrower may not deliver a Utilisation Request if as a result of the
        proposed Utilisation more than six Loans would be outstanding. Loans may
        not be outstanding in more than three currencies at any one time.

5.      UTILISATION

5.1     DELIVERY OF A UTILISATION REQUEST

        A Borrower may utilise the Facility by delivery to the Lender of a duly
        completed Utilisation Request not later than 3:00 p.m. one Business Day
        before the Utilisation Date, in the case of Loans in Sterling or
        Dollars, and not later than 3:00 p.m. three Business Days before the
        Utilisation Date, in any other case.

5.2     COMPLETION OF A UTILISATION REQUEST

(a)     Each Utilisation Request is irrevocable and will not be regarded as
        having been duly completed unless:

        (i)     the proposed Utilisation Date is a Business Day within the
                Availability Period;

        (ii)    the currency and amount of the Utilisation comply with Clause
                5.3 (Currency and amount);

        (iii)   the proposed Interest Period complies with Clause 10 (Interest
                Periods); and

        (iv)    it specifies the account and bank (which must be in the
                principal financial centre of the country of the currency of the
                Utilisation or, in the case of euro, the principal financial
                centre of a Participating Member State in which banks are open
                for general business on that day or London) to which the
                proceeds of the Utilisation are to be credited.

(b)    Only one Loan may be requested in each Utilisation Request.

5.3     CURRENCY AND AMOUNT

(a)     The currency specified in a Utilisation Request must be the Base
        Currency or an Optional Currency.

(b)     The amount of the proposed Loan must be an amount which is not more than
        the Available Commitment and which is a minimum of $5,000,000 (and
        integral multiples of $1,000,000) or, if less, the Available Commitment.

5.4     AVAILABILITY OF LOANS

        If the conditions set out in this Agreement have been met, the Lender
        shall make each Loan available through its Facility Office.

6.      OPTIONAL CURRENCIES

6.1     SELECTION OF CURRENCY

        A Borrower shall select the currency of a Loan in the Utilisation
        Request.

                                      -12-
<PAGE>   14
6.2     UNAVAILABILITY OF A CURRENCY

        If before 3.00 p.m. on any Quotation Day:

        (a)     the Optional Currency requested is not readily available to the
                Lender in the amount required; or

        (b)     compliance with the Lender's obligation to make available a Loan
                in the proposed Optional Currency would contravene a law or
                regulation applicable to it;

        the Lender will give notice to the relevant Borrower to that effect by
        5.00 p.m. on that day. In this event, the Lender will be required to
        make the Loan available in the Base Currency (in an amount equal to the
        Base Currency Amount or, in respect of a Rollover Loan, an amount equal
        to the Base Currency Amount of the maturing Loan that is due to be
        repaid).

6.3     EXCHANGE RATE MOVEMENTS
(a)     In respect of successive Interest Periods of a Term Loan denominated in
        a currency (other than the Base Currency), the Lender shall calculate
        the amount of the Term Loan in that currency for the next following
        Interest Period (by calculating the amount of that currency equal to the
        Base Currency Amount of that Term Loan at the Lender's Spot Rate of
        Exchange three Business Days before the next following Interest Period
        and (subject to paragraph (b) below):

        (i)     if the amount calculated is less than the existing amount of
                that Term Loan in the relevant currency during the then current
                Interest Period, promptly notify the relevant Borrower that the
                Borrower shall pay, on the last day of that Interest Period, an
                amount equal to the difference; or

        (ii)    if the amount calculated is more than the existing amount of
                that Term Loan in the relevant currency during the then current
                Interest Period, the Lender shall, if no Event of Default is
                continuing, on the last day of that Interest Period, pay an
                amount equal to the difference.

(b)     If the calculation made by the Lender pursuant to paragraph (a) above
        shows that the amount of the Term Loan in the relevant currency has
        increased or decreased by less than 5 per cent. compared to its Base
        Currency Amount, no notification shall be made by the Lender and no
        payment shall be required under paragraph (a) above.

7.      REPAYMENT

7.1     REPAYMENT OF LOANS

(a)     Subject to Clause 7.2 (Term-Out), each Loan drawn by a Borrower shall be
        repaid on the last day of its Interest Period.

(b)     Each Term Loan that a Borrower has drawn following an exercise of the
        Term-Out Option shall be repaid on the Final Maturity Date (as
        determined in accordance with Clause 7.2 (Term-Out)).

(c)    Any Term Loan which is repaid may not be reborrowed.

7.2     TERM-OUT

(a)     A Borrower may on or prior to the Final Maturity Date specified in
        paragraph (a) of that definition (the "TERM-OUT DATE") convert all or
        part of the Revolving Loans advanced to it and outstanding at the close
        of business on the Term-Out Date into Term Loans (in the same currency
        as the

                                      -13-
<PAGE>   15
        Revolving Loan from which they are being converted) and/or draw further
        Term Loans (the "TERM-OUT OPTION") by delivery to the Lender of:

        (i)     a Term-Out Notice at least 5 days' prior to the Term-Out Date;
                and

        (ii)    a duly completed Utilisation Request in relation to each Loan
                being converted pursuant to this Clause 7.2 and any further Term
                Loan the Borrower may request, in each case in accordance with
                Clause 5.1 (Delivery of a Utilisation Request).

(b)     In the Term-Out Notice, the relevant Borrower shall specify:

        (i)     the date to which the Final Maturity Date for each Term Loan
                converted from a Revolving Loan is to be extended, which date
                shall be no later than the date falling 5 years after the date
                of this Agreement;

        (ii)    the extent to which the Revolving Loans are to be converted, if
                the Borrower does not intend to convert all Revolving Loans;

        (iii)   any further Term Loan to be requested; and

        (iv)    the Final Maturity Date for any further Term Loan requested,
                which date shall be no later than the date falling 5 years after
                the date of this Agreement.

(c)     If a Borrower has exercised the Term-Out Option, on the Term-Out Date:

        (i)     any part of Revolving Facility which remains undrawn at close of
                business on that date shall be cancelled;

        (ii)    to the extent that it is not to be converted into a Term Loan,
                the Borrower shall repay each Revolving Loan;

        (iii)   save as provided in paragraph (c) (ii) above, each Revolving
                Loan shall be converted into a Term Loan; and

        (iv)    the then Final Maturity Date shall be extended as provided in
                Clause 7.2(b)(i) and, if applicable, (iv).

7.3     EXTENSION

(a)     The Guarantor may, not earlier than 30 and not later than 15 days prior
        to the end of the Availability Period by notice to the Lender request an
        extension to the Availability Period subject to the provisions of this
        Clause 7.3.

(b)     Upon receipt of any such request, the Lender shall undertake a full
        credit assessment of the Obligors. The Lender shall not be under any
        obligation to extend the Availability Period.

(c)     If the Guarantor requests an extension of the Availability Period the
        Lender shall, at its absolute discretion, have the option to:

        (i)     subject to paragraph (d) below, extend the Availability Period
                for a further period of 364 days from the date on which the
                Availability Period is then due to expire; or

        (ii)    decline such request, in which event the Commitment shall be
                cancelled on the date the Availability Period is then due to
                expire.

(d)     The Availability Period may be extended more than once pursuant to this
        Clause 7.3 provided that no extension of the Availability Period shall
        be made if the Term-Out Option has been exercised.

                                      -14-
<PAGE>   16
8.      PREPAYMENT AND CANCELLATION

8.1     ILLEGALITY

        If it becomes unlawful in any jurisdiction for the Lender to perform any
        of its obligations as contemplated by this Agreement or to fund any
        Loan:

        (a)     the Lender shall promptly notify the Guarantor upon becoming
                aware of that event;

        (b)     upon the Lender notifying the Guarantor, the Commitment will be
                immediately cancelled; and

        (c)     each Borrower shall repay the Loans made to that Borrower on the
                last day of the Interest Period for each Loan occurring after
                the Lender has notified the Guarantor or, if earlier, the date
                specified by the Lender in the notice delivered to the Guarantor
                (being no earlier than the last day of any applicable grace
                period permitted by law).

8.2     VOLUNTARY CANCELLATION

        The Guarantor may, if it gives the Lender not less than 10 Business
        Days' prior notice, cancel the whole or any part (being a minimum amount
        of $10,000,000 and integral multiples thereof) of the Available
        Commitment.

8.3     VOLUNTARY PREPAYMENT OF LOANS

        The relevant Borrower to which a Loan has been made may, if it gives the
        Lender not less than 10 Business Days' prior notice, prepay the whole or
        any part of a Loan (but, if in part, being an amount that reduces the
        Base Currency Amount of the Loan by a minimum amount of $5,000,000 and
        integral multiples thereof).

8.4     RESTRICTIONS

(a)     Any notice of cancellation or prepayment given by any Party under this
        Clause 8 shall be irrevocable and, unless a contrary indication appears
        in this Agreement, shall specify the date or dates upon which the
        relevant cancellation or prepayment is to be made and the amount of that
        cancellation or prepayment.

(b)     Any prepayment under this Agreement shall be made together with accrued
        interest on the amount prepaid and, subject to any Break Costs, without
        premium or penalty.

(c)     Unless a contrary indication appears in this Agreement, any part of the
        Facility which is prepaid may be reborrowed in accordance with the terms
        of this Agreement.

(d)     The Borrowers shall not repay or prepay all or any part of the Loans and
        the Guarantor shall not cancel all or any part of the Commitment except
        at the times and in the manner expressly provided for in this Agreement.

(e)     No amount of the Commitment cancelled under this Agreement may be
        subsequently reinstated.

9.      INTEREST

9.1     CALCULATION OF INTEREST

        The rate of interest on each Loan for each Interest Period is the
        percentage rate per annum which is the aggregate of the applicable:

        (a)     Margin;

        (b)     LIBOR; and

                                      -15-
<PAGE>   17
        (c)     Mandatory Cost, if any.

9.2     PAYMENT OF INTEREST

        The Borrower to which a Loan has been made shall pay accrued interest on
        each Loan on the last day of each Interest Period (and, if the Interest
        Period is longer than three Months, on the dates falling at three
        monthly intervals after the first day of the Interest Period).

9.3     DEFAULT INTEREST

(a)     If an Obligor fails to pay any amount payable by it under a Finance
        Document on its due date, interest shall accrue on the overdue amount
        from the due date up to the date of actual payment (both before and
        after judgment) at a rate which is the sum of one per cent. and the rate
        which would have been payable if the overdue amount had, during the
        period of non-payment, constituted a Loan in the currency of the overdue
        amount for successive Interest Periods, each of a duration selected by
        the Lender (acting reasonably).

(b)     However if the overdue amount is principal of a Loan and became due on a
        day other than the last day of an Interest Period relating to that Loan,
        the first Interest Period applicable to that overdue amount shall be of
        a duration equal to the unexpired portion of that Interest Period and
        the rate of interest on that overdue amount for that Interest Period
        shall be the sum of one per cent. and the rate applicable to it
        immediately before it became due.

(c)     Any interest accruing under this Clause 9.3 shall be immediately payable
        by the relevant Obligor on demand by the Lender.

(d)     Default interest (if unpaid) arising on an overdue amount will be
        compounded with the overdue amount at the end of each Interest Period
        applicable to that overdue amount but will remain immediately due and
        payable.

9.4     NOTIFICATION OF RATES OF INTEREST

        The Lender shall promptly notify the relevant Borrower of the
        determination of a rate of interest under this Agreement.

10.     INTEREST PERIODS

10.1    SELECTION OF INTEREST PERIODS

(a)     A Borrower (or the Guarantor on behalf of a Borrower) may select an
        Interest Period for a Loan in the Utilisation Request for that Loan or
        (in relation to a Term Loan that has already been borrowed) in a
        Selection Notice.

(b)     Each Selection Notice for a Term Loan is irrevocable and must be
        delivered to the Lender by a Borrower (or the Guarantor on behalf of a
        Borrower) not later than 3:00 p.m. one Business Day before the first day
        of the relevant Interest Period, in the case of Loans in Sterling or
        Dollars, and not later than 3:00 p.m. three Business Days before the
        first day of the relevant Interest Period, in any other case.

(c)     If the Borrower (or the Guarantor on behalf of a Borrower) does not
        deliver a Selection Notice to the Lender in accordance with paragraph
        (b) above, the relevant Interest Period will be three Months.

(d)     Subject to this Clause 10, a Borrower (or the Guarantor) may select an
        Interest Period of one, two, three or six Months or such other period
        not exceeding 12 months agreed between the Borrower and the Lender.

                                      -16-
<PAGE>   18
(e)     An Interest Period for a Loan shall not extend beyond the Final Maturity
        Date.

(f)     A Revolving Loan has one Interest Period only.

(g)     Each Interest Period for a Term Loan shall start on the Term-Out Date or
        (if already made) the last day of its preceding Interest Period.

10.2    NON-BUSINESS DAYS

        If an Interest Period would otherwise end on a day which is not a
        Business Day, that Interest Period will instead end on the next Business
        Day in that calendar month (if there is one) or the preceding Business
        Day (if there is not).

11.    CHANGES TO THE CALCULATION OF INTEREST

11.1    MARKET DISRUPTION

(a)     If a Market Disruption Event occurs in relation to a Loan for any
        Interest Period, then the rate of interest on that Loan for the Interest
        Period shall be the rate per annum which is the sum of:

        (i)     the Margin;

        (ii)    the rate notified to the relevant Borrower by the Lender as soon
                as practicable and in any event before interest is due to be
                paid in respect of that Interest Period, to be that which
                expresses as a percentage rate per annum the cost to the Lender
                of funding that Loan from whatever source it may reasonably
                select; and

        (iii)   the Mandatory Cost, if any, applicable to that Loan.

(b)     In this Agreement "MARKET DISRUPTION EVENT" means:

        (i)     at or about noon on the Quotation Day for the relevant Interest
                Period the Screen Rate is not available and the Lender is unable
                to provide a quotation to determine LIBOR for the relevant
                currency and period; or

        (ii)    before close of business in London on the Quotation Day for the
                relevant Interest Period, the relevant Borrower receives
                notification from the Lender that the cost to it of obtaining
                matching deposits in the Relevant Interbank Market would be in
                excess of LIBOR.

11.2    ALTERNATIVE BASIS OF INTEREST OR FUNDING

(a)     If a Market Disruption Event occurs and the Lender or the relevant
        Borrower so requires, the Lender and the relevant Borrower shall enter
        into negotiations (for a period of not more than 30 days) with a view to
        agreeing a substitute basis for determining the rate of interest.

(b)     Any alternative basis agreed pursuant to paragraph (a) above shall, with
        the prior consent of the Lender and the relevant Borrower, be binding on
        all Parties.

11.3    BREAK COSTS

(a)     Each Borrower shall, within three Business Days of demand by the Lender,
        pay to the Lender its Break Costs attributable to all or any part of a
        Loan or Unpaid Sum being paid by that Borrower on a day other than the
        last day of an Interest Period for that Loan or Unpaid Sum.

(b)     The Lender shall, as soon as reasonably practicable after a demand by
        the relevant Borrower, provide a certificate confirming the amount of
        its Break Costs for any Interest Period in which they accrue.

                                      -17-
<PAGE>   19
12.     FEES

12.1    COMMITMENT FEE

(a)     The Guarantor shall pay to the Lender a commitment fee in Dollars
        computed at the rate of 0.15 per cent. per annum on the Available
        Commitment from day to day during the Availability Period.

(b)     The accrued commitment fee is payable in arrears quarterly from the date
        of this Agreement and on the Final Maturity Date in respect of the
        Revolving Loan or any earlier date on which the Lender's Commitment is
        reduced to zero.

12.2    UTILISATION FEE

(a)     The Guarantor shall pay to the Lender a utilisation fee in Dollars
        computed at the rate of 0.10 per cent. per annum on the aggregate amount
        of the Loans outstanding payable in respect of each day that the Base
        Currency Amount of all Loans exceeds 33 per cent. of the Commitment on
        that day.

(b)     The accrued utilisation fee is payable on the last day of each
        successive period of three Months commencing on the date of this
        Agreement and on the Final Maturity Date.

13.     TAX GROSS UP AND INDEMNITIES

13.1    DEFINITIONS

(a)     In this Clause 13:

        "QUALIFYING LENDER" means a person which is (on the date a payment falls
        due) within the charge to United Kingdom corporation tax as respects
        that payment and was a bank (as defined for the purpose of section 349
        of the Taxes Act in section 840A of the Taxes Act) at the time the
        relevant Loan was made.

        "TAX CREDIT" means a credit against, relief or remission for, or
        repayment of any Tax.

        "TAX DEDUCTION" means a deduction or withholding for or on account of
        Tax from a payment under a Finance Document.

        "TAX PAYMENT" means an increased payment made by an Obligor to the
        Lender under Clause 13.2 (Tax gross-up) or a payment under Clause 13.3
        (Tax indemnity).

        "TREATY LENDER" means a person which is (on the date a payment falls
        due) entitled to that payment under a double Taxation agreement in force
        on that date (subject to the completion of any necessary procedural
        formalities) without a Tax Deduction.

(b)     In this Clause 13 a reference to "DETERMINES" or "DETERMINED" means a
        determination made in the absolute discretion of the person making the
        determination.

13.2    TAX GROSS-UP

(a)     Each Obligor shall make all payments to be made by it without any Tax
        Deduction, unless a Tax Deduction is required by law.

(b)     The Guarantor or the Lender shall promptly upon becoming aware that an
        Obligor must make a Tax Deduction (or that there is any change in the
        rate or the basis of a Tax Deduction) notify the other party
        accordingly.

(c)     If a Tax Deduction is required by law to be made by an Obligor the
        amount of the payment due from that Obligor shall, subject to paragraphs
        (d) and (e) below, be increased to an amount

                                      -18-
<PAGE>   20
        which (on a net after Tax basis) leaves an amount equal to the payment
        which would have been due if no Tax Deduction had been required.

(d)     In the case of a Tax Deduction required by law to be made by Harsco
        Investment Limited, paragraph (c) shall only apply if the Lender:

        (i)     is a Qualifying Lender or a Treaty Lender, unless Harsco
                Investment Limited is able to demonstrate the Tax Deduction is
                required to be made as a result of the Lender (as a Treaty
                Lender) failing to comply with paragraph (h) below; or

        (ii)    is not or has ceased to be a Qualifying Lender or, as the case
                may be, Treaty Lender to the extent that this altered status
                results from any change after the date of this Agreement in (or
                in the interpretation, administration, or application of) any
                law or double Taxation agreement or any published practice or
                published concession of any relevant Taxing authority.

(e)     In the case of a Tax Deduction for or on account of US Federal
        withholding tax required by law to be made by the US Obligor, paragraph
        (c) shall only apply if the Lender is:

        (i)     a Treaty Lender unless the US Obligor is able to demonstrate the
                Tax Deduction is required to be made as a result of the Lender
                failing to comply with paragraph (h) below; or

        (ii)    is not or has ceased to be a Treaty Lender to the extent that
                this altered status results from any change after the date of
                this Agreement in (or in the interpretation, administration or
                application of) any law or double Taxation agreement or any
                published practice or published concession of any relevant Tax
                authority.

(f)     If an Obligor is required to make a Tax Deduction, that Obligor shall
        make that Tax Deduction and any payment required in connection with that
        Tax Deduction within the time allowed and in the minimum amount required
        by law.

(g)     Within 30 days of making either a Tax Deduction or any payment required
        in connection with that Tax Deduction, the Obligor making that Tax
        Deduction shall deliver to the Lender evidence reasonably satisfactory
        to the Lender that the Tax Deduction has been made or (as applicable)
        any appropriate payment paid to the relevant taxing authority.

(h)     The Lender as a Treaty Lender and each Obligor which makes a payment to
        which the Lender as a Treaty Lender is entitled shall co-operate in
        completing any procedural formalities necessary for that Obligor to
        obtain authorisation to make that payment without a Tax Deduction.

13.3    TAX INDEMNITY

(a)     If the Lender is or will be, for or on account of Tax, subject to any
        liability or required to make any payment in relation to a sum received
        or receivable (or any sum deemed for the purposes of Tax to be received
        or receivable) under a Finance Document, then the Guarantor shall
        (within three Business Days of demand by the Lender) pay to the Lender
        an amount equal to the loss, liability or cost which the Lender
        determines will be or has been (directly or indirectly) suffered by it
        for or on account of Tax.

(b)     Paragraph (a) above shall not apply with respect to any Tax assessed on
        the Lender:

                                      -19-
<PAGE>   21

        (i)     under the law of the jurisdiction in which the Lender is
                incorporated or, if different, the jurisdiction (or
                jurisdictions) in which the Lender is treated as resident for
                tax purposes; or

        (ii)    under the law of the jurisdiction in which the Lender's Facility
                Office is located in respect of amounts received or receivable
                in that jurisdiction,

        if that Tax is imposed on or calculated by reference to the net income
        received or receivable (but not any sum deemed to be received or
        receivable) by the Lender.

(c)     If the Lender makes, or intends to make, a claim pursuant to paragraph
        (a) above, it shall promptly notify the Guarantor of the event which
        will give, or has given, rise to the claim.

13.4    TAX CREDIT

        If an Obligor makes a Tax Payment and the Lender determines that:

        (i)     a Tax Credit is attributable to that Tax Payment; and

        (ii)    the Lender has obtained, utilised and retained that Tax Credit,

        the Lender shall pay an amount to the Obligor which the Lender
        determines will leave it (after that payment) in the same after-Tax
        position as it would have been in had the Tax Payment not been made by
        the Obligor.

13.5    STAMP TAXES

        The Guarantor shall pay and, within three Business Days of demand,
        indemnify the Lender against any cost, loss or liability the Lender
        incurs in relation to all stamp duty, registration and other similar
        Taxes payable in respect of any Finance Document.

13.6    VALUE ADDED TAX

(a)     All consideration payable under a Finance Document by an Obligor to the
        Lender shall be deemed to be exclusive of any VAT. If VAT is chargeable,
        the Obligor shall pay to the Lender (in addition to and at the same time
        as paying the consideration) an amount equal to the amount of the VAT.

(b)     Where a Finance Document requires an Obligor to reimburse the Lender for
        any costs or expenses, that Obligor shall also at the same time pay and
        indemnify the Lender against all VAT incurred by the Lender in respect
        of the costs or expenses.

14.     INCREASED COSTS

14.1    INCREASED COSTS

(a)     Subject to Clause 14.3 (Exceptions) the Guarantor shall, within three
        Business Days of a demand by the Lender, pay the Lender the amount of
        any Increased Costs incurred by the Lender or any of its Affiliates as a
        result of (i) the introduction of or any change in (or in the
        interpretation or application of) any law or regulation or (ii)
        compliance with any law or regulation made after the date of this
        Agreement.

(b)     In this Agreement "INCREASED COSTS" means:

        (i)     a reduction in the rate of return from the Facility or on the
                Lender's (or its Affiliate's) overall capital;

        (ii)    an additional or increased cost; or

                                      -20-
<PAGE>   22
        (iii)   a reduction of any amount due and payable under any Finance
                Document,

        which is incurred or suffered by the Lender or any of its Affiliates to
        the extent that it is attributable to the Lender having entered into its
        Commitment or funding or performing its obligations under any Finance
        Document.

14.2    INCREASED COST CLAIMS

(a)     If the Lender intends to make a claim pursuant to Clause 14 .1
        (Increased costs) it shall notify the Guarantor of the event giving rise
        to the claim.

(b)     The Lender shall, as soon as practicable after a demand by the
        Guarantor, provide a certificate confirming the amount of its Increased
        Costs.

14.3    EXCEPTIONS

(a)     Clause 14.1 (Increased costs) does not apply to the extent any Increased
        Cost is:

        (i)     attributable to a Tax Deduction required by law to be made by an
                Obligor;

        (ii)    compensated for by Clause 13.3 (Tax indemnity) (or would have
                been compensated for under Clause 13.3 (Tax indemnity) but was
                not so compensated solely because one of the exclusions in
                paragraph (b) of Clause 13.3 (Tax indemnity) applied);

        (iii)   compensated for by the payment of the Mandatory Cost; or

        (iv)    attributable to the wilful breach, or breach resulting from
                gross negligence, by the Lender or its Affiliates of any law or
                regulation.

(b)     In this Clause 14.3, a reference to a "TAX DEDUCTION" has the same
        meaning given to the term in Clause 13.1 (Definitions).

15.     OTHER INDEMNITIES

15.1    CURRENCY INDEMNITY

(a)     If any sum due from an Obligor under the Finance Documents (a "SUM"), or
        any order, judgment or award given or made in relation to a Sum, has to
        be converted from the currency (the "FIRST CURRENCY") in which that Sum
        is payable into another currency (the "SECOND CURRENCY") for the purpose
        of:

        (i)     making or filing a claim or proof against that Obligor;

        (ii)    obtaining or enforcing an order, judgment or award in relation
                to any litigation or arbitration proceedings,

        that Obligor shall as an independent obligation, within three Business
        Days of demand, indemnify the Lender against any cost, loss or liability
        arising out of or as a result of the conversion including any
        discrepancy between (A) the rate of exchange used to convert that Sum
        from the First Currency into the Second Currency and (B) the rate or
        rates of exchange available to that person at the time of its receipt of
        that Sum.

(b)     Each Obligor waives any right it may have in any jurisdiction to pay any
        amount under the Finance Documents in a currency or currency unit other
        than that in which it is expressed to be payable.

                                      -21-
<PAGE>   23
15.2    OTHER INDEMNITIES

        The Guarantor shall, within three Business Days of demand, indemnify the
        Lender against any cost, loss or liability incurred by the Lender as a
        result of:

        (a)     the occurrence of any Event of Default;

        (b)     a failure by an Obligor to pay any amount due under a Finance
                Document on its due date;

        (c)     funding, or making arrangements to fund, a Loan requested by a
                Borrower in a Utilisation Request but not made by reason of the
                operation of any one or more of the provisions of this Agreement
                (other than by reason of default or negligence by the Lender
                alone); or

        (d)     a Loan (or part of a Loan) not being prepaid in accordance with
                a notice of prepayment given by a Borrower or the Guarantor.

15.3    INDEMNITY TO THE LENDER

        The Guarantor shall promptly indemnify the Lender against any cost, loss
        or liability incurred by the Lender (acting reasonably) as a result of:

        (a)     investigating any event which it reasonably believes is a
                Default;

        (b)     entering into or performing any foreign exchange contract for
                the purposes of Clause 6 (Optional Currencies); or

        (c)     acting or relying on any notice, request or instruction which it
                reasonably believes to be genuine, correct and appropriately
                authorised.

16.     MITIGATION BY THE LENDER

16.1    MITIGATION

(a)     The Lender shall, in consultation with the Guarantor, take all
        reasonable steps to mitigate any circumstances which arise and which
        would result in any amount becoming payable under, or cancelled pursuant
        to, any of Clause 8.1 (Illegality), Clause 13 (Tax gross-up and
        indemnities) or Clause 14 (Increased costs) including (but not limited
        to) transferring its rights and obligations under the Finance Documents
        to another Affiliate or Facility Office.

(b)     Paragraph (a) above does not in any way limit the obligations of any
        Obligor under the Finance Documents.

16.2    LIMITATION OF LIABILITY

(a)     The Guarantor shall indemnify the Lender for all costs and expenses
        reasonably incurred by the Lender as a result of steps taken by it under
        Clause 16.1 (Mitigation).

(b)     The Lender is not obliged to take any steps under Clause 16.1
        (Mitigation) if, in its opinion (acting reasonably), to do so might be
        prejudicial to it.

17.     COSTS AND EXPENSES

17.1    TRANSACTION EXPENSES

        The Guarantor shall promptly on demand pay the Lender the amount of all
        costs and expenses (including legal fees) reasonably incurred by it in
        connection with the negotiation, preparation, printing and execution of:

                                      -22-
<PAGE>   24
        (a)     this Agreement and any other documents referred to in this
                Agreement; and

        (b)     any other Finance Documents executed after the date of this
                Agreement.

17.2    AMENDMENT COSTS

        If (a) an Obligor requests an amendment, waiver or consent or (b) an
        amendment is required pursuant to Clause 28.8 (Change of currency), the
        Guarantor shall, within three Business Days of demand, reimburse the
        Lender for the amount of all costs and expenses (including legal fees)
        reasonably incurred by the Lender in responding to, evaluating,
        negotiating or complying with that request or requirement.

17.3    ENFORCEMENT COSTS

        The Guarantor shall, within three Business Days of demand, pay to the
        Lender the amount of all costs and expenses (including legal fees)
        incurred by the Lender in connection with the enforcement of, or the
        preservation of any rights under, any Finance Document.

18.     GUARANTEE AND INDEMNITY

18.1    GUARANTEE AND INDEMNITY

        The Guarantor irrevocably and unconditionally:

        (a)     guarantees to the Lender punctual performance by each Borrower
                of all that Borrower's obligations under the Finance Documents;

        (b)     undertakes with the Lender that whenever a Borrower does not pay
                any amount when due under or in connection with any Finance
                Document, the Guarantor shall immediately on demand pay that
                amount as if it was the principal obligor; and

        (c)     indemnifies the Lender immediately on demand against any cost,
                loss or liability suffered by the Lender if any obligation
                guaranteed by it is or becomes unenforceable, invalid or
                illegal. The amount of the cost, loss or liability shall be
                equal to the amount which the Lender would otherwise have been
                entitled to recover.

18.2    CONTINUING GUARANTEE

        This guarantee is a continuing guarantee and will extend to the ultimate
        balance of sums payable by any Obligor under the Finance Documents,
        regardless of any intermediate payment or discharge in whole or in part.

18.3    REINSTATEMENT

        If any payment by an Obligor or any discharge given by the Lender
        (whether in respect of the obligations of any Obligor or any security
        for those obligations or otherwise) is avoided or reduced as a result of
        insolvency or any similar event:

        (a)     the liability of each Obligor shall continue as if the payment,
                discharge, avoidance or reduction had not occurred; and

        (b)     the Lender shall be entitled to recover the value or amount of
                that security or payment from each Obligor, as if the payment,
                discharge, avoidance or reduction had not occurred.

18.4    WAIVER OF DEFENCES

        The obligations of the Guarantor under this Clause 18 will not be
        affected by an act, omission, matter or thing which, but for this
        Clause, would reduce, release or prejudice any of its

                                      -23-
<PAGE>   25
        obligations under this Clause 18 (without limitation and whether or not
        known to it or the Lender) including:

        (a)     any time, waiver or consent granted to, or composition with, any
                Obligor or other person;

        (b)     the release of the Guarantor or any other person under the terms
                of any composition or arrangement with any creditor of any
                member of the Group;

        (c)     the taking, variation, compromise, exchange, renewal or release
                of, or refusal or neglect to perfect, take up or enforce, any
                rights against, or security over assets of, any Obligor or other
                person or any non-presentation or non-observance of any
                formality or other requirement in respect of any instrument or
                any failure to realise the full value of any security;

        (d)     any incapacity or lack of power, authority or legal personality
                of or dissolution or change in the members or status of an
                Obligor or any other person;

        (e)     any amendment (however fundamental) or replacement of a Finance
                Document or any other document or security;

        (f)     any unenforceability, illegality or invalidity of any obligation
                of any person under any Finance Document or any other document
                or security; or

        (g)     any insolvency or similar proceedings.

18.5    IMMEDIATE RECOURSE

        The Guarantor waives any right it may have of first requiring the Lender
        (or any trustee or agent on its behalf) to proceed against or enforce
        any other rights or security or claim payment from any person before
        claiming from the Guarantor under this Clause 18. This waiver applies
        irrespective of any law or any provision of a Finance Document to the
        contrary.

18.6    APPROPRIATIONS

        Until all amounts which may be or become payable by the Obligors under
        or in connection with the Finance Documents have been irrevocably paid
        in full, the Lender (or any trustee or agent on its behalf) may:

        (a)     refrain from applying or enforcing any other moneys, security or
                rights held or received by the Lender (or any trustee or agent
                on its behalf) in respect of those amounts, or apply and enforce
                the same in such manner and order as it sees fit (whether
                against those amounts or otherwise) and the Guarantor shall not
                be entitled to the benefit of the same; and

        (b)     hold in an interest-bearing suspense account any moneys received
                from the Guarantor or on account of the Guarantor's liability
                under this Clause 18.

18.7    DEFERRAL OF GUARANTOR'S RIGHTS

        Until all amounts which may be or become payable by the Obligors under
        or in connection with the Finance Documents have been irrevocably paid
        in full and unless the Lender otherwise directs, the Guarantor will not
        exercise any rights which it may have by reason of performance by it of
        its obligations under the Finance Documents:

        (a)     to be indemnified by a Borrower;

                                      -24-
<PAGE>   26
        (b)     to claim any contribution from any other guarantor of the
                Borrowers' obligations under the Finance Documents; and/or

        (c)     to take the benefit (in whole or in part and whether by way of
                subrogation or otherwise) of any rights of the Lender under the
                Finance Documents or of any other guarantee or security taken
                pursuant to, or in connection with, the Finance Documents by the
                Lender.

18.8    ADDITIONAL SECURITY

        This guarantee is in addition to and is not in any way prejudiced by any
        other guarantee or security now or subsequently held by the Lender.

19.     REPRESENTATIONS

        Each Obligor makes the representations and warranties set out in this
        Clause 19 to the Lender on the date of this Agreement.

19.1    STATUS

(a)     It is a company or corporation, duly organised, validly existing and in
        good standing under the law of its jurisdiction of incorporation.

(b)     It and each of its Subsidiaries has the power to own its assets and
        carry on its business as it is being conducted.

19.2    BINDING OBLIGATIONS

        The obligations expressed to be assumed by it in each Finance Document
        are, except as such enforceability may be limited by (a) bankruptcy,
        insolvency, reorganisation, moratorium or similar laws of general
        applicability affecting the enforcement of creditors' rights and (b) the
        application of general principles of equity (regardless of whether such
        enforceability is considered in a proceeding in equity or at law),
        legal, valid, binding and enforceable obligations.

19.3    NON-CONFLICT WITH OTHER OBLIGATIONS

        The entry into and performance by it of, and the transactions
        contemplated by, the Finance Documents do not and will not conflict
        with:

        (a)     any law or regulation applicable to it;

        (b)     the constitutional documents of any member of the Group; or

        (c)     any agreement or instrument binding upon it or any member of the
                Group or any of its or any member of the Group's assets.

19.4    POWER AND AUTHORITY

        It has the power to enter into, perform and deliver, and has taken all
        necessary action to authorise its entry into, performance and delivery
        of, the Finance Documents to which it is a party and the transactions
        contemplated by those Finance Documents.

19.5    VALIDITY AND ADMISSIBILITY IN EVIDENCE

        All Authorisations required or desirable:

        (a)     to enable it lawfully to enter into, exercise its rights and
                comply with its obligations in the Finance Documents to which it
                is a party; and

        (b)     to make the Finance Documents to which it is a party admissible
                in evidence in its jurisdiction of incorporation,

                                      -25-
<PAGE>   27
        have been obtained or effected and are in full force and effect.

19.6    DUTCH PROVISIONS

        Harsco Finance B.V. meets the criteria set out in the Regulation of the
        Dutch Minister of Finance of 4 February 1993 (Stcrt. 1993, 29) and will
        not therefore qualify as a credit institution (kredietinstelling) within
        the meaning of the Dutch 1992 Act on the Supervision of the Credit
        System (Wet toezicht kredietwezen 1992).

19.7    DEDUCTION OF TAX

        It is not required under the law of its jurisdiction of incorporation or
        organisation (as the case may be) (or, in the case of the US Obligor,
        under the law of the USA or any state thereof) to make any deduction for
        or on account of Tax from any payment it may make under any Finance
        Document.

19.8    TAXES

        (a)     As of the date of this Agreement, the Guarantor and its Domestic
                Subsidiaries are members of an affiliated group of corporations
                filing consolidated returns for Federal income tax purposes, of
                which the Guarantor is the "common parent" (within the meaning
                of Section 1504 of the Code) of such group. The Guarantor and
                its Subsidiaries have filed all Federal income tax returns and
                all other material tax returns that are required to be filed by
                them and have paid all Taxes due pursuant to such returns or
                pursuant to any assessment received by the Guarantor or any of
                its Subsidiaries. The charges, accruals and reserves on the
                books of the Guarantor and its Subsidiaries in respect of Taxes
                and other governmental charges are, in the opinion of the
                Guarantor, adequate. The Guarantor has not been given or been
                requested to give a waiver of the statute of limitations
                relating to the payment of Federal, state, local and foreign
                Taxes or other impositions.

        (b)     Under the law of its jurisdiction of incorporation or
                organisation (as the case may be) (or, in the case of the US
                Obligor, under the law of the USA or any state thereof) it is
                not necessary that the Finance Documents be filed, recorded or
                enrolled with any court or other authority in that jurisdiction
                or that any stamp, registration or similar tax be paid on or in
                relation to the Finance Documents or the transactions
                contemplated by the Finance Documents.

19.9    NO DEFAULT

(a)     No Event of Default is continuing or might reasonably be expected to
        result from the making of any Utilisation.

(b)     No other event or circumstance is outstanding which constitutes a
        default under any other agreement or instrument which is binding on it
        or any of its Subsidiaries or to which its (or its Subsidiaries') assets
        are subject which might have a Material Adverse Effect.

19.10   TRUE AND COMPLETE DISCLOSURE

(a)     The information, reports, financial statements, exhibits and schedules
        furnished in writing by or on behalf of the Guarantor to the Lender in
        connection with the negotiation, preparation or delivery of the Finance
        Documents or included therein or delivered pursuant thereto, when taken
        as a whole, do not contain any untrue statement of material fact or omit
        to state any material fact necessary to make the statements herein or
        therein, in light of the circumstances under which they were made, not
        misleading.

                                      -26-
<PAGE>   28
(b)     All written information furnished after the date of this Agreement by
        the Guarantor and its Subsidiaries to the Lender in connection with the
        Finance Documents and the transactions contemplated thereby will be
        true, complete and accurate in every material respect, or (in the case
        of projections) based on reasonable estimates, on the date as of which
        such information is stated or certified. There is no fact known to the
        Guarantor that could have a Material Adverse Effect that has not been
        disclosed herein or in a report, financial statement, exhibit, schedule,
        disclosure letter or other writing furnished to the Lender for use in
        connection with the transactions contemplated hereby.

19.11   FINANCIAL STATEMENTS

(a)     Its Original Financial Statements were prepared in accordance with GAAP
        consistently applied.

(b)     Its Original Financial Statements fairly represent, in all material
        respects, its financial condition (consolidated in the case of the
        Guarantor) as at such dates and the results of its operations for the
        fiscal year and three-month period ended on such dates (subject, in the
        case of the financial statements as at 30 September 2000 to normal
        year-end audit adjustments) unless expressly disclosed to the contrary
        in those financial statements or in writing by the Guarantor to the
        Lender before the date of this Agreement.

(c)     There has been no material adverse change in its business or financial
        condition (or the business or consolidated financial condition of the
        Group, in the case of the Guarantor) since 31 December 1999.

19.12   PARI PASSU RANKING

        Its payment obligations under the Finance Documents rank at least pari
        passu with the claims of all its other unsecured and unsubordinated
        creditors, except for obligations mandatorily preferred by law applying
        to companies generally.

19.13   NO PROCEEDINGS PENDING OR THREATENED

        Except as disclosed in note 10 of the audited annual consolidated
        financial statements of the Guarantor included in the Guarantor's Form
        10-K dated 16 March 2000 and in the notes to the unaudited quarterly
        consolidated financial statements of the Guarantor included in the
        Guarantor's Form 10-Q dated 14 November 2000 and filed with the
        Securities and Exchange Commission, there are no legal or arbitral
        proceedings, or any proceedings by or before any Governmental Authority,
        now pending or (to the knowledge of the Guarantor) threatened against it
        or any of its Subsidiaries that, if adversely determined, could (either
        individually or in the aggregate) have a Material Adverse Effect.

19.14   ENVIRONMENTAL LAWS AND LICENCES

        (a)     Except as disclosed in the notes to the unaudited quarterly
                consolidated financial statements of the Guarantor included in
                the Guarantor's Form 10-Q dated 14 November 2000 and filed with
                the Securities and Exchange Commission, it and each of its
                Subsidiaries has:

                (i)     complied with all Environmental Laws to which it is
                        subject;

                (ii)    obtained all Environmental Licences required in
                        connection with its business; and

                (iii)   complied with the terms of those Environmental Licences,

                in each case where failure to do so might have a Material
                Adverse Effect.

                                      -27-
<PAGE>   29
        (b)     Since the date of this Agreement, there has been no change in
                the status of the matters disclosed in the notes to the
                unaudited quarterly consolidated financial statements of the
                Guarantor included in the Guarantor's Form 10-Q dated 14
                November 2000 and filed with the Securities and Exchange
                Commission that, individually or in the aggregate, has resulted
                in, or materially increased the likelihood of, a Material
                Adverse Effect.

19.15   ENVIRONMENTAL RELEASES

        Except as disclosed in the notes to the audited annual and unaudited
        quarterly consolidated financial statements of the Guarantor included in
        the Guarantor's Form 10-K dated 16 March 2000 and 10-Q dated 14 November
        2000 and filed with the Securities and Exchange Commission, no:

        (a)     property currently or previously owned, leased, occupied or
                controlled by it or any of its Subsidiaries (including any
                offsite waste management or disposal location utilised by it or
                any of its Subsidiaries) is contaminated with any Hazardous
                Substance; and

        (b)     discharge, release, leaching, migration or escape of any
                Hazardous Substance into the Environment has occurred or is
                occurring on, under or from that property,

        in each case in circumstances where this might have a Material Adverse
        Effect.

19.16   PLANS

        (a)     Each Plan, and, to the knowledge of the US Obligor, each
                Multiemployer Plan, is in compliance in all material respects
                with, and has been administered in all material respects in
                compliance with, the applicable provisions of ERISA, the Code
                and any other Federal or state law of the United States, and no
                event or condition has occurred and is continuing as to which
                the US Obligor would be under an obligation to furnish a report
                to the Lender under Clause 20.5 (Information: ERISA).

        (b)     Except as do not have and could not be reasonably expected to
                have a Material Adverse Effect, the US Obligor has not and no
                ERISA Affiliate has incurred any liability to or could be
                reasonably expected to incur any liability to, or on account of,
                a Multiemployer Plan as a result of violation of Section 515 of
                ERISA or otherwise pursuant to Section 4201, 4204 or 4212(c) of
                ERISA.

        (c)     There are no actions, suits or claims pending against or with
                respect to any Plan or Multiemployer Plan (other than roughtine
                claims for benefits) or, to its knowledge or the knowledge of
                any ERISA Affiliate (in each case after due inquiry), threatened
                against or with respect to any Plan or Multiemployer Plan which
                has or could reasonably be expected to have a Material Adverse
                Effect.

        (d)     Except as could not reasonably be expected to have a Material
                Adverse Effect, the US Obligor has not and no ERISA Affiliate
                has ceased operations at a facility so as to become subject to
                the provisions of Section 4063 of ERISA, withdrawn as a
                substantial employer so as to become subject to the provisions
                of Section 4062 of ERISA or ceased making contributions to any
                Plan subject to Section 4064(a) of ERISA to which it made
                contributions.

19.17   U.S. FEDERAL RESERVE REGULATION

        (a)     The proceeds of the Loan will not be used, directly or
                indirectly, in whole or in part, for any purpose which might
                (whether immediately, incidentally or ultimately) cause the

                                      -28-
<PAGE>   30
                Loan (or any part thereof) to be a "purpose credit" within the
                meaning of Regulation T, Regulation U or Regulation X. Following
                the application of the proceeds of the Loan, not more than 25
                per cent. of the value of the assets of the Group (on a
                consolidated basis) will be Margin Stock.

        (b)     Neither any Obligor nor any agent acting on its behalf has taken
                or will take any action which could cause any of the Finance
                Documents or any of the documents or instruments delivered
                pursuant thereto to violate any regulation of the Board
                (including Regulations T, U and X) or to violate the US
                Securities Exchange Act of 1934 or any applicable US federal or
                state securities laws.

19.18   INVESTMENT COMPANY ACT AND PUBLIC UTILITY HOLDING COMPANY ACT

        (a)     The US Obligor has not and none of its Subsidiaries is subject
                to regulation under the US Public Utility Holding Company Act of
                1935, the US Federal Power Act or the US Investment Company Act
                of 1940 or to any US federal or state statute or regulation
                limiting its ability to incur Indebtedness.

        (b)     It is not an "investment company", or an "affiliated person" of,
                or "promoter" or "principal underwriter" for, an "investment
                company", as such terms are defined in the US Investment Company
                Act of 1940.

        (c)     None of the transactions contemplated by the Finance Documents
                does or will violate any of such Acts, any applicable US federal
                or state laws and regulations.

19.19   LIENS AND EXISTING INDEBTEDNESS

        (a)     Schedule 4 (Existing Liens) is a complete and correct list, as
                of the date of this Agreement, of each Lien securing
                Indebtedness of any person, the aggregate principal or face
                amount of which equals or exceeds (or may equal or exceed)
                $5,000,000 (or its equivalent) and covering any property of the
                Guarantor or any of its Subsidiaries, and the aggregate
                Indebtedness secured (or that may be secured) by each such Lien
                and the property covered by each such Lien is correctly
                described in Schedule 4 (Existing Liens); and

        (b)     Schedule 5 (Existing Indebtedness) is a complete and correct
                list, as of the date of this Agreement, of each credit
                agreement, loan agreement, indenture, guarantee, letter of
                credit or other arrangement providing for or otherwise relating
                to any Indebtedness or any extension of credit (or commitment
                for any extension of credit) to, or guarantee by, the Guarantor
                or any of its Subsidiaries, the aggregate principal or face
                amount of which equals or exceeds (or may equal or exceed)
                $5,000,000 (or its equivalent), and the aggregate principal or
                face amount outstanding or that may become outstanding under
                each such arrangement is correctly described in Schedule 5
                (Existing Indebtedness).

19.20   REPETITION

        The Repeating Representations are deemed to be made by each Obligor by
        reference to the facts and circumstances then existing on the date of
        each Utilisation Request and the date of the Term-Out Notice, on each
        date on which a Loan is made and the first day of each Interest Period.

                                      -29-
<PAGE>   31
20.      INFORMATION UNDERTAKINGS

          The undertakings in this Clause 20 remain in force from the date of
          this Agreement for so long as any amount is outstanding under the
          Finance Documents or any Commitment is in force.

20.1     FINANCIAL STATEMENTS
         The Guarantor shall supply to the Lender:

         (a)      as soon as the same become available, but in any event within
                  90 days after the end of each of its fiscal years:

                  (i)      its consolidated balance sheets and related
                           statements of income, changes in stockholders' equity
                           and cash flows, showing the financial condition of
                           the Guarantor and its Subsidiaries as of the close of
                           such fiscal year and the results of its operations
                           and the operations of its Subsidiaries during such
                           year, all audited by the Guarantor's Auditors and
                           accompanied by an opinion of such auditors (which
                           shall not be qualified in any material respect) to
                           the effect that such consolidated financial
                           statements fairly present the financial condition and
                           results of operations of the Guarantor on a
                           consolidated basis in accordance with GAAP
                           consistently applied; and

                  (ii)     the unaudited financial statements of each Borrower
                           for that fiscal year; and

         (b)      as soon as the same become available, but in any event within
                  45 days after the end of each of the first three fiscal
                  quarters of each of its fiscal years, its consolidated balance
                  sheets and related statements of income, changes in
                  stockholders' equity and cash flows, showing the financial
                  condition of the Guarantor and its Subsidiaries as of the
                  close of such fiscal quarter and the results of its operations
                  and the operations of its Subsidiaries during such fiscal
                  quarter and the then elapsed portion of such fiscal year, all
                  certified by one of its Financial Officers as fairly
                  presenting the financial condition and results of operations
                  of the Guarantor on a consolidated basis in accordance with
                  GAAP consistently applied, subject to normal year-end audit
                  adjustments.

20.2     COMPLIANCE CERTIFICATE

(a)      The Guarantor shall supply to the Lender, with each set of financial
         statements delivered pursuant to paragraph (a)(i) or (b) of Clause 20.1
         (Financial statements), a Compliance Certificate setting out (in
         reasonable detail) computations as to compliance with Clause 21
         (Financial covenants) as at the date as at which those financial
         statements were drawn up.

(b)      Each Compliance Certificate shall be signed by a Financial Officer of
         the Guarantor or, if required to be delivered with the financial
         statements delivered pursuant to paragraph (a) of Clause 20.1
         (Financial statements), by the Guarantor's Auditors (which certificate,
         when furnished by the Guarantor's Auditors, may be limited to
         accounting matters and disclaim responsibility for legal
         interpretations).

20.3     REQUIREMENTS AS TO FINANCIAL STATEMENTS
         Each set of financial statements delivered by the Guarantor pursuant to
         Clause 20.1 (Financial statements) shall be certified by a Financial
         Officer of the relevant company as fairly representing its (or, as the
         case may be, its consolidated) financial condition and operations as at
         the end of and for the period in relation to which those financial
         statements were drawn up.


                                      -30-
<PAGE>   32
20.4     INFORMATION: MISCELLANEOUS
         The Guarantor shall supply to the Lender:

         (a)      promptly after the same becoming publicly available, copies of
                  all periodic and other reports, proxy statements and other
                  materials filed by it with the Securities and Exchange
                  Commission, or any Governmental Authority succeeding to any of
                  or all the functions of such Commission, or with any national
                  securities exchange, or distributed to its shareholders or
                  creditors generally, as the case may be;

         (b)      promptly upon becoming aware of such, the filing or
                  commencement of, or any threat or notice of intention of any
                  person to file or commence, any action, suit or proceeding,
                  whether at law or in equity or by or before any Governmental
                  Authority, against the Guarantor or any Affiliate thereof
                  which, if adversely determined, could have a Material Adverse
                  Effect; and

         (c)      promptly, from time to time, such other information regarding
                  the operations, business affairs and financial condition of
                  the Guarantor or any Subsidiary, or compliance with the terms
                  of any Finance Document, as the Lender may reasonably request.

20.5     INFORMATION: ERISA
         The Guarantor shall supply to the Lender:

         (a)      as soon as possible, and in any event within 30 days after the
                  US Obligor or any ERISA Affiliate either knows or has reason
                  to know that any Reportable Event has occurred that alone or
                  together with any other Reportable Event could reasonably be
                  excepted to result in liability of the US Obligor to the PGBC
                  in an aggregate amount exceeding $5,000,000, a statement of a
                  Financial Officer setting forth details as to such Reportable
                  Event and the action proposed to be taken with respect
                  thereto, together with a copy of the notice, if any, of such
                  Reportable Event given to or received from the PGBC;

         (b)      promptly after receipt thereof, a copy of any notice the US
                  Obligor or any ERISA Affiliate may receive from the PBGC
                  relating to the intention of the PGBC to terminate any Plan or
                  Multiemployer Plan (other than a Plan maintained by an ERISA
                  Affiliate which is considered an ERISA Affiliate only pursuant
                  to subsection (m) or (o) of Section 414 of the Code) or to
                  appoint a trustee to administer any Plan or Multiemployer
                  Plan; and

         (c)      within 10 days after the due date for filing with the PGBC
                  pursuant to Section 412(n) of the Code of a notice of failure
                  to make a required instalment or other payment with respect to
                  a Plan, a statement of a Financial Officer setting forth
                  details as to such failure and the action proposed to be taken
                  with respect thereto, together with a copy of such notice
                  given to the PBGC.

20.6     NOTIFICATION OF DEFAULT
(a)      Each Obligor shall notify the Lender of any Default (and the steps, if
         any, being taken to remedy it) promptly upon becoming aware of its
         occurrence (unless that Obligor is aware that a notification has
         already been provided by another Obligor).

(b)      Promptly upon a request by the Lender, the Guarantor shall supply to
         the Lender a certificate signed by one of its Financial Officers or
         directors on its behalf certifying that no Default is continuing (or if
         a Default is continuing, specifying the Default and the steps, if any,
         being taken to remedy it).


                                      -31-
<PAGE>   33
21.      FINANCIAL COVENANTS

21.1     FINANCIAL CONDITION
         The Guarantor shall ensure that:

         (a)      Net Worth will not at any time be less than $475,000,000; and

         (b)      the ratio of Total Debt to Total Capital will not at any time
                  be greater than 0.60 to 1.00.

21.2     FINANCIAL COVENANT CALCULATIONS
(a)      Net Worth, Total Capital and Total Debt shall be calculated and
         interpreted on a consolidated basis in accordance with GAAP and shall
         be expressed in Dollars.

21.3     DEFINITIONS
         In this Agreement:

         "NET WORTH" means, as at any date, the sum for the Group (determined on
         a consolidated basis without duplication in accordance with GAAP) of
         the following:

         (a)      the amount of common stock; plus

         (b)      the amount of any preferred stock that does not have any
                  requirement for the Guarantor to purchase, redeem, retire or
                  otherwise acquire the same; plus

         (c)      the amount of additional paid-in capital and retained earnings
                  (or, in the case of an additional paid-in capital or retained
                  earnings deficit, minus the amount of such deficit); plus

         (d)      cumulative translation adjustments (or, in the case of
                  negative adjustments, minus the amount of such adjustments);
                  plus

         (e)      cumulative pension liability adjustments (or; in the case of
                  negative adjustments, minus the amount of such adjustments);
                  minus

         (f)      the cost of treasury stock.

         "TOTAL CAPITAL" means, at any time, Net Worth plus Total Debt.

         "TOTAL DEBT" means, at any time, the aggregate outstanding principal
         amount of all Indebtedness of the Group at such time (other than
         Indebtedness described in paragraphs (i) or (j) of the definition of
         the term "Indebtedness") determined on a consolidated basis (without
         duplication) in accordance with GAAP provided that the term "Total
         Debt" shall include any preferred stock that provides for the mandatory
         purchase, retirement, redemption or other acquisition of the same by
         the Guarantor or any Subsidiary (other than preferred stock held by the
         Guarantor or any Subsidiary).

22.      GENERAL UNDERTAKINGS

         The undertakings in this Clause 22 remain in force from the date of
         this Agreement for so long as any amount is outstanding under the
         Finance Documents or any Commitment is in force.

22.1     AUTHORISATIONS
         Each Obligor shall promptly:

         (a)      obtain, comply with and do all that is necessary to maintain
                  in full force and effect; and

         (b)      supply certified copies to the Lender of,


                                      -32-
<PAGE>   34
         any Authorisation required under any law or regulation of its
         jurisdiction of incorporation or organisation (as the case may be) to
         enable it to perform its obligations under the Finance Documents and to
         ensure the legality, validity, enforceability or admissibility in
         evidence in its jurisdiction of incorporation of any Finance Document.

22.2     EXISTENCE AND COMPLIANCE WITH LAWS
(a)      Each Obligor shall (and the Guarantor shall ensure that each other
         member of the Group will) preserve and maintain its corporate
         existence, rights (charter and statute) and material franchises, except
         as otherwise permitted by Clause 22.5 (Merger), provided, however, that
         the Guarantor shall not be required to preserve any such right or
         franchise if (i) the Guarantor shall determine that the preservation
         thereof is no longer desirable in the conduct of the business of the
         Guarantor and (ii) the loss of any such right or franchise is not
         disadvantageous in any material respect to the Lender.

(b)      Each Obligor shall comply in all respects with all laws to which it may
         be subject, if failure so to comply would materially impair its ability
         to perform its obligations under the Finance Documents.

22.3     NEGATIVE PLEDGE
(a)      No Obligor shall (and the Guarantor shall ensure that no other member
         of the Group will) create incur, assume or suffer to exist any Lien
         upon any of its property, whether now owned or hereafter acquired,
         except:

         (i)      Liens in existence on the date of this Agreement which are
                  listed in Schedule 4 (Existing Liens);

         (ii)     Liens imposed by any Governmental Authority for Taxes,
                  assessments or charges not yet due or that are being contested
                  in good faith and by appropriate proceedings if adequate
                  reserves with respect thereto are maintained on the books of
                  the Guarantor or the affected Subsidiaries, as the case may
                  be, in accordance with GAAP;

         (iii)    carriers', warehousemen's, mechanics', materialmen's,
                  repairmen's or other like Liens arising in the ordinary course
                  of business that are not overdue for a period of more than 30
                  days or that are being contested in good faith and by
                  appropriate proceedings and Liens securing judgements but only
                  to the extent for an amount and for a period not resulting in
                  an Event of Default under Clause 23.6(c) (Insolvency and
                  Insolvency Proceedings);

         (iv)     pledges or deposits under worker's compensation, unemployment
                  insurance and other social security legislation;

         (v)      deposits to secure the performance of bids, trade contracts
                  (other than for Indebtedness), leases, statutory obligations,
                  surety and appeal bonds, performance bonds and other
                  obligations of a like nature incurred in the ordinary course
                  of business;

         (vi)     easements, rights-of-way, restrictions and other similar
                  encumbrances incurred in the ordinary course of business and
                  encumbrances consisting of zoning restrictions, easements,
                  licenses, restrictions on the use of property or minor
                  imperfections in title thereto that, in the aggregate, are not
                  material in amount, and that do not in any case materially
                  detract from the value of the property subject thereto or
                  interfere with the ordinary conduct of the business of the
                  Guarantor or any of its Subsidiaries;


                                      -33-
<PAGE>   35
         (vii)    Liens on property of any corporation that becomes a Subsidiary
                  of the Guarantor after the date of this Agreement, provided
                  that such Liens are in existence at the time such corporation
                  becomes a Subsidiary of the Guarantor and were not created in
                  anticipation thereof;

         (viii)   Liens upon real and/or tangible personal property acquired
                  after the date of this Agreement (by purchase, construction or
                  otherwise) by the Guarantor or any of its Subsidiaries, each
                  of which Liens either (A) existed on such property before the
                  time of its acquisition and was not created in anticipation
                  thereof or (B) was created solely for the purpose of securing
                  Indebtedness representing, or incurred to finance, refinance
                  or refund, the cost (including the cost of construction) of
                  such property, provided that no such Lien shall extend to or
                  cover any property of the Guarantor or such Subsidiary other
                  than the property so acquired and improvements thereon;

         (ix)     additional Liens upon real and/or personal property created
                  after the date of this Agreement, provided that the aggregate
                  Indebtedness secured thereby and incurred on and after the
                  date hereof shall not exceed $25,000,000 (or its equivalent as
                  reasonably determined by the Lender) in the aggregate at any
                  one time outstanding; and

         (x)      any extension, renewal or replacement of the foregoing,
                  provided that the Liens permitted hereunder shall not be
                  spread to cover any additional Indebtedness or property (other
                  than a substitution of like property).

22.4     SALE AND LEASE-BACK TRANSACTIONS
         No Obligor shall (and the Guarantor shall ensure that no other member
         of the Group will) enter into any arrangement, directly or indirectly,
         with any person whereby it shall sell or transfer any property, real or
         personal, used or useful in its business, whether now owned or
         hereafter acquired, and thereafter rent or lease such property or other
         property which it intends to use for substantially the same purpose or
         purposes as the property being sold or transferred (such an arrangement
         being a "SALE AND LEASE-BACK TRANSACTION"), other than:

         (i)      Sale and Lease-Back Transactions capitalised on the books of
                  the Guarantor in an aggregate capitalised amount not in excess
                  of $25,000,000 entered into in connection with the financing
                  of an aircraft to be used in connection with the Guarantor's
                  business; and

         (ii)     Sale and Lease-Back Transactions capitalised on the books of
                  the Guarantor (other than a Sale and Lease-Back Transaction
                  permitted by Clause 22.4(i)) if the capitalised amount of all
                  such Sale and Lease-Back Transactions shall not exceed
                  $20,000,000 in aggregate amount at any time outstanding.

22.5     MERGER
(a)      No Obligor shall consolidate or merge with or into any other person or
         sell, convey, transfer or lease its properties and assets substantially
         as an entirety to any person, unless;

         (i)      the company or corporation formed by such consolidation or
                  merger or the person which acquires by sale, conveyance or
                  transfer, or which leases, the properties and assets of such
                  Obligor substantially as an entirety shall be a company or
                  corporation organised and existing under the laws of a
                  jurisdiction acceptable to the Lender and shall expressly
                  assume, by an agreement


                                      -34-
<PAGE>   36
                  supplemental hereto, executed and delivered in favour of the
                  Lender, in form satisfactory to the Lender, the due and
                  punctual payment of the principal of and interest on the Loans
                  and all other obligations of such Obligor under the Finance
                  Documents and the performance or observance of every covenant
                  of this Agreement on the part of such Obligor to be performed
                  or observed;

         (ii)     immediately after giving effect to such transaction, no
                  Default shall have occurred and be continuing; and

         (iii)    the Guarantor shall have delivered to the Lender an officers'
                  certificate and an opinion or, as may be required by the
                  Lender, opinions of counsel, each stating that such
                  consolidation, merger, sale, conveyance, transfer or lease and
                  such supplemental agreement comply with this Clause 22.5(a)
                  and that all conditions precedent in this Agreement provided
                  for relating to such transaction and any other documents which
                  the Lender requests to be delivered at such time have been
                  complied with.

(b)      Upon any consolidation by any Obligor with or merger by any Obligor
         into any other corporation or any sale, conveyance, transfer or lease
         of the properties and assets of any Obligor substantially as an
         entirety in accordance with Clause 22.5(a), the successor corporation
         formed by such consolidation or into which such Obligor is merged or to
         which such sale, conveyance, transfer or lease is made shall succeed
         to, and be substituted for, and may exercise every right and power of,
         the applicable Obligor under the Finance Documents with the same effect
         as if such successor corporation had been named as an Obligor herein,
         and thereafter, the predecessor corporation shall be relieved of all
         obligations and covenants under the Finance Documents.

(c)      This Clause 22.5 is without prejudice to the provisions of Clause 23.14
         (Change of Control).

22.6     LINES OF BUSINESS; FISCAL YEAR
         The Guarantor shall not (and the Guarantor shall ensure that no other
         member of the Group will) engage or invest in operations engaging to
         any substantial extent in any line or lines of business activity other
         than the business of manufacturing, providing, distributing and selling
         such diverse goods and industrial services, principally for industrial,
         commercial, construction and defence applications, the same or similar
         to those goods and services as are manufactured, provided, distributed
         and sold by the Guarantor on the date of this Agreement. In the case of
         the Guarantor, the Guarantor shall not change its fiscal year end from
         that in effect at 31 December 1999.

22.7     TRANSACTIONS WITH AFFILIATES
         The Guarantor shall not (and the Guarantor shall ensure that no other
         member of the Group will) sell or transfer any property or assets to,
         or purchase or acquire any property or assets from, or otherwise engage
         in any other transactions with, any of its Affiliates, except that as
         long as no Default shall have occurred and be continuing, the Guarantor
         or any Subsidiary may engage in any of the foregoing transactions in
         the ordinary course of business at prices and on terms and conditions
         not less favourable to the Guarantor or such Subsidiary than could be
         obtained on an arm's-length basis from unrelated third parties.


                                      -35-
<PAGE>   37
22.8     PROPERTIES AND INSURANCE
         (a)      Each Obligor shall (and the Guarantor shall ensure that each
                  other member of the Group will) maintain and preserve all of
                  its properties which are used in the conduct of its business
                  in good working order and condition, ordinary wear and tear
                  excepted, to the extent that any failure to do so would result
                  in a Material Adverse Effect and except for dispositions
                  thereof permitted by Clause 22.4 (Sale and Lease-Back
                  Transactions).

         (b)      Each Obligor shall (and the Guarantor shall ensure that each
                  other member of the Group will) maintain insurance with
                  financially sound and reputable insurance companies (which
                  insurance companies shall, in any event, have an A.M. Best
                  rating of "B+" or better), and with respect to property and
                  risks of a character usually maintained by corporations
                  engaged in the same or similar business similarly situated,
                  against loss, damage and liability of the kinds and in the
                  amounts customarily maintained by such corporations.

22.9     ENVIRONMENTAL UNDERTAKINGS
         Each Obligor shall (and the Guarantor shall ensure that each other
         member of the Group will):

         (a)      comply with all Environmental Laws to which it is subject;

         (b)      obtain all Environmental Licences required in connection with
                  its business;

         (c)      comply with the terms of all those Environmental Licences; and

         (d)      promptly notify the Lender of any claim, notice or other
                  communication received by it in respect of any actual or
                  alleged breach of or liability under Environmental Law,

         in each case where failure to do so might have a Material Adverse
         Effect.

22.10    US MATTERS
         Each Obligor shall:

         (a)      comply in all material respects with the applicable provisions
                  of ERISA and the Code;

         (b)      ensure that neither it nor any of its ERISA Affiliates shall
                  engage in a complete or partial withdrawal, within the meaning
                  of Sections 4203 and 4205 of ERISA, from any Multiemployer
                  Plan without the prior written consent of the Lender unless
                  such withdrawal could not reasonably by expected to have a
                  Material Adverse Effect; and

         (c)      use the proceeds of, or made available by virtue of, the
                  Facilities without violating any of Regulations U, T and X or
                  any applicable US federal or state laws and regulations.

22.11    GUARANTOR'S AUDITORS
         The Company will retain a firm of recognised international standing as
         auditors to the Group as it shall notify to the Lender from time to
         time.

23.      EVENTS OF DEFAULT

         Each of the events or circumstances set out in Clause 23 is an Event of
         Default.

23.1     NON-PAYMENT
(a)      There is a default made in the payment of any principal of any Loan
         when and as the same shall become due and payable, whether at the due
         date thereof or at a date fixed for prepayment thereof or by
         acceleration thereof or otherwise; or


                                      -36-
<PAGE>   38
(b)      there is a default made in the payment of any interest on any Loan or
         any fee or any other amount (other than an amount referred to in Clause
         23.1(a)) due under any Finance Document, when and as the same shall
         become due and payable, and such default shall continue unremedied for
         a period of five days.

23.2     FINANCIAL COVENANTS
         Any requirement of Clause 21 (Financial covenants) is not satisfied.

23.3     OTHER OBLIGATIONS
(a)      There is a default made in the due observance or performance by any
         Obligor or any Subsidiary of any covenant, condition or agreement
         contained in Clause 20.4(b) (Information: miscellaneous), 20.6
         (Notification of Default), 22.2(a) (Existence and Compliance with
         laws), 22.3 (Negative Pledge), 22.4 (Sale and Lease-Back Transactions),
         22.5 (Merger), 22.6 (Lines of business; Fiscal Year) or 22.7
         (Transactions with Affiliates); or

(b)      there is a default made in the due observance or performance by any
         Obligor or any Subsidiary of any covenant, condition or agreement
         contained in any Finance Document (other than those specified in
         Clauses 23.1 (Non-payment), 23.2 (Financial covenants), or 23.3(a)
         (Other obligations)) and such default shall continue unremedied for a
         period of 30 days after notice thereof from the Lender to the
         Guarantor.

23.4     MISREPRESENTATION
         Any representation or warranty made or deemed made in or in connection
         with any Finance Document or the borrowings hereunder, or any
         representation, warranty, statement or information contained in any
         report, certificate, financial statement or other instrument furnished
         in connection with or pursuant to any Finance Document, shall prove to
         have been false or misleading in any material respect when so made,
         deemed made or furnished.

23.5     CROSS DEFAULT
(a)      The Guarantor or any Subsidiary shall (A) fail to pay any principal or
         interest, regardless of amount, due in respect of any Indebtedness in a
         principal amount in excess of (I) $20,000,000 (or its equivalent in any
         other currency or currencies), in the case of any single obligation, or
         (II) $20,000,000 (or its equivalent in any other currency or
         currencies), in the case of all obligations in the aggregate, in each
         case, when and as the same shall become due and payable; or (B) fail to
         observe or perform any other term, covenant, condition or agreement
         contained in any agreement or instrument evidencing or governing any
         Indebtedness in an aggregate principal amount in excess of $20,000,000
         (or its equivalent in any other currency or currencies) and such
         failure shall continue beyond any applicable grace period; or

(b)      Indebtedness of the Guarantor and its Subsidiaries, or any of them, in
         a principal amount in excess of (A) $20,000,000 (or its equivalent in
         any other currency or currencies), in the case of any single
         obligation, or (B) $20,000,000 (or its equivalent in any other currency
         or currencies), in the case of all obligations in the aggregate, shall
         be declared due and payable or required to be prepaid prior to its
         stated maturity.

23.6     INSOLVENCY AND INSOLVENCY PROCEEDINGS
(a)      An involuntary proceeding shall be commenced or an involuntary petition
         shall be filed in a court of competent jurisdiction seeking (i) relief
         in respect of any Obligor or any Subsidiary, or of a substantial part
         of the property or assets of any Obligor or a Subsidiary, under Title
         11 of the United States Code, as now constituted or hereafter amended,
         or any other Federal or state


                                      -37-
<PAGE>   39
         bankruptcy, insolvency, receivership or similar law (or similar statute
         or law in any other jurisdiction), (ii) the appointment of a receiver,
         trustee, custodian, sequestrator, conservator or similar official for
         any Obligor or any Subsidiary or for a substantial part of the property
         or assets of any Obligor or a Subsidiary or (iii) the winding-up or
         liquidation of any Obligor or any Subsidiary; and such proceeding or
         petition shall continue undismissed for 30 days or an order or decree
         approving or ordering any of the foregoing shall be entered;

(b)      any Obligor or any Subsidiary shall (i) voluntarily commence any
         proceeding or file any petition seeking relief under Title 11 of the
         United States Code, as now constituted or hereafter amended, or any
         other Federal or state bankruptcy, insolvency, receivership or similar
         law (or similar statute or law in any other jurisdiction), (ii) consent
         to the institution of, or fail to contest in a timely and appropriate
         manner, any proceeding or the filing of any petition described in
         Clause 23.6(a), (iii) apply for or consent to the appointment of a
         receiver, trustee, custodian, sequestrator, conservator or similar
         official of any Obligor or any Subsidiary or of a substantial part of
         the property or assets of any Obligor or any Subsidiary, (iv) file an
         answer admitting the material allegations of a petition filed against
         it in any such proceeding, (v) make a general assignment for the
         benefit of creditors, (vi) become unable, admit in writing its
         inability or fail generally to pay its debts as they become due or
         (vii) take any action for the purpose of effecting any of the
         foregoing; or

(c)      one or more judgments for the payment of money in an aggregate amount
         in excess of $10,000,000 (or its equivalent in any other currency or
         currencies) (exclusive of amounts fully covered by insurance where the
         insurer has admitted liability in respect of such judgment) or in
         excess of $20,000,000 (or its equivalent in any other currency or
         currencies) (regardless of insurance coverage) shall be rendered
         against any Obligor, any Subsidiary or any combination thereof and the
         same shall remain undischarged for a period of 60 consecutive days
         during which 60 days execution shall not be effectively stayed, or
         otherwise being appropriately contested in good faith, or any action
         shall be legally taken by a judgment creditor to levy upon assets or
         properties of any Obligor or any Subsidiary to enforce any such
         judgment.

23.7     RELEVANT AGREEMENT
         An "Event of Default" shall have occurred as defined under the Relevant
         Agreement.

23.8     CREDITORS' PROCESS
         Any expropriation, attachment, sequestration, distress or execution
         affects any asset or assets of a member of the Group which the Lender
         determines could have a Material Adverse Effect and is not discharged
         within 5 Business Days.

23.9     OWNERSHIP OF THE BORROWERS
         A Borrower is not or ceases to be a Subsidiary of the Guarantor.

23.10    UNLAWFULNESS
         It is or becomes unlawful for an Obligor to perform any of its material
         obligations under the Finance Documents.

23.11    REPUDIATION
         An Obligor repudiates a Finance Document or evidences in writing an
         intention to repudiate a Finance Document.


                                      -38-
<PAGE>   40
23.12    INVALIDITY OF GUARANTEE
         The obligations of the Guarantor under this Agreement become
         ineffective, invalid, unenforceable or unlawful for any reason.

23.13    ERISA MATTERS
         A Reportable Event or Reportable Events, or a failure to make a
         required instalment or other payment (within the meaning of Section
         412(n)(l) of the Code), shall have occurred with respect to any Plan or
         Multiemployer Plan that reasonably could be expected to result in
         liability of any Obligor to the PBGC or to a Plan or Multiemployer Plan
         in an aggregate amount exceeding $5,000,000 and, within 30 days after
         the reporting of any such Reportable Event to the Lender or after the
         receipt by the Lender of the statement required pursuant to Clause 20.5
         (Information: ERISA), the Lender shall have notified such Obligor in
         writing that (a) it has made a determination that, on the basis of such
         Reportable Event or Reportable Events or the failure to make a required
         payment, there are reasonable grounds (i) for the termination of such
         Plans or Multiemployer Plans by the PBGC, (ii) for the appointment by
         the appropriate United States District Court of a trustee to administer
         such Plans or Multiemployer Plan(s) or (iii) for the imposition of a
         Lien in favour of a Plan or Multiemployer Plan and (b) as a result
         thereof an Event of Default exists or a trustee shall be appointed by a
         United States District Court to administer any such Plan or
         Multiemployer Plan or the PBGC shall institute proceedings to terminate
         any Plan or Multiemployer Plan.

23.14    CHANGE OF CONTROL
         There shall have been a Change of Control.

23.15    ACCELERATION
         On and at any time after the occurrence of an Event of Default the
         Lender may, by notice to the Guarantor:

         (a)      cancel the Commitment whereupon it shall immediately be
                  cancelled;

         (b)      declare that all or part of the Loans, together with accrued
                  interest, and all other amounts accrued under the Finance
                  Documents be immediately due and payable, whereupon they shall
                  become immediately due and payable; and/or

         (c)      declare that all or part of the Loans be payable on demand,
                  whereupon they shall immediately become payable on demand by
                  the Lender.

         Notwithstanding the foregoing, if an Event of Default specified in
         Clauses 23.6 (Insolvency and Insolvency proceedings) or 23.8
         (Creditors' process) occurs with respect to the US Obligor, then
         notwithstanding anything to the contrary in Clause 18 (Guarantee and
         indemnity), each amount expressed by that Clause 18 (Guarantee and
         indemnity) to be payable by the US Obligor upon demand shall be
         immediately due and payable by the Guarantor without need for any
         demand or other claim on the US Obligor and notwithstanding that the
         obligations of the Borrowers payable by the US Obligor under Clause 18
         (Guarantee and indemnity) are not then due and payable.

24.      CHANGES TO THE LENDER

24.1     ASSIGNMENTS AND TRANSFERS BY THE LENDER
         Subject to this Clause 24, the Lender (the "EXISTING LENDER") may:

         (a)      assign any of its rights; or


                                      -39-
<PAGE>   41
         (b)      transfer by novation any of its rights and obligations,

         to another bank or financial institution (the "NEW LENDER").

24.2     CONDITIONS OF ASSIGNMENT OR TRANSFER

(a)      The consent of the Guarantor is required for an assignment or transfer
         by the Lender, unless the assignment or transfer is to an Affiliate of
         the Lender or an Event of Default is continuing.

(b)      The consent of the Guarantor to an assignment or transfer must not be
         unreasonably withheld or delayed. The Guarantor will be deemed to have
         given its consent five Business Days after the Lender has requested it
         unless consent is expressly refused by the Guarantor within that time.

(c)      The consent of the Guarantor to an assignment or transfer must not be
         withheld solely because the assignment or transfer may result in an
         increase to the Mandatory Cost.

(d)      If:

         (i)      the Lender assigns or transfers any of its rights or
                  obligations under the Finance Documents or changes its
                  Facility Office; and

         (ii)     as a result of circumstances existing at the date the
                  assignment, transfer or change occurs, an Obligor would be
                  obliged to make a payment to the New Lender or the Lender
                  acting through its new Facility Office under Clause 13 (Tax
                  gross-up and indemnities) or Clause 14 (Increased costs),

         then the New Lender or the Lender acting through its new Facility
         Office is only entitled to receive payment under those Clauses to the
         same extent as the Existing Lender or the Lender acting through its
         previous Facility Office would have been if the assignment, transfer or
         change had not occurred.

24.3     DISCLOSURE OF INFORMATION

(a)      The Lender may disclose to any person:

         (i)      to (or through) whom the Lender assigns or transfers (or may
                  potentially assign or transfer) all or any of its rights and
                  obligations under this Agreement;

         (ii)     with (or through) whom the Lender enters into (or may
                  potentially enter into) any sub-participation in relation to,
                  or any other transaction under which payments are to be made
                  by reference to, this Agreement or any Obligor; or

         (iii)    to whom, and to the extent that, information is required to be
                  disclosed by any applicable law or regulation,

         any information about any Obligor, the Group and the Finance Documents
         as the Lender shall consider appropriate if, in relation to paragraphs
         (i) and (ii) above, the person to whom the information is to be given
         has entered into a confidentiality undertaking substantially in a
         recommended form of the Loan Market Association or in any other form
         agreed between the Guarantor and the Lender.

(b)      The Lender may disclose to any of its Affiliates such information
         relating to the Group or any Obligor as it reasonably considers
         necessary in relation to the running of the Facility and the
         obligations of the Obligors under it.


                                      -40-
<PAGE>   42
25.      CHANGES TO THE OBLIGORS

         No Obligor may assign any of its rights or transfer any of its rights
         or obligations under the Finance Documents.

26.      CONDUCT OF BUSINESS BY THE LENDER

         No provision of this Agreement will:

         (a)      interfere with the right of the Lender to arrange its affairs
                  (tax or otherwise) in whatever manner it thinks fit;

         (b)      oblige the Lender to investigate or claim any credit, relief,
                  remission or repayment available to it or the extent, order
                  and manner of any claim; or

         (c)      oblige the Lender to disclose any information relating to its
                  affairs (tax or otherwise) or any computations in respect of
                  Tax.

27.      LENDER'S MANAGEMENT TIME

         Any amount payable to the Lender under Clause 15.3 (Indemnity to the
         Lender) and Clause 17 (Costs and expenses) shall include the cost of
         utilising the Lender's management time or other resources and will be
         calculated on the basis of such reasonable daily or hourly rates as the
         Lender may notify to the Guarantor.

28.      PAYMENT MECHANICS

28.1     PAYMENTS TO THE LENDER

(a)      On each date on which an Obligor is required to make a payment under a
         Finance Document, that Obligor shall make the same available to the
         Lender for value on the due date at the time and in such funds
         specified by the Lender as being customary at the time for settlement
         of transactions in the relevant currency in the place of payment.

(b)      Payment shall be made to such account in the principal financial centre
         of the country of that currency (or, in relation to euro, in the
         principal financial centre in a Participating Member State or London)
         with such bank as the Lender may notify to that Obligor by not less
         than five Business Days' notice.

28.2     PAYMENTS BY THE LENDER
(a)      On each date on which the Lender is required to make a payment under a
         Finance Document, the Lender shall make the same available to the
         relevant Borrower for value on the due date at the time and in such
         funds specified by the Lender as being customary at the time for
         settlement of transactions in the relevant currency in the place of
         payment.

(b)      Payment shall be made to such account in the principal financial centre
         of the country of that currency (or, in relation to euro, in the
         principal financial centre in a Participating Member State or London)
         with such bank as the relevant Borrower may notify to the Lender in the
         relevant Utilisation Request.

28.3     DISTRIBUTIONS TO AN OBLIGOR
         The Lender may (with the consent of the Obligor or in accordance with
         Clause 29 (Set-off)) apply any amount received by it for that Obligor
         in or towards payment (on the date and in the


                                      -41-
<PAGE>   43
         currency and funds of receipt) of any amount due from that Obligor
         under the Finance Documents or in or towards purchase of any amount of
         any currency to be so applied.

28.4     PARTIAL PAYMENTS

(a)      If the Lender receives a payment that is insufficient to discharge all
         the amounts then due and payable by an Obligor under the Finance
         Documents, the Lender shall apply that payment towards the obligations
         of that Obligor under the Finance Documents in any order selected by
         the Lender.

(b)      Paragraph (a) above will override any appropriation made by an Obligor.

28.5     NO SET-OFF BY OBLIGORS
         All payments to be made by an Obligor under the Finance Documents shall
         be calculated and be made without (and free and clear of any deduction
         for) set-off or counterclaim.

28.6     BUSINESS DAYS
(a)      Any payment which is due to be made on a day that is not a Business Day
         shall be made on the next Business Day in the same calendar month (if
         there is one) or the preceding Business Day (if there is not).

(b)      During any extension of the due date for payment of any principal or an
         Unpaid Sum under this Agreement interest is payable on the principal or
         Unpaid Sum at the rate payable on the original due date.

28.7     CURRENCY OF ACCOUNT
(a)      Subject to paragraphs (b) to (e) below, the Base Currency is the
         currency of account and payment for any sum due from an Obligor under
         any Finance Document.

(b)      A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum
         shall be made in the currency in which that Loan or Unpaid Sum is
         denominated on its due date.

(c)      Each payment of interest shall be made in the currency in which the sum
         in respect of which the interest is payable was denominated when that
         interest accrued.

(d)      Each payment in respect of costs, expenses or Taxes shall be made in
         the currency in which the costs, expenses or Taxes are incurred.

(e)      Any amount expressed to be payable in a currency other than the Base
         Currency shall be paid in that other currency.

28.8     CHANGE OF CURRENCY
(a)      Unless otherwise prohibited by law, if more than one currency or
         currency unit are at the same time recognised by the central bank of
         any country as the lawful currency of that country, then:

         (i)      any reference in the Finance Documents to, and any obligations
                  arising under the Finance Documents in, the currency of that
                  country shall be translated into, or paid in, the currency or
                  currency unit of that country designated by the Lender (after
                  consultation with the Guarantor); and

         (ii)     any translation from one currency or currency unit to another
                  shall be at the official rate of exchange recognised by the
                  central bank for the conversion of that currency or currency
                  unit into the other, rounded up or down by the Lender (acting
                  reasonably).


                                      -42-
<PAGE>   44
(b)      If a change in any currency of a country occurs, this Agreement will,
         to the extent the Lender (acting reasonably and after consultation with
         the Guarantor) specifies to be necessary, be amended to comply with any
         generally accepted conventions and market practice in the Relevant
         Interbank Market and otherwise to reflect the change in currency.

29.      SET-OFF

         Following an Event of Default which is continuing, the Lender may set
         off any matured obligation due from an Obligor under the Finance
         Documents (to the extent beneficially owned by the Lender) against any
         matured obligation owed by the Lender to that Obligor, regardless of
         the place of payment, booking branch or currency of either obligation.
         If the obligations are in different currencies, the Lender may convert
         either obligation at a market rate of exchange in its usual course of
         business for the purpose of the set-off.

30.      NOTICES

30.1     COMMUNICATIONS IN WRITING
         Any communication to be made under or in connection with the Finance
         Documents shall be made in writing and, unless otherwise stated, may be
         made by fax or letter.

30.2     ADDRESSES
         The address and fax number (and the department or officer, if any, for
         whose attention the communication is to be made) of each Party for any
         communication or document to be made or delivered under or in
         connection with the Finance Documents is that identified with its name
         below or any substitute address, fax number or department or officer as
         the Party may notify to the other Parties by not less than five
         Business Days' notice.

30.3     DELIVERY
(a)      Any communication or document made or delivered by the Lender to
         another Party under or in connection with the Finance Documents will
         only be effective:

         (i)      if by way of fax, when received in legible form; or

         (ii)     if by way of letter, when it has been left at the relevant
                  address or five Business Days after being deposited in the
                  post postage prepaid in an envelope addressed to it at that
                  address,

         and, if a particular department or officer is specified as part of its
         address details provided under Clause 30.2 (Addresses), if addressed to
         that department or officer.

(b)      Any communication or document to be made or delivered to the Lender
         will be effective only when actually received by the Lender and then
         only if it is expressly marked for the attention of the department or
         officer identified with the Lender's signature below (or any substitute
         department or officer as the Lender shall specify for this purpose).

(c)      Any communication or document made or delivered to the Guarantor in
         accordance with this Clause will be deemed to have been made or
         delivered to each of the Obligors.

30.4     ENGLISH LANGUAGE
(a)      Any notice given under or in connection with any Finance Document must
         be in English.

(b)      All other documents provided under or in connection with any Finance
         Document must be:


                                      -43-
<PAGE>   45
         (i)      in English; or

         (ii)     if not in English, and if so required by the Lender,
                  accompanied by a certified English translation and, in this
                  case, the English translation will prevail unless the document
                  is a constitutional, statutory or other official document.

31.      CALCULATIONS AND CERTIFICATES

31.1     ACCOUNTS
         In any litigation or arbitration proceedings arising out of or in
         connection with a Finance Document, the entries made in the accounts
         maintained by the Lender are, in the absence of manifest error, prima
         facie evidence of the matters to which they relate.

31.2     CERTIFICATES AND DETERMINATIONS
         Any certification or determination by the Lender of a rate or amount
         under any Finance Document is, in the absence of manifest error,
         conclusive evidence of the matters to which it relates.

31.3     DAY COUNT CONVENTION
         Any interest, commission or fee accruing under a Finance Document will
         accrue from day to day and is calculated on the basis of the actual
         number of days elapsed and a year of 360 days or, in any case where the
         practice in the Relevant Interbank Market differs, in accordance with
         that market practice.

32.      PARTIAL INVALIDITY

         If, at any time, any provision of the Finance Documents is or becomes
         illegal, invalid or unenforceable in any respect under any law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions nor the legality, validity or enforceability of
         such provision under the law of any other jurisdiction will in any way
         be affected or impaired.

33.      REMEDIES AND WAIVERS

         No failure to exercise, nor any delay in exercising, on the part of the
         Lender, any right or remedy under the Finance Documents shall operate
         as a waiver, nor shall any single or partial exercise of any right or
         remedy prevent any further or other exercise or the exercise of any
         other right or remedy. The rights and remedies provided in this
         Agreement are cumulative and not exclusive of any rights or remedies
         provided by law.

34.      AMENDMENTS AND WAIVERS

         No term of any of the Finance Documents may be amended or waived
         without the prior consent of the Lender and the Obligors and any such
         amendment or waiver will be binding on all Parties.

35.      COUNTERPARTS

         Each Finance Document may be executed in any number of counterparts,
         and this has the same effect as if the signatures on the counterparts
         were on a single copy of the Finance Document.


                                      -44-
<PAGE>   46
36.      GOVERNING LAW

         This Agreement is governed by English law.

37.      ENFORCEMENT

37.1     JURISDICTION OF ENGLISH COURTS
(a)      The courts of England have exclusive jurisdiction to settle any dispute
         arising out of or in connection with this Agreement (including a
         dispute regarding the existence, validity or termination of this
         Agreement) (a "DISPUTE").

(b)      The Parties agree that the courts of England are the most appropriate
         and convenient courts to settle Disputes and accordingly no Party will
         argue to the contrary.

(c)      This Clause 37.1 is for the benefit of the Lender only. As a result,
         the Lender shall not be prevented from taking proceedings relating to a
         Dispute in any other courts with jurisdiction. To the extent allowed by
         law, the Lender may take concurrent proceedings in any number of
         jurisdictions.

37.2     SERVICE OF PROCESS
(a)      Without prejudice to any other mode of service allowed under any
         relevant law, each Obligor (other than Harsco Investment Limited):

         (i)      irrevocably appoints Harsco Investment Limited as its agent
                  for service of process in relation to any proceedings before
                  the English courts in connection with any Finance Document;
                  and

         (ii)     agrees that failure by a process agent to notify the relevant
                  Obligor of the process will not invalidate the proceedings
                  concerned.

(b)      Harsco Investment Limited hereby accepts its appointment as agent for
         service of process of each Obligor not incorporated in England and
         Wales.

THIS AGREEMENT HAS BEEN ENTERED INTO ON THE DATE STATED AT THE BEGINNING OF THIS
AGREEMENT.


                                      -45-
<PAGE>   47
                                   SCHEDULE 1
                              CONDITIONS PRECEDENT

1.       OBLIGORS

(a)      A copy of the constitutional documents of each Obligor.

(b)      A copy of a resolution of the board of directors of each Obligor:

         (i)      approving the terms of, and the transactions contemplated by,
                  the Finance Documents to which it is a party and resolving
                  that it execute the Finance Documents to which it is a party;

         (ii)     authorising a specified person or persons to execute the
                  Finance Documents to which it is a party on its behalf; and

         (iii)    authorising a specified person or persons, on its behalf, to
                  sign and/or despatch all documents and notices (including, if
                  relevant, any Utilisation Request) to be signed and/or
                  despatched by it under or in connection with the Finance
                  Documents to which it is a party.

(c)      A specimen of the signature of each person authorised by the resolution
         referred to in paragraph (b) above.

(d)      A certificate of the Guarantor (signed by the Guarantor's Senior Vice
         President, Chief Financial Officer and Treasurer) confirming that
         borrowing or guaranteeing, as appropriate, the Commitment would not
         cause any borrowing, guaranteeing or similar limit binding on any
         Obligor to be exceeded.

(e)      A certificate of an authorised signatory of the relevant Obligor
         certifying that each copy document relating to it specified in this
         Schedule 1 is correct, complete and in full force and effect as at a
         date no earlier than the date of this Agreement.

2.       LEGAL OPINIONS

(a)      A legal of Paul C. Coppock, Esq., Senior Vice President, Chief
         Administrative Officer, General Counsel and Secretary of the Guarantor,
         substantially in the form agreed by the Lender prior to signing this
         Agreement.

(b)      A legal opinion of Kirkpatrick & Lockhart LLP, legal advisers to the
         Guarantor, substantially in the form agreed by the Lender prior to
         signing this Agreement.

(c)      A legal opinion of Boekel De Neree, legal advisers to Harsco Finance
         B.V. in The Netherlands, substantially in the form agreed by the Lender
         prior to signing this Agreement.

3.       OTHER DOCUMENTS AND EVIDENCE

(a)      A copy of any other Authorisation or other document, opinion or
         assurance which the Lender considers to be necessary or desirable (if
         it has notified the Guarantor accordingly) in connection with the entry
         into and performance of the transactions contemplated by any Finance
         Document or for the validity and enforceability of any Finance
         Document.

(b)      The Original Financial Statements of each Obligor.


                                      -46-
<PAGE>   48
(c)      Evidence that the fees, costs and expenses then due from the Guarantor
         pursuant to the Fee Letter and Clause 17 (Costs and expenses) have been
         paid or will be paid by the first Utilisation Date.

(d)      Confirmation that the Relevant Agreement has been duly entered into by
         the parties thereto.

(e)      The Fee Letter duly signed by the Guarantor.


                                      -47-
<PAGE>   49
                                   SCHEDULE 2
                                    REQUESTS

                                     PART I
                               UTILISATION REQUEST

From:    [Borrower]

To:      [Lender]

Dated:

Dear Sirs

                         $50,000,000 FACILITY AGREEMENT
               DATED 12TH JANUARY 2001 (THE "FACILITY AGREEMENT")

1.       We wish to borrow a Loan on the following terms:

        Proposed Utilisation Date:    [                   ] (or, if that is not
                                       ------------------
                                      a Business Day, the next Business Day)

        Currency of Loan:             [                   ]
                                       -------------------

        [Amount:] *                   [                   ] or, if less, the
                                       -------------------
                                      Available Commitment

        Interest Period:              [                   ]
                                       -------------------

        [Amount of Revolving Loan to be converted:] * [                  ]
                                                      -------------------


2.       We confirm that each condition specified in Clause 4.2 (Further
         conditions precedent) is satisfied on the date of this Utilisation
         Request.

3.       The proceeds of this Loan should be credited to [account].

4.       This Utilisation Request is irrevocable.

5.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Utilisation Request.

                                Yours faithfully





                            authorised signatory for
                               [ name of Borrower]


- -----------
* Delete as appropriate


                                      -48-
<PAGE>   50
                                    PART II
                                SELECTION NOTICE
                            APPLICABLE TO A TERM LOAN


From:    [Borrower]

To:      [Lender]

Dated:

Dear Sirs

                         $50,000,000 FACILITY AGREEMENT
               DATED 12TH JANUARY 2001 (THE "FACILITY AGREEMENT")

1.       We refer to the following Term Loan(s) in [identify currency] with an
         Interest Period ending on [---------------------].*

2.       We request that the next Interest Period for the above Term Loan(s) is
         [---------------------]

3.       This Selection Notice is irrevocable.

4.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Selection Notice.



                                Yours faithfully




                          ----------------------------
                            authorized signatory for
                               [name of Borrower]


- -----------
*Insert details of all Term-Out Loans in the same currency which
have an Interest Period ending on the same date.


                                      -49-
<PAGE>   51
                                    PART III
                                 TERM-OUT NOTICE



From:    [Borrower]

To:      [Lender]

Dated:

Dear Sirs

                        US$50,000,000 FACILITY AGREEMENT
               DATED 12TH JANUARY 2001 (THE "FACILITY AGREEMENT")

1.       We wish to exercise the Term-Out Option under the Facility Agreement
         with effect from the Term-Out Date being [ ].

2.       We wish the following Revolving Loan(s) to be converted to Term Loans
         in the same currency as the Revolving Loan to be converted and in the
         amount(s) stated below and to have the following revised Final Maturity
         Date(s):

                LOAN            AMOUNT CONVERTED        FINAL MATURITY DATE
                 [ ]                  [ ]                       [ ]


3.       [In addition, we wish to make [a] further Term Loan(s) in the following
         amounts with the following Final Maturity Date(s):

                 LOAN                       FINAL MATURITY DATE
                 [ ]                              [  ]*


4.       A Utilization Request in respect of [each of] the above Loan(s) shall
         be delivered in due course.

5.       Terms defined in the Facility Agreement shall have the same meanings
         when used in this Term-Out Notice.



                                Yours faithfully





                            authorized signatory for
                               [Name of Borrower]


- ----------
*Delete as appropriate

                                      -50-
<PAGE>   52
\                                   SCHEDULE 3
                             MANDATORY COST FORMULAE



1.       The Mandatory Cost is an addition to the interest rate to compensate
         the Lender for the cost of compliance with (a) the requirements of the
         Bank of England and/or the Financial Services Authority (or, in either
         case, any other authority which replaces all or any of its functions)
         or (b) the requirements of the European Central Bank.

2.       On the first day of each Interest Period (or as soon as possible
         thereafter) the Lender shall calculate, as a percentage rate, the
         Mandatory Cost, in accordance with the paragraphs set out below.

3.       If the Lender is lending from a Facility Office in a Participating
         Member State, the Mandatory Cost will be the percentage notified by the
         Lender to the Guarantor as the cost of complying with the minimum
         reserve requirements of the European Central Bank.

4.       If the Lender is lending from a Facility Office in the United Kingdom,
         the Mandatory Cost will be calculated by the Lender as follows:

         (a)      in relation to a Sterling Loan:

                                 AB+C(B-D)+Ex0.01
                                 ---------------- per cent. per annum.
                                   100-(A+C)

         (b)      in relation to a Loan in any currency other than Sterling:

                                  Ex0.01
                                  ------ per cent. per annum.
                                   300

         Where:

         A        is the percentage of Eligible Liabilities (assuming these to
                  be in excess of any stated minimum) which the Lender is from
                  time to time required to maintain as an interest free cash
                  ratio deposit with the Bank of England to comply with cash
                  ratio requirements.

         B        is the percentage rate of interest (excluding the Margin and
                  the Mandatory Cost) payable for the relevant Interest Period
                  on the Loan.

         C        is the percentage (if any) of Eligible Liabilities which the
                  Lender is required from time to time to maintain as interest
                  bearing Special Deposits with the Bank of England.

         D        is the percentage rate per annum payable by the Bank of
                  England to the Lender on interest bearing Special Deposits.

         E        is the rate of charge payable by the Lender to the Financial
                  Services Authority pursuant to the Fees Regulations (but, for
                  this purpose, ignoring any minimum fee required pursuant to
                  the Fees Regulations) and expressed in pounds per L1,000,000
                  of the Fee Base of the Lender.

5.       For the purposes of this Schedule:


                                      -51-
<PAGE>   53
         (a)      "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them from time to time under or pursuant to
                  the Bank of England Act 1998 or (as may be appropriate) by the
                  Bank of England;

         (b)      "FEES REGULATIONS" means the Banking Supervision (Fees)
                  Regulations 2000 or such other law or regulation as may be in
                  force from time to time in respect of the payment of fees for
                  banking supervision; and

         (c)      "FEE BASE" has the meaning given to it in, and will be
                  calculated in accordance with, the Fees Regulations.

6.       In application of the above formulae, A, B, C and D will be included in
         the formulae as percentages (i.e. 5 per cent. will be included in the
         formula as 5 and not as 0.05). A negative result obtained by
         subtracting D from B shall be taken as zero. The resulting figures
         shall be rounded to four decimal places.

7.       Any determination by the Lender pursuant to this Schedule in relation
         to a formula, the Mandatory Cost or any amount payable to the Lender
         shall, in the absence of manifest error, be conclusive and binding on
         all Parties.

8.       The Lender may from time to time, after consultation with the
         Guarantor, determine and notify to all Parties any amendments which are
         required to be made to this Schedule in order to comply with any change
         in law, regulation or any requirements from time to time imposed by the
         Bank of England, the Financial Services Authority or the European
         Central Bank (or, in any case, any other authority which replaces all
         or any of its functions) and any such determination shall, in the
         absence of manifest error, be conclusive and binding on all Parties.


                                      -52-
<PAGE>   54
                                   SCHEDULE 4
                                 EXISTING LIENS


1.       Lien on the property and assets of Harsco Corporation's facility in
         Drakesboro, Kentucky securing $6,500,000 indebtedness from a loan
         agreement dated 15 September 1987, between Harsco Corporation and the
         County of Muhlenberg, Kentucky due 1 September 2001.

2.       Lien on Falcon 50 aircraft pursuant to a lease between Harsco
         Corporation and General Electric Credit Corporation dated 22 December
         1994.

3.       Lien on Hawker 800XP aircraft pursuant to a lease between Harsco
         Corporation and Mellon Leasing Corporation dated 9 November 1999.

4.       Liens on various power access equipment pursuant to a master rental
         agreement dated 30 May 1998 between SGB Services PLC and Genie
         Financial Services Europe Limited.


                                      -53-
<PAGE>   55
                                   SCHEDULE 5
                              EXISTING INDEBTEDNESS


1.       CREDIT AGREEMENTS

1.1      $6,500,000 loan agreement dated 15 September 1987 between Harsco
         Corporation and the County of Muhlenberg, Kentucky, due 1 September
         2001. Payments of both principal and interest under the Note are
         irrevocably assigned to Norwest Bank Minnesota, N.A. pursuant to an
         indenture of trust dated 13 September 1987 between the County of
         Muhlenberg, Kentucky, and Norwest Bank Minnesota N.A.

1.2      L20,000,000 master credit facility agreement effective 10 May 1998
         between the National Westminster Bank PLC and the following
         Subsidiaries: Heckett Limited, Heckett MultiServ PLC, Heckett MultiServ
         (UK) Limited, Harsco Europa BV, Heckett International Services Limited,
         Quipco Limited, Harsco (UK) Limited, The Permanent Way Equipment
         Company Limited, Heckett MultiServ Investment Limited, Faber Prest
         Limited, Faber Prest Distribution Limited, Faber Prest (Australia)
         Limited, Faber Prest (Overseas) Limited, Faber Prest (Pacific) Limited,
         Flixborough Warf Limited, Slag Reduction Overseas Limited and Otis
         Transport Services Limited.

1.3      CAD 12,000,000 Harsco Canada Limited short-term credit facility
         agreement with the Canadian Imperial Bank of Commerce dated 24 April
         1992.

1.4      DEM 15,000,000 Harsco G.m.b.H. short-term credit facility agreement
         with Commerzbank AG dated 1 July 1994.

1.5      $15,000,000 multicurrency credit facility agreement dated 4 February
         1999 between Svenska Handelsbanken, Harsco Europa B.V. and Heckett
         MultiServ PLC.

1.6      $20,000,000 multicurrency credit facility agreement dated 8 July 1998
         between Harsco Europa B.V. and Bank Brussels Lambert.

1.7      ZAR 39,000,000 overdraft and other credit facilities agreement between
         Heckett MultiServ (Pty.) Ltd, Heckett MultiServ (SR) (Pty.) Ltd., SRV
         Mill Services (Pty.) Ltd., Heckett MultiServ (FS) (Pty.) Ltd.,
         SteelServ (Pty.) Ltd. and Standard Bank of South Africa Limited.

1.8      $11,000,000 multicurrency credit facility agreement dated 8 May 2000
         between Heckett MultiServ (Sweden) A.B. and Svenska Handelsbanken.

1.9      NLG 18,000,000 multicurrency credit facility dated 13 August 1997
         between Harsco Europa B.V., Heckett MultiServ (Holland) B.V., Heckett
         MultiServ International B.V., Heckett MultiServ Far East B.V., Heckett
         MultiServ China B.V. and ING Bank N.V.

1.10     NLG 14,000,000 credit facility dated 1 September 1997 between
         Bologginsmaatschappij Bouwtmatorieel Europe B.V., Stalen Steigers
         Holland/Handep B.V. and SGB North Europe Central Sales B.V. and ABN
         Amro Bank N.V.

1.11     $218,750,000 five-year credit facility dated 29 September 2000 between
         Harsco Corporation, the banks named therein and The Chase Manhattan
         Bank.

1.12     $131,250,000 364-day facility dated 29 September 2000 between Harsco
         Corporation, the banks named therein and The Chase Manhattan Bank.


                                      -54-
<PAGE>   56
1.13     The Relevant Agreement.

2.       LOAN AGREEMENTS

         Dealer agreement dated June 2000 between Heckett MultiServ (Sweden) AB
         and Svenska Handelsbanken for the distribution of up to SEK 100,000,000
         of bond loans (private placement Swedish Kroner bonds).

3.       INDENTURES

3.1      $150,000,000 Notes issued under an Indenture dated 1 May 1985 between
         Harsco Corporation and The Chase Manhattan Bank and due 15 September
         2003.

3.2      L200,000,000 Guaranteed Notes issued under a Trust Indenture dated 27
         October 2000 between Harsco Finance B.V., Harsco Corporation and The
         Chase Manhattan Trustees Limited and due 27 October 2010.

4.       GUARANTEES

4.1      Guarantee dated 5 May 1998 by Harsco Corporation in favour of the
         National Westminster Bank PLC in respect of the bank's GBP 20,000,000
         master credit facility extended to certain Subsidiaries (see 1.2
         above).

4.2      Guarantee dated 1 May 1992 by Harsco Corporation in favour of Canadian
         Imperial Bank of Commerce in respect of the bank's CAD 12,000,000
         short-term credit facility extended to Harsco Canada Limited (see 1.3
         above).

4.3      Guarantee dated 30 June 1994 by Harsco Corporation in favour of
         Commerzbank AG in respect of the bank's DEM 15,000,000 short-term
         credit facility extended to Harsco G.m.b.H. (see 1.4 above).

4.4      Guarantee dated 22 February 1999 by Harsco Corporation in favour of
         Svenska Handelsbanken in respect of the bank's $15,000,000
         multicurrency credit facility extended to Harsco Europa B.V. and
         Heckett MultiServ PLC (see 1.5 above).

4.5      Guarantee dated 8 February 1999 by Harsco Corporation in favour of Bank
         Brussels Lambert in respect of the bank's $20,000,000 multicurrency
         credit facility extended to Harsco Europa B.V. (see 1.6 above).

4.6      Suretyship dated 23 November 1999 by Harsco Corporation in favour of
         Standard Bank of South Africa Limited in respect of the bank's ZAR
         39,000,000 overdraft and other credit facilities extended to certain
         Subsidiaries (see 1.7 above).

4.7      Guarantee dated 9 May 2000 by Harsco Corporation in favour of Svenska
         Handelsbanken for $11,000,000 in respect of the bank's multicurrency
         credit facility extended to Heckett MultiServ (Sweden) AB (see 1.8
         above).

4.8      Guarantee dated 23 December 1997 by Harsco Corporation in favour of ING
         Bank N.V for NLG 18,000,000 in respect of the bank's multicurrency
         credit facility extended to certain Subsidiaries (see 1.9 above).

4.9      Guarantee dated 11 November 1997 by Harsco Corporation in favour of
         Svenska Handelsbanken for up to $27,240,736.50 in respect of the bank's
         issuing letters of credit for the account of Fortuna Insurance Limited
         (see 5.2 below).


                                      -55-
<PAGE>   57
4.10     Guarantee dated 13 June 2000, by Harsco Corporation in favour of
         Svenska Handelsbanken as representative for the bondholders in
         conjunction with the issuance of up to SEK 100,000.000 bond loans up
         (private placement Swedish Kroner bonds) by Heckett MultiServ (Sweden)
         AB (see 2 above).

4.11     Guarantee dated 25 September 1996 by Harsco Corporation in favour of
         Banque Brussels Lambert for up to BEF 3,000,000,000 in respect of the
         bank's placement of commercial paper for the account of Harsco Europa
         B.V. (see 6.4 below).

5.       LETTERS OF CREDIT

5.1      $19,271,859 standby letter of credit dated 8 December 1997, issued by
         Svenska Handelsbanken in favour of ACE Property & Casualty Insurance
         Company and certain of its subsidiaries and for the account of Harsco
         Corporation expiring on 31 December 2001.

5.2      $11,355,027 standby letter of credit dated 9 April 1997, issued by
         Svenska Handelsbanken in favour of ACE Property & Casualty Insurance
         Company and certain of its subsidiaries and for the account of Fortuna
         Insurance Limited expiring on 31 December 2001.

6.       OTHER ARRANGEMENTS

6.1      Commercial paper placement agency agreement dated 6 November 1998
         between Chase Securities, Inc. and Harsco Corporation for the issuance
         of Harsco Corporation's commercial paper under its $350,000,000
         commercial paper programme.

6.2      Commercial paper placement agency agreement dated 1 October 2000
         between Salomon Smith Barney, Inc. and Harsco Corporation under its
         $350,000,000 commercial paper programme.

6.3      Commercial paper placement agency agreement dated 11 October 1994
         between Lehman Brothers, Inc. and Harsco Corporation for the issuance
         of Harsco Corporation's commercial paper under its $350,000,000
         commercial paper programme.

6.4      Commercial paper placement agency agreement dated 25 September 1996
         between Banque Brussels Lambert and Harsco Europa B.V. for the
         placement of Harsco Europa B.V.'s commercial paper up to BEF
         3,000,000,000 or the equivalent in another currency.

6.5      $80,000,000.00 performance surety bond dated 29 October 1999, issued by
         CNA Insurance Company in favour of the United States Treasury and for
         the account of Harsco Corporation expiring on 25 October 2000.

6.6      Lease dated 22 December 1994, originally valued at $13,897,000 between
         Harsco Corporation and General Electric Credit Corporation for the
         lease of a Falcon 50 aircraft expiring 22 December 2004.

6.7      Lease dated 9 November 1999, originally valued at $12,122,784 between
         Harsco Corporation and Mellon Leasing Corporation for the lease of
         Hawker 800XP aircraft expiring 22 November 2014.

6.8      Master rental agreement dated 30 May 1998 between SGB Services PLC and
         Genie Financial Services Europe Limited for the lease of certain power
         access equipment whose principal value is presently L18,058,000.


                                      -56-
<PAGE>   58
THE GUARANTOR

HARSCO CORPORATION

Address: P.O. Box 8888,
         Camp Hill,
         Pennsylvania 17001-8888

Fax      No: 001 717 763 6424

Attention: Salvatore D. Fazzolari

By:      SALVATORE D. FAZZOLARI
         Senior Vice President
         Chief Financial Officer & Treasurer



THE BORROWERS

HARSCO FINANCE B.V.

Address: Wenckebachstraat 1
         1951 JZ Velsen-Noord
         Postbus 83
         1970 AB ljmudien

Fax      No: +31 251 22 83 12

Attention: Financial Manager

and

Fax      No: +44 207 314 1491

Attention: Graham T. Goulding

By:      DEREK C. HATHAWAY
         Director

By:      SALVATORE D. FAZZOLARI
         Director



HARSCO INVESTMENT LIMITED

Address: Commonwealth House
         2 Chalkhill Road
         London W6 8DW

Fax      No: + 44 207 314 1491

Attention: Graham T. Goulding

By:      SALVATORE D. FAZZOLARI
         Director



THE LENDER


                                      -57-
<PAGE>   59
CITIBANK, N.A.

Address: 399 Park Avenue
         8th Floor/Zone 11
         New York, NY 10043

Fax      No: 212 793 0289

Attention: Hugo Arias

By:      STUART G MILLER
         Vice President


                                      -58-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.C
<SEQUENCE>4
<FILENAME>y46501mex10-c.txt
<DESCRIPTION>COMMERCIAL PAPER PAYMENT AGENCY AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10(c)


         COMMERCIAL PAPER PLACEMENT AGENCY AGREEMENT, dated as of October 1,
2000 between HARSCO CORPORATION, a Delaware corporation (the "Issuer"), and
SALOMON SMITH BARNEY INC., a Delaware corporation (the "Placement Agent").

         The Issuer intends to issue short-term notes pursuant to Section 4(2)
of the Securities Act of 1933, as amended (the "1933 Act"), and Rule 506
thereunder.

         The Issuer desires to enter into this Agreement with the Placement
Agent in order to provide for the offer and sale of such notes in the manner
described herein.

         The parties hereto, in consideration of the premises and mutual
covenants herein contained, agree as follows:

1.       Definitions

         "1933 Act" means the Securities Act of 1933, as amended.

         "Business Day" shall mean any day other than a Saturday or Sunday or a
day when banks are authorized or required by law to close in New York City.

         "Company Information" shall mean the Private Placement Memorandum
(defined below), together with, to the extent applicable, information provided
by the Issuer pursuant to Section 7(b) hereof.

         "DTC" shall mean The Depository Trust Company.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Institutional Accredited Investor" shall mean an institutional
investor that is reasonably believed to qualify as an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the 1933 Act.

         "Issuing and Paying Agent" shall mean The Chase Manhattan Bank, the
issuing and paying agent under the Issuing and Paying Agency Agreement, or any
successor thereto.

         "Issuing and Paying Agency Agreement" shall mean the issuing and paying
agency agreement, dated as of October 12, 1994 between Morgan Guaranty Trust
Company of New York, as the Issuing and Paying Agent and the Issuer, the
obligations under which were assumed by The Chase Manhattan Bank on September 1,
1995, as the same may from time to time be amended.

                                       1
<PAGE>   2
         "Notes" shall mean short-term promissory notes of the Issuer,
represented by master notes substantially in the form of Annex A to the Issuing
and Paying Agency Agreement, issued by the Issuer from time to time pursuant to
the Issuing and Paying Agency Agreement.

         "Offering Materials" shall mean the offering materials concerning the
Issuer contemplated by Section 7 hereof (including the materials incorporated by
reference therein), and such offering materials as from time to time revised or
supplemented.

         "Private Placement Memorandum" shall mean the private placement
memorandum with respect to the offer and sale of the Notes (including materials
referred to therein or incorporated by reference therein), prepared in
accordance with Section 7 hereof and provided to purchasers or prospective
purchasers of the Notes, and all amendments and supplements thereto which may be
prepared from time to time in accordance with this Agreement.

         "Person" shall mean an individual, a corporation, a partnership, a
trust, an association or any other entity.

         "Qualified Institutional Buyer" or "QIB" shall have the meaning
assigned to that term in Rule 144A.

         "Rule 144A" shall mean Rule 144A under the 1933 Act.

         "SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.

2.       Issuance and Placement of Commercial Paper Notes

         (a) The Issuer hereby appoints the Placement Agent to act as the
Issuer's placement agent in connection with the sale of the Notes in accordance
with the terms hereof, and the Placement Agent hereby accepts such appointment.
While (i) the Issuer has and shall have no obligation to permit the Placement
Agent to purchase any Notes for its own account or to arrange for the sale of
the Notes and (ii) the Placement Agent has and shall have no obligation to
purchase any Notes for the Placement Agent's own account or to arrange for the
sale of Notes, the parties agree that, as to any and all Notes which the
Placement Agent may purchase or the sale of which the Placement Agent may
arrange, such Notes, will be purchased or sold by the Placement Agent in
reliance on, among other things, the agreement, representations, warranties and
covenants of the Issuer contained herein and on the terms and conditions and in
the manner provided for herein. Without limiting the generality of the
foregoing, the Issuer agrees that the Issuer will not engage any person or party
to assist in the placement of the Notes other than a placement agent that has
executed a

                                       2
<PAGE>   3
placement agreement with the Issuer which agreement contains procedures and
terms substantially in the form of those set forth in Section 6 hereof (each
such placement agent, along with the Placement Agent, referred to herein as an
"Approved Placement Agent" and together, the "Approved Placement Agents") and
that it shall provide the Placement Agent with a copy thereof within five (5)
Business Days of execution thereof.

         (b) If the Issuer and the Placement Agent shall agree on the terms of
the purchase of any Note by the Placement Agent or the sale of any Note arranged
by the Placement Agent (including, but not limited to, agreement with respect to
the date of issue, purchase price, face or principal amount, maturity and
interest rate (in the case of interest-bearing Notes) or discount rate thereof
(in the case of Notes issued on a discount basis), and appropriate compensation
for the Placement Agent's services hereunder) pursuant to this Agreement, the
Placement Agent shall confirm the terms of each such agreement promptly to the
Issuer in the Placement Agent's customary form, the Issuer shall cause such Note
to be issued and delivered in accordance with the terms of the Issuing and
Paying Agency Agreement, and payment for such Note shall be made in accordance
with such Agreement. The authentication and delivery of such Note by the Issuing
and Paying Agent shall constitute the issuance of such Note by the Issuer. The
Issuer shall deliver Notes signed by the Issuer to the Issuing and Paying Agent,
and instructions shall be delivered to the Issuing and Paying Agent to complete,
authenticate and deliver such Notes in the manner prescribed in the Issuing and
Paying Agency Agreement. So long as incurred at the time with the prior approval
of the Issuer, the Placement Agent shall be entitled to compensation at such
rates and paid in such manner as the Issuer and the Placement Agent shall from
time to time agree upon and to reimbursement for the Placement Agent's
out-of-pocket costs and expenses, including, but not limited to, fees and
disbursements of outside counsel, in connection with the transactions
contemplated hereby.

         (c) The Notes shall be issued in book-entry form only. Notes in
book-entry form shall be represented by master notes registered in the name of a
nominee of DTC and recorded in the book-entry system maintained by DTC.
References to "Notes" in this Agreement shall refer to such book-entry Notes
unless the context otherwise requires. The Notes may be issued either at a
discount or as interest-bearing obligations with interest payable at maturity in
a stated amount.

         (d) Each Note purchased by, or the sale of which is arranged through,
the Placement Agent hereunder shall (i) have a face amount of $250,000, or an
integral multiple of $1,000 in excess thereof, (ii) have a maturity which is a
Business Day not later than the 270th day next succeeding such Note's date of
issuance and (iii) not contain any provision for extension, renewal or automatic
"rollover."

                                       3
<PAGE>   4
3.       Representations and Warranties of the Issuer.

         (a)      The Issuer represents and warrants as follows:

         (i) The Issuer is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own its property, to carry on its business
as presently being conducted, to execute and deliver this Agreement, the Issuing
and Paying Agency Agreement, and the Notes, and to perform and observe the
conditions hereof and thereof.

         (ii) Each of this Agreement and the Issuing and Paying Agency Agreement
has been duly and validly authorized, executed and delivered by the Issuer and
constitutes the legal, valid and binding agreement of the Issuer. The issuance
and sale of Notes by the Issuer hereunder have been duly and validly authorized
by the Issuer and, when delivered by the Issuing and Paying Agent as provided in
the Issuing and Paying Agency Agreement, each Note will be the legal, valid and
binding obligation of the Issuer.

         (iii) Assuming that the Notes are offered and sold in the manner
contemplated by Section 6 below, the offer and sale by the Issuer of such Notes
will constitute exempt transactions under Section 4(2) of the 1933 Act and Rule
506 thereunder, and, accordingly, registration of the Notes under the 1933 Act
will not be required. Qualification of an indenture with respect to the Notes
under the Trust Indenture Act of 1939, as amended, will not be required in
connection with the offer, issuance, sale or delivery of the Notes.

         (iv) The Issuer is neither an "investment company" nor a "company
controlled by an investment company" within the meaning of the Investment
Company Act of 1940, as amended.

         (v) No consent or action of, or filing or registration with, any
governmental or public regulatory body or authority is required to authorize, or
is otherwise required in connection with, the execution, delivery or performance
of this Agreement, the Issuing and Paying Agency Agreement or the Notes.

         (vi) Neither the execution and delivery by the Issuer of any of this
Agreement, the Issuing and Paying Agency Agreement and the Notes, nor the
fulfillment of or compliance with the terms and provisions hereof or thereof by
the Issuer, will (x) result in the creation of imposition of any mortgage, lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Issuer or (y) violate any of the terms of the Issuer's charter
documents or by-laws, any contract or instrument to which the Issuer is a party
or by which it or its property is bound, or any law or regulation, or any order,
writ, injunction or decree of any court or governmental instrumentality, to
which the Issuer is subject or by which it or its property is bound.

                                       4
<PAGE>   5
         (vii) There are no actions, suits, proceedings, claims or governmental
investigations pending or, to the knowledge of the Issuer, threatened against
the Issuer or any of its officers or directors or any persons who control the
Issuer (within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act) or to which any property of the Issuer is subject, which could in
any way result in a material adverse change in the condition (financial or
otherwise) of the Issuer, or materially prevent or interfere with, or materially
and adversely affect the Issuer's execution, delivery of performance of, any of
this Agreement, the Issuing and Paying Agency Agreement and the Notes, of which
the Placement Agent has not been notified in writing.

         (viii) The initial Offering Materials do not, and any amendments or
supplements thereto and any subsequent Offering Materials and any amendments or
supplements thereto will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading.

         (b) Each issuance of Notes by the Issuer shall be deemed a
representation and warranty by the Issuer to the Placement Agent, as of the date
thereof, that both before and after giving effect to such issuance, (i) the
representations and warranties of the Issuer set forth in Section 3(a) hereof
remain true and correct on and as of such date as if made on and as of such date
(except to the extent such representations and warranties expressly relate
solely to an earlier date); (ii) the corporate resolutions and certificate of
incumbency referred to in Section 5 hereof remain accurate and in full force and
effect; (iii) since the date of the most recent Offering Materials, there has
been no material adverse change in the financial condition or operations of the
Issuer which has not been disclosed to the Placement Agent in writing; and (iii)
the Issuer is not in default of any of its obligations hereunder, under the
Issuing and Paying Agency Agreement or under any Note.

4.       Covenants and Agreements of the Issuer.

         (a) Without the prior written consent of the Placement Agent, the
Issuer shall not permit to become effective any amendment, supplement, waiver or
consent to or under the Issuing and Paying Agency Agreement. The Issuer shall
give to the Placement Agent, at least 10 Business Days prior to the proposed
effective date thereof, notice of any proposed amendment, supplement, waiver or
consent under the Issuing and Paying Agency Agreement. The Issuer shall provide
to the Placement Agent, promptly after the same is executed, a copy of any
amendment, supplement or written waiver or consent covered by the notice
requirements of this Section 4(a). The Issuer further agrees to finish prior
written notice to the Placement Agent, as soon as possible and in any event at
least 10 Business Days prior to the effective date

                                       5
<PAGE>   6
thereof, of any proposed resignation, termination or replacement of the Issuing
and Paying Agent.

         (b) The Issuer shall, whenever there shall occur any change in the
Issuer's financial condition or any development or occurrence in relation to the
Issuer that would be material to the holders of Notes or potential holders of
Notes, promptly, and in any event prior to any subsequent issuance of Notes,
notify the Placement Agent (by telephone, confirmed in writing) of such change,
development or occurrence.

         (c) The Issuer covenants and agrees with the Placement Agent that the
Issuer will promptly furnish to the Placement Agent a copy of any notice, report
or other information, relating to the Notes delivered to or from rating agencies
then rating the Notes.

         (d) The Issuer shall not use the proceeds of the sale of the Notes for
the purpose of purchasing or carrying securities within the meaning of
Regulation T of the Board of Governors of the Federal Reserve System, unless the
Issuer gives not less than 10 days' prior written notice to the Placement Agent
of the Issuer's intention to do so and prompt notice of the actual commencement
of such use of proceeds. In the event that, after receipt of such a notice, the
Placement Agent purchases Notes as principal and does not resell such Notes on
the day of such purchase, the Placement Agent shall sell such Notes only to
persons it reasonably believes to be Qualified Institutional Buyers or to
Qualified Institutional Buyers it reasonably believes are acting for other
Qualified Institutional Buyers, in each case pursuant to Rule 144A.

5.       Conditions Precedent.

         At or promptly after the execution of this Agreement, and as conditions
precedent to any obligations of the Placement Agent hereunder, there shall have
been furnished to the Placement Agent, in form and substance satisfactory to the
Placement Agent:

         (i)      an original or photocopy of the executed Issuing and Paying
                  Agency Agreement;

         (ii)     a certified copy of resolutions duly adopted by the Board of
                  Directors of the Issuer authorizing and approving the
                  transactions contemplated hereby;

         (iii)    a certificate of incumbency showing the officers and other
                  representatives of the Issuer authorized to execute Notes and
                  to give instructions concerning the issuance of Notes;

                                       6
<PAGE>   7
         (iv)     an opinion of counsel to the Issuer addressed to the Placement
                  Agent as to the matters set forth in subsections (i)-(vii) of
                  Section 3(a) above and as to such other matters as the
                  Placement Agent shall reasonably request;

         (v)      a copy of each other opinion of counsel furnished to any
                  Person that may be delivered in connection with the issuance
                  of the Notes, including, but not limited to, any opinion
                  delivered under or relating to the Issuing and Paying Agency
                  Agreement, each of which shall be addressed to the Placement
                  Agent;

         (vi)     true and correct copies of the letters assigning ratings and
                  of all other correspondence to the Issuer from the rating
                  agencies that have assigned a rating to the Notes;

         (vii)    a copy of the Offering Materials, including the Private
                  Placement Memorandum, approved in writing by the Issuer;

         (viii)   true and correct copies of any documents relating to the Notes
                  executed by the Issuer and DTC; and

         (ix)     in connection with issuance of Notes in book-entry form, a
                  copy of the master note(s) evidencing such Notes.

6.       Offers, Sales and Resales of Notes.

         All offers and sales of the Notes by the Issuer shall be effected
pursuant to the exemption from the registration requirement of the 1933 Act
provided by Section 4(2) thereof, which exempts transactions by an issuer not
involving any public offering. Offers and sales of the Notes by the Issuer
through the Placement Agent acting as agent for the Issuer shall be made in
accordance with Rule 506 under the 1933 Act. Notes may be resold or otherwise
transferred by the holders thereof only if the Notes are registered under the
1933 Act or if any exemption (including, but not limited to, the exemption
afforded by Rule 144A) from the registration requirement of the 1933 Act is
available, provided, however, that the Issuer shall have no obligation to
register the Notes under the 1933 Act and has no intention of doing so at any
time in the future.

         The Placement Agent (only with respect to offers and sales made by it
as agent for the Issuer and reoffers and subsequent resales or other transfers
made by or through the Placement Agent) and the Issuer hereby establish and
agree to observe the following procedures in connection with offers, sales and
subsequent resales or other transfer of the Notes:

         (a) The Issuer hereby confirms to the Placement Agent that within the
preceding six months neither the Issuer nor any person other than an Approved

                                       7
<PAGE>   8
Placement Agent acting on behalf of the Issuer has offered or sold any Notes, or
any substantially similar security of the Issuer to, or solicited offers to buy
any such security from, any person other than an Approved Placement Agent. The
Issuer also agrees that, as long as the Notes are being offered for sale by the
Approved Placement Agents as contemplated hereby and until at least six months
after the offer of Notes hereunder has been terminated, neither the Issuer nor
any person other than the Approved Placement Agents will offer the Notes or any
substantially similar security of the Issuer for sale to, or solicit offers to
buy any such security from, any person other than the Approved Placement Agents
without the giving of prior written notice to the Placement Agent, it being
understood that such agreement is made with a view to bringing the offer and
sale of the Notes within the exemption provided by Section 4(2) of the 1933 Act
and Rule 506 thereunder and shall survive any termination of this Agreement.

         (b) Offers and sales of the Notes shall be made only to the following
types of investors; (i) Institutional Accredited Investors (including, but not
limited to, a bank, as defined in Section 3(a)(2) of the 1933 Act, or a savings
and loan association or other institution, as defined in Section 3(a)(5)(A) of
the 1933 Act, whether acting in its individual or fiduciary capacity, provided
that, if it is acting in a fiduciary capacity, it has sole investment discretion
with respect to any account for which it is purchasing a Note), (ii) fiduciaries
or agents (other that U.S. banks or savings and loan associations of the type
described in clause (i) of this sentence) that will be purchasing Notes for one
or more accounts, each of which is an Institutional Accredited Investor, and
(iii) Qualified Institutional Buyers.

         (c) Resales and other transfers of the Notes by the holders thereof
shall be made only to the Issuer or to Institutional Accredited Investors or, in
the case of Notes resold or otherwise transferred pursuant to Rule 144A, to
Qualified Institutional Buyers or, if the Rule 144A resale is made through the
Placement Agent, to institutional investors that the Placement Agent reasonably
believes to qualify as Qualified Institutional Buyers. The Placement Agent shall
not be liable to any person or entity for any resales or other transfers made in
violation of the foregoing conditions that are not made by or through the
Placement Agent.

         (d) The Notes shall be offered only by approaching prospective
purchasers on an individual basis. No general solicitation or general
advertising shall be used in connection with the offering of the Notes. Without
limiting the generality of the foregoing, without the prior written approval of
the Placement Agent, the Issuer shall not issue any press release, generate any
publicity, allow any "tombstone" or other advertisement to be published, or hold
any meeting with securities analysts to the extent that any of these actions
relates to the Notes.

         (e) No sale of Notes to any one purchaser shall be for less than
$250,000 principal amount, and no Note shall be issued in a smaller face amount.
If the purchaser is a non-bank fiduciary acting on behalf of others, each

                                       8
<PAGE>   9
person for whom such purchaser is acting must purchase at least $250,000 face
amount of Notes.

         (f) Each Note, and the Private Placement Memorandum, shall contain the
following legend:

         THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED (THE "ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. BY ITS
         ACCEPTANCE OF THIE NOTE, THE PURCHASER REPRESENTS THAT (A) THE
         PURCHASER IS (1) AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED
         INVESTOR WITHIN THE MEANING OF REGULATION D UNDER THE ACT (AN
         "INSTITUTIONAL ACCREDITED INVESTOR") INCLUDING, WITHOUT LIMITATION, A
         BANK, AS DEFINED IN SECTION 3(a)(2) OF THE ACT, OR A SAVINGS AND LOAN
         ASSOCIATION OR OTHER INSTITUTION, AS DEFINED IN SECTION 3(a)(5)(A) OF
         THE ACT, WHETHER ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY,
         PROVIDED THAT, IF IT IS ACTING IN A FIDUCIARY CAPACITY, IT HAS SOLE
         INVESTMENT DISCRETION WITH RESPECT TO ANY ACCOUNT FOR WHICH IT IS
         PURCHASING A NOTE, OR (2) A FIDUCIARY OR AGENT (OTHER THAN A U.S. BANK
         OR SAVINGS AND LOAN ASSOCIATION OF THE TYPE DESCRIBED IN CLAUSE (A)(1)
         OF THIS SENTENCE) PURCHASING THIS NOTE FOR AN ACCOUNT WHICH IS AN
         INSTITUTIONAL ACCREDITED INVESTOR THAT IS PURCHASING AT LEAST $250,000
         OF NOTES OF THE TYPE REPRESENTED HEREBY, OR (3) A QUALIFIED
         INSTITUTIONAL BUYER ("QIB") WITHIN THE MEANING OF RULE 144A UNDER THE
         ACT; (B) THIS NOTE IS BEING ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
         TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION HEREOF; (C) ANY
         RESALE OF THIS NOTE WILL BE MADE ONLY (1) TO THE ISSUER, SALOMON SMITH
         BARNEY INC. ("SSB'), OR ANOTHER PERSON DESIGNATED BY THE ISSUER AS A
         PLACEMENT AGENT FOR THIS NOTE (SSB, AND EACH SUCH PLACEMENT AGENT TO BE
         REFERRED TO HEREINAFTER AS A "PLACEMENT AGENT"), NONE OF WHICH SHALL
         HAVE ANY OBLIGATION TO ACQUIRE THIS NOTE, (2) THROUGH A PLACEMENT AGENT
         TO AN INSTITUTIONAL INVESTOR APPROVED AS AN ACCREDITED INVESTOR OR
         REASONABLY BELIEVED TO BE A QIB BY A PLACEMENT AGENT IN A TRANSACTION
         EXEMPT FROM REGISTRATION UNDERE THE ACT, OR (3) TO A QIB IN A
         TRANSACTION THAT MEETS THE REQUIREMENTS OF RULE 144A; AND (D) IN THE
         CASE OF SALES PURSUANT TO RULE 144A, IT IS A QIB AND THE PURCHASER
         UNDERSTANDS THAT THIS NOTE WAS SOLD TO THE PURCHASER PURSUANT TO ANY
         EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE ACT PURSUANT TO RULE
         144A.

                                       9
<PAGE>   10
         (g) The Placement Agent shall furnish to each purchaser of newly issued
Notes a copy of the Private Placement Memorandum, and each amendment or
supplement thereto (other than any amendment or supplement that has been
completely superseded by a later amendment or supplement), and any additional
Offering Materials approved by the Issuer and requested by such purchaser.

         (h) For so long as any of the Notes is outstanding and is a "restricted
security" within the meaning of Rule 144(a)(3) under the 1933 Act, (i) the
Issuer shall cause to be provided to any holder of Notes and any prospective
purchaser of the Notes designated by a holder of such Notes, upon the request of
such holder or prospective purchaser, the information, if any, required to be
provided to such holder or prospective purchaser by Rule 144A(d)(4) and (ii) the
Issuer shall update such information from time to time in order to prevent such
information from becoming false or misleading and the Issuer shall take such
other actions as are necessary to ensure that the safe harbor exemption from the
registration requirements of the 1933 Act under Rule 144A is and will be
available for resale of the Notes conducted in accordance with Rule 144A.

         (i) In the event that any Note offered or to be offered by the
Placement Agent would be ineligible for resale under Rule 144A (because such
Note is of the same class (within the meaning of Rule 144A) as any other
securities of the Issuer which are at such time listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a U.S.
automated inter-dealer quotation system), the Issuer shall immediately notify
the Placement Agent (by telephone, confirmed in writing) of such fact and shall
promptly prepare and deliver to the Placement Agent an amendment or supplement
to the Offering Materials describing the Notes that are ineligible, the reason
for such ineligibility and any other relevant information relating thereto.

         (j) The Issuer agrees promptly from time to time to take such action as
the Placement Agent may reasonably request to qualify the Notes for offering and
sale under the securities laws of such jurisdictions as the Placement Agent may
request and to comply with such laws so as to permit the continuance of sales
and resales therein for as long as may be necessary to complete the transactions
contemplated hereby, provided that in connection therewith the Issuer shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction other than consent to service of process
under such state securities laws. The Issuer also agrees to reimburse the
Placement Agent for any reasonable fees or costs incurred in so qualifying the
Notes.

7.       Disclosure.

         (a) The Issuer understands that, in connection with the offer and sale
of the Notes, from time to time offering materials, including a Private
Placement

                                       10
<PAGE>   11
Memorandum and any other Company Information approved by the Company for
dissemination to purchasers or potential purchasers of the Notes (the "Offering
Materials"), will be prepared relating to the Issuer, which may be distributed
to the Placement Agent's sales personnel and to purchasers and prospective
purchasers of the Notes.

         (b) To provide a basis for the preparation of the Offering Materials
and to assist in the Placement Agent's ongoing credit review procedures and sale
of the Notes, the Issuer agrees to furnish to the Placement Agent, as these
items become available, (i) the Issuer's most recent report on form 10-K filed
with the SEC and each report on Form 10-Q or 8-K filed by the Issuer with the
SEC since the most recent Form 10-K, (ii) the Issuer's most recent annual
audited financial statements and each interim financial statement or report
prepared subsequent thereto, if not included in item (i) above, (iii) the
Issuer's and its affiliates' other publicly available recent reports, including,
but not limited to, any publicly available filings or reports provided to their
respective shareholders, any national securities exchange or any rating agency,
and any information generally supplied in writing to securities analysts, (iv)
research reports with respect to the Company prepared by any brokerage house or
rating agency, (v) any other information or disclosure prepared pursuant to
Section 7(f) hereof, and (vi) any other information or document prepared or
approved by the Issuer for dissemination to purchasers or potential purchasers
of the Notes. In addition, the Issuer shall provide the Placement Agent with
such other information as the Placement Agent may reasonably request for the
purpose of its ongoing credit review of the Issuer.

         (c) The issuer recognizes that the accuracy and completeness of the
Offering Materials are dependent on the accuracy and completeness of the
information obtained by the Placement Agent and, subject to Section 7(d) and
Section 8 hereof, the Placement Agent shall not be responsible for any
inaccuracy in any Offering Materials.

         (d) The Placement Agent agrees that prior to the distribution of any
Offering Materials the Placement Agent will provide the Issuer with a copy
thereof for the Issuer's review and approval. The Issuer agrees to notify the
Placement Agent in writing within 14 calendar days of receipt of such Offering
Materials of the Issuer's approval or disapproval thereof. Any such approval by
the Issuer shall be deemed to be a representation by the Issuer that the
Offering Materials (excluding any information furnished by the Placement Agent
expressly for inclusion therein, as set forth in the sections thereof entitled
"Additional Information") so approved does not contain an untrue statement of a
material fact nor omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.

         (e) The Issuer represents and warrants to the Placement Agent that the
financial statements of the Issuer delivered or to be delivered to the

                                       11
<PAGE>   12
Placement Agent in accordance with this Section 7 are or will be in accordance
with generally accepted accounting principles and practices in effect in the
United States on the date such statements were or will be prepared and fairly do
or will present the financial condition and operations of the Issuer at such
date and the results of the Issuer's operations for the period then ended.

         (f) The Issuer further agrees to notify the Placement Agent promptly
upon the occurrence of (i) any event that would render any fact contained in the
Issuer's most recent financial reports, as submitted to the Placement Agent,
untrue or misleading, or (ii) any event relating to or affecting the Issuer that
would cause the Offering Materials then in use to include an untrue statement of
material fact or to omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. In such event, the Issuer agrees to supply the
Placement Agent promptly with such information as will correct such untrue or
misleading statement or such omission.

8.       Indemnification.

         (a) The Issuer agrees to indemnify the Placement Agent and its
affiliates, their respective directors, officers, employees, and agents, and
each person who controls the Placement Agent or its affiliates within the
meaning of the 1933 Act or the Exchange Act and any successor thereto (the
Placement Agent and each such person being an "Indemnified Person") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which such Indemnified Person may become subject under any applicable federal
or state law, or otherwise, related to or arising out of (i) any untrue
statement or alleged untrue statement or a material fact contained in the
Offering Materials or in any information (whether oral or written) or documents
furnished or made available by the Issuer to offerees of the Notes or any of
their representatives or the omission or the alleged omission to state therein a
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made, or (ii) any matter or
transaction contemplated by this Agreement or by the engagement of the Placement
Agent pursuant to, and the performance by the Placement Agent of the services
contemplated by, this Agreement and shall promptly reimburse any Indemnified
Person for all expenses (including, but not limited to, fees and disbursements
of internal and external counsel), as they are incurred, in connection with the
investigation of, preparation for or defense of any pending or threatened claims
or any action or proceeding arising therefrom, whether or not such Indemnified
Person is a party, provided, however, that, with respect to (ii) herein, the
Issuer shall not be liable in any such case to the extent such loss, claim,
damage or liability is finally judicially determined to have resulted primarily
from an Indemnified Person's gross negligence or willful misconduct.

                                       12
<PAGE>   13
         (b) Promptly after receipt by an Indemnified Person under this Section
8 of notice of any claim or the commencement of any action, the Indemnified
Person shall, if a claim in respect thereof is to be made against the Issuer
under this Section 8, notify the Issuer in writing of the claim or the
commencement of that action; provided, however, that the failure to notify the
Issuer shall not relieve it from any liability that the Issuer may have under
this Section 8 except up to the extent of any factual and material prejudice
suffered by the Issuer as a result of such failure; and, provided, further, that
in no event shall the failure to notify the Issuer relieve it from any liability
that the Issuer may have to an Indemnified Person otherwise than under this
Section 8. If any such claim or action shall be brought against an Indemnified
Person, and notifies the Issuer thereof, the Issuer shall be entitled to
participate therein and, to the extent that the Issuer wishes, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified Person.
After notice from the Issuer to the Indemnified Person of the Issuer's election
to assume the defense of such claim or action, the Issuer shall not be liable to
the Indemnified Person under this Section 8 for any legal or other expenses
subsequently incurred by the Indemnified Person in connection with the defense
thereof other than reasonable costs of investigation. The Issuer shall not be
liable for any settlement of any such action effected without the Issuer's
written consent (which consent shall not be unreasonably withheld) but, if
settled with the Issuer's written consent or if there is final judgment for the
plaintiff in any such action, the Issuer agrees to indemnify and hold harmless
any Indemnified Person from and against any loss or liability by reason of such
settlement or judgment.

         (c) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 8 is for
any reason unavailable or insufficient to hold harmless an Indemnified Person,
other than as expressly provided above, the Issuer and the Placement Agent shall
contribute to the aggregate costs of satisfying such liability (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer, on the one hand, and the Placement Agent, on the other hand, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuer on the
one hand and the Placement Agent on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Issuer on the one hand and the Placement Agent
on the other with respect to such offering shall be deemed to be in the same
proportion as the aggregate proceeds to the Issuer of the Notes sold pursuant
hereto (before deducting expenses) bear to the aggregate commissions and fees
earned by the Placement Agent hereunder. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuer on the one hand or
the Placement Agent on

                                       13
<PAGE>   14
the other, the intent of the parties, and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Issuer and the Placement Agent agree that, it would not be just
and equitable if contributions pursuant to this Section 8 were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an Indemnified Person as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8
shall be deemed to include, for purposes of this Section 8, but not be limited
to, any fees and disbursement of internal and external counsel reasonably
incurred by an Indemnified Person in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 8, the
aggregate of all amounts paid by the Placement Agent pursuant to the foregoing
shall not exceed the aggregate of such commissions and fees earned by the
Placement Agent hereunder.

         (d) The obligations of the Issuer in this Section 8 are in addition to
any other liability that the Issuer may otherwise have.

         (e) The provisions of this Section 8 shall survive the termination of
this Agreement.

9.       Choice of Forum.

         The Issuer agrees that any suit, action or proceeding brought by the
Issuer against the Placement Agent in connection with or arising out of this
Agreement, any agreement, instrument or document entered into in connection with
this Agreement, or the offer and sale of the Notes shall be brought solely in
the Federal courts located in the Borough of Manhattan or the courts of the
State of New York located in the Borough of Manhattan.

10.      Notices.

         All notices required under the terms and provisions hereof shall be in
writing, delivered by hand, by mail (postage prepaid), or by telex, telecopier
or telegram, and any such notice shall be effective when received at the address
specified below.

If to the Issuer:                          If to the Placement Agent:

Harsco Corporation                         Salomon Smith Barney Inc.
350 Poplar Church Road                     390 Greenwich Street, 4th Floor
Camp Hill, PA  17011                       New York, New York 10013
Attention:  Director-Treasury              Attention:  Money Markets Origination
     Services
Fax No.:  717-763-6424                     Fax No.:  212-723-8624

                                       14
<PAGE>   15
or, if to any of the foregoing parties or their successors, at such other
address as such party or successor may designate from time to time by notice
duly given in accordance with the terms of this Section 10 to the other party
hereto.

11.      Governing Law.

         THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT OF LAWS
PROVISIONS.

12.      Entire Agreement.

         This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters covered hereby and supersedes all prior
agreements and understandings between the parties.

13.      Amendment and Termination:  Successors:  Counterparts.

         (a) The terms of this Agreement shall not be waived, altered, modified,
amended or supplemented in any manner whatsoever except by written instrument
signed by both parties hereto. The Issuer or the Placement Agent may terminate
this Agreement upon at least 30 days' written notice to the other, provided that
such termination shall not affect the obligations of the parties hereunder with
respect to Notes unpaid at the time of such termination or with respect to
actions or events occurring prior to such termination.

         (b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns; provided,
however, that neither the Issuer nor the Placement Agent may assign, either in
whole or in part, any of its rights or obligations under this Agreement without
the prior written consent of the other party, and any such assignment without
such consent shall be null and void, except that the Placement Agent may assign
and transfer this Agreement to a successor in interest to the Placement Agent as
a result of a merger of the Placement Agent with any of its affiliates, or the
acquisition of the Placement Agent or Citigroup (c) This Agreement may be
executed in several counterparts, each of which shall be deemed an original
hereof.

14.      Captions.

         The captions in this Agreement are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.

                                       15
<PAGE>   16
15.      Severability of Provisions.

         Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be in effective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity of such provisions in any other
jurisdiction.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.

                             HARSCO CORPORATION

                             By: _______________________
                                 Name:  Salvatore D. Fazzolari
                                 Title: Sr. Vice President, CFO & Treasurer


                             SALOMON SMITH BARNEY INC.

                             By: _______________________
                                 Name:  James M. Hennessy
                                 Title: Director



                                      16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.P
<SEQUENCE>5
<FILENAME>y46501mex10-p.txt
<DESCRIPTION>AUTH TERMS & CONDITIONS OF THE ANNUAL INCENT AWDS
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10(p)
                               HARSCO CORPORATION

                   1995 EXECUTIVE INCENTIVE COMPENSATION PLAN

                     AUTHORIZATION, TERMS, AND CONDITIONS OF
                             ANNUAL INCENTIVE AWARDS
                    (AS AMENDED AND RESTATED JANUARY 1, 2001)



1.     Purposes of Annual Incentive Awards

       The grant of Annual Incentive Awards ("Awards") under the 1995 Executive
       Incentive Compensation Plan is intended to further the profitable growth
       of Harsco Corporation (the "Company") by offering a short-term incentive
       opportunity, in addition to base salary, to officers and key corporate
       and divisional employees of the Company and its subsidiaries who are
       largely responsible for such growth, to the benefit of the Company's
       stockholders. Such Awards are expected to encourage recipients to improve
       their performance and remain with the Company and its subsidiaries, and
       that the possibility of such awards will encourage other qualified
       persons to seek and accept employment with the Company and its
       subsidiaries.

2.     Overview

       This document (the "Authorization") sets forth the authorization, terms,
       and conditions of Awards under the Company's 1995 Executive Incentive
       Compensation Plan (the "1995 Plan"), as determined by the Management
       Development and Compensation Committee (the "Committee"). The terms of
       this Authorization are subject to, and qualified in their entirety by
       reference to, the 1995 Plan, including Section 6(h) of the 1995 Plan
       setting forth terms relating to Awards. If any terms of this
       Authorization are inconsistent with the terms of the 1995 Plan, the terms
       of the 1995 Plan shall control. Terms used in this Authorization but not
       otherwise defined herein shall have the meanings ascribed to such terms
       in the 1995 Plan.

3.     Definitions

       In addition to terms defined in Sections 1 and 2 hereof, the following
       terms shall be defined as set forth below:

       3.1    Award Potential means the range of amounts, denominated in cash,
              that may be deemed to be earned upon achievement of Performance
              Objectives, as set forth in Section 4.1. The terms Maximum and
              Target Award Potential have the meanings set forth in Section 4.1,
              and the term Earned Award Potential has the meaning set forth in
              Section






                                       1
<PAGE>   2
       5.1.   Award Potentials are hypothetical amounts intended solely to
              provide a  means of valuing Awards for purposes
              of settlement.

       3.2    Base Salary means salary actually earned by a Participant during
              the Performance Year to which the Award relates (as distinct from
              the annual salary rate in effect at the end of such Performance
              Year). This amount excludes payments resulting from awards
              authorized under the Company's Annual and Long-Term Incentive
              Plans prior to 1995 and payments under the 1995 Plan, the
              Authorization, or Awards thereunder.

       3.3    Cause means (i) the willful and continued failure by the
              Participant to perform substantially his or her duties with the
              Company or a subsidiary (other than such failure resulting from
              the Participant's incapacity due to physical or mental illness),
              or (ii) the willful engaging by the Participant in illegal
              conduct, or (iii) the willful engaging by the Participant in
              conduct in violation of any provision of the Code of Conduct or
              other published policies of the Company, or (iv) the willful
              engaging by the Participant in any act of serious dishonesty which
              adversely affects, or in the reasonable estimation of the
              Committee, could in the future adversely affect, the value,
              reliability or performance of the Participant to the Company. For
              purposes of this definition, no act, or failure to act, on the
              part of the Participant shall be considered "willful" unless done,
              or omitted to be done, by the Participant in bad faith and without
              reasonable belief that his or her action or omission was in, or
              not opposed to, the best interests of the Company.

       3.4    Eligible Unit means the Company as a whole or any department,
              division, subsidiary, or other business unit or function of the
              Company for which separate operational results may be available to
              the Committee, as specified by the Committee.

       3.5    Fair Market Value of Common Stock as of any given date means the
              average of the high and the low sale prices of a share of common
              stock reported in the table entitled "New York Stock Exchange
              Composite Transactions" contained in The Wall Street Journal (or
              an equivalent successor table) for such date or, if no such prices
              are reported for such date, on the most recent trading day prior
              to that date for which such prices were reported.

       3.6    Normal Retirement means retirement at or after age 62 with at
              least 30 years of service, or at or after age 65.

       3.7    Participant means an officer of the Company (including division
              officers).







                                       2
<PAGE>   3


       3.8    Performance Objective means the business criteria and minimum,
              targeted, and maximum Performance Levels with respect to such
              business criteria required to be achieved during a Performance
              Year as conditions to the settlement of an Award, and other
              related terms, as set forth in Section 4.2.

       3.9    Performance Level means a specified measure of achievement with
              respect to a business criteria, required in connection with a
              Performance Objective, as set forth in Section 4.2.

       3.10   Performance Year means the fiscal year or other specified period
              during which the achievement of Performance Objectives with
              respect to a given Award shall be measured.

       3.11   Restricted Stock means Restricted Stock granted in settlement of a
              specified portion of an Award, subject to the terms of the 1995
              Plan and this Authorization. Common Stock issued or delivered as
              Restricted Stock may consist, in whole or in part, of authorized
              and unissued shares or treasury shares.

       3.12   Restricted Period shall have the meaning set forth in Section 6.1
              hereof.

       3.13   Salary Level means the numbered category assigned to each
              Participant for purposes of determining annual salary rate under
              the Company's executive compensation program, as of the end of the
              Performance Year to which an Award relates.

       3.14   Termination means a termination of employment immediately after
              which the Participant is not an employee of the Company or any
              subsidiary. Conversion from full-time or part-time employment or a
              leave of absence from employment, if approved by the Committee,
              shall not be deemed to be a Termination for purposes of this
              Authorization.

4.     Awards, Award Potentials, and Performance Objectives

       The Committee may authorize Awards for a given Performance Year for
       eligible officers of the Company. The authorization of an Award for a
       Participant will confer upon such Participant a conditional right to
       receive cash upon achievement of Performance Objectives specified for the
       Participant. Each Award shall relate to a single Performance Year
       specified by the Committee.







                                       3

<PAGE>   4
       4.1    Award Potential; Maximum and Target Award Potentials. The Award
              Potential for each Award shall range from zero to a maximum amount
              equal to the Participant's Base Salary multiplied by his or her
              Salary Level multiplied by 0.03(1), such maximum amount being
              designated the Maximum Award Potential. Within this range, the
              Award Potential equal to 67% of the Maximum Award Potential shall
              be designated as the Target Award Potential.

       4.2    Performance Objectives. For each Award, the Committee shall
              specify Performance Objectives, which shall be set forth in one or
              more exhibits which may be from time to time appended to this
              Authorization. The Performance Objectives specified in a given
              exhibit may apply to one or more Participants, including groups of
              Participants working for an Eligible Unit. Each such exhibit shall
              set forth the following, in any format deemed appropriate by the
              Committee:

              (a)   The Committee shall specify the business criteria for each
                    Performance Objective, setting forth the nature of the
                    performance to be measured. The Committee may limit the
                    scope of any business criteria authorized under the 1995
                    Plan, and set forth in detail any terms relating to such
                    business criteria as the Committee deems necessary or
                    desirable to enable Performance Objectives to be unambiguous
                    and subject to precise measurement.

              (b)   Because multiple Performance Objectives will be designated
                    for each Award, the Committee shall specify the weighting to
                    be given each Performance Objective. Such weighting will be
                    expressed as a percentage, by which a Participant's Award
                    Potential may be multiplied to determine the portion of the
                    Award Potential that relates to a given Performance
                    Objective.

              (c)   The Committee shall designate for each Performance
                    Objective a Minimum, Target, and Maximum Performance Level.
                    The Minimum Performance Level will represent the threshold
                    level of performance required before any Award Potential
                    will be deemed to be earned with respect to a given
                    Performance Objective. The Target Performance Level will
                    represent the level of performance required in order that
                    the Target Award Potential will be deemed to be earned with
                    respect to a given Performance Objective. The Maximum
                    Performance Level will represent the level of performance
                    required in order that the Maximum Award Potential

- ----------------------
(1) As approved by the Management Development and Compensation Committee on
December 14, 2000.







                                       4
<PAGE>   5
                     will be deemed to be earned with respect to a given
                     Performance Objective.

              (d)    The Committee shall designate the Performance Year to which
                     the Performance Objectives relate.

       4.3    Guidelines for Establishing Performance Levels. In establishing
              Performance Levels, the Minimum Performance Level will represent
              less than desired performance, the Target Performance Level will
              represent superior, professional performance under existing
              circumstances rather than ordinary performance, and the Maximum
              Performance Level will represent distinguished performance
              expected to be achieved only rarely, e.g., something on the order
              of two out of ten times. Although the Target Award Potential
              represents 67% of the Maximum Award Potential, there is no
              requirement that Target Performance Levels bear any particular
              mathematical relationship to Maximum Performance Levels or Minimum
              Performance Levels.

       4.4    Notification of Awards. The Company shall notify members of the
              class of eligible employees of their selection for participation,
              the authorization of Awards, and the applicable Performance
              Objectives as promptly as practicable. Such notification shall be
              accomplished in any reasonable manner, in the discretion of the
              Committee.

5.     Settlement of Awards in Cash and Restricted Stock

       5.1    Determination of Earned Award Potential and Limitation Thereof. As
              promptly as practicable following the end of each Performance
              Year, the Committee shall determine whether and the extent to
              which Performance Objectives and other material terms and
              conditions relating to each Participant's Award for such
              Performance Year have been achieved and satisfied, and shall
              determine the Award Potential, if any, deemed to be earned with
              respect to each such Award (the "Earned Award Potential"). In the
              event that a Participant's Earned Award Potential exceeds
              $2,000,000, the Earned Award Potential for such Participant's
              Award shall be reduced to that amount.

       5.2    Payment of Cash and Grant of Restricted Stock. At the time the
              Committee determines a Participant's Earned Award Potential under
              Section 5.1, each Participant shall become entitled, subject to
              Sections 5.3 and 5.4, to receive a payment in cash equal to his or
              her Earned Award Potential. Such cash payment shall be made as
              promptly as practicable after the determination by the Committee
              of the Participant's Earned Award Potential. Participants may
              request that the Committee pay his or her award 60% in cash and
              the balance in a






                                       5
<PAGE>   6
              number of shares of common stock of the Company, equal to 40% of
              his or her Earned Award Potential divided by the Fair Market Value
              of common stock on the last trading day of the performance year.
              Upon approval by the Committee, the award shall be paid to the
              requesting Participant in that manner. Such common stock may
              consist in whole or in part, of authorized and unissued shares or
              treasury stock.

       5.3    Committee Discretion. The Committee may, at any time prior to the
              payment under Section 5.2, adjust or modify Performance
              Objectives, Award Potentials, or other Award terms (1) in
              recognition of unusual or nonrecurring events affecting the
              Company or any Eligible Unit, or the financial statements or
              results thereof, or in response to changes in applicable laws
              (including tax, disclosure, and other laws), regulations,
              accounting principles, or other circumstances deemed relevant by
              the Committee, (2) in view of the Committee's assessment of the
              business strategy of the Company and Eligible Units thereof,
              performance of comparable organizations, economic and business
              conditions, personal performance of the Participant, and other
              circumstances deemed relevant by the Committee, or (3) with
              respect to any Participant whose position or duties with the
              Company or any subsidiary has changed; provided, however, that no
              such adjustment or modification may be made with respect to an
              Award granted to a "covered employee" within the meaning of Code
              Section 162(m) and regulations thereunder if and to the extent
              that such adjustment or modification would increase the amount of
              compensation payable to such covered employee upon achievement of
              the existing Performance Objectives. Examples of considerations
              which might influence the Committee in exercising its discretion
              hereunder include:

              (a)    Achievement of a rate of return on stockholders' equity
                     which was either significantly more or significantly less
                     than the Committee's estimate of the Company's competitive
                     cost of equity.

              (b)    The existence of compensation restraints at an Eligible
                     Unit.

              (c)    A substantial change in the established strategic
                     performance objectives during the period.

              (d)    A substantial change in the composition of an Eligible Unit
                     during the period.

       5.4    Settlement of Award In the Event of Termination. In the event of a
              Participant's Termination, such Participant (or his or her
              beneficiary) shall receive, in lieu of payment of all amounts
              specified in Section 5.2, settlement of such Participant's Award
              as provided in this Section 5.4.






                                       6
<PAGE>   7
              In the event of a Participant's Termination by reason of Normal
              Retirement, death, or full and permanent disability (as determined
              by the Committee) prior to the end of a Performance Year to which
              an Award relates, the Participant's Earned Award Potential shall
              be 100% of the Earned Award Potential otherwise determined under
              Section 5.1. (However, the definition of "Base Salary" will have
              the effect of prorating the Participant's Earned Award Potential
              according to the salary actually earned during the year to the
              date of retirement.) In the event of a Participant's Termination
              for any reason other than an involuntary Termination for Cause
              after the end of a Performance Year to which an Award relates but
              prior to settlement of an Award relating to such Performance Year,
              the Participant's Earned Award Potential shall equal 100% of the
              Earned Award Potential otherwise determined under Section 5.1. In
              any case, the Participant's Earned Award Potential shall be
              determined by the Committee at such time as determinations are
              otherwise made under Section 5.1, and settlement of his or her
              Award shall be made as promptly as practicable thereafter.

              Any settlement under this Section 5.4 shall be made in the form of
              a payment in cash equal to 100% of the Participant's Earned Award
              Potential (as adjusted under this Section 5.4).

              In the event of a Participant's Termination (i) for any reason
              other than Normal Retirement, death, or full and permanent
              disability (as determined by the Committee) prior to the end of a
              Performance Year to which an Award relates or (ii) which is an
              involuntary Termination for Cause after the end of a Performance
              Year to which an Award relates but prior to the Committee's
              determination of the Participant's Earned Award Potential with
              respect to such Award, any Award of such Participant for which
              such Earned Award Potential has not previously been determined
              shall be forfeited.

       5.5    Certification. Determinations by the Committee under this Section
              5 shall be set forth in a written certification, which may include
              for this purpose approved minutes of a meeting of the Committee at
              which such determinations were made.

6.     Restricted Stock

       6.1    Effective January 6, 1999, all restrictions against transfer and
              forfeiture conditions applicable to the outstanding Restricted
              Stock shall terminate and all such shares which had not previously
              been forfeited shall become transferable and nonforfeitable. In
              addition, on such






                                       7
<PAGE>   8
              date, the Company shall repurchase from the Participants all
              outstanding Restricted Stock with respect to which the Fair Market
              Value on January 6, 1999 is more than 10% below the Fair Market
              Value which was used at the time of grant to calculate the number
              of shares awarded ("Original Grant Value"). Such repurchases shall
              be paid for by the Company as soon as practicable in cash (subject
              to necessary withholding) at a price per share equal to the
              Original Grant Value. With respect to awards made in the form of a
              deferred right to receive common stock of the Company (United
              Kingdom Participants only), the Company shall issue common stock
              with respect to those awards which are not being purchased for
              cash, and with respect to the awards which the Company is
              repurchasing, the Company shall pay cash to the Participants in an
              amount per share equal to the Original Grant Value (subject to
              necessary withholding) in satisfaction of its obligation to
              deliver those shares.

       6.2    Delivery of Stock Certificates Upon Termination of Restricted
              Period. Following termination of the Restricted Period applicable
              to Restricted Stock, the Company shall upon Participant's request,
              promptly cause to be delivered to the Participant one or more
              certificates representing the shares granted as such Restricted
              Stock (which shares shall no longer be deemed to be Restricted
              Stock), with any legends no longer applicable to such shares
              removed from such certificate(s).

7.     Tax Withholding

       7.1    Upon the termination of the Restricted Period applicable to
              Restricted Stock, the Company will withhold from such Restricted
              Stock, whole shares of Common Stock which shall be sufficient in
              value to satisfy all or a portion of such tax withholding
              obligations.

       7.2    Shares withheld or surrendered under this Section 7 shall be
              valued at their Fair Market Value on January 6, 1999. The
              Committee may, in its discretion, impose restrictions on any share
              withholding and surrender under this Section 7, including
              restrictions on Participants subject to Section 16 of the Exchange
              Act, in order to ensure that the grant of a right to elect such
              share withholding and provide the opportunity to such Participants
              to avail themselves of an exemption for the actual withholding or
              surrender of shares from short-swing profits liability under the
              Exchange Act.

8.     Administration

              Administrative details relating to Awards shall be handled by the
              Administrator, which shall be one or more individuals, employed in
              the Company's corporate office, designated by the Chief Executive
              Officer of the Company to serve in such capacity.







                                       8
<PAGE>   9
                                                                  Exhibit 1995-I

                       ANNUAL INCENTIVE AWARDS AUTHORIZED
                                    FOR 1995


The following sets forth the name of eligible officers for whom Annual Incentive
Awards are authorized for the 1995 Performance Year. Opposite the name of each
Participant is the Exhibit setting forth the Performance Objectives applicable
to such Participant.

<TABLE>
<CAPTION>
                                                                              Exhibit Setting Forth
                     Name                                                     Performance Objective
<S>                                                                           <C>

                                                                                 Exhibit 1995-II
         -----------------------------------

                                                                                 Exhibit 1995-III
         -----------------------------------

                                                                                 Exhibit 1995-III
         -----------------------------------

                                                                                 Exhibit 1995-IV
         -----------------------------------

                                                                                 Exhibit 1995-IV
         -----------------------------------

                                                                                 Exhibit 1995-IV
         -----------------------------------

                                                                                 Exhibit 1995-V
         -----------------------------------
</TABLE>






                                       9
<PAGE>   10
                                                               Exhibit 1995-____

                         PERFORMANCE OBJECTIVES FOR 1995
                             ANNUAL INCENTIVE AWARDS

                            [NAME OF ELIGIBLE UNIT:]



<TABLE>
<CAPTION>
                                                                         Performance Level
                                                          ------------------------------------------------
<S>                         <C>                             <C>               <C>              <C>
Weight                      Business Criteria               Minimum           Target           Maximum



Notes
</TABLE>






                                       10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.U
<SEQUENCE>6
<FILENAME>y46501mex10-u.txt
<DESCRIPTION>HARSCO CORPORATION DEFERRED COMPENSATION PLAN
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10(u)
                               HARSCO CORPORATION

              DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
                     (AS AMENDED AND RESTATED JUNE 27, 2000)


         Harsco Corporation (the "Corporation") hereby adopts this Deferred
Compensation Plan for Non-Employee Directors (the "Plan") pursuant to which
eligible members of its Board of Directors may elect to defer receipt of all or
any portion of the compensation payable to them for services rendered to the
Corporation as Directors.

         1. Eligible Directors. The Directors of the Corporation eligible to
make deferral elections under this Plan shall be those Directors who are not
actively employed officers or employees of the Corporation or of any of its
subsidiaries or affiliates (hereinafter referred to individually as a
"Non-Employee Director" and collectively as the "Non-Employee Directors").

         2. Deferrable Compensation. A Non-Employee Director may elect to defer
receipt of all, any part or none of the aggregate compensation payable by the
Corporation for services rendered as a Director, including the annual base
retainer, Committee Chairman annual retainer increment, attendance fees for
board and committee meetings, and other fees for special services (in the
aggregate, the "Director's Fees").

         3. Election to Defer. A Non-Employee Director who desires to defer
receipt of all or a portion of his Director's Fees in any calendar year shall so
notify the Corporation's Pension Committee in writing on or before December 31
of the prior calendar year, specifying on a form supplied by the Committee (a)
the dollar amount or percentage of the Director's Fees to be deferred, (b) the
deferral period, (c) the form of payment, and (d) the notional investment
direction. Elections to take effect with respect to the initial year of this
Plan may be made by Non-Employee Directors until the first regularly scheduled
Board of Directors meeting in 1995. A newly-appointed Non-Employee Director
shall be eligible to defer payment of future Director's Fees by so






                                       1
<PAGE>   2
notifying the Pension Committee on the appropriate form at any time within 30
days of his appointment to the Board of Directors. The elections made pursuant
to this Paragraph shall be irrevocable with respect to those Director's Fees to
which such elections pertain and shall also apply to Director's Fees payable in
subsequent calendar years unless the Non-Employee Director notifies the Pension
Committee in writing, on or before December 31, that different elections shall
apply with respect to Director's Fees payable during the immediately following
calendar year. Such new elections shall likewise continue in effect and apply to
subsequent calendar years until similarly changed.

         4. Non-Deferred Compensation. Any Director's Fees not deferred under
this Plan shall be paid in accordance with normal Corporation policy.

         5. Deferred Compensation Accounts and Notional Investment Directions.

                  (a) Accounts: At the time a Non-Employee Director elects to
defer the receipt of compensation pursuant to Paragraph 3 above, he shall also
direct the amount of the deferral to be notionally invested in an
Interest-Bearing Account and the amount to be notionally invested in a Harsco
Stock Account. Pursuant to such investment direction, the deferral amounts shall
be credited to the appropriate accounts as set forth below:


                  (i) Interest-Bearing Account: To the extent that a
Non-Employee Director elects a notional investment in an Interest-Bearing
Account, the Corporation shall, on the business day the Director's Fees would
have been paid absent the deferral election, credit an Interest-Bearing Account
established in his name with the amount of the deferred Director's Fees to be so
invested.

                  (ii) Harsco Stock Account: To the extent that a Non-Employee
Director elects a notional investment in a Harsco Stock Account, the Corporation
shall, on the business day the Director's Fees would have been paid absent the
deferral






                                       2
<PAGE>   3
election, credit a Harsco Stock Account established in his name with units
(including fractions), the number of which shall be obtained by dividing the
amount of the deferred Director's Fees to be so invested by the Fair Market
Value of the Corporation's common stock. These units, thus calculated, are
hereinafter referred to as "Stock Equivalents." For purposes of the Plan, Fair
Market Value of a share of the Corporation's common stock on any date shall be
equal to the mean between the high and low prices at which such shares were
traded on the New York Stock Exchange ("NYSE") on such date, or, if no sales
were quoted on such date, on the most recent preceding date on which sales were
quoted. In the event of any change in the common stock of the Corporation by
reason of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, or a rights offering
to purchase common stock at a price substantially below Fair Market Value, or of
any similar change affecting the common stock, the value and attributes of each
Stock Equivalent shall be appropriately adjusted consistent with such change to
the same extent as if such Stock Equivalents were issued and outstanding shares
of common stock of the Corporation.

                  (b) Earnings: The Corporation shall credit earnings to each
account as follows:

                  (i) Interest-Bearing Account: As of the last day of each
calendar month, the Corporation shall credit as earnings to each
Interest-Bearing Account established on behalf of a Non-Employee Director an
amount equal to the Five Year U.S. Treasury Note Percentage Rate multiplied by
the average daily balance in such Interest-Bearing Account during such calendar
month. Such Five Year U.S. Treasury Note Percentage Rate shall be equal to one
twelfth (1/12) of the yield on U.S. Treasury Notes having a maturity date five
(5) years hence as listed in The Wall Street Journal or any successor
publication, as of market closing on the first day of the calendar quarter which
includes that month.

                  (ii) Harsco Stock Account: As of each quarterly dividend
payment date, the Corporation shall credit as earnings to each Harsco Stock
Account an amount equal






                                       3
<PAGE>   4
to the cash dividends payable on such date with respect to that number of shares
(including fractional shares) of its common stock equal to the number of Stock
Equivalents credited to the Harsco Stock Account on the relevant dividend record
date. The amount so credited shall then be converted into additional Stock
Equivalents in the manner described earlier using the dividend payment date as
the valuation date.

         6. Deferral Period. At the time a Non-Employee Director elects to defer
the receipt of compensation pursuant to Paragraph 3 above, he shall indicate the
deferral period applicable to such deferred compensation by specifying the year
(the "Payment Year") in which the deferred amounts are to be paid in a lump sum
or in which installment payments shall commence; provided, however, that in no
event shall the Payment Year be later than the year following the year in which
the Non-Employee Director will attain age 72.

         7. Form of Payment of Deferred Compensation. Initial payments made
under the Plan shall be based upon the aggregate balance in a Non-Employee
Director's account(s) determined on the first business day of the Payment Year.
The balance in the Non-Employee Director's Interest-Bearing Account shall be the
dollar amount credited to such account as of the first business day of the
Payment Year. The balance in the Non-Employee Director's Stock Account shall be
the dollar amount determined by multiplying the Stock Equivalents credited to
such account on the first business day of the Payment Year by the Fair Market
Value of a share of common stock of the Corporation on such date. The aggregate
balance as thus determined shall be paid to him in cash either in a lump sum
within 30 days following the first business day of the Payment Year or in up to
ten (10) annual installments commencing with the Payment Year as specified in
the election to defer made pursuant to Paragraph 3 above. If an election to
receive installment payments is made, the Non-Employee Director shall receive
the first installment within 30 days following the first business day of the
Payment Year in an amount equal to the aggregate balance in his account(s)
divided by the number of years in the installment payment period. Subsequent
installments shall be computed and paid in similar fashion; provided, however,
that






                                       4
<PAGE>   5
pending distributions in the second through final years of the installment
payment period, the aggregate balance in the Non-Employee Director's account(s)
shall be deemed to be invested in an Interest-Bearing Account and in a Harsco
Stock Account, as applicable, in the same proportion as deferred amounts under
the Plan were notionally invested on the first business day of the Payment Year,
and increased by earnings accordingly. Exhibit A attached hereto presents an
example illustrating how such a calculation is made.

         8.       Early Withdrawal.

                  (a) In the event of an "Early Withdrawal", all or part of the
amounts credited to the account(s) of a Non-Employee Director under the Plan,
net of the forfeited amount described in (c) below, shall be payable to the
Non-Employee Director in a single lump sum notwithstanding the deferral period
and form of payment specified pursuant to Paragraph 3 above.

                  (b) For purposes of the Plan, an "Early Withdrawal" shall have
occurred if:

                      (i) Written Notice: A Non-Employee Director notifies the
Corporation's Pension committee in writing at least 30 days in advance of the
proposed withdrawal date that he wishes to make an Early Withdrawal.

                      (ii) Designation of Amounts: The notice described in (a)
above shall be made on a form supplied by the Pension Committee which shall
require, at minimum, that the Non-Employee Director specify the amount of the
withdrawal (subject to the limitations in (iii) below) and whether the full
amount of the withdrawal is to be taken from the Non-Employee Director's
Interest-Bearing Account or Harsco Stock Account or apportioned between them.

                      (iii) Minimum Amount: The amount to be withdrawn shall
equal at least fifty-percent (50%) of the aggregate balance of the Non-Employee
Director's






                                       5
<PAGE>   6
account(s) determined as of the first business day of the calendar month
immediately preceding the calendar month of the withdrawal date. Such minimum
amount shall be determined without regard to the forfeited amount described in
(c) below.

                  (c) In the event of an Early Withdrawal, the Non-Employee
Director shall forfeit from the amount withdrawn an amount equal to ten-percent
(10%) of the amount withdrawn. The Non-Employee Director and the Non-Employee
Director's designated beneficiary shall not have any right or claim to the
forfeited amount, and the Corporation shall have no obligation whatsoever to the
Non-Employee Director, the Non-Employee Director's designated beneficiary or any
other person with regard to the forfeited amount.

                  (d) If a Non-Employee Director seeks to make an Early
Withdrawal at a time when the Non-Employee Director is subject to Section 16 of
the Securities Exchange Act ("Exchange Act"), the Non-Employee Director shall be
responsible for determining whether such Early Withdrawal may be considered a
nonexempt sale under Section 16 of the Exchange Act and shall be subject to any
liability which may result therefrom.

         9.       Change in Control.

                  (a) In the event of a "Change in Control" of the Corporation
followed by a Non-Employee Director's cessation of service to the Corporation as
a Director, all amounts credited to the account(s) of the Non-Employee Director
under the Plan shall be immediately due and payable to the Non-Employee Director
in a single lump sum notwithstanding the deferral period and form of payment
specified pursuant to Paragraph 3 above.

                  (b) For purposes of this Plan, a "Change in Control" shall
have occurred if:






                                       6
<PAGE>   7
                  (i) Stock Acquisition. Any "person" (as such term is used in
Section 13(d) and 14(d) (2) of the Exchange Act), other than the Corporation or
a corporation a majority of whose outstanding stock entitled to vote is owned,
directly or indirectly, by the Corporation, is or becomes, other than by
purchase from the Corporation or such a corporation, the "beneficial owner" (as
such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding voting securities.
Such a Change in Control shall be deemed to have occurred on the first to occur
of the business day immediately preceding the date securities are first
purchased by a tender or exchange offer, or the date on which the Corporation
first learns of the acquisition of 20% of such securities, or the earlier of the
business day immediately preceding the effective date of an agreement for the
merger, consolidation or other reorganization of the Corporation or the date of
approval thereof by the stockholder of the Corporation, as the case may be.

                  (ii) Change in Board. During any period of two consecutive
years, individuals who at the beginning of such period were members of the Board
of Directors, and any new director whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board of Directors. Such a Change in Control shall be deemed to have
occurred on the date upon which the requisite majority of directors fails to be
elected by the stockholders of the Corporation.

                  (iii) Other Events. There occurs a change in control of the
Corporation of a nature that would be required to be reported as such in
response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13
of 15(d) of the Exchange Act, or any successor provision to such Item relating
to a "change in control," or in any other filings under the Exchange Act.






                                       7
<PAGE>   8
         10. Designation of Beneficiary. If a Non-Employee Director dies prior
to receiving the entire balance of his account(s) under the Plan, any balance
remaining in his account(s) shall be paid in a lump sum as soon as practicable
to the Non-Employee Director's designated beneficiary or, if the Non-Employee
Director has not designated a beneficiary or the designated beneficiary is dead,
then to his estate. Any designation of a beneficiary may be revoked or modified
at any time by the Non-Employee Director, except that no designation shall be
recognized as valid unless properly filed with the Pension Committee during the
lifetime of the Non-Employee Director while he is legally competent.

         11. Withholding of Taxes. The rights of a Non-Employee Director to
payments or credits under this Plan shall be subject to the Corporation's
obligations, if any, to withhold income or other taxes from such payments.

         12. Status of Plan. This Plan is a nonqualified deferred compensation
plan covering no employees of the Corporation. As such, the Plan is exempt from
the requirements of the Employee Retirement Income Security Act of 1974, as
amended. The Corporation intends that the Plan shall at all times be maintained
on an unfunded basis for federal income tax purposes. Hence, all payments from
this Plan shall be made from the general assets of the Corporation. This Plan
shall not require the Corporation to set aside, segregate, earmark, pay into a
trust or special account or otherwise restrict the use of its assets in the
operation of its business. A Non-Employee Director (or, if applicable, his
designated beneficiary) shall have no greater right or status than as an
unsecured general creditor of the Corporation with respect to any amounts owed
hereunder.

         13. Rights Nonassignable. All payments to persons entitled to benefits
hereunder shall be made to such persons and shall not be grantable, transferable
or otherwise assignable in anticipation of payment thereof, in whole or in part,
by the voluntary or involuntary acts of any such persons or by operation of law
subject to






                                       8
<PAGE>   9
garnishment, execution, attachment or any other similar legal process of
creditors of such persons.

         14. Administration. Full power and authority to construe, interpret and
administer this Plan shall be vested in the Corporation's Pension Committee. The
Pension Committee shall have full power and authority to make each determination
provided for in this Plan. All determinations made by the Pension Committee
shall be conclusive and binding upon the Company and any other party claiming
rights hereunder.

         15. Termination. The Board of Directors may, in its discretion,
terminate this Plan at any time. Upon termination of the Plan, benefits shall be
paid in accordance with the deferral elections made by the Non-Employee
Director; provided, however, that the Pension Committee shall have the right to
determine the total amount payable to each Non-Employee Director (or, if
applicable, his beneficiary) and to cause the amount so determined to be paid in
lump sum, thereby discharging the Corporation from any further liability or
obligation under this Plan.

         16. Amendment. The Board of Directors may, in its discretion, amend
this Plan from time to time. In addition, the Pension Committee may from time to
time amend this Plan to make such administrative changes as it may deem
necessary or desirable. No such amendment shall divest any Non-Employee Director
(or person claiming through him) of any rights to amounts previously credited to
his accounts hereunder.

         17. Incompetency. If a person to receive payment hereunder is deemed by
the Pension Committee or is adjusted to be legally incompetent, the payments
shall be made to the duly appointed guardian of such incompetent, or they may be
made to such person or persons who the Pension Committee believes are caring for
or supporting such incompetent; and the receipt thereof by such person or
persons shall constitute complete satisfaction of the Company's obligations
under this Plan.






                                       9
<PAGE>   10
         18. Expenses. The expenses of administering this Plan shall be borne by
the Corporation.

         19. Gender. The masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless a different meaning is
plainly required by context.

         20. Governing Law. This Plan shall be construed, administered and
enforced according to the laws of the Commonwealth of Pennsylvania.

         21. Effective Date. The effective date of this Plan is January 1, 1995
and shall apply with respect to the Director's Fees payable by the Corporation
in respect of services performed on or after such date.

Executed this            day of             , 2001.
              ----------        ------------



ATTEST:                                                HARSCO CORPORATION

- -------------------------------------------            -------------------------
Paul C. Coppock                                        Derek C. Hathaway
Senior Vice President, Chief Administrative            Chairman, President and
Officer, General Counsel and Secretary                 Chief Executive Officer






                                       10
<PAGE>   11
                                                                     "Exhibit A"
                           Deferred Compensation Plan
                           for Non-Employee Directors

                                     Example


                  This example, prepared for illustrative purposes only,
describes the operation of the installment payout option set forth in Paragraph
7 of the Plan.

                  Director Green, age 62, elects to defer all of his Director
Fees until the year following the year he attains age 72. During his service as
a Director, Green directs 60% of his Fees to be invested in the Harsco Stock
Account (HSA) and 40% to be invested in the Interest-Bearing Account (IBA).
Pursuant to Green's prior direction, his accounts are to be paid out in three
annual installments. If Green attains age 72 in 2004 his installment should be
calculated and paid as follows:

                  1st Installment

                  - When paid - Within 30 days of the first business day (assume
January 2) in 2005.

                  - How much - First installment equals one-third of the
aggregate dollar value of Green's accounts as of January 2, 2005. Assume Green's
HSA on January 2, 2005 is credited with 1,000 Stock Equivalents and the FMV of a
share of Harsco common stock on such date is $60, thus giving his HSA a value of
$60,000. Assume further, that as of January 2, 2005, Green's IBA is credited
with $30,000 (representing his prior deferrals plus interest). Accordingly,
Green's first installment should equal $30,000 ($90,000 aggregate account
balance value divided by 3).

                  - Balance in Account after 1st Installment - In order to
continue the 60/40 proportionality going forward, the $60,000 in remaining value
under the Plan should result in the HSA holding 60% of that value and the IBA
holding the remaining 40%. Thus, as of January 2, 2005, the HSA is debited
333.33 shares leaving 666.66 shares (which at $60 FMV equal $40,000) and the IBA
is debited $10,000, thus leaving $20,000.

                  2nd Installment

                  - When paid - Within 30 days of January 2, 2006.

                  - How much - Second installment equals one-half of the
aggregate dollar value of Green's accounts as of January 2, 2006. Assume that as
of this date, Green's HSA was credited with 700 Stock Equivalents (666.66 from
prior year plus 33.34 new units attributable to dividends in the interim) and
that the FMV of a share of Harsco stock on that date was $62. Thus, Green's HSA
would be worth $43,400 at






                                       11
<PAGE>   12
January 2, 2006. Assume further that Green's IBA was worth $21,000 ($20,000 from
prior year plus interim interest of $1,000). Green's second installment would
thus equal $32,200 ($43,400 + $21,000 + 2).

                  - Balance is Accounts after 2nd Installment - The same
methodology would be used again to retain the 60/40 proportionality. As of
January 2, 2006, the combined value of HSA and the IBA was worth $64,400, and
after the payout of half this amount, the combined value was $32,200. This means
that the HSA would have 60% of the total value (or $19,320) and the IBA should
have 40% (or $12,880). Thus, the HSA should be debited 38.39 shares
(representing $24,080 or 3888.39 x $62 FMV/share) leaving 311.61 shares (or
$19,320 in value). The IBA should be debited $8,120, leaving $12,880.

                  3rd and Last Installment

                  - When paid - Within 30 days of January 2, 2007.

                  - How much - Calculate value of both HSA and IBA as of January
2, 2007 (as described above) and pay out total.






                                       12
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12
<SEQUENCE>7
<FILENAME>y46501mex12.txt
<DESCRIPTION>COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TEXT>

<PAGE>   1
                               HARSCO CORPORATION
                                                                      Exhibit 12
               Computation of Ratios of Earnings to Fixed Charges

                            (In Thousands of Dollars)


<TABLE>
<CAPTION>
                                                                                  YEARS ENDED DECEMBER 31
                                                --------------------------------------------------------------------------------
                                                   2000             1999         1998           1997              1996
                                                ---------        ---------     ---------      ---------         ---------

<S>                                            <C>            <C>             <C>            <C>              <C>
   Pre-tax income from continuing
      operations (net of minority interest
      in net income)                            $ 143,608      $ 142,312       $ 174,874       $ 165,613       $ 145,984

   Add fixed charges computed below                64,670         37,418          28,417          24,263          26,181

   Net adjustments for equity companies             3,749            365             139            (694)           (181)

   Net adjustments for capitalized
      interest                                        125           (535)            (10)           --              --
                                                  ---------      ---------       ---------       ---------       ---------


   Consolidated Earnings Available
      for Fixed Charges                         $ 212,152      $ 179,560       $ 203,420       $ 189,182       $ 171,984
                                                =========      =========       =========       =========       =========

Consolidated Fixed Charges:

   Interest expense per financial
      statements (1)                            $  50,104      $  26,968       $  20,504       $  16,741       $  21,483

   Interest expense capitalized                         2            893             128             128             131

   Portion of rentals (1/3) representing
      an interest factor                           14,564          9,557           7,785           7,394           4,567

   Interest expense for equity companies
      whose debt is guaranteed (2)                   --             --              --              --              --
                                                 ---------      ---------       ---------       ---------       ---------

   Consolidated Fixed Charges                   $  64,670      $  37,418       $  28,417       $  24,263       $  26,181
                                                =========      =========       =========       =========       =========

Consolidated Ratio of Earnings to
   Fixed Charges                                     3.28           4.80            7.16            7.80            6.57
                                                =========      =========       =========       =========       =========
</TABLE>
- -------------
(1)  Includes amortization of debt discount and expense.

(2)  No fixed charges were associated with debt of less than fifty percent owned
     companies guaranteed by the Company during the five year period 1996
     through 2000.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>8
<FILENAME>y46501mex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>

<PAGE>   1
             HARSCO CORPORATION                                       EXHIBIT 21

Subsidiaries of the Registrant

<TABLE>
<CAPTION>
                                                               Country of                             Ownership
Name                                                           Incorporation                          Percentage
- ----                                                           -------------                          ----------
<S>                                                            <C>                                    <C>
Heckett MultiServ S.A.I.C.                                     Argentina                                100%
MetServ Holdings Pty. Limited                                  Australia                                 55%
MetServ Australasia Pty. Ltd.                                  Australia                                 70%
MetServ Victoria Pty. Ltd.                                     Australia                                 70%
MetServ Pty. Ltd.                                              Australia                                 55%
Harsco (Australia) Pty. Limited                                Australia                                100%
Harsco Track Technologies Pty. Ltd.                            Australia                                100%
Taylor-Wharton (Australia) Pty. Limited                        Australia                                100%
Heckett MultiServ (Australia) Pty. Ltd.                        Australia                                100%
AluServ Middle East W.L.L.                                     Bahrain                                   65%
Heckett MultiServ S.A.                                         Belgium                                  100%
Heckett MultiServ Russia S.A.                                  Belgium                                  100%
Loyquip Holdings S.A.                                          Belgium                                  100%
Societe D'Etudes et D'Administration
  des Entreprises S.A.                                         Belgium                                  100%
SGB Belgium Sarl                                               Belgium                                  100%
Fortuna Insurance Limited                                      Bermuda                                  100%
Harsco (Bermuda) Limited                                       Bermuda                                  100%
Sobremetal - Recuperacao de Metais Ltda.                       Brazil                                   100%
Heckett MultiServ Limitada                                     Brazil                                   100%
Harsco Canada Limited                                          Canada                                   100%
Guernsey Plant Hire Ltd.                                       Channel Islands-Guernsey                 100%
SGB (Channel Islands) Ltd.                                     Channel Islands-Jersey                   100%
SGB Gulf Ltd.                                                  Channel Islands-Jersey                   100%
Heckett MultiServ S.A.                                         Chile                                    100%
Jiangxi Huanyou Resources Development
  Company Limited                                              China                                     55%
MultiServ Wuhan Co. Ltd.                                       China                                    100%
MultiServ Jiangxi Co. Ltd.                                     China                                    100%
Taylor-Wharton (Beijing) Cryogenic
  Equipment Co. Ltd.                                           China                                     51%
MultiServ spol. s.r.o.                                         Czech Republic                           100%
Czech Slag - Nova Hut s.r.o.                                   Czech Republic                            65%
Czech Slag Consulting s.r.o.                                   Czech Republic                           100%
Czech Slag s.r.o.                                              Czech Republic                           100%
Slag Reduction Vitkovice s.r.o.                                Czech Republic                           100%
SGB Cz a.s.                                                    Czech Republic                           100%
Witca SGB Stillads ApS                                         Denmark                                  100%
Alt Til Alt Undlejning A/S                                     Denmark                                  100%
Heckett MultiServ Bahna S.A.E.                                 Egypt                                     65%
Heckett Bahna Co. For Industrial
  Operations S.A.E.                                            Egypt                                     65%
Bergslagens Suomi Oy                                           Finland                                  100%
Heckett MultiServ France S.A.                                  France                                   100%
</TABLE>






                                       1
<PAGE>   2
HARSCO CORPORATION

Subsidiaries of the Registrant


<TABLE>
<CAPTION>
                                                               Country of                             Ownership
Name                                                           Incorporation                          Percentage
- ----                                                           -------------                          ----------
<S>                                                            <C>                                    <C>
Floyequip S.A.                                                 France                                   100%
PyroServ                                                       France                                   100%
Heckett MultiServ S.A.S.                                       France                                   100%
Heckett MultiServ Sud S.A.                                     France                                   100%
Heckett MultiServ Industries S.A.S.                            France                                   100%
Heckett MultiServ Logistique et
  Services Specialises S.A.S.                                  France                                   100%
SGB France S.A.S.                                              France                                   100%
SCI Fetan S.A.                                                 France                                   100%
SCI Branchy S.A.                                               France                                   100%
SGB S.A.S.                                                     France                                   100%
Carbofer International GmbH                                    Germany                                  100%
MultiServ GmbH                                                 Germany                                  100%
Harsco GmbH                                                    Germany                                  100%
SGB Geruste Und Baugerate GmbH                                 Germany                                  100%
SGB Asia Pacific Ltd.                                          Hong Kong                                100%
Pt Esgebe Bracindo Jaya                                        Indonesia                                100%
IMS Servizi SpA                                                Italy                                    100%
MultiServ SrL                                                  Italy                                    100%
IIServ SrL                                                     Italy                                     65%
Luxequip Holding S.A.                                          Luxembourg                               100%
Heckett MultiServ S.A.                                         Luxembourg                               100%
Societe Luxembourgeoise D'Interim S.A.                         Luxembourg                               100%
Heckett MultiServ Kemaman Sdn. Bhd.                            Malaysia                                 100%
Taylor-Wharon Gas Equipment Sdn. Bhd.                          Malaysia                                 100%
Tayor-Wharton Asia (M) Sdn. Bhd.                               Malaysia                                 100%
SGB Asia Pacific (M) Sdn Bhd.                                  Malaysia                                 100%
Irving, S.A. de C.V.                                           Mexico                                   100%
Heckett Mexicana, S.A. de C.V.                                 Mexico                                   100%
Andamios Patentados, S.A. de C.V.                              Mexico                                   100%
Electroforjados Nacionales, S.A. de C.V.                       Mexico                                   100%
Heckett MultiServ International B.V.                           Netherlands                              100%
Heckett MultiServ Finance B.V.                                 Netherlands                              100%
Heckett MultiServ China B.V.                                   Netherlands                              100%
Heckett MultiServ Far East B.V.                                Netherlands                              100%
Harsco Europa B.V.                                             Netherlands                              100%
Heckett MultiServ (Holland) B.V.                               Netherlands                              100%
Slag Reductie (Pacific) B.V.                                   Netherlands                              100%
Slag Reductie Nederland B.V.                                   Netherlands                              100%
SGB North Europe B.V.                                          Netherlands                              100%
Stalen Steigers Holland B.V.                                   Netherlands                              100%
</TABLE>






                                       2
<PAGE>   3
HARSCO CORPORATION
Subsidiaries of the Registrant


<TABLE>
<CAPTION>
                                                               Country of                             Ownership
Name                                                           Incorporation                          Percentage
- ----                                                           -------------                          ----------
<S>                                                            <C>                                    <C>
SGB Holland B.V.                                               Netherlands                              100%
SGB Industrial Services B.V.                                   Netherlands                              100%
SGB Events B.V.                                                Netherlands                              100%
Harsco Finance B.V.                                            Netherlands                              100%
Heckett MultiServ A.S.                                         Norway                                   100%
Slag Reduction Polska SP Z.O.O.                                Poland                                   100%
Companhia de Tratemento de
  Sucatas, Limitada                                            Portugal                                 100%
Trenci-Engenharia Tecnicas
  Racuionalizades de Construcao Civil Lda.                     Portugal                                 100%
Heckett MultiServ Saudi Arabia Limited                         Saudi Arabia                              55%
SGB Asia Pacific (S) Pte. Ltd.                                 Singapore                                100%
SGB Slovensko s.r.o.                                           Slovak Republic                          100%
MultiServ Slovensko spol. s.r.o.                               Slovak Republic                          100%
Heckett MultiServ (FS) (Pty.) Limited                          South Africa                             100%
SteelServ (Pty.) Ltd.                                          South Africa                             100%
Heckett MultiServ (Pty.) Limited                               South Africa                             100%
S.R.V. Mill Services (Pty.) Ltd.                               South Africa                             100%
Heckett MultiServ (SR) (Pty.) Ltd.                             South Africa                             100%
SRH Pty. Ltd.                                                  South Africa                             100%
Ihlanga Steelphalt                                             South Africa                              51%
MultiServ Lycrete S.A.                                         Spain                                    100%
Serviequipo S.A.                                               Spain                                    100%
MultiServ Intermetal S.A.                                      Spain                                    100%
MultiServ Iberica S.A.                                         Spain                                    100%
Heckett MultiServ Reclamet, S.A.                               Spain                                    100%
Gestion Materias Ferricas, S.A.                                Spain                                    100%
Heckett MultiServ Nordiska A.B.                                Sweden                                   100%
SGB Stallningar A.B.                                           Sweden                                   100%
Heckett MultiServ (Sweden) A.B.                                Sweden                                   100%
Montanus Industriforvaltning A.B.                              Sweden                                   100%
Bergslagens Stalservice A.B.                                   Sweden                                   100%
Heckett MultiServ (Thailand)
  Company Limited                                              Thailand                                  70%
Heckett MultiServ Investment Limited                           U.K.                                     100%
Heckett MultiServ plc                                          U.K.                                     100%
Heckett MultiServ (UK) Ltd.                                    U.K.                                     100%
MultiServ Overseas Ltd.                                        U.K.                                     100%
Quipco Ltd.                                                    U.K.                                     100%
Harsco (U.K.) Ltd.                                             U.K.                                     100%
Heckett International Services Limited                         U.K.                                     100%
Heckett Limited                                                U.K.                                     100%
</TABLE>






                                       3
<PAGE>   4
HARSCO CORPORATION
Subsidiaries of the Registrant

<TABLE>
<CAPTION>
                                                               Country of                             Ownership
Name                                                           Incorporation                          Percentage
- ----                                                           -------------                          ----------
<S>                                                           <C>                                     <C>
Faber Prest (Australia) Limited                                U.K.                                     100%
Faber Prest (Overseas) Limited                                 U.K.                                     100%
Faber Prest (Pacific) Limited                                  U.K.                                     100%
Faber Prest Distribution Limited                               U.K.                                     100%
Faber Prest Limited                                            U.K.                                     100%
Heckett MultiServ (A.S.R.) Ltd.                                U.K.                                     100%
Heckett MultiServ (Sheffield) Ltd.                             U.K.                                     100%
Heckett MultiServ (S.R.) Ltd.                                  U.K.                                     100%
Otis Transport Services Limited                                U.K.                                     100%
Slag Reduction Overseas Limited                                U.K.                                     100%
Faber Prest (US) Ltd.                                          U.K.                                     100%
SGB Group Ltd.                                                 U.K.                                     100%
SGB Services Ltd.                                              U.K.                                     100%
SGB Holdings Ltd.                                              U.K.                                     100%
SGB Investments Ltd.                                           U.K.                                     100%
Harsco Investment Ltd.                                         U.K.                                     100%
Harsco Track Technologies Ltd.                                 U.K.                                     100%
Harsco Foreign Sales Corporation                               U.S. Virgin Islands                      100%
Bio-Oxidation Services Inc.                                    U.S.A.                                   100%
Heckett MultiServ U.S. Corporation                             U.S.A.                                   100%
Heckett MultiServ Inc.                                         U.S.A.                                   100%
Heckett MultiServ Operations Ltd.                              U.S.A.                                   100%
Heckett MultiServ General Corp.                                U.S.A.                                   100%
Heckett MultiServ Intermetal Inc.                              U.S.A.                                   100%
Heckett Technology Services Inc.                               U.S.A.                                   100%
Harsco Defense Holding, Inc.                                   U.S.A.                                   100%
Harsco Minnesota Corporation                                   U.S.A.                                   100%
Harsco UDLP Corporation                                        U.S.A.                                   100%
Heckett MultiServ Investment Corporation                       U.S.A.                                   100%
T.J. Egan and Company Inc.                                     U.S.A.                                   100%
Faber Prest (U.S.), Inc.                                       U.S.A.                                   100%
Harsco Technologies Corporation                                U.S.A.                                   100%
Bio-Oxidation, Inc.                                            U.S.A.                                   100%
SRA Mill Services, Inc.                                        U.S.A.                                   100%
SGB Holdings Inc.                                              U.S.A.                                   100%
SGB Construction Services, Inc.                                U.S.A.                                   100%
Heckett MultiServ M.V. & M.S., C.A.                            Venezuela                                100%
</TABLE>






                                       4
<PAGE>   5
Companies in which Harsco Corporation does not have majority ownership are not
consolidated. These companies are listed below as unconsolidated entities

<TABLE>
<CAPTION>
                                                                                                   Country of
                                                               Incorporation/                      Ownership
 Name                                                           Organization                       Percentage
- ------                                                          ------------                       ----------
<S>                                                            <C>                                 <C>
Steelstone Holdings (Pty.) Ltd.                                Australia                              50%
Steelstone Pty. Limited                                        Australia                              50%
Phooltas Tamper Private Limited                                India                                  40%
Ferro Scrap Nigam Ltd.                                         India                                  40%
p.t. Purna Baja Heckett                                        Indonesia                              40%
IKG-Salcon Sdn. Bhd.                                           Malaysia                               50%
The Slag Reduction Company
  (New Zealand) Limited                                        New Zealand                            50%
SGB Al Darwish United WLL                                      Qatar                                  49%
Salamis / SGB Limited                                          Scotland                               50%
Auxihec                                                        Spain                                  50%
SGB Hertel Limited                                             U.K.                                   50%
S3Networks, LLC                                                U.S.A.                                 49%
Quebeisi SGB Ltd.                                              United Arab Emirates                   49%
</TABLE>






                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>9
<FILENAME>y46501mex23.txt
<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS
<TEXT>

<PAGE>   1
                                                                      Exhibit 23

                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the following
Registration Statements of Harsco Corporation and Subsidiary Companies (the
"Company") of our reports, dated January 30, 2001, relating to of the
consolidated financial statements and financial statement schedule, appear in
this Form 10-K:

- -        Post Effective Amendment No. 6 to Form S-8 Registration Statement
         (Registration No. 2-57876), effective May 21, 1982.

- -        Post Effective Amendment No. 2 to Form S-8 Registration Statement
         (Registration No. 33-5300), dated March 26, 1987.

- -        Form S-8 Registration Statement (Registration No. 33-14064), dated May
         6, 1987.

- -        Amendment No. 2 to Form S-8 Registration Statement (Registration No.
         33-24854), dated October 31, 1988.

- -        Form S-3 Registration Statement (Registration No. 33-56885), dated
         December 15, 1994.

- -        Form S-8 Registration Statement (Registration No. 333-13175), dated
         October 1, 1996.

- -        Form S-8 Registration Statement (Registration No. 333-13173), dated
         October 1, 1996.



PricewaterhouseCoopers LLP



Philadelphia, Pennsylvania
March 19, 2001
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
