1.

THE MERGER

2 

1.1    The Merger

2 

1.2    Effect of the Merger

2 

1.3    Conversion of Company Shares

2 

2.

POST-CLOSING ADJUSTMENT TO MERGER CONSIDERATION

3 

2.1    Amount and Time of Payment

3 

2.2    Definition of Net Adjusted Working Capital

3 

2.3    Determination of Adjustment

4 

3.

JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND SHANNON KO

5 

3.1    Corporate

5 

3.2    The Ko Parties

7 

3.3    No Violation

7 

3.4    Financial Statements and Controls

8 

3.5    Tax Matters

9 

3.6    Accounts Receivable

10 

3.7    Inventory

10 

3.8    Absence of Certain Changes

11 

3.9    Absence of Undisclosed Liabilities

12 

3.10   No Litigation

12 

3.11   Compliance With Laws and Orders

13 

3.12   Title to and Condition of Properties

14 

3.13   Insurance

16 

3.14   Contracts and Commitments

17 

3.15   Labor Matters

18 

3.16   Employee Benefit Plans

19 

3.17   Employment Compensation

22 

3.18   Trade Rights

23 

3.19   Major Customers and Suppliers

23 

3.20   Product Warranty and Product Liability

24 

3.21   Bank Accounts

24 

3.22   Affiliates' Relationships to Company

25 

3.23   Assets Necessary to Business

25 

3.24   No Brokers or Finders

25 

3.25   Disclosure

25 

3.26   Investment Intent

25 

4.

REPRESENTATIONS AND WARRANTIES OF BUYER

26 

4.1    Corporate

26 

4.2    Authority

26 

4.3    Agreement Not in Breach of Other Instruments Affecting Buyer

27 

4.4    Financial Statements

27 

4.5    Ladish's SEC Filings

27 

4.6    Financing

27 

4.7    Due Diligence

27 

4.8    No Brokers or Finders

28 

4.9    Disclosure

28 

4.10    Investment Intent

28 

5.

COVENANTS

28 

5.1    Title Insurance

28 

5.2    Surveys

28 

5.3    Noncompetition; Confidentiality

29 

5.4    General Releases

30 

5.5    Access to Information and Records

31 

5.6    Conduct of Business Pending the Closing

31 

5.7    Consents

32 

5.8    Other Action

32 

5.9    Disclosure Schedule

33 

5.10   Releases

33 

5.11   Tax Matters

33 

5.12   Cash and Funded Debt

33 

5.13   Ladish Capital Structure

34 

5.14   Employment Agreements

34 

5.15   Facilities Lease

34 

5.16   Pension Plan Termination

34 

6.

CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS

35 

6.1    Representations and Warranties True of the Closing Date

35 

6.2    Compliance With Agreement

35 

6.3    Consents and Approvals

35 

6.4    Title Insurance

35 

6.5    Employment Agreements

35 

6.6    Real Estate Leases

35 

7.

CONDITIONS PRECEDENT TO COMPANY'S AND THE KO PARTIES' OBLIGATIONS

36 

7.1    Representations and Warranties True on the Closing Date

36 

7.2    Compliance With Agreement

36 

7.3    Employment Agreements

36 

7.4    Real Estate Leases

36 

8.

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER, COMPANY AND THE KO PARTIES

36 

8.1    Absence of Litigation

36 

9.

INDEMNIFICATION

37 

9.1    By Shareholders and Shannon Ko

37 

9.2    By Buyer

37 

9.3    Indemnification of Third-Party Claims

37 

9.4    Payment

38 

9.5    Indemnification for Environmental Matters

39 

9.6    Limitations on Indemnification

39 

9.7 No Waiver

40 

10.

CLOSING

40 

10.1   Documents to be Delivered by Company and the Ko Parties

40 

10.2   Documents to be Delivered by Buyer

41 

11.

TERMINATION

42 

11.1   Right of Termination Without Breach

42 

11.2   Termination for Breach

42 

12.

MISCELLANEOUS

43 

12.1   Disclosure Schedule

43 

12.2   Further Assurance

43 

12.3   Disclosures and Announcements

44 

12.4   Assignment; Parties in Interest

44 

12.5   Law Governing Agreement

44 

12.6   Amendment and Modification

44 

12.7   Notice

44 

12.8   Shareholders' Agent

46 

12.9   Expenses

46 

12.10   Entire Agreement

47 

12.11   Counterparts

47 

12.12   Headings

47 

12.13   Glossary of Terms

47 

Exhibit A

Form of Employment Agreements 

Exhibit B

Lease 

Schedule 3.1.(c)

-

Foreign Corporation Qualification

Schedule 3.1.(g)

-

Shareholder List

Schedule 3.3

-

Violation, Conflict, Default

Schedule 3.5.(b)

-

Tax Returns (Exceptions to Representations)

Schedule 3.5.(c)

-

Tax Audits

Schedule 3.5.(d)

-

Consolidated Tax Returns

Schedule 3.5.(g)

-

Tax, Other

Schedule 3.6

-

Accounts Receivable (Aged Schedule)

Schedule 3.7

-

Inventory Off Premises

Schedule 3.8

-

Certain Changes

Schedule 3.9

-

Off-Balance Sheet Liabilities

Schedule 3.10

-

Litigation Matters

Schedule 3.11.(a)

-

Non-Compliance with Laws

Schedule 3.11.(b)

-

Licenses and Permits

Schedule 3.11.(c)

-

Environmental Matters (Exceptions to Representations)

Schedule 3.12

-

Liens

Schedule 3.12.(c)

-

Owned Real Property

Schedule 3.13

-

Insurance

Schedule 3.14.(a)

-

Real Property Leases

Schedule 3.14.(b)

-

Personal Property Leases

Schedule 3.14.(d)

-

Sales Commitments

Schedule 3.14.(g)

-

Collective Bargaining Agreements

Schedule 3.14.(h)

-

Loan Agreements, etc.

Schedule 3.14.(i)

-

Guarantees

Schedule 3.14.(l)

-

Material Contracts

Schedule 3.15

-

Labor Matters

Schedule 3.16.(a)

-

Employee Plans/Agreements

Schedule 3.17

-

Employment Compensation

Schedule 3.18

-

Trade Rights

Schedule 3.19.(a)

-

Major Customers

Schedule 3.19.(b)

-

Major Suppliers

Schedule 3.19.(c)

-

Dealers and Distributors

Schedule 3.20

-

Product Warranty, Warranty Expense and Liability Claims

Schedule 3.21

-

Bank Accounts

Schedule 3.22.(a)

-

Contracts with Affiliates

Schedule 3.22.(c)

-

Obligations of and to Affiliates

1.

THE MERGER

1.1

The Merger .

1.2

Effect of the Merger .

        1.2.(a)       General . The Merger shall become effective at the later of the time the Certificate of Merger has been filed with the Secretary of State of the State of Delaware, and the time the Articles of Merger have been filed with the Secretary of State of the State of Nevada (such time, the “ Effective Time ”). The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name of and on behalf of either Sub or Company in order to carry out and effectuate the transactions contemplated by this Agreement.

        1.2.(b)      Articles of Incorporation . The Articles of Incorporation of Sub in effect at the Effective Time will be the Articles of Incorporation of the Surviving Corporation upon and following the Merger; provided, that the Articles of Merger shall provide for the Articles of Incorporation to be amended, upon the Merger, to change the name of the Surviving Corporation to “Chen-Tech Industries, Inc.”

        1.2.(c)      Bylaws . The bylaws of Sub in effect at the Effective Time will be the bylaws of the Surviving Corporation upon and following the Merger.

        1.2.(d)      Directors . The directors of Sub in office at the Effective Time will be the directors of the Surviving Corporation upon and following the Merger, to serve until their successors have been duly elected.

        1.2.(e)      Officers . The officers of Sub in office at the Effective Time will be the officers of the Surviving Corporation upon and following the Merger, to serve at the pleasure of the board of directors.

1.3

Conversion of Company Shares .

        1.3.(a)      General . At and as of the Effective Time, the outstanding Company Shares shall be canceled and retired and shall be converted into the right to receive an aggregate of cash in the amount of $29,750,000.00, plus common shares of Ladish having an aggregate value (determined as provided in Section 1.3.(b) below) of $29,750,000.00. The common shares of Ladish to be issued pursuant to the Merger are sometimes referred to herein as the “ Ladish Shares ”; and the Ladish Shares, together with the cash specified in the previous sentence, are sometimes referred to herein collectively as the “Merger Consideration .” At and as of the Effective Time, each outstanding Company Share shall be canceled and retired and shall be converted into the right to receive cash and Ladish Shares in an amount equal to the amount determined by dividing the Merger Consideration by the total number of Company Shares outstanding at the Effective Time. Shares of treasury stock, and any other shares of stock of Company not outstanding at the Effective Time, shall not be included in such denominator, and shall be canceled at the Effective Time. The aggregate number of Ladish Shares issuable to each Shareholder in the Merger shall be rounded to the nearest integral share.

        1.3.(b)      Valuation of Ladish Shares . The number of shares of common stock of Ladish to be issued hereunder shall be determined by dividing (i) $29,750,000.00 by (ii) the average closing price of Ladish’s common stock on the Nasdaq Stock Market for the period of 30 consecutive business (trading) days ending on the third day prior to the Closing Date (the “ Valuation Period ”).

2.

POST-CLOSING ADJUSTMENT TO MERGER CONSIDERATION

2.1

Amount and Time of Payment .

2.2

Definition of Net Adjusted Working Capital .

        (i)      Prepaid expenses shall be valued at not more than the net realizable value which Company can obtain from such assets.

        (ii)      Inventory shall be valued in accordance with the following standards: a physical inventory shall be taken by Buyer and Shareholder’s Agent, or his designee, as of the close of business on the day immediately prior to the Closing Date (the “ Effective Time ”); inventory which relates to discontinued products or which is otherwise obsolete shall not be valued; inventory which represents more than six (6) months projected requirements based, on the prior 12 months’ usage, of any item of inventory shall not be valued; only inventory of first quality and good and usable in the ordinary course of business shall be valued; and except to the extent otherwise provided for herein, inventory shall be valued on the basis of the lower of cost or market.

        (iii)      All accrued liabilities shall be sufficient for the payment in full of the liabilities to which they relate and accrued expenses shall reflect all accruals of a character that would be reflected in a manner consistent with a year-end balance sheet, including, without limitation, wages, bonuses, vacation, holiday and sick pay (and employee payroll taxes applicable thereto) attributable to all periods or partial periods prior to the Effective Time.

        (iv)      Accounts receivable and notes receivable shall be stated net of an appropriate reserve for doubtful accounts and anticipated collection expenses.

        (v)      There shall be established a reasonable and sufficient reserve for all anticipated costs and expenses (whether or not covered under Company’s product warranties) for the repair or replacement of products manufactured on or prior to the Closing Date which are defective in design, materials or workmanship.

2.3

Determination of Adjustment .

        (i)      Within twenty (20) days after the Closing Date, Buyer shall deliver to the Shareholders’ Agent a schedule as of the Effective Time, prepared in accordance with U.S. GAAP from the books and records of Company, on a basis consistent with the accounting principles theretofore followed by Company in the preparation of the Recent Balance Sheet and in accordance with this Article 2, and fairly presenting the Net Adjusted Working Capital of Company as of the Effective Time. The schedule shall be accompanied by a report of Buyer’s chief financial officer (1) setting forth the amount of the Closing Date Net Adjusted Working Capital, (2) stating that the schedule has been prepared in accordance with U.S. GAAP, on a basis consistent with the accounting principles theretofore followed by Company, except as otherwise provided in this Article 2, and (3) setting forth the amount of any adjustment to the Purchase Price to be paid and by whom, pursuant to Section 2.1 hereof.

        (ii)      Within 15 days following the delivery of the schedule referred to in (i) above, the Shareholders’ Agent or a firm of independent accountants engaged by the Shareholders’ Agent (“ Shareholders’Accountants ”) may object to any of the information contained in said schedule which could affect the necessity or amount of any payment by Buyer or the Shareholders’ Agent pursuant to Section 2.1 hereof. Any such objection shall be made in writing and shall state the Shareholders’ Agent’s determination of the amount of the Closing Date Net Adjusted Working Capital.

        (iii)      In the event of a dispute or disagreement relating to the schedule which Buyer and the Shareholders’ Agent are unable to resolve, either party may elect to have all such disputes or disagreements resolved by an accounting firm of nationally recognized standing (the “ Third Accounting Firm ”) to be mutually selected by the Shareholders’ Agent and Buyer or, if no agreement is reached, by Ladish’s independent accountants and Shareholders’ Accountants. The Third Accounting Firm shall make a resolution of the calculation of Closing Date Net Adjusted Working Capital, which shall be final and binding for purposes of this Article 2. The Third Accounting Firm shall be instructed to use every reasonable effort to perform its services within 15 days of submission of the balance sheet to it and, in any case, as soon as practicable after such submission. The fees and expenses for the services of the Third Accounting Firm shall be shared equally by Buyer and the Shareholders’ Agent (ratably for the accounts of the Shareholders).

        (iv)      Buyer agrees to permit the Shareholders’ Agent, the Shareholders’ Accountants, and their respective representatives, during normal business hours, to have reasonable access to, and to examine and make copies of, all books and records of Company, including but not limited to the books, records, schedules, work papers and audit programs of Buyer and Buyer’s Accountants and access to representatives of Buyer’s Accountants, which documents and access are necessary to review the schedule delivered by Buyer in accordance with this Section 2.3. In addition, Shareholders’ Accountants shall have the opportunity to observe the taking of the inventory in connection with the preparation of such schedule.

3.1

Corporate .

        3.1.(a)      Organization . Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

        3.1.(b)      Corporate Power . Company has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as and where such is now being conducted.

        3.1.(c)      Qualification . Company is duly licensed or qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction wherein the character of the properties owned or leased by it, or the nature of its business, makes such licensing or qualification necessary. The states in which Company is licensed or qualified to do business are listed in Schedule 3.1.(c).

        3.1.(d)      Subsidiaries . Company does not own any interest in any corporation, partnership or other entity.

        3.1.(e)      Corporate Documents, etc . The copies of the Certificate of Incorporation and By-Laws of the Company, including any amendments thereto, which have been delivered by Shareholders to Buyer are true, correct and complete copies of such instruments as presently in effect. The corporate minute book and stock records of the Company which have been furnished to Buyer for inspection are true, correct and complete and accurately reflect all material corporate action taken by the Company. The directors and officers of the Company are listed in Schedule 3.1.(e).

        3.1.(f)      Authority . The execution and delivery of this Agreement and the other documents and instruments to be executed and delivered by Company pursuant hereto and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors and shareholders of Company. No other or further corporate act or proceeding on the part of Company is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by Company pursuant hereto or the consummation of the transactions contemplated hereby and thereby. This Agreement constitutes, and when executed and delivered, the other documents and instruments to be executed and delivered by Company pursuant hereto will constitute, valid binding agreements of Company, enforceable in accordance with their respective terms.

        3.1.(g)      Capitalization of the Company . The authorized capital stock of the Company consists entirely of 89,000 shares of common stock, par value $.01 per share. No shares of such capital stock are issued or outstanding except for 29,750 shares of common stock of the Company which are owned of record and beneficially by Shareholders in the respective numbers set forth in Schedule 3.1.(g). All such shares of capital stock of the Company are validly issued, fully paid and nonassessable. There are no (a) securities convertible into or exchangeable for any of the Company’s capital stock or other securities, (b) options, warrants or other rights to purchase or subscribe to capital stock or other securities of the Company or securities which are convertible into or exchangeable for capital stock or other securities of the Company, or (c) contracts, commitments, agreements, obligations, understandings or arrangements of any kind relating to the issuance, sale or transfer of any capital stock or other equity securities of the Company, any such convertible or exchangeable securities or any such options, warrants or other rights. At the time of Closing, the aggregate amount (including principal and interest) of the Company’s indebtedness for borrowed money, whether long term or short term, shall not exceed $5,000,000 (the “ Permitted Debt ”); and except for bank debt included in such amount, the Company will have no outstanding long term liabilities (as such term is understood under U.S. GAAP), nor any short term liabilities not included in the calculation of Net Adjusted Working Capital.

3.2

The Ko Parties .

        3.2.(a)      Power . Each of the Ko Parties has full power, legal right and authority to enter into, execute and deliver this Agreement and the other agreements, instruments and documents contemplated hereby (such other documents sometimes referred to herein as “ Ancillary Instruments ”), and to carry out the transactions contemplated hereby. The persons identified above as the trustees of each Shareholder constitute all of the duly appointed and currently acting trustees of such trust.

        3.2.(b)      Validity . This Agreement has been duly and validly executed and delivered by each of the Ko Parties and is, and when executed and delivered each Ancillary Instrument will be, the legal, valid and binding obligation of each such party, enforceable in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditors’ rights generally, and by general equitable principles.

        3.2.(c)      Title . Each Shareholder has good and marketable title to the Shares set forth opposite such Shareholder’s name in Schedule 3.1.(g), free and clear of all Liens (as defined in Section 3.12) including, without limitation, voting trusts or agreements, proxies, or marital or community property interests.

3.3

No Violation .

3.4

Financial Statements and Controls .

        3.4.(a)      Financial Statements . Shareholders have provided Buyer true and complete copies of the financial statements of Company consisting of (i) balance sheets of Company as of December 31, 2006 and 2007, and the related statements of income for the years then ended (including the notes contained therein or annexed thereto), which financial statements have been audited by C. Jim Chen Accountancy Corp., independent accountants for Company. All of such financial statements are true, complete and accurate, and, except with respect to the manner in which the Company carries its Inventory, have been prepared in accordance with U.S. GAAP applied on a consistent basis, have been prepared in accordance with the books and records of Company, and fairly present the assets, liabilities and financial position, and the results of operations of Company, as of the dates and for the years and periods indicated. Shareholders have also provided Buyer true and complete copies of a balance sheet of Company as of March 31, 2008 (the “ RRecent Balance Sheet ”) and the related statement of income for the three-month period then ended (together, the “ Interim Financial Statements ”). The Interim Financial Statements are true, complete and accurate, and, except with respect to the manner in which the Company carries its Inventory, have been prepared in accordance with U.S. GAAP (except for the lack of footnote disclosure) applied on a basis consistent with the audited financial statements furnished to Buyer, have been prepared in accordance with the books and records of Company, and fairly present the assets, liabilities and financial position of, and the results of operation of, Company as of and for such date.

        3.4.(b)      Internal Controls Over Financial Reporting . The Company maintains internal control over financial reporting (as defined by the rules and regulations of the Securities and Exchange Commission). To the best of Shareholders’ knowledge, such control is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for internal purposes in accordance with U.S. GAAP and includes policies and procedures that (A) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (B) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on its financial statements. Since December 31, 2003, the Company has discovered no significant deficiencies in the design or operation of, and no material weaknesses in, its internal controls over financial reporting. Notwithstanding the foregoing, Buyer acknowledges that the Company has not been required to, and has not, performed testing of its internal control over financial reporting in order to determine the effectiveness thereof or to determine whether any significant deficiencies or material weaknesses exist. Shareholders expressly disavow any warranty or representation as to the adequacy of the Company’s internal control over financial reporting as may be required by Buyer.

3.5

Tax Matters .

        3.5.(a)      Provision For Taxes . The provision made for taxes on the Recent Balance Sheet is sufficient for the payment of all federal, state, foreign, county, local and other income, ad valorem , excise, profits, franchise, occupation, property, payroll, sales, use, gross receipts and other taxes (and any interest and penalties) and assessments, whether or not disputed, at the date of the Recent Balance Sheet and for all years and periods prior thereto. Since the date of the Recent Balance Sheet, Company has not incurred any taxes other than taxes incurred in the ordinary course of business consistent in type and amount with past practices of Company.

        3.5.(b)      Tax Returns Filed . Except as set forth on Schedule 3.5.(b), all federal, state, foreign, county, local and other tax returns required to be filed by or on behalf of Company have been timely filed and when filed were true and correct in all material respects, and the taxes shown as due thereon were paid or adequately accrued. True and complete copies of all tax returns or reports filed by Company for each of its five most recent fiscal years have been delivered to Buyer. Company has duly withheld and paid all taxes which it is required to withhold and pay relating to salaries and other compensation heretofore paid to the employees of Company.

        3.5.(c)      Tax Audits . The federal and state income tax returns of Company have been audited by the Internal Revenue Service and appropriate state taxing authorities for the periods and to the extent set forth in Schedule 3.5.(c), and Company has not received from the Internal Revenue Service or from the tax authorities of any state, county, local or other jurisdiction any notice of underpayment of taxes or other deficiency which has not been paid nor any objection to any return or report filed by Company. There are outstanding no agreements or waivers extending the statutory period of limitations applicable to any tax return or report.

        3.5.(d)      Consolidated Group . Schedule 3.5.(d) lists every year Company was a member of an affiliated group of corporations that filed a consolidated tax return on which the statute of limitations does not bar a federal tax assessment, and each corporation that has been part of such group. No affiliated group of corporations of which Company has been a member has discontinued filing consolidated returns during the past five years.

        3.5.(e)      S Corporation Status . Company properly and timely filed a valid election under Code Section 1362 to be treated as an S corporation as defined under Code Section 1361 for federal income tax purposes, effective January 1, 1999. Such election has remained in effect at all times since such date. Except for transactions contemplated by this Agreement, no Ko Party, nor Company, nor any shareholder of Company, has taken any action or failed to take any action, nor has any event occurred, that would result in the revocation or termination of such election at any time.

        3.5.(f)      Built-In Gain . Company’s “net unrealized built-in gain,” as such phrase is defined in Section 1374(d) of the Code, has not been calculated as of the Recent Balance Sheet date or at the Closing. Should it become necessary in the future to determine Company’s “net unrealized built-in gain” as of any date, the Shareholders and Shannon Ko, jointly and severally, will indemnify Company and Buyer for any costs associated with such determination and any taxes, interest and penalties associated with the recognition of the “net unrealized built-in gain” by federal or state taxing authorities.

        3.5.(g)      Other . Except as set forth in Schedule 3.5.(g), since December 31, 2000, Company has not (i) filed any consent or agreement under Section 341(f) of the Internal Revenue Code of 1986, as amended (the “Code”), (ii) applied for any tax ruling, (iii) entered into a closing agreement with any taxing authority, (iv) filed an election under Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election under Section 338(e) of the Code occurred), (v) made any payments, or been a party to an agreement (including this Agreement) that under any circumstances could obligate it to make payments that will not be deductible because of Section 280G of the Code, or (vi) been a party to any tax allocation or tax sharing agreement. Company is not a “United States real property holding company” within the meaning of Section 897 of the Code.

3.6

Accounts Receivable .

3.7

Inventory .

3.8

Absence of Certain Changes .

        3.8.(a)      No Adverse Change . Any adverse change in the financial condition, assets, liabilities, business, prospects or operations of Company;

        3.8.(b)      No Damage . Any loss, damage or destruction, whether covered by insurance or not, affecting Company’s business or properties;

        3.8.(c)      No Increase in Compensation . Any increase in the compensation, salaries or wages payable or to become payable to any employee or agent of Company (including, without limitation, any increase or change pursuant to any bonus, pension, profit sharing, retirement or other plan or commitment), or any bonus or other employee benefit granted, made or accrued;

        3.8.(d)      No Labor Disputes . Any labor dispute or disturbance, other than routine individual grievances which are not material to the business, financial condition or results of operations of Company;

        3.8.(e)      No Commitments . Any commitment or transaction by Company (including, without limitation, any borrowing or capital expenditure) other than in the ordinary course of business consistent with past practice;

        3.8.(f)      No Dividends . Any declaration, setting aside, or payment of any dividend or any other distribution in respect of Company’s capital stock; any redemption, purchase or other acquisition by Company of any capital stock of Company, or any security relating thereto; or any other payment to any shareholder of Company as such a shareholder, except for the Shareholders’ right to retain the cash on the Company’s balance sheet as of the Closing Date;

        3.8.(g)      No Disposition of Property . Any sale, lease or other transfer or disposition of any properties or assets of Company, except for the sale of inventory items in the ordinary course of business;

        3.8.(h)      No Indebtedness . Any indebtedness for borrowed money incurred, assumed or guaranteed by Company, except to the extent consistent with the indebtedness permitted to exist at the Closing under Section 3.1.(f);

        3.8.(i)      No Liens . Any mortgage, pledge, lien or encumbrance made on any of the properties or assets of Company;

        3.8.(j)      No Amendment of Contracts . Any entering into, amendment or termination by Company of any contract, or any waiver of material rights thereunder, other than in the ordinary course of business;

        3.8.(k)      Loans and Advances . Any loan or advance (other than advances to employees in the ordinary course of business for travel and entertainment in accordance with past practice) to any person including, but not limited to, any Affiliate (for purposes of this Agreement, the term “ Affiliate ” shall mean and include all Shareholders, directors and officers of Company; the spouse of any such person; any person who would be the heir or descendant of any such person if he or she were not living; and any entity in which any of the foregoing has a direct or indirect interest, except through ownership of less than 5% of the outstanding shares of any entity whose securities are listed on a national securities exchange or traded in the national over-the-counter market);

        3.8.(l)      Credit . Any grant of credit to any customer or distributor on terms or in amounts more favorable than those which have been extended to such customer or distributor in the past, any other change in the terms of any credit heretofore extended, or any other change of Company’s policies or practices with respect to the granting of credit; or

        3.8.(m)      No Unusual Events . Any other event or condition not in the ordinary course of business of Company.

3.9

Absence of Undisclosed Liabilities .

3.10

No Litigation .

3.11

Compliance With Laws and Order s.

        3.11.(a)      Compliance . Except as set forth in Schedule 3.11.(a), to the best of the Shareholders’ knowledge, Company (including each and all of its operations, practices, properties and assets) is in compliance with all applicable Laws and Orders, including, without limitation, those applicable to discrimination in employment, occupational safety and health, trade practices, competition and pricing, product warranties, zoning, building and sanitation, employment, retirement and labor relations, product advertising and the Environmental Laws as hereinafter defined. Except as set forth in Schedule 3.11.(a), Company has not received notice of any violation or alleged violation of, and is subject to no Claim (as defined herein) for past or continuing violation of, any Laws or Orders. To the best of the Shareholders’ knowledge, all reports and returns required to be filed by Company with any Government Entity have been filed, and were accurate and complete when filed. Without limiting the generality of the foregoing:

        (i)      To the best of the Shareholders’ knowledge, the operation of Company’s business as it is now conducted does not, nor does any condition existing at the Facilities, in any manner constitute a nuisance or other tortious interference with the rights of any person or persons in such a manner as to give rise to or constitute the grounds for a suit, action, claim or demand by any such person or persons seeking compensation or damages or seeking to restrain, enjoin or otherwise prohibit any aspect of the conduct of such business or the manner in which it is now conducted.

        (ii)      Company has made all required payments to its unemployment compensation reserve accounts with the appropriate governmental departments of the states where it is required to maintain such accounts, and each of such accounts has a positive balance.

        (iii)      Company has delivered to Buyer copies of all reports of Company for the past five (5) years required under the federal Occupational Safety and Health Act of 1970, as amended, and under all other applicable health and safety laws and regulations. The deficiencies, if any, noted on such reports have been corrected.

        3.11.(b)      Licenses and Permits . To the best of the Shareholders’ knowledge, Company has all licenses, permits, approvals, authorizations and consents of all Government Entities and all certification organizations required for the conduct of the Business (as presently conducted and as proposed to be conducted) and operation of the Facilities. All such licenses, permits, approvals, authorizations and consents are described in Schedule 3.11.(b), are in full force and effect and will not be affected or made subject to loss, limitation or any obligation to reapply as a result of the transactions contemplated hereby. Except as set forth in Schedule 3.11.(b), Company (including its operations, properties and assets) is and has been in compliance with all such permits and licenses, approvals, authorizations and consents.

        3.11.(c)      Environmental Matters . The applicable Laws relating to pollution or protection of the environment and health and safety matters related thereto, including Laws relating to emissions, discharges, generation, storage, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances (including, without limitation, petroleum or petroleum based substances, asbestos-containing or lead-containing materials, polychlorinated biphenyls, radioactive materials, radon, and mold) (collectively, “ Waste ”) into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Waste including, without limitation, the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Comprehensive Environmental Response Compensation Liability Act (“ CERCLA ”), as amended, and their state and local counterparts are herein collectively referred to as the “ Environmental Laws ”. Without limiting the generality of the foregoing provisions of this Section 3.11, to the best of the Shareholders’ knowledge, Company is in full compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in the Environmental Laws or contained in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder. Except as set forth in Schedule 3.11.(c), there is no Litigation nor any demand, claim, hearing or notice of violation pending or, to the best of the Shareholders’ knowledge, threatened against Company relating in any way to the Environmental Laws or any Order issued, entered, promulgated or approved thereunder. Except as set forth in Schedule 3.11.(c), there are no past or present (or, to the best of the Shareholders’ knowledge, threatened or likely future) events, conditions, circumstances, activities, practices, incidents, actions, omissions or plans which may interfere with or prevent compliance or continued compliance with the Environmental Laws or with any Order issued, entered, promulgated or approved thereunder, or which may give rise to any liability, including, without limitation, liability under CERCLA or similar state or local Laws, or otherwise form the basis of any Litigation, hearing, notice of violation, study or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any Waste. No property currently owned or operated by Company, or formerly owned or operated by Company, including soil, groundwater, surface water, buildings or other structures, is or has been, to the best of the Shareholders’ knowledge, contaminated with any Waste.

3.12

Title to and Condition of Properties .

        3.12.(a)      Marketable Title . Company has good and marketable title to all of Company’s assets, business and properties, including, without limitation, all such properties (tangible and intangible) reflected in the Recent Balance Sheet, except for inventory disposed of in the ordinary course of business since the date of such Recent Balance Sheet, free and clear of all mortgages, liens, (statutory or otherwise) security interests, claims, pledges, licenses, equities, options, conditional sales contracts, assessments, levies, easements, covenants, reservations, restrictions, rights-of-way, exceptions, limitations, charges or encumbrances of any nature whatsoever (collectively, “ Liens ”) except those described in Schedule 3.12 and, in the case of real property, Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings (and which have been fully accrued or reserved against in the Recent Balance Sheet), municipal and zoning ordinances and easements for public utilities, none of which interfere with the use of the property as currently utilized. None of Company’s assets, business or properties are subject to any restrictions with respect to the transferability thereof; and Company’s title thereto will not be affected in any way by the transactions contemplated hereby.

        3.12.(b)      Condition . All property and assets owned or utilized by Company are in good operating condition and repair, free from any defects (except such minor defects as do not interfere with the use thereof in the conduct of the normal operations of Company), have been maintained consistent with the standards generally followed in the industry and are sufficient to carry on the business of Company as conducted during the preceding 12 months. All buildings, plants and other structures owned or otherwise utilized by Company are in good condition and repair and have no structural defects or defects affecting the plumbing, electrical, sewerage, or heating, ventilating or air conditioning systems.

        3.12.(c)      Real Property . Schedule 3.12.(c) sets forth all real property owned, used or occupied by Company (the “Real Property ”), including a description of all land, and all encumbrances, easements or rights of way of record (or, if not of record, of which Company has notice or knowledge) granted on or appurtenant to or otherwise affecting such Real Property, the zoning classification thereof, and all plants, buildings or other structures located thereon. Schedule 3.12.(c) also sets forth, with respect to each parcel of Real Property which is leased, the material terms of such lease. There are now in full force and effect duly issued certificates of occupancy permitting the Real Property and improvements located thereon to be legally used and occupied as the same are now constituted. All of the Real Property has permanent rights of access to dedicated public highways. No fact or condition exists which would prohibit or adversely affect the ordinary rights of access to and from the Real Property from and to the existing highways and roads and there is no pending or threatened restriction or denial, governmental or otherwise, upon such ingress and egress. There is not (i) any claim of adverse possession or prescriptive rights involving any of the Real Property, (ii) any structure located on any Real Property which encroaches on or over the boundaries of neighboring or adjacent properties or (iii) any structure of any other party which encroaches on or over the boundaries of any of such Real Property. None of the Real Property is located in a flood plain, flood hazard area, wetland or lakeshore erosion area within the meaning of any Law, regulation or ordinance. No public improvements have been commenced and to Company’s and Shareholders’ knowledge none are planned which in either case may result in special assessments against or otherwise materially adversely affect any Real Property. No portion of any of the Real Property has been used as a landfill or for storage or landfill of hazardous or toxic materials. Neither Company nor any Shareholder has notice or knowledge of any (i) planned or proposed increase in assessed valuations of any Real Property, (ii) Order requiring repair, alteration, or correction of any existing condition affecting any Real Property or the systems or improvements thereat, (iii) condition or defect which could give rise to an order of the sort referred to in “(ii)” above, (iv) underground storage tanks, or any structural, mechanical, or other defects of material significance affecting any Real Property or the systems or improvements thereat (including, but not limited to, inadequacy for normal use of mechanical systems or disposal or water systems at or serving the Real Property), or (v) work that has been done or labor or materials that has or have been furnished to any Real Property during the period of six (6) months immediately preceding the date of this Agreement for which liens could be filed against any of the Real Property. The Real Property constitutes all real property owned, used or occupied by the Company at any time since its incorporation.

        3.12.(d)      No Condemnation or Expropriation . Neither the whole nor any portion of the property or any other assets of Company is subject to any Order to be sold or is being condemned, expropriated or otherwise taken by any Government Entity with or without payment of compensation therefor, nor to the best of Shareholders’ knowledge has any such condemnation, expropriation or taking been proposed.

3.13

Insurance .

3.14

Contracts and Commitments .

        3.14.(a)      Real Property Leases . Except as set forth in Schedule 3.12.(c), Company has no leases of real property.

        3.14.(b)      Personal Property Leases . Except as set forth in Schedule 3.14.(b), Company has no leases of personal property involving consideration or other expenditure in excess of $5,000 or involving performance over a period of more than twelve months.

        3.14.(c)      Purchase Commitments . Company has no purchase commitments for inventory items or supplies that, together with amounts on hand, constitute in excess of twelve months normal usage, or which are at an excessive price.

        3.14.(d)      Sales Commitments . Except as set forth in Schedule 3.14.(d), Company has no sales contracts or commitments to customers or distributors which aggregate in excess of $10,000 to any one customer or distributor (or group of affiliated customers or distributors) other than Buyer. Company has no sales contracts or commitments except those made in the ordinary course of business, at arm’s length, and no such contracts or commitments are for a sales price which would result in a loss to the Company.

        3.14.(e)      Contracts With Affiliates and Certain Others . Company has no agreement, understanding, contract or commitment (written or oral) with any Affiliate or any employee, agent, consultant, distributor, dealer or franchisee that is not cancelable by Company on notice of not longer than 30 days without liability, penalty or premium of any nature or kind whatsoever.

        3.14.(f)      Powers of Attorney . The Company has not given a power of attorney, which is currently in effect, to any person, firm or corporation for any purpose whatsoever.

        3.14.(g)      Collective Bargaining Agreements . Except as set forth in Schedule 3