LADISH CO INC, S-1, 1997-12-23

LADISH CO INC
S-1, 1997-12-23
METAL FORGINGS & STAMPINGS

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As filed with the Securities and Exchange Commission on December 23, 1997

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
___________________

Ladish Co., Inc.
(Exact name of registrant as specified in its charter)

Wisconsin 3462 31-1145953
(State of incorporation) (Primary (I.R.S. Employer
Standard Identification No.)
Industrial
Classification
Code Number)

5481 South Packard Avenue
Cudahy, Wisconsin 53110
(414) 747-2611
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
_______________________

Wayne E. Larsen
Vice President Law/Finance and Secretary
Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110
(414) 747-2611
Facsimile (414) 747-2963
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________________
Copies to:

John M. Olson Gary L. Sellers
Foley & Lardner Simpson Thacher & Bartlett
777 East Wisconsin Avenue 425 Lexington Avenue
Milwaukee, Wisconsin 53202 New York, New York 10017
(414) 271-2400 (212) 455-2000
Facsimile: (414) 297-4900 Facsimile: (212) 455-2502

____________________________

Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [_]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering.
[_] _________________
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] _______________________
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering. [_] __________________________________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [_]

CALCULATION OF REGISTRATION FEE

Proposed
maximum Proposed
offering maximum
Title of each class Amount to price aggregate Amount of
of securities to be be per offering registration
registered registered share(2) price (2) fee

Common Stock ($.01 3,852,500 $18.00 $69,345,000 $20,456.78
par value) . . . shares (1)

(1) Includes 502,500 shares issuable upon exercise of an option granted
to the Underwriters by the Selling Shareholders to cover over-
allotments.
(2) Estimated in accordance with Rule 457(o) under the Securities Act of
1933 solely for the purpose of calculating the registration fee
pursuant to Section 6(b) thereunder.
______________________

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED DECEMBER __, 1997
3,350,000 Shares
Ladish Co., Inc.
Common Stock
($.01 par value)
_______________

Of the 3,350,000 shares of common stock, par value $.01 per share
(the "Common Stock"), offered hereby (the "Offering"), 2,336,000 shares
are being sold by Ladish Co., Inc. (the "Company") and 1,014,000 shares
are being sold by the Selling Shareholders. See "Principal and Selling
Shareholders". The Company will not receive any of the proceeds from the
sale of Common Stock being sold by the Selling Shareholders. The
Company's Common Stock is thinly traded and is quoted on the OTC
Electronic Bulletin Board, a quotation system, in the over-the-counter
market under the symbol "LDSH". On December 15, 1997, the reported closing
price for the Common Stock was $18 per share. It is anticipated that the
initial public offering price will be between $15.00 and $18.00 per
share. For information relating to factors to be considered in
determining the initial public offering price, see "Underwriting".
Application will be made for the quotation of the Common Stock on
The Nasdaq Stock Market's National Market under the symbol "LDSH".

For a discussion of certain factors that should be considered in
connection with an investment in the Common Stock, see "Risk Factors"
beginning on page 9 herein.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Underwriting
Discounts Proceeds to
Price to and Proceeds to Selling
Public Commissions Company (1) Shareholders

Per Share $ $ $ $

Total (2) $ $ $ $
__________

(1) Before deduction of expenses payable by the Company estimated at
$550,000.

(2) Certain of the Selling Shareholders have granted the Underwriters an
option, exercisable for 30 days from the date of this Prospectus, to
purchase a maximum of 502,500 additional shares to cover
over-allotments of the Common Shares. If such option is exercised in
full, the total Price to Public will be $ , Underwriting
Discounts and Commissions will be $ , proceeds to Company will be
$ and proceeds to Selling Shareholders will be $ .

The shares of Common Stock are offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that
the shares of Common Stock will be ready for delivery on or about
, 1998, against payment in immediately available funds.

Credit Suisse First Boston BT Alex. Brown

Prospectus dated , 1998.

<PAGE>

[inside front cover]

Certain persons participating in this Offering may engage in
transactions that stabilize, maintain, or otherwise affect the price of
the Securities offered hereby, including over-allotment, stabilizing
transactions, syndicate short covering transactions and penalty bids. For
a description of these activities, see "Underwriting".

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial
statements and the related notes thereto included elsewhere in this
Prospectus. As used in this Prospectus, unless the context otherwise
requires, the term "Ladish" or "Company" means Ladish Co., Inc. Except as
otherwise indicated, all information in this Prospectus has been adjusted
to give effect to a one for six reverse split of the Common Stock which
occurred effective December 12, 1997. Information in this Prospectus
concerning the number of shares of Common Stock outstanding does not,
except where otherwise indicated, assume the exercise of currently
outstanding and exercisable warrants to purchase an aggregate of 7,608,932
shares, and assumes that the Underwriters have not exercised their over-
allotment option.

The Company

Ladish Co., Inc. ("Ladish" or the "Company") is a leading producer of
highly engineered, technically advanced components for the jet engine,
aerospace and general industrial markets.

Ladish engineers, produces and markets high-strength, high-technology
forged and formed metal components for a wide variety of load-bearing and
fatigue-resisting applications in the jet engine, aerospace and industrial
markets. The Company has been engaged in producing parts for aircraft
engines and other military, aerospace and general industrial applications
for over 50 years. Products developed by Ladish include (i) rotating jet
engine parts, such as fan, compressor and turbine discs, and jet engine
casings, (ii) other aerospace products, including structural aircraft
components, landing gear components, flap tracks, helicopter rotor parts
and shafts and large missile components and (iii) general industrial
forgings such as large crankshafts for power generation equipment. These
products require a high degree of engineering skill and technical
expertise and are generally manufactured from titanium, high-temperature
alloys, steel or aluminum. Components for such rigorous applications
often necessitate manufacture through forging, which yields a seamless
product with a high strength-to-weight ratio relative to castings.
Principal customers include all of the major jet engine manufacturers, as
well as both commercial and government aircraft and satellite
manufacturers, power plants and manufacturers of farm and heavy-duty off-
road equipment. For the nine months ended September 30, 1997,
approximately 89% of the Company's sales were to the aerospace industry.

Since late 1995, demand for forged components has strengthened,
primarily due to increased demand from the commercial aerospace industry.
The Company believes the principal reasons for the recent improvement in
new aircraft orders include increased demand for air travel in Asia, the
recent improved profitability of U.S. commercial airlines and U.S.
Environmental Protection Agency rules requiring airlines to reduce noise,
which, in turn, have prompted airlines to modernize their fleets.
Accordingly, airlines have been retrofitting existing aircraft or
purchasing new jet engines.

In addition to the favorable trends in commercial aviation discussed
above, world airframe manufacturers are seeking to improve the
affordability and efficiency of their products by reducing the number of
engines on airplanes. Newer engines, therefore, must be bigger and run
faster and at higher temperatures, which in turn has increased demand for
components that are structurally larger and more metallurgically complex.
The Company believes that it is well positioned to capitalize on the
current upturn in the commercial aerospace industry in wide-body aircraft
as well as regional and business jets. The Company believes that the
combination of its unique equipment, metallurgical expertise and leading-
edge computer process modeling of forging, heat treating and machining
operations, together with its industry-recognized core competencies in
large and complex forgings, will enable the Company to compete effectively
for this demand.

Business Strategy

The Company's goal is to generate profitable growth and to enhance
shareholder value by capitalizing on Ladish's reputation for quality and
value and its unique manufacturing equipment. To accomplish this goal,
management intends to continue pursuing the following strategies:

Maximize Benefits from Industry Upturn

Ladish intends to capitalize on the current upturn in the aerospace
industry by continuing to manufacture components that meet the demand by
airframe manufacturers for stronger, larger and more metallurgically
complex parts. The Company believes that it is well positioned to benefit
from the reduction in excess capacity in the U.S. airline industry, the
other trends in the commercial aerospace industry and the corresponding
increase in demand for new aircraft and parts.

Make Strategic Acquisitions

As a part of the global consolidation of the aerospace industry,
management believes there are numerous opportunities to grow and enhance
the Company through strategic acquisitions. As an example of these
opportunities, in June 1997, Ladish acquired substantially all of the
assets and assumed a portion of the liabilities of Stowe Machine Co., Inc.
("Stowe"). Located in Windsor, Connecticut, Stowe provides finish
machining services and products to the jet engine industry. Operating
Stowe will further Ladish's efforts to capitalize on the upturn in the jet
engine industry through the value-added services provided by Stowe to the
Company's existing customer base and the vertical integration
opportunities offered through Stowe. With a customer list which mirrors
that of Ladish, Stowe provides Ladish with the ability to integrate
vertically and offer further value-added services to its core markets.

Leverage Core Competencies into New Products and Markets

The Company's growth strategy also includes continuing to identify
new products and markets where it can become a leading supplier by using
its core competencies in metallurgy, precision metal-working and the
management of complex manufacturing processes. The Company has expanded
its processing technology to alloys such as aluminum-lithium in order to
compete for both solid and liquid fuel motor cases for future generations
of launch vehicles such as the Expendable Extended Launch Vehicle
("EELV"). In addition, the Company's ability to shear-form various alloys
has enabled it to develop technically advanced domes, rings and cylinders
for launch vehicles and seamless titanium drums used to manufacture copper
foil for use by the telecommunications industry. Ladish's metallurgical
expertise, combined with the world's largest counterblow hammer, has
enabled it to become the leading supplier of titanium hemispheres in the
commercial satellite industry and large steel crankshafts in the power
generation industry.

Additionally, the Company believes that its manufacturing,
engineering and technical expertise gives it the ability to develop and
process next generation jet engine components for increased performance of
high-temperature materials as well as to develop products for non-
aerospace applications such as farm and heavy-duty off-road machinery.
For example, the Company is currently producing what the Company believes
is the world's largest crankshaft in a closed-die for use in the
international power generation market.

Enhance Market Access Through Customer Cooperation and Strategic
Alliances

Ladish intends to continue its long-standing practice of working
closely with its customers and strategic participants in the forging
industry. The Company works closely with customers by using its
manufacturing and technical expertise to engineer, tool and manufacture
new products according to customer specification. In exchange, the
Company is often designated as the sole-source supplier by its customers
for the life of the program. In addition, Ladish's well-respected
research and development departments have enabled the Company to establish
and maintain strong relationships with GE, Rolls-Royce PLC ("Rolls-
Royce"), Pratt & Whitney, Lockheed Martin Corp. and the United States Air
Force on a number of development projects, many of which are customer
funded. Management believes that these projects position the Company to
win early production contracts on new equipment.

In addition to working closely with customers, Ladish has developed
strategic alliances with other participants in the forging industry to
take advantage of synergy opportunities. In September 1995, the Company
entered into a joint venture with Weber Metals, Inc. ("Weber"), a
subsidiary of German conglomerate Otto Fuchs Metallwerke KG, whereby the
Company combines its engineering and metallurgical expertise with the
capabilities of Weber's 38,000 ton hydraulic press. The product which
results from the combination of the Company's technology with Weber's
press frees up Company capacity, reduces manufacturing costs and gives the
Company access to high-temperature niches of the jet engine market.

Improve Profitability Through Operating Efficiencies and Lower Costs

Since mid-1995, the Company has significantly reduced overhead costs,
improved worker productivity, shortened production cycle times and
rationalized its product mix in order to improve operating margins and
lower its break-even point. During this time, management has invested in
new technologies, developed more efficient manufacturing processes and
focused on selling higher value-added products. By reducing lot sizes,
set-up times and process times throughout its facility, the Company has
reduced its average cycle time by approximately 75% from 1994 to 1996. In
addition, pieces per man-hour increased 11% in 1996 from 1995. Sales per
employee have increased 11% from December 31, 1996 to September 30, 1997.
As a result of the implementation of process improvement techniques
coupled with applied synchronous manufacturing concepts, the Company has
reduced its costs and improved product quality as measured by the
reduction of rework and scrap. In addition, the Company is currently
computerizing the operation of its hammers, which the Company believes
will lead to additional operational efficiency and further improve the
quality of its forgings. Ladish is also implementing cellular
manufacturing techniques in an effort to further decrease production times
and reduce costs.

Focus on Core Business

In the fourth quarter of 1996, the Company decided to focus its
efforts on its core forging business and the markets it serves.
Consequently, Ladish determined that its Industrial Products Division
("IPD"), with its commodity fitting and valve business, was not strategic
to the future direction of the Company. In May 1997, the Company sold
substantially all of the assets of IPD to a subsidiary of Trinity
Industries, Inc. for cash consideration of $36.5 million and the
assumption of certain liabilities. Ladish utilized proceeds from the sale
of IPD to reduce debt and fund the Stowe acquisition, and intends to use
the remainder of the proceeds to fund a significant portion of its
underfunded pension liability. The sale has also allowed management to
focus its time and energy on the growth of the core business and to
identify strategic acquisition opportunities such as Stowe.

History

The Ladish forge shop was founded in 1905. For the next 75 years,
Ladish Co. continued to grow its operations under the control of the
Ladish family. During this period, Ladish Co. supplied forged products to
virtually every industry, including the aerospace industry beginning in
the 1930s, and became a leader within the commercial and military
aerospace industry for forged products and material application.

Beginning in 1981, Ladish Co. experienced a series of ownership
changes. The Company was incorporated as the successor to Ladish Co. in
connection with one of these transactions. From 1991 until the middle of
1995, the aerospace industry experienced a severe cyclical downturn. This
decline resulted from a combination of reduced demand from the commercial
airline industry, which was suffering from weak passenger revenues and
overcapacity, and reduced military budgets as a result of the end of the
Cold War. At the same time, the Company faced substantial debt service on
$110 million of subordinated debentures issued in connection with a 1987
leveraged buyout. In February 1993, the Company filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Under this "pre-packaged" plan, the subordinated debentures were converted
to equity, including the debentures held by the Company's largest current
shareholder; no other class of creditor was affected. The plan was
confirmed and the Company emerged from reorganization in April 1993.

Beginning in 1995, the Company implemented a program to reduce
overhead costs, improve worker productivity, shorten production cycle
times and rationalize product mix. This program has resulted in improved
operating margins and a lower break-even point. Over the same time
period, the market for forged components strengthened due primarily to
increased demand from the commercial airline industry. This resurgence in
demand, which the Company believes is attributable to a number of factors
affecting airlines in the U.S. and throughout the world, has resulted in
strong revenue growth for the Company. The Company's income before taxes
increased from $2.2 million in the first nine months of 1996 to
$14.9 million in the first nine months of 1997, due principally to the
substantial increase in net sales.

The Offering

Common Stock offered by:

The Company . . . . . . . . . . . 2,336,000 shares

Selling Shareholders(1) . . . . . 1,014,000 shares

Total . . . . . . . . . . . . 3,350,000 shares

Common Stock and equivalents to be
outstanding after the Offering(2) . . 15,260,405 shares

Use of Proceeds . . . . . . . . . . . . The proceeds to the Company
from the sale of Common Stock
by the Company are expected to
be approximately $35 million
(net of underwriting discounts
and estimated expenses payable
by the Company and assuming an
offering price per share of
$16.50, the midpoint of the
range set forth on the cover
page of this Prospectus). The
net proceeds from the sale of
shares by the Company will be
used primarily to repay
subordinated debt and a portion
of outstanding indebtedness
under the Company's senior
credit facility, and to
contribute to certain
underfunded pension plans. Any
remaining funds will be used
for general corporate purposes,
which may include acquisitions.
The Company will not receive
any proceeds from the sale of
shares by the Selling
Shareholders. See "Use of
Proceeds" and "Principal and
Selling Shareholders".

Dividend policy . . . . . . . . . . . . The Company currently intends
to retain all of its earnings
to finance its operations and
future growth and does not
expect to pay any dividends for
the foreseeable future. See
"Dividend Policy".

Proposed Nasdaq National Market symbol . "LDSH".

_______________
(1) Does not include up to 502,500 shares of Common Stock issuable upon
exercise of the Underwriters' over-allotment option in full.

(2) Includes 7,608,932 shares subject to outstanding common stock
purchase warrants, but excludes (i) 322,500 shares issuable
pursuant to outstanding options under the Incentive Plan (as
hereinafter defined) and (ii) 496,188 shares reserved for issuance
upon exercise of outstanding options previously granted to former
employees and others. See "Management--Incentive Stock Option
Plan", "Certain Relationships and Related Party Transactions", and
Note 4 to Financial Statements.

Summary Financial Data

The following table sets forth certain historical financial data for
the fiscal years 1994 through 1996, and the nine-month periods ended
September 30, 1996 and 1997. The historical financial data for the fiscal
years ended December 31, 1994, 1995 and 1996 were derived from the audited
financial statements of the Company included elsewhere herein. The
historical financial data for the nine-month periods ended September 30,
1996 and September 30, 1997 have not been audited. The Company's
Industrial Products Division, which was sold during 1997, has been treated
as a discontinued operation and its results of operations are excluded
from the table.

In the opinion of management, the historical financial data for the
nine-month periods ending September 30, 1996 and 1997 include all
adjusting entries (consisting only of normal recurring adjustments)
necessary to present fairly the information set forth therein. The
historical financial data are not necessarily indicative of the results of
operations for any future period. Furthermore, the results of operations
for the nine-month periods ended September 30, 1996 and 1997 should not be
regarded as indicative of the results that may be expected for the full
year. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
1994 1995 1996 1996 1997
Results of Operations: (Dollars in thousands, except earnings per share)

<S> <C> <C> <C> <C> <C>
Net sales $121,803 $115,738 $162,002 $124,068 $157,072
Cost of sales 130,537 128,351 149,637 114,154 134,055
-------- -------- -------- -------- --------
Gross profit (loss) (8,734) (12,613) 12,365 9,914 23,017

Selling, general &
administrative
expenses 5,966 6,139 6,556 4,888 5,607
-------- -------- -------- -------- --------
Income (loss) from
operations (14,700) (18,752) 5,809 5,026 17,410

Interest expense 2,466 3,339 3,703 2,870 2,659

Other income
(expense), net 138 (55) 29 7 143
-------- -------- -------- -------- ---------
Income (loss) from
operations before
provision for
income taxes (17,028) (22,146) 2,135 2,163 14,894

Provision for income
taxes - - - - 1,132
-------- -------- -------- -------- --------
Net income (loss)
from continuing
operations $(17,028) $(22,146) $ 2,135 $ 2,163 $ 13,762
======== ======== ========= ======== ========
Earnings per share
from continuing
operations(1) $ (3.39) $ (4.40) $ 0.20 $ 0.21 $ 1.09

Operating Data:
EBITDA(2) $(5,837) $ (9,899) $ 14,974 $ 11,963 $ 24,931
Capital expenditures 2,549 2,865 4,997 2,747 6,255
Depreciation expense 8,725 8,908 9,136 6,930 7,365

Balance Sheet (at end
of period):

Total assets $164,347 $164,696 $170,270 $182,623 $171,092
Total debt 31,665 43,932 51,848 48,516 33,235
Stockholders' equity
(deficit) 11,141 (9,751) (16,287) (7,331) (1,416)

Backlog(3) $100,648 $150,493 $233,730 $216,811 $277,712

_______________
(1) Calculated in accordance with Note 14 to Financial Statements.
(2) EBITDA from continuing operations for any relevant period presented
above represents net income (loss) from continuing operations, plus
income taxes and interest expense, plus depreciation and amortization
of goodwill and other intangibles. While EBITDA should not be
construed as a substitute for operating income or a better indicator
of liquidity than cash flow from operating activities, which is
determined in accordance with generally accepted accounting
principles, it is included herein to provide additional information
with respect to the ability of the Company to meet its future debt
service, capital expenditure and working capital requirements.
EBITDA is not necessarily a measure of the Company's ability to fund
its cash needs. See the Company's Financial Statements and the
related notes thereto appearing elsewhere herein.
(3) Backlog represents unfilled purchase orders received by the Company as
of the end of each period.

</TABLE>

RISK FACTORS

Prior to making any investment decision, prospective investors should
carefully consider the risk factors set forth below in addition to the
other information presented in this Prospectus.

History of Recent Losses

Although the Company reported net income from continuing operations
of $2.1 million in 1996 and $13.8 million for the nine months ended
September 30, 1997, the Company reported net losses for each of the years
ended December 31, 1991 through 1995. In addition, the Company reported
gross losses for 1994 and 1995 and had an accumulated deficit of
approximately $38.0 million at September 30, 1997. In 1993, the Company
was unable to service its subordinated debt and consequently underwent a
financial restructuring pursuant to Chapter 11 of the United States
Bankruptcy Code, in which the subordinated debt was converted into Common
Stock. The Company has implemented changes designed to improve its cost
structure and increase efficiency and productivity at its facilities,
which the Company believes have enabled it to increase profitability and to
withstand better the volatility inherent in its primary markets. There
can be no assurance, however, that the Company's operations will be
profitable in the future.

Cyclicality of the Aerospace and Jet Engine Industries

Substantially all of the Company's revenues are derived from the
aerospace and jet engine industries, which are cyclical in nature and
subject to changes based on general economic conditions, airline
profitability and international relations. The duration and severity of
upturns and downturns in these industries are influenced by a variety of
factors, including those set forth herein. Accordingly, they cannot be
predicted with any certainty. Historically, orders for new commercial
aircraft and related commercial aerospace components have been driven by
the operating profits or losses of commercial airlines. Purchases by
customers in the military aerospace sector are dependent upon defense
budgets. The commercial aerospace industry experienced a greatly reduced
volume of orders between 1992 and early 1995, although this decline has
been reversed in 1996 and the first nine months of 1997. Events adversely
affecting the aircraft industry, such as cyclical overcapacity and
inability to maintain profitable fare structures, would likely have a
material adverse effect on the financial condition and results of
operations of the Company. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".

Reductions in Government Spending

Since 1990, almost one-quarter of the Company's revenue has been
derived from the government-sponsored aerospace industry, an industry that
is dependent upon government budgets and, in particular, the United States
government budget. In general, defense and space budgets in the United
States have been declining in recent years, resulting in reduced demand
for new aircraft and spare parts. While the effect of U.S. defense and
space budget reductions may be offset in part by foreign military sales,
such sales are affected by U.S. governmental regulation, regulation by the
purchasing government and political uncertainties in the United States and
abroad. There can be no assurance that U.S. defense and space budgets and
the related demand for defense and space equipment will not continue to
decline or that sales of defense and space equipment to foreign
governments will continue at present levels.

Competition

The sale of metal components for the aerospace, jet engine and
industrial markets is highly competitive. Many Ladish products are
readily interchangeable with the products manufactured by Ladish's
competitors. Many of the Company's products are sold under long-term
contracts which are bid upon by several suppliers. Ladish's principal
competitor, Wyman-Gordon Company, is substantially larger than Ladish and
has greater financial resources. See "Business--Competition".

Reliance on Major Customers

The Company's three largest customers accounted for approximately 54%
of the Company's revenues in 1996 and 60% during the nine months ended
September 30, 1997. Because of the small number of customers for some of
the Company's principal products, those customers exercise significant
influence over the Company's prices and other terms of trade. The loss of
any of the Company's largest customers could have a material adverse
effect on the Company's financial condition and results of operations.
See "Business--Customers".

Dependence on Key Personnel

The Company has been and continues to be dependent on certain key
management personnel. The Company's ability to maintain its competitive
position will depend, in part, upon its ability to retain these key
managers and to continue to attract and retain highly qualified
managerial, manufacturing and sales and marketing personnel. There can be
no assurance that the loss of key personnel would not have a material
adverse effect on the Company's results of operations or that the Company
will be able to recruit and retain such personnel. See "Management".

Product Liability Exposure

The Company produces many critical engine and structural parts for
commercial and military aircraft and for other specialty applications. As
a result, the Company has an inherent risk of exposure to product
liability claims. The Company currently maintains product liability
insurance, but there can be no assurance that insurance coverage will
continue to be available on terms acceptable to the Company or that such
coverage will be adequate for any liabilities that might be incurred.

Availability and Price of Raw Materials

The largest single component of the Company's cost of goods sold is
raw material costs. The Company manufactures products in a wide variety
of specialty metals and alloys, some of which can only be purchased from a
limited number of suppliers. The Company holds limited quantities of raw
materials in inventory but, for the principal part of its business, seeks
to procure delivery of raw materials in quantities and at times matching
customers' orders. The Company, along with other entities in the
industry, has experienced periods of increased delivery times for
nickel-based and titanium alloys and certain stainless steels, which
account for a significant portion of the Company's raw materials.
Significant scarcity of supply of raw materials used by the Company could
have a material adverse effect on the Company's results of operations by
affecting both the timing of delivery and the cost of purchasing such
materials. Many of the Company's products are sold pursuant to long-term
agreements with its customers, which currently provide the Company the
right to pass through material cost increases. Any inability to obtain
such rights in future long-term agreements could have a material adverse
effect on the Company's results of operations. See "Business--Raw
Materials".

Labor Contracts

Approximately 83% of the Company's employees are represented by eight
collective bargaining units. Contracts are typically renegotiated every
three years with each union. While management does not expect that work
stoppages will arise in connection with the renewal of labor agreements
expiring in the foreseeable future, no assurance can be given that work
stoppages will not occur. An extended or widespread work stoppage could
have a material adverse effect on the Company's results of operations.
See "Business--Employees".

Pension and Other Postretirement Benefit Obligations

The Company's employees are eligible to participate in various
Company-sponsored pension plans. In addition to pension benefits, the
Company provides health care and life insurance benefits to its eligible
employees and retirees. The pension benefits have been and will continue
to be funded through contributions to pension trusts, while health care
and life insurance benefits are paid as incurred.

The Company has several pension plans, certain of which are
underfunded. The aggregate liability recorded for the Company's pension
plans on the balance sheet at September 30, 1997 was approximately $48
million. The Company has entered into an agreement with the Pension
Benefit Guarantee Corporation requiring minimum contributions to the
underfunded plans of $18 million in 1997, $7.4 million in 1998 and $7.8
million in 1999 in order to substantially reduce this liability. In
addition, approximately $15 million of the net proceeds from the Offering
will be used to make a further contribution to these plans. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Pensions" and Note 8 to Financial Statements.

The liability recorded for postretirement health care and life
insurance benefits on the balance sheet at September 30, 1997 was
approximately $50 million on an actuarial basis and will be paid as
incurred annually. See Note 9 to Financial Statements.

Compliance with Environmental and Other Government Regulations

The Company's operations are subject to extensive environmental,
health and safety laws and regulations promulgated by federal, state and
local governments. Many of these laws and regulations provide for
substantial fines and criminal sanctions for violations. The nature of
the Company's business exposes the Company to risks of liability due to
the use and storage of materials that can cause contamination or personal
injury if released into the environment. In addition, environmental laws
may have a significant effect on the nature, scope and cost of cleanup of
contamination at operating facilities. It is difficult to predict the
future development of such laws and regulations or their impact on future
earnings and operations, but the Company anticipates that these standards
will continue to require increased capital expenditures. There can be no
assurance that the Company will not incur material costs and liabilities
in the future relating to environmental matters.

Based upon information presently available, the Company does not
expect that costs for future environmental compliance and remediation will
have a material adverse effect on its competitive or financial position or
its ongoing results of operations. However, it is not possible to predict
accurately the amount or timing of costs of any future environmental
remediation requirements. Such costs could be material to future results
of operations. In addition, the "Superfund" statutes may impose joint and
several liability for the costs of remedial investigations and actions on
the entities that arranged for disposal of the wastes, the waste
transporters that delivered materials to the disposal sites and the past
and present owners and operators of such sites; responsible parties may be
required to bear all costs, regardless of fault, legality of the original
disposal or ownership of the disposal site. The Company has been named a
potentially responsible party at three sites and has reserved
approximately $300,000 for such liability. The Company believes that the
amount for which it is liable at such sites will not be material; however,
there can be no assurances that the amount for which the Company will be
responsible will not be significantly greater than anticipated. See
"Business--Environmental, Health and Safety Matters".

Significant Shareholders

After the Offering, ING Equity Partners, L.P. I and affiliated
entities (collectively "ING") will continue to own shares of
Common Stock, which will represent approximately % of the outstanding
shares of Common Stock. ING will also own warrants to purchase another
shares of Common Stock which, if exercised, would increase ING's
ownership to % of the then outstanding shares. Grace Brothers, Ltd.
("Grace") will also own warrants to purchase shares of Common
Stock which, if exercised, would represent % of the then outstanding
shares. (If both ING and Grace exercised their warrants, they would own
% and %, respectively, of the outstanding shares of Common Stock
immediately after the Offering.) Consequently, ING and Grace have and
will continue to have significant influence over the affairs of the
Company. See "Principal and Selling Shareholders" and "Certain
Relationships and Related Transactions".

Net Operating Loss Carryforwards

At January 1, 1997, the Company had approximately $73.1 million of
net operating loss carryforwards ("NOLs") for federal income tax purposes,
of which approximately $24.2 million are restricted due to the 1993 change
of ownership of the Company in connection with the Company's financial
restructuring through Chapter 11 proceedings. To the extent the Company
generates taxable income, these NOLs will reduce the federal income taxes
of the Company in future years, and therefore increase its after-tax cash
flow. Under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), certain restrictions on the utilization of NOLs or credit
carryforwards will apply in the event of an ownership change of a
corporation entitled to use such carryforwards. It is likely that the
sale of Common Stock pursuant to the Offering, combined with sales of
Common Stock within the past three years, will cause an ownership change
of the Company (within the meaning of Section 382 of the Code), resulting
in restrictions on the Company's ability to utilize its NOLs during all
taxable years (including partial taxable years) after the date of such
ownership change.

Based on the limitations noted above, and the Company's recent
history of losses, the Company has recorded a valuation allowance against
the entire amount of these NOLs. The Company will continue to evaluate
the ultimate realizability of the NOLs in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Net Operating Loss Carryforwards" and Note 7 to Financial Statements.

Dilution

Purchasers of Common Stock in the Offering will experience immediate
dilution of $13.74 per share of Common Stock purchased, assuming an
offering price of $16.50 per share (the midpoint of the range set forth
on the cover page of this Prospectus) and exercise of all of the Company's
outstanding warrants. See "Dilution". In connection with the Company's
December 1995 and February 1996 private offering of senior subordinated
secured notes (the "Subordinated Notes"), the Company issued warrants to
acquire 7,775,722 shares of Common Stock. Each warrant entitles the
holder to purchase one share of Common Stock at a price of $1.20 per
share. The exercise price may be paid in cash, or by the surrender of
outstanding Common Stock, Subordinated Notes or other warrants having a
fair value equal to the exercise price. An aggregate of 166,790 of such
warrants have subsequently been exercised. Additionally, there are
options to acquire 322,500 shares of Common Stock at an exercise price of
$6.00 per share pursuant to the Company's Incentive Stock Option Plan, and
options to purchase an additional 496,188 shares at exercise prices
ranging from $12.00 to $21.00 per share issued in 1993 in consideration of
consulting services. The exercise of all outstanding options would result
in the issuance by the Company of up to 818,688 additional shares of
Common Stock, and would result in substantial additional dilution to
investors purchasing Common Stock in the Offering.

Limited Prior Market for Common Stock; Possible Volatility of Common Stock
and the Securities Markets

Although the Common Stock of the Company has been quoted on the OTC
Electronic Bulletin Board prior to the Offering, trading has been
sporadic. Application will be made to have the Common Stock quoted on the
Nasdaq National Market. The initial public offering price of the Common
Stock will be determined through negotiations among the Company, the
Selling Shareholders and the representatives of the Underwriters. There
can be no assurance that the initial public offering price will correspond
to the price at which the Common Stock will trade in the public market
subsequent to the Offering or that an active trading market for the Common
Stock will develop and continue after the completion of the Offering. See
"Underwriting". In addition, the market price of the Common Stock upon
the completion of the Offering could be subject to significant
fluctuations in response to variations in the Company's quarterly
financial results or other developments, such as announcements of new
products by the Company or the Company's competitors, enactment of
legislation or regulation affecting the aerospace industry, interest rate
movements or general economic conditions.

Shares Eligible for Future Sale; Registration Rights; Possible Adverse
Effect on Future Market Prices

Upon completion of the Offering, there will be 7,651,473 shares of
Common Stock outstanding. An additional 8,427,620 shares have been
reserved against the exercise of outstanding warrants and options which
are currently exercisable. The 3,350,000 shares sold in the Offering will
be immediately tradeable without restriction by persons other than those
who may be deemed "affiliates" of the Company, as that term is defined in
Rule 144 under the Securities Act. Substantially all the 5,315,473 shares
of Common Stock outstanding prior to the Offering were issued in 1993 in
connection with the reorganization of the Company. Of these shares, those
held by persons who are not "affiliates" of the Company (believed by
management to number approximately 3,193,638 shares) will be immediately
tradeable. The remaining shares (believed to number approximately
2,121,835) are held by "affiliates" and may be sold only pursuant to a
registration statement under the Securities Act or under Rule 144 or
another available exemption. The Underwriters have conditioned the
Offering on the receipt of agreements of the holders of substantially
all Common Stock purchase warrants, all persons selling shares in the
Offering, all holders of registration rights with respect to the Company's
securities and all executive officers and directors of the Company, that
they will not sell any shares of Common Stock without the consent of
Credit Suisse First Boston Corporation, on behalf of the Underwriters, for
a period of 180 days following the date of this Prospectus. After the
Offering, the holders of an aggregate of 25% of the Company's then
outstanding warrants and shares then issued upon exercise of such warrants
will have the right to require the Company to register all or a portion of
the shares underlying such warrants under the Securities Act to permit the
public sale of such shares.

The shares issuable upon the exercise of the Company's outstanding
options and warrants will be "restricted shares" as that term is defined
in Rule 144. As a result, such shares, if and when issued, will only be
subject to resale pursuant to a registration statement under the
Securities Act or under Rule 144 or other available exemption.

Significant sales of shares of Common Stock under a registration
statement, pursuant to Rule 144 or otherwise in the future, or the
prospect of such sales, may depress the price of the shares of Common
Stock or any market that may develop. See "Shares Eligible for Future
Sale" and "Certain Relationships and Related Party
Transactions--Registration Rights".

FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements.
Forward-looking statements are statements other than historical
information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as "believes",
"anticipates", "intends" or "expects". The forward-looking statements
contained and incorporated by reference in this Prospectus are generally
located in the material set forth under the headings "Prospectus Summary",
"Risk Factors", "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" but may be found in
other locations as well. These forward-looking statements relate to the
plans and objectives of the Company for future operations. In light of
the risks and uncertainties inherent in all future projections, including
but not limited to those set forth under the heading "Risk Factors", the
inclusion of the forward-looking statements in this Prospectus should not
be regarded as a representation by the Company or any other person that
the objectives or plans of the Company will be achieved. Many factors
could cause the Company's actual results to differ materially from those
in the forward-looking statements, including in particular unanticipated
fluctuation in demand for the Company's products which are sold in markets
subject to severe cyclicality. The foregoing review of important factors
should not be construed as exhaustive and should be read in conjunction
with other cautionary statements that are included in this Prospectus.
The Company undertakes no obligation to release publicly the results of
any future revisions it may make to forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.

DIVIDEND POLICY

The declaration of dividends is within the discretion of the
Company's Board of Directors. The Company has not paid a dividend on its
Common Stock since 1987. The Company currently intends to retain all of
its earnings from periods following the Offering to finance its operations
and future growth and, accordingly, does not expect to pay any dividends
for the foreseeable future. The Board of Directors will review this
dividend policy from time to time in light of the conditions then
existing, including the Company's financial condition, results of
operations, capital requirements, restrictions (if any) contained in
financing or other agreements binding upon the Company, and such other
factors as the Board of Directors deems relevant. The Company's senior
credit facility currently prohibits the payment of dividends.

USE OF PROCEEDS

The proceeds to the Company from the sale of shares of Common Stock
by the Company are estimated to be approximately $35 million (net of
underwriting discounts and estimated expenses payable by the Company
and assuming an offering price per share of $16.50, the midpoint of the
range set forth on the cover page of this Prospectus). The net proceeds
from the sale of shares by the Company will be used primarily (i) to repay
all of the Company's senior subordinated secured notes, due in February
2000, $11 million aggregate principal amount of which was outstanding at
September 30, 1997, and which bear interest at the rate of 12% per year,
(ii) to repay a portion of outstanding indebtedness under the Company's
current senior credit facility, and (iii) to make contributions in the
amount of approximately $15 million to certain pension plans to reduce
their underfunded status. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Pensions". Some of these
uses of proceeds will require the consent of the Company's lender under
the senior credit facility, which consent is anticipated prior to the date
of the Offering. Any remaining funds will be used for general corporate
purposes, which may include one or more strategic business acquisitions.
See "Business--Business Strategy". The Company currently has no plans or
agreements with respect to specific acquisitions. The Company will not
receive any proceeds from the sale of shares by the Selling Shareholders.
See "Principal and Selling Shareholders".

MARKET FOR COMMON STOCK

Prior to the Offering, limited trading of Common Stock has occurred
in the over-the-counter market. The Common Stock has not previously been
registered under either the Securities Act of 1933, as amended (the
"Securities Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), nor is such stock listed on any exchange or on Nasdaq.
The Company has been informed that three market-makers in the Common Stock
regularly publish bid quotations.

The following table sets forth, for the fiscal periods indicated, the
high and low bid prices for the Common Stock in the over-the-counter
market as reported on the OTC Electronic Bulletin Board. Such quotations
have been adjusted to reflect the 1 for 6 reverse split of the Common
Stock and reflect inter-dealer bid prices, without retail mark-up, mark-
down or commission, and do not necessarily represent actual transactions.

Bid Price
High Low

1996
First Quarter . . . . . $ 4.50 $ 3.90
Second Quarter . . . . . 11.40 3.90
Third Quarter . . . . . 11.40 8.70
Fourth Quarter . . . . . 12.00 9.60
1997
First Quarter . . . . . 12.60 9.90
Second Quarter . . . . . 13.50 9.90
Third Quarter . . . . . 22.80 12.60

On December 15, 1997, the last reported sale price of the Common
Stock, as reported on the OTC Electronic Bulletin Board was $18.00 per
share. As of December 8, 1997, there were approximately 100 record
holders of the Common Stock.

Application will be made to have the Common Stock quoted on the
Nasdaq National Market under the symbol "LDSH". There can be no assurance
that an active market for the Common Stock will develop or, if developed,
will continue. See "Risk Factors--Limited Prior Market for Common Stock;
Possible Volatility of Common Stock Price and the Securities Markets" and
"Underwriting".

DILUTION

At September 30, 1997, the Company had a net tangible book value of
$6.5 million (assuming exercise of all warrants as described below) or
$.50 per share of Common Stock. Net tangible book value per share is
determined by dividing the Company's tangible net book value (total
tangible assets less total liabilities) by the total number of shares of
Common Stock outstanding. After giving effect to the sale of the 2,336,000
shares offered by the Company hereby, at an assumed initial offering price
of $16.50 per share (the midpoint of the range set forth on the cover page
of the Prospectus), and deducting the underwriting discounts and commissions
and estimated Offering expenses payable by the Company, the net tangible
book value of the Company at September 30, 1997 would have been
approximately $41.8 million, or $2.76 per share. This represents an
immediate increase in net tangible book value of $2.26 per share to the
existing shareholders and an immediate dilution in net tangible book value
of $13.74 per share to new investors purchasing Common Stock in the
Offering. The following table illustrates this dilution on a per share
basis:

Assumed initial public offering price per share . . . $16.50

Net tangible book value per share,
without giving effect to the
Offering . . . . . . . . . . . . . $ .50
Increase in net tangible book value
per share attributable to new
investors . . . . . . . . . . . . 2.26
----

Net tangible book value per share after the Offering 2.76
------

Dilution per share to new investors . . . . . . . . . $13.74
======

The following table sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average
price per share paid by the Company's existing shareholders and to be paid
by new investors in the Offering (assuming an initial public offering
price of $16.50 per share, the midpoint of the range set forth on the
cover page of this Prospectus) and before deduction of estimated
underwriting discounts and commissions:

Shares of
Common Stock Total Average
Purchased Consideration Price
Per
Number Percent Amount Percent Share

Existing
shareholders(1) . . . 12,805,239 84.6% $44,511,000(2) 53.6% $ 3.48

New investors(1) . . . 2,336,000 15.4% 38,544,000 46.4 16.50
---------- ----- ---------- -----
Total . . . . . . 15,141,239 100.0% $83,055,000 100.0%
========== ===== ========== =====

_______________

(1) Sales by the Selling Shareholders in the Offering will reduce the
number of shares held by existing shareholders to 11,791,239 or
approximately 77.9% of the total number of shares of Common Stock
outstanding after the Offering, and will increase the number of
shares held by new investors to 3,350,000 or approximately 22.1% of
the total number of shares of Common Stock outstanding after the
Offering.

(2) Amount represents the fair value of the Company's net assets as
of the financial reorganization, plus all consideration received
for subsequent stock issuances.

The foregoing tables assume exercise of all 7,608,932 outstanding
warrants to purchase Common Stock at an exercise price of $1.20 per share,
but no exercise of outstanding options and no exercise of any options that
may be granted under the Incentive Plan. See "Executive Compensation--
Incentive Stock Option Plan". At September 30, 1997, there were
outstanding options to purchase 929,521 shares of Common Stock at a
weighted average exercise price of $11.34 per share. Based on the pro
forma net tangible book value of $2.76 per share after the Offering and
the assumed initial public offering price of $16.50 per share, dilution
to new investors would be $13.25 per share if all of the outstanding
options were exercised.

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of September 30, 1997, and as adjusted to reflect the sale of
2,336,000 shares of Common Stock offered by the Company hereby (at an
assumed initial public offering price of $16.50 per share, the mid-point
of the range set forth on the cover page of this Prospectus) and the
application of the proceeds therefrom, net of estimated underwriting
discounts and expenses of the Offering. See "Use of Proceeds". This
table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Company's Financial Statements and the Notes thereto, included elsewhere
in this Prospectus.

As of September 30, 1997
As
Actual Adjusted(1)

(Dollars in thousands)
Credit Agreement, including
current portion . . . . . . . . . . . . . $ 21,220 $ 11,939(2)

Notes payable, including current
portion . . . . . . . . . . . . . . . . . 1,000 1,000
Subordinated debt . . . . . . . . . . . . . 11,015 --

Stockholders' equity:

Common Stock, $0.01 par value,
100,000,000 shares authorized,
5,196,307 actual shares issued
and outstanding, and 7,532,307
shares issued and outstanding,
as adjusted (3) . . . . . . . . . . . . 52 75
Additional paid in capital . . . . . . . 36,506 71,779

Accumulated deficit . . . . . . . . . . . (37,974) (37,974)
-------- -------

Total stockholders' equity . . . . . . (1,416) 33,880
-------- -------

Total capitalization . . . . . . . . . $ 31,819 $46,819
======== =======

____________________
(1) Does not reflect the contribution of approximately $15 million of
net proceeds to certain pension plans to reduce their underfunded
status. See "Use of Proceeds."
(2) The Company may borrow approximately another $38 million under this
facility.
(3) Does not include 7,608,932 shares reserved against the exercise of
warrants.

<PAGE>

PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

The following Unaudited Pro Forma Consolidated Statements of Income
for the year ended December 31, 1996 and for the nine months ended
September 30, 1997 have been prepared to reflect the following
transactions as if such transactions occurred on January 1, 1996: (i) the
June 16, 1997 acquisition of Stowe, and (ii) the Offering and the
application of the estimated net proceeds to the Company from the Offering
to repay certain indebtedness and fund certain pension obligations.

The pro forma information set forth below is unaudited and not
necessarily indicative of the results that would actually have occurred if
the transactions had been consummated as of such dates or results that may
be attained in the future.

The pro forma adjustments, as described in the Notes to the Unaudited
Pro Forma Consolidated Statements of Income, are based upon available
information and upon certain assumptions that the Company believes are
reasonable. The Unaudited Pro Forma Consolidated Information should be
read in conjunction with the "Selected Historical Consolidated Financial
Data," "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and the Company's Consolidated Financial Statements
and related notes included elsewhere herein.

Stowe
Adjustments Offering
Historical (1) Adjustments Pro Forma
Nine months ended
September 30,
1997 (Dollars in thousands)

Net sales $ 157,072 $ 3,703 $ - $ 160,775
Cost of sales 134,055 3,037 (1,041)(2) 136,051
------- ------- ------ --------
Gross profit 23,017 666 1,041 24,724

Selling, general
& administrative
expenses 5,607 279 - 5,886
------- ------- ------- --------
Income from
operations 17,410 387 1,041 18,838

Interest expense 2,659 590 (1,369)(3) 1,880

Other (income),
net (143) - - (143)
------- ------- ------- --------
Income (loss) 14,894 (203) 2,410 17,101

Provision
(credit) for
income taxes 1,132 (15) 183(4) 1,300
------- ------- ------- -------
Net income (loss) $ 13,762 $ (188) $ 2,227 $ 15,801
======= ======= ======= =======

Year Ended
December 31, 1996

Net sales $162,002 $7,888 $ - $169,890
Cost of sales 149,637 6,432 (1,388)(2) 154,681
------- ------ ------ -------
Gross profit 12,365 1,456 1,388 15,209

Selling, general
& administrative
expenses 6,556 469 - 7,025
------- ------ ------ -------
Income from
operations 5,809 987 1,388 8,184

Interest expense 3,703 914 (1,671)(3) 2,946

Other (income), (29) - - (29)
------- ------ ------- ------
Income before
income taxes 2,135 73 3,059 5,267

Provision for
income taxes - 32 - 32

Net income $ 2,135 $ 41 $ 3,059 $ 5,235
======= ======= ======= =======

(1) Reflects the historical results of operations of Stowe, adjusted for
1996 and for the period from January 1997 through the acquisition date
as follows:

1996 1997

Additional depreciation expense $ 260 $ 119
Elimination of employment costs of
former owners (334) (5)
Additional interest expense 470 386
Amortization of goodwill 43 21

(2) Reflects the reduction of pension expense due to the additional
funding of $15,000 to be contributed from the proceeds of the
Offering.

(3) Reflects the reduction of interest expense based on the repayment of
the Subordinated Notes and a portion of the indebtedness under the
Credit Agreement from the proceeds of the Offering.

(4) Reflects the pro forma tax effects of all adjustments.

SELECTED FINANCIAL DATA

The following table sets forth certain historical financial data for
fiscal years (or periods) 1992 through 1996, and the nine-month periods
ended September 30, 1996 and 1997. The historical financial data for the
years ended December 31, 1994, 1995 and 1996 were derived from the audited
financial statements included elsewhere herein. The historical financial
data for the periods ended December 31 and April 30, 1993 and the year
ended December 31, 1992 were derived from the audited financial statements
of the Company not included herein. The historical financial data for the
nine-month periods ended September 30, 1996 and 1997 have not been
audited. The Company's Industrial Products Division, which was sold
during 1997, has been treated as a discontinued operation and its results
of operations are excluded from the table.

<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, Periods From Years Ended December 31, September 30,
January 1 to May 1 to
April 30, December 31,
1992 1993(1)(2) 1993(1) 1994 1995 1996 1996 1997
(Dollars in thousands, except earnings per share)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Results of
Operations:

Net sales $148,701 $ 54,261 $ 86,628 $121,803 $115,738 $162,002 $124,068 $157,072
Cost of sales 164,338 57,145 88,843 130,537 128,351 149,637 114,154 134,055
-------- -------- -------- -------- -------- ------- ------- --------
Gross profit (loss) (15,637) (2,884) (2,215) (8,734) (12,613) 12,365 9,914 23,017
Selling, general &
administrative
expenses 8,623 2,644 5,212 5,966 6,139 6,556 4,888 5,607
Restructuring
charges 2,250 2,115 -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- ------- --------
Income (loss) from
operations (26,510) (7,643) (7,427) (14,700) (18,752) 5,809 5,026 17,410
Interest expense 13,548 3,314 1,528 2,466 3,339 3,703 2,870 2,659
Other income
(expense), net (1,385) (32) (4) 138 (55) 29 7 143
-------- -------- -------- -------- -------- ------- ------- --------
Income (loss) from
operations
before provision
for income
taxes &
cumulative items (41,443) (10,989) (8,959) (17,028) (22,146) 2,135 2,163 14,894
Reorganization
credit -- 15,703 -- -- -- -- -- --
Provision (credit)
for income taxes (992) -- -- -- -- -- -- 1,132
-------- -------- -------- -------- -------- ------- ------- --------
Net income (loss)
from continuing
operations $(40,451) $ 4,714 $ (8,959) $(17,028) $(22,146) $ 2,135 $ 2,163 $ 13,762
======== ======== ======== ======== ======== ======= ======= ========
Earnings per share
from continuing
operations(3) N/A N/A N/A $(3.39) $(4.40) $0.20 $0.21 $1.09

Operating Data:

EBITDA(4) $(18,144) $(4,096) $(1,742) $(5,837) $(9,899) $14,974 $11,963 $24,931
Capital
expenditures 5,598 965 3,181 2,549 2,865 4,997 2,747 6,255
Depreciation
expense 9,751 3,579 5,689 8,725 8,908 9,136 6,930 7,365

Balance Sheet (end of period)

Total assets $188,515 $208,815 $182,235 $164,347 $164,696 $170,270 $182,623 $171,092
Total debt 148,493 39,200 29,108 31,665 43,932 51,848 48,516 33,235
Stockholders'
equity (deficit) (103,244) 35,180 27,904 11,141 (9,751) (16,287) (7,331) (1,416)

Backlog(5) $254,480 $236,901 $109,935 $100,648 $150,493 $233,730 $216,811 $277,712

_______________

(1) As a result of the Company's emergence from Chapter 11 bankruptcy
proceedings, the Company adopted "fresh start" accounting on April
30, 1993. As a result of the application of "fresh start"
accounting, the financial condition and results of operations of the
Company for the dates and periods subsequent to April 30, 1993 are
not comparable to those prior to May 1, 1993.

(2) The results of operations for the period from January 1 to April 30,
1993 do not include a $95,518 extraordinary gain on the forgiveness
of indebtedness and related interest thereon.

(3) Calculated in accordance with Note 14 to Financial Statements. The
EPS would not be meaningful for the year ended December 31, 1992 or
the periods ended April 30, 1993 and December 31, 1993 due to changes
in the Company's capital structure following the restructuring and
change of ownership.

(4) EBITDA from continuing operations for any relevant period presented
above represents net income (loss) from continuing operations, plus
income taxes and interest expense, plus depreciation and amortization
of goodwill and other intangibles. While EBITDA should not be
construed as a substitute for operating income or a better indicator
of liquidity than cash flow from operating activities, which are
determined in accordance with generally accepted accounting
principles, it is included herein to provide additional information
with respect to the ability of the Company to meet its future debt
service, capital expenditure and working capital requirements.
EBITDA is not necessarily a measure of the Company's ability to fund
its cash needs. See the Company's Financial Statements and the
related notes thereto appearing elsewhere herein.

(5) Backlog represents unfilled purchase orders received by the Company as
of the end of each period.

</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Substantially all of the Company's revenue is generated from the jet
engine, aerospace and general industrial markets. Approximately 53%, 59%,
67% and 73% of the Company's revenues during 1994, 1995, 1996 and the nine
months ended September 30, 1997, respectively, was derived from the jet
engine industry, an industry that is cyclical in nature and subject to
changes based on general economic conditions, airline profitability and
government spending. During the period from 1992 through 1994, the
Company experienced a significant deterioration in its core forging
business. The economic recession combined with an unprecedented decline
in air traffic in 1992 led to a prolonged downturn in the jet engine and
aerospace markets which adversely impacted the Company's performance.
Additionally, a reduction by the U.S. government in military spending and
reductions in the NASA budget compounded the effects of the downturn in
the jet engine and aerospace markets.

Beginning in 1995, the Company implemented a program to reduce
overhead costs, improve worker productivity, shorten production cycle
times and rationalize product mix. This program has resulted in improved
operating margins and a lower break-even point. Over the same time
period, the market for forged components strengthened due primarily to
increased demand from the commercial airline industry. This resurgence in
demand, which the Company believes is attributable to a number of factors
affecting airlines in the U.S. and throughout the world, has resulted in
strong revenue growth for the Company. The Company recorded net sales of
$162 million and net income of $2.1 million from continuing operations in
1996, and net sales of $157 million and net income of $13.8 million from
continuing operations in the first nine months of 1997.

The Company's sales are not subject to significant seasonal
fluctuations. However, production and resulting sales are subject to the
number of "working days" in any given period, with the fourth quarter
containing more holidays than each of the first three quarters of the
year. Therefore, results for various periods may vary materially due to
the number of working days available in any period, with the fourth
quarter results typically lower than the first three periods in any given
year.

Recent Events

On May 30, 1997, the Company sold substantially all of the assets,
and transferred a portion of the liabilities, of its Industrial Products
Division ("IPD") to a subsidiary of Trinity Industries, Inc. As a part of
the consideration for the transaction, the Company received approximately
$36.5 million in cash proceeds. The Company elected to dispose of IPD in
order to better focus on its core forging business for the jet engine,
commercial and general industrial markets. IPD had been primarily focused
on the production of commodity fitting and flange products. The proceeds
from the sale were used to repay approximately $12 million of outstanding
senior debt, fund working capital requirements, and finance $8.5 million
of the Stowe acquisition and a portion will be applied to reduce the level
of the Company's unfunded pension liability. IPD has been treated as a
discontinued operation and its results of operations are excluded from
those of the continuing operations in the accompanying financial
statements. See Note 13 to Financial Statements.

In June 1997, the Company acquired the assets and assumed certain of
the liabilities of Stowe. The acquisition price for Stowe was
approximately $9.5 million. Located in Windsor, Connecticut, Stowe
provides finish machining services for jet engine components. With a
customer list which mirrors that of Ladish, Stowe provides Ladish with the
ability to integrate vertically and offer further value-added services to
its core markets. See Note 15 to Financial Statements.

Results of Operations

The following table sets forth for the periods indicated certain
income statement data from continuing operations of the Company expressed
as a percentage of net sales.

<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
1994 1995 1996 1996 1997

<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%

Cost of sales 107.2 110.9 92.4 92.0 85.3
----- ----- ----- ----- -----
Gross profit (loss) (7.2) (10.9) 7.6 8.0 14.7

Selling, general &
administrative expenses 4.9 5.3 4.0 3.9 3.6
----- ----- ----- ----- -----

Income (loss) from operations (12.1) (16.2) 3.6 4.1 11.1

Interest expense 1.9 2.9 2.3 2.4 1.6
----- ----- ----- ----- -----

Income (loss) from continuing
operations before provision
for income taxes (14.0) (19.1) 1.3 1.7 9.5
Provision for income taxes 0.0 0.0 0.0 0.0 0.7
----- ----- ----- ----- -----

Net income (loss) from
continuing operations (14.0)% (19.1)% 1.3% 1.7% 8.8%
===== ===== ===== ===== =====

</TABLE>

Nine Months Ended September 30, 1997 Compared to Nine Months Ended
September 30, 1996

Net sales for the nine months ended September 30, 1997 were $157.1
million compared to $124.1 million for the comparable period in 1996, an
increase of 27%. The increase in sales in the first nine months of 1997
was largely the result of a continued resurgence in the jet engine market
with steady volume in the aerospace and general industrial markets.
Ladish also benefitted in the first nine months of 1997 as a result of
increased sales and improved pricing due to significant improvement in on-
time deliveries and manufacturing productivity. Gross profit increased by
132% in the 1997 period due to improved operating efficiencies, greater
absorption of fixed costs by higher sales volumes and improved pricing in
the commercial aerospace industry.

Selling, general and administrative expenses, as a percentage of
sales, were 3.6% for the nine months ended September 30, 1997 compared to
3.9% for the comparable period in 1996. This reduced percentage, which
resulted primarily from the increase in sales, occurred even though
foreign sales, which involve greater commission expense than domestic
sales, increased from 39% of net sales in the 1996 period to 42% in the
1997 period.

Interest expense for the nine months ended September 30, 1997 was
$2.7 million compared to $2.9 million for the nine months ended September
30, 1996, a decrease of 7%. The decrease in interest expense was
attributable to lower loan balances of senior debt along with reduced
interest rates. Approximately $0.9 million of the interest expense in the
first nine months of 1997 and $0.8 million in the first nine months of
1996 was attributable to non-cash payment-in-kind ("PIK") payments on
certain Subordinated Notes issued in late 1995 and early 1996. See "--
Liquidity and Capital Resources". As of September 30, 1997, the Company's
senior debt had an effective interest rate equal to the commercial paper
rate plus 2.0% per annum (reduced from 2.5% as of December 31, 1996).
Effective interest rates averaged 8.4% during the nine months ended
September 30, 1997 compared to 10.3% during the same period of 1996.

The Company's income before taxes increased from $2.2 million in the
first nine months of 1996 to $14.9 million in the first nine months of
1997, due principally to the substantial increase in net sales.

The $1.1 million provision for taxes for the nine-month period ending
September 30, 1997 represented a non-cash accounting charge. The use of
pre-restructuring NOLs requires the Company to record a tax provision and
to reflect the offset as an addition to paid-in capital. The Company
intends to continue to use its NOLs in the future to reduce actual payment
of federal income taxes. The future use of the NOLs is subject to certain
statutory restrictions. See "--Liquidity and Capital Resources--Net
Operating Loss Carryforwards".

Contract backlog at September 30, 1997 was $278 million, compared to
$217 million at September 30, 1996, an increase of 28%, due primarily to
an increase in orders.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

The year 1996 represented a turn-around year for the Company as sales
increased 40%, to $162 million from $115.7 million in 1995 and operating
earnings returned to a positive position for the first time in five years.
The return to profitability was attributable to a significant increase in
sales to the jet engine market, a better product mix and improved
operating efficiencies throughout the Company. Gross profit increased by
$25 million in 1996 over 1995 due to the increased volume of business in
the jet engine market, internal improvements accelerating the movement of
product and pricing increases associated with improved product mix and
selection.

In 1996, selling, general and administrative expenses dropped to 4.0%
of sales from 5.3% in 1995. This reduction reflected improved cost
controls within the Company and an increased level of sales.

Interest expense for 1996 was $3.7 million compared to $3.3 million
in 1995, due to higher levels of indebtedness resulting from increased
demands for working capital in 1996. Approximately $1.0 million of the
interest expense in 1996 was attributable to non-cash PIK payments on the
Subordinated Notes. Effective interest rates averaged 9.9% during 1996
compared with 11.1% during 1995.

The Company's income before taxes increased from a $22.1 million loss
in 1995 to earnings of $2.1 million in 1996. This turnaround was
attributable principally to the increase in net sales, allowing fuller
absorption of the Company's fixed costs.

Contract backlog at December 31, 1996 was $234 million, compared to
$150 million at December 31, 1995, an increase of 56%, due primarily to an
increase in orders.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Net sales for 1995 were $115.7 million compared to $121.8 million for
1994, a decrease of 5%. However, 1994 sales had the benefit of
approximately $11 million of contract settlement payments for a NASA
program terminated in the fourth quarter of 1993. Operations for the
first half of 1995 were similar to 1994. In the second half of the year,
however, the Company experienced a considerable improvement in operating
results over the prior year after excluding the contract settlement from
the prior year. This improvement resulted from an overall increase in
demand in the jet engine and aerospace markets. For the six-month period
from July through December 1995, sales were $57.7 million, up 12.7% over
the $51.2 million of sales during the same period of the prior year.
Gross profit (loss) for the same six-month period showed an improvement,
from $(8.1) million in 1994 to $(4.7) million in 1995. Income in 1995
includes $1.6 million received in the settlement of litigation with a
former owner of the Company. Customer orders exceeded shipments during
every month in 1995.

Selling, general and administrative expenses increased to 5.3% of
sales in 1995 from 4.9% in 1994, primarily due to increased consulting
services and commissions and other expenses related to international
shipments.

Interest expense for 1995 was $3.3 million compared to $2.5 million
in 1994, due to higher loan balances during 1995 and higher average
interest rates. Average loan balances on senior debt were $38.1 million
in 1995 versus $32.2 million in 1994. Effective interest rates averaged
11.1% during 1995 compared with 9.5% during 1994.

The Company's pretax loss increased from $17.0 million in 1994 to
$22.1 million in 1995, due principally to a contract settlement received
by the Company in 1994.

The Company's contract backlog at December 31, 1995 was approximately
$150 million, compared to $101 million at December 31, 1994, an increase
of 49%, due primarily to an increase in orders.

Liquidity and Capital Resources

In July 1995, the Company entered into a credit agreement (the
"Credit Agreement") with General Electric Capital Corporation which
expires on June 30, 2000. The Credit Agreement currently consists of two
facilities: (i) a $45 million revolving line of credit (the "Revolving
Credit Facility") and (ii) an $8 million term loan (the "Term Loan"). All
of the Company's assets have been pledged to secure borrowings under the
Credit Agreement. An affiliated party of the senior lender is also a
significant customer of the Company.

Borrowings under the Revolving Credit Facility bear interest at a
rate equal to the commercial paper rate plus 2.0% per annum (reduced from
2.5% as of December 31, 1996). Availability under the Revolving Credit
Facility is subject to a borrowing base limitation which is calculated
based upon eligible accounts receivable and inventories reduced by the
amount of any letters of credit. At September 30, 1997, approximately $24
million was available and undrawn under the Revolving Credit Facility.

The Term Loan is payable in 16 consecutive quarterly installments
which commenced on September 30, 1996. The first four quarterly
installments were $375,000 each, the next eight installments are $500,000
each beginning September 30, 1997, and the last four installments are
$625,000 each, with the first installment due on September 30, 1999 and
the last installment due on June 30, 2000. Borrowings under the Term Loan
bear interest at a rate equal to the commercial paper rate plus 2.0% per
annum. The Company may, at any time, prepay the outstanding balance of
the Term Loan, in whole or in part, subject to a prepayment fee of 1% of
the outstanding balance (or in the case of a partial prepayment, of the
amount prepaid) if the Term Loan is prepaid on or before July 1, 1999.
The balance of the Term Loan as of September 30, 1997 was $6.0 million.

The Credit Agreement contains certain covenants, including, but not
limited to, restrictions on the incurrence of additional indebtedness and
operations and capital expenditures. In addition, the Company is required
to maintain an interest coverage ratio of 1.5 to 1 for 1997 and 2.0 to 1
thereafter and to maintain a fixed charge coverage ratio of 1.0 to 1. At
September 30, 1997, the Company was in compliance with all covenants under
the Credit Agreement and believes that it will remain in compliance with
such covenants for the foreseeable future.

Transaction fees incurred in connection with the Credit Agreement
were approximately $1.1 million, $645,000 of which was refunded to the
Company as a result of its offering of Subordinated Notes in December 1995
and February 1996. In addition, the Company is required to pay an unused
facility fee of 0.25% per annum on the average daily unused balance.

In December 1995, the Company issued a total of $4.0 million of its
12% senior subordinated secured notes due December 22, 2000 (the
"Subordinated Notes") to ING and Grace. In February 1996, the Company
completed a second offering of Subordinated Notes when it issued an
additional $5.3 million of Subordinated Notes to ING, Grace and certain
other stockholders. The Subordinated Notes bear interest at a rate of 12%
per annum, are due in December 2000 and include detachable ten-year
warrants to purchase an aggregate of 7,775,722 shares of Common Stock at
an exercise price of $1.20 per share. Interest on the Subordinated Notes
is payable quarterly in the form of additional Subordinated Notes. The
Subordinated Notes are secured by a second security interest in
substantially all of the Company's assets, and are subordinated to
indebtedness under the Credit Agreement. The Subordinated Notes include a
number of affirmative and negative covenants, including, but not limited
to, restrictions on the incurrence of indebtedness junior to obligations
under the Credit Agreement and senior to the Subordinated Notes. Upon a
change in control of the Company, the Company is required to redeem the
outstanding Subordinated Notes at a price equal to the outstanding
principal amount plus accrued and unpaid interest. At September 30, 1997
the Company was in compliance with all covenants under the Subordinated
Notes. Proceeds from the sale of the Subordinated Notes were used to fund
working capital requirements associated with an increase in customer
orders. See Note 3 to Financial Statements.

Due to the significant increase in the Company's shipments and
backlog, accounts receivable increased to $33.1 million at September 30,
1997 from $21.8 million at December 31, 1996. During the same period, the
Company's inventories increased from $36.0 million to $48.5 million.
Ladish funded this growth in working capital through internally generated
cash and a portion of the proceeds from the sale of IPD.

Capital expenditures for the first nine months of 1997 were $6.3
million versus $2.7 million for the same period in 1996. For all of 1997,
Ladish anticipates its capital expenditures will increase to approximately
$9.5 million, which will reflect the efforts of the Company to reinvest
and improve its operations. For 1998, Ladish anticipates increasing its
capital investment level to approximately $12.0 million. In addition, a
portion of the proceeds of the Offering may be used to improve and expand
the Company's operations. See "Use of Proceeds".

Net Operating Loss Carryforwards

At January 1, 1997, the Company had approximately $73.1 million of
net operating loss carryforwards ("NOLs") for federal income tax purposes,
of which approximately $24.2 million are restricted due to the 1993 change
of ownership of the Company. To the extent that the Company generates
taxable income, these NOLs will reduce the federal income taxes of the
Company in future years, and therefore increase its after-tax cash flow.
Under Section 382 of the Code, certain restrictions on the utilization of
NOLs or credit carryforwards will apply in the event of an ownership
change of a corporation entitled to use such carryforwards. Such an
ownership change occurs when there is a change in the ownership of the
stock of such corporation of more than 50 percentage points over a period
of not more than three years. Those restrictions, if applicable, would
permit the utilization of only a specified portion of the NOLs in any
taxable year following the ownership change.

It is likely that the sale of Common Stock pursuant to the Offering,
combined with sales of Common Stock by the Company's shareholders during
the past two years, will cause an ownership change of the Company (within
the meaning of Section 382 of the Code). If such an ownership change
occurs, the ability of the Company to fully utilize the NOLs could be
adversely affected, depending on factors such as the time at which the
ownership change occurs, the equity value of the Company at the time of
such ownership change, prevailing interest rates at the time of such
change, the ability of the Company to generate income to utilize the NOLs
both before and after the ownership change and the realization of any
built-in gains. Based on the limitations noted above, and the Company's
recent history of losses, the Company has recorded a valuation allowance
against the entire amount of these NOLs. The Company will continue to
evaluate the ultimate realizability of the NOLs in the future. See Note 7
to Financial Statements.

Pensions

On June 17, 1996, the Company and the Pension Benefit Guarantee
Corporation (the "PBGC") entered into a Payment and Security Agreement
(the "PBGC Agreement") whereby the Company was able to defer the immediate
payment of the minimum funding for plan year 1995 for certain of the
Company's defined benefit pension plans. The PBGC Agreement also granted
a third lien to the PBGC on certain of the Company's physical assets in
Wisconsin.

The Company and the PBGC entered into an Amended Payment and Security
Agreement on October 14, 1997 (the "Amended PBGC Agreement"). Pursuant to
the Amended PBGC Agreement, the Company has agreed to increase the funding
of six underfunded pension plans by an aggregate of approximately $18
million. Of this amount, the Company has discharged $4 million through a
cash contribution, and intends to discharge approximately another $4
million through the merger into the underfunded plans of certain
overfunded plans. The remaining $10 million will be contributed prior to
the end of 1997 from the proceeds from the sale of IPD. The PBGC has
agreed that the above increases in the funding levels for those plans will
satisfy the Company's funding obligation for plan years 1995-1997 and will
satisfy the Company's obligation under the PBGC Agreement which will in
turn obligate the PBGC to release its third lien on the Company's physical
assets in Wisconsin.

In addition to the amounts specified above and the $15 million of
proceeds from the Offering which the Company intends to contribute to the
underfunded plans, the Company intends to make cash contributions into the
pension trust for the underfunded plans of approximately $7.4 million in
1998 and $7.8 million in 1999.

Impact of Inflation

The Company's operating income is affected by changes in price levels
and in particular pricing from its raw material suppliers. The Company's
contracts with customers generally provide for fixed prices with limited
protection against cost increases. Gross margins, therefore, are affected
by supplier price changes during the duration of its customer contracts.
The Company attempts to minimize its risk by entering into fixed price
contracts with its raw material suppliers.

BUSINESS

General

Ladish Co., Inc. ("Ladish" or the "Company") is a leading producer of
highly engineered, technically advanced components for the jet engine,
aerospace and general industrial markets.

History

Beginning in 1981, Ladish Co. experienced a series of ownership
changes. The Company was incorporated as the successor to Ladish Co. in
connection with one of these transactions. From 1991 until the middle of
1995, the aerospace industry experienced a severe cyclical downturn. This
decline resulted from a combination of reduced demand from the commercial
airline industry, which was suffering from weak passenger revenues and
overcapacity, and reduced military budgets as a result of the end of the
Cold War. At the same time, the Company faced substantial debt service on
$110 million of subordinated debentures issued in connection with a 1987
leveraged buyout. In February 1993, the Company filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Under this "pre-packaged" plan, the subordinated debentures were converted
to equity; no other class of creditor was affected. The plan was
confirmed and the Company emerged from reorganization in April 1993.

Since late 1995, demand for forged components has strengthened,
primarily due to increased demand from the commercial aerospace industry.
The Company believes the principal reasons for the recent improvement in
new aircraft orders include increased demand for air travel in Asia, the
recent improved profitability of U.S. commercial airlines, and U.S.
Environmental Protection Agency rules requiring airlines to reduce noise,
which, in turn, have prompted airlines to modernize their fleets.
Accordingly, airlines have been retrofitting existing aircraft or
purchasing new jet engines.

Business Strategy

Maximize Benefits from Industry Upturn

Make Strategic Acquisitions

As a part of the global consolidation of the aerospace industry,
management believes there are numerous opportunities to grow and enhance
the Company through strategic acquisitions. As an example of these
opportunities, in June 1997, Ladish acquired substantially all of the
assets and assumed a portion of the liabilities of Stowe. Located in
Windsor, Connecticut, Stowe provides finish machining services and
products to the jet engine industry. Operating Stowe will further
Ladish's efforts to capitalize on the upturn in the jet engine industry
through the value-added services provided by Stowe to the Company's
existing customer base and the vertical integration opportunities offered
through Stowe. With a customer list which mirrors that of Ladish, Stowe
provides Ladish with the ability to integrate vertically and offer further
value-added services to its core markets.

Leverage Core Competencies into New Products and Markets

Additionally, the Company believes that its manufacturing,
engineering and technical expertise gives it the ability to develop and
process next generation jet engine components for increased performance of
high-temperature materials as well as to develop products for non-
aerospace applications such as farm and heavy-duty off-road machinery.
For example, the Company is currently producing the largest known
crankshaft in a closed-die for use in the international power generation
market.

Enhance Market Access Through Customer Cooperation and Strategic
Alliances

Ladish intends to continue its long-standing practice of working
closely with its customers and strategic participants in the forging
industry. The Company works closely with customers by using its
manufacturing and technical expertise to engineer, tool and manufacture
new products according to customer specification. In exchange, the
Company is often designated as the sole-source supplier by its customers
for the life of the program. In addition, Ladish's well-respected
research and development effort has enabled the Company to establish and
maintain strong relationships with GE, Rolls-Royce PLC ("Rolls-Royce"),
Pratt & Whitney, Lockheed Martin Corp. and the United States Air Force on
a number of development projects, many of which are customer funded.
Management believes that these projects position the Company to win early
production contracts on new equipment.

In addition to working closely with customers, Ladish has developed
strategic alliances with other participants in the forging industry to
take advantage of synergy opportunities. In September 1995, the Company
entered into a joint venture with Weber Metals, Inc. ("Weber"), a
subsidiary of German conglomerate Otto Fuchs Metallwerke KG, whereby the
Company combines its engineering and metallurgical expertise with the
capabilities of Weber's 38,000 ton hydraulic press. The product which
results from the combination of the Company's technology with Weber's
press frees up Company capacity, reduces manufacturing costs and gives the
Company significantly improved access to high-temperature niches of the
jet engine market.

Improve Profitability Through Operating Efficiencies and Lower Costs

Focus on Core Business

In the fourth quarter of 1996, the Company decided to focus its
efforts on its core forging business and the markets it serves.
Consequently, Ladish determined that IPD, with its commodity fitting and
valve business, was not strategic to the future direction of the Company.
In May 1997, the Company sold substantially all of the assets of IPD to a
subsidiary of Trinity Industries, Inc. for cash consideration of $36.5
million and the assumption of certain liabilities. Ladish utilized the
proceeds from the sale of IPD to reduce debt, fund the Stowe acquisition
and fund a significant portion of its underfunded pension liability. The
sale has also allowed management to focus its time and energy on the
growth of the core business and to identify strategic acquisition
opportunities such as Stowe.

Products and Markets

The Company markets its forging products primarily to manufacturers
of jet engines, commercial business and defense aircraft, helicopters,
satellites, heavy-duty off-road vehicles and industrial and marine
turbines. The principal forging markets served by the Company are jet
engine, commercial aerospace (defined by Ladish as satellite, rocket and
aircraft components other than jet engines) and general industrial
forgings. The amount of revenue and the revenue as a percentage of total
revenue by market were as follows for the periods indicated:

<TABLE>
<CAPTION>
Years Ended December 31, Nine Months Ended September 30,

(Dollars in millions) 1994 1995 1996 1996 1997

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jet Engine Forgings $ 65 53% $ 69 59% $108 67% $ 83 67% $115 73%

Aerospace Forgings 34 28 24 21 31 19 23 19 25 16

General Industrial
Forgings 23 19 23 20 23 14 18 14 17 11
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Total $122 100% $116 100% $162 100% $124 100% $157 100%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>

Jet Engine Forgings

The Company is a market leader in manufacturing large, complex forged
components for use in jet engines. Products include fan, compressor and
turbine discs, shafts for large and small jet engines, and containment
cases for larger jet engines. The Company manufactures a variety of jet
engine forgings for virtually every active commercial and military jet
engine program in existence today, including those of GE, Rolls-Royce,
Pratt & Whitney and Allison.

Because jet engines may produce in excess of 100,000 pounds of thrust
and may subject components to temperatures exceeding 1,350 degrees
Fahrenheit, producing components for such extreme conditions requires
precision manufacturing and expertise with titanium, nickel-based
superalloys and powder metallurgy alloys. In addition, rotating parts
such as fan, compressor and turbine discs and shafts must be manufactured
to precise quality specifications. These products all require forging,
which imparts structural integrity into key engine parts and allows them
to withstand high temperatures and stress. Further, newer jet engines are
bigger, run hotter and spin faster. As this market shift continues, the
demand for even larger forged components utilizing materials that must
withstand ever-greater stress at higher operating temperatures is expected
to grow. The Company believes it possesses the industry's largest
isothermal press, shear forming machine, ring rolling machine and
counterblow hammer. The Company believes combining these unique pieces of
equipment with years of material process technology expertise and computer
process modeling of the forging, heat treating, and machining operations
positions the Company to compete effectively for parts for these newer
engines. Furthermore, the Company's joint venture with Weber allows the
Company to free up Company capacity and reduce manufacturing costs, while
providing the Company access to a technically demanding niche of the jet
engine market.

Aerospace Forgings

The Company manufactures products utilized in commercial and military
aircraft (including both airplanes and helicopters), such as landing gear
components, rotors, hubs, shafts and wing structurals and beams. Critical
structural components must be strong, yet lightweight. Many of these
forgings, therefore, are made from titanium and high-alloy steels. The
Company believes that given its expertise in material process technology
and its unique equipment, Ladish is well positioned to meet the increasing
demand by air carriers and corporate users for new aircraft and the U.S.
military's demand for helicopter spare parts. For example, as a result of
the Company's strong relationship with Sikorsky, the Company is
manufacturing all of the large titanium power transmission components for
Sikorsky's next generation helicopter.

The Company also manufactures components for solid and liquid motors
for launch vehicles, as well as forgings for satellite fuel tanks. The
Company has produced the cylinders, skirts and domes for the solid rocket
motor cases for every Titan IV and Space Shuttle launch recorded to date.
As programs such as the EELV have developed, the Company has expanded its
processing technology to alloys other than steel, such as aluminum-
lithium, in order to compete for both solid and liquid cylinders for
future launch platforms. The Company also produces titanium hemisphere
fuel tanks that are forged on its largest counterblow hammer. Satellite
fuel systems use two of these hemispheres, welded together, for storing
liquid propellant for the life of each satellite. The Company expects
that the satellite launch industry will grow significantly, primarily to
service the global needs of the telecommunications industry. Launch
vehicles are evolving in an effort to service this demand.

General Industrial Forgings

The Company manufactures a number of key industrial components in
which structural integrity, product strength and toughness drive the need
for a forged product. These components include large crankshafts, axles,
gears, reaction hubs, links and yokes for such customers as Caterpillar,
Inc. ("Caterpillar") and Allison. As the components become larger and
more complex, the Company can utilize its full range of equipment,
knowledge and technical expertise to manufacture these products. Using
the Company's expertise in forging engineering and its unique
manufacturing equipment, the Company has recently expanded into
manufacturing large crankshafts for land-based and marine power generation
equipment. The Company believes this market will continue to grow based
upon the need to develop the infrastructure of emerging nations.

Marketing and Sales

The forging product sales force (consisting of 14 engineers), based
in Cudahy, Wisconsin, is supported by the Company's metallurgical staff of
97 engineers and technicians. These technically trained sales engineers,
organized along product line and customer groupings, work with customers
on an ongoing basis to monitor competitive trends and technological
innovations. Additionally, sales engineers consult with customers
regarding potential projects and product development opportunities.
During the past few years, the Company has refocused its marketing efforts
on the jet engine components market and the commercial aerospace industry.

The Company is actively involved with key customers in joint
cooperative research and development, engineering, quality control, just-
in-time inventory control and computerized process modeling programs. The
Company has entered into strategic life-of-the-program contracts for a
number of sole-sourced products with each of Allison, Sikorsky and Thyssen
for major programs. The Company believes that these contracts are a
reflection of the aerospace and industrial markets' recognition of the
Company's manufacturing and technical expertise.

The research and development of jet engine components is actively
supported by the Company's Advanced Materials and Process Technology
Group. The Company's long-standing commitment to research and development
is evidenced by its industry-recognized materials and process advancements
such as processing aluminum-lithium, Udimet 720 and titanium aluminides.
The experienced staff and fully equipped research facilities support
Ladish sales through customer-funded projects. Management believes that
these research efforts position the Company to participate in future
growth in demand for critical advanced jet engine components.

Customers

The Company's top three customers, Rolls-Royce, United Technologies
and General Electric, accounted for approximately 44% of the Company's
revenues in 1994, 48% of the Company's revenues in 1995, 54% of the
Company's revenues in 1996 and 60% of the Company's revenues during the
nine months ended September 30, 1997. No other customer accounted for ten
percent or more of the Company's sales.

Caterpillar, Volvo and Allison are also significant customers of the
Company. Because of the relatively small number of customers for some of
the Company's principal products, the Company's largest customers exercise
significant influence over the Company's prices and other terms of trade.
See "Risk Factors--Reliance on Major Customers".

A substantial portion of the Company's revenues are derived from
long-term, fixed price contracts with major engine and aircraft
manufacturers. These contracts are typically "requirements" contracts
under which the purchaser commits to purchase a given portion of its
requirements of a particular component from the Company. Actual purchase
quantities are typically not determined until shortly before the year in
which products are to be delivered. The Company attempts to minimize its
risk by entering into fixed-price contracts with its raw material
suppliers. Additionally, a portion of the Company's revenue is directly
or indirectly related to government spending, particularly military and
space program spending. See "Risk Factors--Reductions in Government
Spending".

Backlog

The average amount of time necessary to manufacture the Company's
products is five to six weeks from the receipt of raw material. The
timing of the placement and filling of specific orders may significantly
affect the Company's backlog figures, which are subject to cancellation
for a variety of reasons. As a result, the Company's backlog may not be
indicative of actual results or provide meaningful data for period-to-
period comparisons. The following table provides certain information with
respect to the Company's total firm backlog as of September 30, 1996 and
1997:

As of September 30,
1996 1997
(Dollars in millions)

Jet Engine $155 71% $211 76%
Aerospace 49 23 53 19
General Industrial 13 6 14 5
---- ---- ---- ----
Total $217 100% $278 100%
==== ==== ==== ====

At September 30, 1997, approximately $208 million of total firm
backlog was scheduled to be shipped within one year and the remainder in
subsequent years in comparison to September 30, 1996 backlog of
approximately $175 million which was scheduled for shipment within one
year. Sales during any period may include sales which were not part of
the backlog at the end of the prior period.

Manufacturing Process

Forging

Forging is the process by which desired shapes, metallurgical
characteristics and mechanical properties are imparted to metal by heating
and shaping it through hammering, pressing, extruding or ring rolling.
Cold forming of cylindrical shapes is performed utilizing a proprietary
shear forming process. The Company forges alloys of titanium, aluminum
and steel as well as high-temperature nickel-based superalloys.

The Company forges its products at its facilities in Cudahy,
Wisconsin. Much of the Company's forging business is capital intensive,
requiring large and sophisticated hydraulic and mechanical presses,
single-action and counterblow hammers and extensive facilities for heat
treatment, machining inspection and testing of components after forging.
The Company has independently designed and built much of its unique and
specialized equipment. The Company considers its manufacturing equipment
to be in good operating condition and adequate for the purposes for which
it is being used.

The Company employs all major forging methods, including the
following:

Open-Die Forging. In this process, the metal is hammered or pressed
between dies that never completely surround the metal, thus allowing the
metal to be observed during the process. Typically, open-die forging is
used to create relatively simple, preliminary shapes to be further
processed by closed-die forging or for simple low-quantity orders.

Closed-Die Forging. Closed-die forging involves hammering or
pressing heated metal into the required shapes and size determined by
machined impressions in specially prepared dies which exert three
dimensional control on the metal. The Company's multiple-ram process
featured on the Company's 15,000 ton press enables the Company to produce
extremely large, complex-shaped forgings in a single heating and pressing
cycle. In hot-die forging, a unique type of closed-die process, the dies
are heated to a temperature approaching the transformation temperature of
the materials being forged which allows the metal to flow more easily
within the die cavity, producing forgings with superior surface
conditions, stronger metallurgical structures, tighter tolerances,
enhanced repeatability of the part shapes and greater metallurgical
control. Both titanium and nickel-based superalloys are forged using this
process, in which the dies are heated to a temperature of approximately
1,300 degrees Fahrenheit.

Isothermal Forging. Isothermal forging is a closed-die pressing
process in which the dies are heated to the same temperature as the metal
being forged, typically in excess of 1,700 degrees Fahrenheit. The forged
material typically consists of nickel-based superalloy and powder
metallurgy alloys. Because of the extreme temperatures necessary for
forming these alloys, the dies must be made of refractory metal (such as
molybdenum) so that the die retains its strength and shape during the
forging process. Because the dies may oxidize at these elevated
temperatures, the forging process is carried on in a vacuum or inert gas
atmosphere. The Company's two isothermal presses allow it to produce
near-net shape components (requiring less machining by the customer) made
from nickel-based superalloys. The Company believes that its 10,000 ton
isothermal press is the largest in the industry, allowing it to press
larger, more complex parts than the Company's competitors.

Ring Rolling. Ring rolling involves rotating heated metal rings
through presses to produce seamless cylindrical and/or contoured products.
The Company believes that it has the largest ring-rolling machine in the
industry, with the capability of producing metal rings that weigh up to
350,000 pounds with outside diameters as large as 28 feet and face heights
up to 10 feet. This process is also utilized to extrude large, heavy wall
preforms used in the manufacture of roll form cylinders.

Shear Forming. Shear forming is a process whereby metal cylinders
are formed by thinning the cylinder walls while increasing the length of
the cylinder without heating the metal. The process yields uniform
metallurgical properties and maximizes metal usage allowing formation of
cylinders much longer than those capable of being formed by conventional
forge methods. The Company believes that it has the largest shear forming
machine in the industry, which allows the Company to produce larger and
more complex thin-walled components for the missile and rocket industry.

Conversion

The Company converts ingot material, primarily titanium, into a range
of billet sizes through a proprietary forging process. This yields
superior metallurgical properties utilized in the manufacture of jet
engine components. The Company utilizes its conventional press
capabilities and subjects the material to high sensitivity ultrasonic
testing performed on an exclusive multi-zone ultrasonic unit, which
management believes is one of only three in the aerospace industry. This
unit provides state-of-the-art material testing to meet the most stringent
customer requirements.

Modeling

For the successful engineering of highly complex forged shapes and
demanding metallurgical specifications, the Company uses computer-based
modeling. This modeling has enabled the Company to improve die design,
improve predictability of metal flow and enhance grain flow
characteristics. The Company has embarked upon a program with the
assistance of the United States Air Force and the cooperation of several
major universities to advance its modeling capabilities to the next
generation of modeling with three-dimensional models. A number of
Ladish's major customers rely on the Company's unique expertise in this
area to assist them with processing issues.

Support Operations

The Company manufactures most of its own forging dies out of high-
strength steel and molybdenum. These dies can weigh in excess of 50 tons
and can be up to 20 feet in length. In manufacturing its dies, the
Company utilizes its customers' drawings and engineers the dies using
CAD/CAM equipment and sophisticated metal flow computer models that
simulate metal flow during the forging process. This activity improves
die design and process control and permits the Company to enhance the
metallurgical characteristics of the forging and reduce lead times.

Ladish has machine shops with computer-aided profiling equipment,
vertical turret lathes and other equipment that it employs to rough
machine products to a shape allowing inspection of the products. The
Company also operates rotary and car-bottom heat treating furnaces that
enhance the performance characteristics of the forgings. These furnaces
have sufficient capacity to handle all the Company's forged products.

Testing

Because the Company's products endure high performance end uses,
rigorous testing is necessary and is performed internally by Company
engineers. Throughout the manufacturing process, numerous tests and
inspections are performed to insure the final quality of each product;
statistical process control ("SPC") techniques are also applied throughout
the entire manufacturing process. The Company subjects its products to
extensive quality inspection and contract qualification procedures
involving zyglo, chemical etching, ultrasonic, red dye and electrical
conductivity testing facilities.

Raw Materials

Raw materials used by the Company in its forgings include alloys of
titanium, nickel, steel, aluminum, tungsten and other high temperature
alloys. The major portion of metal requirements for forged products are
purchased from major metal suppliers producing forging quality material as
needed to fill customer orders. The Company has two or more sources of
supply for all significant raw materials.

The titanium and nickel-based superalloys used by the Company have a
relatively high dollar value. Accordingly, the Company recovers and
recycles scrap materials such as machine turnings, forging flash, solids
and test pieces.

The Company's most significant raw materials consist of nickel and
titanium alloys. Its principal suppliers of nickel alloys include Special
Metals Corporation and Allvac Corporation. Its principal suppliers of
titanium alloys are Titanium Metals Corporation of America, Oregon
Metallurgical Corp. and Reactive Metals, Inc. Each of these suppliers has
experienced increases in the market prices of the elements (e.g. nickel,
titanium, cobalt) that they use in manufacturing their products. The
Company often has fixed-price contracts with its suppliers. Because
aerospace suppliers generally have alternative markets for their products
where they may have greater ability to increase their prices, suppliers
have in some cases diverted materials away from the aerospace industry in
favor of alternative markets. During 1996, the Company's lead time for
deliveries from its suppliers increased from 20 weeks to 45 weeks in the
case of titanium alloys and from 22 weeks to 48 weeks in the case of
nickel-based alloys. In the event of cancellation by its customer because
of production delays, the Company may, under certain circumstances, obtain
reimbursement from the customer if the material cannot be diverted to
other uses. Costs of material already on hand, along with any conversion
costs incurred, are usually billed to the customer unless transferable to
another order. As demand for the Company's products grew during fiscal
year 1995, and prices of raw materials rose, the Company experienced
certain raw material shortages and production delays. Although this
situation improved during the first nine months of 1996, it had a negative
impact on overall revenues. Availability of titanium, due to limited mill
capacity, has yet to recover to the level demanded by the jet engine
industry. To counter this situation, the Company has established long-
term relationships and technical support with the mills in an effort to
secure its position for raw material. See "Risk Factors".

The Company has successfully sought price increases and other
financial considerations from its customers which have allowed it to meet
the rising prices demanded by suppliers. In addition, the Company, its
customers and suppliers have undertaken active programs for supply chain
management which are reducing overall lead times and the total cost of raw
materials.

Energy

Energy is required by the Company primarily for heating metals to be
forged, heat treating materials after forging, operating equipment, die-
sinking and machining. The Company uses natural gas and electricity in
varying amounts at its manufacturing facilities; however, natural gas is
traditionally the largest energy source. Supplies of natural gas and
electricity have been sufficient and there is no anticipated shortage for
the future. In the event of shortages of natural gas, the Company
maintains back-up supplies of propane for heating and processing.

Employees

As of September 30, 1997, the Company had approximately 1,075
employees, of whom 770 were engaged in manufacturing functions, 90 in
executive and administrative functions, another 165 in technical
functions, and 45 in sales and sales support. At such date, approximately
890 employees, principally those engaged in manufacturing, were
represented by labor organizations under collective bargaining agreements.
The following table sets forth certain information with respect to the
Company's collective bargaining agreements with its employees:

Number of
Employees
Represented by
Collective
Bargaining
Union Expiration Date Agreement

International Association of
Machinists & Aerospace Workers,
Local 1862 February 20, 2000 378

International Brotherhood of
Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers & Helpers,
Subordinate Lodge 1509 September 24, 2000 212

International Federation of
Professional & Technical
Engineers, Technical Group, Local
92 August 20, 2000 118

International Association of
Machinists & Aerospace Workers,
Die Sinkers, Local 140 March 26, 2000 81

Office & Professional Employees
International Union, Clerical
Group, Local 35 July 1, 2001 45

International Federation of
Professional & Technical
Engineers, Professional Group,
Local 92 March 1, 1998 26

International Brotherhood of
Electrical Workers, Local 662 October 15, 2000 26

Service Employees International,
Local 150 April 23, 2000 4

Research and Development

The Company maintains a research and development department which is
engaged in applied research and development work primarily relating to the
Company's forging operations. The Company works closely with customers,
universities and government technical agencies in developing advanced
forgings, materials and processes. The Company spent approximately $3.9
million, $3.8 million, $3.4 million, and $2.2 million on applied research
and development work during 1994, 1995, 1996 and the nine months ended
September 30, 1997, respectively.

Although the Company owns patents covering certain of its processes,
the Company does not consider these patents to be of material importance
to the Company's business as a whole. The Company considers certain other
information that it owns to be trade secrets and the Company takes
measures to protect the confidentiality and control the disclosure and use
of such information. The Company believes that these safeguards
adequately protect its proprietary rights and the Company vigorously
defends these rights.

The Company owns or has obtained licenses for various trademarks,
trademark registrations, service marks, service mark registrations, trade
names, copyrights, copyright registrations, patent applications,
inventions, know-how, trade secrets, confidential information and any
other intellectual property that are necessary for the conduct of its
businesses (collectively, "Intellectual Property"). The Company is not
aware of any claim (or of any facts that would reasonably be expected to
result in any such claim) or challenge by any third party that would
significantly limit the rights of the Company with respect to any such
Intellectual Property or to the validity or scope of any such Intellectual
Property. The Company has no pending claim against a third party with
respect to the infringement by such third party of any such Intellectual
Property that, if determined adversely to the Company, would individually
or in the aggregate have a material adverse effect on the Company's
financial condition or results of operations. While the Company considers
all of its proprietary rights as a whole to be important, the Company does
not consider any single right to be essential to its operations as a
whole.

Competition

The sale of forged metal components is highly competitive. Certain
of the Company's competitors are larger than the Company, and have
substantially greater capital resources. Although the Company is the sole
supplier of several sophisticated components required by prime contractors
under a number of governmental programs, many of the Company's products
could be replaced with other similar products of its competitors.
However, the significant investment in tooling, the time required and the
cost of obtaining the status of a "certified supplier" are barriers to
entry. Competition is based on quality (including advanced engineering
and manufacturing capability), price and the ability to meet delivery
requirements. See "Risk Factors--Competition".

Product Liability Exposure

The Company produces many critical engine and structural parts for
commercial and military aircraft. As a result, the Company faces an
inherent business risk of exposure to product liability claims. The
Company maintains insurance against product liability claims, but there
can be no assurance that such coverage will be adequate for liabilities
actually incurred. The Company has not experienced any material loss from
product liability claims and believes that its insurance coverage is
adequate to protect it against any claims to which it may be subject.

Environmental, Health and Safety Matters

The Company's operations are subject to many federal, state and local
regulations relating to the protection of the environment and to workplace
health and safety. In particular, the Company's operations are subject to
extensive federal, state and local laws and regulations governing waste
disposal, air and water emissions, the handling of hazardous substances,
environmental protection, remediation, workplace exposure and other
matters. Management believes that the Company is presently in substantial
compliance with all such laws and does not currently anticipate that the
Company will be required to expend any substantial amounts in the
foreseeable future in order to meet current environmental, workplace
health or safety requirements. However, additional costs and liabilities
may be incurred to comply with current and future requirements, which
costs and liabilities could have a material adverse effect on the
Company's results of operations or financial condition.

There are no known pending remedial actions or claims relating to
environmental matters that are expected to have a material effect on the
Company's financial position or results of operations. Both of the
properties owned by the Company, however, are located in industrial areas
and have a history of heavy industrial use. These properties may
potentially incur environmental liabilities in the future that could have
a material adverse effect on the Company's financial condition or results
of operations. The Company has been named a potentially responsible party
at three "Superfund" sites. Although the Company does not believe that
the amount for which it may be held liable will be material and has
reserved approximately $300,000 for such loss, no assurance can be given
that the amount for which the Company will be held responsible will not be
significantly greater than expected. In connection with the sale of IPD,
the Company has agreed to indemnify Trinity Industries, Inc. until May 29,
2001 against certain environmental liabilities that may arise with respect
to the properties and operations of IPD relating to the period prior to
closing.

Properties

The following table sets forth the location and size of the Company's
two facilities:

Approximate Square
Location Approximate Acreage Footage

Cudahy, Wisconsin 184.5 1,650,000
Windsor, Connecticut 8.2 20,000

The above facilities are owned by the Company. The Company also owns
approximately 4 acres of land in Houston, Texas, which is currently vacant
and for sale.

The Company believes that its facilities are well maintained, are
suitable to support the Company's business and are adequate for the
Company's present and anticipated needs. While the rate of utilization of
the Company's manufacturing equipment is not uniform, the Company
estimates that its facilities overall are currently operating at
approximately 60% of capacity. The Company-owned facilities have been
pledged as collateral to its senior lender, with a secondary lien on the
Wisconsin facility granted to the holders of the Subordinated Notes and a
third lien on the Wisconsin facility to the PBGC. The PBGC lien will be
released pursuant to the Amended PBGC Agreement.

The principal executive offices of the Company are located at
5481 South Packard Avenue, Cudahy, Wisconsin 53110. Its telephone number
at such address is (414) 747-2611.

Legal Proceedings

From time to time the Company is involved in legal proceedings
relating to claims arising out of its operations in the normal course of
business. The Company believes that there are no material legal
proceedings pending or threatened against the Company or any of its
properties.

MANAGEMENT

Directors and Executive Officers

The following table sets forth certain information concerning the
current directors and executive officers of the Company:

Name Age Position

Kerry L. Woody . . . . 46 President and Director

Wayne E. Larsen . . . . 43 Vice President Law/Finance &
Secretary

Gene E. Bunge . . . . . 51 Vice President, Engineering

Robert J. Noel . . . . 57 Vice President, Quality &
Technology

James K. Sorenson . . . 60 Vice President, Materials
Management

Gary J. Vroman . . . . 37 Vice President, Sales &
Marketing

Lawrence C. Hammond . . 49 Vice President, Human
Resources

Ronald O. Wiese . . . . 63 Treasurer

Thomas S. Plichta . . . 54 Corporate Controller

Gregory P. Flynn . . . 41 Director

Robert W. Sullivan . . 38 Director

Fred W. Whitridge, Jr. 42 Director

Kerry Woody has served as President since October 1994. Prior to
that time he was Vice President, Operations; Vice President, Manufacturing
Services; Production Manager; and an industrial engineer. Mr. Woody
joined the Company in 1975 from General Electric. He has a B.S. in
Engineering from Milliken University. He has served as a Director of the
Company since August 1997.

Wayne Larsen has been Vice President Law/Finance and Secretary of the
Company since September 1995, and a Director since December 1997. He served
as General Counsel and Secretary since May 1989 and as its Corporate Counsel
and Secretary since February 1987. Mr. Larsen has been with the Company
since 1981. He has a B.A. from Marquette University and a J.D. from
Marquette Law School.

Gene Bunge has served as Vice President, Engineering since November
1991. From 1985 until that time he was General Manager of Engineering.
Mr. Bunge has been with the Company since 1973. He has a B.S.E.E. from
the Milwaukee School of Engineering.

Robert Noel has been Vice President, Quality and Technology since
March 1991. He has been Manager of Metallurgy since 1985 and prior to
that period was a Product Metallurgist for jet engine components. Mr.
Noel has been with the Company since 1963. He has a B.S. in Mechanical
Engineering from Marquette University.

James Sorenson has served as Vice President, Materials Management
since March 1991. Prior to that time he had been Purchasing Manager,
Production Manager, and Head Buyer. Mr. Sorenson has been with the
Company since 1963. He has a B.S. in Mechanical Engineering from the
University of Wisconsin.

Gary Vroman has served as Vice President, Sales and Marketing since
December 1995. From January 1994 to December 1995 he was General Manager
of Sales. Prior to that period he had been the Product Manager for jet
engine components. Mr. Vroman has been with the Company since 1982. He
has a B.S. in Engineering from the University of Illinois and a M.S. in
Engineering Management from the Milwaukee School of Engineering.

Lawrence Hammond has served as Vice President, Human Resources since
January 1994. Prior to that time he had served as Director of Industrial
Relations at the Company and he had been Labor Counsel at the Company.
Mr. Hammond has been with the Company since 1980. He has a B.A. and a
Masters in Industrial Relations from Michigan State University and a J.D.
from the Detroit College of Law.

Ronald Wiese has served as Treasurer since May 1989. He was
Assistant Treasurer of the Company since 1986 and was its Tax Manager from
1982 to 1986. Mr. Wiese has been with the Company since 1955. He holds a
B.S. in Accounting from Marquette University.

Thomas Plichta has served as Corporate Controller since May 1989. He
served as Assistant Corporate Controller for more than five years prior to
that time. Mr. Plichta has been with the Company since 1965. He has a
B.S. in Accounting from Marquette University.

Gregory Flynn has served as a Director of the Company since May 1993.
Mr. Flynn is a Managing Partner of ING Equity Partners, L.P. I, an
investment partnership. Mr. Flynn also serves as a director of The
Presley Companies, a home building firm.

Robert Sullivan has served as a Director of the Company since May
1993. Mr. Sullivan is President of The Martec Group, a sales and
marketing consulting group.

Fred Whitridge, Jr. has served as a Director of the Company since
August 1997. Mr. Whitridge is President of Archipelago Corporation, an
investment firm. He also serves as a Director of California Microwave
Inc., a producer of communications equipment.

In connection with the Offering, the Board of Directors will add
additional independent director(s) as soon as practicable after completion
of the Offering, which directors will not be officers or employees of the
Company or have a relationship with the Company's principal shareholders
or their affiliates.

EXECUTIVE COMPENSATION

The following table summarizes all compensation paid to the Company's
five most highly compensated executive officers (the "Named Executive
Officers") for services rendered in all capacities to the Company during
the fiscal year ended December 31, 1996.

Summary Compensation Table

Annual Compensation
Name and
Principal Position Salary Bonus Other(1)

Kerry L. Woody $151,366 $64,000 $1,608
President

Robert J. Noel 116,110 26,000 1,608
Vice President,
Quality & Technology

Gary J. Vroman 112,216 26,000 1,608
Vice President,
Sales & Marketing

Wayne E. Larsen 111,879 30,000 1,608
Vice President
Law/ Finance & Secretary

Lawrence C. Hammond 112,937 26,000 1,608
Vice President
Human Resources
______________________

(1) This sum represents the imputed value of additional life insurance
benefits provided to certain officers
of the Company.

Employment Agreements

The Company has entered into employment agreements with Messrs.
Woody, Noel, Vroman, Larsen and Hammond which are substantially similar in
all respects. The basic employment agreement provides for a number of
benefits, all of which vest after ten years of employment, including group
term life insurance, health and dental coverage and long-term disability
coverage.

The agreements provide that, upon the involuntary termination of the
employee other than for cause, the Company is required to pay the employee
up to 24 months of severance pay, determined by multiplying the employee's
years of service by the employee's base monthly salary at the time of
termination. In the case of Messrs. Woody and Larsen, should they be
terminated due to a change of control or ownership, they are entitled to
24 months of severance pay. Upon retirement at age 65, the employee will
receive his normal retirement benefits. Such benefits include a monthly
payment equal to 52.5% of the employee's average compensation (i.e.,
monthly average of compensation for the five years of highest compensation
over the ten years prior to retirement) multiplied by a fraction, the
numerator of which is the length of service of the employee and the
denominator of which is 35. There are also provisions adjusting this
calculation in the event of early retirement. Disabled employees can also
be eligible for certain retirement benefits. All retirement benefits are
tolled during any period of re-employment. Each agreement further
provides that any compensation paid by the Company shall be reduced by any
benefit paid under the Company's salaried employees retirement plan.

Pension Benefits

Defined Benefit Plan. The Ladish Co., Inc. Salaried Pension Plan
(the "Pension Plan") is a "defined benefit" pension plan generally
covering salaried, non-union employees of the Company who are not covered
by any other defined benefit plan to which the Company makes contributions
pursuant to a collective bargaining agreement.

Upon reaching normal retirement at or after age 65, a participant is
generally entitled to receive an annual retirement benefit for life. The
Pension Plan provides alternative actuarially equivalent forms of benefit
payment. Vesting under the Pension Plan occurs after five years of
continued service.

The monthly retirement benefit at the normal retirement age of at
least 65 is determined pursuant to a formula as follows: 1.1% of the
average monthly base salary (exclusive of bonuses or other incentive or
special compensation) of the individual during the consecutive five year
period of service within the ten years preceding termination of employment
(or after age 45, if longer) that his/her earnings were highest is
multiplied by the number of years of Benefit Service (as defined).
Monthly normal retirement benefits are payable on a straight life annuity
basis and such amounts are not subject to any deduction for Social
Security or other offset amounts.

The following table sets forth the annual benefits payable to a
participant who qualifies for normal retirement in 1996, with the
specified highest average earnings during the consecutive five year period
of service within the ten years prior to retirement and the specified
years of Benefit Service:

<TABLE>
<CAPTION>
Average Annual Years of Benefit Service
Earnings for Highest
5-Year Period Within 10 15 20 25 30 35
the 10-Years
Preceding Retirement

The years of Benefit Service for Messrs. Woody, Noel, Vroman, Larsen
and Hammond as of January 1, 1997 were 22, 35, 15, 16 and 17,
respectively.

Deferred Compensation Agreements. The Company has entered into
deferred compensation agreements (the "Agreements") with nine current
officers of the Company, including Messrs. Woody, Noel, Vroman, Larsen and
Hammond. Each employee covered by the Agreements (an "Employee"), upon
full vesting, is entitled to receive supplemental disability or retirement
benefits; provided that in no event may a person's total retirement
benefits under the Agreements exceed 52.5% of the monthly average base
salary (inclusive of bonuses or other compensation) during the five
calendar years immediately preceding retirement.

The retirement benefit at the normal retirement age of at least 65 is
determined pursuant to a formula as follows: 52.5% of the monthly average
of the Employee's base salary during the five calendar years immediately
preceding retirement multiplied by years of service, up to 35, and divided
by 35. If an Employee suffers a disability (as defined), he is entitled
to benefits paid under the same formula as in the preceding sentence (with
his years of service calculated as if he had retired at age 65), reduced
by other disability benefits paid by the Company or through workers'
compensation (unless he is receiving fixed statutory payments for certain
bodily injuries).

Any amount to be paid under the Agreement shall be reduced by any
benefit paid to an Employee or his beneficiary pursuant to the Pension
Plan.

Defined Contribution Plan. The Ladish Co., Inc. Savings and Deferral
Investment Plan ("SDIP"), which has been qualified under section 401(k) of
the Code, provides that salaried, non-union employees with six months'
service may contribute 1% to 18% of their annual base salary to SDIP and
the Company will provide a matching contribution in an amount to be
determined by the Board of Directors of the Company. Employee's
contributions of 1% to 18% can be "before tax" contributions, "after tax"
contributions or a combination of both. The employees' contributions and
the matching Company contribution may be placed by the employee in a fixed
income fund, an equity investment fund or various combinations of each.

Incentive Stock Option Plan

The Ladish Co., Inc. 1996 Long-Term Incentive Plan (the "Incentive
Plan") has been established by the Company to promote the long-term
financial interest of the Company by providing for the award of equity-
based incentives to key employees and other persons providing material
services to the Company. The Incentive Plan provides a means whereby such
individuals may acquire shares of Common Stock through the grant of stock
options and stock appreciation rights.

The Incentive Plan is not subject to any provision of ERISA or
qualified under Section 401(a) of the Code.

The number of shares of Common Stock subject to awards under the
Incentive Plan may not exceed 833,333, of which 433,333 have been issued or
are subject to outstanding options and 400,000 have been reserved for
issuance under future grants. The number of shares underlying awards made
to any one individual in any one-year period may not exceed 166,667 shares.
The Common Stock issued under the Incentive Plan may be shares currently
authorized but unissued or currently held or subsequently acquired by the
Company as treasury shares.

The number of shares subject to the Incentive Plan and the terms of
any outstanding award may be adjusted as described in the Incentive Plan
to reflect certain changes in the capitalization of the Company.

The authority to manage and control the operation and administration
of the Incentive Plan is vested in a committee selected by the Board of
Directors of the Company (the "Committee") which shall consist of two or
more members of the Board. The Committee has the authority and discretion
to determine the individuals who will receive awards under the Incentive
Plan and to determine the time of receipt, type of award, the number of
shares covered by such award and the terms, conditions, performance
criteria, restrictions and other provisions applicable to such award. The
Committee also has the authority and discretion to interpret the Incentive
Plan and to establish, amend and rescind any rules and regulations
relating to the Incentive Plan. Any interpretation of the Incentive Plan
by the Committee and any decision made by it under the Incentive Plan is
final and binding on all persons.

Subject to the terms and provisions of the Incentive Plan, a
participant to whom a stock option is granted will have the right to
purchase the number of shares of Common Stock covered by the option.
Subject to the conditions and limitations of the Incentive Plan, the
Committee shall determine all of the terms and conditions of such grant,
including without limitation, the option price, any vesting schedule and
the period of exercisability.

No option may be exercised after its expiration date. The expiration
date shall be determined by the Committee at the time of grant, but may
not be later than the earliest to occur of: (i) the ten-year anniversary
of the grant date; (ii) if the participant's termination of employment
with the Company and its affiliates occurs by reason of death or
disability (as defined in the Incentive Plan), the one-year anniversary of
such termination of employment; (iii) if the participant's termination of
employment with the Company and its affiliates occurs by reason of
retirement, the three-month anniversary of such termination of employment;
or (iv) if the participant's termination with the Company and its
affiliates occurs for any other reason, the date of such termination.

The full purchase price of each share of Common Stock purchased upon
the exercise of an option shall be paid at the time of such exercise in
cash or in shares of Common Stock (valued at fair market value as of the
date of exercise) that have been held by the participant at least six
months, or in any combination thereof, as determined by the Committee. To
the extent provided by the Committee, a participant may elect to pay the
purchase price upon the exercise of an option through a cashless exercise
arrangement.

Options awarded under the Incentive Plan may be nonqualified options
or incentive stock options, as determined in the discretion of the
Committee. Under the terms of the Incentive Plan, the Committee may also
issue stock appreciation rights ("SARs"). Upon exercise, a SAR entitles
the holder thereof to a payment equal to the excess of the fair market
value of a share of stock on the exercise date over the fair market value
of a share of stock on the grant date. If the committee so determines,
SARs may be issued in tandem with stock options.

Generally, options and SARs are not transferable prior to the
participant's death. However, the Committee may provide that an option or
SAR award may be transferred to an immediate family member or to a trust
for the benefit of an immediate family member.

Upon a change in control of the Company (as defined in the Incentive
Plan), all options and SARs shall become immediately exercisable.

The Board of Directors of the Company may amend or terminate the
Incentive Plan at any time, provided that no such amendment or termination
may materially adversely affect the rights of any participant or
beneficiary under any award made under the plan prior to the date such
amendment is adopted by the Board.

The following tables set forth certain information as of December 31,
1996 and for the fiscal year then ended with respect to stock options
granted to the Named Executive Officers.

<TABLE>
<CAPTION>
Option Grants in Fiscal Year 1996

Percent of Potential
Number of Total Options Realizable Value at Assumed
Securities Granted to Annual Rates of Stock Price
Underlying Employees Exercise or Appreciation
Options in Fiscal Base Price For Option Term(4)
Name Granted (1) Year ($/Share)(2) Expiration Date(3) 5% 10%

<S> <C> <C> <C> <C> <C> <C>
Kerry L. Woody 100,000 23.0% $6.00 September 30, 2006 $977,337 $1,55,245
Wayne E. Larsen 50,000 11.5 $6.00 September 30, 2006 $488,668 $778,123
Robert J. Noel 50,000 11.5 $6.00 September 30, 2006 $488,668 $778,123
Gary J. Vroman 50,000 11.5 $6.00 September 30, 2006 $488,668 $778,123
Lawrence C. Hammond 33,333 7.7 $6.00 September 30, 2006 $325,776 $518,743

_________________

(1) The right to exercise these stock options vests over a four-year
period.

(2) The exercise price is equal to 100% of the fair market value on the
date of grant.

(3) The options have a term of 10 years, subject to earlier termination
in certain events related to termination of employment.

(4) The 5% and 10% assumed rates of appreciation are suggested by the
rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of the future Common Stock
price. There can be no assurance that any of the values reflected in
the table will be achieved.
</TABLE>

<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Options Values

Number of Number of Shares
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Options
on Value Year-End at Fiscal Year-End
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable

<S> <C> <C> <C> <C>
Kerry L. Woody . . - - 25,000/75,000 $75,000/$225,000
Wayne E. Larsen . . - - 12,500/37,500 $37,500/$112,500
Robert J. Noel . . - - 12,500/37,500 $37,500/$112,500
Gary J. Vroman . . - - 12,500/37,500 $37,500/$112,500
Lawrence C. Hammond - - 8,333/25,000 $25,000/$75,000

</TABLE>

Directors' Compensation

Directors currently receive an annual retainer of twenty thousand
dollars ($20,000) and a fee of one thousand dollars ($1,000) per meeting
attended in person and two hundred fifty dollars ($250) per telephonic
meeting.

Compensation Committee Interlocks and Insider Participation

During 1996, the Board of Directors of the Company established a
Compensation Committee consisting of Messrs. Flynn, Sullivan and Woody.
Executive compensation levels during 1996 were established by the Board of
Directors.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of December 12, 1997,
and as adjusted to reflect the sale of Common Stock in the Offering, by
(i) each person who is known by the Company to own beneficially more than
5% of the Company's Common Stock, (ii) each Named Executive Officer, (iii)
each Director, and (iv) each Selling Shareholder.

For purposes of this filing, the Company has assumed that ING Equity
Partners L.P. I and/or Internationale Nederlanden (U.S.) Capital Corporation
will sell all 1,014,000 shares offered by the Selling Shareholders. In the
event other shareholders having registration rights elect to participate in
the Offering, the foregoing entities' participations will be reduced.

Beneficial Ownership Beneficial Ownership
Prior to the Offering After the Offering
Number
of
Shares
Name Number(1) Percent(2) Offered Number(1) Percent(2)

<S> <C> <C> <C> <C> <C>
Kerry L. Woody . . . . . . . . . 29,167 * - 29,167 *
Wayne E. Larsen . . . . . . . . . 12,500 * - 12,500 *
Robert J. Noel . . . . . . . . . 14,353 * - 14,353 *
Gary J. Vroman . . . . . . . . . 14,833 * - 14,833 *
Lawrence C. Hammond . . . . . . . 8,500 * - 8,500 *
Gregory P. Flynn(3) . . . . . . . 2,259,320 34.05%
Robert W. Sullivan . . . . . . . 83 * - 83 *
Fred Whitridge, Jr. . . . . . . . - * - - *

All Directors and executive
officers as a group
(13 persons) . . . . . . . . . . 2,388,673 34.85

ING Equity Partners L.P. I
("ING")(4) . . . . . . . . . . . 2,259,320 34.05

Grace Brothers, Ltd.
("Grace")(5) . . . . . . . . . . 2,862,573 35.50

Internationale Nederlanden (U.S.)
Capital Corporation ("INCC")(6) . 2,246,820 33.86
Franklin Principal Maturity
Trust(7) . . . . . . . . . . . . 1,220,096 20.50

____________________

* Less than 1%

(1) Includes, in the case of each Named Executive Officer and Directors
and executive officers as a group, options granted under the
Incentive Plan which are exercisable within 60 days.

(2) In accordance with regulations of the Securities and Exchange
Commission, the percentage of shares beneficially owned by each named
shareholder in the accompanying table assumes the prior exercise of
all options, warrants and similar rights owned by such shareholder
which are exercisable within 60 days but does not assume the exercise
of options, warrants or rights owned by any other shareholder.

(3) Consists of 828,033 shares of Common Stock and 1,431,287 warrants
held by ING Equity Partners L.P. I, of which Mr. Flynn is a partner.
Mr. Flynn disclaims beneficial ownership of such shares, except to
the extent of his financial interest in such partnership. Mr.
Flynn's address is 135 East 57 Street, New York, New York 10022.

(4) Consists of 828,033 shares of Common Stock and 1,431,287 shares of
Common Stock issuable upon exercise of warrants, but does not include
815,533 shares beneficially owned by Internationale Nederlanden
(U.S.) Capital Corporation, as to which beneficial ownership is
disclaimed. ING Equity Partners L.P. I's address is 135 East 57
Street, New York, New York 10022.

(5) Consists of 2,862,573 shares of Common Stock issuable upon exercise
of warrants. Grace Brothers, Ltd.'s address is 1560 Sherman Avenue,
Suite 900, Evanston, Illinois 60201.

(6) Consists of 815,533 shares of Common Stock and 1,431,287 shares of
Common Stock issuable upon exercise of warrants, but does not include
828,033 shares beneficially owned by ING Equity Partners L.P. I, as
to which beneficial ownership is disclaimed. Internationale
Nederlanden (U.S.) Capital Corporation's address is 135 East 57
Street, New York, New York 10022.

(7) Includes 746,096 shares of Common Stock issuable upon exercise of
warrants. Franklin Principal Maturity Trust's address is 777
Mariner's Island Boulevard, San Mateo, California 94404.
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Letter of Credit

On June 30, 1994, the Company issued 12,500 shares of Common Stock
to ING in exchange for ING causing INCC to issue a $2 million letter of
credit in favor of the Company. The letter of credit was canceled in
June 1995 with the establishment of the Credit Agreement.

Subordinated Note Offering

In December 1995, the Company issued $2 million of senior
subordinated secured notes ("Subordinated Notes") to each of ING and
Grace. In February 1996, the Company issued an additional $1.435 million
of Notes to each of ING and Grace. The Notes purchased by ING and Grace
were each accompanied by warrants to purchase 2,862,573 shares of Common
Stock at a price of $1.20 per share. Pursuant to the terms of the Notes,
in 1996 and the first nine months of 1997, ING (and its affiliates) and
Grace were issued an aggregate of $1,395,507 principal amount of
additional Notes as interest payments. The Notes were offered in a
private placement to all shareholders of the Company that represented that
they were "accredited investors" as defined in Rule 501 under the
Securities Act.

Certain Options

In April 1993, the Company issued options to purchase 496,188 shares
of Common Stock, at exercise prices ranging from $12.00 to $21.00 per
share, to Anchor Industries International, Inc. ("AII"), in connection
with an agreement to perform certain consulting services. AII was owned
by Vincent J. Naimoli, who, at the time of issuance of the options, was
Chairman of the Board of Directors of Ladish. The Company believes that
the fair market value of its Common Stock on the date of issuance was
substantially below the exercise price of the options. Such options,
which are still outstanding and currently exercisable, expire ten years
from the date of grant.

Registration Rights

In connection with the offering of the Subordinated Notes, the
Company entered into an agreement granting certain registration rights
with respect to (i) all Common Stock held at any time by ING and Grace and
(ii) all Common Stock issuable upon the exercise of the warrants
(collectively, the "Registerable Stock"). At any time beginning six
months after the effective date of a registration statement covering a
public offering of securities of the Company, the holders of Registerable
Stock constituting at least 25% of the shares of Registerable Stock then
outstanding may require the Company to register all or any portion of
their shares for sale. In addition, all holders of Registerable Stock
have certain "piggyback" rights in the event the Company proposes to
register any of its securities for sale to the public. All registration
rights are subject to certain conditions and limitations. The Company is
required to bear the expenses of such registrations, other than
underwriting discounts and selling commissions. The registration rights
expire at such time as all Registerable Shares have been effectively
registered and disposed of pursuant to such registration or sold pursuant
to Rule 144.

DESCRIPTION OF COMMON STOCK

General

Under the Articles of Incorporation, the authorized capital stock of
the Company consists of 100,000,000 shares of Common Stock, $.01 par
value. Except as provided by Section 180.0662(2)(b) of the Wisconsin
Business Corporation Law ("WBCL"), all outstanding shares of Common Stock
are, and all of the shares of Common Stock offered hereby will be, legally
issued, fully paid and non-assessable. WBCL Section 180.0662(2)(b)
provides that shareholders of every corporation, other than railroad
corporations, are personally liable to an amount equal to the par value of
shares owned by them, or to the consideration for which their shares
without par value were issued, for all debts owing to employees of the
corporation for services performed for such corporation, but not exceeding
six months' service in any one case.

Common Stock

Voting Rights. The holders of Common Stock have one vote per share
on all matters submitted to a vote by the shareholders of the Company.
Shares of Common Stock do not have cumulative voting rights.

Dividend Rights. Each share of Common Stock is entitled to dividends
if, as and when dividends are declared by the Board of Directors.

Liquidation Rights. The holders of the Common Stock are entitled to
participate equally on a share for share basis in all distributions to the
holders of Common Stock in any liquidation, distribution or winding up of
the Company.

Preemptive Rights. The holders of Common Stock do not have
preemptive rights to purchase shares of any class of the Company's capital
stock.

Subscription or Conversion Rights. The holders of Common Stock have
no statutory subscription or conversion rights.

Redemption and Sinking Fund Privileges. The holders of the Common
Stock do not have any redemption or sinking fund privileges.

Transfer Agent. Firstar Trust Company will be the transfer agent for
the Common Stock.

Common Stock Warrants

In 1995 and 1996, the Company issued warrants to purchase an
aggregate of 7,775,722 shares of Common Stock, at a purchase price of
$1.20 per share. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources".
Such warrants expire ten years after issuance. The holders of unexercised
warrants are entitled to receive all dividends and other distributions
made to holders of Common Stock, as if such warrants had been previously
exercised. In addition, the holders of the warrants have certain rights
to require the Company to register the warrant shares for resale. See
"Certain Relationships and Related Party Transactions-Registration
Rights".

Anti-Takeover Effects of Wisconsin Law and Articles of Incorporation and
By-Laws

The Articles of Incorporation, the By-Laws and the Wisconsin Business
Corporation Law ("WBCL") contain certain provisions that may make more
difficult the acquisition of control of the Company by means of a tender
offer, open market purchase, a proxy contest or otherwise. These
provisions are designed to encourage persons seeking to acquire control of
the Company to negotiate with the Board of Directors. However, these
provisions could have the effect of discouraging a prospective acquiror
from making a tender offer or otherwise attempting to obtain control of
the Company. To the extent that these provisions discourage takeover
attempts, they could deprive shareholders of opportunities to realize
takeover premiums for their shares or could depress the market price of
the shares of the Common Stock.

Control Share Voting Restrictions

Section 180.1150 of the WBCL provides that the voting power of shares
of a "resident domestic corporation" held by any person, including shares
issuable upon conversion of convertible securities or upon exercise of
options or warrants, in excess of 20% of the voting power in the election
of directors shall be limited to 10% of the full voting power of those
shares. This statute is a scaled voting rights or control share
acquisition statute, designed to protect corporations against uninvited
take-over bids. This voting restriction is not applicable to securities
acquired prior to April 22, 1986, shares acquired directly from the
Company or shares acquired in other circumstances described in Section
180.1150(3) of the WBCL. A "resident domestic corporation" is defined as
a domestic corporation (i) whose principal offices are located in
Wisconsin, (ii) which has significant business operations in Wisconsin,
(iii) more than 10% of whose holders of record are residents of Wisconsin,
and (iv) more than 10% of whose shares are held of record by residents of
Wisconsin. Based upon the Company's stock transfer records as of the date
of this Prospectus, management believes that the Company is not a
"resident domestic corporation". The Company may, however, through
securities transfers occurring in the future and beyond the Company's
control, become a "resident domestic corporation".

Business Combination Restrictions

Sections 180.1140 to 180.1144 of the WBCL provide that a "resident
domestic corporation" may not engage in a business combination with an
interested stockholder (a person beneficially owning 10% or more of the
aggregate voting power of the stock of such corporation) for three years
after the interested stockholder's stock acquisition date unless the board
of directors of the corporation has approved such business combination or
purchase of stock prior to the stock acquisition date. After the three-
year period, any such business combination may be consummated only if it
is approved by a vote of the majority of the voting stock not beneficially
owned by the interested stockholder, or made at a certain statutory
formula price intended to provide a fair price for the shares held by
disinterested shareholders.

Sections 180.1130 to 180.1134 of the WBCL provide that certain
business combinations of a "resident domestic corporation" not meeting
specified statutory adequacy-of-price standards must be approved by 80% of
the votes entitled to be cast by shareholders, and two-thirds of the votes
entitled to be cast by holders of voting shares other than voting shares
beneficially owned by a "significant shareholder" (generally including a
person that is a beneficial owner of 10% or more of the voting power of
the shares of the corporation) or an affiliate or associate thereof who is
a party to the transaction.

Availability of Shares of Capital Stock for Future Issuance

The availability for issue of shares of authorized but unissued
Common Stock by the Company without further action by shareholders (except
as may be required by applicable stock exchange or Nasdaq National Market
regulations) could be viewed as enabling the Board of Directors to make
more difficult a change in control of the Company. The issuance of
warrants or rights to acquire shares of Common Stock may discourage or
defeat unsolicited stock accumulation programs and acquisition proposals,
and the issuance of shares in a private placement or public offering to
dilute or deter stock ownership of persons seeking to obtain control of
the Company may have a similar effect. The Company has no present plans
to issue any shares of Common Stock other than as contemplated under the
Incentive Plan and pursuant to the exercise of outstanding options or
warrants.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been only a limited market for the
Common Stock of the Company and no prediction can be made as to the
effect, if any, that market sales of shares or the availability of such
shares for sale will have on the market price of the Common Stock
prevailing from time to time. Future sales of substantial numbers of
shares of Common Stock in the public market, however, could adversely
affect prevailing market prices and impair the Company's future ability to
raise capital through the sale of its equity securities.

Upon completion of the Offering, the Company will have outstanding
7,651,473 shares of Common Stock. Of these shares, the 3,350,000 sold in
the Offering will be freely tradeable without restriction or further
registration under the Securities Act, except for any shares purchased by
"affiliates" of the Company (as defined under the Securities Act). Shares
purchased by affiliates may not be sold unless the sale is registered
under the Securities Act or unless they are sold pursuant to Rule 144
under the Securities Act or another exemption from registration.

Of the 5,315,473 shares of Common Stock outstanding at the date of
this Prospectus, 3,193,638 are held by persons not deemed by the Company
to be affiliates. The Underwriters have conditioned the Offering on the
receipt of agreements of the holders of substantially all Common Stock
purchase warrants, all persons selling shares in the Offering, all holders
of registration rights with respect to the Company's securities and all
executive officers and directors of the Company, that they will not sell
any shares of Common Stock without the consent of Credit Suisse First
Boston Corporation, on behalf of the Underwriters, for a period of 180
days following the date of this Prospectus. See "Underwriting" and "Risk
Factors--Shares Eligible in Future Sale; Registration Rights; Possible
Adverse Effects on Future Market Prices". Any such shares will be
tradeable without restriction under Rule 144(k) after the end of the
180 day lock-up period. The remaining shares held by non-
affiliates are, and immediately after the Offering will be, freely
tradeable without restriction. The remaining 2,121,835 outstanding shares
of Common Stock are held by persons deemed to be affiliates of the
Company. These shares will be available for sale in the public market
beginning 180 days after the date of this Prospectus (or earlier with
the consent of the Underwriters), subject to the restrictions imposed by
Rule 144. The holders of certain of the foregoing shares have rights to
require the Company to register such shares for resale. See "Certain
Relationships and Related Party Transactions".

In general, under Rule 144 as in effect on the date of this
Prospectus, an affiliate of the Company, or any other person (or persons
whose shares are aggregated) who has beneficially owned restricted
securities for at least one year, will be entitled to sell in any
three-month period a number of shares that does not exceed the greater of
(i) 1% of the then outstanding shares of Common Stock of the Company
(approximately 76,500 shares immediately after the Offering) or (ii) the
average weekly trading volume during the four calendar weeks immediately
preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission. Sales pursuant to Rule 144 are
subject to certain requirements relating to manner of sale, notice and
availability of current public information about the Company. A person
(or persons whose shares are aggregated) who is not deemed to have been an
affiliate of the Company at any time during the 90 days immediately
preceding the sale and who has beneficially owned restricted shares for at
least two years is entitled to sell shares pursuant to Rule 144(k) without
regard to the limitations above.

In addition to the foregoing, there are outstanding at the date of
this Prospectus (i) options to purchase 322,500 shares of Common Stock
held by persons who are employees of the Company, (ii) options to purchase
496,188 shares of Common Stock beneficially owned by persons who were
formerly employees or executives of the Company, and (iii) warrants to
purchase 7,608,932 shares of Common Stock issued in connection with
certain financing provided to the Company by the Company's controlling
shareholders. See "Certain Relationships and Related Transactions". The
foregoing options and warrants were issued in unregistered transactions,
and the shares issuable upon exercise will constitute "restricted
securities" within the meaning of Rule 144 and therefore be subject to a
one-year holding period from the date such shares are deemed to have been
acquired. The holders of the warrants have certain rights to require the
Company to register such shares for resale. See "Certain Relationships
and Related Party Transactions". Such demand rights may not be exercised
within 120 days after the date of this Prospectus.

UNDERWRITING

Under the terms and subject to the conditions contained in an
Underwriting Agreement dated , 1998 (the "Underwriting
Agreement") among the Company, the Selling Shareholders and the
underwriters named below (the "Underwriters"), for whom Credit Suisse
First Boston Corporation ("CSFBC") and BT Alex. Brown Incorporated are
acting as representatives (the "Representatives"), the Underwriters have
severally but not jointly agreed to purchase from the Company and the
Selling Shareholders the following respective numbers of shares of Common
Stock.

Underwriter Number of
Shares

Credit Suisse First Boston Corporation . . .
BT Alex. Brown Incorporated . . . . . . . . .

Total . . . . . . . . . . . . . . . . . 3,350,000
=========

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the shares of Common
Stock offered hereby (other than those shares covered by the over-
allotment option described below) if any are purchased. The Underwriting
Agreement provides that, in the event of a default by an Underwriter, in
certain circumstances the purchase commitments of non-defaulting
Underwriters may be increased or the Underwriting Agreement may be
terminated.

Certain of the Selling Shareholders have granted to the Underwriters
an option, exercisable by CSFBC on behalf of the Underwriters, expiring at
the close of business on the 30th day after the date of this Prospectus,
to purchase up to 502,500 additional shares of the Common Stock at the
initial public offering price less the underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. Such
option may be exercised only to cover over-allotments, if any, in the sale
of the shares of Common Stock. To the extent such option is exercised,
each Underwriter will become obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares of
Common Stock as it was obligated to purchase pursuant to the Underwriting
Agreement.

The Company and the Selling Shareholders have been advised by the
Representatives that the Underwriters propose to offer the shares of
Common Stock to the public initially at the public offering price set
forth on the cover page of this Prospectus and, through the Underwriters,
to certain dealers at such price less a concession of $ per share,
and the Underwriters and such dealers may allow a discount of $ per
share on sales to certain other dealers. After the initial public
offering, the public offering price and concession and discount to dealers
may be changed by the Representatives.

The Representatives have informed the Company that they do not expect
discretionary sales by the Underwriters to exceed 5% of the shares being
offered hereby.

The Underwriters have conditioned the Offering on the agreement of the
Company, its executive officers and directors, the holders of substantially
all Common Stock purchase warrants, all persons holding registration rights
with respect to the Company's securities and the Selling Shareholders
that they will not offer, sell, contract to sell, announce their intention
to sell, pledge, hypothecate, grant any option to purchase or otherwise
dispose of, directly or indirectly, or, in the case of the Company, file
with the Securities and Exchange Commission (the "Commission") a
registration statement under the Securities Act relating to any additional
shares of the Company's Common Stock or securities convertible into or
exchangeable or exercisable for any shares of the Company's Common Stock,
without the prior written consent of CSFBC for a period of 180 days after
the date of this Prospectus, except, in the case of the Company, issuances
pursuant to the exercise of stock options granted under the Incentive
Plan.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities
under the Securities Act, and to contribute to payments which the
Underwriters may be required to make in respect thereof.

Prior to the Offering, there has been a limited public market for the
Common Stock. The initial public offering price for the shares of Common
Stock has been negotiated between the Company and the Representatives.
Among the factors considered in determining the initial public offering
price of the Common Stock were the Company's historical performance,
estimates of the business potential and earnings prospects of the Company
and its industry in general, an assessment of the Company's management,
the market valuation of companies in related businesses, the general
condition of the equity securities market, the limited trading history
of the Common Stock and other relevant factors. There can be no assurance
that the initial public offering price of the Common Stock will correspond
to the price at which the Common Stock has traded in the past or will trade
in the public market subsequent to the Offering, or that an active
public market for the Common Stock will develop and continue after the
Offering.

CSFBC, on behalf of the Underwriters, may engage in over-allotment,
stabilizing transactions, syndicate covering transactions and penalty bids
in accordance with Regulation M under the Exchange Act. Over-allotment
involves syndicate sales in excess of the offering size, which creates a
syndicate short position. Stabilizing transactions permit bids to
purchase shares of Common Stock so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve
purchases of Common Stock in the open market after the distribution has
been completed in order to cover syndicate short positions. Penalty bids
permit CSFBC, on behalf of the Underwriters, to reclaim a selling
concession from a dealer when the shares originally sold by such dealer
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such over-allotment, stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of shares of
Common Stock to be higher than it would otherwise be in the absence of
such transactions. These transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any
time.

Certain of the Underwriters have provided certain financial, advisory
and investment banking services to the Company and ING in the past.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the Common Stock in Canada is being made only on
a private placement basis exempt from the requirement that the Company and
the Selling Shareholders prepare and file a prospectus with the securities
regulatory authorities in each province where trades of Common Stock are
effected. Accordingly, any resale of the Common Stock in Canada must be
made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to
be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior
to any resale of the Common Stock.

Representations of Purchasers

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling
Shareholders and the dealer from whom such purchase confirmation is
received that (i) such purchaser is entitled under applicable provincial
securities law to purchase such Common Stock without the benefit of a
prospectus qualified under such securities laws, (ii) where required by
law, that such purchaser is purchasing as principal and not as agent and
(iii) such purchaser has reviewed the text above under "Resale
Restrictions."

Rights of Action (Ontario Purchasers)

The securities being offered are those of a foreign issuer and
Ontario purchasers will not receive the contractual right of action
prescribed by section 32 of the Regulation under the Securities Act
(Ontario). As a result, Ontario purchasers must rely on other remedies
that may be available, including common law rights of action for damages
or rescission or rights of action under the civil liability provisions of
the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts
named herein and the Selling Shareholders may be located outside of Canada
and, as a result, it may not be possible for Canadian purchasers to effect
service of process within Canada upon the issuer or such persons. All or
a substantial portion of the assets of the issuer and such persons and the
Selling Shareholders may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such
persons in Canada or to enforce a judgment obtained in Canadian courts
against the issuer or such persons outside of Canada.

Notice to British Columbia Residents

A purchaser of Common Stock to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with
the British Columbia Securities Commission a report within ten days of the
sale of any Common Stock acquired by such purchaser pursuant to the
Offering. Such report must be in the form attached to British Columbia
Securities Commission Blanket Order BOR #95/17, a copy of which may be
obtained from the Company. Only one such report must be filed in respect
of Common Stock acquired on the same date and under the same prospectus
exemption.

Taxation and Eligibility for Investment

Certain purchasers of Common Stock should consult their own legal and
tax advisors with respect to the tax consequences of an investment in the
Common Stock in their particular circumstances and with respect to the
eligibility of the Common Stock for investment by the purchaser under
relevant Canadian Legislation.

EXPERTS

The financial statements of Ladish Co., Inc. as of December 31, 1995
and 1996 and for each of the three years ending December 31, 1996 included
in this Prospectus and elsewhere in the registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving such
reports.

The financial statements of Stowe Machine Company Incorporated at
December 31, 1995 and 1996, and for the years then ended, appearing in
this Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Foley & Lardner, Milwaukee,
Wisconsin. Certain legal matters will be passed upon for the Underwriters
by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement on Form S-1 (herein, together
with all amendments thereto, called the "Registration Statement") under
the Securities Act with respect to the Common Stock offered hereby.
Reference is made to the Registration Statement, including the exhibits
thereto and the financial statements, notes and schedules filed as a part
thereof. This Prospectus, which is a part of the Registration Statement,
does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain items of which
are omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Company and the Common Stock
offered hereby, reference is made to the Registration Statement and to the
financial statements, schedules, and exhibits filed as a part thereof.
The Registration Statement, including all schedules and exhibits thereto,
may be inspected without charge at the public reference facilities
maintained by the Commission at its principal office at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. and at the Commission's regional
offices at 7 World Trade Center, 13th floor, New York, New York, and 500
West Madison Street, Suite 1400, Chicago, Illinois. Copies of such
material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates or may be accessed electronically by means of the
Commission's home page on the Internet at http:\\www.sec.gov.

Statements contained in this Prospectus concerning the contents of
any contract or other document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or otherwise with the
Commission, each such statement being qualified in all respects by such
reference.

<PAGE>

LADISH CO., INC.

INDEX TO FINANCIAL STATEMENTS

LADISH CO., INC.

Report of Independent Public Accountants . . . . . . . . . . . . . . F-2

Balance Sheets at December 31, 1995 and 1996
and (unaudited) September 30, 1997 . . . . . . . . . . . . . . . . . F-3

Statements of Operations for the three years ended December 31,
1994, 1995 and 1996 and (unaudited) for the nine months ended
September 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . F-4

Statements of Stockholders' Equity for the three years ended
December 31, 1994, 1995 and 1996, and (unaudited) for nine
months ended September 30, 1997 . . . . . . . . . . . . . . . . . . . F-5

Statements of Cash Flows for the three years ended December 31,
1994, 1995 and 1996, and (unaudited) for nine months ended
September 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . F-6

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . F-7

STOWE MACHINE COMPANY INCORPORATED

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . F-21

Balance Sheets at December 31, 1995 and 1996 . . . . . . . . . . . . F-22

Statements of Operations for the two years ended
December 31, 1995 and 1996 . . . . . . . . . . . . . . . . . . . . . F-24

Statements of Cash Flows for the two years ended December 31,
1995 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-25

Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . F-26

Statements of Operations (unaudited) for the nine months
ended September 30, 1996 and 1997 . . . . . . . . . . . . . . . . . . F-31

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders
of Ladish Co., Inc.:

We have audited the accompanying balance sheets of Ladish Co., Inc., a
Wisconsin corporation, as of December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity and cash flows for each of
the years in the three year period ended December 31, 1996. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ladish Co., Inc. as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the years in the three year period ended December 31,
1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin,
June 16, 1997,
except for matters discussed
in Note 17, as to which
the date is December 12, 1997.

<PAGE>

LADISH CO., INC.

BALANCE SHEETS
(Dollars in Thousands Except Per Share Data)

December 31, September 30,
1995 1996 1997
ASSETS (Unaudited)

CURRENT ASSETS:
Cash $337 $102 $693
Accounts receivable, less
allowance of $450, $300 and
$300, respectively 16,066 21,757 33,135
Inventories 27,795 36,006 48,509
Prepaid expenses and other
current assets 378 368 2,117
Net assets of IPD (Note 13) 14,772 31,640 --
-------- -------- --------
Total current assets 59,348 89,873 84,454

NET ASSETS OF IPD (Note 13) 20,505 -- --

PROPERTY, PLANT AND
EQUIPMENT:
Land and improvements 4,156 4,156 3,855
Building and improvements 11,785 12,504 13,165
Machinery and equipment 87,815 90,418 98,802
Construction in progress 3,708 5,267 7,301
-------- -------- --------
107,464 112,345 123,123
Less-Accumulated depreciation (23,255) (32,361) (39,718)
-------- -------- --------

Net property, plant and
equipment 84,209 79,984 83,405

DEFERRED FINANCING COSTS AND OTHER
ASSETS 634 413 3,233
-------- -------- --------
Total assets $164,696 $170,270 $171,092
======== ======== ========

LIABILITIES AND
STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of senior bank
loan $750 $22,498 $2,000
Notes payable -- -- 250
Accounts payable 16,894 17,719 22,828
Accrued liabilities-
Pensions 878 15,300 15,629
Postretirement benefits 6,290 5,790 5,790
Wages and salaries 4,695 5,174 5,474
Taxes, other than income taxes 358 295 264
Interest 184 153 145
Profit sharing -- 2,780 2,400
Other 4,894 4,689 6,622
-------- -------- --------
Total current liabilities 34,943 74,398 61,402

LONG-TERM LIABILITIES:
Senior bank loan-less current
portion 39,210 19,197 19,220
Subordinated debt 3,972 10,153 11,015
Notes payable -- -- 750
Pensions 45,236 33,295 31,991
Postretirement benefits 46,757 45,315 43,965
Officers' deferred compensation 2,246 2,224 2,206
Other noncurrent liabilities 2,083 1,975 1,959
-------- -------- --------
Total long term liabilities 139,504 112,159 111,106
-------- -------- --------
Total liabilities 174,447 186,557 172,508

STOCKHOLDERS' EQUITY:
Common stock-authorized
100,000,000, issued and
outstanding 5,029,517,
5,139,993 and 5,196,307 shares
in each period of no par,
$.01 par and $.01 par,
respectively 35,224 51 52
Additional paid-in capital 40 35,398 36,506
Accumulated deficit (45,015) (51,736) (37,974)
-------- -------- --------
Total stockholders' equity (9,751) (16,287) (1,416)
-------- -------- --------
Total liabilities and
stockholders' equity $164,696 $170,270 $171,092
======== ======== ========

The accompanying notes to financial statements are an integral
part of these balance sheets.

<PAGE>

<TABLE>
LADISH CO., INC.

STATEMENTS OF OPERATIONS

(Dollars in Thousands Except Per Share Data)
<CAPTION>
(Unaudited)
Years Ended December 31, Nine Months Ended September 30,
1994 1995 1996 1996 1997

<S> <C> <C> <C> <C> <C>
NET SALES $121,803 $115,738 $162,002 $124,068 $157,072

COST OF SALES 130,537 128,351 149,637 114,154 134,055
------- ------- ------- ------- -------
Gross profit (loss) (8,734) (12,613) 12,365 9,914 23,017

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 5,966 6,139 6,556 4,888 5,607
------- ------- ------- ------- -------
Income (loss) from operations (14,700) (18,752) 5,809 5,026 17,410

OTHER (INCOME) EXPENSE:

Interest expense 2,466 3,339 3,703 2,870 2,659
Other, net (138) 55 (29) (7) (143)
Income (loss) from continuing operations
before provision for income taxes (17,028) (22,146) 2,135 2,163 14,894

PROVISION FOR INCOME TAXES -- -- -- -- 1,132
------- ------- ------- ------- -------
Income (loss) from continuing operations (17,028) (22,146) 2,135 2,163 13,762

DISCONTINUED OPERATIONS (Note 13):
Income (loss) from operations of IPD (net
of tax effect of $-- for all periods) 221 1,214 (262) 72 --

Loss on disposal of IPD (net of tax effect
of $--) -- -- (8,594) -- --
------- ------- ------- ------- -------
Net income (loss) $(16,807) $(20,932) $(6,721) $2,235 $13,762
======= ======= ======= ======= =======
NET INCOME (LOSS) PER SHARE:

From continuing operations $(3.39) $(4.40) $ 0.20 $ 0.21 $ 1.09
From discontinued operations .04 .24 (.73) -- --
------- ------- ------- ------- ------
Net income (loss) $(3.35) $(4.16) $(.53) $ 0.21 $ 1.09
======= ======= ======= ======= ======
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

<PAGE>

<TABLE>
LADISH CO., INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in Thousands Except Share Data)
<CAPTION>

Common Stock Additional
Paid-In Accumulated
Shares Amount Capital Deficit Total

<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 5,017,017 $5,017 $30,163 $(7,276) $27,904
Net loss -- -- -- (16,807) (16,807)
Issuance of common stock 12,500 13 31 -- 44
--------- ------- ------- ------- -------
BALANCE, December 31, 1994 5,029,517 5,030 30,194 (24,083) 11,141

Net loss -- -- -- (20,932) (20,932)
Change in par value of common stock
from $1 to no par -- 30,194 (30,194) -- --
Issuance of warrants on senior
subordinated notes -- -- 40 -- 40
--------- ------- ------- ------- -------
BALANCE, December 31, 1995 5,029,517 35,224 40 (45,015) (9,751)

Net loss -- -- -- (6,721) (6,721)
Change in par value of common stock
from no par to $.01 -- (35,174) 35,174 -- --
Issuance of warrants on senior
subordinated notes -- -- 53 -- 53
Exercise of warrants 110,476 1 131 -- 132
--------- ------- ------- ------- -------
BALANCE, December 31, 1996 5,139,993 51 35,398 (51,736) (16,287)

Net income -- -- -- 13,762 13,762
Reduction in valuation allowance
related to pre-fresh start NOLs -- -- 1,040 -- 1,040
Exercise of warrants 56,314 1 68 -- 69
--------- ------- ------- ------- -------
BALANCE, September 30, 1997
(Unaudited) 5,196,307 $52 $36,506 $(37,974) $(1,416)
========== ======== ======= ======== ========
</TABLE>

The accompanying notes to financial statements are an integral
part of these statements.

<PAGE>

<TABLE>
LADISH CO., INC.
STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
(Unaudited)
Nine Months Ended
Years Ended December 31, September 30,
1994 1995 1996 1996 1997

<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)- $(16,807) $(20,932) $(6,721) $2,235 $13,762
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating
activities-
Depreciation 8,725 8,908 9,136 6,930 7,365
Amortization 5 121 151 119 113
Deferred interest on subordinated debt -- 12 1,035 773 931
Deferred tax provision -- -- -- -- 1,040
Loss on disposal of IPD -- -- 8,594 -- --
Changes in assets and liabilities-
Accounts receivable 1,128 (3,166) (5,691) (7,474) (10,886)
Inventories 5,501 (2,925) (8,211) (7,008) (8,886)
Net assets of IPD 3,422 (1,091) (5,768) (5,086) --
Other assets 64 (650) 96 516 (156)
Accounts payable and accrued liabilities (3,244) 7,494 17,707 22,117 1,793
Other liabilities (438) 1,480 (12,702) (11,194) (2,688)
------- ------- ------- ------- -------
Net cash provided by (used for)
operating activities (1,644) (10,749) (2,374) 1,928 2,388
------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (2,549) (2,865) (4,997) (2,747) (6,255)
Proceeds from sale of property, plant and
equipment 1,877 1,018 70 70 612
Acquisition of business -- -- -- -- (8,529)
Net proceeds from sale of IPD -- -- -- -- 32,850
-------- -------- -------- -------- --------
Net cash provided by (used for)
investing activities (672) (1,847) (4,927) (2,677) 18,678

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior bank loan -- (31,665) -- -- --
Net proceeds from (repayments of) senior bank
loan 2,557 39,960 1,735 (1,335) (20,475)
Proceeds from issuance of (retirement of)
subordinated debt and warrants -- 4,000 5,199 5,199 (69)
Issuance of common stock 44 -- 132 132 69
------- -------- ------- ------- -------
Net cash provided by (used in) financing
activities 2,601 12,295 7,066 3,996 (20,475)
------- -------- ------- ------- -------
INCREASE (DECREASE) IN CASH: 285 (301) (235) 3,247 591

CASH, beginning of period 353 638 337 337 102
------- -------- ------- ------- -------
CASH, end of period $638 $337 $102 $3,584 $693
======= ======== ======= ======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $21 $20 $14 $14 $297
Interest paid $3,110 $4,560 $4,087 $3,309 $2,216

</TABLE>

The accompanying notes to financial statements are an integral part of
these statements.

<PAGE>

LADISH CO., INC.

NOTES TO FINANCIAL STATEMENTS

(Dollars in Thousands Except Share and Per Share Data)

(1) Business Information-

Through May 30, 1997, Ladish Co., Inc. (the "Company") operated
facilities located in Cudahy, Wisconsin; Russellville, Arkansas; and
Cynthiana, Kentucky. On May 30, 1997, the Company disposed of its
Industrial Products Division ("IPD") which includes the facilities
located in Arkansas and Kentucky. (See Note 13.)

The Company engineers, produces and markets high-strength, high-
technology forged and formed metal components for a wide variety of
load-bearing and fatigue-resisting applications in the aerospace,
defense and industrial markets, for both domestic and international
customers. Net sales to the aerospace, defense and industrial
markets were approximately 71%, 15% and 14%, respectively, of total
Company net sales in 1996 from continuing operations.

Customers which individually accounted for more than 10% of net sales
from continuing operations in the periods presented is summarized as
follows:

Years Ended December 31,
1994 1995 1996

Number of customers 2 2 3
Percentage of net sales 34% 41% 54%

Exports accounted for approximately 28%, 31%, and 40% of the Company
sales for the years ended December 31, 1994, 1995 and 1996
respectively. Sales to Europe constituted approximately 18%, 19% and
31% for the periods ended December 31, 1994, 1995 and 1996,
respectively. Of the European sales, 11%, 8% and 17% were to the
United Kingdom for the same periods.

As of September 30, 1997, approximately 83% of the Company's
employees are represented by one of eight collective bargaining
units. The collective bargaining agreements with most of these units
will expire during 2000. The Company does not anticipate that work
stoppages will arise in connection with the renewal of these
agreements in the future.

(2) Summary of Significant Accounting Policies-

(a) Outstanding checks-

Outstanding payroll and accounts payable checks related to
certain bank accounts are recorded as accounts payable in the
accompanying balance sheets. These checks amounted to $2,071
and $2,171 as of December 31, 1995 and 1996, respectively.

(b) Inventories-

Inventories are stated at the lower of cost or market using the
first-in, first-out (FIFO) valuation method. Inventory costs
include material, labor and overhead.

Inventories consist of the following:

(Unaudited)
December 31, September 30,
1995 1996 1997

Raw materials $11,836 $10,867 $19,272
Work-in-process and finished 18,375 28,723 32,251
------- ------- -------
30,211 39,590 51,523
Less progress payments (2,416) (3,584) (3,014)
------- ------- -------
Total inventories $27,795 $36,006 $48,509
======= ======= =======

Additions to property, plant, and equipment are recorded at
cost. Tooling costs are expensed as incurred. Depreciation is
provided using the straight-line method over the estimated
useful lives of the assets, as follows:

Land improvements 39 years
Buildings and improvements 39 years
Machinery and equipment 5 to 12 years

(d) Revenue recognition-

Sales revenue is recognized when products are shipped or in
other instances when the customer accepts legal title. Net
sales include reductions for returns and allowances, sales
discounts and freight out. Progress payments on contracts are
generally recognized as a reduction of the related inventory
costs.

(e) Contract settlement adjustments-

Settlement adjustments applicable to long-term contracts are
recognized as an adjustment to sales revenue in the year
agreement is reached on the amounts to be received or paid.
Settlement amounts for the years ended December 31, 1994, 1995
and 1996, were not significant, except for the contract
termination set forth below.

On October 28, 1993, the Company was notified by its customer,
Babcock & Wilcox, that NASA had terminated the Advanced Solid
Rocket Motor ("ASRM") program. A termination claim was filed
with Babcock & Wilcox by the Company in 1993 and was
subsequently settled during 1994. This termination settlement
resulted in the realization of net revenue of $6,228, which is
reflected in gross profit in the statement of operations for the
year ended December 31, 1994.

(f) Income taxes-

Deferred income taxes are provided at the enacted marginal rates
on the difference between the financial statement and income tax
basis of assets and liabilities. Deferred income tax provisions
or benefits are based on the change in the deferred tax assets
and liabilities from period to period. See Note 7 for further
discussion.

(g) Use of estimates-

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 and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.

(h) Fair value of financial instruments-

Based on the borrowing rates currently available to the Company
for loans with similar terms and maturities, the fair value of
long-term debt of the Company approximates book value as of
December 31, 1996.

(3) Debt-

Senior bank loan-

In 1993, the Company and its lenders entered into an Amended and
Restated Loan & Security Agreement (the "Amended Loan Agreement").

On May 10, 1994, the First Amendment to the Amended Loan Agreement
provided the Company with a total credit facility of $45,000 which
included a term loan of $3,950 with scheduled amortization payments
under the term loan of $600 per year. On July 7, 1995, the Company
entered into a credit agreement with a new lender which provided for
a $45,000 total credit facility which included an $8,000 term loan.
On November 12, 1996, the total credit facility was increased to
$53,000. All personal and real property of the Company has been
pledged as collateral under the new credit agreement. An affiliated
party of this lender is also a significant customer of the Company.

As of December 31, 1996, the $45,000 revolving credit facility
carried an interest rate of commercial paper plus 2-1/2%,
approximately 8.6% at December 31, 1996. The credit facility expires
on June 30, 2000. To the extent the Company meets certain cash flow
provisions of the credit agreement in the future, the interest rate
on the revolving credit facility will be reduced by 0.5% effective
the month following achievement of the cash flow provisions. The
credit line availability is subject to a borrowing base limitation
which is calculated based on eligible accounts receivable and
inventories reduced by any letters of credit. Letters of credit
outstanding total $884 as of December 31, 1995 and 1996,
respectively. As of December 31, 1996, the amount available for
future borrowing under the revolving credit facility was
approximately $10,000.

The $8,000 term loan is payable in sixteen quarterly installments and
commenced on September 30, 1996. The first four quarterly
installments were $375 each, the next eight installments are $500
each and the last four installments beginning September 30, 1999 will
be $625 each with the last installment due on June 30, 2000. The
Company may, at any time, prepay the outstanding balance, but will be
subject to a prepayment fee of 1% if the prepayment is prior to
July 1, 1999. The term loan carries an interest rate of commercial
paper plus 2-1/2%. As of December 31, 1996, the interest rate was
approximately 8.6%. To the extent the Company meets certain cash
flow provisions of the credit agreement in the future, the interest
rate on the term loan will also be reduced by 0.5% effective the
month following achievement of the cash flow provisions.

The revolving credit facility and term loan contain covenants
including but not limited to restrictions on indebtedness,
operations, change in control and the requirement that interest
coverage and fixed charge coverage ratios, as defined, be maintained.
As of December 31, 1996, the Company was in compliance with all
covenants under the credit facility and term loan. Transaction fees
incurred in connection with this refinancing were approximately
$1,115. The credit agreement provided for a refund of up to $645 of
the transaction fees if the Company received an acceptable infusion
of capital prior to June 30, 1996. The Company obtained refunds of
transaction fees of $344 in December, 1995 and the remaining $301 in
February, 1996 as a result of the issuance of senior subordinated
notes described below. In addition, the revolving credit facility
requires that the Company pay an unused facility fee of 0.25% per
annum on the average daily unused balance.

The annual maturities of the Company's term loan are as follows:

1997 $1,750
1998 2,000
1999 2,250
2000 1,250
------
$7,250
======

Senior subordinated secured notes and warrants-

In December 1995, the Company issued a total of $4,000 of senior
subordinated notes ("Notes") to two of the Company's largest
stockholders. In February 1996, in a second offering of these notes,
additional proceeds of $5,331 ($132 of these proceeds related to the
purchase of common stock under the rights attached to warrants as
discussed later in this note) were received by the Company. These
Notes carry interest at 12%, are due in December 2000, and include
detachable warrants to purchase shares of common stock. Interest is
payable quarterly in the form of additional notes also carrying
interest at 12%.

The Notes are secured by a second security interest in substantially
all of the Company's assets, and are subordinated to the $53,000
Credit Agreement. The Company has undertaken a number of affirmative
and negative covenants including but not limited to restrictions on
indebtedness, operations and change in control. The Subordinated
Notes include a number of affirmative and negative covenants,
including, but not limited to, restrictions on the incurrence of
indebtedness junior to obligations under the Credit Agreement and
senior to the Subordinated Notes. Upon a change in control of the
Company, the Company is required to redeem the outstanding
Subordinated Notes at a price equal to the outstanding principal
amount plus accrued and unpaid interest. At September 30, 1997 the
Company was in compliance with all covenants under the Subordinated
Notes.

As stated above, the noteholders also received warrants with each
Note purchased. Each warrant entitles the holder to purchase common
stock for $1.20 per share. The exercise price may be paid in cash,
or by the surrender of already outstanding Ladish common stock, Notes
or other warrants having a fair value equal to the exercise price.
Based on the total proceeds of $9,331 from the private placement,
warrants were issued, which, when exercised, would entitle the
holders to purchase 7,775,722 shares of common stock. The warrants
expire ten years from the date of issuance. The warrants were
recorded as an increase to additional paid-in capital at their stated
value which is considered to approximate fair value at the date of
issuance.

(4) Stockholders' Equity-

In November 1995, the Company's stockholders approved an amendment to
the articles of incorporation which increased the number of
authorized shares to 100,000,000 and changed the par value of a share
of common stock from $1 to "no par". This amendment increased common
stock by $30,194 and reduced additional paid-in capital by $30,194.

In June 1996, the Company's stockholders approved an amendment to the
articles of incorporation which changed the par value of a share of
common stock from "no par" to $.01 par. This amendment decreased
common stock by $35,174 and increased additional paid-in-capital by
$35,174.

In addition to the common stock outstanding, the Board of Directors
entered into an agreement in 1993 to issue to a former executive
496,188 options to purchase common stock at an average exercise price
of $16.00 per share. All of these options are exercisable but remain
outstanding.

In 1996, the Company adopted the Ladish Co., Inc. 1996 Long-Term
Incentive Plan (the "Plan"). Under the Plan, incentive stock options
may be granted to employees of Ladish Co., Inc. which expire ten
years from the vesting date. The options vest over four years. In
September 1996, the Company issued 433,333 options under the Plan,
and has reserved 400,000 shares for future issuance under the Plan.

The Company accounts for its option grants using the intrinsic value
based method pursuant to APB Opinion No. 25 and Statement of
Financial Accounting Standards No. 123 ("SFAS 123") under which no
compensation expense was recognized in 1995 and 1996. Had
compensation cost for these options been determined pursuant to the
fair value method under SFAS 123, the Company's net loss and earnings
per share from continuing operations would have been reduced by the
following pro forma amounts:

1995 1996
As Reported Pro Forma As Reported Pro Forma

Net Income (Loss) $(22,146) $(22,146) $2,135 $1,523

Earnings (Loss)
Per Share $(4.40) $(4.40) $0.20 $0.13

Because the SFAS 123 method of accounting has not been applied to
options granted prior to January 1, 1995, and additional awards in
future years are anticipated, the effects of applying SFAS 123 in
these pro forma disclosure are not indicative of future amounts.

The fair value of the 1995 and 1996 option grants used to compute the
pro forma amounts above was estimated on the date of the grant using
the Minimum Value option pricing model with the following assumptions
used for grants in 1995 and 1996 respectively: risk free interest
rate of 6%, expected remaining lives of 10 years, and market value of
$3.00 and $9.00. The weighted average minimum value of options
granted in 1995 and 1996 was zero and $5.64 respectively.

<TABLE>
<CAPTION>
1994 1995 1996
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price

<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of Period 220,528 $12.00 220,528 $ 12.00 385,924 $ 14.57
Granted - - 165,396 18.00 543,597 9.04
Exercised - - - - - -
Canceled - - - - - -
------- -------- ------- -------- ------- --------
Outstanding at end
of Period 220,528 12.00 385,924 14.57 929,521 11.34

Exercisable at end of
Period 220,528 12.00 385,924 14.57 604,521 14.21
</TABLE>

(5) Research and Development-

Research and Development costs are expensed as incurred. These costs
of continuing operations were $3,908, $3,783 and $3,384 in 1994, 1995
and 1996, respectively. Research and Development costs funded by
customers, amounting to $1,328, $1,535 and $885 from continuing
operations in 1994, 1995 and 1996, respectively, have been recorded
as sales.

(6) Leases-

Certain office and warehouse facilities and equipment are leased
under noncancelable operating leases expiring on various dates
through 2001. Rental expense from continuing operations was $292,
$266 and $284 in 1994, 1995 and 1996, respectively.

Minimum lease obligations under noncancelable operating leases are as
follows:

1997 $279
1998 226
1999 213
2000 152
2001 and thereafter 146
------
Total $1,016
======

(7) Income Taxes-

As a result of a financial restructuring completed on April 30, 1993,
tax net operating loss ("NOL") carryforwards generated prior to the
financial restructuring are limited under the Internal Revenue Code
by a formula based upon the Company's stockholders' equity of $35,180
as of April 30, 1993, which was calculated in conjunction with fresh
start reporting. The annual use of this NOL carryforward is limited
to the lesser of the Company's taxable income or the NOL allowed to
be used under the formula. Each year under the formula,
approximately $2,100 of the NOL generated prior to the financial
restructuring is available for use. Any amount not used in the
current or previous years is allowed to be used in subsequent years.
These NOL carryforwards may be used to offset taxable income through
the year 2007. Based on these limitations and certain other factors,
a valuation allowance has been recorded against the entire amount of
the NOL carryforward and other deferred tax assets. Any tax benefit
that is realized in subsequent years from the reduction of the
valuation allowance established at or prior to the financial
restructuring will be recorded as an addition to paid-in capital.

In addition, NOL carryforwards generated subsequent to the financial
restructuring of approximately $14,000, $20,000 and $15,000 for the
eight months ended December 31, 1993, and for the years ended
December 31, 1994 and 1995, respectively, are available to offset
future taxable income through the years 2008, 2009 and 2010,
respectively. The Company has also recorded a valuation allowance
against the entire amount of these NOL carryforwards. Any tax
benefit that is realized in subsequent years from the utilization of
these NOL carryforwards will be recorded as a reduction of future
income tax provisions.

There is no provision for Federal income taxes in 1994, 1995 and 1996
due to the utilization of the NOL carryforwards.

Components of the deferred income taxes are as follows:

December 31,
1995 1996
Deferred tax liabilities-

Property, plant and equipment $(24,267) $(21,700)
-------- --------
Total deferred tax
liabilities (24,267) (21,700)
-------- --------
Deferred tax assets-
Postretirement health care
benefits 21,219 20,442
Pension benefits 19,327 16,968
Tax operating loss carryforwards 33,619 32,984
Inventory adjustments 646 1,048
Accrued employee costs 1,615 1,606
Other, net (1,008) 2,454
-------- --------
Total deferred tax assets 75,418 75,502
-------- --------
Valuation allowance (51,151) (53,802)
-------- --------
Net deferred taxes $ -- $ --
======== ========

(8) Pension Plans-

The Company has noncontributory defined benefit pension plans
("Plans") covering substantially all employees. Plans covering
salaried and management employees provide pension benefits that are
based on the highest five consecutive years of an employee's
compensation during the last ten years prior to retirement. Plans
covering hourly employees and union members generally provide
benefits of stated amounts for each year of service. The Company's
funding policy is to contribute annually the minimum amount required
under the Employee Retirement Income Security Act of 1974. The
Plans' assets are primarily invested in U.S. Government securities,
corporate bonds and common stocks.

A summary of the Plans' funded status and amounts reflected in the
balance sheets is as follows:

December 31, 1995
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
Actuarial present value of benefit
obligations:

Vested benefit obligations $(66,872) $(99,300)
======= ========

Accumulated benefit obligations $(70,043) $(108,379)
======= ========
Projected benefit obligations $(71,763) $(108,379)

Plan assets at fair value 82,804 67,765
-------- --------
Plan assets in excess of (less
than) projected benefit
obligations 11,041 (40,614)

Unrecognized net gain (10,593) (8,964)
Unrecognized prior service cost 302 2,757
Adjustment to recognize minimum
liability -- (43)
------- --------
Prepaid (accrued) pension cost $ 750 $(46,864)
======= ========

December 31, 1996
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
Actuarial present value of benefit
obligations:
Vested benefit obligations $(71,985) $(86,073)
======== ========
Accumulated benefit obligations $(75,053) $(93,508)
======== ========
Projected benefit obligations $(76,480) $(93,508)
Plan assets at fair value 94,998 56,263
-------- --------
Plan assets in excess of (less
than) projected benefit
obligations 18,518 (37,245)

Unrecognized net gain (19,043) (13,188)
Unrecognized prior service cost 242 2,163
Adjustment to recognize minimum
liability -- (42)
------- --------
Accrued pension cost $(283) $(48,312)
======= ========

Net periodic pension cost includes the following components:

December 31,
1994 1995 1996
Service cost-benefits earned
during the period $ 2,095 $ 1,624 $ 1,595
Interest cost on projected benefit
obligation 13,626 14,469 14,013
Actual return on plan assets 352 (28,029) (17,303)
Net amortization and deferral (13,038) 16,164 5,501
Curtailment gain -- -- (445)
------- ------- -------
Net periodic pension cost $ 3,035 $ 4,228 $ 3,361
======= ======= =======

Assumptions used in the determination of net periodic pension cost
for these periods are:

December 31,
1994 1995 1996

Discount rate 7.00% 8.25% 7.75%
Rate of increase in compensation
levels 4.50% 4.50% 2.00%
Expected long-term rate of
return on assets 8.00% 8.00% 8.00%

The actuarial present value of the projected benefit obligation was
determined utilizing a discount rate of 7.75% and 8.25% as of
December 31, 1995 and 1996, respectively. The increase in the
discount rate resulted in a decrease in the accumulated benefit
obligation of approximately $6,895 as of December 31, 1996.

Certain employees are covered by union-sponsored, collectively-
bargained, multi-employer pension plans.

The actuarial calculation of the Company's minimum funding pension
payment due in 1997 for 1996 and 1997 is $15,300. This amount is
shown as a current liability on the balance sheet as of December 31,
1996.

Due to the sale of IPD, the Company experienced a gain of $445
related to the pension benefit plans that are being placed in
curtailment. The Company will remain liable for the plans and will
continue to administer the plans. This gain is reflected as a
component of the loss on the sale of IPD.

(9) Postretirement Health Care and Life Insurance Benefits-

In addition to pension benefits, employees are provided certain
postretirement health care and life insurance benefits.
Substantially all of the employees may become eligible for these
benefits when they retire. The Company accrues, as current costs,
the future lifetime retirement benefits for both active and retired
employees and their dependents. Steps have been taken by the Company
to reduce the amount of the future obligation for postretirement
benefits of future retirees by capping the amount of funds payable on
behalf of the retirees.

Amounts reflected in the balance sheets for postretirement benefit
obligations are as follows:

December 31,
1995 1996

Retirees $43,951 $37,838
Fully eligible active plan
participants 3,366 2,984
Other active plan participants 6,585 6,034
------- -------
Accumulated postretirement
benefit obligation 53,902 46,856
Unrecognized net gain (loss) (855) 4,615
Curtailment gain -- (366)
------- -------
Postretirement liability $53,047 $51,105
======= =======

Net periodic postretirement benefit cost includes the following
components:

December 31,
1994 1995 1996
Service cost benefits earned during
the period $476 $369 $380
Interest cost on accumulated
postretirement benefit obligation 3,758 4,015 3,890
Net amortization and deferral -- (38) (56)
Curtailment gain -- -- (366)
------ ------ ------
Net periodic postretirement benefit
cost $4,234 $4,346 $3,848
====== ====== ======

Assumptions used in the determination of net periodic postretirement
benefit cost for these periods are:

December 31,
1994 1995 1996
Discount rate 7.00% 8.25% 7.75%
Inflation-
Retirees as of 1991
Pre-65 Medical trending rate
-initial 14.00% 13.00% 12.00%
-ultimate 7.00% 7.00% 7.00%

Post-65 Medical trending rate
-initial 8.50% 8.00% 7.50%
-ultimate 5.00% 5.00% 5.00%

Retirees Subsequent to 1991
-initial and ultimate medical
trending rate 3.00% 3.00% 3.00%

The initial rates used for the retirees as of 1991, are estimated to
decrease at a rate of 1% and .5% for the pre-65 and post-65 retiree
populations, respectively, until they reach the ultimate medical
trending rate.

An increase of one percentage point in the assumed medical trending
rate for each future year would increase the accumulated
postretirement benefit obligation as of December 31, 1995 and 1996,
by approximately $2,930 and $2,342, respectively, and the aggregate
of the service and interest cost components of net periodic
postretirement benefit cost by approximately $265 for the year ended
December 31, 1996.

The accumulated postretirement benefit obligation was determined
utilizing a discount rate of 7.75% and 8.25% as of December 31, 1995
and 1996, respectively. The increase in the discount rate resulted
in a decrease of the accumulated postretirement benefit obligation of
approximately $1,695 as of December 31, 1996.

Due to the sale of IPD, the Company experienced a gain of $366
related to the postretirement benefits that are being placed in
curtailment. This gain is reflected as a component of the loss on
the sale of IPD.

(10) Officers' Deferred Compensation Plan-

Certain officers have deferred compensation agreements which, upon
retirement, provide them with, among other things, supplemental
pension and other postretirement benefits. An accumulated liability
of $2,246 and $2,224 as of December 31, 1995 and 1996, respectively,
has been recorded under these agreements as actuarially determined.
The expense was $186, $208 and $169 in 1994, 1995 and 1996,
respectively.

(11) Profit Sharing-

Effective January 1, 1996, the Company initiated a profit sharing
program in which substantially all of the employees are eligible to
participate. The profit sharing payout is derived from a formula
based on pretax income and is payable no later than February 15th of
the subsequent year. The expense was $2,780 for the year ended
December 31, 1996.

(12) Commitments and Contingencies-

The Company is involved in various stages of investigation relative
to environmental protection matters relating to various waste
disposal sites. The potential costs related to such matters and the
possible impact thereof on future operations are uncertain due in
part to uncertainty as to the extent of the pollution, the complexity
of government laws and regulations and their interpretations, the
varying costs and effectiveness of alternative cleanup technologies
and methods, and the questionable level of the Company's involvement.
The Company has made provisions in the financial statements for
potential losses related to these matters. The Company does not
anticipate such losses will have a material impact on the financial
statements beyond the aforementioned provisions.

Various other lawsuits and claims arising in the normal course of
business are pending against the Company and such losses are not
expected to be material to the financial statements.

In 1995, the Company resolved a dispute with a previous owner of the
Company. The resolution of this dispute resulted in the Company
recovering $1,650 of costs incurred in prior years associated with
the indemnification of another lawsuit. This recovery was recorded
as other income in the 1995 statement of operations.

(13) Discontinued Operations-

Subsequent to year end, the Board of Directors approved of the
disposition of the Company's Industrial Products Division ("IPD")
which includes two facilities located in Arkansas and Kentucky. The
disposal date was May 30, 1997 and substantially all IPD assets were
sold to a third party buyer for approximately $36,500 in cash subject
to a working capital adjustment. Ten percent of the cash proceeds
($3,650) was placed in an escrow account to secure certain
representations made by the Company in connection with the sale.
$1,825 of the total escrow is reflected on the balance sheet as other
current assets and $1,825 as other noncurrent assets. The proceeds
from the sale of IPD will be used for minimum pension funding
requirements and to reduce the outstanding bank debt.

The net results of these operations prior to December 31, 1996 are
included in the consolidated statements of operations under
"discontinued operations." Sales for IPD were $43,506, $44,348 and
$46,034 for the years ended December 31, 1994, 1995 and 1996,
respectively.

The operating results of IPD include an interest allocation based
upon net assets of IPD. Interest expense allocated to the
discontinued operation was $821, $1,178 and $1,422 for the years
ended December 31, 1994, 1995 and 1996, respectively.

The loss on disposal of IPD reflected in the consolidated statements
of operations includes the write-down of the assets of IPD to
estimated net realizable value, estimated operating losses incurred
by IPD during the period of January 1, 1997 through May 30, 1997 and
the estimated disposal costs of these operations. Subsequent to year
end, the Kentucky facility of IPD sustained significant flood damage
which, in management's opinion, is covered by insurance, less a
$1,300 deductible. The deductible related to the flood damage is
included in the loss on disposal of IPD.

The net assets of IPD as shown on the balance sheet consist of the
following:

December 31,
1995 1996
Current assets (primarily
receivables and inventory) $18,298 $23,838
Property and equipment, net 20,505 19,933
Current liabilities (3,526) (2,726)
Writedown of IPD net assets to net
realizable value -- (4,545)
------- -------
35,277 36,500

Provision for operating losses and
disposal costs of IPD -- (4,860)
------- -------
Total IPD net assets $35,277 $31,640
======= =======

(14) Earnings Per Share-

Earnings per share is computed on the basis of the weighted average
number of common stock and common stock equivalents outstanding
during the periods. The weighted average number of common stock and
common stock equivalents outstanding for the years ended December 31,
1994, 1995 and 1996, were 5,023, 5,030, and 5,092, respectively.

In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). The Company will adopt SFAS 128 effective for
the year ending December 31, 1997. On a pro forma basis, if the
Company had adopted SFAS 128 for the three years ended December 31,
1994, 1995 and 1996, and for the nine months ended September 30, 1996
and 1997 (unaudited), the reported earnings per share on continuing
operations would be:

(Unaudited)
December 31, September 30,
1994 1995 1996 1996 1997
Earnings per share:
Basic $ (3.39) $ (4.40) $0.42 $0.43 $2.66
Diluted (3.39) (4.40) 0.20 0.21 1.09

(15) Acquisition-

On June 16, 1997, the Company completed the purchase of certain
assets and assumption of certain liabilities of Stowe Machine Co.,
Inc. (Stowe). The purchase price was composed of approximately
$8,500 in cash and a note payable for $1,000.

The acquisition has been accounted for using the purchase method of
accounting. Accordingly, the net assets are included in the
Company's Unaudited Consolidated Balance Sheets as of September 30,
1997 based upon their estimated fair values at the acquisition's
effective date of June 16, 1997. The Company's Consolidated
Statements of Operations do not include the revenues and expenses of
Stowe prior to this date. The excess of the purchase price over the
estimated fair value of the net assets acquired (goodwill) of
approximately $870 will be amortized on a straight-line basis over 20
years. The purchase price allocation is based on preliminary
estimates of the fair value of the net assets acquired and is subject
to adjustment as additional information becomes available during 1997
and 1998.

Supplemental pro forma results of operations (Unaudited)-

The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition had occurred at the
beginning of the periods presented and does not purport to be
indicative of what would have occurred had the acquisition actually
been made as of such date or of results which may occur in the
future.

Nine-Month
Year Ended Period Ended
December 31, September 30,
1996 1997

Net sales $169,890 $160,775
Net income from continuing operations 2,176 13,574
Net income per share from continuing
operations 0.18 1.07

(16) Valuation and Qualifying Accounts-

Payments
Provision and
Balance at Charged Accounts Balance
Beginning to Profit Written at End
of Year and Loss Off of Year

Year ended December 31,
1994
Allowance for doubtful
accounts $450 $3 $3 $450
===== ===== ===== =====

Year ended December 31,
1995
Allowance for doubtful
accounts $450 $44 $44 $450
===== ===== ===== =====

Year ended December 31,
1996
Allowance for doubtful
accounts $450 $(121) $29 $300
===== ===== ===== =====

(17) Events Subsequent to December 31, 1996-

a) Effective December 12, 1997, the Company effected a 1 for 6
reverse stock split. All share and per share data have been
retroactively restated.

b) In October 1997, the Company reached an agreement with the
Pension Benefit Guarantee Corporation whereby the Company's
minimum funding requirements for 1996 were adjusted. The
adjusted amounts are expected to be paid during the fourth
quarter of 1997.

<PAGE>

Report of Independent Auditors

Stockholders and Board of Directors
Stowe Machine Company Incorporated

We have audited the accompanying balance sheets of Stowe Machine Company
Incorporated as of December 31, 1995 and 1996, and the related statements
of operations and cash flows for the years then ended. 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Stowe Machine Company
Incorporated at December 31, 1995 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

Ernst & Young LLP
Hartford, Connecticut
March 24, 1997

<PAGE>

Stowe Machine Company Incorporated

Balance Sheets

December 31,
1995 1996
Assets
Current assets:
Cash $102,405 $59,987
Accounts receivable 569,109 651,519
Inventories 3,278,411 3,463,044
Deferred state income taxes 5,210 10,587
Prepaid expense 12,658 13,356
--------- ---------
Total current assets 3,967,793 4,198,493

Property, plant and equipment:
Land and land improvements 255,881 279,924
Buildings 731,595 731,595
Machinery and equipment 5,266,146 5,354,874
Furniture, fixtures and
automobiles 72,573 72,573
--------- ---------
6,326,195 6,438,966

Less accumulated depreciation 4,186,713 4,373,767
--------- ---------
2,139,482 2,065,199

Intangible assets, net of
accumulated amortization of
$93,301 in 1995 and $106,349 in
1996 65,964 52,916
--------- ---------
Total assets $6,173,239 $6,316,608
========= =========

Liabilities and stockholders'
equity
Current liabilities:
Demand notes payable to officers $80,000 $80,000
Accounts payable 406,818 748,312
Accrued expenses 495,416 552,146
Interest payable 27,609 20,282
State income taxes payable - 27,496
Current portion of long-term debt 963,938 620,947
--------- ---------
Total current liabilities 1,973,781 2,049,183

Long-term debt:
Notes payable, less current
portion 2,877,490 2,656,543
Notes payable to officers 383,333 283,334
--------- ---------
3,260,823 2,939,877

Deferred state income taxes 104,949 111,420

Stockholders' equity:
Common stock, $100 par value:
Authorized--10,000 shares
Issued and outstanding--577
shares 57,700 57,700
Additional paid-in capital 242,300 242,300
Retained earnings 533,686 916,128
--------- ---------
Total stockholders' equity 833,686 1,216,128
--------- ---------
Total liabilities and stockholders'
equity $6,173,239 $6,316,608
========= =========

The accompanying notes to financial statements are an integral part of
these financial statements.

<PAGE>

Stowe Machine Company Incorporated

Statements of Operations

Year ended December 31,

1995 1996

Net Sales $ 6,854,037 $7,887,583
Cost of sales 5,592,343 6,470,349
Selling, general and
administrative expenses 477,217 473,583
--------- ---------
6,069,560 6,943,932
--------- ---------
Income from operations 784,477 943,651

Interest expense 494,536 444,183
---------- ---------
Income before provision for
income taxes and
extraordinary charge 289,941 499,468

State income taxes 18,209 31,992
---------- ---------
Income before extraordinary
charge 271,732 467,476

Extraordinary charge (75,702) (85,034)
---------- ---------
Net income $196,030 $382,442
========== =========

The accompanying notes to financial statements are an integral part of
these financial statements.

<PAGE>

Stowe Machine Company Incorporated

Statements of Cash Flows

Year Ended December 31,
1995 1996
Cash flows from operating
activities:
Net income $196,030 $382,442
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 181,812 200,102
Changes in assets and
liabilities:
Accounts receivable 58,505 (82,410)
Inventories and prepaid
expenses 267,728 (185,331)
Accounts payable, accrued
expenses, interest payable
and state income taxes
payable (179,369) 418,393
Deferred state income taxes 12,109 1,094
--------- ---------
Net cash provided by operating
activities 536,815 734,290

Cash flows used by investing
activities:

Additions for property, plant and
equipment (589,692) (112,771)
--------- ---------
Net cash used by investing
activities (589,692) (112,771)

Cash flows used by financing
activities:
Principal borrowings on long-term
debt 575,865 --
Principal payments on notes payable
to officers (100,000) (99,999)
Principal payments on long-term
debt (503,156) (563,938)
--------- ---------
Net cash used by financing
activities (27,291) (663,937)
--------- ---------
Net (decrease) increase in cash (80,168) (42,418)

Cash, beginning of period 182,573 102,405
--------- ---------
Cash, end of period $102,405 $59,987
========= =========

The accompanying notes to financial statements are an integral part of
these financial statements.

<PAGE>

Stowe Machine Company Incorporated

Notes to Financial Statements

December 31, 1996

1. Business and Significant Accounting Policies

Description of Business

Stowe Machine Company Incorporated (the Company) is a manufacturer of
machined components for the jet engine industry. It has special machining
capabilities which are applied to cylindrical forgings of titanium or
nickel alloy. The Company's three primary customers, one of which is the
U.S. Government, account for approximately eighty-five percent of sales,
and the Company has not experienced losses related to accounts receivable
in the past.

Inventories

Inventories are stated at the lower cost or market. Cost is determined by
the last-in, first-out (LIFO) method.

On orders where the Company is either the prime contractor or a
subcontractor for the U.S. Government, the Company is entitled to receive
progress payments prior to shipment. Inventories are reduced for payments
received on orders which have not been shipped at year-end.

Property, Plant and Equipment

Property, plant and equipment is stated on the basis of cost. Depreciation
is calculated using the straight-line method over the estimated useful
lives of the assets.

Income Taxes

The Company operates under Subchapter S of the Internal Revenue Code, and
consequently, it is not subject to federal income tax; the stockholders
include the Company's income in their own income for federal income tax
purposes.

Deferred state income taxes are provided on the temporary differences
between financial statement and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which such differences are
expected to reverse.

Intangible Assets

Intangible assets consist of deferred financing costs which are being
amortized on a straight-line basis over the terms of the related
agreements (seven years).

Use of Estimates

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 and
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.

2. Long-Term Debt and Extraordinary Charge

Long-term debt consisted of the following:
1995 1996
People's term note A, prime plus
1.25%, payable October 1, 2001. $ 1,333,334 $ 1,104,762

People's term note B, prime plus
1.25%, payable October 1, 2001. 368,850 342,150

People's term note C, prime plus
1.25%, payable October 1, 2001. 832,565 689,705

People's revolving credit note,
prime plus 1.25%, payable July
31, 1998. 360,000 300,000

Mortgage note payable, 15%
interest, maturing March 1, 2001.
Secured by the mortgage on
property and is subordinate to
the above People's debt. 796,679 690,873

Promissory notes payable to
officers, prime plus 1.25%,
payable October 1, 1999. 383,333 283,334

Promissory note payable, 12%
interest, payable April 1, 1999. 150,000 150,000
--------- ---------
4,224,761 3,560,824

Less current portion 963,938 620,947
--------- ---------
$ 3,260,823 $ 2,939,877
========= =========

The Company has three term promissory notes and a revolving line of credit
with People's Bank (People's). Term note A is to be repaid commencing
November 1, 1994 in eighty-four consecutive monthly principal payments of
$19,048. Term note B is to be repaid commencing on November 1, 1994 in
eighty-three consecutive monthly principal payments of $2,225, followed by
a single payment of $215,325. Term note C is to be repaid commencing on
November 1, 1994 in eighty-four consecutive monthly principal payments of
$11,905. Interest on the unpaid principal balance of all the loans is due
monthly at People's base rate plus 1.75% (10.25% at December 31, 1995).
The People's notes are secured by accounts receivable, inventory and
property, plant and equipment. Additionally, repayment of up to 75% of the
total amount borrowed on term note C has been guaranteed by the Small
Business Administration.

In July 1996, the term promissory notes and revolving credit note
agreement with People's Bank was amended, changing the interest rate to
the People's base rate plus 1.25% (9.5% at December 31, 1996) and
increasing the borrowing capacity and expiration date under the revolving
credit note to $800,000 and July 1998, respectively.

Aggregate scheduled annual maturities of long-term debt during each of the
five years subsequent to 1996 are as follows:

1997 $ 620,947
1998 940,690
1999 796,940
2000 590,208
2001 612,039
----------
$ 3,560,824
==========

In 1989, the Company retired outstanding senior secured notes early. The
related agreement required the Company, among other things, to pay an
amount equal to 6% of the gross profit each year, up to and including
fiscal 1998, or until the total paid equals $550,545, whichever comes
first. As of December 31, 1996 the total amount paid or accrued was
$520,537, of which $397,537 is included in accrued expenses. The early
extinguishment of the debt resulted in extraordinary charges of $85,034 in
1996 and $75,702 in 1995; there were no state income tax effects.

Interest paid on the above obligations in 1996 and 1995 was $429,130 and
$477,670, respectively.

3. Inventories

The components of inventories were as follows:

December 31,
1995 1996

Raw materials $ 241,185 $ 490,196
Work in process 1,260,901 1,263,738
Finished goods 1,973,077 1,977,482
Inventory owned by U.S.
Government (25,303) -
--------- ---------
3,449,860 3,731,416

Less LIFO reserve 171,449 268,372
--------- ---------
$ 3,278,411 $ 3,463,044
========= =========

4. Demand Notes Payable to Officers

F. Robert and William R. Petricone, executive officers, have loaned the
Company $80,000 for working capital purposes. The notes are payable on
demand and bear interest at Shawmut Bank Connecticut, N.A. prime rate plus
1 1/2% (9.75% at December 31, 1996 and 10% at December 31, 1995).

Interest paid on the above obligations amounted to $8,149 in 1996 and
$8,548 in 1995.

5. State Income Taxes

State income taxes for the years ended December 31 consisted of the
following:

1995 1996

Current $ 6,100 $30,898
Deferred 12,109 1,094
------- ------
$ 18,209 $31,992
======= ======

Significant components of the net deferred state income tax liability
follow:

December 31,
1995 1996
Current asset:
Inventory $ 5,210 $10,587
-------- ------
5,210 10,587

Noncurrent liability:
Property, plant and (105,400) (109,744)
equipment
Intangible assets 451 (1,676)
--------- --------
(104,949) (111,420)
--------- --------
Net deferred liability $ (99,739) $(100,833)
========= ========

Income taxes paid in 1996 and 1995 were $12,500 and $21,250, respectively.

6. Employee 401(k) Plan

Under the Company's 401(k) plan, all employees may contribute up to 15% of
their salary to a retirement account up to the maximum amount allowed by
law. The Company contributes an amount equal to 30% of the amount
contributed by each participant. The Company's contribution to the plan
was $27,308 in 1996 and $21,373 in 1995.

<PAGE>

Stowe Machine Company Incorporated

Statements of Operations

(Dollars in Thousands)

(unaudited)
Nine Months Ended
September 30,
1996 1997

NET SALES $5,506 $6,052
COST OF SALES 4,392 4,623
------ ------
Gross profit 1,114 1,429

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 229 269
------ ------
Income from operations 885 1,160

INTEREST EXPENSE 355 204
------ ------

Income before provision for income taxes
and extraordinary item 530 956

PROVISION (CREDIT) FOR INCOME TAXES (8) 92
------ ------
Income before extraordinary item 538 864

EXTRAORDINARY ITEM (67) (8)
------ ------
Net income $ 471 $ 856
====== ======

Notes To Interim Financial Statements
(Unaudited)

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required for complete financial statements. In
the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Adjustments consisted of only normal
recurring accruals. Operating results for the nine months ended September
30, 1997 are not necessarily indicative of the results that may be
expected for the entire year.

<PAGE>

No dealer, salesperson or other person has been authorized to give
any information or to make any representation not contained in this
Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company, any Selling
Shareholder or any Underwriter. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information herein is correct as of any
time subsequent to the date hereof or that there has been no change in the
affairs of the Company since such date.

_____________

TABLE OF CONTENTS
Page

Prospectus Summary . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . 9
Forward-Looking Statements . . . . . . . . . . . . . . 13
Dividend Policy . . . . . . . . . . . . . . . . . . . . 14
Use of Proceeds . . . . . . . . . . . . . . . . . . . . 14
Market for Common Stock . . . . . . . . . . . . . . . . 14
Dilution . . . . . . . . . . . . . . . . . . . . . . . 15
Capitalization . . . . . . . . . . . . . . . . . . . . 17
Pro Forma Consolidated
Statements of Income . . . . . . . . . . . . . . . . 18
Selected Financial Data . . . . . . . . . . . . . . . . 20
Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . 23
Business . . . . . . . . . . . . . . . . . . . . . . . 29
Management . . . . . . . . . . . . . . . . . . . . . . 40
Executive Compensation . . . . . . . . . . . . . . . . 42
Principal and Selling Shareholders . . . . . . . . . . 47
Certain Relationships and
Related Party Transactions . . . . . . . . . . . . . 48
Description of Common Stock . . . . . . . . . . . . . . 49
Shares Eligible for Future Sale . . . . . . . . . . . . 51
Underwriting . . . . . . . . . . . . . . . . . . . . . 52
Notice to Canadian Residents . . . . . . . . . . . . . 54
Experts . . . . . . . . . . . . . . . . . . . . . . . . 55
Legal Matters . . . . . . . . . . . . . . . . . . . . . 55
Additional Information . . . . . . . . . . . . . . . . 55
Index to Financial Statements . . . . . . . . . . . . . F-1

Until , 1998 (25 days after the commencement of the
Offering), all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the obligation
of dealers to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

<PAGE>

[LOGO]

LADISH CO., INC.

3,350,000 Shares

Common Stock

($0.01 par value)

PROSPECTUS

Credit Suisse First Boston

BT Alex. Brown

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following are the estimated expenses in connection with the
distribution of the securities being registered:

Securities and Exchange Commission Registration Fee . $20,457
NASD Filing Fee . . . . . . . . . . . . . . . . . . . 7,435
Printing and Engraving Expenses . . . . . . . . . . .
Accounting Fees and Expenses . . . . . . . . . . . .
Attorneys' Fees and Expenses . . . . . . . . . . . .
Transfer Agent's and Registrar's Fees . . . . . . . .
Blue Sky Fees and Expenses (including attorneys'
fees) . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq Listing Fees . . . . . . . . . . . . . . . . . 36,629
Miscellaneous . . . . . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . . $
=========

Item 14. Indemnification of Directors and Officers

(a) The Company is incorporated under the Wisconsin Business Corporation
Law ("WBCL"). Under Section 180.0851(1) of the WBCL, the Company is
required to indemnify a director or officer, to the extent that such
person is successful on the merits or otherwise in the defense of a
proceeding, for all reasonable expenses incurred in the proceeding if such
person was a party because he or she was a director or officer of the
Company. In all other cases, the Company is required by
Section 180.0851(2) to indemnify a director or officer against liability
incurred in a proceeding to which such a person was a party because he or
she was a director or officer of the Company, unless it is determined that
he or she breached or failed to perform a duty owed to the Company and the
breach or failure to perform constitutes:

(i) a willful failure to deal fairly with the Company or its
shareholders in connection with a matter in which the director or officer
has a material conflict of interest;

(ii) a violation of criminal law, unless the director or officer had
reasonable cause to believe his or her conduct was lawful or no reasonable
cause to believe his or her conduct was unlawful;

(iii) a transaction from which the director or officer derived an
improper personal profit; or

(iv) willful misconduct.

Section 180.0858(1) provides that, subject to certain limitations, the
mandatory indemnification provisions do not preclude any additional right
to indemnification or allowance of expenses that a director or officer may
have under the Company's articles of incorporation, by-laws, a written
agreement or a resolution of the Board of Directors or shareholders.

Section 180.0859 of the WBCL provides that it is the public policy of the
State of Wisconsin to require or permit indemnification, allowance of
expenses and insurance to the extent required to be permitted under
Sections 180.0850 to 180.0858 of the WBCL, for any liability incurred in
connection with a proceeding involving a federal or state statute, rule or
regulation regulating the offer, sale or purchase of securities.

Section 180.0828 of the WBCL provides that, with certain exceptions, a
director is not liable to a corporation, its shareholders, or any person
asserting rights on behalf of the corporation or its shareholders, for
damages, settlements, fees, fines, penalties or other monetary liabilities
arising from a breach of or failure to perform, any duty resulting solely
from his or her status as a director, unless the person asserting
liability proves that the breach or failure to perform constitutes any of
the four exceptions to mandatory indemnification under Section 180.0851(2)
referred to above.

Under Section 180.0833 of the WBCL, directors of the Company against whom
claims are asserted with respect to the declaration of improper dividends
or distributions to shareholders or certain other improper acts which they
approved are entitled to contribution from other directors who approved
such actions and from shareholders who knowingly accepted an improper
dividend or distribution, as provided therein.

(b) Article XIII of the By-Laws of the Registrant provides for
indemnification of directors, to the maximum extent allowed or mandated by
the laws of the State of Wisconsin and of officers and employees to the
maximum extent allowed or mandated by the laws of the State of Wisconsin
except that no indemnification shall be made in respect to any issue or
matter as to which such officer or employee shall have been adjudged to be
liable for negligence or misconduct in the performance of duty to the
corporation unless the court in which such action or suit is brought shall
determine that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses.

(c) Reference is made to Section of the Underwriting Agreement (the
form of which is included as Exhibit 1.1 to this Registration Statement)
for provisions regarding the indemnification under certain circumstances
of the Registrant, its directors and certain of its officers by the
Underwriters.

Item 15. Recent Sale of Unregistered Securities

On June 30, 1994 the Company issued 12,500 shares of Common Stock to ING
in exchange for ING causing INCC to issue a $2 million letter of credit in
favor of the Company. The letter of credit was canceled in June 1995 with
the establishment of the Credit Agreement.

In December 1995, the Company issued $4.0 million of its Subordinated
Notes to ING and Grace. In February 1996, in a second private placement
of Subordinated Notes, the Company issued an additional $5.3 million of
Notes to ING, Grace and other shareholders. The Subordinated Notes were
accompanied by detachable ten-year warrants to purchase an aggregate of
7,775,722 shares of Common Stock. During 1996 and the first nine months
of 1997, the Company has issued another $1.6 million of Subordinated Notes
as interest upon the outstanding Subordinated Notes.

In addition, during 1996 and 1997 the Company has issued an aggregate of
166,790 shares upon exercise of outstanding Warrants, and 110,833 shares
upon exercise of outstanding stock options granted to officers of the
Company.

In October 1997, the Company issued 8,333 shares of Common Stock to a
former employee in partial settlement of certain litigation.

The foregoing sales were exempt from registration under the Securities Act
pursuant to Section 4(2) thereof.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits:

A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits
and is incorporated herein by reference.

(b) Financial Statement Schedules:

None.

Item 17. Undertakings

The undersigned Registrant hereby undertakes to provide to the
underwriters at the closing specified in the Underwriting Agreements
certificates in such denominations and registered in such names as
required by the Underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Cudahy, State of Wisconsin, on December 23, 1997.

LADISH CO., INC.

By /s/ Wayne E. Larsen
Wayne E. Larsen, Vice President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in
the capacities indicated on December 23, 1997. Each person whose
signature appears below constitutes and appoints Kerry L. Woody and
Wayne E. Larsen, and each of them individually, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name,place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any
additional registration statement to be filed pursuant to Rule 462(b)
under the Securities Act of 1933, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Name Title

/s/ Kerry L. Woody President (Principal Executive
Kerry L. Woody Officer), Director

/s/ Wayne E. Larsen Vice President, Law/Finance and
Wayne E. Larsen Secretary (Principal Financial
and Accounting Officer)

/s/ Gregory P. Flynn Director
Gregory P. Flynn

/s/ Robert W. Sullivan Director
Robert W. Sullivan

/s/ Fred W. Whitridge, Jr. Director
Fred W. Whitridge, Jr.

<PAGE>

INDEX TO EXHIBITS
Sequentially
Numbered
Number Exhibit Page

1.1* Form of Underwriting Agreement . . . . . . .

3.1 Restated Articles of Incorporation of the
Registrant, as amended . . . . . . . . . . .

3.2 By-Laws of the Registrant . . . . . . . . . .

4.1* Form of Common Stock Certificate . . . . . .

4.2 Amended and Restated Note and Warrant
Purchase Agreement dated February 22, 1996
among Ladish Co., Inc. and the Purchasers
named therein . . . . . . . . . . . . . . . .

4.3 Amended and Restated Warrant Agreement dated
February 22, 1996 among Ladish Co., Inc. and
the purchasers named therein . . . . . . . .

4.4 Amended and Restated Registration Rights
Agreement dated February 22, 1996 among
Ladish Co., Inc. and certain note and warrant
purchasers . . . . . . . . . . . . . . . . .

5 Form of Opinion of Foley & Lardner . . . . .

10.1 Credit Agreement dated June 30, 1995 among
Ladish Co., Inc. and General Electric Capital
Corporation, as amended . . . . . . . . . . .

10.2* Asset Purchase Agreement dated June 14, 1997
between Ladish Co., Inc. and Stowe Machine
Co., Inc. . . . . . . . . . . . . . . . . . .

10.3* Asset Purchase Agreement dated April 24, 1997
between Ladish Co., Inc. and Trinity Fitting
& Flange Group, Inc. . . . . . . . . . . . .

10.4 Ladish Co., Inc. 1996 Long-Term Incentive
Plan . . . . . . . . . . . . . . . . . . . .

10.5* Form of Employment Agreement between Ladish
Co., Inc. and certain of its executive
officers, together with a schedule of parties
thereto. Such agreements are materially
different only as to the signing officers,
the compensation of such officers and the
dates of execution . . . . . . . . . . . . .

10.6* Amended Payment and Security Agreement dated
October 14, 1997 between Ladish Co., Inc. and
the Pension Benefit Guaranty Corporation . .

11 Statement re: Computation of Per Share
Earnings . . . . . . . . . . . . . . . . . .

21 Subsidiaries of the Registrant . . . . . . .

23.1 Consent of Arthur Andersen LLP . . . . . . .

23.2 Consent of Ernst & Young LLP . . . . . . . .

23.3 Consent of Foley & Lardner (contained in
their Opinion filed as Exhibit 5 to this
Registration Statement)

24 Powers of Attorney (appearing on the
signature page hereof) . . . . . . . . . . .

27 Financial Data Schedule . . . . . . . . . . .

_______________
*To be filed by amendment.

LADISH CO., INC.

RESTATED ARTICLES OF INCORPORATION,
as amended

ARTICLE 1

The name of the corporation is Ladish Co., Inc.

ARTICLE 2

The period of existence of the corporation shall be perpetual.

ARTICLE 3

The purposes shall be to engage in any lawful activities authorized
by Chapter 180 of the Wisconsin Business Corporation Law.

ARTICLE 4

The number of shares of common stock the corporation shall be
authorized to issue is 100,000,000. The common stock shall have a par
value of $.01 per share. As of the effective date hereof, each previously
outstanding share of common stock of the corporation shall be converted to
one-tenth of a share of common stock of the corporation. If as a result
of the foregoing conversion any fractional shares would otherwise be issued,
such fraction, if equal lto one-half or a greater percentage of a share,
shall be rounded to the next higher integral shar; otherwise, such fraction
shall be rounded to the next lower integral share.

ARTICLE 5

There are no preferences, limitations, designations or relative
rights with respect to the common stock of the corporation.

ARTICLE 6

The registered office of the corporation is located in Milwaukee
County, Wisconsin and the address of such registered office is:

5481 South Packard Avenue
Cudahy, Wisconsin 53110
(414) 747-2611

ARTICLE 7

The registered agent for the corporation at the above address is:
Wayne E. Larsen, Secretary

ARTICLE 8

The number of directors constituting the Board of Directors of the
corporation is fixed by the By-Laws of the corporation.

ARTICLE 9

None

ARTICLE 10

None

ARTICLE 11

These restated articles of incorporation may be amended in the manner
authorized by law at the time of such amendment.

LADISH CO., INC.

BY-LAWS

ARTICLE I

OFFICES

Section 1. The registered office shall be located in Cudahy,
Wisconsin.

Section 2. The corporation may also have offices at such other
places both within and without the State of Wisconsin as the board of
directors may from time to time determine or the business of the
corporation may require.

ARTICLE II

ANNUAL MEETINGS OF SHAREHOLDERS

Section 1. All meetings of shareholders for the election of
directors shall be held at the registered office of the corporation, in
the State of Wisconsin, or at such place, within or without the State of
Wisconsin as may be fixed from time to time by the board of directors.

Section 2. Annual meetings of shareholders, shall be held on each
anniversary of the beginning of the corporation's existence, or at such
other time as the board of directors may designate, at which they shall
elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.

Section 3. Written or printed notice of the annual meeting
stating the place, day and hour of the meeting shall be delivered not less
than ten nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the president, the
secretary, or the officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting.

ARTICLE III

SPECIAL MEETINGS OF SHAREHOLDERS

Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within
or without the State of Wisconsin as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.

Section 2. Special meetings of the shareholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or
the holders of not less than one-tenth of all the shares entitled to vote
at the meeting.

Section 3. Written or printed notice of a special meeting stating
the place, day and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, the secretary, or the
officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting.

Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.

ARTICLE IV

QUORUM AND VOTING OF STOCK

Section 1. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote, represented in person or by
proxy, shall constitute a quorum at all meetings of the shareholders for
the transaction of business except as otherwise provided by statute or by
the articles of incorporation. If, however, such quorum shall not be
present or represented at any meeting of the shareholders, the
shareholders present in person or represented by proxy shall have power to
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been
transacted at the meeting as originally notified.

Section 2. If a quorum is present, the affirmative vote of a
majority of the shares of stock represented at the meeting shall be the
act of the shareholders unless the vote of a greater number of shares of
stock is required by law or the articles of incorporation.

Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders. A shareholder may vote either in person or by
proxy executed in writing by the shareholder or by his or her duly
authorized attorney-in-fact.

Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken is provided to all shareholders, shall
be signed by a majority of the shareholders entitled to vote with respect
to the subject matter thereof.

ARTICLE V

DIRECTORS

Section 1. The number of directors shall be one or more, as fixed
from time to time by resolution of the board of directors. Directors need
not be residents of the State of Wisconsin nor shareholders of the
corporation. The directors, other than the first board of directors,
shall be elected at the annual meeting of the shareholders, and each
director elected shall serve until the next succeeding annual meeting and
until his or her successor shall have been elected and qualified. The
first board of directors shall hold office until the first annual meeting
of shareholders.

Section 2. Vacancies and newly created directorships resulting
from any increase in the number of directors may be filled by a majority
of the directors then in office, though less than a quorum, and the
directors so chosen shall hold office until the next annual election and
until their successors are duly elected and qualified. Providing,
however, a vacancy created by the removal of a director by the
shareholders may be filled by the shareholders.

Section 3. The business affairs of the corporation shall be
managed by its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by
statute or by the articles of incorporation or by these by-laws directed
or required to be exercised or done by the shareholders.

Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of
the State of Wisconsin, at such place or places as they may from time to
time determine.

Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish
reasonable compensation of all directors for services to the corporation
as directors, officers or otherwise.

ARTICLE VI

MEETINGS OF THE BOARD OF DIRECTORS

Section 1. Meetings of the board of directors, regular or
special, may be held either within or without the State of Wisconsin.

Section 2. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the
vote of the shareholders at the annual meeting and no notice of such
meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided a quorum shall be present, or it may
convene at such place and time as shall be fixed by the consent in writing
of all the directors.

Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as
shall from time to time be determined by the board. The board of
directors may conduct meetings telephonically, provided that a quorum of
directors are telephonically connected and the secretary has confirmed the
identity of each director by having him/her state their respective birth
date.

Section 4. Special meetings of the board of directors may be
called by the president on five days' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by
the president or secretary in like manner and on like notice on the
written request of two directors.

Section 5. Attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a director
attends for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or
special meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.

Section 6. A majority of the directors shall constitute a quorum
for the transaction of business unless a greater number is required by law
or by the articles of incorporation. The act of a majority of the
directors present at any meeting at which a quorum is present shall be the
act of the board of directors, unless the act of a greater number is
required by statute or by the articles of incorporation. If a quorum
shall not be present at any meeting of directors, the directors present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.

Section 7. Any action required or permitted to be taken at a
meeting of the directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors entitled to vote with respect to the subject matter thereof.

ARTICLE VII

EXECUTIVE COMMITTEE

Section 1. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by-laws or otherwise, may
designate three or more directors to constitute an executive committee,
which committee, to the extent provided in such resolution, shall have and
exercise all of the authority of the board of directors in the management
of the corporation, except as otherwise required by law. Vacancies in the
membership of the committee shall be filled by the board of directors.
The executive committee shall keep regular minutes of its proceedings and
report the same to the board when required.

ARTICLE VIII

NOTICES

Section 1. Whenever, under the provisions of the statutes or of
the articles of incorporation or of these by-laws, notice is required to
be given to any director or shareholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at his or her address as it
appears on the records of the corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Notice to directors may
also be given by telegram.

Section 2. Whenever any notice is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such
notice.

ARTICLE IX

OFFICERS

Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary
and a treasurer. The board of directors may also choose additional vice-
presidents, and one or more assistant secretaries and assistant
treasurers.

Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, one or more vice-
presidents, a secretary and a treasurer, none of whom need be a member of
the board.

Section 3. The board of directors may appoint such other officers
and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the board of directors.

Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.

Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualified. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy
occurring in any office at the corporation shall be filled by the board of
directors.

THE PRESIDENT

Section 6. The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the shareholders and the
board of directors, shall have general and active management of the
business of the corporation and shall see that all orders and resolutions
of the board of directors are carried into effect.

Section 7. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly
delegated by the board of directors to some other officer or agent of the
corporation.

THE VICE PRESIDENTS

Section 8. The vice-president, or if there shall be more than
one, the vice-presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform
the duties and exercise the powers of the president and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.

THE SECRETARY AND ASSISTANT SECRETARIES

Section 9. The secretary shall attend all meetings of the board
of directors and all meetings of the shareholders and record all the
proceedings of the meetings of the corporation and of the board of
directors in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He or she shall give,
or cause to be given, notice of all meetings of the shareholders and
special meetings of the board of directors, and shall perform such other
duties as may be prescribed by the board of directors or president, under
whose supervision he or she shall be. He or she shall have custody of the
corporate seal of the corporation and he or she, or an assistant
secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.

Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform
the duties and exercise the powers of the secretary and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.

THE TREASURER AND ASSISTANT TREASURERS

Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.

Section 12. The treasurer shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper
vouchers for such disbursements, and shall render to the president and the
board of directors, at its regular meetings, or when the board of
directors so requires, an account of all his or her transactions as
treasurer and of the financial condition of the corporation.

Section 13. If required by the board of directors, the treasurer
shall give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for the
faithful performance of the duties of his or her office and for the
restoration to the corporation, in case of his or her death, resignation,
retirement or removal from office, of all books, papers, vouchers, money
and other property of whatever kind in his or her possession or under his
or her control belonging to the corporation.

Section 14. The assistant treasurer, or, if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer and shall perform such
other duties and have such other powers as the board of directors may from
time to time prescribe.

ARTICLE X

CERTIFICATES FOR SHARES

Section 1. The shares of the corporation shall be represented by
certificates signed by the president or a vice-president and the secretary
or an assistant secretary of the corporation, and may be sealed with the
seal of the corporation or a facsimile thereof.

When the corporation is authorized to issue shares of more than
one class, every certificate shall set forth upon the face or back of such
certificate a statement of the designations, preferences, limitations and
relative rights of the shares of each class authorized to be issued, as
required by the laws of the State of Wisconsin.

Section 2. The signatures of the officers of the corporation upon
a certificate may be facsimiles if the certificate is manually
countersigned on behalf of a transfer agent, or a registrar, other than
the corporation itself or an employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same
effect as if he or she were such officer at the date of its issue.

LOST CERTIFICATES

Section 3. The board of directors may direct a new certificate to
be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed. When authorizing such
issue of a new certificate, the board of directors, in its discretion and
as a condition precedent to the issuance thereof, may prescribe such terms
and conditions as it deems expedient, and may require such indemnities as
it deems adequate, to protect the corporation from any claim that may be
made against it with respect to any such certificate alleged to have been
lost or destroyed.

TRANSFERS OF SHARES

Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the person
entitled thereto, and the old certificate cancelled and the transaction
recorded upon the books of the corporation.

CLOSING OF TRANSFER BOOKS

Section 5. For the purpose of determining shareholders entitled
to notice of or to vote at any meeting of shareholders, or any adjournment
thereof or entitled to receive payment of any dividend, or in order to
make a determination of shareholders for any other proper purpose, the
board of directors may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, fifty days. If
the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the
board of directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more
than fifty days and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer
books are not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend,
the date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted,
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof.

REGISTERED SHAREHOLDERS

Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Wisconsin.

RECORD OF SHAREHOLDERS

Section 7. The officer or agent having charge of the stock
transfer books for shares of a corporation shall before each meeting of
shareholders, make a complete record of the shareholders entitled to vote
at such meeting or any adjournment thereof, with the address of and the
number of shares held by each, with record shall be produced and kept open
at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting for the
purpose of the meeting. The original stock transfer books shall be prima
facie evidence as to who are the shareholders entitled to examine such
record or transfer books or to vote at any meeting of shareholders.

ARTICLE XI

GENERAL PROVISIONS

DIVIDENDS

Section 1. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the
board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in shares of the capital
stock, subject to any provisions of the articles of incorporation.

Section 2. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think
conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.

CHECKS

Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time
designate.

FISCAL YEAR

Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.

SEAL

Section 5. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words
"Corporate Seal, Wisconsin". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any manner reproduced.

ARTICLE XII

AMENDMENTS

Section 1. These by-laws may be altered, amended or repealed or
new by-laws may be adopted (a) at any regular or special meeting of
shareholders at which a quorum is present or represented, by the
affirmative vote of a majority of the stock entitled to vote, provided
notice of the proposed alteration, amendment or repeal be contained in the
notice of such meeting, or (b) by the affirmative vote of a majority of
the board of directors at any regular or special meeting of the board.
However, the shareholders shall have authority to change or repeal any by-
laws adopted by the directors.

ARTICLE XIII

INDEMNIFICATION

Section 1. The corporation shall indemnify any of its directors
who is a party or threatened to be made a party to any threatened or
pending action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or on behalf of
the corporation) by reason of the fact that he/she is or was a director of
the corporation, to the maximum extent allowed or mandated by the laws of
the State of Wisconsin.

Section 2. The corporation shall indemnify any officer or
employee of the corporation who is a party or threatened to be made a
party to any threatened or pending action, suit or proceeding, whether
civil, criminal or investigative (other than an action by or on behalf of
the corporation) by reason of the fact that he/she is or was an officer or
employee of the corporation, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding except that no
indemnification shall be made in respect to any issue or matter as to
which such officer or employee shall have been adjudged to be liable for
negligence or misconduct in the performance of duty to the corporation
unless the court in which such action or suit is brought shall determine
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses.

(a) In order to invoke the indemnification provisions of this
Section, an officer or employee must provide written notification
to the board of directors (or the executive committee) of the
corporation, of that individual's request for indemnification. By
requesting indemnification, an officer or employee shall agree to
allow the corporation to participate in, and/or assume the defense
of, any action, suit or proceeding.

(b) Expenses, including attorneys' fees incurred in defending
an action, suit or proceeding may be paid by the corporation in
advance of final disposition of such action, suit or proceeding as
authorized in this Section upon receipt of an undertaking by or on
behalf of an officer or employee to repay such amount should it
ultimately be determined that the individual was not entitled to
be indemnified by the corporation pursuant to this Section.

Section 3. The indemnification provided by this Article shall not
be deemed exclusive of any other right to which an indemnified person may
be entitled as a matter of law, and shall continue as to a person who has
ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such a person.

AMENDED AND RESTATED

NOTE AND WARRANT PURCHASE AGREEMENT,

dated as of February 22, 1996

among

LADISH CO., INC.,

as the Company,

and

THE PURCHASERS LISTED ON SCHEDULE I HERETO

with respect to

U.S. $9,330,866 principal amount

Senior Subordinated Notes

Due December 22, 2000

and

Warrants to Purchase 46,654,330 Shares of Common Stock

AMENDED AND RESTATED
NOTE AND WARRANT PURCHASE AGREEMENT

TABLE OF CONTENTS

Page

ARTICLE I

DEFINED TERMS

SECTION 1.1. Defined Terms . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Additional Terms . . . . . . . . . . . . . . . . . 15
SECTION 1.3. Use of Defined Terms . . . . . . . . . . . . . . . 16
SECTION 1.4. Cross-References . . . . . . . . . . . . . . . . . 16
SECTION 1.5. Accounting and Financial Determinations . . . . . 16
SECTION 1.6. Construction . . . . . . . . . . . . . . . . . . . 16

ARTICLE II

PURCHASE AND SALE OF SECURITIES

SECTION 2.1. Issue of Securities . . . . . . . . . . . . . . . 17
SECTION 2.2. Purchase and Sale of Securities . . . . . . . . . 18
SECTION 2.2.1. Purchase and Sale . . . . . . . . . . . . . . . . 18
SECTION 2.2.2. Closing . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.2.3. Fees and Expenses . . . . . . . . . . . . . . . . 18
SECTION 2.3. Registration of Securities . . . . . . . . . . . . 19
SECTION 2.4. Delivery Expenses . . . . . . . . . . . . . . . . 19
SECTION 2.5. Issue Taxes . . . . . . . . . . . . . . . . . . . 20
SECTION 2.6. General Provisions Regarding Payments . . . . . . 20
SECTION 2.7. Lost Securities, etc. . . . . . . . . . . . . . . 20
SECTION 2.8. Indemnification . . . . . . . . . . . . . . . . . 21
SECTION 2.9. Use of Proceeds . . . . . . . . . . . . . . . . . 23
SECTION 2.10. Margin Regulations . . . . . . . . . . . . . . . . 23
SECTION 2.11. Taxes . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE III

CLOSING CONDITIONS

SECTION 3.1. Organic Documents, Resolutions, etc . . . . . . . 24
SECTION 3.2. Execution of this Agreement and each other
Transaction Document . . . . . . . . . . . . . . 25
SECTION 3.3. Capitalization . . . . . . . . . . . . . . . . . . 26
SECTION 3.4. Necessary Consents . . . . . . . . . . . . . . . . 26
SECTION 3.5. Financials; Pro Forma Balance Sheets . . . . . . . 26
SECTION 3.6. Closing Expenses, etc. . . . . . . . . . . . . . . 26
SECTION 3.7. Approvals . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.8. Investment by Other Purchasers . . . . . . . . . . 26
SECTION 3.9. Representations and Warranties . . . . . . . . . . 26
SECTION 3.10. Opinions of Counsel to Company . . . . . . . . . . 26
SECTION 3.11. Satisfactory Legal Form . . . . . . . . . . . . . 27

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

SECTION 4.1. Corporate Existence . . . . . . . . . . . . . . . 27
SECTION 4.2. Power and Authority . . . . . . . . . . . . . . . 27
SECTION 4.3. Binding Obligation . . . . . . . . . . . . . . . . 28
SECTION 4.4. Capitalization . . . . . . . . . . . . . . . . . . 28
SECTION 4.5. Consents, Approvals and Non-Contravention . . . . 29
SECTION 4.6. Pro Forma Balance Sheet . . . . . . . . . . . . . 29
SECTION 4.7. Financial Statements . . . . . . . . . . . . . . . 29
SECTION 4.8. No Material Adverse Effect . . . . . . . . . . . . 30
SECTION 4.9. Events Subsequent to the Date of the Last Financial
Statement . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.10. Absence of Undisclosed Liabilities . . . . . . . . 30
SECTION 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.12. Litigation . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.13. Insurance . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.14. Licenses; Compliance with Laws, Other Agreements,
etc. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.15. Investment Company Act . . . . . . . . . . . . . . 32
SECTION 4.16. Brokers, etc. . . . . . . . . . . . . . . . . . . 32
SECTION 4.17. Private Sale . . . . . . . . . . . . . . . . . . . 32
SECTION 4.18. Disclosure . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.19. Subsidiaries . . . . . . . . . . . . . . . . . . . 33
SECTION 4.20. Ownership of Properties . . . . . . . . . . . . . 33
SECTION 4.21. Pension and Welfare Plans . . . . . . . . . . . . 33
SECTION 4.22. Environmental Warranties . . . . . . . . . . . . . 34
SECTION 4.23. Securities Activities . . . . . . . . . . . . . . 35
SECTION 4.24. Solvency . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

SECTION 5.1. Purchase for Own Account . . . . . . . . . . . . . 35
SECTION 5.2. Accredited Investor . . . . . . . . . . . . . . . 35

ARTICLE VI

AFFIRMATIVE COVENANTS

SECTION 6.1. Financial Statements and Other Reports . . . . . . 36
SECTION 6.2. Corporate Existence, etc. . . . . . . . . . . . . 40
SECTION 6.3. Compliance with Laws, etc. . . . . . . . . . . . . 40
SECTION 6.4. Maintenance of Properties . . . . . . . . . . . . 41
SECTION 6.5. Insurance . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.6. Books and Records . . . . . . . . . . . . . . . . 41
SECTION 6.7. Environmental Covenant . . . . . . . . . . . . . . 41
SECTION 6.8. The Company's Remedial Action Regarding Hazardous
Materials . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.9. Maintenance of Office or Agency . . . . . . . . . 42
SECTION 6.10. Private Offering . . . . . . . . . . . . . . . . . 43
SECTION 6.11. Information to Prospective Purchasers . . . . . . 43
SECTION 6.12. Further Assurances . . . . . . . . . . . . . . . . 43
SECTION 6.13. Board of Directors . . . . . . . . . . . . . . . . 43

ARTICLE VII

NEGATIVE COVENANTS

SECTION 7.1. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . 43
SECTION 7.2. [INTENTIONALLY OMITTED]. . . . . . . . . . . . . . 44
SECTION 7.3. [INTENTIONALLY OMITTED] . . . . . . . . . . . . . 44
SECTION 7.4. Modification of Certain Agreements . . . . . . . . 44
SECTION 7.5. Transactions with Affiliates . . . . . . . . . . . 44
SECTION 7.6. Inconsistent Agreements . . . . . . . . . . . . . 44
SECTION 7.7. Fiscal Year . . . . . . . . . . . . . . . . . . . 44
SECTION 7.8. Limitation of Ranking of Future Indebtedness . . . 44
SECTION 7.9. Stay, Extension and Usury Laws . . . . . . . . . . 44

ARTICLE VIII

REDEMPTION

SECTION 8.1. Mandatory Redemption . . . . . . . . . . . . . . . 45
SECTION 8.2. The Company's Right to Redeem . . . . . . . . . . 45
SECTION 8.3. Selection of Notes and Portions of Notes to Be
Redeemed . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.4. Notice of Redemption . . . . . . . . . . . . . . . 45
SECTION 8.5. Effect of Notice of Redemption . . . . . . . . . . 46
SECTION 8.6. Payment of Redemption Price . . . . . . . . . . . 46

ARTICLE IX

EVENTS OF DEFAULT

SECTION 9.1. Listing of Events of Default . . . . . . . . . . . 47
SECTION 9.1.1. Non-Payment of Obligations . . . . . . . . . . . . 47
SECTION 9.1.2. Breach of Warranty . . . . . . . . . . . . . . . . 47
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations
47
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations 47
SECTION 9.1.5. Default on Other Indebtedness . . . . . . . . . . 47
SECTION 9.1.6. Judgments . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.1.7. Pension Plans . . . . . . . . . . . . . . . . . . 48
SECTION 9.1.8. Bankruptcy, Insolvency, etc. . . . . . . . . . . . 48
SECTION 9.1.9. Dissolution . . . . . . . . . . . . . . . . . . . 49
SECTION 9.1.10. Impairment of Transaction Documents, etc. . . . . 49
SECTION 9.2. Action if Bankruptcy . . . . . . . . . . . . . . . 49
SECTION 9.3. Action if Other Event of Default . . . . . . . . . 49

ARTICLE X

SUBORDINATION

SECTION 10.1. Agreement to Subordinate . . . . . . . . . . . . . 50
SECTION 10.2. General Subordination to Senior Debt . . . . . . . 50
SECTION 10.3. Subordination on Dissolution, Liquidation or
Reorganization of the Company . . . . . . . . . . 50
SECTION 10.4. Limitation on Remedies . . . . . . . . . . . . . . 51
SECTION 10.4.1. . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.5. Amendments and Exchanges of Subordinated Debt . . 52
SECTION 10.6. Payments Received in Contravention of Subordination
Provisions . . . . . . . . . . . . . . . . . . . 53
SECTION 10.7. Subrogation . . . . . . . . . . . . . . . . . . . 53
SECTION 10.8. Relative Rights . . . . . . . . . . . . . . . . . 53
SECTION 10.9. Reliance on Judicial Order or Decree or Senior Agent
Certificate . . . . . . . . . . . . . . . . . . . 54
SECTION 10.10. Proof of Claim . . . . . . . . . . . . . . . . . . 54

ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Amendments and Waivers . . . . . . . . . . . . . . 54
SECTION 11.2. Transfers . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.3. Notices . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.4. Independence of Covenants . . . . . . . . . . . . 58
SECTION 11.5. Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . 58
SECTION 11.6. Failure or Indulgence Not Waiver; Remedies
Cumulative . . . . . . . . . . . . . . . . . . . 59
SECTION 11.7. Severability . . . . . . . . . . . . . . . . . . . 59
SECTION 11.8. Obligations Several; Independent Nature of Senior
Debtholders' Rights . . . . . . . . . . . . . . . 59
SECTION 11.9. Headings . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.10. APPLICABLE LAW . . . . . . . . . . . . . . . . . . 59
SECTION 11.11. Successors and Assigns . . . . . . . . . . . . . . 59
SECTION 11.12. Consent to Jurisdiction and Service of Process . . 60
SECTION 11.13. Waiver of Jury Trial . . . . . . . . . . . . . . . 60
SECTION 11.14. Counterparts; Effectiveness . . . . . . . . . . . 61
SECTION 11.15. Understanding Among the Purchasers . . . . . . . . 61
SECTION 11.17. Entire Agreement . . . . . . . . . . . . . . . . . 67

SCHEDULE I - Disclosure Schedule

EXHIBIT A - Form of Note
EXHIBIT B - Form of Warrant Agreement

THIS AMENDED AND RESTATED NOTE AND WARRANT PURCHASE
AGREEMENT, dated as of February 22, 1996 (this "Agreement"), by and among
LADISH CO., INC., a Wisconsin corporation (the "Company"), the Purchasers
listed on Schedule I hereto (together with their respective successors and
assigns, the "Purchasers").

W I T N E S S E T H:

WHEREAS, the Company and certain of the Purchasers are
parties to the Note and Warrant Purchase Agreement, dated as of December
22, 1995 (the "Existing Purchase Agreement");

WHEREAS, the parties to the Existing Agreement desire that
such agreement be amended and restated as set forth in this Agreement;

WHEREAS, the Company desires that the Purchasers purchase
U.S.$9,330,866 principal amount of Senior Subordinated Notes (such
capitalized term and other capitalized terms used in these recitals
without definition shall have the meanings provided for in Article I) of
the Company, the proceeds of which will be used to refinance certain
outstanding trade indebtedness of the Company and for general corporate
purposes (including capital expenditures); and

WHEREAS, the Company desires that the Purchasers purchase the
Warrants exercisable for 46,654,330 shares of the Common Stock of the
Company, representing on a fully-diluted basis as of the date hereof
approximately 61% of the outstanding Common Stock of the Company;

NOW, THEREFORE, based upon the foregoing and the mutual
covenants and agreements herein contained, and for other good and
sufficient consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
agree (i) that the Existing Purchase Agreement is hereby amended and
restated, and (ii) further as follows:

ARTICLE I

DEFINED TERMS

SECTION 1.1. Defined Terms. The following terms (whether or
not underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings:

"Affiliate" means, with respect to any Person, any
other Person which, directly or indirectly, controls, is
under common control with, or is owned or controlled by, such
Person. For purposes of this definition, (i) "control"
means, with respect to any Person, either (x) the beneficial
ownership of five percent (5%) or more of any class of
equity, securities or other beneficial Interests of such
Person or (y) the power to direct the management and policies
of such Person through the ownership of voting securities, by
contract or otherwise, (ii) "controlling", "control with" and
"controlled by", and similar terms shall have meanings
correlative to the foregoing and (iii) the officers,
directors and shareholders of such Person shall be deemed to
be Affiliates of such Person.

"Agreement" means this Note and Warrant Purchase
Agreement, as it may be amended, restated, supplemented or
otherwise modified from time to time pursuant to Section
11.1.

"Authorized Officer" means, relative to the Company,
those of its officers whose signatures and incumbency shall
have been certified to the Purchasers pursuant to Section
3.1.

"Bankruptcy Code" shall mean Title 11 of the United
States Code, as amended from time to time, and all rules and
regulations promulgated thereunder.

"Business Day" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the
State of New York or is a day on which banking institutions
located in such state are authorized or required by law or
other governmental action to close.

"Capitalized Lease Liabilities" means, with respect to
any Person, all monetary obligations of such Person or any of
its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the
lessee without payment of a penalty.

"Capital Stock" means, with respect to any Person, any
and all shares, interests, participations or other
equivalents (however designated) of such Person's capital
stock or equity, whether now outstanding or issued after the
date hereof, including all common stock, preferred stock,
partnership interests and member interests.

"Cash Equivalents" means, as at any time,

(a) marketable securities (i) issued or directly and
unconditionally guaranteed as to interest and principal
by the United States Government or (ii) issued by any
agency of the United States the obligations of which
are backed by the full faith and credit of the United
States, in each case maturing within one year after
such date;

(b) marketable direct obligations issued by any
state of the United States of America or any political
subdivision of any such state or any public
instrumentality thereof, in each case maturing within
one year after such date and having, at the time of the
acquisition thereof, one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group,
a division of McGraw-Hill, Inc. ("S&P") or Moody's
Investors Service, Inc. ("Moody's");

(c) commercial paper maturing no more than one year
from the date of creation thereof and having, at the
time of the acquisition thereof, a rating of at least
A-1 (or the equivalent) from S&P or at least P-1 (or
the equivalent) from Moody's;

(d) certificates of deposit or bankers' acceptances
maturing within one year after such date and issued or
accepted by any commercial bank organized under the
laws of the United States of America or any state
thereof or the District of Columbia that (i) is at
least "adequately capitalized" (as defined in the
regulations of its primary federal banking regulator)
and (ii) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and

(e) shares of any money market mutual fund that
(i) has at least 95% of its assets invested
continuously in the types of investments referred to in
clauses (a) and (b) above, (ii) has net assets of not
less than $500,000,000, and (iii) has one of the two
highest ratings obtainable from either S&P or Moody's.

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

"CERCLIS" means the Comprehensive Environmental
Response Compensation Liability Information System List.

"Change in Control" means any event, transaction or
occurrence as a result of which, without the consent of the
Requisite Holders (which consent shall not be unreasonably
withheld), either (i) (x) Internationale Nederlanden (U.S.)
Capital Corporation and its Affiliates shall cease to own or
control at least 15% or (y) Grace Brothers, Ltd. and its
Affiliates shall cease to own or control at least 10%, of the
outstanding shares of Capital Stock, on a fully diluted
basis, or (ii) any other Person and its Affiliates shall own
or control, directly or indirectly, in the aggregate 51% or
more of the shares of Capital Stock on a fully diluted basis.

"Code" means the Internal Revenue Code of 1986, as
amended, reformed or otherwise modified from time to time.

"Collateral" shall mean all property of the Company
that at the time is security for the Senior Debt.

"Common Stock" means the Common Stock, no par value per
share, of the Company.

"Controlled Group" means all members of a controlled
group of corporations and all members of a controlled group
of trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated
as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.

"Credit Agreement" means, collectively, (i) the Credit
Agreement, dated as of June 30, 1995, among the Company, the
lenders named therein and General Electric Capital
Corporation, as agent, as amended on September 15, 1995,
December 22, 1995 and as such agreement may be further
amended, restated, extended, renewed, supplemented or
otherwise modified from time to time, or replaced through
refinancing and (ii) all other agreements, documents and
instruments evidencing, governing, securing or pertaining to
all or any portion of the Senior Debt.

"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or
both, would constitute an Event of Default.

"Disclosure Schedule" means the Disclosure Schedule
attached hereto as Schedule II, as it may be amended,
supplemented or otherwise modified from time to time by the
Company with the written consent of the Requisite Holders.

"Dollars" and the sign "$" mean the lawful money of the
United States of America.

"Environmental Claim" means any accusation, allegation,
notice of violation, claim, demand, abatement order or other
order or direction (conditional or otherwise) by any
governmental authority or any Person for any damage,
including personal injury (including sickness, disease or
death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties
or restrictions, in each case relating to, resulting from or
in connection with Hazardous Materials and relating to the
Company, any of their respective Affiliates or any Facility.

"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, guidance documents or decrees
relating to (i) environmental matters, including those
relating to fines, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries
resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation
or disposal of Hazardous Materials, or (iii) occupational
safety and health, industrial hygiene, or the protection of
human, plant or animal health or welfare from injury as a
result of exposure to Hazardous Materials or loss of
ecological resources, in any manner applicable to the
Company, any of their respective Affiliates or predecessors
or any of their respective properties, including the
Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
Section 136 et seq.), the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.) and the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. Section 11001 et
seq.), each as amended or supplemented, and any analogous
future or present local, state and federal statutes and
regulations promulgated pursuant thereto, each as in effect
as of the date of determination.

"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA
also refer to any successor sections.

"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor
statute.

"Facilities" means any and all real property (including
all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore owned, leased, operated
or used by the Company or any of its predecessors or
Affiliates.

"Fiscal Quarter" means any quarter of a Fiscal Year.

"Fiscal Year" means any period of twelve consecutive
calendar months ending on December 31; references to a Fiscal
Year with a number corresponding to any calendar year (e.g.,
the "1995 Fiscal Year") refer to the Fiscal Year ending on
the December 31 occurring during such calendar year.

"fully diluted basis" means, as applied to the
calculation of the number of shares of Common Stock
outstanding at any time, after giving effect to (a) all
shares of Common Stock outstanding at the time of
determination, (b) all shares of Common Stock issuable upon
the conversion, exercise or exchange of any convertible
security, warrant, option, subscriptions, calls or other
rights to acquire Common Stock outstanding at the time of
determination, irrespective of whether such conversion,
exercise or exchange is permitted, restricted or vested at
the time of determination, and irrespective of the price or
consideration required by such conversion, exercise or
exchange, and (c) all other commitments, promises or
understandings to issue any shares of Common Stock or any
convertible security, warrant, option, subscription, call or
other rights outstanding at the time of determination. Such
calculation will reflect the Warrants, and will not be made
in accordance with the "treasury method in accordance with
GAAP".

"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent
decree of or from any federal, state or local governmental
authority, agency or court.

"guaranty" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct
or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to or otherwise to invest
in a debtor or otherwise to assure a creditor against loss)
the debt, obligation or other liability of any other Person
(other than by endorsements of instruments in the course of
collection) or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The
amount of the obligor's obligation under any guaranty shall
(subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum outstanding
principal amount, if larger) of the debt, obligation or other
liability guaranteed thereby.

"Hazardous Materials" means (i) any chemical, material
or substance at any time defined as or included in the
definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic
substances" or any other formulations intended to define,
list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under
any applicable Environmental Laws or publications promulgated
pursuant thereto; (ii) any oil, petroleum, petroleum fraction
or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the
exploration, development or production of crude oil, natural
gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in
any form; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million;
(ix) pesticides; and (x) any other chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any governmental authority or which may or could
pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of the Facilities.

"Hedging Obligations" means, with respect to any
Person, all liabilities of such Person under interest rate
swap agreements, interest rate cap agreements, interest rate
collar agreements, foreign exchange contracts, currency swap
agreements, futures contracts, option contracts, and
synthetic cap agreements and all other agreements or
arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.

"Holder" means each Purchaser (or any of its permitted
designees, successors or assigns, other than the Company or
any of its Subsidiaries) who continues to hold any of the
Securities and any other holder of any of the Securities;
provided, that for the purposes of Article X and Section
11.16, "Holder" includes the Company or any of its
Subsidiaries to the extent that such entity holds any of the
Securities or otherwise would be deemed a Purchaser
hereunder.

"Indebtedness" of any Person means, without
duplication:

(a) all obligations of such Person for borrowed
money and all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments
(including Redeemable Capital Stock);

(b) all obligations, contingent or otherwise,
relative to the face amount of all letters of credit,
whether or not drawn, and banker's acceptances issued
for the account of such Person;

(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with
GAAP, recorded as Capitalized Lease Liabilities;

(d) all other items which, in accordance with GAAP,
would be included as liabilities on the liability side
of the balance sheet of such Person as of the date at
which Indebtedness is to be determined;

(e) net liabilities of such Person under all Hedging
Obligations;

(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to
pay the deferred purchase price of property or
services, and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being
purchased by such Person (including indebtedness
arising under conditional sales or other title
retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in
recourse; and

(g) all guaranties of such Person in respect of any
of the foregoing.

For all purposes of this Agreement, the Indebtedness of any
Person shall include the Indebtedness of any partnership or
joint venture in which such Person is a general partner or a
joint venturer.

"Joint Venture" means a joint venture, partnership or
other similar arrangement, whether in corporate, partnership
or other legal form; provided that in no event shall any
corporate Subsidiary of any Person be considered to be a
Joint Venture to which such Person is a party.

"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or otherwise), charge against or interest in
property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of
any kind or nature whatsoever (including any conditional sale
or other title retention agreement, any financing lease
involving substantially the same economic effect as any of
the foregoing or the filing of any financing statement under
the Uniform Commercial Code or comparable law of any
jurisdiction).

"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.

"Material Adverse Effect" means (i) a material adverse
effect upon the business, assets, liabilities, condition
(financial or otherwise), operations, performance, properties
or prospects of the Company, or (ii) the impairment of the
ability of the Company to perform, or the Holders to enforce,
any obligation of the Company under any Transaction Document
to which it is party (including the Obligations).

"Net Income" means, with respect to any Person for any
applicable period, the net income (or loss) of such Person
and its Subsidiaries on a consolidated basis for such period
determined in conformity with GAAP, exclusive of any
extraordinary gains or non-cash extraordinary losses.

"Net Worth" means, with respect to any Person as at any
date of determination, the sum of the capital stock and
additional paid-in capital plus retained earnings (or minus
accumulated deficits) of such Person and its Subsidiaries on
a consolidated basis determined in conformity with GAAP.

"Note" means each promissory note of the Company, dated
the Closing Date, substantially in the form of Exhibit A
hereto (as such promissory note may be amended, endorsed or
otherwise modified from time to time), all other promissory
notes accepted from time to time in substitution, replacement
or renewal therefor, and any payment-in-kind note issued to
pay interest thereunder.

"Obligations" means all obligations (monetary or
otherwise) of every nature of the Company from time to time
owed to the Purchasers, Holders or any of them under the
Transaction Documents, whether for principal, interest, fees,
expenses, indemnification or otherwise.

"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such
corporation by its chairman of the board (if an officer) or
its president or one of its vice presidents and by its chief
financial officer or its treasurer; provided that any
Officers' Certificate with respect to the compliance with a
condition precedent to the issuance and sale of the
Securities hereunder shall include (i) a statement that the
officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or
other provisions contained in this Agreement relating
thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them
to express an informed opinion as to whether or not such
condition has been complied with and (iii) a statement as to
whether, in the opinion of the signers, such condition has
been complied with.

"Organic Document" means, relative to any Person, such
Person's certificate of incorporation, by-laws and all
shareholder agreements, voting trusts and similar
arrangements applicable to any of such Person's authorized
shares of Capital Stock.

"Other Subordinated Securities" means equity and debt
securities subordinated at least to the same extent as the
Notes to the payment of all outstanding Senior Debt and which
do not contain terms in respect of affirmative and negative
covenants, events of default or amortization that are more
onerous, as a whole, to the Company than the initial terms of
the Notes.

"PBGC" means the Pension Benefit Guaranty Corporation
and any entity succeeding to any or all of its functions
under ERISA.

"Pension Plan" means a "pension plan", as such term is
defined in section 3(2) of ERISA, which is subject to
Title IV of ERISA (other than a multiemployer plan as defined
in section 4001(a)(3) of ERISA), and to which the Company or
any corporation, trade or business that is, along with the
Company, a member of a Controlled Group, may have liability,
including any liability by reason of having been a
substantial employer within the meaning of section 4063 of
ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under
section 4069 of ERISA.

"Person" means any individual, corporation, general or
limited partnership, joint venture, association, limited
liability company, joint stock company, trust, business
trust, land trust, bank, trust company, estate (including any
beneficiaries thereof), unincorporated organization,
cooperative, association or government branch, agency or
political subdivision thereof.

"Redeemable Capital Stock" means, as applied to any
Person, any Capital Stock of such Person which, either by its
terms, by the terms of any security into which it is
convertible or exchangeable or otherwise, (i) is or upon the
happening of an event or passage of time would be required to
be redeemed (for consideration other than shares of the
common equity capital of such Person) on or prior to December
20, 2000, (ii) is redeemable at the option of the holder
thereof (for consideration other than shares of the common
equity capital of such Person) at any time prior to such date
or (iii) is convertible into or exchangeable for debt
securities at any time prior to such date.

"Redemption Date" means (i) in the case of a redemption
of Notes pursuant to Section 8.1 in connection with a Change
in Control, the date 30 days following the occurrence of such
Change in Control, unless such date is a day which is not a
Business Day, in which case the Redemption Date shall be the
next succeeding Business Day, and (ii) in the case of a
redemption of Notes pursuant to Section 8.2, the date
selected by the Company for such redemption.

"Redemption Price" means, when used with respect to any
Note to be redeemed, the redemption price fixed for such
redemption pursuant to Section 8.1 or 8.2.

"Registration Rights Agreement" means the Amended and
Restated Registration Rights Agreement, dated as of the
Closing Date, substantially in the form of Exhibit C to the
Warrant Agreement, as the same may be amended, restated,
supplemented or otherwise modified from time to time in
accordance with the terms thereof.

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

"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels,
containers or other closed receptacles containing any
Hazardous Materials), or into or out of any Facility,
including the movement of any Hazardous Material through the
air, soil, surface water, groundwater or property.

"Requisite Holders" means the Holders of at least a
majority in aggregate principal amount of the then
outstanding Notes.

"Requisite Senior Debtholders" means, with respect to
any action which may be taken by the Senior Debtholders in
connection with any term of this Agreement, the Senior
Debtholder or Senior Debtholders necessary to approve or
consent to such action pursuant to the terms of the Credit
Agreement.

"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.

"Senior Agent" means General Electric Capital
Corporation, in its capacity as agent for the lenders under
the Credit Agreement, and its successors in such capacity,
or, if there is then no acting agent under the Credit
Agreement, financial institutions holding a majority in
principal amount of the Senior Debt outstanding thereunder,
or if no debt is outstanding, a majority in amount of the
loan commitments outstanding thereunder.

"Senior Debt" means all loans, advances, debts,
liabilities and obligations, for the performance of
covenants, tasks or duties or for the payment of monetary
amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing
by the Company to the Senior Agent or any lender under the
Credit Agreement, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or
not evidenced by any note, agreement or other instrument,
arising under the Credit Agreement. Senior Debt includes all
principal, interests, fees, expenses, attorneys' fees and any
other sum chargeable to the Company under the Credit
Agreement or any of the other Loan Documents, together with,
subject to the last sentence hereof, (a) all complete or
partial refinancings of the Senior Debt, (b) any amendments,
modifications, renewals or extensions of any of the foregoing
and (c) any interest accruing on the foregoing after the
commencement of any bankruptcy, insolvency or similar
proceeding, without regard to whether or not such interest
accrues in any such proceeding or is an allowed claim in any
such proceeding. Senior Debt shall be considered to be
outstanding whenever any loan commitment under the Credit
Agreement is outstanding. Notwithstanding the foregoing,
however, "Senior Debt" shall not include any loans, advances,
debts, liabilities, obligations or other amounts arising out
of any partial or complete refinancing of Senior Debt if both
(i) such refinancing is with a party or parties other than
the existing Senior Agent and the Senior Debtholders for whom
the Senior Agent is at the time serving as agent under the
Credit Agreement and (ii) the final stated maturity date of
such refinancing is later than December 22, 2003.

"Senior Debtholder" means a holder of Senior Debt.

"Solvent" means, with respect to any Person, that as of
the date of determination both (a) (i) the then fair saleable
value of the property of such Person is (A) greater than the
total amount of liabilities (including contingent
liabilities) of such Person and (B) not less than the amount
that will be required to pay the probable liabilities on such
Person's then existing debts as they become absolute and
matured considering all financing alternatives and potential
asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and
(iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and
(b) such Person is "solvent" within the meaning given that
term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an
actual or matured liability.

"Stated Maturity Date" means December 20, 2000.

"Subordinated Debt" means all of the obligations of the
Company to the Holders evidenced by the Subordinated Debt
Documents, all other amounts now or hereafter owed by the
Company to the Holders under the Subordinated Debt Documents,
and all other obligations of the Company to the Holders now
or hereafter arising, including without limitation, all
principal (and premium, if any) and interest outstanding
under the Subordinated Debt Documents and all claims relating
to the Subordinated Debt Documents arising from rescission,
misrepresentation, breach of warranty, indemnification, taxes
or securities law violations.

"Subordinated Debt Documents" means this Agreement and
the Notes and all agreements, documents and instruments
securing the Subordinated Debt pursuant to Section 11.16
hereof.

"Subsidiary" means, with respect to any specified
Person, any corporation, partnership, association, joint
venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any
contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is
at the time owned or controlled, directly or indirectly, by
such specified Person or one or more of the other
Subsidiaries of such specified Person or a combination
thereof.

"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any
nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed;
provided that "Tax on the overall net income" of a Person
shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office is
located (and/or, in the case of a Holder, the jurisdiction in
which the office through which its investment in the
Securities is being maintained is located) or in which that
Person is deemed to be doing business on all or part of the
net income, profits or gains of that Person (whether
worldwide, or only insofar as such income, profits or gains
are considered to arise in or to relate to a particular
jurisdiction, or otherwise).

"Transaction Costs" means the fees, costs and expenses
payable by the Company in connection with the transactions
contemplated hereby.

"Transaction Documents" means the Subordinated Debt
Documents and the Warrant Documents and each other agreement,
document, certificate or instrument delivered in connection
with and such agreements and documents, whether or not
specifically mentioned herein or therein.

"Undertaking" means the undertaking of the Company as
set forth in Section 6.13, relating to, among other things,
the commitment of the Company to (i) by January 10, 1996,
complete and distribute to the accredited investor
stockholders of the Company, a Private Placement Memorandum
for the offer of notes and warrants of the Company on terms
substantially similar to those contained in the Transaction
Documents, and (ii) by February 29, 1996, complete the
transactions described in the Private Placement Memorandum.

"United States" or "U.S." means the United States of
America, its fifty States and the District of Columbia.

"Warrant Documents" means the Warrant Agreement, the
Warrant Certificates and the Registration Rights Agreement.

"Warrants" is defined in the Warrant Agreement.

"Welfare Plan" means a "welfare plan", as such term is
defined in Section 3(1) of ERISA.

SECTION 1.2. Additional Terms. The following terms shall
have the meanings indicated or referred to in the following Sections of
this Agreement:

Term Section

Audited Financial Statements 3.7
Blue Sky Laws 4.2
Closing 2.2.2
Closing Date 2.2.2
Company Preamble
Event of Default 9.1
Existing Purchase Agreement First Recital
Financial Statements 3.7
GAAP 1.5
Indemnified Parties 2.8
Indemnifying Party 2.8
Interim Financial Statements 3.7
Intellectual Property 4.17
Licenses 4.16
Losses 2.8
Note Register 2.3
Notice of Redemption 8.4
Offering 6.13
Purchasers Preamble
Securities 2.1
Senior Payment Default 10.2
Warrant Agreement 2.1
Warrant Certificate 2.1(c)
Warrant Register 2.3
Warrant Shares 2.1(c)

SECTION 1.3. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule,
in each Note, in each other Transaction Document, and in each other notice
and other communication delivered from time to time in connection with
this Agreement or any other Transaction Document.

SECTION 1.4. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Transaction Document to any
Article or Section are references to such Article or Section of this
Agreement or such other Transaction Document, as the case may be, and,
unless otherwise specified, references in any Article, Section or
definition to any clause are references to such clause of such Article,
Section or definition.

SECTION 1.5. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other
Transaction Document shall be interpreted, all accounting determinations
and computations hereunder or thereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be
prepared in accordance with, those generally accepted accounting
principles ("GAAP") set forth in opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, in each case as applied in the preparation of the
financial statements referred to in Section 4.7.

SECTION 1.6. Construction. When used herein, the masculine form of
words includes the feminine and the neuter and vice versa, and, unless the
context otherwise requires, the singular form of words includes the plural
and vice versa.

ARTICLE II

PURCHASE AND SALE OF SECURITIES

SECTION 2.1. Issue of Securities. (a) On or before the Closing
Date,

(i) the Company will have authorized the issue and sale of
U.S.$[_______] aggregate principal amount of the Notes; and

(ii) the Company will have authorized the issue and sale of the
Warrants pursuant to an Amended and Restated Warrant Agreement
substantially in the form attached hereto as Exhibit B (as amended or
otherwise modified from time to time in accordance with the terms
thereof, the "Warrant Agreement").

The Notes and the Warrants shall individually be referred to herein as a
"Security" and collectively referred to herein as the "Securities".

(b) The Notes shall be substantially in the form attached hereto as
Exhibit A and shall include such notations, legends or endorsements set
forth therefor or required by law. Each Note shall be dated the date of
its issuance. The aggregate principal amount of the Notes shall be due
and payable on the Stated Maturity Date. The terms and provisions
contained in the Notes shall constitute, and are hereby expressly made, a
part of this Agreement and, to the extent applicable, the Company and the
Purchasers, by their execution and delivery of this Agreement, expressly
agree to such terms and provisions and to be bound thereby.

(c) Each Warrant shall be evidenced by a certificate substantially
in the form attached as Exhibit A to the Warrant Agreement (each such
certificate being referred to herein as a "Warrant Certificate"). Each
Warrant Certificate shall be dated the date of its issuance. The Warrants
will be exercisable, in the manner provided in the Warrant Agreement and
the applicable Warrant Certificate, for a number of shares of Common Stock
as provided therein (the "Warrant Shares"). The Holders of Warrant Shares
will have certain rights with respect to the Warrant Shares as provided in
the Registration Rights Agreement. The terms and provisions contained in
the Warrant Agreement and the Warrant Certificates shall constitute, and
are hereby expressly made, a part of this Agreement and, to the extent
applicable, the Company and the Purchasers, by their execution and
delivery of this Agreement, expressly agree to such terms and provisions
and to be bound thereby.

SECTION 2.2. Purchase and Sale of Securities.

SECTION 2.2.1. Purchase and Sale. (a) The Company agrees to sell
and, subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of the Company contained or
incorporated herein, each of the Purchasers agrees, severally but not
jointly, to purchase the Securities set forth below such Purchaser's name
on Schedule I hereto, at a purchase price of $990 per $1000 principal
amount of Notes and $10 per Warrant unit, for an aggregate purchase price
of $1000 per each unit of Notes and Warrants.

(b) The Company and each Purchaser hereby acknowledge and agree that
the Notes and Warrants are part of an investment unit within the meaning
of Section 1273(c)(2) of the Code. Any other provision of this Agreement
to the contrary notwithstanding, the Company and each Purchaser hereby
further acknowledge and agree that the total issue price of the investment
unit consisting of the Notes and Warrants for all federal, state and local
income tax purposes is $1,000 per investment unit comprised of $990 per
$1,000 principal amount of Notes and $10 per Warrant unit. All federal,
state and local income tax returns shall be filed by the Company and each
Purchaser in a manner consistent in all material respects with the
provisions of this Section 2.2.1.

SECTION 2.2.2. Closing. The purchase and sale of the Notes and
Warrants shall take place at a closing (the "Closing") at the offices of
the Company located at 5481 South Packard Avenue, Cudahy, Wisconsin on
February 22, 1996 or such other Business Day, as may be agreed upon by the
Purchasers and the Company (the "Closing Date"). At the Closing, the
Company will deliver to each Purchaser the Securities to be delivered to
such Purchaser (in such permitted denomination or denominations and
registered in such Purchaser's name or the name of such nominee or
nominees as such Purchaser may reasonably request), dated the Closing
Date, against payment of the purchase price therefor by intra-bank or
federal funds bank wire transfer of same day funds to such bank account as
the Company shall designate at least one Business Day prior to the
Closing.

SECTION 2.2.3. Fees and Expenses. After the Notes and Warrants are
sold, the Company agrees to pay or reimburse all reasonable expenses
relating to this Agreement, including:

(a) the reasonable fees and other charges of one counsel for
the Purchasers appointed by the Requisite Holders in connection
herewith;

(b) any reasonable out-of-pocket fees and expenses (including
the reasonable fees and expenses of one counsel for the Purchasers
appointed by the Requisite Holders) in connection with any
registration or qualification of the Securities required in
connection with the offer and sale of the Securities pursuant to this
Agreement under the securities or Blue Sky Laws of any jurisdiction
requiring such registration or qualification or in connection with
obtaining any exemptions from such requirements; and

(c) the reasonable fees and expenses of one counsel for the
Purchasers appointed by the Requisite Holders relating to any
amendment, supplement or modification of, or any waiver, consent,
enforcement or preservation of rights under, this Agreement, the
Securities, the Warrant Agreement or any other Transaction Document,
or any other documents contemplated hereby or thereby, including any
refinancing or restructuring of the Obligations in the nature of a
"work-out" or pursuant to bankruptcy or insolvency proceedings.

The Company shall deliver to such Purchaser or to such other Persons
as such Purchaser shall direct, at Closing, by intra-bank or federal funds
bank wire transfer of same day funds payment for the reasonable fees and
expenses of one counsel for the Purchasers appointed by the Requisite
Holders, or at Purchasers' election shall deduct such amount from the
Purchase Price for the Securities.

SECTION 2.3. Registration of Securities. The Company shall cause to
be kept at its principal office (i) a register for the registration and
transfer of the Notes (the "Note Register") and (ii) a register for the
registration and transfer of the Warrants (the "Warrant Register"). The
names and addresses of the Holders of Notes, the transfer of Notes, and
the names and addresses of the transferees of the Notes shall be
registered in the Note Register. The names and addresses of the Holders
of Warrants, the transfer of Warrants and the names and addresses of the
transferees of Warrants shall be registered in the Warrant Register.

The Person in whose name any registered Security shall be registered
shall be deemed and treated as the owner and holder thereof for all
purposes of this Agreement and the Company shall not be affected by any
notice to the contrary, until due presentment of such Security for
registration of transfer so provided in this Section 2.3. Payment of or
on account of the principal, premium, if any, and interest on, or any
other amount in respect of, any registered Securities shall be made to or
upon the written order of such registered holder.

SECTION 2.4. Delivery Expenses. If a Holder surrenders any Note or
Warrant to the Company for any reason, the Company agrees to pay the cost
of delivering to such Holder's home office or to the office of such
Holder's designee from the Company each Security issued in substitution or
replacement for the surrendered Security.

SECTION 2.5. Issue Taxes. The Company agrees to pay all taxes
(other than taxes in the nature of income, franchise or gift taxes) in
connection with the issuance, sale, delivery or transfer by the Company to
each Purchaser of the Notes and the Warrants and the execution and
delivery of the agreements and instruments contemplated hereby and any
modification of any of such Securities, agreements and instruments and
will save such Purchaser harmless without limitation as to time against
any and all liabilities with respect to all such taxes. The obligations
of the Company under this Section 2.5 shall survive the payment or
prepayment of the Notes, the exercise of the Warrants and the termination
of this Agreement.

SECTION 2.6. General Provisions Regarding Payments.

(a) Manner and Time of Payment. All payments by the Company of
principal, premium, if any, and other amounts hereunder shall be made in
Dollars in same day funds, without defense, setoff or counterclaim, free
of any restriction or condition, and delivered to each Holder's account
not later than 12:00 Noon (New York time) on the date due unless such date
is a day which is not a Business Day, in which case the Company shall make
such payments on the next succeeding Business Day, and interest shall
accrue on the aggregate amount of such payments until such amount is paid
and payment of such accrued interest shall be made concurrently with the
payment of such amount. Funds received by a Holder after 12:00 Noon
(New York time) on the date due shall be deemed to have been paid by the
Company on the next succeeding Business Day and interest shall accrue on
such amount paid until such next succeeding Business Day.

(b) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Note shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all
such payments shall be applied to the payment of interest before
application to principal.

SECTION 2.7. Lost Securities, etc. If a mutilated Security is
surrendered to the Company or if the Holder of a Security claims and
submits an affidavit or other evidence, satisfactory to the Company to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue a replacement Security subject to the terms of the
immediately succeeding sentence. If required by the Company, such Holder
must provide an indemnity bond, or other form of indemnity, sufficient in
the judgment of the Company to protect the Company from any loss which it
may suffer if a Security is replaced; provided that, if any Purchaser or
any other institutional Holder (or nominee thereof) is the owner of any
such lost, stolen or destroyed Security, then the affidavit of an
authorized officer of such owner, setting forth the fact of loss, theft or
destruction and of its ownership of the Security at the time of such loss,
theft or destruction shall be accepted as satisfactory evidence thereof
and no further indemnity shall be required as a condition to the execution
and delivery of a new Security other than the unsecured written agreement
of such owner reasonably satisfactory to indemnify the Company or at the
option of such Purchaser or such institutional Holder an indemnity bond in
the amount of the Security remaining outstanding.

Every replacement Security is an obligation of the Company.

SECTION 2.8. Indemnification. The Company (the "Indemnifying
Party") hereby agrees, without limitation as to time, to indemnify each
Holder and each director, officer, partner, member, employee, counsel,
agent and Affiliate of such Holder (collectively, the "Indemnified
Parties") against, and hold it and them harmless from, all losses, claims,
damages, liabilities, costs (including reasonable attorneys' fees and
disbursements) (collectively, "Losses") incurred by it or them and arising
out of or in connection with this Agreement, the Securities, the Credit
Agreement, the Warrant Agreement or any other Transaction Document, or the
transactions contemplated hereby or thereby (or any other document or
instrument executed herewith or pursuant hereto or thereto), whether or
not the transactions contemplated by this Agreement are consummated and
whether or not any Indemnified Party is a formal party to any proceeding,
other than to the extent that any Losses result from action on the part of
any Indemnified Party which is finally judicially determined to constitute
either gross negligence or willful misconduct. For the purpose of the
preceding sentence, "Losses" shall not include any losses by any Holder
resulting solely from the reduction in value of the Securities or
Transaction Documents. The Indemnifying Party agrees to reimburse any
Indemnified Party promptly for all such Losses as they are incurred by
such Indemnified Party. The obligations of the Indemnifying Party to each
Indemnified Party hereunder shall be separate obligations and each
Indemnifying Party's liability to any such Indemnified Party hereunder
shall not be extinguished solely because any other Indemnified Party is
not entitled to indemnity hereunder. The obligations of the Indemnifying
Party under this Section 2.8 shall survive the payment or prepayment of
the Notes, at maturity, upon acceleration, redemption or otherwise, the
exercise of the Warrants purchased by any Purchaser, the redemption or
repurchase by the Company of the Warrants purchased by any Purchaser, the
redemption or repurchase of any Warrant Shares, any transfer of the
Securities by any Holder and the termination of this Agreement, the
Securities, the Warrant Agreement or any other Transaction Document. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have, including under this Agreement and any other
indemnification agreements contained in the Warrant Agreement or any other
Transaction Document.

In case any action shall be brought against any Indemnified Party
with respect to which indemnity may be sought against the Indemnifying
Party hereunder, such Indemnified Party shall promptly notify the
Indemnifying Party in writing and the Indemnifying Party shall, if it so
desires, assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Party and payment of such
counsel's reasonable fees and expenses. The failure to so notify the
Indemnifying Party shall not affect any obligation it may have to any
Indemnified Party under this Agreement or otherwise unless it is
materially adversely affected by such failure. Each Indemnified Party
shall have the right to employ separate counsel in such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless: (a) the
Indemnifying Party has agreed in writing to pay such expenses, (b) the
Indemnifying Party has failed to assume such defense and employ counsel or
(c) the named parties to any such action (including any impleaded parties)
include any Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by outside counsel that there
may be one or more significant legal defenses available to it which are
materially inconsistent with or additional to those available to the
Indemnifying Party; provided that, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel in
the circumstances described in the preceding clause (b) or (c), the
Indemnifying Party shall not have the right to assume the defense of such
action or proceeding; provided, however, that the Indemnifying Party shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be responsible hereunder for the fees and expenses of more than one such
firm of separate counsel (in addition to any necessary local counsel),
which counsel shall be designated by such Indemnified Party. The
Indemnifying Party shall not be liable for any settlement of any such
action effected without its written consent. Without limiting the effect
of the immediately preceding sentence, the Indemnifying Party agrees that
it will not, without the prior written consent of the Indemnified Parties,
settle or compromise any pending or threatened claim, action or suit in
respect of which indemnification or contribution may be sought hereunder
unless the foregoing contains an unconditional release of the Indemnified
Parties from all liability and obligation arising therefrom.

If the indemnification provided for in this Section 2.8 is
unavailable to any Indemnified Party in respect of any Losses referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Persons,
shall have an obligation to contribute to the amount paid or payable by
such Persons as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party, its
Subsidiaries and/or any other Person or Persons (other than each Purchaser
and the other Indemnified Parties) and each Purchaser and the other
Indemnified Parties in connection with the actions which resulted in such
Losses as well as any other relevant equitable considerations. The amount
paid or payable by any such Person as a result of the Losses referred to
above shall be deemed to include, subject to the limitations set forth in
this Section 2.8, any legal or other fees or expenses reasonably incurred
by such Person in connection with any investigation, lawsuit or legal or
administrative action or proceeding.

The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.8 were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph.

SECTION 2.9. Use of Proceeds. The net cash proceeds of the
Securities, together with other funds available to the Company, shall be
applied by the Company in accordance with the first recital.

SECTION 2.10. Margin Regulations. No portion of the proceeds of any
Securities under this Agreement shall be used by any Transaction Party in
any manner that might cause the issuance and sale of the Securities or the
application of such proceeds to violate Regulations G, U, T or X of the
Board of Governors of the Federal Reserve System or any other regulation
of such Board or to violate the Exchange Act, in each case as in effect on
the date or dates of such issuance and sale and such use of proceeds.

SECTION 2.11. Taxes. (a) All sums payable by the Company under
this Agreement and the other Transaction Documents shall be paid free and
clear of and (except to the extent required by law) without any deduction
or withholding on account of any Tax (other than a Tax on the overall net
income of any Holder) imposed, levied, collected, withheld or assessed by
or within the United States or any political subdivision in or of the
United States or any other jurisdiction from or to which a payment is made
by or on behalf of the Company or by any federation or organization of
which the United States or any such jurisdiction is a member at the time
of payment.

(b) If the Company or any other Person is required by law to make
any deduction or withholding on account of any such Tax from any sum paid
or payable by the Company to any Holder under any of the Transaction
Documents:

(i) the Company shall notify each Holder of any such
requirement or any change in any such requirement as soon as the
Company becomes aware of it;

(ii) the Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the
liability to pay is imposed on the Company) for its own account or
(if that liability is imposed on such Holder) on behalf of and in the
name of such Holder; provided, that the Company shall be entitled to
seek reimbursement for any such amounts so paid, including by seeking
setoff against interest due and payable on the Notes;

(iii) the sum payable by the Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, such Holder receives on the
due date a net sum equal to what it would have received had no such
deduction, withholding or payment been required or made; provided,
that the Company shall be entitled to seek reimbursement for any such
amounts so paid, including by seeking setoff against interest due and
payable on the Notes; and

(iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b)(ii) above to pay, the Company shall deliver to such Holder
evidence satisfactory to it of such deduction, withholding or payment
and of the remittance thereof to the relevant taxing or other
authority.

ARTICLE III

CLOSING CONDITIONS

The obligation of each Purchaser to purchase and pay for the Notes
and the Warrants to be delivered on the Closing Date shall be subject to
the prior or concurrent satisfaction of each of the conditions precedent
set forth in this Article III.

SECTION 3.1. Organic Documents, Resolutions, etc. On or before the
Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser (with sufficient originally executed copies, where appropriate,
for such Purchaser and its counsel) the following, each, unless otherwise
specified, dated the Closing Date:

(a) certified copies of its certificate of incorporation,
together with an Officer's Certificate certifying that the Company
(i) is in good standing and is duly qualified and licensed in each
state wherein the character of its real property or the nature of its
business makes such qualification or qualification necessary, and
(ii) has paid any applicable franchise or similar taxes which are due
and owing as of the Closing Date;

(b) copies of its by-laws, certified as of the Closing Date by
its corporate secretary or an assistant secretary;

(c) resolutions of the independent member of its Board of
Directors approving and authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents to
which it is a party, in form and substance reasonably satisfactory to
each Purchaser and its counsel, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment; and

(d) signature and incumbency certificates of its officers
executing this Agreement and the other Transaction Documents to which
it is a party.

SECTION 3.2. Execution of this Agreement and each other Transaction
Document. On or before the Closing Date, each Purchaser shall received
original copies of the following:

(a) this Agreement duly executed by the Company and each
Purchaser;

(b) the Notes duly executed by the Company;

(d) the Warrant Certificates evidencing the Warrants duly
executed by the Company;

(e) the Registration Rights Agreement duly executed by the
Company;

(f) each other Transaction Document duly executed by the party
or parties to it.

SECTION 3.3. Capitalization. Each Purchaser shall be reasonably
satisfied with the capital, organization, ownership and management
structure of the Company.

SECTION 3.4. Necessary Consents. The Company shall have obtained
all consents necessary in connection with the transactions contemplated
by the Transaction Documents (including pursuant to the Credit Agreement),
and each of the foregoing shall be in full force and effect and in form
and substance reasonably satisfactory to each Purchaser.

SECTION 3.5. Financials; Pro Forma Balance Sheets. On or before the
Closing Date, the Purchaser shall have received from the Company
(i) audited financial statements for the Company for the fiscal year
ending December 31, 1994 and December 31, 1993 (the "Audited Financial
Statements"), (ii) the unaudited financial statements of the Company as of
November 30, 1995 (the "Interim Financial Statements", and, together with
the Audited Financial Statements, the "Financial Statements"), and
(iii) an estimated pro forma balance sheet of the Company as at the
Closing Date, prepared in accordance with GAAP after giving effect to all
the transactions contemplated hereby and by the other Transaction
Documents, which shall be in form and substance reasonably satisfactory to
the Purchaser.

SECTION 3.6. Closing Expenses, etc. Each Purchaser shall have
received all costs and expenses due and payable pursuant to Section 2.2.3
(including counsel fees), if then invoiced.

SECTION 3.7. Approvals. Each Purchaser shall have received the
approvals of its investment advisory committee and/or other committees
needed to approve its investment under this Agreement.

SECTION 3.8. Investment by Other Purchasers. On the Closing Date,
each Purchaser shall have purchased and paid for the Securities required
to be purchased by it hereunder.

SECTION 3.9. Representations and Warranties. The Purchasers shall
have received an Officer's Certificate to the effect that (i)
representations and warranties contained in Article IV shall be true,
correct and complete on and as of the Closing Date to the same extent as
though such representations and warranties had been made on and as of such
date (except to the extent that any such representations and warranties
specifically apply to a prior date) and (ii) after giving effect to the
transactions set forth in the transaction documents, no default or event
of default shall exist under the Credit Agreement.

SECTION 3.10. Opinions of Counsel to Company. Each Purchaser and
its counsel shall have received originally executed copies of one or more
opinions of counsel for the Company, each in form and substance reasonably
satisfactory to each Purchaser and its counsel, addressed to each
Purchaser, dated the Closing Date.

SECTION 3.11. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Company shall be
satisfactory in form and substance to the Requisite Purchasers and one
counsel for the Purchasers appointed by the Requisite Holders; each
Purchaser and one counsel for the Purchasers appointed by the Requisite
Holders shall have received all information, approvals, opinions or
instruments as such Purchaser or counsel may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

In order to induce the Purchasers to enter into this Agreement and to
purchase the Notes and the Warrants, the Company represents and warrants
to each Purchaser, as of the Closing Date (except to the extent any of the
following representations or warranties specifically apply or relate to a
prior date, in which event the Company represents and warrants such
representations and warranties to be true and correct as of such prior
date), as follows:

SECTION 4.1. Corporate Existence. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Wisconsin and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
ownership or use of its assets or properties, or the conduct or nature of
its business, makes such qualification necessary.

SECTION 4.2. Power and Authority. The Company has all requisite
corporate power and authority, and has taken all required corporate and
other action necessary, to execute, deliver and perform this Agreement and
all other Transaction Documents and to issue and sell the Securities as
herein provided. None of the foregoing actions will (i) violate any
provision of the Organic Documents of the Company, (ii) result in the
breach of or constitute a default under any contract, agreement or
instrument to which the Company is a party or by which the Company or any
of its properties is bound, (iii) result in the creation or imposition of
any material Lien, claim or encumbrance on any properties of the Company,
(iv) give any Person rights to terminate any contracts or agreements with
the Company or otherwise to exercise rights against the Company or
(v) violate any order, writ, judgment, injunction, decree, statute, rule
or regulation of any court, tribunal or governmental entity applicable to
or bearing upon the Company or any of its respective assets or businesses.
The Securities to be delivered to each Purchaser will be duly authorized
and validly issued and will be delivered to such Purchaser free and clear
of any Liens, encumbrances, pre-emptive rights, escrows, options, rights
of first refusal or other agreements, arrangements, commitments,
understandings or obligations, whether written or oral, or any other
restrictions affecting rights and other incidents of record and beneficial
ownership, other than (i) as set forth herein or in the other Transaction
Documents and (ii) restrictions on transferability imposed generally under
the Securities Act and under the securities laws of the several states and
the rules and regulations issued in respect thereto (such state laws,
rules and regulations, being, collectively, "Blue Sky Laws"). The
issuance and delivery of the Securities is exempt from the registration
requirements of the Securities Act and the Blue Sky Laws or has been
qualified as may be necessary.

SECTION 4.3. Binding Obligation. Each of the Transaction Documents
has been duly executed and delivered by the Company and is the legally
valid and binding obligation of the Company, enforceable against such
Transaction Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.

SECTION 4.4. Capitalization. As of the date hereof, the authorized
Capital Stock of the Company consists of 100,000,000 shares of Common
Stock, of which 30,177,100 shares are outstanding. All outstanding shares
of Common Stock are fully paid and nonassessable and are free of all Liens
and there are no other outstanding shares of Capital Stock of the Company.
The stockholders of record and holders of subscriptions, warrants,
options, convertible securities and other rights (contingent or other) to
purchase or otherwise acquire capital stock of the Company, and the number
of shares of capital stock and the number of such subscriptions, warrants,
options, convertible securities, and other such rights held by each, are
as set forth in Item 4.4 of the Disclosure Schedule. The designations,
powers, preferences, rights, qualifications, limitations and restrictions
in respect of each class and series of authorized capital stock of the
Company are as set forth in the Company's charter, copies of which will be
delivered to the purchasers on the closing date, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws. Except as set forth in Item 4.4 of the Disclosure
Schedule, (i) no Person owns of record or is known to the Company to own
beneficially any shares of capital stock, (ii) no subscription, warrant,
option, convertible security or other right (contingent or other) to
purchase or otherwise acquire capital stock of the Company is authorized
or outstanding and (iii) there is no commitment by the Company to issue
shares, subscriptions, warrants, options, convertible securities or other
such rights or to distribute to holders of any of its capital stock any
evidence of indebtedness or asset. Except as provided for in the Charter
or as set forth in Item 4.4 of the Disclosure Statement, the Company has
no obligation (contingent or other) to purchase, redeem or otherwise
acquire any of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Except for
the Warrant Documents and as set forth in Item 4.4 of the Disclosure
Statement, there are no voting trusts or agreements, stockholders'
agreements, pledge agreements, buy-sell agreements, rights of first
refusal, preemptive rights or proxies relating to any securities of the
Company or any of its Subsidiaries (whether or not the Company or any of
its Subsidiaries is a party thereto). All of the outstanding securities of
the Company were issued in compliance with all applicable Federal and
state securities laws.

SECTION 4.5. Consents, Approvals and Non-Contravention. Neither the
execution, delivery and performance of this Agreement or any other
Transaction Document by the Company, nor the consummation of any
transaction related hereto or thereto, nor the issuance, sale or delivery
of the Securities will

(a) require any consent or approval of, filing or taking of any
other action with, or notice to, any Person;

(b) violate any contract, agreement, instrument or other
arrangement to which the Company is a party or by which it or any of
its properties is bound; or

(c) violate any order, writ, judgment, injunction, decree,
statute, law, rule or regulation of any court, tribunal or
governmental entity or authority applicable to or bearing upon the
Company or any of its properties or businesses.

SECTION 4.6. Pro Forma Balance Sheet. The pro forma balance sheet
referred to in Section 3.5 fairly presents the financial condition of the
Company upon consummation of the transactions contemplated hereby and by
the other Transaction Documents.

SECTION 4.7. Financial Statements. The Financial Statements have
been prepared in accordance with GAAP, consistently applied, and fairly
present the financial position of the Company and the results of its
consolidated operations and cash flows for the periods covered thereby.

SECTION 4.8. No Material Adverse Effect. Except as disclosed on
Item 4.8 of the Disclosure Schedule, since December 31, 1994, no event or
change has occurred that has caused or could cause, or evidences, either
in any case or in the aggregate, a Material Adverse Effect.

SECTION 4.9. Events Subsequent to the Date of the Last Financial
Statement. Except as disclosed on Item 4.9 of the Disclosure Schedule,
since the date of the last Audited Financial Statements, except as
contemplated by this Agreement or as set forth in the Interim Financial
Statements, the Company has not (i) issued any stock, bond or other
corporate security, (ii) borrowed any amount or incurred or become subject
to any liability (absolute, accrued or contingent), except current
liabilities incurred and liabilities under contracts entered into in the
ordinary course of business, (iii) discharged or satisfied any Lien or
encumbrance or incurred or paid any obligation or liability (absolute,
accrued or contingent) other than current liabilities shown on the Interim
Financial Statements and current liabilities incurred since the date of
the last applicable Interim Financial Statement in the ordinary course of
business, (iv) declared or made any payment or distribution to
stockholders or purchased or redeemed any of its capital stock,
(v) mortgaged, pledged or subjected to any Lien or encumbrance any of its
assets, tangible or intangible, other than Liens of current real property
taxes not yet due and payable, (vi) sold, assigned or transferred any of
its tangible assets except in the ordinary course of business, or
cancelled any debt or claim owed to it except in the ordinary course of
business, (vii) sold, assigned, transferred or granted any exclusive
license with respect to any patent, trademark, trade name, service mark,
copyright, trade secret or other intangible asset, (viii) suffered any
substantial loss of property or waived any right of substantial value
other than in the ordinary course of business, (ix) made any change in
officer compensation except in the ordinary course of business and
consistent with past practice, (x) made any material change in the manner
of its business or operations, (xi) entered into any transaction except in
the ordinary course of business or as otherwise contemplated hereby or
(xii) entered into any commitment, obligation, understanding or other
arrangement, contingent or otherwise, to effect, directly or indirectly,
any of the foregoing.

SECTION 4.10. Absence of Undisclosed Liabilities. Since the date of
the last Audited Financial Statements, the Company has no material
liabilities (matured or unmatured, fixed or contingent), which are not
fully reflected or provided for on the Interim Financial Statements, or
any material loss contingency (as defined in Statement of Financial
Accounting Standards No. 5) whether or not required by GAAP to be shown on
the Interim Financial Statements, except (i) obligations to perform under
commitments incurred in the ordinary course of business, and (ii) tax and
related liabilities which have been disclosed pursuant to Section 4.11.

SECTION 4.11. Taxes. The Company has filed all tax returns,
Federal, state, county, local and foreign, required to be filed by it, as
well as all informational returns required of it. All taxes shown as due
on all such returns have been paid. Each such return and filing is true
and correct and the Company neither has nor will have any additional
liability for taxes with respect to any return or other filing heretofore
filed or which was required by law to be filed, other than as reflected as
liabilities on the Financial Statements or which may result from pending
or subsequent audits. All taxes which the Company is required by law to
withhold or collect, including without limitation, sales and use taxes,
and amounts required to be withheld for taxes of employees, have been duly
withheld or collected and, to the extent required, have been paid over to
the proper governmental authorities or are held in separate bank accounts
for such purpose. All such taxes with respect to which the Company has
become obligated pursuant to elections made by the Company in accordance
with generally accepted practice have been paid and adequate reserves have
been established for all taxes accrued but not yet payable. No deficiency
assessment with respect to or proposed adjustment of the Company's
Federal, state, county or local taxes is pending or, to the Company's best
knowledge, threatened, and the Company is not aware of any fact which
would constitute grounds for the assessment of any additional taxes by any
taxing authority with respect to the taxable years of the Company
beginning on or before the Closing Date. The Company has not granted or
been requested to grant waivers of any statutes of limitations applicable
to any claim for taxes. There is no tax lien, whether imposed by any
Federal, state, county or local taxing authority, outstanding against the
assets, properties or business of the Company. Neither the Company nor
any of its stockholders has ever filed (a) an election pursuant to Section
1362 of the Code, that the Company be taxed as an S corporation or
(b) consent pursuant to Section 341(f) of the Code, relating to
collapsible corporations.

SECTION 4.12. Litigation. Other than as set forth on Item 4.12 of
the Disclosure Schedule, there are no actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting the
Company, or any of its respective properties, businesses, assets or
revenues or any of its respective directors or employees, at law or in
equity, before any court, arbitration panel, tribunal or governmental
department, commission, board, bureau, agency or instrumentality which
could have a Material Adverse Effect or which could materially adversely
affect the legality, validity or enforceability of this Agreement or any
other Transaction Document or materially adversely affect the transactions
contemplated by the Agreement and the other Transaction Documents.

SECTION 4.13. Insurance. The Company holds valid policies in full
force and effect covering all of the insurance required to be maintained
by it pursuant to Section 6.5.

SECTION 4.14. Licenses; Compliance with Laws, Other Agreements, etc.
All governmental approvals, authorizations, consents, licenses and
permits, which are necessary or required for the conduct of the businesses
currently conducted by the Company are referred to collectively herein as
"Licenses". The Company knows of no basis upon which the renewal of any
License would be denied in the future. Each such License has been validly
issued to the Company, and is in full force and effect, and the Company,
is not in violation of any such License.

SECTION 4.15. Investment Company Act. The Company is not an
"investment company" within the meaning of the Investment Company Act of
1940, as amended; or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.

SECTION 4.16. Brokers, etc. The Company has not dealt with, nor is
the Company obligated to pay any fee or commission in connection with, any
broker, finder or other similar Person in connection with the offer or
sale of the Securities or any of the transactions contemplated by this
Agreement, and the Company hereby indemnifies each Purchaser against, and
agrees that it will hold each Purchaser harmless from, any claim, demand
or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.

SECTION 4.17. Private Sale. The Company has not, either directly or
through any agent, offered any Securities or any other securities to, or
solicited any offers to acquire any Securities or any other securities
from, or otherwise approached, negotiated or communicated in respect of
any Securities or any other securities with, any Person in such a manner
as to require that the offer or sale of the Securities or any such other
securities be registered pursuant to the Securities Act or any Blue Sky
Laws. The Purchasers are the sole purchasers of the Securities and no
securities have been issued and sold by the Company within the four-month
period immediately prior to the date hereof.

SECTION 4.18. Disclosure. Neither this Agreement, nor any other
Transaction Document nor any of the exhibits, schedules, attachments,
written or oral statements, documents, certificates or other items
prepared or supplied to any of the Purchasers by or on behalf of the
Company, with respect to the transactions contemplated hereby or thereby
contain any untrue statement of a material fact or omit a material fact
necessary to make each statement contained herein or therein not
misleading; provided, however, that with respect to the financial
projections furnished to any of the Purchasers by or on behalf of the
Company, the Company represents and warrants only that such projections
were based upon assumptions reasonably believed by the Company to be
reasonable and fair as of the date the projections were prepared in the
context of the Company's history and current and reasonably foreseeable
business conditions. There is no fact which the Company have not
disclosed to any of the Purchasers in writing and of which any of its
officers and directors is aware (other than general economic conditions)
and which has had or could reasonably be expected to have a Material
Adverse Effect.

SECTION 4.19. Subsidiaries. The Company has no Subsidiaries.

SECTION 4.20. Ownership of Properties. The Company owns good and
marketable title to all of its respective properties and assets, real and
personal, tangible and intangible, of any nature whatsoever (including
patents, trademarks, trade names, service marks and copyrights), free and
clear of all Liens (including infringement claims with respect to patents,
trademarks, copyrights and the like).

SECTION 4.21. Pension and Welfare Plans. Except as disclosed in
Item 4.24 of the Disclosure Schedule, during the twelve-consecutive-month
period prior to the date of the execution and delivery of this Agreement,
no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to any
Pension Plan which might result in the incurrence by the Company, or any
member of its Controlled Group of any material liability, fine or penalty.
Except as disclosed in Item 4.24 of the Disclosure Schedule, neither the
Company nor any member of its Controlled Group has any contingent
liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6
of Title I of ERISA.

SECTION 4.22. Environmental Warranties. Except as set forth in Item
4.22 of the Disclosure Schedule

(a) the Company's real properties are free of contamination
from any Hazardous Materials. In addition, Item 4.22 discloses
material environmental liabilities of the Company of which it has
knowledge (i) related to noncompliance with any Environmental Laws,
or (ii) associated with its real properties. The Company has not
caused or suffered to occur any Release with respect to any Hazardous
Materials at, under, above or upon any real property which it owns or
leases. The Company is not involved in operations that are likely to
result in the imposition of any Lien on its assets or any material
liability on the Company, under any Environmental Laws, and the
Company has not permitted any tenant or occupant of such premises to
engage in any such activity. The Company has provided to the
Purchasers copies of all existing environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Claims, in each case relating to the Company.

(b) there have been no Releases of Hazardous Materials at, on
or under any property now or previously owned or leased by the
Company that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;

(c) the Company has been issued and are in material compliance
with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or
desirable for their businesses;

(d) no property now or previously owned or leased by the
Company is listed or proposed for listing (with respect to owned
property only) on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;

(e) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any
property now or previously owned or leased by the Company that,
singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect;

(f) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the
Company that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect; and

(g) no conditions exist at, on or under any property now or
previously owned or leased by the Company which, with the passage of
time, or the giving of notice or both, could give rise to liability
under any Environmental Law.

SECTION 4.23. Securities Activities. (a) The Company is not
engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock.

(b) No portion of the proceeds of the issuance of the Securities
under this Agreement shall be used by the Company in any manner that might
cause such issuance and sale or the application of such proceeds to
violate Regulations G, U, T or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board or to violate the
Exchange Act, in each case as in effect on the date or dates of such
issuance and sale and such use of proceeds.

SECTION 4.24. Solvency. The Company is and, upon consummation of
the transactions contemplated hereby, will be, Solvent.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each of the Purchasers severally, not jointly, represent and warrant
to the Company, at and as of the Closing Date that:

SECTION 5.1. Purchase for Own Account. Such Purchaser is purchasing
the Notes and Warrants solely for its own account and not as nominee or
agent for any other Person and not with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning of the
Securities Act) that would be in violation of the securities laws of the
United States of America or any state thereof, without prejudice, however,
to its right at all times to sell or otherwise dispose of all or any part
of said Notes and Warrants pursuant to a registration statement under the
Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act, and subject, nevertheless, to the
disposition of its property being at all times within its control.

SECTION 5.2. Accredited Investor. Such Purchaser is knowledgeable,
sophisticated and experienced in business and financial matters; it
previously invested in securities similar to the Notes and Warrants and it
acknowledges that the Notes and Warrants have not been registered under
the Securities Act and understands that the Notes and Warrants must be
held indefinitely unless they are subsequently registered under the
Securities Act or such sale is permitted pursuant to an available
exemption from such registration requirement; it is able to bear the
economic risk of its investment in the Notes and Warrants and is presently
able to afford the complete loss of such investment; it is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act;
and it has been afforded access to information about the Company and its
respective financial condition, results of operations, business, property,
management and prospects sufficient to enable it to evaluate its
investment in the Notes and Warrants. Such Purchaser acknowledges that it
has conducted its own analysis of the foregoing factors.

ARTICLE VI

AFFIRMATIVE COVENANTS

The Company covenants and agrees that, until payment in full of all
the Obligations, the Company shall perform, or cause the performance of,
all covenants set forth in this Article VI.

SECTION 6.1. Financial Statements and Other Reports. The Company
will maintain, and will cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in
conformity with GAAP. The Company will furnish, or will cause to be
furnished, to each Holder of at least 10% of the aggregate principal
amount of the outstanding Notes (each a "Qualified Holder"), unless such
Qualified Holder has notified the Company that he or it elects not to
receive such information, copies of the following financial statements,
reports, notices and information:

(a) promptly when available and in any event when furnished
pursuant to the Credit Agreement, copies of all financial statements,
certificates, audit and other reports, filings, projections,
management letters and other information furnished pursuant thereto;

(b) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal
Year of as of the end of such Fiscal Quarter statements of earnings,
stockholders' equity and cash flow of the Company for such Fiscal
Quarter and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal quarter, certified
by the chief financial Authorized Officer of the Company;

(c) as soon as available and in any event within 120 days after
the end of each Fiscal Year of the Company, a copy of the annual
audit report for such Fiscal Year for the Company, including therein
consolidated balance sheets the Company and its Subsidiaries as of
the end of such Fiscal Year and statements of earnings, stockholders'
equity and cash flow of the Company for such Fiscal Year, in each
case certified in a manner acceptable to the Requisite Holders by
Arthur Andersen LLP or other independent public accountants
acceptable to the Requisite Holders, and to the effect that, in
making the examination necessary for the signing of such annual
report by such accountants, they have not become aware of any Default
or Event of Default that has occurred and is continuing, or, if they
have become aware of such Default or Event of Default, describing
such Default or Event of Default and the steps, if any, being taken
to cure it;

(d) if, as a result of any material change in accounting
principles and policies from those used in the preparation of the
Financial Statements referred to in Section 4.7, the consolidated
financial statements of the Company and its Subsidiaries delivered
pursuant to clause (b), (c) or (k) of this Section 6.1 will differ in
any material respect from the consolidated financial statements that
would have been delivered pursuant to such clauses had no such change
in accounting principles and policies been made, then, at the
reasonable request of the Requisite Holders, financial statements of
the Company for (i) the then current Fiscal Year to the effective
date of such change and (ii) the one full Fiscal Year immediately
preceding the Fiscal Year in which such change is made, in each case
prepared on a pro forma basis as if such change had been in effect
during such periods, and a written statement of the chief accounting
Authorized Officer or chief financial Authorized Officer of the
Company setting forth the differences which would have resulted if
such financial statements had been prepared without giving effect to
such change;

(e) promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all material reports
submitted to the Company or its Subsidiaries by independent certified
public accountants in connection with each annual, interim or special
audit of the financial statements of the Company made by such
accountants, including any comment letter submitted by such
accountants to management in connection with their annual audit;

(f) promptly after the sending or filing thereof, copies of
(i) all financial statements, reports, notices and proxy statements
sent or made available generally by the Company to its
securityholders, (ii) all regular and periodic reports and all
registration statements (other than on Form S-8 or a similar form)
and prospectuses, if any, filed by the Company with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (iii) all press
releases and other statements made available generally by the Company
to the public concerning material developments in the business of the
Company;

(g) promptly upon any officer of the Company obtaining
knowledge (i) of any condition or event that constitutes a Default or
Event of Default, or becoming aware that the any Holder has given any
notice or taken any other action with respect to a claimed Default or
Event of Default, (ii) that any Person has given any notice to the
Company or taken any other action with respect to a claimed default
or event or condition of the type referred to in Section 9.1.2,
(iii) of any condition or event that would be required to be
disclosed in a current report filed by the Company or its
Subsidiaries with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof)
if the Company were required to file such reports under the Exchange
Act, or (iv) of the occurrence of any event or change that has caused
or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of
such claimed Event of Default, Default, event or condition, and what
action the Company has taken, is taking and proposes to take with
respect thereto;

(h) promptly upon any officer of the Company obtaining
knowledge of (i) the institution of, or non-frivolous threat of, any
action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or
affecting the Company or its Subsidiaries or any of its properties
(collectively, "Proceedings") not previously disclosed in writing by
the Company to the Holders or (ii) any material development in any
Proceeding that:

(A) if adversely determined, could give rise to a Material
Adverse Effect, or

(B) seeks to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of,
the transactions contemplated hereby,

written notice thereof together with such other information as may be
reasonably available to the Company to enable the Holders and their
counsel to evaluate such matters; and within twenty days after the
end of each Fiscal Quarter of the Company, a schedule of all
Proceedings involving an alleged liability of, or claims against or
affecting, the Company equal to or greater than $50,000, and promptly
after request by the Requisite Holders such other information as may
be reasonably requested by the Requisite Holders to enable the
Holders and their respective counsel to evaluate any of such
Proceedings;

(i) immediately upon becoming aware of the institution of any
steps by the Company to terminate any Pension Plan, or the failure to
make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien under section 302(f) of ERISA, or
the taking of any action with respect to a Pension Plan which could
result in the requirement that the Company furnish a bond or other
security to the PBGC or such Pension Plan, or the occurrence of any
event with respect to any Pension Plan which could result in the
incurrence by the Company of any material liability, fine or penalty,
or any material increase in the contingent liability of the Company
with respect to any post-retirement Welfare Plan benefit, notice
thereof and copies of all documentation relating thereto;

(j) as soon as available and in any event no later than 60 days
after the beginning of each Fiscal Year, a plan and financial
forecast for such Fiscal Year, including (i) forecasted balance
sheets and forecasted statements of income, stockholders' equity and
cash flow of the Company for each such Fiscal Year, together with an
explanation of the assumptions on which such forecasts are based,
(ii) forecasted statements of income, stockholders' equity and cash
flows of the Company for each month of each such Fiscal Year,
together with an explanation of the assumptions on which such
forecasts are based, and (iii) such other information and projections
as the Requisite Holders may reasonably request;

(k) as soon as practicable and in any event by the last day of
each Fiscal Year, a report in form and substance reasonably
satisfactory to the Requisite Holders outlining all material
insurance coverage maintained as of the date of such report by the
Company and all material insurance coverage planned to be maintained
by the Company in the immediately succeeding Fiscal Year;

(l) as soon as practicable following receipt thereof, copies of
all environmental audits and reports, whether prepared by personnel
of the Company or by independent consultants, with respect to
significant environmental matters at any Facility or which relate to
an Environmental Claim which could result in a Material Adverse
Effect;

(m) with reasonable promptness, written notice of any change in
the Board of Directors of the Company;

(n) promptly upon any Person becoming a Subsidiary of the
Company, (i) a written notice setting forth with respect to such
Person the date on which such Person became a Subsidiary of the
Company and (ii) an Officer's Certificate demonstrating in reasonable
detail compliance with the restrictions contained in Article VII; and

(o) with reasonable promptness, such other information and data
with respect to the financial condition, business, property, assets,
revenues and operations of the Company as the Requisite Holders may
from time to time reasonably request; provided, that the Company
shall not be required to deliver any of the information specified in
this Section 6.1 to any Holder which the Company reasonably
determines to be in, or be affiliated with a Person in, a line of
business which is competitive with the Company's line of business.

SECTION 6.2. Corporate Existence, etc. The Company will, and will
cause its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material
to its business.

SECTION 6.3. Compliance with Laws, etc. The Company will, and will
cause its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to
include:

(a) the maintenance and preservation of its corporate existence
and qualification as a foreign corporation; and

(b) the payment, before the same become delinquent, of all
taxes, assessments and governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income,
businesses or franchises before any penalty accrues thereon, and all
claims (including claims for labor, services, materials and supplies)
for sums that have become due and payable and that by law have or may
become a Lien upon any of its properties or assets, prior to the time
when any penalty or fine shall be incurred with respect thereto;
provided that no such charge or claim need be paid if the same is
being diligently contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.

SECTION 6.4. Maintenance of Properties. The Company will, and will
cause its Subsidiaries to, maintain, preserve, protect and keep its
properties (including all its Intellectual Property) in good repair,
working order and condition, and make necessary and proper repairs,
renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times unless the Company
determines in good faith that the continued maintenance of any of its
properties is no longer economically desirable.

SECTION 6.5. Insurance. The Company will, and will cause its
Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(including business interruption insurance) against such casualties and
contingencies and of such types and in such amounts as is customary in the
case of similar businesses and will, upon request of the Requisite
Holders, furnish to each Qualified Holder at reasonable intervals a
certificate of an Authorized Officer of the Company setting forth the
nature and extent of all insurance maintained by the Company and its
Subsidiaries in accordance with this Section.

SECTION 6.6. Books and Records. The Company will, and will cause
its Subsidiaries to, keep books and records which accurately reflect all
of its business affairs and transactions and permit each Holder of greater
than 25% of the then outstanding principal amount of the Notes or any of
their respective representatives, at reasonable times and intervals, to
visit all of its offices, to discuss its financial matters with its
officers and independent public accountant (and the Company hereby
authorizes such independent public accountant to discuss their financial
matters with each such Holder or its representatives whether or not any
representative of the Company is present) and to examine (and, at the
expense of the Company, photocopy extracts from) any of its books or other
corporate records. The Company shall pay reasonable fees of such
independent public accountant incurred in connection with any such
Holder's exercise of its rights pursuant to this Section.

SECTION 6.7. Environmental Covenant. The Company will, and will
cause its Subsidiaries to,

(a) use and operate all of its Facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;

(b) promptly notify each of the Qualified Holders of (i) any
proposed acquisition of stock, assets or property by the Company or
any of its Subsidiaries that could reasonably be expected to expose
the Company or any of its Subsidiaries to, or result in,
Environmental Claims that could have a Material Adverse Effect or
that could reasonably be expected to have a material adverse effect
on any Governmental Authorization then held by the Company or any of
its Subsidiaries and (ii) any proposed action to be taken by the
Company or any of its Subsidiaries to commence manufacturing,
industrial or other operations that could reasonably be expected to
subject any such Person to additional Environmental Laws, including
Environmental Laws requiring additional environmental permits or
licenses; and

(c) provide such information, certifications and copies of
documents (at the expense of the Company) which the Requisite Holders
may reasonably request from time to time to evidence compliance with
this Section 6.7.

SECTION 6.8. The Company's Remedial Action Regarding Hazardous
Materials. The Company will promptly take, and will cause each of its
Subsidiaries to promptly take, any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials on, under or about any Facility in
order to comply with all applicable Environmental Laws and Governmental
Authorizations applicable to the Company or its Subsidiaries in respect of
such Facility. In the event the Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on,
under or about any Facility, the Company or such Subsidiary will conduct
and complete such remedial action in compliance with all applicable
Environmental Laws, and in accordance with the applicable policies, orders
and directives of all federal, state and local governmental authorities
except when, and only to the extent that, the liability of the Company or
such Subsidiary for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith
by such Person.

SECTION 6.9. Maintenance of Office or Agency. The Company will
maintain (a) an office or agency where the applicable Securities may be
presented for payment, (b) an office or agency where the applicable
Securities may be presented for registration and transfer and for exchange
as provided in this Agreement, and (c) an office or agency where notices
and demands to or upon the Company in respect of the applicable Securities
may be served. The location of such office or agency initially shall be
at 5481 South Packard Avenue, Cudahy, Wisconsin 53110. The Company shall
give to each applicable Holder written notice of any change of location
thereof.

SECTION 6.10. Private Offering. The Company agrees that neither it,
nor anyone acting on its behalf, will offer or sell the Securities, or any
portion of them, other than as contemplated by the Undertaking, if such
offer or sale might bring the issuance and sale of the Securities to any
Purchaser hereunder within the provisions of Section 5 of the Securities
Act nor offer any similar securities for issuance or sale to, or solicit
any offer to acquire any of the same from, or otherwise approach or
negotiate with respect thereto with, anyone if the sale of the Securities
and any such securities could be integrated as a single offering for the
purposes of the Securities Act, including Regulation D thereunder.

SECTION 6.11. Information to Prospective Purchasers. The Company
shall, upon the request of any Holder, deliver to such Holder and any
prospective purchaser designated by such Holder promptly following the
request of such Holder or such prospective purchaser, such information
which such Holder or such prospective purchaser may reasonably request in
order to comply with the information requirements of Rule 144 or Rule 144A
under the Securities Act.

SECTION 6.12. Further Assurances. At any time and from time to time
upon the request of the Requisite Holders, the Company will, and will
cause each of its Subsidiaries to, at their own expense, promptly execute,
acknowledge and deliver such further documents and do such other acts and
things as the Requisite Holders may reasonably request in order to effect
fully the purposes of the Transaction Documents and to provide for payment
of the Obligations in accordance with the terms of this Agreement, the
Notes and the other Transaction Documents.

SECTION 6.13. Board of Directors. The Company and the Purchasers
shall, on or prior to March 15, 1996, use their respective best efforts to
amend the Company's Organic Documents and to take any and all other
actions reasonably necessary to permit the Company's Board of Directors to
consist of four directors.

ARTICLE VII

NEGATIVE COVENANTS

The Company covenants and agrees that, until payment in full of all
of the Obligations, the Company shall perform the obligations set forth in
this Article VII.

SECTION 7.1. [INTENTIONALLY OMITTED].

SECTION 7.2. [INTENTIONALLY OMITTED].

SECTION 7.3. [INTENTIONALLY OMITTED].

SECTION 7.4. Modification of Certain Agreements. The Company will
not consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to, the Transaction
Documents, Warrant, other than any amendment, supplement or other
modification which does not affect the rights of the Holders under the
Transaction Documents.

SECTION 7.5. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into, or cause,
suffer or permit to exist any arrangement or contract with any of its
other Affiliates unless such arrangement or contract is fair and equitable
to the Company or such Subsidiary and is an arrangement or contract of the
kind which would be entered into by a prudent Person in the position of
the Company or such Subsidiary with a Person which is not one of its
Affiliates.

SECTION 7.6. Inconsistent Agreements. The Company will not, and
will not permit any of its Subsidiaries to, enter into any agreement or
arrangement which is inconsistent with the obligations of the Company or
any of its respective Subsidiaries under this Agreement or any other
Transaction Document.

SECTION 7.7. Fiscal Year. The Company will not change its Fiscal
Year.

SECTION 7.8. Limitation of Ranking of Future Indebtedness. The
Company will not, directly or indirectly, incur, create, or suffer to
exist any Indebtedness which is subordinate or junior in right of payment
(to any extent) to any Senior Debt and which is senior or superior in
right of payment (to any extent) to the Notes.

SECTION 7.9. Stay, Extension and Usury Laws. The Company covenants
and agrees (to the extent that it may lawfully do so) that it will not,
and will not permit any of its Subsidiaries to, at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit of or
advantage of, and will use its best efforts to resist any attempts to
claim or take the benefit of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of its obligations under this Agreement, the
Notes or any other Transaction Document, and the Company (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Holders, but will suffer and permit the execution of every such power as
though no such law has been enacted.

ARTICLE VIII

REDEMPTION

SECTION 8.1. Mandatory Redemption. Upon the occurrence of a Change
of Control, and subject to Article X, the Company shall offer to redeem
all of the then outstanding Notes at a redemption price equal to the
aggregate principal amount thereof then outstanding plus accrued and
unpaid interest, within 30 days of the occurrence of such Change in
Control, and shall provide a Notice of Redemption pursuant to Section 8.4.

SECTION 8.2. The Company's Right to Redeem. Subject to Article X,
the Company, at its option, may redeem, at any time, all of the then
outstanding Notes at a redemption price equal to the aggregate principal
amount thereof then outstanding plus accrued and unpaid interest.

SECTION 8.3. Selection of Notes and Portions of Notes to Be
Redeemed. If less than all of the then outstanding Notes are being
redeemed, the Company shall redeem the Notes pro rata, in such manner as
complies with applicable legal requirements, if any. Notes in
denominations of $1,000 may be redeemed only in whole. The Company may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than
$1,000. Provisions of this Agreement that apply to Notes called for
redemption also apply to portions of Notes called for redemption.

SECTION 8.4. Notice of Redemption. A notice of redemption ("Notice
of Redemption") shall be mailed by the Company to each Holder whose Notes
are to be redeemed at such Holder's registered address by first class mail
(i) in the event such Notes are being redeemed pursuant to Section 8.1 in
connection with a Change in Control, not more than 10 days after the
occurrence of such Change in Control, or (ii) in the event such Notes are
being redeemed pursuant to Section 8.2, at least 20 days but not more than
60 days before the applicable Redemption Date. Each Notice of Redemption
shall identify the Notes to be redeemed and shall state:

(a) the applicable Redemption Date;

(b) the applicable Redemption Price;

(d) that the Notes called for redemption must be surrendered to
the Company to collect the applicable Redemption Price;

(e) that, unless the Company defaults in payment of the
Redemption Price, interest on the Notes called for redemption ceases
to accrue on and after the applicable Redemption Date, and the only
remaining right of the Holders of such Notes is to receive payment of
the Redemption Price upon surrender to the Company of the Notes
redeemed;

(f) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in aggregate principal amount equal to the unredeemed portion thereof
will be issued setting forth the remaining principal amount due on
the Stated Maturity Date;

(g) if less than all the Notes then outstanding are to be
redeemed, the identification of the particular Notes (or portion(s)
thereof) to be redeemed, as well as the aggregate principal amount of
Notes to be redeemed and the aggregate principal amount of Note(s) to
be outstanding after such partial redemption; and

(h) the Section of this Agreement pursuant to which the Notes
are to be redeemed.

SECTION 8.5. Effect of Notice of Redemption. Once a Notice of
Redemption is delivered in accordance with Section 8.4 in connection with
a redemption pursuant to Section 8.2, the Notes called for redemption
thereunder shall become due and payable on the applicable Redemption Date
at the applicable Redemption Price.

SECTION 8.6. Payment of Redemption Price. On presentation and
surrender of any Notes in connection with a mandatory redemption in
respect of a Change of Control or an optional redemption with respect to
which a Notice of Redemption has been given, at the place of payment
specified in Section 6.9, such Notes or specified portions thereof shall
be paid and redeemed by the Company on the applicable Redemption Date at
the applicable Redemption Price.

ARTICLE IX

EVENTS OF DEFAULT

SECTION 9.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 9.1 shall constitute an
"Event of Default".

SECTION 9.1.1. Non-Payment of Obligations. The Company shall
default in the payment when due, whether at stated maturity, by
acceleration, by notice of optional redemption or prepayment, by mandatory
redemption or prepayment or otherwise, of (a) any principal or premium of
any Note, (b) any interest on any Note, or (c) any other Obligation (and
the failure to pay such Obligation shall remain unremedied for a period of
ten days).

SECTION 9.1.2. Breach of Warranty. Any representation or warranty
of the Company made or deemed to be made hereunder or in any other
Transaction Document executed by it or any other writing or certificate
furnished by or on behalf of the Company to any Purchaser or any Holder
for the purposes of or in connection with this Agreement or any such other
Transaction Document (including any certificates delivered pursuant to
Article III) is or shall be incorrect when made in any material respect.

SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
The Company shall default in the due performance and observance of any of
its obligations under Article VII or Section 6.1, 6.2, 6.13 or 6.14.

SECTION 9.1.4. Non-Performance of Other Covenants and Obligations.
The Company shall default in the due performance and observance of any
other agreement contained herein or in any other Transaction Document
executed by it, and such default shall continue unremedied for a period of
fifteen days after the earlier of (i) an officer of the Company becoming
aware of such default or (ii) notice thereof shall have been given to the
Company by any Holder.

SECTION 9.1.5. Default on Other Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of the Company having a principal amount,
individually or in the aggregate, in excess of $2,000,000, or a default
shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default
is to accelerate the maturity of any such Indebtedness or such default
shall continue unremedied for any applicable period of time sufficient to
permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable
prior to its expressed maturity.

SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $500,000 shall be rendered against the Company, and
either

(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or

(b) there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.

SECTION 9.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan

(a) the institution of any steps by the Company, any member of
its Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Company or any such member
could be required to make a contribution to such Pension Plan, or
could reasonably expect to incur a liability or obligation to such
Pension Plan, in excess of $100,000; or

(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of ERISA.

SECTION 9.1.8. Bankruptcy, Insolvency, etc. The Company shall

(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become
due;

(b) apply for, consent to, or acquiesce in, the appointment of
a trustee, receiver, sequestrator or other custodian for the Company
or any property of it, or make a general assignment for the benefit
of creditors;

(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Company or for a
substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged
within 60 days, provided that the Company expressly authorizes each
Holder to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend their
rights hereunder and under the other Transaction Documents;

(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the
Company and, if any such case or proceeding is not commenced by the
Company, such case or proceeding shall be consented to or acquiesced
in by the Company or shall result in the entry of an order for relief
or shall remain for 60 days undismissed, provided that the Company
expressly authorizes each Holder to appear in any court conducting
any such case or proceeding during such 60-day period to preserve,
protect and defend their rights hereunder and under the other
Transaction Documents; or

(e) take any corporate action authorizing, or in furtherance
of, any of the foregoing.

SECTION 9.1.9. Dissolution. Any order, judgment or decree shall be
entered against the Company decreeing the dissolution or split up of the
Company, such order shall remain undischarged or unstayed for a period in
excess of 30 days.

SECTION 9.1.10. Impairment of Transaction Documents, etc. Any
Transaction Document shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Company, or the Company
shall, directly or indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability. Without limiting the
foregoing, if the Undertaking is conducted other than in accordance with
(i) Regulation D promulgated under the Securities Act and (ii) Blue Sky
Laws or is declared to be null and void, or the Company denies in writing
that it has any further liability thereunder or under any other
Transaction Document to which it is a party.

SECTION 9.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 9.1.8 shall occur, the
outstanding principal amount of all outstanding Notes and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.

SECTION 9.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through
(d) of Section 9.1.8) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Requisite Holders (or, in the case
such Event of Default is an Event of Default described in Section 9.1.1,
Holders holding at least 25% of the aggregate principal amount of the then
outstanding Notes) may, upon notice or demand and subject to Article X,
declare all or any portion of the outstanding principal amount of the
Notes and other Obligations, to be due and payable, whereupon the full
unpaid amount of such Notes and any and all other Obligations which shall
be so declared due and payable shall be and become immediately due and
payable, without further notice, demand or presentment.

ARTICLE X

SUBORDINATION

SECTION 10.1. Agreement to Subordinate. The Company and each
Holder, by its acceptance of a Note, covenant and agree that the
Subordinated Debt shall, to the extent and in the manner set forth herein
and in Section 11.16, be subordinated in right of payment to the prior
payment in full in cash or Cash Equivalents by the Company of the Senior
Debt, whether now outstanding or hereafter created, incurred, assumed or
guaranteed. The provisions of this Article X shall be given independent
effect so that if a particular payment is prohibited by any one of such
provisions, it shall be prohibited although it otherwise would not be
prohibited by another provision. All provisions of this Article X are for
the benefit of the Senior Agent and the Senior Debtholders and the Senior
Agent and the Senior Debtholders are entitled to enforce such provisions
in all respects and each Holder waives acceptance of such provisions by
the Senior Agent and the Senior Debtholders.

SECTION 10.2. General Subordination to Senior Debt. (a) Until the
Senior Debt is repaid in full in cash or Cash Equivalents and all
commitments to extend Senior Debt have been terminated, no payment or
distribution of assets of the Company of any kind or character shall be
made by the Company for or on account of the Subordinated Debt or any
principal, interest, fees or judgment related thereto, or on account of
the purchase or redemption or other acquisition of Subordinated Debt,
other than payment-in-kind of interest on the Notes pursuant to paragraph
1 thereof. Notwithstanding the foregoing, the consent of the Senior
Debtholders shall not be required for the surrender by holders of
Subordinated Debt of Notes to the Company as consideration for all or any
portion of the exercise price for the Warrants.

SECTION 10.3. Subordination on Dissolution, Liquidation or
Reorganization of the Company. Upon any payment or distribution of cash,
securities or other property of the Company of any kind or character to
creditors upon any dissolution, winding up, total or partial liquidation,
reorganization or marshaling of assets of the Company, whether voluntary
or involuntary, or in bankruptcy, insolvency, receivership proceedings or
upon assignment for the benefit of creditors:

(i) all Senior Debt shall first be paid in full in cash or Cash
Equivalents before any Holder may receive or retain any payment or
distribution of assets of any kind, and

(ii) any payment or distribution of cash, securities or other
property of any kind to which any Holder would be entitled, except
for the provisions of this Article X, shall be paid directly to the
Senior Agent for the benefit of the Senior Debtholders to the extent
necessary to pay all Senior Debt in full in cash or Cash Equivalents,
after giving effect to any concurrent payment or distribution to the
Senior Debtholders, before any such payment or distribution is made
to any Holder.

SECTION 10.4. Limitation on Remedies. (a) So long as any Senior
Debt remains outstanding, no Holder may

(i) declare, or join in the declaration of, any Subordinated
Debt to be due and payable prior to the maturity thereof or otherwise
accelerate the maturity of the principal of the Notes, accrued
interest thereon or other amounts due thereunder, prior to the
acceleration of any Senior Debt, or

(ii) commence any administrative, legal or equitable action or
proceeding against the Company or any Collateral, including, without
limitation, filing or joining in the filing of any insolvency
petition against the Company.

(b) To the extent the Holders of Subordinated Debt have been granted
a Lien in any assets of the Company to secure the Subordinated Debt, the
Liens and Security Interests of Senior Agent and the Senior Debtholder
under the Credit Agreement in the assets of the Company shall be senior
and have priority over the Liens of the Holders. In addition, so long as
any Senior Debt or commitments to advance any Senior Debt remain
outstanding, the Holders shall not exercise rights or remedies in respect
of any of its Liens, nor shall any of the Holders contest in any manner
the validity or enforceability of the Senior Debt or the validity,
enforceability, priority or perfection of any of the Liens or security
interests securing the Senior Debt.

SECTION 10.4.1. Modifications to Senior Debt. The Senior
Debtholders may at any time and from time to time without the consent of
or notice to Holders, without incurring liability to the Holders and
without impairing or releasing the obligations of the Holders under this
Article X or Section 11.16, change the manner or place of payment or
extend the time of payment of or renew, alter or change the amount of any
Senior Debt, release any collateral therefor or amend in any manner any
agreement, note, guaranty or other instrument evidencing or securing or
otherwise relating the Senior Debt. Subject to the final sentence of the
definition of Senior Debt, the terms of this Article X, the subordination
effected hereby, and the rights and the obligations of the Holders, the
Senior Agent or Senior Debtholders arising hereunder, shall not be
affected, modified or impaired in any manner or to any extent by: (a) any
amendment or modification of or supplement to the Credit Agreement or any
of the Subordinated Debt Documents; (b) the validity or enforceability of
any of such documents; or (c) any exercise or non-exercise of any right,
power or remedy under or in respect of the Senior Debt or the Subordinated
Debt or any of the instruments or documents referred to in clause (a)
above. The Holders hereby acknowledge that the provisions of this Article
X are intended to be enforceable at all times, whether before the
commencement of, after the commencement of, in connection with or premised
on the occurrence of a bankruptcy, insolvency or similar proceeding by or
against the Company.

SECTION 10.5. Amendments and Exchanges of Subordinated Debt.
Without the prior written consent of the Requisite Senior Debtholders, but
without limiting the obligations of the Company to the Senior Debtholders
with regard thereto under the Credit Agreement, the Company and the
Holders shall not amend, supplement or otherwise modify the terms of the
Subordinated Debt if the effect of such amendment, supplement or other
modification is to change (to earlier dates) any dates upon which payments
of principal or interest are due on such Subordinated Debt, take any Liens
in any property of the Company other than as expressly set forth herein
and in Section 11.16, change any affirmative or negative covenant in any
significant respect, change the redemption or prepayment provisions
thereof or change any of the subordination provisions thereof (including,
without limitation, subordinating the Subordinated Debt to any other
debt), and if the effect of such amendment, supplement or other
modification is to increase materially the obligations of the obligor
thereunder or to confer any additional rights on the Holders (or a trustee
or other representative on their behalf) which would be adverse to any
Senior Debtholder. Notwithstanding any other term or provision of the
Agreement (including Section 11.1(a)), no amendment, modification,
termination or waiver of any term or provision of Article X or Section
11.16 hereof, or of any definitions used therein, or of the form of any
Note issued hereunder, shall be effective without the express written
consent of the Requisite Senior Debtholders.

SECTION 10.6. Payments Received in Contravention of Subordination
Provisions. If any Holder receives any payment or distribution of assets
in violation of this Article X and Section 11.16, such Holder shall
receive such payment or distribution of assets in trust for the Senior
Debtholders' benefit and shall forthwith remit such payment or
distribution of assets, as the case may be, to the Senior Agent for the
benefit of the Senior Debtholders in the form in which it was received,
together with such endorsements or documents as may be necessary to
effectively negotiate or transfer the same (but without recourse and
without representation or warranty).

SECTION 10.7. Subrogation. After all Senior Debt of the Company has
been paid in full in cash or Cash Equivalents and until the Notes are paid
in full in cash or Cash Equivalents, the Holders shall be subrogated to
any rights of the Senior Debtholders to receive payments or distributions
of assets applicable to such Senior Debt to the extent that payments or
distributions otherwise payable to the Holders have been applied to the
payment of such Senior Debt. A distribution made under this Article X to
the Senior Debtholders that otherwise would have been made to the Holders
is not, as between the Company and the Holders, a payment by the Company
on its Senior Debt.

SECTION 10.8. Relative Rights. This Article X and Section 11.16
defines the relative rights of Holders and Senior Debtholders and this
Article X and Section 11.16 shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Senior Debt. Nothing
in this Article X and Section 11.16 or elsewhere in this Agreement or any
Note is intended to or shall:

(a) impair, as between the Company and the Holders, the
Company's obligations, which are absolute and unconditional, to pay
principal of, and premium, if any, and interest on, the Notes in
accordance with their terms;

(b) affect the relative rights of the Holders and the Company's
creditors other than the rights of the Holders in relation to the
Senior Debtholders; or

(c) prevent the Holders from accelerating the Subordinated Debt
in accordance with Sections 9.3 and 10.4 (a)(i) and exercising their
available remedies upon a Default or Event of Default, after the
Senior Debt has been paid in full and the Credit Agreement has been
terminated.

The failure to make a payment on account of principal of, or interest
on, the Notes by reason of any provision of this Article X shall not be
construed as preventing the occurrence of an Event of Default under
Section 9.1.1.

SECTION 10.9. Reliance on Judicial Order or Decree or Senior Agent
Certificate. The Holders shall be entitled to rely upon any order or
decree of any court of competent jurisdiction or any certificate of the
Senior Agent in ascertaining any amount to be paid or distributed to the
Senior Debtholders and all other facts pertinent to such payment or
distribution or to this Article X, provided that, in the case of any such
order or decree, such court has been fully apprised of the provisions of,
or the order or decree makes reference to, the provisions of this Article
X.

SECTION 10.10. Proof of Claim. In the event that, while any Senior
Debt is outstanding, any bankruptcy or insolvency proceeding is commenced
by or against the Company or its property and the Holders have not filed
appropriate proofs of claim as of the tenth business day preceding the bar
date therefor, the Senior Agent on behalf of the Senior Debtholders will
be irrevocably authorized and empowered (in its own name or otherwise),
but shall have no obligation, to file appropriate proofs of claim for the
exercise or enforcement of any of the rights or interests of the Holders
with respect to the Subordinated Debt in such proceeding. Notwithstanding
the foregoing, neither the Senior Agent nor any Senior Debtholder shall
have any right whatsoever to vote any claim that any Holder may have in
such proceeding to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or extension.

ARTICLE XI

MISCELLANEOUS

SECTION 11.1. Amendments and Waivers.

(a) Consent of Holders. No amendment, modification, termination or
waiver of any provision of this Agreement, the Notes, or consent to any
departure by the Company therefrom, shall in any event be effective
without the written concurrence of the Requisite Holders; provided,
however, that no amendment, modification, termination or waiver of any
term or provision of Article X or Section 11.16 hereof, or of any
definitions used therein, or of the form of any Note issued hereunder,
shall be effective without the express written consent of the Requisite
Senior Debtholders. Without the consent of each Holder affected, no
amendment, modification, termination or waiver may (with respect to any
Notes held by a non-consenting Holder of Notes):

(i) reduce the principal amount of, or change the Stated
Maturity Date of, any Note of such Holder;

(ii) amend the provisions with respect to the redemption of any
Note of such Holder pursuant to Sections 8.1, 8.2 and 8.3 (including
reducing any applicable Redemption Price);

(iii) reduce the rate of, or change the time for payment of,
interest on any Note of such Holder;

(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes;

(v) make the principal of, premium, if any, or the interest on,
any Note of such Holder payable in any manner other than that stated
in this Agreement and the Notes;

(vi) waive a redemption payment with respect to any Note of
such Holder;

(vii) make any change to the subordination provisions of this
Agreement that adversely affects any Holder;

(viii) make any change to the definition of "Requisite
Holders";

(ix) reduce the percentage of the aggregate outstanding
principal amount of Notes necessary to accelerate the Notes under
Section 9.3 or modify the right of a Holder to accelerate its Note
under Section 9.3;

(x) make any change to the transfer provisions of Section 11.2
that adversely affects the ability of a Holder to make any transfer
described therein; or

(xi) make any change in the foregoing amendment and waiver
provisions.

After an amendment, modification, termination or waiver under this
Section 11.1 becomes effective, the Company shall mail to the Holders
affected thereby a notice briefly describing such amendment, modification,
termination or waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such amendment, modification, termination or waiver.

(b) Solicitation of Noteholders. The Company will not solicit,
request or negotiate for or with respect to any proposed amendment,
modification, termination or waiver of any of the provisions of this
Agreement or the Notes unless each Holder of the Notes (irrespective of
the amount of Notes then owned by it) shall be informed thereof by the
Company (but only to the extent the Company has been provided with
addresses for the Holders) and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any amendment,
modification, termination or waiver effected pursuant to the provisions of
this Section 11.1 shall be delivered by the Company to each Holder of
outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by the Holder or Holders of the requisite
percentage of outstanding Notes (but only to the extent the Company has
been provided with the addresses for the Holders).

(c) Revocation and Effect of Consents. Until an amendment,
modification, termination or waiver becomes effective, a consent to it by
a Holder is a continuing consent by the Holder and every subsequent Holder
of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on
any Note. However, any such Holder of subsequent Holder may revoke the
consent as to its Note or portion of its Note by notice to the Company
received before the date on which the Requisite Holders have consented
(and not theretofore revoked such consent) to such amendment,
modification, termination or waiver.

The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any
amendment, modification, termination or waiver, which record date shall be
at least 30 days prior to the first solicitation of such consent. If a
record date is fixed, then notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date.

After an amendment, modification, termination or waiver becomes
effective, it shall bind every Holder of a Note, unless it makes a change
described in any of clauses (i) through (viii) of Section 11.1(a), in
which case, the amendment, modification, termination or waiver shall bind
only each Holder of a Note who has consented to it and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note; provided that any such waiver shall not impair
or affect the right of any Holder to receive payment of principal of,
premium (if any) and interest on a Note, on or after the respective due
dates expressed in such Note, or to bring suit for the enforcement of any
such payment on or after such respective dates without the consent of such
Holder.

SECTION 11.2. Transfers. Each Holder shall be permitted to transfer
any Note or any portion thereof (and the rights relating thereto under
this Agreement and the other Transaction Documents) to any Person;
provided that

(i) such transfer is made pursuant to a registration statement
under the Securities Act (it being acknowledged that the Company
shall not be obligated to assist in any manner in any such
registration) or pursuant to an exemption from the registration
requirements of the Securities Act;

(ii) if such transfer is being made pursuant to an exemption
from such registration requirements and if requested by the Company,
counsel for such Holder (which counsel may be internal counsel)
furnishes to the Company an opinion to the effect that such transfer
is being made pursuant such an exemption;

(iii) the applicable transferee is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act;

(iv) such transferee represents to the Company in writing that
it is acquiring such Note solely for its own account and not as
nominee or agent for any other Person (other than for such managed
accounts, if applicable) and not with a view to, or for offer or sale
in connection with, any distribution thereof (within the meaning of
the Securities Act) that would be in violation of the securities laws
of the United States of America or any state thereof, without
prejudice, however, to its right at all times to sell or otherwise
dispose of all or any part of said Note pursuant to a registration
statement under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all times
within its control;

(v) unless the Holder making such transfer is making such
transfer to any of its Affiliates or any of its partners or with the
Company's prior written consent, such transfer is of (A) all the
Notes then held by such Holder or (B) a Note or Notes (or a portion
thereof) evidencing an aggregate principal amount outstanding of not
less than $1,000,000.

Within three Business Days after its receipt of notice that a
transfer is being made pursuant to this Section 11.2, but not prior to the
effective date of such transfer, the Company shall deliver to the
applicable transferee a new Note evidencing the aggregate principal amount
transferred and, if the Holder making such transfer is retaining an
interest in the Notes, a replacement Note in the aggregate principal
amount being retained by such Holder (such Note to be in exchange for, but
not in payment of, the Note then held by such Holder). Each such Note
shall be dated the date of the predecessor Note. The Holder making such
transfer shall mark the predecessor Note "exchanged" and deliver it to the
Company.

SECTION 11.3. Notices. Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to
be given shall be in writing and shall be made by personal service,
facsimile, United States air mail or reputable courier service:

(a) if to the Purchasers or any subsequent Holder, at the
address or telecopier number set forth on the signature pages hereof,
or such other address as shall be designated in a written notice
delivered to the Company, with a copy to Mayer, Brown & Platt,
1675 Broadway, New York, New York 10019, Facsimile No. (212) 262-
1910, Attention: James B. Carlson; and

(b) if to the Company, at the address or telecopy number set
forth on the signature pages hereof, or such other address as shall
be designated in a written notice delivered to the other parties
hereto.

Unless otherwise specifically provided herein, any notice or other
communication shall be deemed to have been given when delivered in person
or by courier service, upon receipt of facsimile (electronically
confirmed), or five Business Days after depositing it in the United States
air mail with postage prepaid and properly addressed.

SECTION 11.4. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence of a
Default or an Event of Default if such action is taken or condition
exists.

SECTION 11.5. Survival of Representations, Warranties and
Agreements. (a) All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the
issuance and sale of the Securities hereunder.

(b) Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Company set forth in Sections 2.2,
2.5, 2.8, and 2.11 shall survive the payment of the Notes, the exercise of
the Warrants, and the termination of this Agreement.

SECTION 11.6. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Holder in the exercise of any
power, right or privilege hereunder or under any other Transaction
Document shall impair such power, right or privilege or be construed to be
a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement and the other
Transaction Documents are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

SECTION 11.7. Severability. Any provision of this Agreement, the
Notes or any other Transaction Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating or impairing the remaining
provisions of this Agreement, the Notes or such other Transaction Document
or affecting the validity or enforceability of such provision in any other
jurisdiction.

SECTION 11.8. Obligations Several; Independent Nature of Senior
Debtholders' Rights. The obligations of the Holders hereunder are several
and no Holder shall be responsible for the obligations of any other Holder
hereunder. Nothing contained herein or in any other Transaction Document,
and no action taken by the Holders pursuant hereto or thereto, shall be
deemed to constitute the Holders as a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time
hereunder to each Holder shall be a separate and independent debt, and
each Holder shall be entitled to protect and enforce, subject to the
express provisions of this Agreement, its rights arising out of this
Agreement and it shall not be necessary for any other Holder to be joined
as an additional party in any proceeding for such purpose.

SECTION 11.9. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given
any substantive effect.

SECTION 11.10. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS.

SECTION 11.11. Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of each Purchaser (including each Holder).

SECTION 11.12. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY TRANSACTION PARTY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY
OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT AND THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER TRANSACTION DOCUMENT
OR SUCH OBLIGATION. The Company hereby agrees that service of all process
in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to such Person at its address
provided on the signature pages hereto, such service being hereby
acknowledged by such Person to be sufficient for personal jurisdiction in
any action against such Person in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or
shall limit the right of any Holder to bring proceedings against the
Company in the courts of any other jurisdiction.

SECTION 11.13. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a
business relationship, that each has already relied on this waiver in
entering into this Agreement, and that each will continue to rely on this
waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES ISSUED
HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.

SECTION 11.14. Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents or supplements hereto or in connection
herewith may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages
may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to
the same document.

SECTION 11.15. Understanding Among the Purchasers. The
determination of each Purchaser to purchase the Securities pursuant to
this Agreement has been made by such Purchaser independent of any other
Purchaser and independent of any statements (including any projections) or
opinions as to the advisability of such purchase or as to the properties,
business, prospects or condition (financial or otherwise) of the Company
which may have been made or given by any other Purchaser or by any agent
or employee of any other Purchaser. In addition, it is acknowledged by
each Purchaser that no other Purchaser has acted as an agent of or in
concert with such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as an agent of such
Purchaser in connection with monitoring its investment hereunder.

SECTION 11.16. Grant of Security. (a) The Company hereby assigns
and pledges to the Purchasers for their respective benefit and the ratable
benefit of each of the Holders, and hereby grants to the Purchasers, for
their respective benefit and the ratable benefit of each of the Holders, a
security interest in all Collateral. The Company and each Holder, by its
acceptance of a Note, covenant and agree that the Liens granted hereunder
or under any other document or instrument to the Holders shall, to the
extent and in the manner herein set forth, (i) not extend to any property
of the Company other than the Collateral, and (ii) be subordinated and
junior to the Liens of the Senior Agent on the terms set forth in this
Section 11.16. The provisions of this Section 11.16 shall be given
independent effect so that if a particular action is prohibited by any one
of such provisions, it shall be prohibited although it otherwise would not
be prohibited by another provision. All provisions of Section 11.16 are
for the benefit of the Senior Agent and the Senior Debtholders and the
Senior Agent and the Senior Debtholders are entitled to enforce such
provisions in all respects, and each Holder waives acceptance of such
provisions by the Senior Agent and Senior Debtholders.

(b) Notwithstanding the date, manner or order of grant, attachment
or perfection of the Liens in the Collateral granted to or for the benefit
of the Holders, and notwithstanding any provision of the Uniform
Commercial Code, or any other applicable law or decisions, the Senior
Agent under the Credit Agreement shall have a first and prior lien and
security interest in the Collateral and all proceeds thereof to secure the
Senior Debt, and any Lien in the Collateral held by or for the benefit of
the Holders shall be junior and subordinate to all Liens in the Collateral
held by or for the benefit of the Senior Agent under the Credit Agreement.

(c) Each Holder acknowledges that the priorities provided in this
Section 11.16 shall not be affected or impaired in any manner whatsoever
including, without limitation, on account of (i) the invalidity,
irregularity or unenforceability of all or any part of the Credit
Agreement, (ii) any amendment, change or modification of the Credit
Agreement or (iii) any impairment, modification, change, exchange, release
or subordination of or limitation on, any liability of, or stay of actions
or lien enforcement proceedings against, any of the Company, its property,
or its estate in bankruptcy resulting from any bankruptcy, arrangement,
readjustment, composition, liquidation, rehabilitation, similar proceeding
or otherwise involving or affecting the Company. This Section 11.16 shall
continue and be effective until all Senior Debt shall have been
indefeasibly paid in full and any commitment to advance Senior Debt has
been terminated, or all the Liens of the Senior Agent and the Senior
Debtholders shall have been consensually released by the Senior Agent and
the Senior Debtholders.

(d) Except as otherwise expressly permitted in this Section 11.16,
(i) the Holders shall not exercise or enforce any rights or remedies with
respect to the Collateral or in any manner interfere with the Liens and
security interests of the Senior Agent and the Senior Debtholders or the
enforcement thereof and (ii) the sole right of the Holders with respect to
the Collateral is to hold a Lien in the Collateral to the extent granted
herein. The Senior Agent and Senior Debtholders shall have the right to
specific performance by the Company and the Holders of the provisions of
Article X and Section 11.16 hereof, in addition to any other remedies they
may have at law or in equity. The Holders and the Company hereby
irrevocably waive, to the extent that they may do so under applicable law,
any defense based on the adequacy of a remedy at law which may be asserted
as a bar to the remedy of specific performance in any action brought
against the Company or the Holders for specific performance of the
provisions of Article X and Section 11.16 hereof by the Senior Agent or
the Senior Debtholders.

(e) Notwithstanding anything to the contrary contained in the Credit
Agreement or otherwise provided in law or equity, so long as any Senior
Debt, or any commitment to advance any such Senior Debt, is outstanding,
the Senior Agent and Senior Debtholders shall have the exclusive right
(whether exercised pursuant to a bankruptcy or similar proceeding or
otherwise) solely on behalf of the Senior Debtholders, without the consent
of any Holder: (i) to take action with respect to, to release or consent
to the release of the Liens of the Senior Agent and the Senior Debtholders
and of the Holders of the Subordinated Debt in respect of, or to
substitute, sell or otherwise dispose of, the Collateral, in accordance
with the Credit Agreement free and clear of the Liens of the Senior
Debtholders and Holders of the Subordinated Debt or as permitted by
applicable law; (ii) to enforce and realize upon the Liens on the
Collateral held by the Senior Agent on behalf of the Senior Debtholders,
in accordance with the Credit Agreement or as permitted by applicable law,
including to conduct any public or private sale of all or any portion of
the Collateral or turnover of all or any portion of the Collateral under
Article 9 of the Uniform Commercial Code, (iii) to determine whether or
not to accept a deed in lieu of foreclosure or similar transfer of all or
any portion of the Collateral, (iv) to enforce all rights and privileges
related to the Collateral accruing to the Senior Agent or the Senior
Debtholders by reason of, and in accordance with, the Credit Agreement,
including, without limitation, to grant or refuse to grant any and all
consents, approvals and waivers, to exercise all of its rights and
privileges as attorney-in-fact for purposes of carrying out the terms of
the Credit Agreement, (v) to take any and all appropriate action and to
execute any and all documents and instruments related to the Collateral
which may be necessary or desirable to accomplish the purposes of this
Section 11.16 or the Credit Agreement and (vi) to make all decisions on
behalf of itself, and the Senior Debtholders under the Credit Agreement,
in any such circumstances. In exercising its rights as aforesaid, the
Senior Agent shall have sole control over the timing, circumstances and
manner of exercising its rights.

(f) Any proceeds of Collateral received by the Holders in
contravention of this Agreement shall be segregated and held in trust for
the benefit of the Senior Agent and paid over to the Senior Agent in the
same form as received, with any necessary endorsements, or as a court of
competent jurisdiction may otherwise direct.

(g) This Section 11.16 shall be applicable both before and after the
commencement, whether voluntary or involuntary, of any case of the Company
under the Bankruptcy Code, and all references herein to the Company, shall
be deemed to apply to such entity as debtor in possession and to any
trustee in bankruptcy for the estate of such entity.

(h) So long as any Senior Debt, or commitment to advance any Senior
Debt, is outstanding, in any bankruptcy or similar proceeding of the
Company, the Senior Agent and the Senior Debtholders shall have the sole
right to seek, and the Holders shall not seek, in respect of any part of
the Collateral or proceeds thereof or any Lien which may exist thereon any
adequate protection rights pursuant to Section 361 of the Bankruptcy Code
or otherwise, any relief from or modification of the automatic stay as
provided in section 362 of the Bankruptcy Code or otherwise, the entry of
any cash collateral order pursuant to Section 363 of the Bankruptcy Code
or otherwise, any sale of all or any portion of the Collateral pursuant to
Section 363 of the Bankruptcy Code or otherwise, or the entry of any
financing order under Section 364 of the Bankruptcy Code or otherwise,
unless in each instance the Senior Agent shall consent thereto. The
Holders shall not oppose any such relief or modification sought by the
Senior Agent or the Senior Debtholders under the Credit Agreement with
respect to all or any portion of the Collateral.

(i) In the event the Senior Agent or any of the Senior Debtholders
under the Credit Agreement is required under any bankruptcy or other law
to return to the Company, the estate in bankruptcy thereof, any third
party or any trustee, receiver or other representative of the Company, any
payment or distribution of assets, whether in cash, property or
securities, including, without limitation, any Collateral or any proceeds
of the Collateral previously received by the Senior Agent or such Senior
Debtholder under the Credit Agreement (a "Recovered Distribution"), then
to the extent permitted by law, this Agreement and the subordination of
the Liens of the Holders in such Collateral or proceeds as set forth
herein shall be reinstated on the terms set forth herein with respect to
any such Recovered Distribution to the extent that the claim of the Senior
Agent and the Senior Debtholders under the Credit Agreement resulting from
the return of such Recovered Distribution is entitled to a priority under
such bankruptcy or other law at least equal to the general unsecured
obligation of the Company existing prior to the commencement of any such
bankruptcy case or other proceeding.

(j) Nothing contained herein shall prevent the Holders from filing
claims or pleadings or otherwise participating in any bankruptcy or
similar proceeding of the Company provided the same is not inconsistent
with and does not violate the terms and conditions of this Agreement.

(k) So long as any Senior Debt or commitment to extend any such
Senior Debt, is outstanding, the Holders, to the fullest extent permitted
by applicable law, waive, with respect to the Collateral, any requirement
regarding, and agree not to demand, request, plead or otherwise claim the
benefit of, any marshalling, appraisement, valuation or other similar
right that may otherwise be available under applicable law.

(l) Until all Senior Debt owed to the Senior Agent and the Senior
Debtholders has been finally and indefeasibly paid in full and any
commitment to advance Senior Debt has been terminated, the Holders shall
have no right to subrogation with respect to the Collateral.

(m) The Holders agree that neither the Senior Agent nor the Senior
Debtholders under the Credit Agreement shall have any liability to the
Holders for, and each of the Holders hereby waives, any claim which such
Holder may have at any time against the Senior Agent or the Senior
Debtholders under the Credit Agreement arising out of any and all actions
which the Senior Agent or the Senior Debtholders under the Credit
Agreement take or omit to take, in a commercially reasonable manner and
not otherwise in violation of the express provisions of this Agreement,
with respect to the possession, administration, foreclosure upon or sale,
liquidation or other disposition, or valuation, use, protection or
release, of the Collateral.

(n) If any of the Senior Agent, the Senior Debtholders under the
Credit Agreement, or the Holders shall enforce its rights or remedies in
violation of the terms of this section 11.16, the Company agrees that it
shall not raise such violation as a defense to the enforcement by any such
or other party of the Credit Agreement, nor assert such violation as a
counterclaim or basis for setoff or recoupment against any such party.

(o) This Section 11.16 is solely for the purpose of defining the
rights and priorities of the Senior Agent and the Senior Debtholders, on
the one hand, and the Holders, on the other, and their respective
successors and assigns with respect to the Collateral, and no other
person, firm, entity or corporation shall have any right, benefit,
priority or interest under, or because of the existence of, this Section
11.16, nor shall this Section 11.16 affect the obligations of the Company
to the Senior Debtholders under the Credit Agreement, the Senior Agent or
the Holders, which obligations shall remain absolute and unconditional in
all circumstances. This Section 11.16 shall not inure to the benefit of
the Company or its respective successors and assigns.

(p) Unless and until the Senior Debt has been paid in full and the
Credit Agreement shall have been terminated, the Senior Agent shall have
the sole and exclusive right, subject to the rights of the Company under
the Agreement, to adjust settlement for any insurance policy covering the
Collateral in the event of any loss thereunder and to approve any award
granted in any condemnation or similar proceeding affecting the
Collateral. Unless and until the Senior Debt shall have been paid in full
and the Agreement shall have been terminated, all proceeds of any such
policy and any such award shall be paid to the Senior Agent, provided that
any such proceeds or awards remaining after payment of the Credit shall be
promptly delivered to the Holders for application to the Subordinated
Debt.

(q) The Senior Agent hereby agrees to hold, for the benefit of the
Holders, as possessory agent, any Collateral in respect of which a
security interest is perfected by possession and has actually been
delivered to the Senior Agent (the "Possessory Collateral"), including
without limitation, all negotiable collateral so delivered and the Senior
Agent hereby acknowledges that it will hold all of such Possessory
Collateral as agent on behalf of the Holders in order to perfect the Lien
of the Holders in such Possessory Collateral. The Senior Agent's sole
role as agent on behalf of the Holders in accordance with this Section
11.16 shall be to hold any such Possessory Collateral on behalf of the
Holders and deliver the same to the Holders (or any agent of the Holders
designated in writing to the Senior Agent) upon payment in full of the
Senior Debt and the termination of the Credit Agreement but subject to its
right to release such Collateral pursuant to the Credit Agreement and this
Section 11.16. Notwithstanding anything herein to the contrary, the
Senior Agent's obligation to hold Possessory Collateral on behalf of the
Holders shall extend only to that Possessory Collateral which the Senior
Agent holds on its own behalf, and the Senior Agent shall have no
liability to the Holders for its failure to hold any Possessory
Collateral.

(r) Any collateral document executed in connection with this
Agreement to secure the Subordinated Debt shall expressly state that any
lien or security interest evidenced by or referenced in such collateral
document is subordinated to the Liens of the Senior Agent in accordance
with this Section 11.16.

(s) Other than as set forth in the Credit Agreement, no UCC
statement, mortgage or similar document of record shall be filed in any
recording office or similar location with respect to the Liens of the
Holders unless and until a UCC statement, mortgage or similar document of
record has been filed in such office or location with respect to the Liens
and security interests of the Senior Agent and the Senior Debtholders.
Each UCC or other recording document filed with respect to the Liens of
the Holders shall contain a description of collateral that is no broader
than any description filed on behalf of the Senior Agent and the Senior
Debtholders.

(t) Other than as set forth in the Credit Agreement, prior to the
filing of any UCC statement, mortgage or similar document of record in any
recording office or similar location, an appropriate UCC termination
statement or release for such filing in recordable form shall be delivered
to the Senior Agent to be held in trust and filed in connection with the
Senior Debtholders' rights under this Section 11.16. Upon payment in full
of the Senior Debt and termination of any commitment to extend Senior
Debt, the Senior Agent shall return such UCC termination statements or
releases (if not filed) to the Holders.

(u) If the Holders obtain any interest in Collateral contrary to any
provision of this Section 11.16, such interest shall be deemed null and
void.

SECTION 11.17. Entire Agreement. This Agreement, together with the
Securities, the Warrant Agreement and the schedules and exhibits hereto
and thereto is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding, written or verbal, of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement together with the
Securities and the Warrant Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as
of the day and year first above written.

LADISH CO., INC.

By: /s/ Wayne E. Larsen
Name: Wayne E. Larsen
Title: Secretary

Notice Address:

5481 South Packard Avenue
Cudahy, Wisconsin 53110
Attention: Wayne E. Larsen
Telephone: 414-747-2935
Facsimile: 414-747-2890

GRACE BROTHERS, LTD.

By: /s/ Bradford T. Whitmore
Name: Bradford T. Whitmore
Title:

Notice Address:

1560 Sherman Avenue
Suite 900
Evanston, Illinois 60201
Attention: Brad Whitmore
Telephone: 708-733-1230
Facsimile: 708-733-0339

(signature page to Purchase Agreement)

ING EQUITY PARTNERS, L.P. I

By: Lexington Partners, L.P.,
its General Partner

By: Lexington Partners, Inc.,
its General Partner

By: /s/ Gregory P. Flynn
Name: Gregory P. Flynn
Title:

Notice Address:

135 East 57th Street
16th Floor
New York, New York 10022
Attention: Gregory P. Flynn
Telephone: 212-446-1533
Facsimile: 212-750-2790

STATE STREET RESEARCH
HIGH INCOME FUND

By: /s/ Scott B. Richards
Name: Scott B. Richards

STATE STREET RESEARCH MANAGED ASSETS

By: /s/ Scott B. Richards
Name: Scott B. Richards

FRANKLIN PRINCIPLE MATURITY TRUST

By: /s/ Chauncey Lufkin
Name: Chauncey Lufkin

SALOMON BROTHERS INC.

By: /s/ Robert Okun
Name: Robert Okun

WYNNEFIELD PARTNERS

By: /s/ Nelson Obus
Name: Nelson Obus

C.C. PARTNERS, LTD.

By: /s/ Cromwell Coulson
Name: Cromwell Coulson

EBI INDEMNITY COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

SECURITY REINSURANCE COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

GUARANTY NATIONAL INSURANCE COMPANY

By: /s/ Raymond J. Schuyler
Name: Raymond J. Schuyler

CANYON PARTNERS INCORPORATED

By: /s/ Mitchell R. Julis
Name: Mitchell R. Julis

NEW GENERATION LIMITED PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

NEW GENERATION INSTITUTIONAL LIMITED
PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

CARUCCI FAMILY PARTNERS

By: /s/ Walter P. Carucci
Name: Walter P. Carucci

PRUDENTIAL SECURITIES

By: /s/ David W. Schwartz
Name: David W. Schwartz

MORGAN STANLEY & CO.

By: /s/ Barry Bergman
Name: Barry Bergman

/s/ Marcus Lane

/s/ Jay Zidell

/s/ Joel T. Leonard

/s/ Charles F. Nichols

/s/ Chester Sobol

/s/ Robert J. Noel

/s/ Lawrence Hammond

<PAGE>

SCHEDULE I

Purchasers Securities Purchase Amount

Grace Brothers Ltd. Note in principal amount of $3,435,088
$9,330,866

Warrant to purchase 17,175,440
shares of Common Stock

ING Equity Note in principal amount of $3,435,088
Partners L.P. I $9,330,866

Warrant to purchase 17,174,440
shares of Common Stock

State Street Research Note in principal amount of $181,135
High Income Fund $9,330,866

Warrant to purchase 905,675
shares of Common Stock

State Street Research Note in principal amount of $18,114
Managed Assets $9,330,866

Warrant to purchase 90,750
shares of Common Stock

Franklin Principle Note in principal amount of $895,315
Maturity Trust $9,330,866

Warrant to purchase 4,476,575
shares of Common Stock

Salomon Brothers Inc Note in principal amount of $433,330
$9,330,866

Warrant to purchase 2,166,650
shares of Common Stock

Wynnefield Partners Note in principal amount of $72,280
$9,330,866

Warrant to purchase 361,400
shares of Common Stock

C.C. Partners, Ltd. Note in principal amount of $54,340
$9,330,866

Warrant to purchase 271,700
shares of Common Stock

EBI Indemnity Company Note in principal amount of $27,170
$9,330,866

Warrant to purchase 135,850
shares of Common Stock

Security Reinsurance Note in principal amount of $63,397
Company $9,330,866

Warrant to purchase 316,985
shares of Common Stock

Guaranty National Note in principal amount of $90,567
Insurance Company $9,330,866

Warrant to purchase 452,835
shares of Common Stock

Canyon Partners Note in principal amount of $110,000
Incorporated $9,330,866

Warrant to purchase 550,000
shares of Common Stock

New Generation Note in principal amount of $38,491
Limited Partnership $9,330,866

Warrant to purchase 192,455
shares of Common Stock

New Generation Note in principal amount of $6,793
Institutional Limited $9,330,866
Partnership
Warrant to purchase 33,965
shares of Common Stock

Carucci Family Note in principal amount of $67,576
Partners $9,330,866

Warrant to purchase 337,880
shares of Common Stock

Prudential Securities Note in principal amount of $315,244
$9,330,866

Warrant to purchase 1,576,220
shares of Common Stock

Morgan Stanley & Co. Note in principal amount of $41,800
$9,330,866

Warrant to purchase 209,000
shares of Common Stock

Marcus Lane Note in principal amount of $4,529
$9,330,866

Warrant to purchase 22,645
shares of Common Stock

Jay Zidell Note in principal amount of $6,966
$9,330,866

Warrant to purchase 34,830
shares of Common Stock

Joel T. Leonard Note in principal amount of $13,933
$9,330,866

Warrant to purchase 69,665
shares of Common Stock

Charles F. Nichols Note in principal amount of $17,416
$9,330,866

Warrant to purchase 87,080
shares of Common Stock

AMENDED AND RESTATED WARRANT AGREEMENT,

dated as of February 22, 1996

between

LADISH CO., INC.

and

the Purchasers

listed on the signature pages hereto.

TABLE OF CONTENTS

Page

SECTION 1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1

SECTION 2. Issuance and Delivery of Warrants . . . . . . . . . . . . 7

SECTION 3. Execution of Warrant Certificates . . . . . . . . . . . . 7

SECTION 4. Registration . . . . . . . . . . . . . . . . . . . . . . 7

SECTION 5. Warrants; Exercise of Warrants . . . . . . . . . . . . . 7

SECTION 6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . 9

SECTION 7. Fractional Interests . . . . . . . . . . . . . . . . . . 9

SECTION 8. Reservation of Warrant Shares . . . . . . . . . . . . . . 9

SECTION 9. Adjustment of Exercise Price and Number of Warrant
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SECTION 10. Payments in Respect of Dividends and Distributions . . . 16

SECTION 11. Preemptive Rights . . . . . . . . . . . . . . . . . . . 16

SECTION 12. Registration Rights . . . . . . . . . . . . . . . . . . 18

SECTION 13. Representations and Warranties . . . . . . . . . . . . . 18

SECTION 14. Covenants . . . . . . . . . . . . . . . . . . . . . . . 18

SECTION 15. Amendments and Waivers . . . . . . . . . . . . . . . . . 22

SECTION 16. Transfers . . . . . . . . . . . . . . . . . . . . . . . 23

SECTION 17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . 24

EXHIBIT A - Form of Warrant Certificate

EXHIBIT B - Registration Rights Provisions

AMENDED AND RESTATED WARRANT AGREEMENT

THIS AMENDED AND RESTATED WARRANT AGREEMENT, dated as of
February 22, 1996 (this "Agreement"), by and among LADISH CO., INC., a
Wisconsin corporation (the "Company"), and each of the Purchasers listed
on the signature pages attached hereto (together with their respective
successors and assigns, the "Purchasers").

W I T N E S S E T H:

WHEREAS, the Company and certain of the Purchasers are
parties to the Warrant Agreement, dated as of December 22, 1995 (the
"Existing Warrant Agreement");

WHEREAS, the parties to the Existing Warrant Agreement desire
that such agreement be amended and restated as set forth in this
Agreement;

WHEREAS, the Company proposes to issue to the Purchasers
Warrants (such capitalized term and other capitalized terms used in these
recitals without definition shall have the meanings provided in Section 1)
to purchase shares of the Common Stock, no par value per share (the
"Common Stock"), of the Company pursuant to an Amended and Restated Note
and Warrant Purchase Agreement dated as of the date hereof (as amended
from time to time pursuant to the terms thereof and hereof, the "Note and
Warrant Purchase Agreement"), in the amounts set forth on Schedule I
attached thereto by and among the Company and the Purchasers;

NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties hereto agree (i) that the
Existing Warrant Agreement is hereby amended and restated, and (ii)
further as follows:

SECTION 1. Defined Terms. (a) The following terms (whether
or not underscored) when used in this Agreement, including its preamble
and recitals, shall, except where the context otherwise requires, have the
following meanings:

"Equivalent Security" means, with respect to any security (a
"first security") issued or to be issued by any Person, a security (an
"equivalent security") of such Person that is identical in rights and
benefits to such first security, except that (a) the equivalent security
shall not be entitled to vote on any matter on which holders of voting
securities of such Person are entitled to vote, other than as required by
applicable law or with respect to any amendment or repeal of any provision
of the Organic Documents of such Person or any other agreement or
instrument pursuant to which the equivalent security was issued which
provision specifically affects such equivalent security, (b) subject to
such reasonable restrictions as the applicable Holder may request, the
equivalent security shall be convertible in a one-to-one ratio into the
first security and (c) the terms of the equivalent security shall include
such provisions requested by the applicable Holder as are reasonable and
equitable to ensure that (i) the equivalent security is treated comparably
to the first security with respect to dividends, distributions, stock
splits, reclassifications, capital reorganizations, mergers,
consolidations and other similar events and transactions, (ii) the
conversion right provided in clause (b) above is equitably protected and
(iii) the acquisition of the equivalent security will not cause such
Holder to violate any applicable law.

"Excluded Securities" means:

(a) securities issued pursuant to a stock dividend, stock
split or subdivision;

(b) Common Stock issued upon the exercise of any Warrant;
and

"Fully-Diluted Basis" means, as applied to the calculation of
the number of shares of Common Stock outstanding at any time, after giving
effect to (a) all shares of Common Stock outstanding at the time of
determination, (b) all shares of Common Stock issuable upon the
conversion, exercise or exchange of any convertible security, warrant,
option, subscriptions, calls or other rights to acquire Common Stock
outstanding at the time of determination, irrespective of whether such
conversion, exercise or exchange is permitted, restricted or vested at the
time of determination, and irrespective of the price or consideration
required by such conversion, exercise or exchange, and (c) all other
commitments, promises or understandings to issue any shares of Common
Stock or any convertible security, warrant, option, subscription, call or
other rights outstanding at the time of determination. Such calculation
will reflect the Warrants, and will not be made in accordance with the
"treasury method in accordance with GAAP".

"Holder" or "Holders" means the Purchasers (so long as either
of them holds any Warrants or Warrant Shares) and any other holder of any
of the Warrants or Warrant Shares.

"Independent Financial Expert" means a nationally recognized
investment banking firm (a) that does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material
financial interest in the Company, (b) that has not been, and, at the time
it is called upon to serve as an Independent Financial Expert under this
Agreement is not (and none of whose directors, officers, employees or
Affiliates is) a promoter, director or officer of the Company, (c) that
has not been retained by the Company for any purpose, other than to
perform an equity valuation, within the preceding twelve months and (d)
that is otherwise qualified to serve as an independent financial advisor.
Any such Person may receive customary compensation and indemnification by
the Company for opinions or services it provides as an Independent
Financial Expert.

"Interest Expense" means, with respect to any Person for any
applicable period, the total interest expense of such Person and its
Subsidiaries for such period, as determined in accordance with GAAP,
including (i) commitment fees paid or owed with respect to the then
unutilized portion of any credit facility, (ii) all other fees paid or
owed with respect to the issuance or maintenance of letters of credit,
bankers' acceptances and similar contingent liabilities, which, in
accordance with GAAP, would be included as interest expense, (iii) net
costs in connection with Hedging Obligations and (iv) the portion of any
payments made in respect of Capitalized Lease Liabilities of such Person
and its Subsidiaries allocable to interest expense.

"Liquidity Creation Event" means any of the following:

(a) a Qualified Public Offering;

(b) a sale of all the Common Stock of the Company
(including the Warrants and all Warrant Shares) pursuant to a
bona fide transaction in which (i) the consideration therefor
consists solely of cash and Publicly Traded securities, (ii)
each holder of shares of Common Stock receives the same form
and amount of consideration and no such holder or Affiliate
thereof would be entitled, directly or indirectly, to any
benefits, fees, payments, inducements or other compensation
from any of the purchasers except as provided to each other
such holder; (iii) if any such holder is given an option as
to the form and amount of consideration to be received, each
such holder is given the same option; (iv) each Holder, to
the extent of its unexercised Warrants, is given an
opportunity to either (A) exercise such Warrants prior to the
consummation of such sale and participate in such sale as
holders of Common Stock or (B) upon the consummation of such
sale, receive in exchange for such Warrants consideration
equal to the amount determined by multiplying (1) the same
amount of consideration per share of Common Stock received by
holders of such Common Stock in connection with such sale
less the Exercise Price per share of such Common Stock
pursuant to such Warrants by (2) the number of shares of such
Common Stock represented by such Warrants; (v) no Holder is
obligated in connection with such sale to make any
representations, warranties, indemnities or similar
agreements other than representations and warranties as to
such Holder's title to the Warrants or Warrant Shares being
sold and the authority to sell such Warrants or Warrant
Shares and indemnities as to such representations and
warranties, which indemnities shall be several and not joint
(provided that no Holder shall be required to provide
indemnification that would result in an aggregate liability
to such Holder in excess of such Holder's net proceeds from
the sale of its Warrants or Warrant Shares pursuant to such
sale); (vii) no Holder is obligated to pay any portion of the
transaction costs associated with such sale (except for the
costs of any legal counsel specifically engaged by it); and
(viii) in the case such sale involves a purchase price
adjustment based on a closing financial statement of the
Company as of the closing date of such sale, no Holder is
obligated to remit to any purchaser in such sale any amount
after 180 days following such closing date or if such
adjustment is finally determined and due and payable within
such 180 days pay any amount which is greater than the lesser
of (x) such Holder's pro rata share of the amount of such
adjustment as finally determined and (y) an amount equal to
10% of the aggregate net proceeds received by such Holder at
such closing (provided that each Holder shall be entitled to
receive its full pro rata share of any adjustment in favor of
the sellers in such sale when and as paid to all such
sellers); or

"Market Price" means, with respect to a share of Common Stock
on any Business Day:

(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices for the
Common Stock on the principal United States domestic
securities exchange on which such security may at the time be
listed, or, if there have been no sales on any such exchange
on such day, the average of the highest bid and lowest asked
prices on such exchange at the end of such day, or, if on any
day such security is not so listed, the average of the
representative bid and asked prices quoted on NASDAQ as of
4:00 P.M., New York time, on such day, or if on any day such
security is not quoted in NASDAQ, the average of the highest
bid and lowest asked prices on such day in the United States
domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 20
Business Days consisting of the Business Day as of which
"Market Price" is being determined and 19 consecutive
Business Days prior to such day; or

(b) if the Common Stock is not Publicly Traded at the time
of determination, the Market Value per share of Common Stock.

"Market Value" means the fair market value of the common
equity interest in the Company as determined in good faith by the Board of
Directors of the Company.

"Market Value per share of Common Stock" means the price per
share of Common Stock obtained by dividing (i) the Market Value by
(ii) the number of shares of Common Stock outstanding (on a Fully-Diluted
Basis) at the time of determination.

"NASDAQ" means the National Association of Securities
Dealers, Inc., Automated Quotation System.

"Net Income" means, with respect to any Person for any
applicable period, the net income (or loss) of such Person and its
Subsidiaries on a consolidated basis for such period determined in
conformity with GAAP, exclusive of any extraordinary gains or non-cash
extraordinary losses.

"Proportionate Percentage" means, with respect to any Holder
at any time, the quotient obtained by dividing (a) the aggregate number of
Warrant Shares then held by such Holder by (b) the total number of shares
of Common Stock then outstanding (on a Fully-Diluted Basis).

"Publicly Traded" means, with respect to any security, that
such security is (a) listed on a United States domestic securities
exchange, (b) quoted on NASDAQ or (c) traded in the United States domestic
over-the-counter market, which trades are reported by the National
Quotation Bureau, Incorporated.

"Qualified Public Offering" means an underwritten public
offering of Common Stock registered under the Securities Act at an initial
offering price (subject to appropriate reverse stock splits) of $5.00 per
share and resulting in gross proceeds to the Company of at least
$10,000,000.

"Requisite Holders" means Holders holding Warrants or Warrant
Shares representing at least a majority of all Warrant Shares issued or
issuable upon exercise of Warrants outstanding on the date of
determination.

"Significant Holder" means a Holder holding Warrants or
Warrant Shares representing more than 25% of all Warrant Shares issued or
issuable upon exercise of Warrants outstanding on the date of
determination.

"Warrant Certificate" means a certificate evidencing
Warrants, substantially in the form set forth as Exhibit A hereto.
Warrant Certificates shall be dated the date of issuance by the Company.

"Warrant Shares" means (a) the shares of Common Stock issued
or issuable upon exercise of a Warrant in accordance with Section 5 or
upon exchange of a Warrant in accordance with Section 5, (b) all other
securities or other property issued or issuable upon any such exercise or
exchange in accordance with this Agreement and (c) any securities of the
Company distributed with respect to the securities referred to in the
preceding clauses (a) and (b). As used in this Agreement, the phrase
"Warrant Shares then held" by any Holder or Holders (or any similar
phrase) shall mean Warrant Shares held at the time of determination by
such Holder or Holders, and shall include Warrant Shares issuable upon
exercise of Warrants held at the time of determination by such Holder or
Holders.

"Warrants" means the Warrants, the Escrowed Warrants and the
Additional Warrants.

(b) The following terms are defined in the Sections or other
areas indicated:

Term Section
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Board Representative . . . . . . . . . . . . . . . . . . . . . . . . . 14
Common Stock . . . . . . . . . . . . . . . . . . . . . . . third recital
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . 9
Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Existing Warrant Agreement . . . . . . . . . . . . . . . . first recital
Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Note and Warrant Purchase Agreement . . . . . . . . . . . . third recital
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . 12
Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11 Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11 Offer Notice . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 11 Offered Securities . . . . . . . . . . . . . . . . . . . . . 11
Section 11 Notice of Acceptance . . . . . . . . . . . . . . . . . . . . 11
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

(c) Unless otherwise defined herein or the context otherwise
requires, terms used in this Agreement have the meanings provided in the
Note and Warrant Purchase Agreement.

SECTION 2. Issuance and Delivery of Warrants. On the terms
and subject to the conditions of the Note and Warrant Purchase Agreement
and this Agreement, on the Closing Date, the Company shall issue and
deliver to the Purchasers Warrant Certificates evidencing the Warrants.

SECTION 3. Execution of Warrant Certificates. The Warrant
Certificates shall be signed on behalf of the Company by its Chairman of
the Board or its President or a Vice President. Each such signature upon
the Warrant Certificates may be in the form of a facsimile signature of
the present or any future Chairman of the Board, President or Vice
President, and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been Chairman of the
Board, President or Vice President, notwithstanding the fact that at the
time the Warrant Certificates shall be delivered or disposed of he shall
have ceased to hold such office. Each Warrant Certificate shall also be
manually signed on behalf of the Company by its Secretary or an Assistant
Secretary under its corporate seal. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.

SECTION 4. Registration. The Company shall number and
register the Warrant Certificates in a register as they are issued. The
Company may deem and treat the registered Holders of the Warrant
Certificates as the absolute owners thereof (notwithstanding any notation
of ownership or other writing thereon made by anyone) for all purposes and
shall not be affected by any notice to the contrary. The Warrants shall
be registered initially in such name or names as the Purchaser shall
designate.

SECTION 5. Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Holder shall have the right, which may be
exercised at any time or from time to time until 5:00 p.m., New York time,
on December 21, 2005 (the "Expiration Date") to receive from the Company
the number of fully paid and nonassessable Warrant Shares (and such other
consideration) which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect
for such Warrant Shares. Each Warrant not exercised prior to 5:00 p.m.,
New York time, on the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall
cease as of such time; provided that the occurrence of the Expiration Date
shall not relieve the Company of any obligation to any Holder which arose
pursuant to the terms of this Agreement prior to such date.

The price at which each Warrant shall be exercisable (the
"Exercise Price") shall initially be $0.20 per share of Common Stock. The
Company shall not change the par value of its Common Stock.

A Warrant may be exercised upon surrender to the Company at
its office designated for such purpose (as provided for in Section 17(b))
of the Warrant Certificate or Certificates to be exercised with the form
of election to purchase attached thereto duly filled in and signed, and
upon payment to the Company of the Exercise Price for the number of
Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Exercise Price may be made, at the option of the
applicable Holder, (i) by cash, certified or bank cashier's check or wire
transfer, (ii) by surrendering to the Company the number of Warrants
which, if exercised, would entitle the Holder thereof to that number of
Warrant Shares which is equal to (A) such aggregate Exercise Price divided
by (B) the excess of (1) the product obtained by multiplying the number of
Warrant Shares which may be purchased with one Warrant by the Market Price
per share of Common Stock over (2) the Exercise Price, (iii) by
surrendering to the Company the number of shares of Common Stock equal to
the quotient obtained by dividing (A) such aggregate Exercise Price by (B)
the Market Price per share of Common Stock, (iv) by surrendering Notes to
the Company in an aggregate principal amount equal to the aggregate
Exercise Price, or (v) any combination of the foregoing.

Subject to the provisions of Section 6, upon such surrender
of Warrants and payment of the Exercise Price the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as such Holder may designate
a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrants (and such other consideration
as may be deliverable upon exercise of such Warrants) together with, at
the sole option of the Company, cash for fractional Warrant Shares as
provided in Section 7; provided that, if requested by any Holder in its
sole discretion, such Holder shall be entitled to receive, in lieu of any
such consideration comprised of securities not constituting shares of
Common Stock, the same number of shares or other units of an Equivalent
Security (which the Company agrees to use its best efforts to create,
including, subject to Section 14(h), amending its Organic Documents).
Such certificate or certificates shall be deemed to have been issued and
the Person so named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of
delivery of such certificate or certificates for Warrant Shares.

Each Warrant shall be exercisable, at the election of the
Holder thereof, either in full or from time to time in part and, in the
event that a Warrant Certificate is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the
date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section 5.

All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled and disposed of by the Company. The Company
shall keep copies of this Agreement and any notices given or received
hereunder available for inspection by the Holders during normal business
hours at its office.

SECTION 6. Payment of Taxes. The Company will pay all taxes
and other governmental charges (including all documentary stamp taxes, but
excluding all foreign, federal, state or local income taxes payable by a
Holder of a Warrant) in connection with the issuance or delivery of the
Warrants hereunder, including all such taxes attributable to the initial
issuance or delivery of Warrant Shares upon the exercise of Warrants and
payment of the Exercise Price. The Company shall not, however, be
required to pay any tax that may be payable in respect of any subsequent
transfer of the Warrants.

SECTION 7. Fractional Interests. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the
same time by the same Holder, the number of full Warrant Shares which
shall be issuable upon the exercise thereof shall be computed on the basis
of the aggregate number of Warrant Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Warrant Share would, except
for the provisions of this Section 7, be issuable on the exercise of any
Warrants (or specified portion thereof), the Company shall, at its sole
option, pay an amount in cash equal to the Market Price of the Warrant
Share so issuable multiplied by such fraction.

SECTION 8. Reservation of Warrant Shares. The Company shall
at all times reserve and keep available, free from preemptive rights
(except as otherwise provided herein), out of its authorized and issued
Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants,
the maximum number of shares of Common Stock which may then be deliverable
upon the exercise of all outstanding Warrants options, warrants or other
securities convertible into (including the Warrant Shares) or exchangeable
or exercisable for Common Stock.

The Company or, if appointed, the transfer agent for the
Common Stock and each transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the Warrants
(collectively, the "Transfer Agent)" will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company shall keep a copy of this
Agreement on file with any such Transfer Agent. The Company will supply
any such Transfer Agent with duly executed certificates for such purposes
and will provide or otherwise make available all other consideration that
may be deliverable upon exercise of the Warrants. the Company will
furnish any such Transfer Agent a copy of all notices of adjustments and
certificates related thereto transmitted to each Holder pursuant to
Section 14(a).

The Company covenants that all Warrant Shares and other
capital stock issued upon exercise of Warrants will, upon payment of the
Exercise Price therefor and issue thereof, be validly authorized and
issued, fully paid, nonassessable, free of preemptive rights (except as
may be granted by this Agreement) and free, subject to the provisions of
Section 6, from all taxes, liens, charges and security interests with
respect to the issue thereof.

SECTION 9. Adjustment of Exercise Price and Number of
Warrant Shares. The Exercise Price and the number and kind of Warrant
Shares purchasable upon exercise of each Warrant shall be subject to
adjustment from time to time in accordance with this Section 9.

(a) Adjustment upon Issuance of Common Stock. (i) If, at
any time after the Closing Date (other than in connection with the
Undertaking), the Company shall issue or sell (or, in accordance with
Section 9(a)(ii), shall be deemed to have issued or sold) any shares of
Common Stock without consideration or for a consideration per share less
than the Market Price determined as of the date of such issuance or sale,
then, effective immediately upon such issuance or sale, the Exercise Price
shall be reduced to an amount equal to the product obtained by multiplying

(A) the Exercise Price in effect immediately prior to such
issuance or sale,

(B) a fraction, the numerator of which shall be the sum of

(x) the product obtained by multiplying (1) the number of
shares of Common Stock outstanding on a Fully-Diluted Basis
immediately prior to such issuance or sale by (2) the Market
Price as of the date of such issuance or sale,

plus

(y) the consideration, if any, received by the Company upon
such issuance or sale, and

the denominator of which shall be the product obtained by
multiplying (1) the number of shares of Common Stock
outstanding on a Fully-Diluted Basis immediately after such
issuance or sale by (2) such Market Price.

Upon each such adjustment of the Exercise Price hereunder, the number of
Warrant Shares which may be obtained upon exercise of such Warrant shall
be increased to the number of shares determined by multiplying (A) the
number of Warrant Shares which could be obtained upon exercise of such
Warrant immediately prior to such adjustment by (B) a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior
to such adjustment and the denominator of which shall be the Exercise
Price in effect immediately after such adjustment.

(ii) For the purpose of determining the adjusted Exercise
Price under this Section 9, the following shall be applicable:

(A) Issuance of Rights or Options. If the Company in any
manner (other than in connection with the Undertaking) issues
or grants any rights or options to subscribe for or to
purchase (A) Common Stock or (B) any stock or other
securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options" and
such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), and the price per
share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such
Convertible Securities is less than the Market Price
determined as of the date of issuance or grant of such
Options, then the total maximum number of shares of Common
Stock issuable upon the exercise of such Options (or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such
Options) shall be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For
purposes of this paragraph, the price per share for which
Common Stock is issuable upon exercise of Options or upon
conversion or exchange of Convertible Securities issuable
upon exercise of Options shall be determined by dividing (x)
the total amount, if any, received or receivable by the
Company as consideration for the issuing or granting of such
Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all
such Options, plus in the case of such Options which relate
to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon
issuance or sale of such Convertible Securities and the
conversion or exchange thereof by (y) the total maximum
number of shares of Common Stock issuable upon exercise of
such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options. No further adjustment of the Exercise Price shall
be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.

(B) Issuance of Convertible Securities. If the Company in
any manner issues or sells any Convertible Securities having
an exercise or conversion or exchange price per share of
Common Stock which is less than the Market Price determined
as of the date of such issuance or sale, then the maximum
number of shares of Common Stock issuable upon the conversion
or exchange of such Convertible Securities shall be deemed to
be outstanding and to have been issued and sold by the
Company for such lower price per share. For purposes of this
paragraph, the price per share for which Common Stock is
issuable upon conversion or exchange of Convertible
Securities is determined by dividing (x) the total amount
received or receivable by the Company as consideration for
the issuance or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issuance or sale of such
Convertible Securities is made upon exercise of any Options
for which adjustments of the Exercise Price had been or are
required to be made pursuant to other provisions of this
Section 9(a)(ii), no further adjustment of the Exercise Price
shall be made by reason of such issuance or sale.

(C) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Options, the additional
consideration, if any, payable upon the issuance, conversion
or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or
exchangeable for Common Stock change at any time, then the
Exercise Price in effect at the time of such change shall be
readjusted to the Exercise Price which would have been in
effect at such time had such Options or Convertible
Securities still outstanding provided for such changed
purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially
granted, issued or sold and the number of Warrant Shares
shall be correspondingly readjusted.

(D) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or
the termination of any right to convert or exchange any
Convertible Securities without the exercise of such Option or
right, the Exercise Price then in effect and the number of
Warrant Shares acquirable hereunder shall be adjusted to the
Exercise Price and the number of shares which would have been
in effect at the time of such expiration or termination had
such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or
termination, never been issued.

(E) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold
or deemed to have been issued or sold for cash, then the
consideration received therefor shall be deemed to be the net
amount received by the Company therefor. If any Common
Stock, Options or Convertible Securities are issued or sold
for consideration other than cash, then the amount of the
consideration other than cash received by the Company shall
be the Market Value of such consideration.

(F) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned
or held by or for the account of the Company or any
Subsidiary of the Company, and the disposition of any shares
so owned or held shall be considered an issue or sale of
Common Stock.

(G) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (x)
to receive a dividend or other distribution payable in Common
Stock, Options or in Convertible Securities or (y) to
subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed
to be the date of the issuance or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

(b) Subdivisions or Combinations of Common Stock. If, at
any time after the Closing Date, (i) the number of shares of Common Stock
outstanding is increased by a dividend or other distribution payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock or (ii) the number of shares of Common Stock outstanding is
decreased by a combination or reverse stock split of shares of Common
Stock, then, in each case, effective as of the effective date of such
event retroactive to the record date, if any, of such event, (A) the
Exercise Price shall be adjusted to a price determined by multiplying (x)
the Exercise Price in effect immediately prior to such event by (y) a
fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event and the denominator of
which shall be the number of shares of Common Stock outstanding after
giving effect to such event and (B) the number of Warrant Shares subject
to purchase upon the exercise of any Warrant shall be adjusted effective
at such time to a number equal to the product of (x) the number of Warrant
Shares subject to purchase upon the exercise of such Warrant immediately
prior to such event by (y) a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding after giving effect to such
event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such event.

(c) Reorganizations. In case of any capital reorganization
or reclassification of the capital stock of the Company, other than in the
cases referred to in Section 9(a) or (b), or the consolidation or merger
of the Company with or into another Person (other than a merger or
consolidation in which the Company is the surviving entity and which does
not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the
sale of the property of the Company as an entirety or substantially as an
entirety (collectively, such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of
any Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would
have been entitled upon such Reorganization if such Warrant had been
exercised in full immediately prior to such Reorganization. In case of
any Reorganization, appropriate adjustment, as determined in good faith by
the Board of Directors of the Company, whose determination shall be
described in a duly adopted resolution certified by the Company's
Secretary or Assistant Secretary, shall be made in the application of the
provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be
applicable, as nearly as possible, in relation to any shares or other
property thereafter deliverable upon exercise of Warrants.

The Company shall not effect or permit any such
Reorganization unless (i) the successor entity resulting from such
Reorganization or the Person purchasing such assets (A) is a corporation
duly organized and validly existing under the laws of a state of the
United States of America, (B) immediately after giving effect to such
Reorganization (and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith) shall have a Net
Worth equal to or greater than the Net Worth of the Company immediately
preceding such transaction and (ii) prior to or simultaneously with the
consummation of such Reorganization the successor entity (if other than
the Company) resulting from such Reorganization or the Person purchasing
such assets shall expressly assume, by a supplemental Warrant Agreement or
other acknowledgement executed and delivered to the Holder(s) in form and
substance satisfactory to the Requisite Holders, the obligation to deliver
to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
purchase, and all other obligations and liabilities under this Agreement.

(d) Notice; Calculations; Etc. Whenever the Exercise Price
and the number of Warrant Shares shall be adjusted as provided in this
Section 9, the Company shall provide to each Holder an Officer's
Certificate describing in detail the facts requiring such adjustment and
setting forth a calculation of the Exercise Price and the number of
Warrant Shares applicable to each Warrant after giving effect to such
adjustment. All calculations under this Section 9 shall be made to the
nearest one hundredth of a cent ($.0001) or to the nearest one hundred
thousandth of a share, as the case may be. Adjustments pursuant to
Sections 9(a), (b) and (c) shall apply to successive events or
transactions of the type covered thereby.

(e) Adjustment Rules. Any adjustments pursuant to this
Section 9 shall be made successively whenever an event referred to herein
shall occur, except that, notwithstanding any other provision of this
Section 9, no adjustment shall be made to the number of Warrant Shares or
to the Exercise Price if such adjustment represents less than 1/2 of 1% of
the number of Warrant Shares then outstanding, but any lesser adjustment
shall be carried forward and shall be made at the time and together with
the next subsequent adjustment which together with any adjustments so
carried forward shall amount to 1/2 of 1% or more of such number of
Warrant Shares.

(f) Form of Warrants. Irrespective of any adjustments in
the Exercise Price or the number or kind of Warrant Shares purchasable
upon the exercise of any Warrant, Warrants theretofore or thereafter
issued may continue to express the same Exercise Price and number and kind
of Warrant Shares as are stated in the Warrants initially issuable
pursuant to this Agreement.

(g) Miscellaneous. In the event that at any time, as a
result of an adjustment made pursuant to this Section 9, the Holders shall
become entitled to purchase any securities of the Company other than, or
in addition to, shares of Common Stock, thereafter the number or amount of
such other securities so purchasable upon exercise of each Warrant shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Section 9, and the provisions of Sections
5, 6, 7 and 8 with respect to the Warrant Shares or the Common Stock shall
apply on like terms to any such other securities.

SECTION 10. Payments in Respect of Dividends and
Distributions. If the Company pays any dividend or makes any distribution
(whether in cash, property or securities of the Company) on its capital
stock which does not result in an adjustment under Section 9, then the
Company shall simultaneously pay to each Holder the dividend or
distribution which would have been paid to such Holder on the Warrant
Shares receivable upon the exercise in full of each Warrant had such
Warrant been fully exercised immediately prior to the record date for such
dividend or distribution or, if no record is taken, the date as of which
the record holders of Common Stock entitled to such dividend or
distribution are to be determined.

SECTION 11. Preemptive Rights. (a) The Company shall not
issue, sell or exchange, agree to issue, sell or exchange, or reserve or
set aside for issuance, sale or exchange, any (i) Common Stock, (ii) any
other equity security of the Company, (iii) any debt security of the
Company which by its terms is convertible into or exchangeable for any
equity security of the Company or has any other equity feature, (iv) any
security of the Company that is a combination of debt and equity or (v)
any option, warrant or other right to subscribe for, purchase or otherwise
acquire any equity security or any such debt security of the Company (each
of the foregoing, a "Security"), unless, in each case, the Company shall
have first offered (each such offer, a "Section 11 Offer") to sell to each
Holder its Proportionate Percentage of such Securities (such Securities,
the "Section 11 Offered Securities") (and to sell thereto Section 11
Offered Securities not subscribed for by other Holders as hereinafter
provided), at a price and on such other terms as shall have been specified
by the Company in a written notice (each such notice, a "Section 11 Offer
Notice") delivered to such Holder, which Offer by its terms shall remain
open and irrevocable for a period of twenty Business Days from the date it
is delivered by the Company to such Holder.

(b) Notice of each Holder's intention to accept, in whole or
in part, a Section 11 Offer shall be evidenced by a writing signed by such
Holder and delivered to the Company prior to the end of the 20-day period
of such Section 11 Offer, setting forth such portion of the Section 11
Offered Securities as such Holder elects to purchase (each such writing, a
"Section 11 Notice of Acceptance"). If any Holder shall subscribe for
less than its Proportionate Percentage of the Section 11 Offered
Securities available to such Holder, the other subscribing Holders,
subject to the terms of the Stockholders Agreement, shall be entitled to
purchase the balance of such Holder's Proportionate Percentage in the same
proportion in which they were initially entitled to purchase the Section
11 Offered Securities (excluding for such purposes such Holder subscribing
for less than its Proportionate Percentage). The Company shall notify
each other Holder within five Business Days following the expiration of
the 20-day period described above of the amount of Section 11 Offered
Securities which each Holder may purchase pursuant to the foregoing
sentence, and each Holder shall then have five Business Days from the
delivery of such notice to indicate such additional amount, if any, that
such Holder wishes to purchase.

(c) In the event that Section 11 Notices of Acceptance are
not given by the Holders in respect of all the Section 11 Offered
Securities, the Company shall have 90 days from the expiration of the
foregoing 20-day period to sell all or any part of such Section 11 Offered
Securities as to which Section 11 Notices of Acceptance have not been
given by the Holders (such Securities, the "Refused Securities") to any
other Person or Persons, but only upon terms and conditions in all
respects, including unit price and interest rates, which are no more
favorable, in the aggregate, to such other Person or Persons or less
favorable to the Company than those set forth in the Section 11 Offer.
Upon the closing of the sale of the Refused Securities, the Holders shall
purchase from the Company, and the Company shall sell to the Holders, the
Section 11 Offered Securities in respect of which Section 11 Notices of
Acceptance were delivered to the Company, at the terms specified in the
Section 11 Offer.

(d) The preemptive rights granted in this Section 11 shall
not apply to the issuance or sale of Excluded Securities.

(e) If requested by any Holder in its sole discretion, such
Holder shall be entitled to receive, in lieu of such number (as it shall
specify) of shares or other units of Section 11 Offered Securities it
would otherwise be entitled to acquire pursuant to this Section 11, the
same number of shares or other units of Common Stock, to the extent such
Section 11 Offered Securities are comprised of Common Stock, and/or an
Equivalent Security (which the Company agrees to use its best efforts to
create, including amending its Organic Documents) to the extent such
Section 11 Offered Securities are comprised of Securities other than
Common Stock.

SECTION 12. Registration Rights. The Company hereby grants
to the Holders the registration rights with respect to the Warrant Shares
on the terms set forth in Exhibit B hereto (the "Registration Rights
Agreement"), and all references to "this Agreement" contained herein are
deemed to include the Registration Rights Agreement.

SECTION 13. Representations and Warranties. The Company
hereby represents and warrants to the Holders that the representations and
warranties contained in Article IV of the Note and Warrant Purchase
Agreement and in any of the other Transaction Documents are hereby
confirmed and restated, insofar as the representations and warranties
contained therein by their terms are applicable to the Company or any of
its Subsidiaries and its or their properties, each such representation and
warranty (insofar as applicable as aforesaid), together with all related
definitions and ancillary provisions, being hereby incorporated into this
Agreement by reference as though specifically set forth in this Section.

SECTION 14. Covenants. (a) Notices of Certain Actions. In
the event that the Company:

(i) shall authorize the issuance to holders of Common Stock
of rights or warrants to subscribe for or purchase capital
stock of the Company or of any other subscription rights or
warrants; or

(ii) shall authorize a dividend or other distribution to
holders of Common Stock of evidences of its indebtedness,
cash or other property or assets; or

(iii) proposes to become a party to any consolidation or
merger for which approval of any stockholders of the Company
will be required, or to a conveyance or transfer of the
properties and assets of the Company substantially as an
entirety, or of any capital reorganization or
reclassification or change of the Common Stock; or

(iv) commences a voluntary or involuntary dissolution,
liquidation or winding up; or

(v) commences discussions with respect to a Qualified
Public Offering or other Liquidity Creation Event; or

(vi) breaches, or suffers a default under, this Agreement;
or

(vii) proposes to take any other action which would require
an adjustment pursuant to Section 9; or

(viii) becomes subject to a Change in Control;

then the Company shall provide as soon as possible a written notice to
each Holder stating (A) the date as of which the holders of record of
Common Stock to be entitled to receive any such rights, warrants or
distribution are to be determined, (B) the material terms of any such
consolidation, merger, Liquidity Creation Event, Change in Control,
conveyance, transfer, dissolution, liquidation or winding up (including
copies of all documents executed in connection therewith), the date any
such event is expected to occur or become effective, and, if applicable,
the date as of which it is expected that holders of record of Common Stock
will be entitled to exchange their shares for securities or other
property, if any, deliverable upon the occurrence of any such event or (C)
the nature and period of existence of any such breach or default.

(b) Financial Statements and Reports. The Company shall
furnish to each Holder the financial statements, reports, certificates,
statements and notices described in Section 6.1 of the Note and Warrant
Purchase Agreement as in effect on the date hereof, within the periods set
forth therein, and such clauses, together with all related definitions and
ancillary definitions, are hereby incorporated into this Agreement by
reference as though specifically set forth in this Section and all of such
provisions shall survive the repayment of the Note and the termination of
the Note and Warrant Purchase Agreement for the purposes hereof.

(c) Information Rights. (i) Each Holder shall have all of
the rights of a holder of Common Stock under applicable law, whether or
not such Holder has exercised or exchanged any Warrants, to receive lists
of stockholders and, subject to the other provisions of this Agreement, to
receive other information respecting the Company, to inspect the books and
records of the Company and its Subsidiaries and to visit the properties of
the Company and its Subsidiaries.

(ii) The Company will permit an authorized representative of
each Significant Holder to visit and inspect any of the properties of the
Company or any of its Subsidiaries, including its and their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss its and their affairs, finances and accounts with its and their
officers and independent public accountants (and the Company hereby
authorizes such independent public accountant to discuss its and their
financial matters with each such Significant Holder or its representatives
whether or not any representative of the Company is present) and to
examine (and, at the expense of the Company, photocopy extracts from) any
of its and their books or other corporate records. The Company shall pay
reasonable fees of such independent public accountant (up to a $15,000
maximum aggregate amount) incurred in connection with any Significant
Holder's exercise of its rights pursuant to this Section.

(iii) The Company will hold meetings of its Board of
Directors at least quarterly. An authorized representative of each
Significant Holder (each such representative, a "Board Representative")
may, at the expense of the Company, attend all meetings of the Board of
Directors of the Company in a nonvoting observer capacity. The Company
shall provide each Board Representative with such notice of, and other
information with respect to, such meetings as are provided to members of
the Board of Directors or to members of management at the same time as so
provided to such Persons. The Company shall notify each Board
Representative, as promptly as practicable prior thereto, of the taking of
any action by written consent of its Board of Directors in lieu of a
meeting thereof.

(d) Covenants Incorporated by Reference. The Company agrees
with each of the Holders that, until the performance of all of its
obligations hereunder, the Company will perform, comply with and be bound
by all of the agreements, covenants and obligations contained in Articles
II and VI of the Note and Warrant Purchase Agreement as in effect on the
date hereof, which by their terms are applicable to the Company or its
properties, each such agreement, covenant and obligation, together with
all related definitions and ancillary provisions, being hereby
incorporated into this Agreement by reference as though specifically set
forth in this Section and all of such agreements, covenants and
obligations shall survive the repayment of the Notes and the termination
of the Note and Warrant Purchase Agreement for purposes hereof.

(e) Liquidity Creation Event. The Company agrees to use its
best efforts to consummate a Liquidity Creation Event prior to the third
anniversary of this Agreement; provided, however, that, in the event a
Liquidity Creation Event shall have not been consummated prior to such
date, the Company shall continue to use its best efforts to consummate a
Liquidity Creation Event prior to December 21, 2005.

(f) Current Public Information. At all times after the
Company has filed a registration statement with the Securities and
Exchange Commission pursuant to the requirements of either the Securities
Act or the Exchange Act, the Company will file all reports required to be
filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Securities and Exchange Commission
thereunder, and will take such further action as any Holder may reasonably
request, all to the extent required to enable such Holder to sell Warrant
Shares pursuant to Rule 144 or Rule 144A adopted by the Securities and
Exchange Commission under the Securities Act. Upon request, the Company
will deliver to any such Holder a written statement as to whether it has
complied with such requirements.

(g) Public Disclosures. The Company will not disclose any
Holder's name or identity as an investor in the Company in any press
release or other public announcement or in any public filing without the
written consent of such Holder, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of
competent jurisdiction, in which case prior to making such disclosure the
Company will give written notice to such Holder describing in reasonable
detail the proposed content of such disclosure and will permit the Holder
to review and comment upon the form and substance of such disclosure.

(h) Certain Restrictions. The Company will not without the
consent of the Requisite Holders:

(i) permit any amendment to its Organic Documents, as in
effect on the date hereof, including the creation of any
class of capital stock other than the Common Stock and Common
Stock or the alteration of any powers, preferences or special
rights of the shares of Common Stock so as to affect them
beneficially or so as to affect the holders of Common Stock
adversely; or

(ii) take any other action, corporate or otherwise, the
effect of which would be to alter, impair or affect adversely
either the rights and benefits of the Holders or the duties
and obligations of the Company under the Warrant Documents.

(i) Specific Performance. Each Holder shall have the right
to specific performance by the Company of the provisions of this
Agreement, in addition to any other remedies it may have at law or in
equity. the Company hereby irrevocably waives, to the extent that it may
do so under applicable law, any defense based on the adequacy of a remedy
at law which may be asserted as a bar to the remedy of specific
performance in any action brought against the Company for specific
performance of this Agreement by any Holder of the Warrants or Warrant
Shares.

SECTION 15. Amendments and Waivers. (a) Consent of
Holders. No amendment, modification, termination or waiver of any
provision of this Agreement (including the terms of the Note and Warrant
Purchase Agreement incorporated herein by reference and the Registration
Rights Agreement) and the Warrant Certificates, or consent to any
departure by the Company therefrom, shall in any event be effective
without the written concurrence of the Requisite Holders; provided,
however, that without the consent of each Holder affected, no amendment,
modification, termination or waiver may:

(i) make any change to the definition of "Requisite
Holders";

(ii) make any change to the transfer provisions of Section
16 that adversely affects the ability of a Holder to make any
transfer described therein; or

(iii) make any change in the foregoing amendment and waiver
provisions.

After an amendment, modification, termination or waiver under
this Section 15 becomes effective, the Company shall mail to the Holders
affected thereby a notice briefly describing such amendment, modification,
termination or waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the
validity of any such amendment, modification, termination or waiver.

(b) Solicitation of Holders. The Company will not solicit,
request or negotiate for or with respect to any proposed amendment,
modification, termination or waiver of any of the provisions of this
Agreement (including the Registration Rights Agreement) and the Warrant
Certificates, unless each Holder (irrespective of the amount of Warrants
or Warrant Shares then owned by it) shall be informed thereof by the
Company (but only to the extent the Company has been provided with
addresses for the Holders) and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any amendment,
modification, termination or waiver effected pursuant to the provisions of
this Section 15 shall be delivered by the Company to each Holder of
outstanding Warrants or Warrant Shares forthwith following the date on
which the same shall have been executed and delivered by the Holder or
Holders of the requisite percentage of outstanding Warrant Shares (but
only to the extent the Company has been provided with the addresses for
the Holders).

(c) Revocation and Effect of Consents. Until an amendment,
modification, termination or waiver becomes effective, a consent to it by
a Holder is a continuing consent by the Holder and every subsequent Holder
of a Warrant or Warrant Shares, even if notation of the consent is not
made on any Warrant Certificate or stock certificate. However, any such
Holder or subsequent Holder may revoke any such consent by notice to the
Company received before the date on which the Requisite Holders have
consented (and not theretofore revoked such consent) to such amendment,
modification, termination or waiver.

The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, modification, termination or waiver, which record date shall be
at least 30 days prior to the first solicitation of such consent. If a
record date is fixed, then notwithstanding the last sentence of the
immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not
such Persons continue to be Holders after such record date.

SECTION 16. Transfers. Each Holder shall be permitted to
transfer any Warrant or Warrant Share (and the rights relating thereto
under this Agreement and the other Warrant Documents) to any Person;
provided that

(i) such transfer is made pursuant to a registration
statement under the Securities Act (it being acknowledged
that the Company shall not be obligated to assist in any
manner in any such registration) or pursuant to an exemption
from the registration requirements of the Securities Act;

(ii) if such transfer is being made pursuant to an
exemption from such registration requirements and if
requested by the Company, counsel for such Holder (which
counsel may be internal counsel) furnishes to the Company an
opinion to the effect that such transfer is being made
pursuant such an exemption;

(iii) the applicable transferee is an "accredited investor"
as defined in Regulation D promulgated under the Securities
Act;

(iv) such transferee represents to the Company in writing
that it is acquiring such Warrant or Warrant Share solely for
its own account and not as nominee or agent for any other
Person and not with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning
of the Securities Act) that would be in violation of the
securities laws of the United States of America or any state
thereof, without prejudice, however, to its right at all
times to sell or otherwise dispose of all or any part of said
Warrant or Warrant Share pursuant to a registration statement
under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act, and subject,
nevertheless, to the disposition of its property being at all
times within its control; and

(v) unless the Holder making such transfer is making such
transfer to any of its Affiliates or any of its partners or
with the Company's prior written consent, such transfer is of
(A) all the Warrants and Warrant Shares then held by such
Holder or (B) Warrants and Warrant Shares (assuming exercise
of the Warrants) aggregating not less than 5% of the shares
of Common Stock outstanding (on a Fully-Diluted Basis) as of
the date hereof, as such amount may be adjusted from time to
time upon application of the provisions of Section 9.

The Company shall promptly register the transfer of any
outstanding Warrants in the Warrant Register and any outstanding Warrant
Shares in a Common Stock register to be maintained by the Company upon
surrender thereof accompanied by a written instrument or instruments of
transfer in form reasonably satisfactory to the Company, duly executed by
the registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate or Common Stock
certificate, as the case may be, shall be issued and delivered with all
reasonable dispatch to the transferee(s) and such transferee(s) shall be
deemed to have become the Holder(s) of record of the Warrants or Warrant
Shares evidenced thereby, as the case may be, and the surrendered Warrant
Certificate or Common Stock certificates, as the case may be, shall be
canceled and disposed of by the Company.

SECTION 17. Miscellaneous. (a) Warrant Document. This
Agreement is a Warrant Document executed pursuant to the Note and Warrant
Purchase Agreement and shall (unless otherwise expressly indicated herein)
be construed, administered and applied in accordance with the terms and
provisions thereof, including Article XII thereof.

(b) Notices. Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to be given
shall be in writing and shall be made by personal service, facsimile,
United States airmail or reputable courier service:

(i) if to the Purchasers or subsequent Holder, at the
address or facsimile number set forth on the signature pages
to the Note and Warrant Purchase Agreement, or such other
address as shall be designated in a written notice delivered
to the Company, with a copy to Mayer, Brown & Platt, 1675
Broadway, New York, New York 10019, Facsimile No. (212) 262-
1910, Attention: James B. Carlson, Esq.; and

(ii) if to the Company, at the address or facsimile number
set forth on the signature pages to the Note and Warrant
Purchase Agreement, or such other address as shall be
designated in a written notice delivered to the other parties
hereto.

Unless otherwise specifically provided herein, any notice or
other communication shall be deemed to have been given when delivered in
person or by courier service, upon receipt of facsimile (electronically
confirmed), or five Business Days after depositing it in the United States
airmail with postage prepaid and properly addressed.

(c) Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any Holder in the exercise of any
power, right or privilege hereunder or under any other Warrant Document
shall impair such power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement and the other Warrant Documents
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

(d) Severability. In case any provision in or obligation
under this Agreement or the Warrant Certificates shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

(e) Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or be given
any substantive effect.

(f) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS.

(g) Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the parties hereto and the successors and
assigns of the Purchaser (including each Holder and its successors and
assigns).

(h) Consent to Jurisdiction and Service of Process. The
Company hereby confirms its agreements under Section 11.12 of the Note and
Warrant Purchase Agreement.

(i) Waiver of Jury Trial. The Company hereby confirms its
agreements under Section 11.13 of the Note and Warrant Purchase Agreement.

(j) Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.

[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.

LADISH CO., INC.

By: /s/ Wayne E. Larsen
Name: Wayne E. Larsen
Title: Secretary

GRACE BROTHERS, LTD.

By: /s/ Bradford T. Whitmore
Name: Bradford T. Whitmore
Title:

ING EQUITY PARTNERS, L.P. I

By: Lexington Partners, L.P.,
its General Partner

By: Lexington Partners, Inc.,
its General Partner

By: /s/ Gregory P. Flynn
Name: Gregory P. Flynn
Title:

STATE STREET RESEARCH
HIGH INCOME FUND

By: /s/ Scott B. Richards
Name: Scott B. Richards

STATE STREET RESEARCH MANAGED ASSETS

By: /s/ Scott B. Richards
Name: Scott B. Richards

FRANKLIN PRINCIPLE MATURITY TRUST

By: /s/ Chauncey Lufkin
Name: Chauncey Lufkin

SALOMON BROTHERS INC.

By: /s/ Robert Okun
Name: Robert Okun

WYNNEFIELD PARTNERS

By: /s/ Nelson Obus
Name: Nelson Obus

C.C. PARTNERS, LTD.

By: /s/ Cromwell Coulson
Name: Cromwell Coulson

EBI INDEMNITY COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

SECURITY REINSURANCE COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

GUARANTY NATIONAL INSURANCE COMPANY

By: /s/ Raymond J. Schuyler
Name: Raymond J. Schuyler

CANYON PARTNERS INCORPORATED

By: /s/ Mitchell R. Julis
Name: Mitchell R. Julis

NEW GENERATION LIMITED PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

NEW GENERATION INSTITUTIONAL LIMITED
PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

CARUCCI FAMILY PARTNERS

By: /s/ Walter P. Carucci
Name: Walter P. Carucci

PRUDENTIAL SECURITIES

By: /s/ David W. Schwartz
Name: David W. Schwartz

MORGAN STANLEY & CO.

By: /s/ Barry Bergman
Name: Barry Bergman

/s/ Marcus Lane

/s/ Jay Zidell

/s/ Joel T. Leonard

/s/ Charles F. Nichols

/s/ Chester Sobol

/s/ Robert J. Noel

/s/ Lawrence Hammond

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

February 22, 1996

To each of the Purchasers named in Schedule I to the Amended and Restated
Note and Warrant Purchase Agreement of even date herewith and those by the
terms thereof permitted to join therein (the "Purchasers")

RECITALS

WHEREAS: The Company and certain of the Purchasers are parties to
Registration Rights Agreement, dated as of December 22, 1995
(the "Existing Registration Rights Agreement");

WHEREAS: The parties to the Existing Registration Rights Agreement desire
that such agreement be amended and restated as set forth in this
Agreement;

WHEREAS: The Purchasers have purchased or may purchase from the Company
Warrants to purchase shares of the Company's Common Stock
pursuant to the Purchase Agreement; and

WHEREAS: As a condition to such purchase, the Company has agreed to grant
to the Purchasers registration rights with respect to certain
securities of the Company held by the Purchasers.

AGREEMENT

NOW, THEREFORE, it is agreed that (i) the Existing Registration
Rights Agreement is hereby amended and restated, and (ii) further as
follows:

1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:

"Agreement" shall mean this Amended and Restated Registration
Rights Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time.

"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities
Act.

"Common Stock" shall mean the Common Stock, no par value per
share, of the Company, as constituted as of the date of this
Agreement.

"Company" shall mean Ladish Co., Inc., a Wisconsin corporation.

"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.

"Purchase Agreement" shall mean the Note and Warrant Purchase
Agreement dated as of the date hereof.

"Registration Expenses" shall mean the expenses so described in
Section 7.

"Registerable Stock" shall mean the Warrant Shares and any
Common Stock held as of the date hereof or thereafter by the
Purchasers, but only so long as such shares continue to be Restricted
Stock. Any such share shall continue to be Restricted Stock until
such time as such share (i) has been effectively registered under the
Securities Act and disposed of in accordance with the Registration
Statement covering it, or (ii) has been publicly sold pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act.

"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.

"Selling Expenses" shall mean the expenses so described in
Section 7.

"Warrant Shares" shall mean shares of Common Stock issued upon
exercise of the Warrants.

"Warrants" shall mean the warrants granted to the Purchasers to
purchase shares of Common Stock.

2. Restrictive Legend. Each certificate representing shares of
Registerable Stock shall, except as otherwise provided in this Section 2,
be stamped or otherwise imprinted with a legend substantially in the
following form:

"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION
FROM REGISTRATION IS AVAILABLE."

A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company the securities being sold thereby may be
publicly sold without registration under the Securities Act.

3. Required Registration. (a) At any time beginning six months
after a registration statement covering a public offering of securities of
the Company under the Securities Act shall have become effective, the
holders of Registerable Stock constituting at least 25% of the total
shares of Registerable Stock then outstanding may request the Company to
register under the Securities Act all or any portion of the shares of
Registerable Stock held by such requesting holder or holders for sale in
the manner specified in such notice. In addition, at any time following
the second anniversary of the date of this Agreement, if a registration
statement on Form S-1 has not yet become effective, the holders of
Registerable Stock constituting more than 50% of the total shares of
Registerable Stock then outstanding may request the Company to register
under the Securities Act all or any portion of the shares of Registerable
Stock held by such requesting holder or holders for sale in the manner
specified in such notice. Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 3 within 120
days after the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering; provided,
however, that this limitation shall not be utilized by the Company to deny
the request of holders of Registerable Stock on more than one occasion in
any twelve month period.

(b) Following receipt of any notice under this Section 3, the
Company shall immediately notify all holders of Registerable Stock from
whom notice has not been received and shall use its best efforts to
register under the Securities Act, for public sale in accordance with the
method of disposition specified in such notice from requesting holders,
the number of shares of Registerable Stock specified in such notice (and
in all notices received by the Company from other holders within 30 days
after the giving of such notice by the Company). The Company shall be
obligated to register Registerable Stock pursuant to this Section 3 on two
occasions only; provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering all shares of
Registerable Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is
a firm commitment underwritten public offering, all such shares shall have
been sold pursuant thereto.

(c) The Company shall be entitled to include in any
registration statement referred to in this Section 3, for sale in
accordance with the method of disposition specified by the requesting
holders, shares of Common Stock to be sold by the Company for its own
account or for sale by others, except as and to the extent that, in the
opinion of the managing underwriter (if such method of disposition shall
be an underwritten public offering), such inclusion would adversely affect
the marketing of the Registerable Stock to be sold. Except for
registration statements on Form S-4, S-8 or any successor thereto, the
Company will not file with the Commission any other registration statement
with respect to its Common Stock, whether for its own account or that of
other stockholders, from the date of receipt of a notice from requesting
holders pursuant to this Section 3 until the completion of the period of
distribution of the registration contemplated thereby.

4. Incidental Registration. If the Company at any time (other than
pursuant to Section 3 or Section 5) proposes to register any of its
securities under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Registerable Stock for sale
to the public), each such time it will give written notice to all holders
of outstanding Registerable Stock of its intention so to do. Upon the
written request of any such holder, received by the Company within 30 days
after the giving of any such notice by the Company, to register any of its
Registerable Stock (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause the
Registerable Stock as to which registration shall have been so requested
to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite
to permit the sale or other disposition by the holder (in accordance with
its written request) of such Registerable Stock so registered. In the
event that any registration pursuant to this Section 4 shall be, in whole
or in part, an underwritten public offering of Common Stock, the number of
shares of Registerable Stock to be included in such an underwriting may be
reduced (pro rata among the requesting holders based upon the number of
shares of Registerable Stock owned by such holders) if and to the extent
that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the
Company therein, provided, however, that such number of shares of
Registerable Stock shall not be reduced if any shares are to be included
in such underwriting for the account of any person other than the Company
or requesting holders of Registerable Stock; provided, further, however,
that in no event may less than twenty (20%) percent of the total number of
shares of Common Stock to be included in such underwriting be made
available for shares of Registerable Stock. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement referred
to in this Section 4 without thereby incurring any liability to the
holders of Registerable Stock.

5. Registration on Form S-3. If at any time (i) a holder or
holders of Registerable Stock request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of
all or any portion of the shares of Registerable Stock held by such
requesting holder or holders, the reasonably anticipated aggregate price
to the public of which would exceed $500,000, and (ii) the Company is a
registrant entitled to use Form S-3 or any successor thereto to register
such shares, then the Company shall use its best efforts to register under
the Securities Act on Form S-3 or any successor thereto, for public sale
in accordance with the method of disposition specified in such notice, the
number of shares of Registerable Stock specified in such notice. Whenever
the Company is required by this Section 5 to use its best efforts to
effect the registration of Registerable Stock, each of the procedures and
requirements of Section 3 (including but not limited to the requirement
that the Company notify all holders of Registerable Stock from whom notice
has not been received and provide them with the opportunity to participate
in the offering) shall apply to such registration, provided, however, that
(i) the Company shall be obligated to register Registerable Stock pursuant
to this Section 5 on one occasion per calendar year only, (ii) the
requirements contained in the first sentence of Section 3(a) shall not
apply to any registration on Form S-3 which may be requested and obtained
under this Section 5 and (iii) the Company shall not be obligated to
register Registerable Stock pursuant to this Section 5, if in the opinion
of counsel acceptable to the Company and the holders of the Registerable
Stock the shares of Registerable Stock intended to be included in a
registration on Form S-3 pursuant to the terms of this Section 5 are
saleable under Rule 144 of the Securities Act within a period of four
months from the date the holders give notice of their intention to
register shares of Registerable Stock pursuant to this Section 5.

6. Registration Procedures. If and whenever the Company is
required by the provisions of Sections 3, 4 or 5 to use its best efforts
to effect the registration of any shares of Registerable Stock under the
Securities Act, the Company will, as expeditiously as possible:

(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering
pursuant to Section 3, shall be on Form S-1 or other form of general
applicability satisfactory to the managing underwriter selected as
therein provided) with respect to such securities and use its best
efforts to cause such registration statement to become and remain
effective for the period of the distribution contemplated thereby
(determined as hereinafter provided);

(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in paragraph (a) above
and comply with the provisions of the Securities Act with respect to
the disposition of all Registerable Stock covered by such
registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for
such period;

(c) furnish to each seller of Registerable Stock and to each
underwriter such number of copies of the registration statement and
the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Registerable
Stock covered by such registration statement;

(d) use its best efforts to register or qualify the
Registerable Stock covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registerable Stock or, in the case of an underwritten public
offering, the managing underwriter reasonably shall request;
provided, however, that the Company shall not for any such purpose be
required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction;

(e) use its best efforts to list the Registerable Stock covered
by such registration statement with any securities exchange on which
the Common Stock of the Company is then listed;

(f) immediately notify each seller of Registerable Stock and
each underwriter under such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company
has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;

(g) if the offering is underwritten and at the request of any
seller of Registerable Stock, use its best efforts to furnish on the
date that Registerable Stock is delivered to the underwriters for
sale pursuant to such registration: (i) an opinion dated such date of
counsel representing the Company for the purposes of such
registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under
the Securities Act and that (A) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with
the requirements of the Securities Act (except that such counsel need
not express any opinion as to financial statements or other financial
data contained therein) and (C) to such other effects as reasonably
may be requested by counsel for the underwriters or by such seller or
its counsel and (ii) a letter dated such date from the independent
public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent
public accountants within the meaning of the Securities Act and that,
in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or
any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act, and such letter shall additionally cover such other
financial matters (including information as to the period ending no
more than five business days prior to the date of such letter) with
respect to such registration as such underwriters reasonably may
request; and

(h) make available for inspection by each seller of
Registerable Stock, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant
or other agent retained by such seller or underwriter, all financial
and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with
such registration statement.

For purposes of Section 6(a) and 7(b) and of Section 3(c), the period
of distribution of Registerable Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has
completed the distribution of all securities purchased by it, and the
period of distribution of Registerable Stock in any other registration
shall be deemed to extend until the earlier of the sale of all
Registerable Stock covered thereby and 120 days after the effective date
thereof.

In connection with each registration hereunder, the sellers of
Registerable Stock will furnish to the Company in writing such information
with respect to themselves and the proposed distribution by them as
reasonably shall be necessary in order to assure compliance with federal
and applicable state securities laws.

In connection with each registration pursuant to Sections 3, 4 or 5
covering an underwritten public offering, the Company and each seller
agree to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an
arrangement between such underwriter and companies of the Company's size
and investment stature.

7. Expenses. All expenses incurred by the Company in complying
with Sections 3, 4 and 5, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable fees and disbursements of
one counsel for the sellers of Registerable Stock, but excluding any
Selling Expenses, are called "Registration Expenses". All underwriting
discounts and selling commissions applicable to the sale of Registerable
Stock are called "Selling Expenses".

The Company will pay all Registration Expenses in connection with
each registration statement under Sections 3 and 4 and all Registration
Expenses in connection with one registration statement under Section 5.
All Selling Expenses in connection with each registration statement under
Sections 3, 4 or 5 shall be borne by the participating sellers in
proportion to the number of shares sold by each, or by such participating
sellers other than the Company (except to the extent the Company shall be
a seller) as they may agree.

8. Indemnification and Contribution. (a) In the event of a
registration of any of the Registerable Stock under the Securities Act
pursuant to Sections 3, 4 or 5, the Company will indemnify and hold
harmless each seller of such Registerable Stock thereunder, each
underwriter of such Registerable Stock thereunder and each other person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which such seller, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Registerable Stock was registered under the Securities
Act pursuant to Sections 3, 4 or 5, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each such
seller, each such underwriter and each such controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case if and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by any such seller, any such underwriter or any such
controlling person in writing specifically for use in such registration
statement or prospectus.

(b) In the event of a registration of any of the Registerable
Stock under the Securities Act pursuant to Sections 3, 4 or 5, each seller
of such Registerable Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registerable Stock was registered under the Securities Act pursuant to
Sections 3, 4, or 5, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that such seller will be liable hereunder in
any such case if and only to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and
in conformity with information pertaining to such seller, as such,
furnished in writing to the Company by such seller specifically for use in
such registration statement or prospectus; provided, further, that the
liability of each seller hereunder shall be limited to the proportion of
any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by such
seller under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to
exceed the proceeds received by such seller from the sale of Registerable
Stock covered by such registration statement.

(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under
this Section 8 and shall only relieve it from any liability which it may
have to such indemnified party under this Section 8 if and to the extent
the indemnifying party is prejudiced by such omission. In case any such
action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume
and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 8 for any legal
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and
of liaison with counsel so selected; provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party
or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified
party shall have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such action,
with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party
as incurred. No indemnifying party, in defense of any such action, shall,
except with the consent of each indemnified party, consent to the entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving, by the claimant or plaintiff, to
such indemnified party of a release from all liability in respect to such
action.

(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i)
any holder of Registerable Stock exercising rights under this Agreement,
or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 8 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, or (ii) contribution under the Securities
Act may be required on the part of any such selling holder or any such
controlling person in circumstances for which indemnification is provided
under this Section 8; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others)
in such proportion so that such holder is responsible for the portion
represented by the percentage that the public offering price of its
Registerable Stock offered by the registration statement bears to the
public offering price of all securities offered by such registration
statement, and the Company is responsible for the remaining portion;
provided, however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the public offering price
of all such Registerable Stock offered by it pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) will be entitled to contribution from any person or entity who was
not guilty of such fraudulent misrepresentation.

9. Changes in Common Stock. If, and as often as, there is any
change in the Common Stock by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock
as so changed.

10. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at
any time permit the sale of the Registerable Stock to the public without
registration, at all times after 90 days after any registration statement
covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:

(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;

(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act; and

(c) furnish to each holder of Registerable Stock forthwith upon
request a written statement by the Company as to its compliance with
the reporting requirements of such Rule 144 and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed
by the Company as such holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such
holder to sell any Registerable Stock without registration.

11. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:

(a) The execution, delivery and performance of this Agreement
by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation
or By-laws of the Company or any provision of any indenture,
agreement or other instrument to which it or any or its properties or
assets is bound, conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.

(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization and moratorium laws
and other laws of general application affecting enforcement of
creditors' rights generally and (ii) the availability of equitable
remedies as such remedies may be limited by equitable principles of
general applicability (regardless of whether enforcement is sought in
a proceeding in equity or at law).

12. Miscellaneous. (a) All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the
parties hereto (including without limitation transferees of any
Registerable Stock), whether so expressed or not; provided, however, that
registration rights conferred herein on the holders of Registerable Stock
shall only inure to the benefit of a transferee of Registerable Stock if
(i) there is transferred to such transferee at least 20% of the total
shares of Registerable Stock originally issued pursuant to the Purchase
Agreement applicable to such holder, to the direct or indirect transferor
of such transferee or (ii) such transferee is a partner, shareholder or
affiliate of a party hereto.

(b) All notices, requests, consents and other communications
hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage pre-paid, or telexed,
in the case of non-U.S. residents, addressed as follows:

if to the Company or any other party hereto, at the address of
such party set forth in the Purchase Agreement applicable to such
party;

if to any subsequent holder of Registerable Shares, to it at
such address as may have been furnished to the Company in writing by
such holder;

or, in any case, at such other address or addresses as shall have been
furnished in writing to the Company (in the case of a holder of
Registerable Stock) or to the holders of Registerable Stock (in the case
of the Company) in accordance with the provisions of this paragraph.

(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company
and the holders of at least two-thirds of the then outstanding shares of
Registerable Stock. The Company may not, without the prior written
consent of holders of at least two- thirds of the then outstanding shares
of Registerable Stock, grant any rights to any persons to register shares
of capital stock or securities of the Company if such rights could
reasonably be expected to conflict with, or be on a parity with the rights
of the holders of Registerable Stock granted pursuant to this Agreement.

(e) This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

(f) The obligations of the Company to register shares of
Registerable Stock under Sections 3, 4 or 5 shall terminate on the tenth
anniversary of the date of this Agreement, unless such obligations
terminate earlier in accordance with the terms of this Agreement.

(g) If requested in writing by the underwriters for the initial
underwritten public offering of securities of the Company, each holder of
Registerable Stock who is a party to this Agreement shall agree not to
sell publicly any shares of Registerable Stock or any other shares of
Common Stock (other than shares of Registerable Stock or other shares of
Common Stock being registered in such offering), without the consent of
such underwriters, for a period of not more than 180 days following the
effective date of the registration statement relating to such offering;
provided, however, that all persons entitled to registration rights with
respect to shares of Common Stock who are not parties to this Agreement,
all other persons selling shares of Common Stock in such offering and all
executive officers and directors of the Company shall also have agreed not
to sell publicly their Common Stock under the circumstances and pursuant
to the terms set forth in this Section 13(g).

(h) Notwithstanding the provisions of Section 6(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended
for a period not to exceed 90 days in any 24-month period if there exists
at the time material non-public information relating to the Company which,
in the reasonable opinion of the Company, should not be disclosed.

(i) If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other
provision of this Agreement, and this Agreement shall be carried out as if
any such illegal, invalid or unenforceable provision were not contained
herein.

(j) Except as otherwise provided herein, neither this Agreement
nor any provision hereof can be modified, changed, discharged or
terminated except by an instrument in writing signed by the party against
whom the enforcement of any modification, change, discharge or termination
is sought or by the agreement of holders of more than 50% of all shares of
Registrable Stock held by the Stockholders; provided, however, that no
modification or amendment shall be effective to reduce the percentage of
the shares of shares of Registrable Stock the consent of the holders of
which is required under this Section 12(j).

(Signature page to Registration Rights Agreement)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be effective as of this ___ day of February, 1996.

LADISH CO., INC.

By: /s/ Wayne E. Larsen
Title: Wayne E. Larsen

GRACE BROTHERS, LTD.

By: /s/ Bradford T. Whitmore
Name: Bardford T. Whitmore

ING EQUITY PARTNERS, L.P. I

By: Lexington Partners, L.P.,
its General Partner

By: Lexington Partners, Inc.,
its General Partner

By: /s/ Gregory P. Flynn
Title:

STATE STREET RESEARCH
HIGH INCOME FUND

By: /s/ Scott B. Richards
Name: Scott B. Richards

STATE STREET RESEARCH MANAGED ASSETS

By: /s/ Scott B. Richards
Name: Scott B. Richards

FRANKLIN PRINCIPLE MATURITY TRUST

By: /s/ Chauncey Lufkin
Name: Chauncey Lufkin

SALOMON BROTHERS INC.

By: /s/ Robert Okun
Name: Robert Okun

WYNNEFIELD PARTNERS

By: /s/ Nelson Obus
Name: Nelson Obus

C.C. PARTNERS, LTD.

By: /s/ Cromwell Coulson
Name: Cromwell Coulson

EBI INDEMNITY COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

SECURITY REINSURANCE COMPANY

By: /s/ Robert T. Claiborne
Name: Robert T. Claiborne

GUARANTY NATIONAL INSURANCE COMPANY

By: /s/ Raymond J. Schuyler
Name: Raymond J. Schuyler

CANYON PARTNERS INCORPORATED

By: /s/ Mitchell R. Julis
Name: Mitchell R. Julis

NEW GENERATION LIMITED PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

NEW GENERATION LIMITED INSTITUTIONAL
LIMITED PARTNERSHIP

By: /s/ George Putnam
Name: George Putnam

CARUCCI FAMILY PARTNERS

By: /s/ Walter P. Carucci
Name: Walter P. Carucci

PRUDENTIAL SECURITIES

By: /s/ David W. Schwartz
Name: David W. Schwartz

MORGAN STANLEY & CO.

By: /s/ Barry Bergman
Name: Barry Bergman

/s/ Marcus Lane

/s/ Jay Zidell

/s/ Joel T. Leonard

/s/ Charles F. Nichols

/s/ Chester Sobol

/s/ Robert J. Noel

/s/ Lawrence Hammond

Exhibit 5

F O L E Y & L A R D N E R

A T T O R N E Y S A T L A W

CHICAGO FIRSTAR CENTER SAN DIEGO
JACKSONVILLE 777 EAST WISCONSIN AVENUE SAN FRANCISCO
LOS ANGELES MILWAUKEE, WISCONSIN 53202-5367 TALLAHASSEE
MADISON TELEPHONE (414) 271-2400 TAMPA
ORLANDO FACSIMILE (414) 297-4900 WASHINGTON, D.C.
SACRAMENTO WEST PALM BEACH

WRITERS DIRECT LINE

(414) 967-5639

December 15, 1997

Ladish Co., Inc.
5481 South Packard Avenue
Cudahy, Wisconsin 53110

Ladies and Gentlemen:

We have acted as counsel for Ladish Co., Inc., a Wisconsin
corporation (the "Company"), and certain shareholders of the Company (the
"Selling Shareholders") with respect to the preparation of a Registration
Statement of Form S-1 (the "Registration Statement"), including the
prospectus constituting a part thereof (the "Prospectus"), filed by the
Company with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act"), relating to 3,350,000
shares of the Company's common stock, $0.01 par value per share ("Common
Stock"), together with up to 502,500 shares of Common Stock being
registered to cover an over-allotment option granted to the underwriters.

In connection with our representation, we have examined: (a)
the Registration Statement, including the Prospectus; (b) the Articles of
Incorporation and Bylaws of the Company, as amended to date; (c)
resolutions of the Company's Board of Directors relating to the
authorization of the issuance of certain of the securities covered by the
Registration Statement; and (d) such other proceedings, documents and
records as we have deemed necessary to enable us to render this opinion.

Based on the foregoing, we are of the opinion that:

1. The Company is a corporation validly existing under the
laws of the State of Wisconsin.

2. The shares of Common Stock covered by the Registration
Statement that are to be offered and sold by the Company, when the price
thereof has been determined by action of the Company's Board of Directors
and when issued and paid for in the manner contemplated in the
Registration Statement and Prospectus, will be validly issued, fully paid
and nonassessable, except with respect to wage claims of, or other debts
owing to, employees of the Company for services performed, but not
exceeding six months' service in any one case, as provided in section
180.0622(2)(b) of the Wisconsin Business Corporation Law and judicial
interpretations thereof.

3. The shares of Common Stock covered by the Registration
Statement that are to be offered and sold by the Selling Shareholders are,
and when sold in the manner contemplated in the Registration Statement and
Prospectus will continue to be, validly issued, fully paid and
nonassessable, except with respect to wage claims of, or other debts
owning to, employees of the Company for services performed, but not
exceeding six months' service in any one case, as provided in Section
180.0622(2)(b) of the Wisconsin Business Corporation Law and judicial
interpretations thereof.

We consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm therein. In
giving our consent, we do not admit that we are "experts" within the
meaning of Section 11 of the Securities Act or within the category of
persons whose consent in required by Section 7 of the Securities Act.

Very truly yours,

FOLEY & LARDNER

CREDIT AGREEMENT

Dated as of June 30, 1995

among

LADISH CO., INC.

as Borrower,

THE LENDERS NAMED HEREIN

as Lenders,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Agent and Lender

<PAGE>

TABLE OF CONTENTS

1. AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . 1
1.1 Credit Facilities . . . . . . . . . . . . . . . . . . . . . 1
1.2 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 3
1.3 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Interest on Revolving Credit Loan . . . . . . . . . . . . . 5
1.6 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . 7
1.7 Eligible Inventory . . . . . . . . . . . . . . . . . . . . 8
1.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9 Cash Management Systems; Daily Sweep . . . . . . . . . . . 8
1.10 Receipt of Payments . . . . . . . . . . . . . . . . . . . . 9
1.11 Application and Allocation of Payments . . . . . . . . . . 9
1.12 Loan Account and Accounting . . . . . . . . . . . . . . . . 10
1.13 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.14 Access . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.16 Capital Adequacy; Increased Costs; Illegality . . . . . . . 13

2. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Conditions to the Initial Loans . . . . . . . . . . . . . . 15
2.2 Further Conditions to Each Revolving Credit Advance . . . . 19

3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 19
3.1 Corporate Existence; Compliance with Law . . . . . . . . . 20
3.2 Executive Offices . . . . . . . . . . . . . . . . . . . . . 20
3.3 Corporate Power, Authorization, Enforceable Obligations . . 20
3.4 Financial Statements and Projections . . . . . . . . . . . 21
3.5 Collateral Reports . . . . . . . . . . . . . . . . . . . . 21
3.6 Material Adverse Effect . . . . . . . . . . . . . . . . . . 21
3.7 Ownership of Property; Liens . . . . . . . . . . . . . . . 22
3.8 Restrictions; No Default . . . . . . . . . . . . . . . . . 22
3.9 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 23
3.10 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness . . . . . . . . . . . . . . . . . . . . . 23
3.11 Government Regulation . . . . . . . . . . . . . . . . . . . 23
3.12 Margin Regulations . . . . . . . . . . . . . . . . . . . . 24
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.15 No Litigation . . . . . . . . . . . . . . . . . . . . . . . 26
3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.17 Employment Matters . . . . . . . . . . . . . . . . . . . . 26
3.18 Patents, Trademarks, Copyrights and Licenses . . . . . . . 26
3.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 27
3.20 Hazardous Materials . . . . . . . . . . . . . . . . . . . . 27
3.21 Insurance Policies . . . . . . . . . . . . . . . . . . . . 27
3.22 Deposit and Disbursement Accounts . . . . . . . . . . . . . 27
3.23 Government Contracts . . . . . . . . . . . . . . . . . . . 28
3.24 Customer and Trade Relations . . . . . . . . . . . . . . . 28
3.25 Agreements and Other Documents . . . . . . . . . . . . . . 28
3.26 FEIN . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

4. FINANCIAL STATEMENTS AND INFORMATION . . . . . . . . . . . . . . 28
4.1 Reports and Notices . . . . . . . . . . . . . . . . . . . . 28
4.2 Communication with Accountants . . . . . . . . . . . . . . 29

5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 29
5.1 Maintenance of Existence and Conduct of Business . . . . . 29
5.2 Payment of Obligations . . . . . . . . . . . . . . . . . . 29
5.3 Books and Records . . . . . . . . . . . . . . . . . . . . . 30
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . 32
5.7 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . 32
5.8 Supplemental Disclosure . . . . . . . . . . . . . . . . . . 32
5.9 Employee Plans . . . . . . . . . . . . . . . . . . . . . . 32
5.10 Environmental Matters . . . . . . . . . . . . . . . . . . . 32
5.11 Landlords' Agreements, Bailee Letters and Mortgagee
Agreements . . . . . . . . . . . . . . . . . . . . . . . . 33
5.12 Leased Locations of Collateral . . . . . . . . . . . . . . 33

6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 33
6.1 Mergers, Subsidiaries, Etc . . . . . . . . . . . . . . . . 33
6.2 Investments; Loans and Advances . . . . . . . . . . . . . . 33
6.3 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Employee Loans and Affiliate Transactions . . . . . . . . . 34
6.5 Capital Structure and Business . . . . . . . . . . . . . . 34
6.6 Guaranteed Indebtedness . . . . . . . . . . . . . . . . . . 34
6.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . 35
6.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.10 Financial Covenants . . . . . . . . . . . . . . . . . . . . 36
6.11 Hazardous Materials . . . . . . . . . . . . . . . . . . . . 36
6.12 Sale-Leasebacks . . . . . . . . . . . . . . . . . . . . . . 36
6.13 Cancellation of Indebtedness . . . . . . . . . . . . . . . 36
6.14 Restricted Payments . . . . . . . . . . . . . . . . . . . . 36
6.15 Management Agreements . . . . . . . . . . . . . . . . . . . 36
6.16 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.17 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 37
6.18 Change of Corporate Name or Location . . . . . . . . . . . 37
6.19 Cash Management . . . . . . . . . . . . . . . . . . . . . . 37
6.20 Technology Development Arrangements . . . . . . . . . . . . 37

7. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Survival of Obligations Upon Termination of Financing
Arrangements . . . . . . . . . . . . . . . . . . . . . . . 38

8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES . . . . . . . . . . . . . 38
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 38
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Waivers by Borrower . . . . . . . . . . . . . . . . . . . . 41

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . . . . 42
9.1 Assignment and Participations . . . . . . . . . . . . . . . 42
9.2 Appointment of Agent . . . . . . . . . . . . . . . . . . . 43
9.3 Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . 44
9.4 GE Capital and Affiliates . . . . . . . . . . . . . . . . . 45
9.5 Lender Credit Decision . . . . . . . . . . . . . . . . . . 45
9.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Setoff and Sharing of Payments . . . . . . . . . . . . . . 47
9.9 Disbursement of Funds . . . . . . . . . . . . . . . . . . . 47
9.10 Advances; Payments; Information; Non-Funding Lenders . . . 48

10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . 51
10.1 Successors and Assigns . . . . . . . . . . . . . . . . . . 51

11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1 Complete Agreement; Modification of Agreement . . . . . . 52
11.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . 52
11.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 53
11.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 54
11.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . 55
11.7 Conflict of Terms . . . . . . . . . . . . . . . . . . . . 55
11.8 Authorized Signature . . . . . . . . . . . . . . . . . . . 55
11.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 55
11.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.11 Section Titles . . . . . . . . . . . . . . . . . . . . . . 56
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 56
11.13 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 56
11.14 Press Releases . . . . . . . . . . . . . . . . . . . . . . 57
11.15 Reinstatement . . . . . . . . . . . . . . . . . . . . . . 57

<PAGE>

INDEX OF EXHIBITS AND SCHEDULES

Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Term Note
Exhibit E - Form of Security Agreement

Schedule 1.1(a) - Responsible Individual
Schedule 1.9 - List of Bank Accounts
Schedule 3.2 - Executive Offices
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.7 - Real Estate and Leases
Schedule 3.9 - Labor Matters
Schedule 3.10 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Schedule 3.13 - Tax Matters
Schedule 3.14 - ERISA Plans
Schedule 3.15 - Litigation
Schedule 3.16 - Brokers Fees
Schedule 3.17 - Employment Matters
Schedule 3.18 - Intellectual Property
Schedule 3.20 - Hazardous Materials
Schedule 3.21 - Insurance Policies
Schedule 3.22 - Deposit and Disbursement Accounts
Schedule 3.23 - Government Contracts
Schedule 3.25 - Material Agreements
Schedule 3.28 - Fein Numbers
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.4(b) - Employee Compensation
Schedule 6.7 - Existing Liens
Schedule 8.1 - Additional Terms
Schedule 11.8 - Authorized Signatures

Schedule A (Recitals) - Definitions
Schedule B (Section 1.2) - Letters of Credit
Documents
Schedule C (Section 1.6) - Eligible Accounts
Schedule D (Section 1.7) - Eligible Inventory
Schedule E (Section 1.9) - Cash Management Systems
Schedule F (Section 2.1(b)) - Schedule of Additional Closing
Documents
Schedule G (Section 4.1(a)) - Financial Statements and
Projections -- Reporting
Schedule H (Section 4.1(b)) - Collateral Reports
Schedule I (Section 6.11) - Financial Covenants
Schedule J (Section 11.10) - Notice Addresses
Schedule K (Section 9.10(a)(iii)) - Wire Transfer Account Information

<PAGE>

This CREDIT AGREEMENT, dated as of June 30, 1995 among LADISH
CO., INC., a Wisconsin corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself, as Lender, and as Agent for Lenders, and the other
Lenders signatory hereto.

RECITALS

WHEREAS, Borrower desires that Lenders extend a revolving and
term credit facility to Borrower for the purpose of refinancing certain
indebtedness of Borrower, to provide working capital financing for
Borrower and to provide funds for other general corporate purposes of
Borrower; and Borrower desires to borrow up to Forty-Three Million Dollars
($43,000,000) from Lenders, and Lenders are willing to make certain loans
and other extensions of credit to Borrower of up to such amount upon the
terms and conditions set forth herein;

WHEREAS, Borrower desires to secure all of its obligations under
the Loan Documents by granting to Agent, on behalf of Lenders, a security
interest in and lien upon all of its personal and real property;

WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Schedule A. All Schedules, Exhibits and
other attachments hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together, shall constitute but
a single agreement. These Recitals shall be construed as part of the
Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:

1. AMOUNT AND TERMS OF CREDIT

1.1 Credit Facilities.

(a) Revolving Credit Facility. (i) Upon and subject to the
terms and conditions hereof, each Lender, severally and not jointly,
agrees to make available, from time to time, until the Commitment
Termination Date, for Borrower's use and upon the request of Borrower
therefor, its Pro Rata Share of advances (each, a "Revolving Credit
Advance") in an aggregate amount which shall not at any given time exceed
the lesser at such time of (A) the Maximum Revolving Credit Loan and (B)
an amount equal to the Borrowing Base less the amount of the Letter of
Credit Obligations at such time ("Borrowing Availability"); provided,
however, that in no event shall the Revolving Credit Loan of any Lender
exceed its Revolving Credit Loan Commitment less its Pro Rata Share of the
Letter of Credit Obligations at such time. Until all amounts outstanding
in respect of the Revolving Credit Loan shall become due and payable on
the Commitment Termination Date, subject to the terms and conditions
hereof Borrower may from time to time borrow, repay and reborrow under
this Section 1.1(a). Each Revolving Credit Advance shall be made on
notice by Borrower to the individual at the Agent identified on Schedule
1.1(a) at the address specified thereon, given no later than (i) 11:00
a.m. (Chicago time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (ii) 11:00 a.m. (Chicago
time) on the day which is three (3) Business Days prior to the proposed
Revolving Credit Advance in the case of a LIBOR Loan; provided, however,
that unless Borrower shall also have complied with the requirements of
Section 1.5(e), all such Revolving Credit Advances shall bear interest by
reference to the Index Rate; provided, further that any Revolving Credit
Advance requested as a LIBOR Loan shall be in a minimum amount of
$1,000,000 and multiples of $500,000 in excess of such amount. Each such
notice (a "Notice of Revolving Credit Advance") shall be substantially in
the form of Exhibit A hereto, specifying therein the requested date, the
amount and type of such Revolving Credit Advance, and such other
information as may be required by Agent and shall be given in writing (by
telecopy or overnight courier) or by telephone confirmed immediately in
writing. Agent shall be entitled to rely upon, and shall be fully
protected under this Agreement in relying upon, any Notice of Revolving
Credit Advance believed by Agent to be genuine and to assume that each
Person executing and delivering the same was duly authorized unless the
responsible individual acting thereon for Agent shall have, at the time of
reliance thereon, actual knowledge to the contrary.

(ii) Borrower shall execute and deliver to each Lender a note
to evidence the Revolving Credit Loan, such note to be in the principal
amount of the Revolving Credit Loan Commitment of such Lender, dated the
Closing Date and substantially in the form of Exhibit C hereto (each a
"Revolving Credit Note" and, collectively, the "Revolving Credit Notes").
The Revolving Credit Notes shall represent the obligation of Borrower to
pay the amount of the Revolving Credit Loan Commitment or, if less, the
aggregate unpaid principal amount of all Revolving Credit Advances made by
Lenders to Borrower and all other obligations together with interest
thereon as prescribed in Section 1.5. The date and amount of each
Revolving Credit Advance and each payment of principal with respect
thereto shall be recorded on the books and records of Agent, which books
and records shall constitute prima facie evidence of the accuracy of the
information therein recorded. The entire unpaid balance of the Revolving
Credit Loan shall be immediately due and payable on the Commitment
Termination Date.

(b) Term Loan. Upon and subject to the terms and conditions
hereof, each Lender having a Term Loan Commitment severally and not
jointly agrees to make a term loan to Borrower on the Closing Date (all
such term loans, collectively, being the "Term Loan") in the original
principal amount of its Term Loan Commitment. The Term Loan shall be
evidenced by Term Notes substantially in the form of Exhibit D, and
Borrower shall execute and deliver the same to each such Lender.

The principal amount of the Term Loan shall be payable in
sixteen (16) consecutive quarterly installments on the last day of March,
June, September and December of each year, commencing September 30, 1996,
in the following respective scheduled installments:

Installments 1 through 4 $375,000 each;
Installments 5 through 12 $500,000 each; and
Installments 13 through 16 $625,000 each.

Installment 16 shall be due and payable on June 30, 2000 and shall be in
the amount of $625,000 or the then remaining principal balance of the Term
Loan if different than such amount. Amounts paid on the Term Loan may not
be reborrowed.

1.2 Letters of Credit. Subject to the terms and conditions of
Schedule B, Agent agrees to issue or guaranty Letters of Credit for the
benefit of Borrower.

1.3 Prepayment. (a) In the event that the outstanding balance
of the Revolving Credit Loan shall, at any time, exceed the lesser at such
time of (i) the Maximum Revolving Credit Loan and (ii) the Borrowing Base
less the outstanding amount of the Letter of Credit Obligations, Borrower
shall immediately repay the Revolving Credit Loan in the amount of such
excess. In the event that the sum of the outstanding balance of the
Revolving Credit Loan plus the Letter of Credit Obligations shall at any
time exceed the Borrowing Base, Borrower shall immediately repay the
Revolving Credit Loan in the amount of such excess, together with the
payment of any LIBOR breakage funding costs in accordance with Section
1.13(c).

(b) Immediately upon receipt by Borrower of net proceeds (after
deducting all expenses, including commissions, taxes payable, and amounts
payable to holders of prior liens, if any, and an appropriate reserve for
income taxes in connection therewith) of any asset disposition permitted
by Section 6.8(ii) or (iii), Borrower shall prepay the Loans with such net
proceeds (i) if such proceeds are Special Proceeds, in accordance with
clause (f) below, and (ii) otherwise in accordance with clause (e) below,
in each case together with the payment of any LIBOR breakage funding costs
in accordance with Section 1.13(c). As used in this Section 1.3(b),
"Special Proceeds" shall mean (x) proceeds of the sale of Borrower's real
estate located in Houston, Texas, and (y) proceeds (other than from sales
of machinery, equipment or dies and other than from the sale of the real
estate in Houston, Texas) not exceeding in the aggregate $500,000 per
Fiscal Year on a noncumulative basis.

(c) In the event that Borrower receives proceeds from the
issuance of any Stock after June 30, 1996, no later than the third
Business Day following the date of receipt of such proceeds Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs
associated therewith, which prepayment shall be applied in accordance with
clause (f) below, together with the payment of any LIBOR breakage funding
costs in accordance with Section 1.13(c).

(d) Borrower shall have the right at any time on thirty (30)
days' prior written notice to Agent to voluntarily prepay all or part of
the Term Loan, and/or to voluntarily prepay all or part of the Revolving
Credit Loan and in connection therewith permanently reduce or terminate
the Revolving Credit Loan Commitment, provided that any such voluntary
prepayment shall be accompanied by the payment of the fee required by
Section 1.8(c), if any, plus the payment of any LIBOR funding breakage
costs in accordance with Section 1.13(c). Upon any such prepayment and
permanent reduction or termination of the Revolving Credit Loan
Commitment, Borrower's right to receive Revolving Credit Advances shall
simultaneously terminate or be permanently reduced, as the case may be.

(e) Any prepayments required under clause (b) above to be
applied under this clause (e) shall be applied in satisfaction of the
Obligations as follows:

(i) First, to the Term Loan and accrued interest with respect
thereto, to prepay scheduled installments of such Term Loan in
inverse order of maturity until the Term Loan shall have been prepaid
in full;

(ii) Second, to the principal amount of the Revolving Credit
Loan outstanding and accrued interest with respect thereto until the
same shall have been paid in full, and the Revolving Credit Loan
Commitment shall automatically be permanently reduced by the amount
of such prepayments;

(iii) Third, to cash collateralize the undrawn portion of any
Letters of Credit; and

(iv) Fourth, to all remaining Obligations.

(f) Any prepayments required under clause (b) or (c) above to
be applied under this clause (f) shall be applied in satisfaction of the
Obligations as follows:

(i) First, to the principal amount of the Revolving Credit Loan
outstanding and accrued interest with respect thereto until the same
shall have been paid in full;

(ii) Second, to the Term Loan and accrued interest with respect
thereto, to prepay scheduled installments of such Term Loan in
inverse order of maturity until the Term Loan shall have been prepaid
in full;

(iii) Third, to cash collateralize the undrawn portion of any
Letters of Credit; and

(iv) Fourth, to all remaining Obligations.

(g) Any cash collateral required by this Section 1.3 shall be
held by the Agent in a separate cash collateral account subject to the
security interest and lien of the Security Agreement and the terms of
Schedule B. The Borrower shall have no access to such account.

1.4 Use of Proceeds. Borrower shall utilize the proceeds of
Revolving Credit Advances solely for the Refinancing (and to pay any
related transaction expenses) and for the financing of ordinary working
capital and general corporate needs (but excluding in any event any direct
or indirect redemption, purchase, repayment or defeasance of any Stock of
Borrower.

1.5 Interest on Revolving Credit Loan. (a) Borrower shall pay
interest to Agent, for the ratable benefit of Lenders in accordance with
the various Loans being made by each Lender, in arrears on each applicable
Interest Payment Date, at a rate equal to: (A) with respect to the
Revolving Credit Loan, the Index Rate plus the Applicable Margin, or, at
the election of Borrower in accordance with Section 1.5(e), the applicable
LIBOR Rate plus the Applicable Margin, based on the amounts outstanding
from time to time under the Revolving Credit Loan; and (B) with respect to
the Term Loan, the Index Rate plus the Applicable Margin or, at the
election of Borrower in accordance with Section 1.5(e), the applicable
LIBOR Rate plus the Applicable Margin.

(b) If any payment on the Revolving Credit Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.

(c) All computations of interest shall be made by Agent on the
basis of a three hundred and sixty (360) day year, in each case for the
actual number of days occurring in the period for which such interest is
payable. The Index Rate shall be determined as of the last day of each
month and shall be in effect at such rate during the succeeding calendar
month. Each determination by Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error or bad
faith.

(d) So long as any Event of Default shall have occurred and be
continuing, and after written notice from Agent to Borrower, the interest
rates applicable to the Revolving Credit Loan and any other Obligations
shall be increased by two percent (2%) per annum above the rate of
interest otherwise applicable hereunder ("Default Rate").

(e) Provided no Event of Default shall have occurred and be
continuing, Borrower may elect by 11:00 a.m. (Chicago time) on the third
(3rd) Business Day prior to (i) the date of any proposed Revolving Credit
Advance which is to bear interest at the LIBOR Rate, (ii) the end of each
LIBOR Period with respect to any LIBOR Loans, or (iii) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan, to have
all or some portion of the Revolving Credit Loan or the Term Loan bear
interest at the LIBOR Rate for the next succeeding LIBOR Period as
designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 A.M. (Chicago time) on the third (3rd)
Business Day prior to the end of the LIBOR Period with respect to such
LIBOR Loan (or if a Default or an Event of Default shall have occurred and
be continuing), such LIBOR Loan shall be converted to an Index Rate Loan
at the end of the LIBOR Period. Borrower shall make such election by
notice to Agent in writing, by telecopy or overnight courier. Borrower
shall have the option to (1) convert at any time all or any part of the
outstanding Revolving Credit Loan or Term Loan equal to $1,000,000 and
integral multiples of $500,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative basis, or (2)
upon the expiration of any LIBOR Period applicable to a LIBOR Loan, to
continue all or any portion of such Loan equal to $1,000,000 and integral
multiples of $500,000 in excess of that amount as a LIBOR Loan and the
succeeding LIBOR Period(s) of such continued Loan shall commence on the
last day of the LIBOR Period of the Loan to be continued; provided that
LIBOR Loans may only be converted into Index Rate Loans on the expiration
date of a LIBOR Period applicable thereto; and provided, further, that no
outstanding Loan may be made or continued as, or be converted into, a
LIBOR Loan when any Event of Default has occurred and is continuing; and
provided, further, that no Loan may be made as converted into a LIBOR Loan
until five (5) days after the Closing Date, and only two (2) LIBOR Periods
shall be in effect at any one time for the Term Loan and not more than six
(6) LIBOR Periods shall be in effect at any one time for the Revolving
Credit Loan.

(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if, at any time until payment in full of all of the
Obligations, the rate of interest payable hereunder exceeds the highest
rate of interest permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto (the
"Maximum Lawful Rate"), then in such event and so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, however, that if at
any time thereafter the rate of interest payable hereunder is less than
the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest received
by Agent, on behalf of Lenders, from the making of such advances hereunder
is equal to the total interest which would have been received had the
interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, the interest rate payable
hereunder shall be the rate of interest provided in Sections 1.5(b)
through (e) of this Agreement, unless and until the rate of interest again
exceeds the Maximum Lawful Rate, in which event this paragraph shall again
apply. In no event shall the total interest received by any Lender
pursuant to the terms hereof exceed the amount which such Lender could
lawfully have received had the interest due hereunder been calculated for
the full term hereof at the Maximum Lawful Rate. In the event the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall
be calculated at a daily rate equal to the Maximum Lawful Rate divided by
the number of days in the year in which such calculation is made. In the
event that a court of competent jurisdiction, notwithstanding the
provisions of this Section 1.5 (f), shall make a final determination that
a Lender has received interest hereunder or under any of the other Loan
Documents in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess first to any
interest due and not yet paid hereunder in respect of the Loans, then to
the outstanding principal of the Loans, then to Fees and any other unpaid
Obligations and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.

1.6 Eligible Accounts. Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other information
available to Agent, Agent shall determine which Accounts shall be deemed
to be "Eligible Accounts" for purposes of determining the amounts, if any,
to be advanced to Borrower under the Revolving Credit Loan. In
determining whether a particular Account constitutes an Eligible Account,
Agent shall not include any such Account which meets any of the criteria
set forth in Schedule C.

1.7 Eligible Inventory. Based on the most recent Borrowing
Base Certificate delivered by Borrower to Agent and on other information
available to Agent, Agent shall determine which Inventory shall be deemed
to be "Eligible Inventory" for purposes of determining the amounts, if
any, to be advanced to Borrower under the Revolving Credit Loan. In
determining whether any particular Inventory constitutes Eligible
Inventory, Agent shall not include Inventory which meets any of the
criteria set forth in Schedule D.

1.8 Fees. (a) Borrower shall pay to GE Capital, individually,
the fees specified in that certain Fee Letter, dated of even date herewith
(the "GE Capital Fee Letter"), at the times specified for payment therein.

(b) As additional compensation for Lenders' costs and risks in
making the Revolving Credit Loan available to Borrower, Borrower agrees to
pay to Agent, for the ratable benefit of Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a fee for Borrower's non-use of available
funds (the "Non-use Fee") in an amount equal to one-half of one percent
(1/2%) per annum (calculated on the basis of a 360 day year for actual
days elapsed) of the difference between the respective daily averages of
(i) the Maximum Revolving Credit Loan (as it may be adjusted from time to
time hereunder) and (ii) the amount of the Revolving Credit Loan
outstanding during the period for which the Non-Use Fee is due.

(c) Except as set forth in Section 1.3(d) above, if, prior to
July 1, 1998, Borrower shall prepay the Term Loans, Borrower shall pay to
the Agent, for the benefit of Lenders as liquidated damages and
compensation for the costs of being prepared to make funds available to
Borrower hereunder an amount determined by multiplying (i) in the case of
a prepayment of the Term Loan on or before June 30, 1997, two percent (2%)
by the sum of the outstanding principal balance of the Term Loan at the
date of such prepayment (or, in the case of a partial prepayment, by the
amount so prepaid) and (ii) in the case of a permanent prepayment of the
Term Loan after June 30, 1997 and on or before June 30, 1998, one percent
(1%) by the sum of the outstanding principal balance of the Term Loans at
the date of such prepayment (or, in the case of a partial prepayment, by
the amount so prepaid).

1.9 Cash Management Systems; Daily Sweep. On or prior to the
Closing Date, Borrower will establish and will maintain until the
Termination Date, the cash management systems described on Schedule E.
The Revolving Credit Loan shall be repaid at the close of each Business
Day to the extent of the balance in the Collection Account as more fully
described on Schedule E.

1.10 Receipt of Payments. Borrower shall make each payment
under this Agreement not later than noon (Chicago time) on the day when
due in lawful money of the United States of America in immediately
available funds to the Collection Account. For purposes of computing
interest and fees and determining the amount of funds available for
borrowing by Borrower pursuant to Section 1.1(a), (a) all payments
(including cash sweeps) consisting of cash, wire or electronic transfers
in immediately available funds shall be deemed received on the date of
deposit thereof in the Collection Account and notice to Agent of such
deposit before the time specified above, and (b) all payments consisting
of checks, drafts, or similar non-cash items shall be deemed received on
the day of receipt of good funds following deposit of any such payment in
the Collection Account and notice to Agent of such deposit.

1.11 Application and Allocation of Payments. Borrower
hereby irrevocably waives the right to direct the application of any and
all payments at any time or times hereafter received from or on behalf of
Borrower, and Borrower hereby irrevocably agrees that Agent shall have the
continuing exclusive right to apply any and all such payments against the
then due and payable Obligations of Borrower, to cash collateralize the
undrawn portion of any Letters of Credit, and in repayment of the
Revolving Credit Loan and Term Loans as Agent may deem advisable
notwithstanding any previous entry by Agent upon the Loan Account or any
other books and records. In the absence of a specific determination by
Agent with respect thereto, the same shall be applied in the following
order: (i) to then due and payable expenses of the Agent and to then due
and payable Fees; (ii) to then due and payable interest payments on the
Revolving Credit Loan and Term Loan; (iii) to principal payments on the
Revolving Credit Loan and Term Loan; (iv) to cash collateralize the
undrawn portion of any Letters of Credit, and (v) to all other then due
and payable Obligations. Agent is authorized to, and at its option may,
make or cause to be made Revolving Credit Advances on behalf of Borrower
for payment of all Fees, expenses, Charges, costs, principal, interest, or
other Obligations owing by Borrower under this Agreement or any of the
other Loan Documents if and to the extent Borrower fails to promptly pay
any such amounts as and when due, even if such Revolving Credit Advance
would cause total Revolving Credit Advances to exceed Borrowing
Availability or the Maximum Revolving Credit Loan amount. At Agent's
option and to the extent permitted by law, any advances so made shall be
deemed Revolving Credit Advances constituting part of the Revolving Credit
Loan hereunder. Any cash collateral required by this Section 1.11 shall
be held by the Agent in a separate cash collateral account subject to the
security interest and lien of the Security Agreement and the terms of
Schedule B. The Borrower shall have no access to such account.

1.12 Loan Account and Accounting. Agent shall maintain a
loan account (the "Loan Account") on its books to record: (a) all
Revolving Credit Advances and the Term Loan, (b) all payments made by
Borrower, and (c) all other appropriate debits and credits as provided in
this Agreement with respect to the Revolving Credit Loan and Term Loan or
any other Obligations. All entries in the Loan Account shall be made in
accordance with Agent's customary accounting practices as in effect from
time to time. Borrower shall pay all Obligations as such amounts become
due or are declared due pursuant to the terms of this Agreement.

The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall be presumptive evidence
of the amounts due and owing to Agent and Lenders by Borrower; provided,
that, any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's obligations to pay the Obligations.
Agent shall render to Borrower a monthly accounting of transactions under
the Revolving Credit Loan and Term Loans setting forth the balance of the
Loan Account. Each and every such accounting shall (absent manifest
error) be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein, unless Borrower, within
thirty (30) days after the date any such accounting is rendered, shall
notify Agent in writing of any objection which Borrower may have to any
such accounting, describing the basis for such objection with specificity.
In that event, only those items expressly objected to in such notice shall
be deemed to be disputed by Borrower.

1.13 Indemnity. (a) Borrower shall jointly and severally
indemnify and hold each of Agent, Lenders, their respective Affiliates,
and each such Person's respective officers, directors, employees,
attorneys, agents and representatives (each, an "Indemnified Person"),
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including attorneys' fees and
disbursements and other costs of investigation or defense, including those
incurred upon any appeal) which may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having
been extended under this Agreement and the other Loan Documents or in
connection with or arising out of the transactions contemplated hereunder
and thereunder or any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and Costs; provided, that
Borrower shall not be liable for any indemnification to such Indemnified
Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results solely from such Indemnified
Person's gross negligence or willful misconduct, as finally determined by
a court of competent jurisdiction after all possible appeals have been
exhausted. NEITHER AGENT, ANY LENDER, NOR ANY OTHER INDEMNIFIED PERSON
SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED OR TERMINATED UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

(b) Borrower hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or
Borrower's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents to influence Borrower's conduct with
respect to the ownership, operation or management of any of its Real
Estate.

(c) Borrower understands that in connection with Lenders'
arranging to provide the LIBOR Rate interest option with respect to the
Revolving Credit Loan and Term Loans from time to time at the option of
Borrower on the terms provided herein, Lenders may enter into funding
arrangements with third parties ("Funding Arrangements") on terms and con-
ditions which could result in losses to such Lenders if such LIBOR Rate
funds do not remain outstanding at the interest rates provided herein for
the entire LIBOR Period with respect to which the LIBOR Rate has been
fixed. Consequently, in order to induce Lenders to provide such LIBOR
Rate option on the terms provided herein and in consideration of Lenders
entering into such Funding Arrangements from time to time, if any LIBOR
Loans are repaid in whole or in part prior to the last day of any such
LIBOR Period therefor (whether such repayment is made pursuant to any
provision of this Agreement or any other Loan Document or is the result of
acceleration, by operation of law or otherwise), Borrower shall indemnify
and hold harmless each Lender from and against and in respect of any and
all losses, costs and expenses resulting from, or arising out of or
imposed upon or incurred by such Lender by reason of the liquidation or
reemployment of funds acquired or committed to be acquired by such Lender
to fund such LIBOR Loans pursuant to the Funding Arrangements. The amount
of any losses, costs or expenses resulting in an obligation of Borrower to
make a payment pursuant to the foregoing sentence shall not include any
losses attributable to lost profit to Lenders but shall represent the
excess, if any, of (A) such Lender's cost of borrowing the LIBOR Rate
funds pursuant to the Funding Arrangements over (B) the return to such
Lender on its reinvestment of such funds; provided, however, that if any
Lender terminates any Funding Arrangements in respect of the LIBOR Loans,
the amount of such losses, costs and expenses shall include the cost to
such Lender of such termination. In reinvesting any funds borrowed by any
Lender pursuant to the Funding Arrangements, such Lender shall take into
consideration the remaining maturity of such borrowings. As promptly as
practicable under the circumstances, each Lender shall provide Borrower
with its written calculation of all amounts payable pursuant to the next
preceding sentence, and such calculation shall be binding on the parties
hereto unless Borrower shall object thereto in writing within ten (10)
Business Days of receipt thereof.

1.14 Access. (a) Borrower shall provide full access during
normal business hours, from time to time upon three (3) Business Days'
prior notice, to Agent and any of its officers, employees and agents, as
frequently as Agent determines, in its reasonable discretion, to be
appropriate (unless a Default or Event of Default shall have occurred and
be continuing, in which event Agent and its officers, employees,
designees, agents and representatives shall have access at any and all
times and without any advance notice), to the properties, facilities,
books, records, suppliers, customers, advisors and employees (including
officers) of Borrower, to the Collateral, to the accountants (including
Arthur Andersen LLP) of Borrower and to the work papers of such
accountants, if available. Without limiting the generality of the
foregoing, Borrower shall (i) permit Agent, and any of its officers,
employees, agents and representatives, to inspect, audit and make extracts
from all of Borrower's records, files and books of account and (ii) permit
Agent, and any of its officers, employees, agents and representatives, to
inspect, review and evaluate the Accounts and Inventory at Borrower's
locations and at premises not owned by or leased to Borrower. Borrower
shall make available to Agent and its counsel, as quickly as is possible
under the circumstances, originals or copies of all books, records, board
minutes, contracts, insurance policies, environmental audits, business
plans, files, financial statements (actual and pro forma), filings with
federal, state and local regulatory agencies, and other instruments and
documents which Agent may request. Borrower shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to
obtain records from any service bureau or other Person which maintains
records for Borrower, and shall maintain records or supporting
documentation on media, including computer tapes and discs owned by
Borrower. Borrower shall instruct their certified public accountants to
make available to Agent such information and records as Agent may request.

(b) A fee of $400 per day per individual (plus all out-of-
pocket costs and expenses) in connection with Agent's field examinations
permitted under Section 1.14(a) above and Section 4(c) of the Security
Agreement shall be charged against the Revolving Credit Facility in
connection with each field audit conducted after the Closing Date.

1.15 Taxes. (a) Any and all payments by Borrower hereunder
or under the Revolving Credit Notes or Term Notes shall be made, in
accordance with this Section 1.15, free and clear of and without deduction
for any and all present or future Taxes. If Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or
under the Revolving Credit Notes or Term Notes, (i) the sum payable shall
be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums
payable under this Section 1.15) Agent or Lenders, as applicable, receive
an amount equal to the sum they would have received had no such deductions
been made, (ii) Borrower shall make such deductions, and (iii) Borrower
shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law.

(b) Borrower shall indemnify and pay, within ten (10) days of
demand therefor, Agent and each Lender for the full amount of Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under
this Section 1.15) paid by Agent or such Lender, as appropriate, and any
liability (including penalties, interest and expenses) arising therefrom
or with respect thereto.

(c) Within thirty (30) days after the date of any payment of
Taxes, Borrower shall furnish to Agent, at its address referred to in
Section 11.10, the original or a certified copy of a receipt evidencing
payment thereof.

1.16 Capital Adequacy; Increased Costs; Illegality. (a)
In the event that any Lender shall have determined that the adoption after
the date hereof of any law, treaty, governmental (or quasi-governmental)
rule, regulation, guideline or order regarding capital adequacy, reserve
requirements or similar requirements or compliance by any Lender with any
request or directive regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction has the effect of
increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then
Borrower shall from time to time within fifteen (15) days after notice and
demand on Borrower by such Lender (together with the certificate referred
to in the next sentence and with a copy to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of such cost
and showing the basis of the computation of such cost submitted by such
Lender to Borrower and Agent shall, absent manifest error, be final,
conclusive and binding for all purposes, unless Borrower within ten (10)
days after demand for payment of such additional amount(s) shall notify
Agent and such Lender in writing of any objection which Borrower may have
to such computation, describing the basis for such objection with
specificity. In that event, only those items expressly objected to in
such notice shall be deemed to be disputed by Borrower. Such Lender's
determination, based upon the facts available, of the computation shall
(absent manifest error) be final, binding and conclusive on Borrower.

(b) If, due to either (i) the introduction of or any change in
or in the judicial or governmental interpretation of any law or regulation
or (ii) the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make
or making, funding or maintaining of any Loan, then Borrower shall from
time to time, within fifteen (15) days after notice and demand by such
Lender (with a copy of such demand to Agent), pay to Agent for the account
of such Lender additional amounts sufficient to compensate such Lender for
such increased cost. A certificate as to the amount of such increased
cost, submitted to Borrower and Agent by such Lender, shall be conclusive
and binding on Borrower for all purposes, absent manifest error, unless
Borrower within ten (10) days after demand for payment of such additional
amount(s) shall notify Agent and such Lender in writing of any objection
which Borrower may have to such computation, describing the basis for such
objection with specificity. In that event, only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.
Such Lender's determination, based upon the facts available, of the
computation shall (absent manifest error) be final, binding and conclusive
on Borrower. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to in clause (i) or (ii) above
which would result in any such increased cost to such Lender, such Lender
shall, to the extent not inconsistent with such Lender's internal policies
of general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrower pursuant
to this Section 1.16(b).

(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in or in the judicial or governmental
interpretation of any law or regulation shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is
unlawful, for any Lender to agree to make or to make or to continue to
fund or maintain any LIBOR Loan, then, unless such Lender is able to agree
to make or to make or to continue to fund or to maintain such LIBOR Loan
at another branch or office of such Lender without, in such Lender's
opinion, adversely affecting it or its Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make
or to make or to continue to fund or maintain LIBOR Loans shall terminate
and (ii) on the last day of each LIBOR Period applicable thereto, Borrower
shall prepay in full all outstanding LIBOR Loans or convert such LIBOR
Loans into Index Rate Loans.

(d) Upon the Agent obtaining actual knowledge of the occurrence
of any of the events set forth in this Section 1.16, Agent shall promptly
notify Borrower of the occurrence of such event. Borrower shall have the
right within five (5) days of receipt of such notice to convert any
outstanding LIBOR Loans to Index Rate Loans.

(e) Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which
payments to be made under this Agreement or under the Notes are exempt
from United States withholding tax or are subject to United States
withholding tax at a reduced rate under an applicable statute or tax
treaty shall provide to Borrower and Agent a properly completed and
executed Internal Revenue Service Form 4224 or Form 1001 or other
applicable form, certificate or document prescribed by the Internal
Revenue Service or the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate or withholding with
respect to payments to be made to such Foreign Lender under this Agreement
and under the Notes (a "Certificate of Exemption"). Prior to becoming a
Lender under this Agreement and within fifteen (15) days after a
reasonable written request of Borrower or Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement
shall provide a Certificate of Exemption to Borrower and Agent. No Person
may become a Lender hereunder if such Person is unable to deliver a
Certificate of Exemption.

If a Foreign Lender does not provide a Certificate of Exemption
to Borrower and Agent within the time periods set forth in the preceding
paragraph, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rate and Borrower shall not be required
to pay any additional amounts as a result of such withholding; provided,
however, that all such withholding shall cease upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrower and Agent.

2. CONDITIONS PRECEDENT

2.1 Conditions to the Initial Loans.

Notwithstanding any other provision of this Agreement and
without affecting in any manner the rights of Agent and Lenders hereunder,
Borrower shall have no rights under this Agreement (but shall have all
applicable obligations hereunder), and no Lender shall be obligated to
make any Loan on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been
satisfied, in Agent's sole discretion, or waived in writing by Agent:

(a) Credit Agreement. This Agreement or counterparts hereof
shall have been duly executed by, and delivered to, Borrower, Agent and
Lenders.

(b) Loan Documents. Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall request in
connection with the transactions contemplated by this Agreement and the
other Loan Documents, including all documents, instruments, agreements and
legal opinions listed in the Schedule of Documents attached hereto as
Schedule F, each in form and substance satisfactory to Agent.

(c) Repayment of Prior Loans. A pay-off letter(s) satisfactory
to Agent confirming that all of the Prior Lender Obligations will be
repaid in full from the proceeds of the initial Revolving Credit Advance
and Term Loan or otherwise terminated and all Liens upon any of the
property of Borrower in favor of Prior Lender shall be terminated by Prior
Lender immediately upon such payment or termination.

(d) Governmental Approvals. Evidence satisfactory to Agent
that Borrower has obtained consents and acknowledgments of all Persons
whose consents and acknowledgments may be required, including, but not
limited to, all requisite Governmental Authorities, to the terms, and to
the execution and delivery, of this Agreement, the other Loan Documents
and the consummation of the transactions contemplated hereby and thereby.

(e) Insurance. Evidence satisfactory to Agent that the
insurance policies provided for in Section 3.21 and Schedule 3.21 are in
full force and effect, together with appropriate evidence showing loss
payable and/or additional insured clauses or endorsements, as requested by
Agent, in favor of Agent, on behalf of Lenders, and in form and substance
satisfactory to Agent.

(f) Opening Availability. The Eligible Accounts and Eligible
Inventory supporting the initial Revolving Credit Advance and the amount
of the reserves to be established on the Closing Date shall be sufficient
in value, as determined by Agent, to provide Borrower with excess
Borrowing Availability, after giving effect to the initial Revolving
Credit Advance, the Term Loan, the amount of any Letter of Credit
Obligations under the Revolving Credit Loan and any initial Letter of
Credit Obligations (on a pro forma basis and without any deterioration in
trade payables) of at least $1,000,000.

(g) Payment of Fees. Payment by Borrower to GE Capital of the
fees required to be paid on the Closing Date in the respective amounts
specified in GE Capital Fee Letter.

(h) Officer's Certificate. Agent shall have received duly
executed originals of a certificate of the chief executive officer and the
Financial Officer of Borrower, dated the Closing Date, stating that since
December 30, 1994, to the best of their knowledge and belief, after due
inquiry (i) there has been no material adverse change in the business,
results of operations, financial condition or prospects of Borrower or the
industries in which Borrower operates; (ii) no litigation other than as
disclosed on Schedule 3.15 has been commenced which, if successful, would
have a Material Adverse Effect or could challenge any of the transactions
contemplated by this Agreement and the other Loan Documents; (iii) there
have been no dividends or other distributions to Borrower's stockholders;
and (iv) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of Borrower.

(i) Accountants Letters. Agent, on behalf of Lenders, shall
have received a letter satisfactory in form and substance to Agent signed
by Borrower's independent certified public accountants, acknowledging that
Agent and Lenders are entitled to rely upon such accountant's
certification of Borrower's financial statements.

(j) Compliance with Laws. Agent shall have received evidence
satisfactory to Agent and its counsel that Borrower is in compliance in
all material respects, with all applicable foreign, federal, state and
local laws and regulations, including those relating to labor and
environmental matters and ERISA.

(k) Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in
form and substance satisfactory to Agent, in each case as required
pursuant to Section 5.11. In the event Borrower is unable to obtain a
landlord waiver and consent, bailee letter and/or mortgage agreement
acceptable to Agent as to any such location on or before the Closing Date,
Eligible Inventory at that location shall be subject to a reserve
established by Agent in accordance with Section 5.11.

(l) Mortgages. Mortgages covering all of the Real Estate other
than Borrower's regional sales office facilities not co-located with a
manufacturing facility (the "Mortgaged Properties") together with: (a)
copies of existing title insurance policies, as-built surveys, zoning
letters and certificates of occupancy, the contents of which are in each
case satisfactory to Agent in its sole discretion; (b) evidence that
counterparts of the Mortgages have been recorded in all places to the
extent necessary or desirable, in the judgment of Agent, to create a valid
and enforceable first priority lien (subject to Permitted Encumbrances) on
each Mortgaged Property in favor of Agent for the benefit of itself and
Lenders (or in favor of such other trustee as may be required or desired
under local law); and (c) an opinion of counsel in each state in which any
Mortgaged Property is located in form and substance and from counsel
satisfactory to Agent.

(m) Other Indebtedness. The terms and conditions of all
long-term debt of Borrower shall be acceptable to Agent, in its sole
discretion, and Agent and Lenders shall have received any and all
subordination and/or intercreditor agreements, all in form and substance
reasonably satisfactory to Agent, in its sole discretion, as Agent shall
have deemed necessary or appropriate with respect to such indebtedness.

(n) Environmental Reports. Agent shall have received copies of
existing environmental review and audit reports with respect to the
properties of Borrower and Agent shall be satisfied, in its sole
discretion, with the contents of all such environmental reports.

(o) Audited Financials. Agent shall have received Borrower's
most recent draft financial statements prepared by Arthur Andersen LLP.

(p) Real Estate Appraisals. Agent shall have received copies
of existing real estate appraisals of the Real Estate owned by Borrower
and shall be satisfied with the contents thereof in its sole discretion.

(q) Financial Condition. Borrower shall have provided Agent
with their current operating statements, a consolidated balance sheet and
statement of cash flows, and projections, and a Borrowing Base Certificate
certified by Borrower's Financial Officer for each Division, in each case
in form and substance satisfactory to Agent, and Agent shall be satisfied,
in its sole discretion, with all of the foregoing, including:

(i) the Pro Forma as of the Closing Date in accordance
with Section 3.4 hereof;

(ii) Projections in accordance with Section 3.4 hereof;

(iii) Borrower's most recent audited and unaudited financial
statements; and

(iv) a certificate of the Chief Executive Officer and/or
the Financial Officer of Borrower, based on such Pro Forma,
Projections and financial statements, to the effect that (A) Borrower
will be Solvent upon the consummation of the transactions
contemplated herein; (B) the Pro Forma fairly presents the financial
condition of Borrower as of the date thereof after giving effect to
the transactions contemplated by the Loan Documents; (C) the
Projections are reasonable estimates of the future financial
performance of the Borrower subsequent to the date thereof based upon
the historical performance of the Borrower; and (D) containing such
other statements with respect to the solvency of Borrower and matters
related thereto as the Agent shall request.

2.2 Further Conditions to Each Revolving Credit Advance. It
shall be a further condition to the Term Loan, to the initial and each
subsequent Revolving Credit Advance and to the incurrence of the initial
and any subsequent Letter of Credit Obligations that the following
statements shall be true on the date of each such advance or funding, as
the case may be:

(a) All of Borrower's representations and warranties contained
herein or in any of the other Loan Documents shall be true and correct on
and as of the Closing Date and the date on which each Revolving Credit
Advance is made (or Letter of Credit Obligation is incurred) as though
made on and as of such date, except to the extent that any such
representation or warranty expressly relates to an earlier date and except
for changes therein expressly permitted or expressly contemplated by this
Agreement.

(b) No Material Adverse Effect shall have occurred since the
date hereof.

(c) No event shall have occurred and be continuing, or would
result from the making of any Revolving Credit Advance (or the incurrence
of any Letter of Credit Obligations), which constitutes or would
constitute a Default or an Event of Default.

(d) After giving effect to each Revolving Credit Advance (or
Letter of Credit Obligations) the aggregate principal amount of the
Revolving Credit Loan shall not exceed the maximum amount permitted by
Section 1.3(a) without requiring that a payment be made to Agent or any
Lender.

The request and acceptance by Borrower of the proceeds of the Term Loan or
any Revolving Credit Advance or the incurrence of any Letter of Credit
Obligations shall be deemed to constitute, as of the date of such request
or acceptance, (i) a representation and warranty by Borrower that the
conditions in this Section 2.2 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of Agent's
Liens, on behalf of itself and Lenders, pursuant to the Collateral
Documents.

3. REPRESENTATIONS AND WARRANTIES

To induce Lenders to make the Revolving Credit Loan and Term
Loan and to incur Letter of Credit Obligations, Borrower makes the
following representations and warranties to Agent and each Lender, each
and all of which shall survive the execution and delivery of this
Agreement:

3.1 Corporate Existence; Compliance with Law. Borrower (i) is
a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has been duly qualified
to conduct business and is in good standing in each other jurisdiction
where its ownership or lease of property or the conduct of its business
requires such qualification; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to
be conducted; (iii) has all licenses, permits, consents or approvals from
or by, and has made all filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (iv) is in compliance with its
certificate or articles of incorporation and by-laws; and (v) is in
compliance with all applicable provisions of law.

3.2 Executive Offices. The current location of Borrower's
chief executive office and principal place of business is set forth in
Schedule 3.2 and, as of the Closing Date, none of such locations have
changed within the past six (6) months.

3.3 Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by Borrower of the Loan Documents
and all other instruments and documents to be delivered by Borrower, and
the creation of all Liens provided for therein: (i) are within Borrower's
corporate power; (ii) have been duly authorized by all necessary or proper
corporate and shareholder action; (iii) are not in contravention of any
provision of Borrower's certificate or articles or incorporation or
bylaws; (iv) will not violate any law or regulation, or any order or
decree of any court or governmental instrumentality; (v) will not conflict
with or result in the breach or termination of, constitute a default under
or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Borrower is a
party or by which Borrower or any of its property is bound; (vi) will not
result in the creation or imposition of any Lien upon any of the property
of Borrower other than those in favor of Agent, on behalf of itself and
Lenders, all pursuant to the Loan Documents; and (vii) do not require the
consent or approval of any Governmental Authority or any other Person,
except those referred to in Section 2.1(d), all of which will have been
duly obtained, made or complied with prior to the Closing Date. On or
prior to the Closing Date, each of the Loan Documents shall have been duly
executed and delivered for the benefit of or on behalf of Borrower, and
each Loan Document shall then constitute a legal, valid and binding
obligation of Borrower enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency
or other similar laws affecting the rights of creditors generally or by
application of general principles of equity.

3.4 Financial Statements and Projections. All financial
statements (the "Financial Statements"), except for the Projections,
concerning Borrower which are referenced below have been prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as disclosed therein and except, with respect to unaudited
financial statements, for the absence of footnotes and normal year-end
audit adjustments) and, to the best of Borrower's knowledge and belief
after due inquiry, do present fairly in all material respects the
financial condition of the corporations covered thereby as at the dates
thereof and the results of their operations for the periods then ended.

(a) The following financial statements attached hereto as
Schedule 3.4(A) have been delivered on the date hereof:

(i) The audited balance sheet at December 31, 1993 and related
statement of income, certified by Arthur Andersen LLP and the draft
audited balance sheet at December 31, 1994 and related statement of
income prepared by Arthur Andersen LLP.

(ii) The unaudited balance sheet at March 31, 1995 and the
related statement of income for the Fiscal Quarter then ended.

(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Schedule 3.4(B) was prepared by Borrower based on the
unaudited balance sheet of March 31, 1995 and was prepared in accordance
with GAAP, with only such adjustments thereto as would be required in
accordance with GAAP.

(c) Projections. The Projections delivered on the date hereof
and attached hereto as Schedule 3.4(C) have been prepared by Borrower in
light of past operations of its business, and reflect projections for the
three-year period beginning on January 1, 1995 on a quarter-by-quarter
basis for the first year and on a year-by- year basis thereafter. The
Projections represent as of the date hereof the good faith and reasonable
estimates of the future financial performance of Borrower based on its
historical performance (it being understood that such Projections are not
warranties of future performance).

3.5 Collateral Reports. Borrower has delivered the Collateral
Reports identified on Schedule H and each such Collateral Report complies
with the description thereof contained on Schedule H.

3.6 Material Adverse Effect. Since December 31, 1994, Borrower
has not incurred any obligations, contingent liabilities, or liabilities
for Charges, long-term leases or unusual forward or long-term commitments
which are not reflected in the pro forma balance sheet of Borrower and
which could, alone or in the aggregate, have or result in a Material
Adverse Effect. No Material Adverse Effect has occurred between December
31, 1994 and the Closing Date.

3.7 Ownership of Property; Liens. (a) Except as described on
Schedule 3.7, the real estate ("Real Estate") listed on Schedule 3.7
constitutes all of the real property owned, leased, or used in its
business by Borrower. Borrower (i) owns good and marketable fee simple
title to all of its owned real estate, and valid and marketable leasehold
interests in all of its Leases (both as lessor and lessee, sublessee or
assignee), all as described on Schedule 3.7, and (ii) good and marketable
title to, or valid leasehold interests in, all of its other properties and
assets, and none of the properties and assets of Borrower are subject to
any Liens, except Permitted Encumbrances; and Borrower has received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and duly effected
all recordings, filings and other actions necessary to establish, protect
and perfect Borrower's right, title and interest in and to all such real
estate and other assets or property. Except as described on Schedule 3.7,
(i) neither Borrower nor any other party to any such Lease described on
Schedule 3.7 is in default of its obligations thereunder or has delivered
or received any notice of default under any such Lease, and no event has
occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such Lease; (ii) Borrower does not
own or hold nor is obligated under or a party to, any option, right of
first refusal or any other contractual right to purchase, acquire, sell,
assign or dispose of any real property owned or leased by Borrower except
as set forth therein; and (iii) no portion of any real property owned or
leased by Borrower has suffered any material damage by fire or other
casualty loss or a Release which has not heretofore been completely
repaired and restored to its original condition or is being remedied. All
permits required to have been issued or appropriate to enable the real
property owned or leased by Borrower to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used, have
been lawfully issued and are, as of the date hereof, in full force and
effect.

3.8 Restrictions; No Default. No contract, lease, agreement or
other instrument to which Borrower is a party or by which it or any of its
properties or assets is bound or affected and no provision of applicable
law or governmental regulation has or results in a Material Adverse
Effect, or could have or result in a Material Adverse Effect. Borrower is
not in default, and to Borrower's knowledge no third party is in default,
under or with respect to any material contract, agreement, lease or other
instrument to which it is a party.

3.9 Labor Matters. No strikes or other labor disputes against
Borrower are pending or, to Borrower's knowledge, threatened. Hours
worked by and payment made to employees of Borrower have not been in
violation of the Fair Labor Standards Act or any other applicable federal,
state, local or foreign law dealing with such matters. All payments due
from Borrower on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of Borrower. Except as
set forth in Schedule 3.9, Borrower has no obligations under any
collective bargaining agreement, management agreement, consulting
agreement or any material employment agreement. There is no organizing
activity involving Borrower pending or, to Borrower's knowledge,
threatened by any labor union or group of employees. Except as set forth
in Schedule 3.9, there are no representation proceedings pending or, to
Borrower's knowledge, threatened with the National Labor Relations Board,
and no labor organization or group of employees of Borrower has made a
pending demand for recognition. Except as set forth in Schedule 3.9,
there are no complaints or charges against Borrower pending or threatened
to be filed with any federal, state, local or foreign court, governmental
agency or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by
Borrower of any individual.

3.10 Ventures, Subsidiaries and Affiliates; Outstanding
Stock and Indebtedness. Borrower has no Subsidiaries, is not engaged in
any joint venture or partnership with any other Person, and, except as set
forth on Schedule 3.10, is not an Affiliate of any other Person. Borrower
previously has furnished Agent the identity of each Shareholder known by
Borrower to own or control all the issued and outstanding Stock of
Borrower. Except as set forth in Schedule 3.10, there are no outstanding
rights to purchase, options, warrants or similar rights or agreements
pursuant to which Borrower may be required to issue or sell any Stock or
other equity security. As of the Closing Date, all outstanding
Indebtedness of Borrower is described in Section 6.3 (including Schedule
6.3).

3.11 Government Regulation. Borrower 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 Investment Company Act of 1940 as amended. Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any other federal or state statute that restricts or
limits its ability to incur Indebtedness or to perform its obligations
hereunder, and the making of the Revolving Credit Advances and Term Loan
by Lenders, the incurrence of the Letter of Credit Obligations, the
application of the proceeds thereof and repayment thereof by Borrower and
the consummation of the transactions contemplated by this Agreement and
the other Loan Documents will not violate any provision of any such
statute or any rule, regulation or order issued by the Securities and
Exchange Commission.

3.12 Margin Regulations. Borrower is not engaged, nor will
it engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carrying"
any "margin security" as such term is defined in Regulation U or G of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board") as now and from time to time hereafter in effect (such securities
being referred to herein as "Margin Stock"). Borrower does not own any
Margin Stock, and the proceeds of the Revolving Credit Advances and Term
Loan will not be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or
carry any Margin Stock or for any other purpose which might cause any of
the loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulation G, T, U or
X of the Federal Reserve Board.

3.13 Taxes. All federal, state, local and foreign tax
returns, reports and statements, including, but not limited to,
information returns required to be filed by Borrower have been filed with
the appropriate Governmental Authority and all Charges and other
impositions shown thereon to be due and payable have been paid prior to
the date on which any fine, penalty, interest or late charge may be added
thereto for nonpayment thereof (or any such fine, penalty, interest, late
charge or loss has been paid), and Borrower has paid when due and payable
all Charges required to be paid by it excluding, in each case, Charges or
other amounts being contested in accordance with Section 5.2(b). Proper
and accurate amounts have been withheld by Borrower from its respective
employees for all periods in full and complete compliance with the tax,
social security and unemployment withholding provisions of applicable
federal, state, local and foreign law and such withholdings have been
timely paid to the respective Governmental Authorities. Schedule 3.13
sets forth as of the Closing Date those taxable years for which Borrower's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Schedule 3.13, Borrower has not executed or filed with the
IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. Borrower is not liable for any Charges or the
documents delivered in connection therewith: (i) under any agreement
(including, without limitation, any tax sharing agreements) or (ii) to the
best of Borrower's knowledge, as a transferee. As of the Closing Date,
Borrower has not agreed or been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise
which would have a Material Adverse Effect.

3.14 ERISA. (a) Schedule 3.14 lists all Plans maintained
or contributed to by Borrower and all Qualified Plans maintained or
contributed to by any ERISA Affiliate, and separately identifies the Title
IV Plans, Multiemployer Plans, any multiple employer plans subject to
Section 4064 of ERISA, unfunded Pension Plans, Welfare Plans and Retiree
Welfare Plans. Each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, and the trusts created thereunder
have been determined to be exempt from tax under the provisions of Section
501 of the IRC, and to the best knowledge of Borrower nothing has occurred
which would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the
IRC, including the filing of reports required under the IRC or ERISA, and
with respect to each Plan, other than a Qualified Plan, all required
contributions and benefits have been paid in accordance with the
provisions of each such Plan. Neither Borrower nor any ERISA Affiliate,
with respect to any Qualified Plan, has failed to make any contribution or
pay any amount due as required by Section 412 of the IRC or Section 302 of
ERISA or the terms of any such Plan. With respect to all Retiree Welfare
Plans, the present value of future anticipated expenses pursuant to the
latest actuarial projections of liabilities does not exceed $55,000,000 as
of September 30, 1994, and copies of such latest projections have been
provided to Agent. Neither Borrower nor any ERISA Affiliate thereof has
engaged in a prohibited transaction, as defined in Section 4975 of the IRC
or Section 406 of ERISA, in connection with any Plan, which would subject
Borrower (after giving effect to any exemption) to a material tax on
prohibited transactions imposed by Section 4975 of the IRC or any other
material liability.

(b) Except as set forth in Schedule 3.14 and the Borrower's
audited financial statements for the period ended December 31, 1994: (i)
no Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event
or event described in Section 4062(e) of ERISA with respect to any Title
IV Plan has occurred or is reasonably expected to occur; (iii) there are
no pending, or to the knowledge of Borrower, threatened claims, actions or
lawsuits (other than claims for benefits in the normal course), asserted
or instituted against (x) any Plan or its assets, (y) any fiduciary with
respect to any Plan or (z) Borrower nor any ERISA Affiliate with respect
to any Plan; (iv) neither Borrower nor any ERISA Affiliate thereof has
incurred or reasonably expects to incur any withdrawal liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 of ERISA as a
result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years neither Borrower nor any ERISA Affiliate
thereof has engaged in a transaction which resulted in a Title IV Plan
with Unfunded Liabilities being transferred outside of the "controlled
group" (within the meaning of Section 4001(a)(14) of ERISA) of any such
entity; (vi) no Plan which is a Retiree Welfare Plan provides for
continuing benefits or coverage for any participant or any beneficiary of
a participant after such participant's termination of employment (except
as may be required by Section 4980B of the IRC and at the sole expense of
the participant or the beneficiary of the participant); (vii) Borrower and
each ERISA Affiliate have complied with the notice and continuation
coverage requirements of Section 4980B of the IRC and the regulations
thereunder except where the failure to comply could not have or result in
any Material Adverse Effect; and (viii) no liability under any Plan has
been funded, nor has such obligation been satisfied, with the purchase of
a contract from an insurance company that is not rated AAA by the Standard
& Poor's Corporation or the equivalent by another nationally recognized
rating agency.

3.15 No Litigation. Except as set forth in Schedule 3.15,
no action, claim or proceeding is now pending or, to the knowledge of
Borrower, threatened against Borrower, before any court, board,
commission, agency or instrumentality of any federal, state, local or
foreign government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, (i) which challenges Borrower's right
or power to enter into or perform any of its obligations under the Loan
Documents, or the validity or enforceability of any Loan Document or any
action taken thereunder, or (ii) which, if determined adversely, would
have or result in a Material Adverse Effect, nor to the best knowledge of
Borrower does a state of facts exist which is reasonably likely to give
rise to such proceedings.

3.16 Brokers. Except as set forth in Schedule 3.16, no
broker or finder acting on behalf of Borrower thereof brought about the
obtaining, making or closing of the loans made pursuant to this Agreement
or the transactions contemplated by the Loan Documents and Borrower has no
obligations to any Person in respect of any finder's or brokerage fees in
connection therewith.

3.17 Employment Matters. Except as set forth in Schedules 3.9
and 3.17, there are no material employment, consulting or management
agreements covering any management employee or Affiliate of Borrower. A
true and complete copy of each such agreement has been furnished to Agent.

3.18 Patents, Trademarks, Copyrights and Licenses. Except
as otherwise set forth in Schedule 3.18, Borrower owns all material
licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, and trade names necessary to continue
to conduct its business as heretofore conducted by it or proposed to be
conducted by it, each of which is listed, together with Copyright Office
or Patent and Trademark Office application or registration numbers, where
applicable, on Schedule 3.18. Schedule 3.18 also lists all tradenames or
other names under which Borrower conducts business. To the best of
Borrower's knowledge, the conduct of its business does not infringe upon
any intellectual property right of any other Person.

3.19 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, the Projections, the
Financials, the Collateral Reports or any written statement furnished by
or on behalf of Borrower pursuant to the terms of this Agreement, which
has previously been delivered to Agent, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. The Liens granted to Agent, on
behalf of itself and Lenders, pursuant to the Collateral Documents will at
the Closing Date be fully perfected first priority Liens in and to the
Collateral described therein, subject only to Liens set forth in Schedule
3.7 and the Liens granted to Agent, on behalf of itself and Lenders,
pursuant to the Mortgages will at the Closing Date be fully protected
first priority Liens in and to the Mortgaged Property described therein
and Permitted Liens.

3.20 Hazardous Materials. Except as set forth in Schedule
3.20, the Real Property is free of contamination from any Hazardous
Material. In addition, Schedule 3.20 discloses material environmental
liabilities of Borrower of which it has knowledge (i) related to
noncompliance with the Environmental Laws, or (ii) associated with the
Real Estate. Borrower has not caused or suffered to occur any Release
with respect to any Hazardous Material at, under, above or upon any real
property which it owns or leases. Borrower is not involved in operations
that are likely to result in the imposition of any Lien on its assets or
any material liability on Borrower, under any Environmental Law, and
Borrower has not permitted any tenant or occupant of such premises to
engage in any such activity. Borrower has provided to Agent copies of all
existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities
and Costs, in each case relating to Borrower.

3.21 Insurance Policies. Schedule 3.21 lists all insurance
of any nature maintained for current occurrences by Borrower, as well as a
summary of the terms of such insurance.

3.22 Deposit and Disbursement Accounts. Schedule 3.22
lists all banks and other financial institutions at which Borrower
maintains deposits and/or other accounts, including any disbursement
accounts, and such Schedule correctly identifies the name, address and
telephone number of each depository, the name in which the account is
held, a description of the purpose of the account, and the complete
account number.

3.23 Government Contracts. Except as set forth in Schedule
3.23, Borrower is not a party to any contract or agreement with the
federal government and none of the Accounts are subject to the Federal
Assignment of Claims Act (31 U.S.C. Section 3727).

3.24 Customer and Trade Relations. There exists no actual
or threatened termination or cancellation of, or any material adverse
modification or change in: (a) the business relationship of Borrower with
any customer or group of customers whose purchases during the preceding
twelve (12) months caused them to be ranked among the ten largest
customers of Borrower taken as a whole; or (b) the business relationship
of Borrower with any supplier material to the operations of Borrower.

3.25 Agreements and Other Documents. As of the Closing
Date, Borrower has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following
agreements or documents to which Borrower is subject and each of which are
listed on Schedule 3.25: (a) Plans; (b) supply agreements not terminable
by Borrower, within sixty (60) days following written notice issued by
Borrower; (c) purchase agreements not terminable by Borrower, within 60
days following written notice issued by Borrower; (d) Leases; (e) any
lease of equipment having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of $50,000 per
annum; (f) licenses and permits necessary for the conduct of Borrower's
businesses; (g) instruments or documents evidencing Indebtedness of
Borrower and any security interest granted by Borrower with respect
thereto; (h) instruments and agreements evidencing the issuance of any
equity securities, warrants, rights or options to purchase equity
securities of Borrower; (i) employment and consulting agreements; and (j)
all agreements providing for compensation of or payments to senior members
of management and/or stockholders of Borrower. The Management Agreements
are the only agreements in effect for the provision to the Borrower of
management services.

3.26 FEIN. Borrower's federal employer identification
number is 31-1145953.

4. FINANCIAL STATEMENTS AND INFORMATION

4.1 Reports and Notices. (a) Borrower hereby covenants and
agrees that from and after the Closing Date and until the Termination
Date, it shall deliver to Agent and/or Lenders, as required, financial
statements, notices and Projections at the times, to the Persons and in
the manner set forth in Schedule G.

(b) Borrower hereby covenants and agrees that from and after
the Closing Date, they shall deliver to Agent and/or Lenders, as required,
the various Collateral Reports at the times, to the Persons and in the
manner set forth in Schedule H.

4.2 Communication with Accountants. Borrower authorizes Agent
and each Lender to communicate directly with its independent certified
public accountants including Arthur Andersen LLP, and authorizes those
accountants and advisors to disclose to Agent and each Lender any and all
financial statements and other supporting financial documents and
schedules relating to Borrower (including, without limitation, copies of
any issued management letters) with respect to the business, financial
condition and other affairs of Borrower. On or before the Closing Date,
Borrower shall obtain a letter from such accountants, on which the Agent
shall be designated as a recipient, acknowledging that Borrower intends
the financial statements certified by such accountants to benefit or
influence Lenders and that Lenders may rely upon such certification.

5. AFFIRMATIVE COVENANTS

Borrower covenants and agrees that, unless Agent shall otherwise
consent in writing, from and after the date hereof and until the
Termination Date:

5.1 Maintenance of Existence and Conduct of Business. Borrower
shall: (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; (b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all times maintain,
preserve and protect all of its copyrights, patents, trademarks, trade
names and all other intellectual property and rights as licensee or
licensor thereof and preserve all the remainder of its assets and
properties, used or useful in the conduct of its business, and keep the
same in good repair, working order and condition (taking into
consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices; and (d) transact
business only in such corporate and trade names as are set forth in
Schedule 5.1. In addition, Schedule 5.1 lists the FEIN or Federal
Employer Identification Number of Borrower.

5.2 Payment of Obligations. (a) Subject to Section 5.2(b),
Borrower shall pay and discharge or cause to be paid and discharged
promptly all (A) Charges imposed upon it, its income and profits, or any
of its property (real, personal or mixed), and (B) lawful claims for
labor, materials, supplies and services or otherwise, before any thereof
shall become past due.

(b) Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described
Section 5.2(a); provided, that, at the time of commencement of any such
action or proceeding, and during the pendency thereof (i) no Default or
Event of Default shall have occurred and be continuing, (ii) adequate
reserves with respect thereto are maintained on the books of Borrower, in
accordance with GAAP, (iii) such contest is maintained and prosecuted
continuously and with diligence, (iv) none of the Collateral becomes
subject to forfeiture or loss as a result of such Charges or claims, (v)
no Lien shall be imposed to secure payment of such Charges or claims other
than inchoate tax liens, and (vi) Borrower shall promptly pay or discharge
such contested Charges and all additional charges, interest, penalties and
expenses, if any, and shall deliver to Agent evidence acceptable to Agent
of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to Borrower or the conditions set forth in this
Section 5.2(b) are no longer met.

5.3 Books and Records. Borrower shall keep adequate records
and books of account with respect to Borrower's business activities, in
which proper entries, reflecting all financial transactions, are made in
accordance with GAAP and on a basis consistent with the Financial
Statements referred to in Schedule 3.4.

5.4 Litigation. Borrower shall notify Agent in writing,
promptly upon learning thereof, of any litigation commenced or threatened
against Borrower, and of the institution against it of any suit or
administrative proceeding that (a) seeks damages in excess of $100,000 or
(b) seeks injunctive relief.

5.5 Insurance. (a) Borrower shall, at its sole cost and
expense, maintain the policies of insurance described on Schedule 3.21 in
form and with insurers rated AA or better by Bests. Such policies shall
be in such amounts as are set forth in Schedule 3.21. Borrower shall
notify Agent promptly of any occurrence causing a material loss or decline
in value of any real or personal property and the estimated (or actual, if
available) amount of such loss or decline. So long as any Event of
Default shall have occurred and be continuing or if the casualty loss
exceeds $100,000: Borrower hereby directs all present and future insurers
under its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Agent, on behalf of itself and Lenders and
irrevocably makes, constitutes and appoints Agent (and all officers,
employees or agents designated by Agent) as Borrower's true and lawful
agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance and endorsing
the name of Borrower on any check or other item of payment for the
proceeds of such "All Risk" policies of insurance. In the event Borrower
at any time or times hereafter shall fail to obtain or maintain any of the
policies of insurance required above or to pay any premium in whole or in
part relating thereto, Agent, without waiving or releasing any Obligations
or Default or Event of Default hereunder, may at any time or times
thereafter (but shall not be obligated to) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which Agent deems advisable. All sums so disbursed,
including attorneys, fees, court costs and other charges related thereto,
shall be payable, on demand, by Borrower to Agent and shall be additional
Obligations hereunder secured by the Collateral, provided, that, if and to
the extent Borrower fails to promptly pay any of such sums upon demand
therefor, Agent is authorized to, and at its option may, make or cause to
be made Revolving Credit Advances on behalf of Borrower for payment
thereof.

(b) Agent reserves the right at any time, upon any change in
Borrower's risk profile (including, without limitation, any change in the
product mix maintained by Borrower or any laws affecting the potential
liability of Borrower), to require additional forms and limits of
insurance to, in Agent's reasonable opinion, adequately protect both Agent
and Lenders' interests in all or any portion of the Collateral and to
ensure that Borrower is protected by insurance in amounts and with
coverage customary for its industry. If requested by Agent, Borrower
shall deliver to Agent from time to time a report of a reputable insurance
broker, satisfactory to Agent, with respect to its insurance policies.

(c) Borrower shall deliver to Agent endorsements (i) to all
"All Risk" and business interruption insurance naming Agent, on behalf of
itself and Lenders, as loss payee, and (ii) to all general liability and
other liability policies naming Agent, on behalf of itself and Lenders, as
additional insured.

(d) The loss, if any, under any property insurance required to
be carried by this Section 5.5 shall be adjusted with the insurance
companies or otherwise collected, including the filing of appropriate
proceedings by Borrower, subject to the reasonable approval of the Agent
in the case of claims in excess of $100,000. If the proceeds payable
under any policy of property insurance are $100,000 or less, Borrower
shall have the right to use such proceeds to repair or replace the damaged
or destroyed property, provided that a Default or an Event of Default
shall not have occurred and be continuing at the time the proceeds are
paid. If a Default or an Event of Default shall have occurred and be
continuing at the time such insurance proceeds are paid, or if such
insurance proceeds are more than $100,000, such insurance proceeds shall
be applied to the Obligations in accordance with Section 1.3(f) (and,
notwithstanding anything else to the contrary in this Agreement or
otherwise, to permanently reduce the Revolving Credit Loan Commitment by
the amount of such proceeds that are, or are available to be, applied
against the Revolving Credit Loan) unless the Requisite Lenders agree to
permit part or all of such insurance proceeds to be used to repair or
replace the damaged or destroyed property.

5.6 Compliance with Laws. (a) Borrower shall comply in all
material respects with all federal, state and local laws and regulations
applicable to it, including those relating to licensing, ERISA and labor
matters.

5.7 [Intentionally Omitted].

5.8 Supplemental Disclosure. On the request of Agent (in the
event that such information is not otherwise delivered by Borrower to
Agent pursuant to this Agreement), so long as there are Obligations
outstanding hereunder, but not more frequently than quarterly absent the
occurrence and continuance of a Default or an Event of Default, Borrower
will supplement each schedule or representation herein with respect to any
matter hereafter arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in
such schedule or as an exception to such representation or which is
necessary to correct any information in such schedule or representation
which has been rendered inaccurate thereby; provided, however, that such
supplement to such schedule or representation shall not be deemed an
amendment thereof unless expressly consented to in writing by Agent and
Requisite Lenders, and no such amendments, except as the same may be
consented to in a writing which expressly includes a waiver, shall be or
be deemed a waiver of any Default or Event of Default disclosed therein.

5.9 Employee Plans. Borrower shall notify Agent of (i) any and
all claims, actions, or lawsuits asserted or instituted, and of any
threatened litigation or claims, against Borrower, or against any ERISA
Affiliate, in connection with any Plan maintained, at any time, by
Borrower or such ERISA Affiliate, or to which Borrower or such ERISA
Affiliate has or had at any time any obligation to contribute, or/and
against any such Plan itself, or against any fiduciary of or service
provider to any such Plan and (ii) the occurrence of any material
Reportable Event with respect to any Pension Plan of Borrower or such
ERISA Affiliate.

5.10 Environmental Matters. Borrower shall (i) comply in
all material respects with the Environmental Laws applicable to it, (ii)
notify Agent promptly after Borrower becomes aware of any Release upon or
at any premises owned or occupied by it (other than Releases of immaterial
quantities of cleaning materials, lubricants, solvents and similar
products within any building which can be remediated promptly without any
adverse environmental effect and without any required notification to
regulatory authorities), and (iii) promptly forward to Agent a copy of any
order, notice, permit, application, or any communication or report
received by Borrower in connection with any Release or any other matter
relating to the Environmental Laws that may affect such premises or
Borrower. The provisions of this Section 5.10 shall apply whether or not
the Environmental Protection Agency, any other federal agency or any
state, local or foreign environmental agency has taken or threatened any
action in connection with any Release or the presence of any Hazardous
Materials.

5.11 Landlords' Agreements, Bailee Letters and Mortgagee
Agreements. Borrower shall use its best efforts to obtain a landlord's
agreement in form and substance acceptable to Agent from the lessor of its
manufacturing facility in Cythiana, Kentucky. If Borrower is unable to
obtain a landlord's agreement within ninety (90) days after the Closing
Date, Eligible Inventory at that location shall be subject to a reserve
equal to two (2) month's lease payments for purposes of calculating
Borrowing Availability. No real property or warehouse space shall be
leased or acquired by Borrower after the Closing Date, unless and until a
landlord or mortgagee agreement or bailee letter, as appropriate, shall
first have been obtained with respect to such location.

5.12 Leased Locations of Collateral. Borrower shall timely
and fully pay and perform its obligations under all leases and other
agreements with respect to each leased location or public warehouse where
any Collateral is or may be located. Borrower shall promptly deliver to
Agent copies of (i) any and all default notices received under or with
respect to any such leased location or public warehouse, and (ii) such
other notices or documents as Agent may request in its reasonable
discretion.

6. NEGATIVE COVENANTS

Borrower covenants and agrees that, without the prior written
consent of Agent and the Requisite Lenders, from and after the date hereof
until the Termination Date:

6.1 Mergers, Subsidiaries, Etc. Borrower shall not directly or
indirectly, by operation of law or otherwise, (i) form or acquire any
Subsidiary, or (ii) merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine
with, any Person.

6.2 Investments; Loans and Advances. Except as otherwise
permitted by Section 6.3 or 6.4 below, Borrower shall not make any
investment in, or make or accrue loans or advances of money to any Person,
through the direct or indirect lending of money, holding of securities or
otherwise.

6.3 Indebtedness. Borrower shall not create, incur, assume or
permit to exist any Indebtedness, except (i) Indebtedness secured by Liens
permitted under Section 6.7, (ii) the Revolving Credit Loan, the Term Loan
and the other Obligations, (iii) deferred taxes, (iv) unfunded pension
fund and other employee benefit plan obligations and liabilities to the
extent they are permitted to remain unfunded under applicable law, (v)
existing Indebtedness set forth in Schedule 6.3 and refinancings thereof
on terms and conditions acceptable to Agent, in its reasonable discretion,
which shall in any event be on terms no less favorable to Borrower, Agent
or any Lender than the terms of the Indebtedness being refinanced, and
(vi) Capital Lease Obligations in an amount outstanding at any one time
which, when added to all then remaining lease obligations under operating
leases in which Borrower is lessee and including all renewal periods at
the option of lessor, does not exceed $2,000,000.

6.4 Employee Loans and Affiliate Transactions. (a) Borrower
shall not enter into or be a party to any transaction with an Affiliate of
Borrower except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms
that are fully disclosed to Agent in advance and are no less favorable to
Borrower than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate of Borrower. All such transactions
existing as of the date hereof are described on Schedule 6.4(a).

(b) Borrower shall not enter into any lending or borrowing
transaction with any of its employees.

6.5 Capital Structure and Business. Borrower shall not (i)
make any changes in any of its business objectives, purposes or operations
which could in any way adversely affect the repayment of the Revolving
Credit Loan or Term Loan or any of the other Obligations or could have or
result in a Material Adverse Effect, (ii) make any change in its capital
structure that is not acceptable to Agent in its reasonable discretion or
(iii) amend its certificate or articles of incorporation or bylaws in a
manner which would adversely affect the Lenders or its duty or ability to
repay the Obligations. Borrower shall not engage in any business other
than the businesses currently engaged in by Borrower or businesses
reasonably related thereto.

6.6 Guaranteed Indebtedness. Borrower shall not incur any
Guaranteed Indebtedness except (i) by endorsement of instruments or items
of payment for deposit to the general account of Borrower, and (ii) for
Guaranteed Indebtedness incurred for the benefit of Borrower if the
primary obligation is expressly permitted by this Agreement.

6.7 Liens. Borrower shall not create, incur, assume or permit
to exist any Lien on or with respect to any of its properties or assets
(including Accounts, instruments, or chattel paper) of Borrower, whether
now owned or hereafter acquired except (i) Permitted Encumbrances, (ii)
presently existing or hereinafter created Liens in favor of Agent, on
behalf of Lenders, (iii) Lessor's interests under Capital Leases permitted
by Section 6.3(vi), and (iv) Liens existing on the date hereof and
described on Schedule 6.7.

In addition, Borrower shall not become a party to any agreement,
note, indenture or instrument, or take any other action, which would
prohibit the creation of a Lien on any of its properties or other assets
in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases
or intellectual property licenses which prohibit liens upon the assets
that are subject thereto.

6.8 Sale of Assets. Borrower shall not sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets,
including any of its Accounts, other than (i) the sale of Inventory in the
ordinary course of business, (ii) the sale, transfer, conveyance or other
disposition of assets having a value not exceeding $50,000 in any single
transaction or $250,000 in the aggregate in any Fiscal Year, and (iii) the
sale, transfer, conveyance or other disposition of obsolete or redundant
assets. Borrower shall promptly deliver to Agent all of the cash proceeds
(after deducting all expenses, including commissions, taxes payable, and
amounts payable to holders of prior liens, if any, and an appropriate
reserve for income taxes in connection therewith) of sales or dispositions
permitted under clauses (ii) and (iii) above, which proceeds shall be
applied to the repayment of the Obligations. With respect to any
disposition of assets or other properties permitted pursuant to this
Section 6.8, Agent agrees on reasonable prior written notice to release
its Lien on such assets or other properties in order to permit Borrower to
effect such disposition and shall execute and deliver to Borrower, at
Borrower's expense, appropriate UCC-3 termination statements and other
releases as reasonably requested by Borrower.

6.9 ERISA. Borrower shall not, nor shall it cause or permit
any ERISA Affiliate thereof (without Agent's prior written consent) to,
(i) acquire any ERISA Affiliate that maintains or has an obligation to
contribute to a Pension Plan that has either an "accumulated funding
deficiency", as defined in Section 302 of ERISA, or any "unfunded vested
benefits", as defined in Section 4006(a)(3)(E)(iii) of ERISA, in the case
of any plan other than a Multiemployer Plan, and as defined in Section
4211 of ERISA in the case of a Multiemployer Plan, in excess of $50,000,
(ii) permit or suffer any representation set forth in Schedule 3.14 to
cease to be met and satisfied at any time, (iii) terminate any Title IV
Plan where such termination could reasonably be anticipated to result in
liability in excess of $50,000 to such Person, (iv) permit any accumulated
funding deficiency, as defined in Section 302(a)(2) of ERISA, to be
incurred with respect to any Pension Plan, in excess of $50,000, (v) fail
to make any material contributions or fail to pay any amounts due and
owing as required by the terms of any Plan before such contributions or
amounts become delinquent, (vi) make a complete or partial withdrawal
(within the meaning of Section 4201 of ERISA) from any Multiemployer Plan,
or (vii) fail to promptly provide Agent with copies of any Plan documents
or governmental reports or filings, if requested by Agent.

6.10 Financial Covenants. Borrower shall not breach or
fail to comply with any of the Financial Covenants (the "Financial
Covenants") set forth in Schedule I.

6.11 Hazardous Materials. Borrower shall not cause or
permit any other Person within its control to, cause or permit a Release
or the presence, use, generation, manufacture, installation, Release,
discharge, storage or disposal of any Hazardous Materials on, under, in,
above or about any of its real estate or the transportation of any
Hazardous Materials to or from any real estate where such Release or such
presence, use, generation, manufacture, installation, Release, discharge,
storage or disposal would violate in any material respect, or form the
basis for any material liability under, any Environmental Laws. If a
Default or Event of Default shall have occurred and be continuing,
Borrower, at its own expense, shall cause the performance of such
investigation and remediation and preparation of such environmental
reports as Agent may from time to time request as to any location at which
Collateral is then located, by reputable environmental consulting firms
acceptable to Agent, and in form and substance acceptable to Agent.

6.12 Sale-Leasebacks. Borrower shall not engage in any
sale-leaseback or similar transaction involving any of its assets.

6.13 Cancellation of Indebtedness. Borrower shall not
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its
business consistent with past practices.

6.14 Restricted Payments. Borrower shall not make any
Restricted Payment.

6.15 Management Agreements. Without Agent's consent,
Borrower shall not amend, modify, supplement, extend or renew the
Management Agreements, except of terms substantially the same as currently
exist or pay compensation thereunder in excess of the amounts set forth
therein.

6.16 Leases. (a) Borrower shall not enter into any lease
of real property or similar agreement or arrangement except existing
leases disclosed on Schedule 6.16 and renewals thereof on substantially
the same terms.

(b) Borrower shall not enter into or permit to exist any
operating lease for equipment or personal property, if the aggregate of
operating lease payments remaining to be paid under all outstanding
operating leases in which Borrower is lessee, including all renewal
periods at the option of lessor, together with all outstanding Capital
Lease Obligations, at any time exceeds $2,000,000.

6.17 Fiscal Year. Borrower shall not change its Fiscal
Year.

6.18 Change of Corporate Name or Location. (a) Borrower
shall not (i) change its corporate name or (ii) change its chief executive
office, principal place of business, corporate offices or warehouses or
Collateral locations, or the location of its records concerning the
Collateral, in any case without at least thirty (30) days' prior written
notice to Agent and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including,
without limitation, to continue the perfection of any Liens in favor of
Agent, on behalf of Lenders, in any Collateral has been completed or taken
and provided that any such new location shall be in the Continental United
States; (b) in furtherance of and without limiting the scope of clause (a)
above, Borrower shall not change its name, identity or corporate structure
in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of
Section 9.402(7) of the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and after
Agent's written acknowledgement that any reasonable action requested by
Agent in connection therewith, including, without limitation, to continue
the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral has been completed or taken.

6.19 Cash Management. Borrower shall not accumulate or
maintain cash in disbursement, imprest or payroll accounts as of any date
of determination in excess of checks outstanding against such accounts as
of that date and amounts necessary to meet minimum balance requirements.

6.20 Technology Development Arrangements. Any term or
provision of this Agreement to the contrary notwithstanding, the Borrower
shall be permitted to enter into technology development arrangements in
the ordinary course of business with Persons other than Affiliates,
provided that (i) the aggregate amount of expenditures and commitments
therefor during the term of this Agreement shall not exceed $100,000 per
annum on a non-cumulative basis, and (ii) such arrangements do not involve
the creation of or investment in any legal entity established under
applicable law.

7. TERM

7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the
Revolving Credit Loan, the Term Loan and all other Obligations shall be
automatically due and payable in full on such date.

7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or
procedure) of any financing arrangement under this Agreement shall in any
way affect or impair the obligations, duties and liabilities of Borrower
or the rights of Agent and Lenders relating to any unpaid portion of the
Revolving Credit Loan, the Term Loan or any other Obligation, due or not
due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date.
Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon Borrower, and all rights of Agent and
each Lender, all as contained in the Loan Documents shall not terminate or
expire, but rather shall survive such termination or cancellation and
shall continue in full force and effect until such time as all of the
Obligations have been paid in full in accordance with the terms of the
agreements creating such Obligations.

8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES

8.1 Events of Default. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute
an "Event of Default" hereunder:

(a) Borrower shall fail to pay any regularly scheduled
installment of principal of, or interest on, the Revolving Credit Loan or
the Term Loan when due and payable, and such failure shall remain
unremedied for a period of two (2) Business Days or more, or Borrower
shall fail to make payment of any of the other Obligations (other than as
set forth in clause (b) below) when due and payable or declared due and
payable.

(b) Borrower shall fail to pay any Fees, costs or expenses
payable or reimbursable by Borrower under this Agreement or under any
other Loan Document, and such failure shall have remained unremedied for a
period of 5 days or more after Borrower has received notice of such
failure from Agent or any Lender.

(c) Borrower shall fail or neglect to perform, keep or observe
any of the provisions of (i) Sections 1.9, 5.5 or 6, or any of the
provisions set forth in Schedules E or I, respectively; or (ii) Section 4
or any provisions set forth in Schedules G or H, respectively, within ten
(10) days after written notice from Agent.

(d) Borrower shall fail or neglect to perform, keep or observe
any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other
clause of this Section 8.1) and the same shall remain unremedied for ten
(10) days or more after Borrower has received written notice of any such
failure from Agent or any Lender.

(e) A default or breach shall occur under any other agreement,
document or instrument to which Borrower is a party and such default is
not cured within any applicable grace period and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness (other than the Obligations) of Borrower in excess of $50,000
in the aggregate, or (ii) causes such Indebtedness or a portion thereof in
excess of $50,000 in the aggregate to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, or (iii)
entitles any holder of such Indebtedness or a trustee to cause such
Indebtedness or a portion thereof in excess of $50,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, regardless of whether such right is exercised
or waived by such holder or trustee.

(f) Any representation or warranty herein or in any Loan
Document or in any written statement, report, financial statement or
certificate made or delivered to any Lender by Borrower shall be untrue or
incorrect in any material respect, as of the date when made or deemed
made.

(g) Assets of Borrower with a fair market value of $50,000 or
more shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of Borrower and such
condition shall continue for thirty (30) days or more.

(h) A case or proceeding shall have been commenced against
Borrower in a court having competent jurisdiction seeking a decree or
order in respect of Borrower (i) under Title 11 of the United States Code,
as now constituted or hereafter amended or any other applicable federal,
state or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for Borrower or for any substantial part of Borrower's
assets, or (iii) ordering the winding-up or liquidation of the affairs of
Borrower and such case or proceeding shall remain undismissed or unstayed
for forty-five (45) days or more or such court shall enter a decree or
order granting the relief sought in such case or proceeding.

(i) Borrower shall (i) file a petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, State or foreign bankruptcy or
other similar law, (ii) consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of Borrower or of any
substantial part of Borrower's assets, (iii) make an assignment for the
benefit of creditors, or (iv) take any corporate action in furtherance of
any such action.

(j) A final judgment or judgments for the payment of money in
excess of $50,000 in the aggregate shall be rendered against Borrower and
the same shall not (i) be fully covered by insurance, or (ii) within
thirty (30) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
prior to the expiration of any such stay.

(k) With respect to any Plan: (i) which is a Defined
Contribution Plan or Welfare Plan, Borrower or any ERISA Affiliate thereof
or any other party-in-interest or disqualified Person shall engage in any
transactions which in the aggregate results in a final assessment to
Borrower in excess of $50,000 under Section 409 or 502 of ERISA or IRC
Section 4975 which assessment has not been paid within 30 days of final
assessment and which is not being contested pursuant to Sections 6.2(b) or
(c) hereof; (ii) Borrower or any ERISA Affiliate thereof shall incur any
accumulated funding deficiency, as defined in IRC Section 412, in the
aggregate in excess of $50,000, or request a funding waiver from the IRS
for contributions in the aggregate in excess of $50,000; (iii) Borrower or
any ERISA Affiliate thereof shall not pay any withdrawal liability which
involves annual withdrawal liability payments which exceed $50,000, as a
result of a complete or partial withdrawal within the meaning of Section
4203 or 4205 of ERISA, within 30 days after the date such payment becomes
due, unless such payment is being contested pursuant to Sections 6.2(b) or
(c) hereof; (iv) Borrower or any ERISA Affiliate thereof shall fail to
make a required contribution by the due date under Section 412 of the IRC
or Section 302 of ERISA which would result in the imposition of a lien
under Section 412 of the IRC or Section 302 of ERISA within 30 days after
the date such payment becomes due; or (v) an ERISA Event (other than an
event described in 29 CFR Section 2615.23) with respect to a Plan has
occurred, and within thirty (30) days Borrower has not contested such
ERISA Event by appropriate proceedings.

(l) Any material provision of any Loan Document shall for any
reason cease to be valid or enforceable in accordance with its terms
(Borrower shall challenge the enforceability of any Loan Document), or any
security interest created under any Loan Document shall cease to be a
valid and perfected first priority security interest or Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported
to be covered thereby.

(m) Any "Change of Control" shall occur.

8.2 Remedies. If any Default or Event of Default shall have
occurred and be continuing, Agent may (and at the written request of the
Requisite Lenders shall), without notice terminate this facility with
respect to further Revolving Credit Advances, whereupon any further
Revolving Credit Advances shall be made in Agent's sole discretion. If
any Event of Default shall have occurred and be continuing, Agent may (and
at the written request of the Requisite Lenders shall), without notice,
(a) declare all or any portion of the Obligations, including all or any
portion of the Revolving Credit Loan and/or Term Loan, to be forthwith due
and payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Schedule B, all without presentment, demand,
protest or further notice of any kind, all of which are expressly waived
by Borrower; (b) increase the rate of interest applicable to the Revolving
Credit Loan and/or Term Loan to the Default Rate, as provided in Section
1.5(d); and (c) exercise any rights and remedies provided to Agent under
the Loan Documents and/or at law or equity, including all remedies
provided under the Code; provided, however, that upon the occurrence of an
Event of Default specified in Sections 8.1 (j) or (k), all of the
Obligations, including the Revolving Credit Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.

8.3 Waivers by Borrower. Except as otherwise provided for in
this Agreement or by applicable law, Borrower waives: (i) presentment,
demand and protest and notice of presentment, dishonor, notice of intent
to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or
all commercial paper, accounts, contract rights, documents, instruments,
chattel paper and guaranties at any time held by Agent on which Borrower
may in any way be liable, and hereby ratifies and confirms whatever Agent
may do in this regard, (ii) all rights to notice and a hearing prior to
Agent's taking possession or control of, or to Agent's replevy, attachment
or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Agent to exercise any of its
remedies, and (iii) the benefit of all valuation, appraisal and exemption
laws. Borrower acknowledges that it has been advised by counsel of its
choice with respect to this Agreement, the other Loan Documents and the
transactions evidenced by this Agreement and the other Loan Documents.

9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

9.1 Assignment and Participations. (a) Borrower hereby
consents to Agent's and any Lender's sale of participations, and to
Agent's and any Lender's assignment, at any time or times, of any of the
Loan Documents, any Commitment or of any portion thereof or interest
therein, including, without limitation, Agent's and any Lender's rights,
title, interests, remedies, powers or duties thereunder, whether evidenced
by a writing or not; provided, however, that any assignment by a Lender of
all or any part of its Commitment shall (i) require the consent of
Borrower, which consent shall not be unreasonably withheld, provided such
consent shall not be required in connection with any loan portfolio
transfer made by GE Capital; (ii) require the consent of Agent and the
execution of a Lender Addition Agreement in form and substance
satisfactory to Agent; (iii) be conditioned on such assignee Lender
representing to the assigning Lender and the Agent that it is purchasing
the portion of the Revolving Credit Loan and/or Term Loan to be assigned
to it for its own account, for investment purposes and not with a view to
the distribution thereof; (iv) if a partial assignment, be in an amount at
least equal to $5,000,000 and, after giving effect to any such partial
assignment, the assigning Lender shall have retained Commitments in an
amount at least equal to $5,000,000; and (v) include a payment by the
assigning Lender to the Agent of an assignment fee of $3,000; and,
provided, further, that any participation by a Lender of all or any part
of its Commitments shall be in an amount at least equal to $5,000,000, and
with the understanding that all amounts payable by Borrower hereunder
shall be determined as if that Lender had not sold such participation, and
that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions
directly affecting (i) any reduction in the principal amount, interest
rate or fees payable hereunder in which such holder participates, (ii) any
extension of the final scheduled maturity date of the principal amount of
the Revolving Credit Loan and/or Term Loan in which such holder
participates, and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement, the
Collateral Documents or the other Loan Documents). Borrower hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the participant and the participant shall for
purposes of Sections 1.15, 1.16 and 9.8 be considered to be a "Lender".

(b) In the case of an assignment by a Lender under this Section
9.1, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were a Lender
hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitments or assigned portion thereof.
Borrower hereby acknowledges and agrees that any assignment will give rise
to a direct obligation of Borrower to the assignee and that the assignee
shall be considered to be a "Lender". In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall
be limited to such Lender's Pro Rata Share.

(c) Except as otherwise provided in this Section 9.1, no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.

(d) Borrower shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Borrower shall certify the correctness, completeness and
accuracy of all descriptions of Borrower and its affairs contained in any
selling materials provided by Borrower and all other information provided
by Borrower and included in such materials, except that any projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in good faith and based on reasonable assumptions
consistent with Borrower's anticipated business plans.

(e) A Lender may furnish any information concerning Borrower in
the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided,
however, that such Lender shall utilize commercially reasonable procedures
to cause such assignees or participants to maintain the confidentiality of
confidential information of Borrower. In the event Agent or any Lender
assigns or otherwise transfers all or any part of a Note, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request
of Agent or such Lender, execute new Notes in exchange for the Notes being
assigned.

9.2 Appointment of Agent. GE Capital is hereby appointed Agent
to act on behalf of all Lenders as Agent under this Agreement and the
other Loan Documents. The provisions of this Section 9.2 are solely for
the benefit of Agent and Lenders and neither Borrower nor any other Person
shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement and the other Loan Documents, Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for Borrower
or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in
nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship
in respect of any Lender. Neither Agent nor any of its officers,
directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or
under any other Loan Document, or in connection herewith or therewith,
except for damages caused by its or their own gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction
after all possible appeals have been exhausted.

If Agent shall request instructions from Requisite Lenders with
respect to any act or action (including failure to act) in connection with
this Agreement or any other Loan Document, then Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall
have received instructions from Requisite Lenders, and Agent shall not
incur liability to any Person by reason of so refraining. Agent shall be
fully justified in failing or refusing to take any action hereunder or
under any other Loan Document (a) if such action would, in the opinion of
Agent, be contrary to law or the terms of this Agreement or any other Loan
Document or (b) if Agent shall not first be indemnified to its
satisfaction against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders.

9.3 Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction after all possible appeals have been exhausted.
Without limitation of the generality of the foregoing, Agent: (i) may
treat the payee of any Revolving Credit Note or Term Note as the holder
thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to Agent; (ii) may
consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender
for any statements, warranties or representations made in or in connection
with this Agreement or the other Loan Documents; (iv) shall not have any
duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of Borrower or to inspect the Collateral (including
the books and records) of Borrower; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; and (vi) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy,
telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties.

9.4 GE Capital and Affiliates. With respect to its commitment
hereunder to make the Term Loan and Revolving Credit Advances, GE Capital
shall have the same rights and powers under this Agreement and the other
Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally
engage in any kind of business with, Borrower, and any of its Affiliates
and any Person who may do business with or own securities of Borrower or
any Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept
fees and other consideration from Borrower for services in connection with
the Agreement or otherwise without having to account for the same to
Lenders.

9.5 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and
based on the financial statements referred to in Section 3.4 and such
other documents and information as it has deemed appropriate, made its own
credit and financial analysis of Borrower and its own decision to enter
into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Agreement. Each Lender acknowledges the
potential conflict of interest of each other Lender as a result of the
Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.

9.6 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower and without limiting the Obligations of
Borrower hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or
omitted by Agent in connection therewith; provided, however, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or wilful misconduct
as finally determined by a court of competent jurisdiction after all
possible appeals have been exhausted. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by
Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other
Loan Document, to the extent that Agent is not reimbursed for such
expenses by Borrower.

9.7 Successor Agent. Agent may resign at any time by giving
not less than thirty (30) days' prior written notice thereof to Lenders
and Borrower. Upon any such resignation, the Requisite Lenders shall have
the right to appoint a successor Agent which shall be reasonably
acceptable to Borrower. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such
appointment, within 30 days after the resigning Agent's giving notice of
resignation then the resigning Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a Lender, if a Lender is willing
to accept such appointment, or otherwise shall be a commercial bank or
financial institution organized under the laws of the United States of
America or of any State thereof having a combined capital and surplus of
at least $300,000,000, which is reasonably acceptable to Borrower. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the resigning Agent, and the
resigning Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity
rights or other rights in favor of such resigning Agent shall continue.
After any resigning Agent's resignation hereunder as Agent, the provisions
of this Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and the
other Loan Documents.

9.8 Setoff and Sharing of Payments. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation
of any such rights, upon the occurrence and during the continuance of any
Event of Default, each Lender and each holder of any Note is hereby
authorized at any time or from time to time, without notice to Borrower or
to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all balances held by it at any
of its offices for the account of Borrower (regardless of whether such
balances are then due to Borrower) and any other properties or assets any
time held or owing by that Lender or that holder to or for the credit or
for the account of Borrower against and on account of any of the
Obligations which are not paid when due. Any Lender or holder of any Note
having a right to set off shall, to the extent the amount of any such set
off exceeds its Pro Rata Share of the Obligations, purchase for cash (and
the other Lenders or holders shall sell) such participations in each such
other Lender's or holder's Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share such excess with each other Lender
or holder in accordance with their respective Pro Rata Shares. Borrower
agrees, to the fullest extent permitted by law, that (a) any Lender or
holder may exercise its right to set off with respect to amounts in excess
of its Pro Rata Share of the Obligations and may sell participations in
such excess to other Lenders and holders and (b) any Lender or holders so
purchasing a participation in the Revolving Credit Advances or Term Loan
made or other Obligations held by other Lenders or holders may exercise
all rights of set-off, bankers' lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender or holder were a
direct holder of Revolving Credit Advances, Term Loan and other
Obligations in the amount of such participation.

9.9 Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrower for Revolving Credit Advances requested. Each
Lender shall reimburse Agent on demand for all funds disbursed on its
behalf by Agent, or if Agent so requests, each Lender will remit to Agent
its Pro Rata Share of any Revolving Credit Advance before Agent disburses
same to Borrower. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrower
and Borrower shall immediately repay such amount to Agent. Nothing in
this Section 9.9 or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of
any Lender or to relieve any Lender from its obligation to fulfill its
Revolving Credit Loan Commitment hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default by such
Lender hereunder.

9.10 Advances; Payments; Information; Non-Funding Lenders.

(a) Revolving Credit Advances; Payments; Fee Payments.

(i) The Revolving Credit Loan balance may fluctuate from
day to day through Agent's disbursement of funds to, and receipt of funds
from, Borrower. In order to minimize the frequency of transfers of funds
between Agent and each Lender, Revolving Credit Advances and payments in
respect thereof will be settled according to the procedures described in
Sections 9.10(a)(ii) and 9.10(a)(iii) below. Notwithstanding these
procedures, each Lender's obligation to fund its portion of any advances
made by Agent to Borrower will commence on the date such advances are made
by Agent. Such payments will be made by each Lender without setoff,
counterclaim or reduction of any kind.

(ii) Not later than 11:00 a.m. (Chicago time) on the second
(2nd) Business Day of each week, or more frequently (including daily) if
Agent so elects or if Borrower has requested a Revolving Credit Advance in
excess of $500,000 (each such day being a "Settlement Date"), Agent will
advise each Lender by telephone, telex or telecopy of the amount of such
Lender's Pro Rata Share of the Revolving Credit Loan balance as of the
close of business on the first (1st) Business Day immediately preceding
the Settlement Date. In the event that payments are necessary to adjust
the amount of such Lender's portion of the Revolving Credit Loan to such
Lender's Pro Rata Share of the Revolving Credit Loan as of any Settlement
Date, the party from which such payment is due will pay the other, in same
day funds, by wire transfer to the other's account not later than
2:00 p.m. (Chicago time) on the Settlement Date. Notwithstanding the
foregoing, if Agent so elects, Agent may require that each Lender make its
Pro Rata Share of any requested Revolving Credit Advance available to
Agent for disbursement prior to the funding of such Revolving Credit
Advance. If Agent elects to require that such funds be so made available,
Agent shall advise each Lender by telephone, telex or telecopy of the
amount of such Lender's Pro Rata Share of the requested Revolving Credit
Advance no later than 11:00 a.m. (Chicago time) on the date of funding
thereof, and each such Lender shall pay Agent such Lender's Pro Rata Share
of such requested Revolving Credit Advance, in same day funds, by wire
transfer to the Agent's account not later than 2:00 p.m. (Chicago time) on
the date of funding such Revolving Credit Advance.

(iii) For purposes of this Section 9.10(a)(iii), the
following terms and conditions will have the following meanings:

(A) "Daily Loan Balance" means, with respect to the
Revolving Credit Loan or Term Loan, an amount
calculated as of the end of each calendar day by
subtracting (i) the cumulative principal amount paid
by Agent to a Lender with respect to such Loan from
the Closing Date through and including such calendar
day, from (ii) the cumulative principal amount of such
Loan advanced by such Lender to Agent from the Closing
Date through and including such calendar day.

(B) "Daily Interest Rate" means, with respect to the
Revolving Credit Loan or Term Loan, an amount
calculated by dividing the interest rate payable to a
Lender on such Loan (as set forth in Section 1.5) as
of each calendar day by three hundred sixty (360)
days.

(C) "Daily Interest Amount" means, with respect to the
Revolving Credit Loan or Term Loan, an amount
calculated by multiplying the Daily Loan Balance of
such Loan by the associated Daily Interest Rate
applicable to such Loan.

(D) "Interest Ratio" means, with respect to the Revolving
Credit Loan or Term Loan, a number calculated by
dividing the total amount of interest on such Loan
received by Agent during the immediately preceding
month by the total amount of interest on such Loan due
from Borrower during the immediately preceding month.

On the first (1st) Business Day of each calendar month (an "Interest
Settlement Date"), Agent will advise each Lender by telephone, telex or
telecopy of the amount of such Lender's Pro Rata Share of principal,
interest and Fees paid for the benefit of Lenders on the Revolving Credit
Loan and Term Loan as of the end of the last day of the immediately
preceding month. Provided that such Lender has made all payments required
to be made by it under this Agreement and the other Loan Documents, Agent
will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on Schedule K or the applicable Lender Addition
Agreement, as amended by such Lender from time to time after the date
hereof pursuant to the notice provisions contained herein or in the
applicable Lender Addition Agreement) not later than 12:00 noon (Chicago
time) on the next Business Day following the Interest Settlement Date,
such Lender's Pro Rata Share of principal, interest and Fees paid for the
benefit of Lenders on the Revolving Credit Loan and Term Loan, as
applicable. Such Lender's Pro Rata Share of interest on the Revolving
Credit Loan and Term Loans, as applicable, will be calculated by adding
together the Daily Interest Amounts for each calendar day of the prior
month for such Loan and multiplying the total thereof by the Interest
Ratio for such Loan.

(b) Availability of Lender's Pro Rata Share.

(i) Agent may assume that each Lender will make its Pro Rata
Share of each Revolving Credit Advance available to Agent on the first
(1st) Business Day following each Settlement Date. If such Pro Rata Share
is not, in fact, paid to Agent by such Lender when due, Agent will be
entitled to recover such amount on demand from such Lender without
set-off, counterclaim or deduction of any kind.

(ii) Nothing contained in this Section 9.10(b) will be deemed to
relieve any Lender of its obligation to fulfill its Commitments or to
prejudice any rights Agent or Borrower may have against any Lender as a
result of any default by such Lender under this Agreement.

(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not received
by Agent, then Agent will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction of any kind.

(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any
other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Loan Document, Agent will not be required to distribute any portion
thereof to any Lender. In addition, each Lender will repay to Agent on
demand any portion of such amount that Agent has distributed to such
Lender, together with interest at such rate, if any, as Agent is required
to pay to Borrower or such other Person, without set-off, counterclaim or
deduction of any kind.

(d) Dissemination of Information.

Agent will use reasonable efforts to provide Lenders with any
information received by Agent from Borrower which is required to be
provided to Lenders hereunder, with any notice of Default or Event of
Default received by Agent from Borrower, with any notice of Default or
Event of Default delivered by Agent to Borrower, with notice of any
Default or Event of Default of which Agent has actually become aware and
with notice of any action taken by Agent following any Default or Event of
Default; provided, however, that Agent shall not be liable to any Lender
for any failure to do so, except to the extent that such failure is
attributable to Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction after all possible appeals
have been exhausted.

(f) Non-Funding Lenders. The failure of any Lender (such
Lender, a "Non-Funding Lender") to make any Revolving Credit Advance to be
made by it on the date specified therefor shall not relieve any other
Lender (each such other Lender, an "Other Lender") of its obligations to
make its Revolving Credit Advance on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding
Lender to make a Revolving Credit Advance to be made by such Non-Funding
Lender, and no Non-Funding Lender shall have any obligation to Agent or
any Other Lender for the failure by such Non-Funding Lender.
Notwithstanding anything set forth herein to the contrary, a Non-Funding
Lender shall not have any voting or consent rights under or with respect
to any Loan Document or constitute a "Lender" (or be included in the
calculation of "Required Lenders" hereunder) for any voting or consent
rights under or with to any Loan Document. Anything in this Agreement to
the contrary notwithstanding, each Lender hereby agrees with each other
Lender that no Lender shall take any action to protect or enforce its
rights arising out of this Agreement or the Notes (including, without
limitation, exercising any rights of set-off) without first obtaining the
prior written consent of Agent or Required Lenders, it being the intent of
Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or
with the consent of the Agent.

10. SUCCESSORS AND ASSIGNS

10.1 Successors and Assigns. This Agreement and the other
Loan Documents shall be binding on and shall inure to the benefit of
Borrower, Agent, Lenders and their respective successors and assigns,
except as otherwise provided herein or therein. Borrower may not assign,
transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents
without the prior express written consent of Agent and Requisite Lenders.
Any such purported assignment, transfer, hypothecation or other conveyance
by Borrower without the prior express written consent of Agent shall be
void. The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of Borrower, Agent and
Lenders with respect to the transactions contemplated hereby and there
shall be no third party beneficiaries of any of the terms and provisions
of this Agreement or any of the other Loan Documents.

11. MISCELLANEOUS

11.1 Complete Agreement; Modification of Agreement. The
Loan Documents constitute the complete agreement between the parties with
respect to the subject matter thereof and may not be modified, altered or
amended except as set forth in Section 11.2 below. Any letter of interest
or commitment letter and/or fee letter between Borrower and Agent or any
of its affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.

11.2 Amendments and Waivers. (a) Except as otherwise
provided herein, no amendment, modification, termination or waiver of any
provision of this Agreement or any of the Notes or consent to any
departure by Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower.

(b) In furtherance of and without limiting the foregoing, no
amendment, modification, termination or waiver of or consent with respect
to any provision of this Agreement which (i) increases the percentage
advance rates set forth in the definition of Borrowing Base or (ii) makes
less restrictive the nondiscretionary criteria for exclusion from Eligible
Accounts and Eligible Inventory set forth in Schedule C and Schedule D
hereto shall be effective unless the same shall be in writing and signed
by Agent, Requisite Lenders and Borrower.

(c) Notwithstanding the foregoing, except to the extent
permitted by any applicable Lender Addition Agreement, no amendment,
modification, termination or waiver shall, unless in writing and signed by
Agent and each affected Lender, do any of the following: (a) increase the
principal amount of the Commitment of any affected Lender; (b) reduce the
principal of, rate of interest on or Fees payable with respect to any
Revolving Credit Advance, Letter of Credit Obligations or Term Loan; (c)
extend the final scheduled maturity date of the principal amount of any
Loan; (d) waive, forgive, defer, extend or postpone any payment of
interest or Fees required hereunder; (e) except as otherwise contemplated
herein or in one of the other Loan Documents, permit Borrower to sell or
otherwise dispose of any Collateral with a value exceeding $5,000,000 in
the aggregate; (f) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which shall be required for
Lenders or any of them to take any action hereunder; and (g) amend or
waive this Section 11.2 or the definitions of the terms used in this
Section 11.2 insofar as the definitions affect the substance of this
Section 11.2; and provided, further, that no amendment, modification,
termination or waiver affecting the rights or duties of Agent under this
agreement or any other Loan Document shall in any event be effective,
unless in writing and signed by Agent, in addition to Lenders required
hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and
for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No
notice to or demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in
accordance with this Section 11.2 shall be binding upon each holder of the
Notes at the time outstanding and each future holder of the Notes.

11.3 Fees and Expenses. Borrower shall reimburse Agent for
all reasonable out-of-pocket expenses incurred in connection with (a) the
preparation of the Loan Documents (including the reasonable fees and
expenses of all of its special loan counsel, advisors, consultants and
auditors retained in connection with the Loan Documents and the
transactions contemplated thereby and advice in connection therewith), and
(b) wire transfers to the account of Borrower. Borrower shall reimburse
Agent for all fees, costs and expenses, including the fees, costs and
expenses of counsel or other advisors (including environmental and
management consultants) for advice, assistance, or other representation in
connection with:

(i) the forwarding to Borrower or any other Person on
behalf of Borrower by Agent of the proceeds of the Revolving Credit
Advances and Term Loan;

(ii) any amendment, modification or waiver of, or consent
with respect to, any of the Loan Documents or advice in connection with
the administration of the loans made pursuant hereto or its rights
hereunder or thereunder;

(iii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, Borrower or any other
Person) in any way relating to the Collateral, any of the Loan Documents
or any other agreement to be executed or delivered in connection therewith
or herewith, whether as party, witness, or otherwise, including any
litigation, contest, dispute, suit, case, proceeding or action, and any
appeal or review thereof, in connection with a case commenced by or
against Borrower or any other Person that may be obligated to Agent by
virtue of the Loan Documents;

(iv) any attempt to enforce any rights of Agent or any
Lender against Borrower or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents;

(v) efforts to (A) monitor the Loans or any of the other
Obligations, (B) evaluate, observe, assess Borrower, any Subsidiary
thereof or their respective affairs, and (C) verify, protect, evaluate,
assess, appraise, collect, sell, liquidate or otherwise dispose of any of
the Collateral;

including, without limitation, all the attorneys' and other professional
and service providers' fees arising from such services, including those in
connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or
actions described in this Section 11.3 shall be payable, on demand, by
Borrower to Agent. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, environmental advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal
or other advisory services.

11.4 No Waiver. Agent's or any Lender's failure, at any
time or times, to require strict performance by Borrower of any provision
of this Agreement and any of the other Loan Documents shall not waive,
affect or diminish any right of Agent or such Lender thereafter to demand
strict compliance and performance therewith. Any suspension or waiver of
an Event of Default under this Agreement or any of the other Loan
Documents shall not suspend, waive or affect any other Event of Default
under this Agreement and any of the other Loan Documents whether the same
is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by Borrower under
this Agreement and no defaults by Borrower under any of the other Loan
Documents shall be deemed to have been suspended or waived by Agent or any
Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Agent and
Requisite Lenders and directed to Borrower specifying such suspension or
waiver.

11.5 Remedies. Agent's and Lenders' rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies which Agent or any Lender may have under any other
agreement, including the other Loan Documents, by operation of law or
otherwise. Recourse to the Collateral shall not be required.

11.6 Severability. Wherever possible, each provision of
this Agreement and the other Loan Documents shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

11.7 Conflict of Terms. Except as otherwise provided in
this Agreement or any of the other Loan Documents by specific reference to
the applicable provisions of this Agreement, if any provision contained in
this Agreement is in conflict with, or inconsistent with, any provision in
any of the other Loan Documents, the provision contained in this Agreement
shall govern and control.

11.8 Authorized Signature. Until Agent shall be notified
by Borrower to the contrary, the signature upon any document or instrument
delivered pursuant hereto of an officer of Borrower listed on Schedule
11.8 shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's
Board of Directors.

11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT
REGARD TO CONFLICT OF LAW PROVISIONS) AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. BORROWER HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, CITY OF CHICAGO, ILLINOIS,
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN BORROWERS, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED,
THAT AGENT, LENDERS AND BORROWER ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY,
CITY OF CHICAGO, ILLINOIS AND, PROVIDED, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF AGENT. BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED
IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SCHEDULE J OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

11.10 Notices. Except as otherwise provided herein,
whenever it is provided herein that any notice, demand, request, consent,
approval, declaration or other communication shall or may be given to or
served upon either of the parties by the other party, or whenever either
of the parties desires to give or serve upon the other party any
communication with respect to this Agreement, each such notice, demand,
request, consent, approval, declaration or other communication shall be in
writing and shall be deemed to have been validly served, given or
delivered (i) upon the earlier of actual receipt and three (3) Business
Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (ii) upon
transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided in this Section 11.10), (iii) one (1) Business Day after deposit
with a reputable overnight courier with all charges prepaid or (iv) when
delivered, if hand-delivered by messenger, all of which shall be addressed
to the party to be notified and sent to the address or facsimile number
indicated on Schedule J or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any
notice required hereunder may be waived in writing by the party entitled
to receive such notice. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated on
Schedule J to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval,
declaration or other communication.

11.11 Section Titles. The Section titles and Table of
Contents contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and
separately constitute one agreement.

11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES
WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, AMONG AGENT, LENDERS AND BORROWER ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM
IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.

11.14 Press Releases. Borrower hereby agrees that it is not
on the date hereof issuing any press releases with respect to this
Agreement or the Related Transactions which mentions or uses the name of
General Electric Capital Corporation or its affiliates. Borrower further
agrees that it will not make in the future any press releases using the
name of General Electric Capital Corporation or its affiliates referring
to this Agreement without the prior written consent of GE Capital unless
Borrower is required to do so under law and then, in any event, Borrower
will consult with GE Capital before issuing such press release.

11.15 Reinstatement. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed
by or against Borrower for liquidation or reorganization, should Borrower
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of Borrower's assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as
though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

[signature pages follow]

<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first written above.

LADISH CO., INC.

By: /s/

Title: Secretary

By: /s/

Title: Treasurer_

GENERAL ELECTRIC CAPITAL
CORPORATION,
Revolving Credit Loan as Agent and Lender
Commitment:
$35,000,000.00 By: /s/

Term Loan Commitment: Title: Region Operations Manager
$8,000,000.00

<PAGE>

AMENDMENT NO. 1 TO CREDIT AGREEMENT

This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Amendment") is
entered into as of this 15th day of September, 1995 by and among LADISH
CO., INC., a Wisconsin corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself as Lender and as Agent for Lenders, and the other
Lenders signatory hereto. Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to them by
the Credit Agreement (as hereinafter defined).

RECITALS

WHEREAS, Borrower, Agent and Lenders have entered into that
certain Credit Agreement dated as of June 30, 1995 (as amended,
supplemented, restated or otherwise modified from time to time, the
"Credit Agreement"); and

WHEREAS, Borrower, Agent and Lenders wish to amend the Credit
Agreement to increase the Revolving Credit Loan Commitment from Thirty-
Five Million Dollars ($35,000,000) to Thirty-Seven Million Dollars
($37,000,000), thereby increasing the Commitments from Forty-Three Million
Dollars ($43,000,000) to Forty-Five Million Dollars ($45,000,000);

NOW THEREFORE, in consideration of the mutual execution hereof
and other good and valuable consideration, the parties hereto agree as
follows:

SECTION 1. Amendments to the Credit Agreement.

(a) The first recital to the Credit Agreement is amended in its
entirety to read as follows:

WHEREAS, Borrower desires that Lenders extend a revolving
and term credit facility to Borrower for the purpose of refinancing
certain indebtedness of Borrower, to provide working capital
financing for Borrower and to provide funds for other general
corporate purposes of Borrower; and Borrower desires to borrow up to
Forty-Five Million Dollars ($45,000,000) from Lenders, and Lenders
are willing to make certain loans and other extensions of credit to
Borrower of up to such amount upon the terms and conditions set forth
herein;

(b) The definition of "Commitments" in Schedule A to the Credit
Agreement is amended in its entirety to read as follows:

"Commitments" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances
and the Term Loan as set forth on the signature page to the Agreement
or in the most recent Lender Addition Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Revolving Credit Advances and the Term Loan, which
aggregate commitment shall be Forty-Three Million Dollars
($43,000,000) on the Closing Date and shall increase to Forty-Five
Million Dollars ($45,000,000) on September 15, 1995, as such amount
may be further adjusted, if at all, from time to time in accordance
with the Credit Agreement.

(c) The definition of "Revolving Credit Loan Commitment" in
Schedule A to the Credit Agreement is amended in its entirety to read as
follows:

"Revolving Credit Loan Commitment" shall mean (a) as to any
Lender, the aggregate commitment of such Lender to make Revolving
Credit Advances as set forth on the signature page to the Agreement
or in the most recent Lender Addition Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Revolving Credit Advances, which aggregate commitment
shall be Thirty-Five Million Dollars ($35,000,000) on the Closing
Date and shall increase to Thirty-Seven Million Dollars ($37,000,000)
on September 15, 1995, as such amount may be further adjusted, if at
all, from time to time in accordance with the Credit Agreement.

(d) The Revolving Credit Loan Commitment of GE Capital set
forth on the signature page of the Credit Agreement is amended from
Thirty-Five Million Dollars ($35,000,000) to Thirty-Seven Million Dollars
($37,000,000).

Section 2. Representations and Warranties of Borrower.
Borrower represents and warrants that:

(a) The execution, delivery and performance by Borrower of
this Amendment, the new Revolving Credit Note and the amended
Mortgages have been duly authorized by all necessary corporate action
and that this Amendment is a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms,
except as the enforcement thereof may be subject to (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law);

(b) Each of the representations and warranties contained
in the Credit Agreement is true and correct in all material respects
on and as of the date hereof as if made on the date hereof;

(c) Neither the execution, delivery and performance of
this Amendment nor the consummation of the transactions contemplated
hereby does or shall contravene, result in a breach of, or violate
(i) any provision of Borrower's certificate or articles of
incorporation or bylaws, (ii) any law or regulation, or any order or
decree of any court or government instrumentality or (iii) indenture,
mortgage, deed of trust, lease, agreement or other instrument to
which Borrower is a party or by which Borrower or any of its property
is bound, except in any such case to the extent such conflict or
breach has been waived by a written waiver document a copy of which
has been delivered to Agent on or before the date hereof;

(d) Since the Closing Date, no provisions of Borrower's
certificate or articles of incorporation or by-laws have been
amended or changed; and

(e) No Default or Event of Default has occurred and is
continuing.

Section 3. Reference to and Effect Upon the Credit
Agreement.

(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Agent or
any Lender under the Credit Agreement or any Loan Document, nor constitute
a waiver of any provision of the Credit Agreement or any Loan Document,
except as specifically set forth herein. Upon the effectiveness of this
Amendment, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of similar import shall mean and
be a reference to the Credit Agreement as amended hereby. Each reference
in the Credit Agreement to the "Revolving Credit Note" shall mean and be a
reference to the Revolving Credit Note executed of even date with this
Amendment.

Section 4. Costs and Expenses. As provided in Section 11.3
of the Credit Agreement, Borrower agrees to reimburse Agent for all costs
and expenses, including the fees, costs and expenses of counsel or other
advisors for advice, assistance, or other representation in connection
with this Amendment.

Section 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

Section 6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purposes.

Section 7. Counterparts. This Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed
an original but all such counterparts shall constitute one and the same
instrument.

Section 8. Effectiveness. This Amendment shall become
effective upon:

(a) the receipt of executed original signature pages to this
Amendment by Lenders and Borrower;

(b) the receipt of an executed original Revolving Credit Note in
the amount of Thirty-Seven Million Dollars ($37,000,000), evidencing the
Revolving Credit Loan, both existing outstanding amounts and future
borrowings, and the return of the prior Revolving Credit Note in the
amount of Thirty-Five Million Dollars ($35,000,000);

(c) receipt of an executed original certificate from the
Secretary of the Borrower, certifying as to (i) resolutions of the Board
of Directors of Borrower duly authorizing the execution, delivery and
effectiveness of this Amendment and all other instruments and documents to
be delivered by the Borrower; and (ii) incumbency of qualified officers of
the Borrower;

(d) receipt of an executed original certificate from an
authorized officer of the Borrower, certifying that no Default or Event of
Default has occurred and is continuing;

(e) receipt of executed original signature pages to amended
Mortgages covering all of the Mortgaged Properties;

(f) receipt of a satisfactory original opinion of counsel from
Wayne Larsen, General Counsel of Borrower; and

(g) reimbursement of Agent's costs and expenses as provided in
Section 4 hereof.

[signature pages follow]

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.

LADISH CO., INC.

By: /s/

Title: Vice President Law//Finance &
Secretary

GENERAL ELECTRIC CAPITAL CORPORATION,
individually and as Agent
for the Lenders

By: /s/

Title: Region Operations Manager

<PAGE>

AMENDMENT NO. 2 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT (this "Amendment")
dated as of December 22, 1995, by and among Ladish Co., Inc., a Wisconsin
corporation ("Borrower") and General Electric Capital Corporation, a New
York corporation (in its individual capacity, "GE Capital"), for itself as
Lender, and as Agent for the Lenders.

W I T N E S S E T H:

WHEREAS, Borrower, Agent and GE Capital have entered into that
certain Credit Agreement dated as of June 30, 1995, as amended on
September 15, 1995 (the "Credit Agreement");

WHEREAS, Borrower proposes to enter into a Note and Warrant
Purchase Agreement (the "Initial Purchase Agreement") with certain
purchasers listed on the schedule thereto (the "Purchasers"), pursuant to
which the Purchasers shall purchase (i) $4,000,000 principal amount of
senior subordinated notes (the "Senior Subordinated Notes") and (ii)
warrants (the "Warrants") exercisable for 20,000,000 shares of the
Borrower's common stock, and also proposes to enter into a Warrant
Agreement with the Purchasers (a "Warrant Agreement") and a Registration
Rights Agreement with the Purchasers (a "Registration Rights Agreement");

WHEREAS, Borrower proposes to enter into one or more additional
note purchase agreements on or before June 30, 1996 (individually, a
"Subsequent Purchase Agreement," and collectively or together with the
Initial Purchase Agreement, the "Purchase Agreements"), pursuant to which
up to an additional $6,600,000 principal amount of Senior Subordinated
Notes shall be sold, and also proposes to enter into further Warrant
Agreements and Registration Rights Agreements;

WHEREAS, Section 6.3 of the Credit Agreement provides that the
Borrower shall not create, incur, assume or permit to exist any
Indebtedness, except in limited circumstances;

WHEREAS, Section 6.5 of the Credit Agreement provides that the
Borrower shall not make any change in its capital structure that is not
acceptable to Agent in its reasonable discretion;

WHEREAS, Section 6.7 of the Credit Agreement provides that the
Borrower shall not create, incur, assume or permit to exist any Lien on or
with respect to its properties or assets, except in limited circumstances;

WHEREAS, the parties hereto wish to amend the Credit Agreement
to, among other things, allow Borrower to enter into the Purchase
Agreements, Warrant Agreements and Registration Rights Agreements.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Definitions. Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.

2. Amendments to the Credit Agreement.

(a) The definition of "Change of Control" in Schedule A to the
Credit Agreement is amended in its entirety to read as follows:

"Change of Control" shall mean any event, transaction or
occurrence as a result of which, without the consent of the Agent
(which consent shall not be unreasonably withheld), either (i) (x)
Internationale Nederlanden (U.S.) Capital Corporation and its
Affiliates shall cease to own or control at least 15% of the
outstanding Stock (or rights to acquire Stock), on a fully diluted
basis and (y) Grace Brothers Ltd. and its Affiliates shall cease to
own or control at least 10% of the outstanding Stock (or rights to
acquire Stock), on a fully diluted basis, or (ii) any other Person
and its Affiliates shall own or control, directly or indirectly, in
the aggregate 51% or more of the Voting Stock, on a fully diluted
basis.

(b) Section 6.3 of the Credit Agreement is amended by deleting the
word "and " immediately before clause (vi) thereof and adding the
following after such clause (vi):

, and (vii) up to $10,600,000 original principal amount at the time
of issue of senior subordinated notes (the "Senior Subordinated
Notes") pursuant to that certain Note and Warrant Purchase Agreement
(the "Initial Purchase Agreement"), dated as of December 22, 1995
among Borrower and the purchasers listed on Schedule I thereto and
pursuant to any subsequent note purchase agreement (individually, a
"Subsequent Purchase Agreement," and, together with the Initial
Purchase Agreement, the "Purchase Agreements"), the notes for which
are purchased on or before June 30, 1996, provided, that the terms
and conditions of each such Purchase Agreement are substantially
identical to the Initial Purchase Agreement, provided further, that
the provisions of Article X and Section 11.16 of each such Purchase
Agreement, the definitions used therein and the form of notes issued
thereunder shall be identical in all respects to the provisions of
Article X and Section 11.16 of the Initial Purchase Agreement, the
definitions used therein and the form of notes issued thereunder,
respectively, and provided further, that the Agent shall be provided
with a true and complete copy of each Subsequent Purchase Agreement
five Business Days prior to the effective date of such Subsequent
Purchase Agreement.

, except for the issuance of up to 53,000,000 warrants in the
aggregate pursuant to (x) the Purchase Agreements, (y) that certain
Warrant Agreement (the "Warrant Agreement") dated as of December 22,
1995 between the Borrower and the purchasers listed therein and one
or more subsequent warrant agreements (together with the Warrant
Agreement, the "Warrant Agreements"), the terms of which are
substantially identical to the Warrant Agreement and which are
executed concurrently with one of the Purchase Agreements, (z) that
certain Registration Rights Agreement (the "Registration Rights
Agreement") dated as of December 22, 1995 between the Borrower and
the purchasers listed therein and one or more subsequent registration
rights agreements (together with the Registration Rights Agreement,
the "Registration Rights Agreements"), the terms of which are
substantially identical to the Registration Rights Agreement and
which are executed concurrently with one of the Warrant Agreements
and one of the Purchase Agreements.

(d) Section 6.7 of the Credit Agreement is amended by deleting the
word "and" immediately before clause (iv) thereof and adding the following
after such clause (iv):

, and (v) Liens in connection with any of the Purchase Agreements,
provided that such Liens shall be junior and subordinated to the
Liens under this Agreement on the express terms set forth in Article
X and Section 11.16 of the Purchase Agreements, and the Borrower in
all respects shall comply with the requirements thereof, and provided
further, that the Borrower shall furnish to the Agent and its counsel
a true and complete copy of each agreement, document and instrument
granting or creating any such lien including any UCC statement,
mortgage, recordation and similar filing documents, and any proposed
amendments or modifications thereto from time to time, at least five
Business Days prior to the execution thereof.

(e) Section 8.1 of the Credit Agreement is amended by adding the
following:

(n) Any payment shall be made on account of any of the Senior
Subordinated Notes or Subordinated Debt (as defined in the Purchase
Agreements) or any breach of the provisions of Article X or Section
11.16 of any of the Purchase Agreements shall occur or be continuing
prior to termination of the Commitments and payment in full of the
Revolving Credit Loan and the Term Loan and all fees, costs and
expenses payable or reimbursable by Borrower pursuant to the Credit
Agreement or any other Loan Agreement.

(o) Any modification or amendment shall be made to any of the
Purchase Agreements, Senior Subordinated Notes, Warrant Agreements or
Registration Rights Agreements without the prior written consent of
Agent, which consent shall not be unreasonably withheld.

3. Incorporated Representations and Warranties. The representations and
warranties contained in Article 3 of the Credit Agreement are and will be
true and correct and complete in all material respects on and as of the
date hereof to the same extent as though made on and as of the date
hereof, except to the extent such representations and warranties
specifically relate to an earlier date, in which they are true, correct
and complete in all material respects as of such earlier date.

4. Representations and Warranties. In order to induce Agent to enter
into this Amendment, the Borrower represents and warrants that the copies
of the Initial Purchase Agreement, the Warrant Agreement and the
Registration Rights Agreement most recently caused by the Borrower to be
provided to Agent are true and complete copies of the duly and validly
executed Initial Purchase Agreement, the Warrant Agreement and the
Registration Rights Agreement.

5. Return of Closing Fee. Upon the effectiveness of the Initial
Purchase Agreement and receipt by the Borrower of the proceeds of the
Senior Subordinated Notes purchased thereunder, GE Capital will promptly
credit the Borrower's account by the aggregate amount of $344,000,
pursuant to Section 1 of the GE Capital Fee Letter. Upon the
effectiveness of any Subsequent Purchase Agreement on or before June 30,
1996 and receipt by the Borrower of the proceeds of the Senior
Subordinated Notes purchased thereunder, GE Capital will promptly further
credit the Borrower's account by an aggregate amount equal to 8.6% of the
net proceeds of the sale of the Senior Subordinated Notes, provided that
the total amount of the Closing Fee returned by GE Capital on account of
the Purchase Agreement and all Additional Purchase Agreements shall not
exceed $645,000, pursuant to Section 1 of the GE Capital Fee Letter.

6. Miscellaneous. The parties hereto hereby further agree as follows:

6.1 Further Assurances. Each of the parties hereto hereby agrees to
do such further acts and things and to execute, deliver and acknowledge
such additional agreements, powers and instruments as any other party
hereto may reasonably require to carry into effect the purposes of this
Amendment.

6.2 Costs, Expenses and Taxes; Indemnity. The provisions of Section
11.3 of the Credit Agreement are hereby incorporated by reference as if
fully set forth herein mutatis mutandis and made applicable to this
Amendment.

6.3 Counterparts. This Amendment may be executed in one or more
counterparts, each of which, when executed and delivered, shall be deemed
to be an original and all of which counterparts, taken together, shall
constitute but one and the same document with the same force and effect as
if the signatures of all of the parties were on a single counterpart, and
it shall not be necessary in making proof of this Amendment to produce
more than one (1) such counterpart.

6.4 Headings. Headings used in this Amendment are for convenience
of reference only and shall not affect the construction of this Amendment.

6.5 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF ILLINOIS, AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS AND DECISIONS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.

6.6 Binding Effect. This Amendment shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. Except as expressly set forth to the
contrary herein, this Amendment shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Amendment
and their respective successors and permitted assigns.

6.7 Amendment; Waiver; Reaffirmation of Loan Documents. The parties
hereto agree and acknowledge that nothing contained in this Amendment in
any manner or respect limits or terminates any of the provisions of the
Credit Agreement or the other Loan Documents other than as expressly set
forth herein and further agree and acknowledge that the Credit Agreement
and each of the other Loan Documents remain and continue in full force and
effect and are hereby ratified and reaffirmed in all respects. No delay
on the part of Agent in exercising any of their respective rights,
remedies, powers and privileges under the Credit Agreement or any of the
other Loan Documents or partial or single exercise thereof, shall
constitute a waiver thereof.

6.8 Financing Statements and Public Filings. The Agent agrees to
consent or object to the form of any UCC statement or other recording
document submitted to it on behalf of the Holders within five Business
Days; provided, that no such consent shall be unreasonably withheld; and,
provided, further, that the failure to object within five Business Days of
such submission to the Agent shall be deemed a consent by the Agent to the
filing of such UCC statement or other recording document on behalf of the
Holders; and provided, further that such UCC statement or other recording
document shall comply with the terms and provisions of Section 11.16 of
the Purchase Agreements.

[Balance of page intentionally left blank. Signature pages follow.]

<PAGE>

IN WITNESS WHEREOF, this Amendment has been duly executed as of
the date first written above.

LADISH CO., INC.

By: /s/

Title: Vice President Law/Finance
& Secretary

GENERAL ELECTRIC CAPITAL CORPORATION,
As Agent and as Lender

By: /s/

Title: Senior Vice President Commercial
Finance

<PAGE>

AMENDMENT NO. 3 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT (this "Amendment")
dated as of June 17, 1996, by and among Ladish Co., Inc., a Wisconsin
corporation ("Borrower") and General Electric Capital Corporation, a New
York corporation (in its individual capacity, "GE Capital"), for itself as
Lender, and as Agent for the Lenders.

W I T N E S S E T H:

WHEREAS, Borrower, Agent and GE Capital have entered into that
certain Credit Agreement dated as of June 30, 1995, as amended (the
"Credit Agreement");

WHEREAS, the Borrower is the sponsor of the defined benefit
pension plans (the "Plans") set forth in Exhibit A hereto, covered by
Title IV of ERISA; and

WHEREAS, the Borrower has applied under section 412(d) of the
Internal Revenue Code and section 303 of ERISA to the U.S. Internal
Revenue Service ("IRS") for conditional waivers of the minimum funding
standard for the Plans ("Funding Waivers") for plan year 1995. As a
condition to granting the requested Funding Waivers, the IRS may require
that security perfected and enforced by the Pension Benefit Guaranty
Corporation ("PBGC") be provided to the Plans; and

WHEREAS, in the event the Funding Waivers are granted, the
Borrower has agreed to grant to the Plans and to PBGC a security interest
and lien in the amount of $11.2 million on the property described in
Exhibit B hereto (the "PBGC Collateral") to secure full and timely payment
of all amounts owing by the Borrower to the Plans as payment for the
Funding Waivers and payment to PBGC for liabilities that may arise under
the provisions of Section 4062 of ERISA in the event that one or more of
the Plans terminates prior to full payment of the amounts owing for the
Funding Waivers; and

WHEREAS, the parties hereto wish to amend the Credit Agreement
to, among other things, allow Borrower to obtain the Funding Waivers and
grant the PBGC Liens on the terms and conditions set forth in this
Amendment No. 3.

NOW, THEREFORE, the parties hereto hereby agree as follows:

I. Definitions. Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.

II. Amendments to the Credit Agreement.

(a) Section 6.7 of the Credit Agreement is amended by deleting
the word "and" immediately before clause (v) thereof and adding the
following after such clause (v):

, and (vi) Liens granted to the PBGC in all real estate currently
owned by the Borrower and located in Cudahy, Wisconsin, and in all
equipment and fixtures owned by the Borrower and located on such real
estate and securing an amount payable to the PBGC under the
Borrower's defined benefit pensions not to exceed $11,200,000,
provided that (i) such Liens shall continue and be outstanding only
as long as the Borrower has not repaid the amount of its minimum
funding requirements waived as of the date hereof by the PBGC for the
Borrower's 1995 plan year, (ii) such Liens shall be junior and
subordinated to the Liens under this Agreement on the express terms
set forth in the Intercreditor Agreement, dated as of June 17, 1996,
by the Agent, ING Equity Partners, L.P. I, as agent for the holders
of the Senior Subordinated Notes and the PBGC, as amended,
supplemented or otherwise modified from time to time (the "PBGC
Intercreditor Agreement"), (iii) the Borrower shall not amend or
otherwise modify without the prior written consent of the Agent that
certain Payment and Security Agreement, dated June 17, 1996 by and
between the Borrower and the PBGC (the "PBGC Agreement"), which
consent of the Agent shall not be unreasonably withheld, provided
that the Agent shall in its sole and absolute discretion have the
right to consent to any additional Liens that might be proposed by
the Borrower to secure any obligations to the PBGC, and (iv) the
Borrower shall furnish to the Agent and its counsel a true and
complete copy of each agreement, document and instrument granting or
creating any such lien including any UCC statement, mortgage,
recordation and similar filing documents, and any proposed amendments
or modifications thereto from time to time, at least five Business
Days prior to the execution thereof.

(b) Section 8.1 of the Credit Agreement is amended by adding the
following:

(p) Any breach by the Borrower or any of the holders of the
Senior Subordinated Notes of the PBGC Intercreditor Agreement shall
occur or be continuing.

(q) Any breach by the Borrower shall occur or be continuing
under the PBGC Agreement or any other document or instrument related
thereto or arising thereunder.

III. Incorporated Representations and Warranties. The
representations and warranties contained in Article 3 of the Credit
Agreement are and will be true and correct and complete in all material
respects on and as of the date hereof to the same extent as though made on
and as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which they are true,
correct and complete in all material respects as of such earlier date.

IV. Representations and Warranties. In order to induce Agent
to enter into this Amendment, the Borrower represents and warrants that
the copy of the PBGC Agreement most recently caused by the Borrower to be
provided to Agent is a true and complete copy of the duly and validly
executed PBGC Agreement.

V. Waiver. GE Capital, individually and in its capacity as
Agent, hereby waives any breach of the Credit Agreement caused by the
failure of the Borrower to pay the amount of the Funding Waivers prior to
the Borrower's entering into the PBGC Agreement.

VI. Miscellaneous. The parties hereto hereby further agree as
follows:

6.1 Further Assurances. Each of the parties hereto hereby
agrees to do such further acts and things and to execute, deliver and
acknowledge such additional agreements, powers and instruments as any
other party hereto may reasonably require to carry into effect the
purposes of this Amendment.

6.2 Costs, Expenses and Taxes; Indemnity. The provisions of
Section 11.3 of the Credit Agreement are hereby incorporated by
reference as if fully set forth herein mutatis mutandis and made
applicable to this Amendment.

6.3 Counterparts. This Amendment may be executed in one or
more counterparts, each of which, when executed and delivered, shall
be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same document with the
same force and effect as if the signatures of all of the parties were
on a single counterpart, and it shall not be necessary in making
proof of this Amendment to produce more than one (1) such
counterpart.

6.4 Headings. Headings used in this Amendment are for
convenience of reference only and shall not affect the construction
of this Amendment.

6.5 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF ILLINOIS, AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF SAID STATE,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

6.6 Binding Effect. This Amendment shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns. Except as expressly set
forth to the contrary herein, this Amendment shall not be construed
so as to confer any right or benefit upon any Person other than the
parties to this Amendment and their respective successors and
permitted assigns.

6.7 Amendment; Waiver; Reaffirmation of Loan Documents. The
parties hereto agree and acknowledge that nothing contained in this
Amendment in any manner or respect limits or terminates any of the
provisions of the Credit Agreement or the other Loan Documents other
than as expressly set forth herein and further agree and acknowledge
that the Credit Agreement and each of the other Loan Documents remain
and continue in full force and effect and are hereby ratified and
reaffirmed in all respects. No delay on the part of Agent in
exercising any of their respective rights, remedies, powers and
privileges under the Credit Agreement or any of the other Loan
Documents or partial or single exercise thereof, shall constitute a
waiver thereof.

6.8 Financing Statements and Public Filings. The Agent agrees
to consent or object to the form of any UCC statement or other
recording document submitted to it on behalf of the PBGC within five
Business Days; provided, that no such consent shall be unreasonably
withheld; and, provided, further that such UCC statement or other
recording document shall comply with the terms and provisions of the
PBGC Intercreditor Agreement.

[Balance of page intentionally left blank.
Signature pages follow.]

<PAGE>

IN WITNESS WHEREOF, this Amendment has been duly executed as of
the date first written above.

LADISH CO., INC.

By: /s/

Title:________________________

GENERAL ELECTRIC CAPITAL CORPORATION,
As Agent and as Lender

By: /s/

Title:_________________________

<PAGE>

AMENDMENT NO. 4 TO CREDIT AGREEMENT

This AMENDMENT NO. 4 TO CREDIT AGREEMENT (this "Amendment") is
entered into as of this 12th day of November, 1996 by and among LADISH
CO., INC., a Wisconsin corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself as Lender and as Agent for Lenders, and the other
Lenders signatory hereto. Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to them by
the Credit Agreement (as hereinafter defined).

RECITALS

WHEREAS, Borrower, Agent and Lenders wish to amend the Credit
Agreement to increase the Revolving Credit Loan Commitment from Thirty-
Seven Million Dollars ($37,000,000) to Forty-Five Million Dollars
($45,000,000), thereby increasing the Commitments from Forty-Five Million
Dollars ($45,000,000) to Fifty-Three Million Dollars ($53,000,000);

WHEREAS, Borrower, Agent and Lenders wish to amend the Credit
Agreement to reduce the Non-Use Fee;

NOW THEREFORE, in consideration of the mutual execution hereof
and other good and valuable consideration, the parties hereto agree as
follows:

SECTION 1. Amendments to the Credit Agreement.

(a) The first recital to the Credit Agreement is amended in its
entirety to read as follows:

WHEREAS, Borrower desires that Lenders extend a revolving
and term credit facility to Borrower for the purpose of refinancing
certain indebtedness of Borrower, to provide working capital
financing for Borrower and to provide funds for other general
corporate purposes of Borrower; and Borrower desires to borrow up to
Fifty-Three Million Dollars ($53,000,000) from Lenders, and Lenders
are willing to make certain loans and other extensions of credit to
Borrower of up to such amount upon the terms and conditions set forth
herein;

(b) Section 1.8(b) of the Credit Agreement is amended in its
entirety to read as follows:

(b) As additional compensation for Lenders' costs and
risks in making the Revolving Credit Loan available to Borrower,
Borrower agrees to pay to Agent, for the ratable benefit of Lenders,
in arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date, a
fee for Borrower's non-use of available funds (the "Non-use Fee") in
amount equal to one-quarter of one percent (1/4%) per annum
(calculated on the basis of a 360 day year for actual days elapsed)
of the difference between the respective daily averages of (i) the
Maximum Revolving Credit Loan (as it may be adjusted from time to
time hereunder) and (ii) the amount of the Revolving Credit Loan
outstanding during the period for which the Non-use Fee is due.

"Commitments" shall mean (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances
and the Term Loan as set forth on the signature page to the Agreement
or in the most recent Lender Addition Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Revolving Credit Advances and the Term Loan, which
aggregate commitment shall be Forty-Three Million Dollars
($43,000,000) on the Closing Date, shall increase to Forty-Five
Million Dollars ($45,000,000) on September 15, 1995, and shall
increase to Fifty-Three Million Dollars ($53,000,000) on November __,
1996, as such amount may be further adjusted, if at all, from time to
time in accordance with the Credit Agreement.

(d) The definition of "Revolving Credit Loan Commitment" in
Schedule A to the Credit Agreement is amended in its entirety to read as
follows:

"Revolving Credit Loan Commitment" shall mean (a) as to any
Lender, the aggregate commitment of such Lender to make Revolving
Credit Advances as set forth on the signature page to the Agreement
or in the most recent Lender Addition Agreement executed by such
Lender and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Revolving Credit Advances, which aggregate commitment
shall be Thirty-Five Million Dollars ($35,000,000) on the Closing
Date, shall increase to Thirty-Seven Million Dollars ($37,000,000) on
September 15, 1995 and shall increase to Forty-Five Million Dollars
($45,000,000) on November __, 1996, as such amount may be further
adjusted, if at all, from time to time in accordance with the Credit
Agreement.

(e) The Revolving Credit Loan Commitment of GE Capital set
forth on the signature page of the Credit Agreement is amended from
Thirty-Seven Million Dollars ($37,000,000) to Forty-Five Million Dollars
($45,000,000).

Section 2. Representations and Warranties of Borrower.
Borrower represents and warrants that:

(b) Each of the representations and warranties contained
in the Credit Agreement is true and correct in all material respects
on and as of the date hereof as if made on the date hereof;

(d) Since the Closing Date, no provisions of Borrower's
certificate or articles of incorporation or by-laws have been
amended or changed; and

(e) No Default or Event of Default has occurred and is
continuing.

Section 3. Reference to and Effect Upon the Credit
Agreement.

(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

Section 4. Costs and Expenses. As provided in Section 11.3
of the Credit Agreement, Borrower agrees to reimburse Agent upon demand
for all costs and expenses, including the fees, costs and expenses of
counsel or other advisors for advice, assistance, or other representation
in connection with this Amendment.

Section 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

Section 6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purposes.

Section 8. Effectiveness. This Amendment shall become
effective upon:

(a) the receipt of executed original signature pages to this
Amendment by Lenders and Borrower;

(b) the receipt of an executed original Revolving Credit Note in
the amount of Forty-Five Million Dollars ($45,000,000), evidencing the
Revolving Credit Loan, both existing outstanding amounts and future
borrowings, and the return of the prior Revolving Credit Note in the
amount of Thirty-Seven Million Dollars ($37,000,000);

(d) receipt of an executed original certificate from an
authorized officer of the Borrower, certifying that no Default or Event of
Default has occurred and is continuing;

(e) receipt of executed original signature pages to amended
Mortgages covering all of the Mortgaged Properties;

(f) receipt of a satisfactory original opinion of counsel from
Wayne Larsen, General Counsel of Borrower; and

(g) reimbursement of Agent's costs and expenses as provided in
Section 4 hereof.

IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.

LADISH CO., INC.

By: /s/

Title:

GENERAL ELECTRIC CAPITAL CORPORATION,
individually and as Agent
for the Lenders

By: /s/

Title:

<PAGE>
AMENDMENT NO. 5 TO CREDIT AGREEMENT

This AMENDMENT NO. 5 TO CREDIT AGREEMENT (this "Amendment") is
entered into as of this 8th day of April, 1997 by and among LADISH CO.,
INC., a Wisconsin corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, ("GE
Capital"), for itself as Lender and as Agent for Lenders, and the other
Lenders signatory hereto. Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to them by
the Credit Agreement (as hereinafter defined).

RECITALS

WHEREAS, Borrower, Agent and Lenders wish to terminate the
Borrower's right to choose the LIBOR pricing option; and

WHEREAS, Borrower, Agent and Lenders wish to amend the Credit
Agreement to provide for adjustments to the Applicable Margin for LIBOR
Loans and to change the amount to be paid to Agent, for the benefit of the
Lenders, as a result of a voluntary prepayment.

NOW THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Termination of LIBOR Pricing Option. Upon the
effectiveness of this Amendment pursuant to Section 9 hereof, the Borrower
shall no longer have the option to elect LIBOR pricing and all existing
LIBOR Loans immediately shall be converted to Index Rate Loans.

SECTION 2. Amendments to the Credit Agreement.

(a) Section 1.3(d) of the Credit Agreement is amended in its
entirety to read as follows:

"(d) Borrower shall have the right at any time on thirty
(30) days' prior written notice to Agent to voluntarily:

(i) prepay all or part of the Term Loan, provided that any
such voluntary prepayment shall be accompanied by the payment of the fee
required by Section 1.8(c), if any, plus the payment of any LIBOR funding
breakage costs in accordance with Section 1.13(c); and

(ii) permanently reduce the Revolving Credit Loan
Commitment in whole or in part ratably among the Lenders in a minimum
aggregate amount of $1,000,000 or any integral multiple of $1,000,000
excess thereof; provided, however, that the amount of the Revolving
Outstanding Advances; provided further that any such voluntary reduction
shall be accompanied by the payment of the fee required by Section 1.8(c),
if any, plus the payment of any LIBOR funding breakage costs in accordance
with Section 1.13(c)."

(b) The second sentence of Section 1.5(c) of the Credit
Agreement is deleted and replaced by the following text:

"The Index Rate shall be determined each day based upon the
Index Rate as in effect each day."

"(c) Except as set forth in Section 1.3(d) above, if, prior to
July 1, 1999, Borrower shall prepay the Term Loans or permanently reduce
the Revolving Credit Loan Commitment, Borrower shall pay to the Agent, for
the benefit of Lenders as liquidated damages and compensation for the
costs of being prepared to make funds available to Borrower hereunder an
amount determined by multiplying one percent (1%) by, in the case of a
prepayment of the Term Loan, the amount of such prepayment, and in the
case of a permanent reduction in the Revolving Credit Loan Commitment, the
amount of such reduction."

(d) The definition of "Applicable Margin" in Schedule A to the
Credit Agreement is amended in its entirety to read as follows:

""Applicable Margin" shall mean, for Index Rate Loans,
until June 1, 1997, two and one-half percent (2.5%), and thereafter a
percentage in effect for the ten applicable Margin Period equal to the
percentage shown below opposite the Borrower's EBITDA for the twelve (12)
full consecutive calendar months ending with the most recent Fiscal Month
prior to such Margin Period for which Borrower has delivered its monthly
financial statements to Agent pursuant to clause (a) of Schedule G
("EBITDA Calculation Period"):

Applicable Margin for
EBITDA for the EBITDA Index Rate Loans for the
Calculation Period Related Margin Period

Greater than $23,500,000 2.00%

Greater than $20,750,000
but less than or equal to
$23,500,000 2.50%

Less than or equal to
$20,750,000 3.00%

As used in this definition: "Margin Period" shall mean, on any date of
determination, the period (i) commencing five (5) days after the delivery
of its monthly financial statements by the Borrower to the Agent as
required by clause (a) of Schedule G for its most recent Fiscal Month, and
(ii) ending four (4) days after the delivery of such monthly financial
statements for the next succeeding Fiscal Month."

(e) The definition of "Index Rate" in Schedule A to the Credit
Agreement is amended in its entirety to read as follows:

""Index Rate" shall mean, for any day, the published rate
for the thirty-day dealer placed commercial paper (sold through the
dealers by major corporations) which normally is published in the "Money
Rates" section of The Wall Street Journal for such day or, in the event
such reports shall not so appear, in such other nationally recognized
publications as Agent may, from time to time, specify to Borrower."

Section 3. Representations and Warranties of Borrower.
Borrower represents and warrants that:

(a) The execution, delivery and performance by Borrower of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment is a legal, valid and binding obligation of
Borrower enforceable against Borrower in accordance with its terms, except
as the enforcement thereof may be subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforcement is sought in a proceeding
in equity or at law);

(b) Each of the representations and warranties contained
in the Credit Agreement is true and correct in all material respects on
and as of the date hereof as if made on the date hereof;

(c) Neither the execution, delivery and performance of
this Amendment nor the consummation of the transactions contemplated
hereby does or shall contravene, result in a breach of, or violate (i) any
provision of Borrower's certificate or articles of incorporation or
bylaws, (ii) any law or regulation, or any order or decree of any court or
government instrumentality or (iii) indenture, mortgage, deed of trust,
lease, agreement or other instrument to which Borrower is a party or by
which Borrower or any of its property is bound, except in any such case to
the extent such conflict or breach has been waived by a written waiver
document a copy of which has been delivered to Agent on or before the date
hereof;

(d) Since the Closing Date, no provisions of Borrower's
certificate or articles of incorporation or by-laws have been amended or
changed; and

(e) No Default or Event of Default has occurred and is
continuing.

Section 4. Reference to and Effect Upon the Credit
Agreement.

(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

Section 5. Costs and Expenses. As provided in Section 11.3
of the Credit Agreement, Borrower agrees to reimburse Agent upon demand
for all costs and expenses, including the fees, costs and expenses of
counsel or other advisors for advice, assistance, or other representation
in connection with this Amendment.

Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

Section 7. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purposes.

Section 8. Counterparts. This Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed
an original but all such counterparts shall constitute one and the same
instrument.

Section 9. Effectiveness. This Amendment shall become
effective upon:

(a) the receipt of executed original signature pages to this
Amendment by Lenders and Borrower;

(b) receipt of an executed original certificate from the
Secretary of the Borrower, certifying as to (i) resolutions of the Board
of Directors of Borrower duly authorizing the execution, delivery and
effectiveness of this Amendment and all other instruments and documents to
be delivered by the Borrower; and (ii) incumbency of qualified officers of
the Borrower;

(c) receipt of an executed original certificate from an
authorized officer of the Borrower, certifying that no Default or Event of
Default has occurred and is continuing;

(d) receipt of a satisfactory original opinion of counsel from
Wayne Larsen, General Counsel of Borrower; and

(e) reimbursement of Agent's costs and expenses as provided in
Section 5 hereof.

IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.

LADISH CO., INC.

By: /s/

Title:

GENERAL ELECTRIC CAPITAL CORPORATION,
individually and as Agent
for the Lenders

By: /s/

Title: Duly Authorized Signatory

<PAGE>

AMENDMENT NO. 6 TO CREDIT AGREEMENT

This AMENDMENT NO. 6 TO CREDIT AGREEMENT (this "Amendment") is
entered into as of this 23rd day of May, 1997 by and among LADISH CO.,
INC., a Wisconsin corporation ("Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE
Capital"), for itself as Lender and as Agent for Lenders, and the other
Lenders signatory hereto. Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings ascribed to them by
the Credit Agreement (as hereinafter defined).

RECITALS

WHEREAS, Borrower has entered into an Asset Purchase Agreement
dated April 24, 1997 (the "Trinity Asset Purchase Agreement") with Trinity
Fitting & Flange Group, Inc., a Delaware corporation ("Trinity"), pursuant
to which Borrower is selling and Trinity is purchasing certain assets
related to the Borrower's Industrial Products Division;

WHEREAS, Borrower proposes to purchase (the "Stowe Purchase")
substantially all of the assets (the "Stowe Assets") of Stowe Machine
Company, Incorporated, a Connecticut corporation ("Stowe"); and

WHEREAS, the parties hereto wish to enter into this Amendment to
consent to the Trinity Asset Purchase Agreement, waive any Defaults caused
thereby, consent to the Stowe Purchase and amend the Credit Agreement as
provided herein.

NOW THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Consent and Waiver. Subject to the satisfaction
of each of the conditions set forth in Section 9 of this Amendment, Agent
and Lenders hereby consent to the execution and consummation of the
Trinity Asset Purchase Agreement and waive any existing Default caused
solely by the execution of the Trinity Asset Purchase Agreement; provided
that the proceeds received pursuant thereto is applied to the Revolving
Credit Loan; provided further that the escrow agent under that certain
Escrow Agreement to be executed pursuant to Section 11.1. of the Trinity
Asset Purchase Agreement (the "Escrow Agreement") shall have acknowledged
that Agent has a first priority perfected security interest in the
Borrower's interest in any funds deposited in escrow pursuant to the
Escrow Agreement, such acknowledgment to be in form and substance
satisfactory to Agent, and provided further that the Trinity Asset
Purchase Agreement shall not be materially amended without the consent of
the Agent.

SECTION 2. Amendments to the Credit Agreement.

(a) Section 1.4 of the Credit Agreement is amended in its
entirety to read as follows:

"1.4 Use of Proceeds. (a) Borrower shall utilize the
proceeds of Revolving Credit Advances solely for the Refinancing (and
to pay any related transaction expenses) and for the financing of
ordinary working capital and general corporate needs (but excluding
in any event any direct or indirect redemption, purchase, repayment
or defeasance of any Stock of Borrower).

(b) Notwithstanding Section 1.4(a), but subject to Section
1.1 (a), Borrower shall not utilize proceeds of the Trinity Asset
Purchase which flow through the Revolving Credit Advances to pay to
its Pension Plans except in an amount not to exceed ten million
dollars ($10,000,000) in the aggregate; provided that on or before
the date of such Revolving Credit Advances, each of the following
shall have occurred in form and substance satisfactory to the Agent:
(i) the PBGC shall have released its Liens on Borrower's property and
withdraw all other conditions and requirements imposed in connection
with its conditional waiver of the minimum funding standards for
Borrower's Plans, (ii) that certain Intercreditor Agreement dated as
of June 17, 1996, by Agent, ING Equity Partners, L.P. I, as agent for
the Noteholders and the PBGC shall have been terminated, and (iii)
that certain Payment and Security Agreement dated as of June 17, 1996
between Borrower and the PBGC shall have been terminated.

(c) Notwithstanding Section 1.4(a), but subject to Section
1.1 (a), Borrower shall not utilize proceeds of Revolving Credit
Advances Borrower to purchase assets other than in the ordinary
course of business except for an amount not to exceed eight million
five hundred thousand dollars ($8,500,000) in the aggregate to
purchase the Stowe Assets; provided that the terms and conditions of
the Stowe Purchase are satisfactory to Agent in its reasonable
discretion and provided further that on or before the date of such
Revolving Credit Advances, any Liens on Stowe Assets shall have been
released and Borrower shall have executed and delivered in form and
substance satisfactory to Agent (i) mortgages with respect to any
Stowe Assets which constitute real property and (ii) UCC financing
statements for each jurisdiction in which Stowe Assets are located.

(d) Notwithstanding Section 1.4(a) and Section 6.3, but
subject to Section 1.1(a) and the provisos contained in Section
1.4(c), Borrower may execute a note in the principal amount of one
million dollars ($1,000,000) in favor of the shareholders of Stowe
and use proceeds of Revolving Credit Advances to pay interest and
principal on the note."

SECTION 3. Representations and Warranties of Borrower.
Borrower represents and warrants that:

(a) The execution, delivery and performance by Borrower of
this Amendment have been duly authorized by all necessary corporate
action and that this Amendment is a legal, valid and binding
obligation of Borrower enforceable against Borrower in accordance
with its terms, except as the enforcement thereof may be subject to
(i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at
law);

(b) Each of the representations and warranties contained
in the Credit Agreement is true and correct in all material respects
on and as of the date hereof as if made on the date hereof;

(d) Since the Closing Date, no provisions of Borrower's
certificate or articles of incorporation or by-laws have been
amended or changed; and

(e) No Default or Event of Default has occurred and is
continuing.

SECTION 4. Reference to and Effect Upon the Credit
Agreement.

(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

SECTION 5. Costs and Expenses. As provided in Section 11.3
of the Credit Agreement, Borrower agrees to reimburse Agent upon demand
for all costs and expenses, including the fees, costs and expenses of
counsel or other advisors for advice, assistance, or other representation
in connection with this Amendment.

SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

SECTION 7. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purposes.

SECTION 8. Counterparts. This Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed
an original but all such counterparts shall constitute one and the same
instrument.

SECTION 9. Effectiveness. This Amendment shall become
effective upon:

(a) the receipt of executed original signature pages to this
Amendment by Lenders and Borrower;

(c) receipt of an executed original certificate from an
authorized officer of the Borrower, certifying that no Default or Event of
Default has occurred and is continuing;

(d) receipt of a satisfactory original opinion of counsel from
Wayne Larsen, Vice President Law/Finance of Borrower;

(e) reimbursement of Agent's costs and expenses as provided in
Section 5 hereof; and

(f) receipt of a Borrowing Base Certificate certified by
Borrower's Financial Officer after giving effect to the Trinity Asset
Purchase Agreement, in form and substance satisfactory to Agent.

IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.

LADISH CO., INC.

By: /s/

Title: Treasurer

GENERAL ELECTRIC CAPITAL CORPORATION,
individually and as Agent
for the Lenders

By: /s/

Title: Duly Authorized Signatory

<PAGE>

AMENDMENT NO. 7 TO CREDIT AGREEMENT

This AMENDMENT NO. 7 TO CREDIT AGREEMENT (this "Amendment") is
entered into as of this 2nd day of July, 1997 by and among LADISH CO.,
INC., a Wisconsin corporation ("Borrower"), STOWE MACHINE CO., INC., a
Nevada corporation and a wholly-owned subsidiary of Borrower
("Guarantor"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (in its individual capacity, "GE Capital"), for itself as
Lender and as Agent for Lenders, and the other Lenders signatory hereto.
Unless otherwise specified herein, capitalized terms used in this
Amendment shall have the meanings ascribed to them by the Credit Agreement
(as hereinafter defined).

RECITALS

WHEREAS, Borrower entered into an Asset Purchase Agreement dated
June 18, 1997 (the "Stowe Asset Purchase Agreement") with Stowe Machine
Company, Incorporated, a Connecticut corporation ("Stowe"), pursuant to
which Borrower purchased substantially all of the assets of Stowe (the
"Stowe Assets").

WHEREAS, Borrower caused Guarantor to be formed as a wholly-
owned subsidiary of Borrower and caused some or all of the Stowe Assets to
be transferred to Guarantor;

WHEREAS, as a condition to making the Loans under the Credit
Agreement to fund the purchase of the Stowe Assets and allowing the
formation of Guarantor, Agent requires that (i) the Borrower pledge the
Stowe Assets to secure the Obligations and (ii) Guarantor guarantee the
Obligations and pledge the Stowe Assets to secure such guaranty;

WHEREAS, the parties hereto wish to enter into this Amendment to
consent to the formation of Guarantor and the transfer of the Stowe Assets
to Guarantor, waive any Defaults caused thereby and amend the Credit
Agreement as provided herein.

NOW THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Consent and Waiver. Subject to the satisfaction
of each of the conditions set forth in Section 10 of this Amendment, Agent
and Lenders hereby consent to the formation of Guarantor and the transfer
of the Stowe Assets to Guarantor and waive any existing Default caused
solely thereby.

SECTION 2. Amendments to the Credit Agreement.

(a) Sections 5 and 6 of the Credit Agreement are amended by (i)
deleting each reference therein to "Borrower shall not" and replacing each
such reference with a reference to "Borrower shall not, and shall not
cause or permit any Subsidiary to," and (ii) deleting each other reference
therein to "Borrower shall" and replacing each such reference with a
reference to "Borrower shall, and shall cause each Subsidiary to,".

(b) Section 6.2 of the Credit Agreement is amended by inserting
the following text at the end of such Section:

", provided that Borrower may make loans and advances to Guarantor
and Guarantor may make loans and advances to Borrower.

(c) The financial covenants referred to in Section 6.10 of the
Credit Agreement and Schedule I thereto henceforth shall be calculated for
Borrower and its Subsidiaries on a consolidated basis. All defined terms
used therein shall henceforth be deemed to refer to Borrower and its
Subsidiaries on a consolidated basis.

(d) The following text is added as Section 12 of the Credit
Agreement:

"12. GUARANTY

Guarantor hereby unconditionally guarantees the due and
punctual payment of all Obligations of Borrower from time to time
outstanding, including without limitation the due and punctual
payment of the principal of and interest on the Loans made to
Borrower pursuant to this Agreement and the due and punctual payment
of all other amounts payable by Borrower under this Agreement or the
other Loan Documents (collectively, the "Guaranteed Obligations").

The obligations of Guarantor under this Section 12 and
under any other Loan Document executed by Guarantor shall be
unconditional and absolute and, without limiting the generality of
the foregoing, shall not be released, discharged or otherwise
affected by:

(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any Guaranteed Obligation of Borrower or the
Collateral therefor under this Agreement or the other Loan Documents
unless such extension, renewal, settlement, compromise, waiver or
release expressly applies to any Guaranteed Obligation;

(b) any modification or amendment of or supplement to this
Agreement or the other Loan Documents unless such modification,
amendment or supplement expressly releases or discharges the
Guaranteed Obligations;

(c) any change in the corporate existence, structure or
ownership of Borrower, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting Borrower or its Collateral or
assets;

(d) the existence of any claim, set-off or other rights which
Borrower may have at any time against Guarantor, the Agent, any
Lender or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent
the assertion of any such claim by separate suit or compulsory
counterclaim;

(e) any invalidity or unenforceability for any reason of any
provision or all of this Agreement or the other Loan Documents
relating to or against Borrower, or any provision of applicable law
or regulation purporting to prohibit the payment by Borrower of the
principal of or interest on any Note or any other amount payable by
it under this Agreement or the other Loan Documents; or

(f) any other act or omission to act or delay of any kind by
Borrower, Agent, any Lender or any other Person, or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of Borrower's
obligations under this Agreement or the other Loan Documents.

Guarantor's obligations under this Section 12 and under any
other Loan Document executed by Guarantor shall remain in full force
and effect until all Guaranteed Obligations shall have been paid in
full and this Agreement and the other Loan Documents shall have
terminated in accordance with their terms. If at any time any
payment of the principal of or interest on any Note made by Borrower
or any other amount payable by Borrower under this or the other Loan
Documents is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of Borrower or
otherwise, Guarantor's obligations under this Section 12 with respect
to such payment shall be revived and continued in full force and
effect.

Guarantor irrevocably waives notice, presentment, protest,
notice, demand or action on delinquency in respect of the Guaranteed
Obligations or any part thereof, including any right to require the
Agent or the Lenders to sue the Borrower, any other guarantor or any
other Person obligated with respect to the Obligations or any part
thereof, or otherwise to enforce payment thereof against any
collateral securing the same.

Until the Obligations are paid in full, the Guarantor shall
not exercise any right of subrogation, reimbursement, contribution or
indemnity with respect to payments made by the Guarantor pursuant to
this Section 12 or under any other Loan Document executed by
Guarantor. In the event that the demand for payment of any amount
payable by Borrower under this Agreement or the other Loan Documents
is stayed upon the insolvency, bankruptcy or reorganization of
Borrower, all such amounts otherwise subject to acceleration under
the terms of this Agreement or the other Loan Documents shall
nonetheless be payable by the Guarantor hereunder forthwith upon
demand by the Agent.

If in any action or proceeding involving any state, federal
or foreign bankruptcy, insolvency or other law affecting the rights
of creditors generally, the obligations of Guarantor set forth in
this Section 12 or under any other Loan Document executed by
Guarantor would be held or determined to be void, invalid or
unenforceable on account of the amount of the aggregate liability of
Guarantor hereunder, then notwithstanding any other provision of this
Section 12 or under any other Loan Document executed by Guarantor to
the contrary, the aggregate amount of Guarantor's liability shall,
without any further action of Agent or any other Person, be
automatically limited and reduced with respect to Guarantor to the
highest amount which is valid and enforceable as determined in such
action or proceeding."

(e) Schedules 1.9, 3.7, 3.9, 3.10, 3.15, 3.17, 3.28, 5.1, 6.3,
6.4(a), 6.4(b), 6.7, 11.8 to the Credit Agreement are amended in their
entirety to read as provided in Exhibit A hereto.

(f) The definitions of "Accounts," "Copyright License,"
"Copyrights," "Documents," "Equipment," "Fiscal Quarter," "Fixtures,"
"General Intangibles," "Goods," "Hazardous Material," "Instruments,"
"Inventory," "License," "Material Adverse Effect," "Mortgages," "Patent
License," "Patents," "Permitted Encumbrances," "Proceeds," "Trademark
License," "Trademarks" and "Work-in-Process" in Schedule A to the Credit
Agreement are amended by deleting each reference therein to "Borrower" and
replacing each such reference with a reference to "Borrower or any
Subsidiary" and deleting each reference therein to "Borrower's" and
replacing each such reference with a reference to "Borrower's or any
Subsidiary's."

(g) The definition of "Agreement" in Schedule A to the Credit
Agreement is amended by inserting the word "Guarantor," directly after the
reference to "Borrower."

(h) The definition of "Obligations" in Schedule A to the Credit
Agreement is amended by inserting the words "or Guarantor" directly after
each reference to "Borrower."

(i) The definition of "Security Agreement" in Schedule A to the
Credit Agreement is amended by inserting the words " and Guarantor"
directly after the reference to "Borrower."

(j) Schedule A to the Credit Agreement is amended by inserting
the following definition in appropriate alphabetical order:

""Guarantor" shall mean Stowe Machine Co., Inc., a Nevada
corporation."

(k) The financial statements and operating plans to be
delivered pursuant to Sections (a), (b), (c) and (d) of Schedule G to the
Credit Agreement henceforth shall be prepared for Borrower and its
Subsidiaries on a consolidated and a consolidating basis.

SECTION 3. Representations and Warranties of Borrower.
Borrower represents and warrants that:

(a) The execution, delivery and performance by Borrower of
this Amendment have been duly authorized by all necessary corporate
action and that this Amendment is a legal, valid and binding
obligation of Borrower enforceable against Borrower in accordance
with its terms, except as the enforcement thereof may be subject to
(i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at
law);

(b) After giving effect to this Amendment, each of the
representations and warranties contained in the Credit Agreement is
true and correct in all material respects on and as of the date
hereof as if made on the date hereof with respect to Borrower and its
Subsidiaries;

(d) After giving effect to this Amendment, no Default or
Event of Default has occurred and is continuing.

SECTION 4. Representations and Warranties of Guarantor.
Guarantor represents and warrants that:

(a) Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation;

(b) Guarantor is duly qualified to do business and is in
good standing under the laws of each jurisdiction where its ownership
or lease of property or the conduct of its business requires such
qualification;

(c) Guarantor has the requisite corporate power and
authority and the legal right to own, pledge, mortgage and operate
its properties, to lease the property it operates under lease, and to
conduct its business as now, heretofore and proposed to be conducted;

(d) Guarantor has all licenses, permits, consents or
approvals from or by, and has made all material filings with, and has
given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation
and conduct;

(e) Guarantor is in compliance with its charter and by-
laws;

(f) Guarantor is in compliance with all applicable
provisions of law, except where the failure to comply, individually
or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect;

(g) After giving effect to this Amendment, each of the
representations and warranties made by Borrower in Sections 3.2,
3.7,3.9, 3.10, 3.13, 3.15, 3.17, 3.18, 3.20, 3.21, 3.22, 3.23, 3.25
and 3.26 of the Credit Agreement are true and correct as if made by
Guarantor with respect to Guarantor and its properties on the date
hereof.

(h) The execution, delivery and performance by Guarantor
of this Amendment have been duly authorized by all necessary
corporate action and that this Amendment is a legal, valid and
binding obligation of Guarantor enforceable against Guarantor in
accordance with its terms, except as the enforcement thereof may be
subject to (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at
law);

(i) Neither the execution, delivery and performance of
this Amendment nor the consummation of the transactions contemplated
hereby does or shall contravene, result in a breach of, or violate
(i) any provision of Guarantor's certificate or articles of
incorporation or bylaws, (ii) any law or regulation, or any order or
decree of any court or government instrumentality or (iii) indenture,
mortgage, deed of trust, lease, agreement or other instrument to
which Guarantor is a party or by which Guarantor or any of its
property is bound, except in any such case to the extent such
conflict or breach has been waived by a written waiver document a
copy of which has been delivered to Agent on or before the date
hereof; and

(j) Guarantor's federal employee identification number is
06-1487703.

SECTION 5. Reference to and Effect Upon the Credit
Agreement.

(a) Except as specifically amended above, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.

SECTION 6. Costs and Expenses. As provided in Section 11.3
of the Credit Agreement, Borrower agrees to reimburse Agent upon demand
for all costs and expenses, including the fees, costs and expenses of
counsel or other advisors for advice, assistance, or other representation
in connection with this Amendment.

SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

SECTION 8. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purposes.

SECTION 9. Counterparts. This Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed
an original but all such counterparts shall constitute one and the same
instrument.

SECTION 10. Effectiveness. This Amendment shall become
effective upon:

(a) the receipt of executed original signature pages to this
Amendment by Lenders, Borrower and Guarantor;

(b) the receipt of executed original signature pages to that
certain Amendment No. 1 to Security Agreement, of even date herewith by
Borrower and Guarantor;

(c) the receipt of executed original signature pages to that
certain Mortgage of even date herewith by Guarantor in favor of Agent,
covering real estate located in Connecticut;

(d) evidence satisfactory to Agent that Agent (for the benefit
of itself and Lenders) has a valid and perfected first priority security
interest in the Guarantor Collateral, including (i) such documents duly
executed by Guarantor (including financing statements under the UCC and
other applicable documents under the laws of any jurisdiction with respect
to the perfection of Liens) as Agent may request in order to perfect its
security interests in the Guarantor Collateral and (ii) copies of UCC
search reports listing all effective financing statements that name
Guarantor, as debtor, together with copies of such financing statements,
none of which shall cover the Guarantor Collateral.

(e) receipt of an executed original certificate from the
Secretary of each of Borrower and Guarantor, certifying as to (i)
resolutions of the Board of Directors of such entity duly authorizing the
execution, delivery and effectiveness of this Amendment and all other
instruments and documents to be delivered by such entity; and (ii)
incumbency of qualified officers of such entity;

(f) receipt of an executed original certificate from an
authorized officer of each of Borrower and Guarantor, certifying that no
Default or Event of Default has occurred and is continuing;

(g) receipt of (i) certified copies of Guarantor's certificate
or articles of incorporation and all amendments thereto, (ii) good
standing certificate (including verification of tax status) for Guarantor
in its state of incorporation and (iii) for each of Borrower and
Guarantor, good standing certificates (including verification of tax
status) and certificates of qualification to conduct business in each
jurisdiction where Guarantor's ownership or lease of property or the
conduct of its business requires such qualification, each of the foregoing
dated a recent date prior to the dated hereof and certified by the
applicable Secretary of State or other authorized governmental entity.

(h) receipt of a satisfactory original opinions of counsel from
Wayne Larsen, Vice President Law/Finance of Borrower and Vice President
Law/Finance of Guarantor;

(i) receipt of an executed copy of the Stowe Purchase
Agreement; and

(j) reimbursement of Agent's costs and expenses as provided in
Section 7 hereof; and

IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date and year first above written.

LADISH CO., INC.

By: /s/

Title: Vice President Law/Finance

STOWE MACHINE CO., INC.

By:

Title: Vice President & Secretary

GENERAL ELECTRIC CAPITAL CORPORATION,
individually and as Agent
for the Lenders

By: /s/

Title:

LADISH CO, INC.
1996 LONG-TERM INCENTIVE PLAN

TABLE OF CONTENTS

SECTION 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Participation . . . . . . . . . . . . . . . . . . . . . 1

SECTION 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Definition . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Eligibility . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Price . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Exercise . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5. Post-Exercise Limitations . . . . . . . . . . . . . . . 4
2.6. Expiration Date . . . . . . . . . . . . . . . . . . . . 4
2.7. Reload Provision . . . . . . . . . . . . . . . . . . . . 5

SECTION 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . . . 5
3.1. Definition . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Eligibility . . . . . . . . . . . . . . . . . . . . . . 5
3.3. Exercise . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4. Settlement of Award . . . . . . . . . . . . . . . . . . 6
3.5. Post-Exercise Limitations . . . . . . . . . . . . . . . 6
3.6. Expiration Date . . . . . . . . . . . . . . . . . . . . 6

SECTION 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
STOCK AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Definition . . . . . . . . . . . . . . . . . . . . . . . 7
4.2. Eligibility . . . . . . . . . . . . . . . . . . . . . . 8
4.3. Terms and Conditions of Awards . . . . . . . . . . . . . 8

SECTION 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
STOCK PURCHASE PROGRAM . . . . . . . . . . . . . . . . . . . . . 9
5.1. Purchase of Stock . . . . . . . . . . . . . . . . . . . 9
5.2. Matching Shares . . . . . . . . . . . . . . . . . . . . 9
5.3. Restrictions on Shares . . . . . . . . . . . . . . . . . 9

SECTION 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PERFORMANCE UNITS . . . . . . . . . . . . . . . . . . . . . . . 9
6.1. Definition . . . . . . . . . . . . . . . . . . . . . . . 9
6.2. Eligibility . . . . . . . . . . . . . . . . . . . . . . 9
6.3. Terms and Conditions of Awards . . . . . . . . . . . . . 9
6.4. Settlement . . . . . . . . . . . . . . . . . . . . . . . 10
6.5. Termination during Performance Period . . . . . . . . . 10

SECTION 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
OPERATION AND ADMINISTRATION . . . . . . . . . . . . . . . . . . 11
7.1. Effective Date . . . . . . . . . . . . . . . . . . . . . 11
7.2. Shares Subject to Plan . . . . . . . . . . . . . . . . . 11
7.3. Individual Limits on Awards . . . . . . . . . . . . . . 11
7.4. Adjustments to Shares . . . . . . . . . . . . . . . . . 12
7.5. Limit on Distribution . . . . . . . . . . . . . . . . . 14
7.6. Liability for Cash Payments. . . . . . . . . . . . . . . 15
7.7. Performance-Based Compensation . . . . . . . . . . . . . 15
7.8. Withholding . . . . . . . . . . . . . . . . . . . . . . 16
7.9. Transferability . . . . . . . . . . . . . . . . . . . . 16
7.10. Notices . . . . . . . . . . . . . . . . . . . . . . . . 16
7.11. Form and Time of Elections . . . . . . . . . . . . . . . 16
7.12. Agreement With Company . . . . . . . . . . . . . . . . . 17
7.13. Limitation of Implied Rights. . . . . . . . . . . . . . 17
7.14. Evidence . . . . . . . . . . . . . . . . . . . . . . . . 17
7.15. Action by Company or Related Company . . . . . . . . . . 17
7.16. Gender and Number . . . . . . . . . . . . . . . . . . . 18
7.17. Termination for Cause . . . . . . . . . . . . . . . . . 18

SECTION 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1. Administration . . . . . . . . . . . . . . . . . . . . . 18
8.2. Selection of Committee . . . . . . . . . . . . . . . . . 18
8.3. Powers of Committee . . . . . . . . . . . . . . . . . . 18
8.4. Delegation by Committee . . . . . . . . . . . . . . . . 19
8.5. Information to be Furnished to Committee . . . . . . . . 19
8.6. Liability and Indemnification of Committee . . . . . . . 19

SECTION 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . 20

SECTION 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . 22

LADISH CO, INC.
1996 LONG-TERM INCENTIVE PLAN

SECTION 1

GENERAL

1.1. Purpose. The Ladish Co, Inc. 1996 Long-Term Incentive Plan
(the "Plan") has been established by Ladish Co, Inc. (the "Company") to:

(a) attract and retain employees and other persons providing
services to the Company and the Related Companies (as defined
below);

(b) motivate Participants, by means of appropriate incentives, to
achieve long-range goals;

(d) further identify Participants' interests with those of the
Company's other stockholders through compensation that is based
on the Company's common stock;

and thereby promote the long-term financial interest of the Company and
the Related Companies, including the growth in value of the Company's
equity and enhancement of long-term stockholder return. The term "Related
Company" means any company during any period in which it is a "subsidiary
corporation" (as that term is defined in section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code")) with respect to the
Company.

1.2. Participation. Subject to the terms and conditions of the
Plan, the Committee (as described in Section 8) shall determine and
designate, from time to time, from among the Eligible Individuals those
persons who will be granted one or more awards under Sections 2, 3, 4, 5
or 6 of the Plan (an "Award"), and thereby become "Participants" in the
Plan. In the discretion of the Committee, and subject to the terms of the
Plan, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a
Participant. Except as otherwise agreed by the Company and the
Participant, or except as otherwise provided in the Plan, an Award under
the Plan shall not affect any previous Award under the Plan or an award
under any other plan maintained by the Company or the Related Companies.
For purposes of the Plan, the term "Eligible Individual" shall mean any
employee of the Company or a Related Company, and any other person
providing material services to the Company or a Related Company; provided,
however, that a member of the Board who is not an employee of the Company
or a Related Company shall not be an "Eligible Individual".

SECTION 2

OPTIONS

2.1. Definitions. The grant of an "Option" under this Section 2
entitles the Participant to purchase shares of common stock of the Company
("Stock") at a price fixed at the time the Option is granted, subject to
the terms of this Section. Options granted under this Section may be
either Incentive Stock Options or Non-Qualified Stock Options, as
determined in the discretion of the Committee. An "Incentive Stock
Option" is an Option that is intended to satisfy the requirements
applicable to an "incentive stock option" described in section 422 of the
Code. A "Non-Qualified Stock Option" is an Option that is not intended to
be an Incentive Stock Option.

2.2. Eligibility. The Committee shall designate the Participants to
whom Options are to be granted under this Section and shall determine the
number of shares of Stock subject to each such Option. To the extent that
the aggregate fair market value of Stock with respect to which Incentive
Stock Options are exercisable for the first time by any individual during
any calendar year (under all plans of the Company and all Related
Companies) exceeds $100,000, such options shall be treated as Non-
Qualified Stock Options, to the extent required by section 422 of the
Code.

2.3. Price. The determination and payment of the purchase price of
a share of Stock under each Option granted under this Section shall be
subject to the following:

(a) The purchase price shall be established by the Committee at the
time the Option is granted; provided, however, that in no event
shall such price be less than the par value of a share of Stock
on such date; further, provided, in no event shall the purchase
price of a share of Stock under an Incentive Stock Option be
less than the Fair Market Value (defined below) of a share of
stock at the time the Option is granted.

(b) Subject to the following provisions of this subsection, the full
purchase price of each share of Stock purchased upon the
exercise of any Option shall be paid at the time of such
exercise and, as soon as practicable thereafter, a certificate
representing the shares so purchased shall be delivered to the
person entitled thereto.

(c) The purchase price shall be payable in cash or in shares of
Stock (valued at Fair Market Value as of the day of exercise)
that have been held by the Participant at least six months, or
in any combination thereof, as determined by the Committee.

(d) A Participant may elect to pay the purchase price upon the
exercise of an Option through a cashless exercise arrangement to
the extent provided by the Committee.

(e) The "Fair Market Value" of a share of Stock of the Company as of
any date shall be the closing price per share of Stock (or the
mean of the closing bid and asked prices of a share, if the
Stock is so reported) on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") the NASDAQ
National Market System or other national or regional securities
exchange or market system on which the Stock is primarily traded
(not including "pink sheets" or the over-the-counter market),
or, if there shall have been no such sale so reported on that
date, on the last preceding date on which such a sale was so
reported, or if the Stock is not traded on any such exchange or
system then at a price established by the Committee.

2.4. Exercise. Except as otherwise expressly provided in the Plan,
an Option granted under this Section shall be exercisable in accordance
with the following terms of this subsection:

(a) The terms and conditions relating to exercise of an Option shall
be established by the Committee, and may include, without
limitation, conditions relating to completion of a specified
period of service (subject to paragraph (b) below), achievement
of performance standards prior to exercise of the Option or
achievement of Stock ownership objectives by the Participant.
The Committee, in its sole discretion, may accelerate the
vesting of any Option under circumstances designated by it at
the time the Option is granted or thereafter.

(b) No Option may be exercised by a Participant after the Expiration
Date (as defined in subsection 2.6) applicable to that Option.

(c) The exercise of an Option will result in the surrender of the
corresponding rights under a tandem Stock Appreciation Right (as
described in Section 3), if any.

2.5. Post-Exercise Limitations. The Committee, in its discretion,
may impose such restrictions on the transfer of shares of Stock acquired
pursuant to the exercise of an Option (including stock acquired pursuant
to the exercise of a tandem Stock Appreciation Right) as it determines to
be desirable.

2.6. Expiration Date. The "Expiration Date" with respect to an
Option means the date established as the Expiration Date by the Committee
at the time of the grant; provided, however, that the Expiration Date with
respect to any Option shall not be later than the earliest to occur of:

(a) the ten-year anniversary of the date on which the Option is
granted;

(b) if the Participant's Date of Termination occurs by reason of
death or Disability, 90 days after such Date of Termination;

(d) if the Participant's Date of Termination occurs for reasons
other than Retirement, death, Disability or Cause, such Date of
Termination; or

(e) if the Participant's Date of Termination occurs for reasons of
Cause, such Date of Termination.

On the Date of Termination of Participant, for any reason, all unvested
Options shall terminate. Subject to Section 7.17, on the Date of
Termination of Participant, for Cause, all unvested and unvested Options
shall terminate.

For purposes of the Plan, a Participant's "Date of Termination" shall be
the date on which he both ceases to be an employee of the Company and the
Related Companies and ceases to perform material services for the Company
and the Related Companies, regardless of the reason for the cessation;
provided that a "Date of Termination" shall not be considered to have
occurred during the period in which the reason for the cessation of
services is a leave of absence approved by the Company or the Related
Company which was the recipient of the Participant's services. Except as
otherwise provided by the Committee, a Participant shall be considered to
have a "Disability" during the period in which he is unable, by reason of
a medically determinable physical or mental impairment, to engage in any
substantial gainful activity, which condition, in the opinion of a
physician selected by the Committee, is expected to have a duration of not
less than 120 days. "Retirement" of a Participant shall mean the
occurrence of a Participant's Date of Termination for reasons other than
death, Disability or Cause after providing at least five years of service
to the Company or the Related Companies and attaining age 65 or the
Participant attaining age plus years of service totaling 90 or more.

For purposes of the Plan, "Cause" shall mean, in the reasonable judgment
of the Committee (i) the willful and continued failure by the Participant
to substantially perform his or her duties with the Company or any Related
Company after written notification by the Company or Related Company, (ii)
the willful engaging by the Participant in conduct which is demonstrably
injurious to the Company or any Related Company, monetarily or otherwise,
(iii) the engaging by the Participant in egregious misconduct involving
serious moral turpitude, or (iv) the breach or violation by Participant of
any agreement with the Company, including any option or award agreement
delivered in connection with grants and any confidentiality agreement
contained therein, or any employment or stockholders agreement. For
purposes hereof, no act, or failure to act, on the Participant's part
shall be deemed "willful" unless done, or omitted to be done, by the
Participant not in good faith and without reasonable belief that such
action was in the best interest of the Company or Related Company.

SECTION 3

STOCK APPRECIATION RIGHTS

3.1. Definition. Subject to the terms of this Section, a "Stock
Appreciation Right" granted under the Plan entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection
3.4), value equal to all or a portion of the excess of: (a) the Fair
Market Value of a specified number of shares of Stock at the time of
exercise over (b) a specified price designated at the time the Stock
Appreciation Right is granted or, if granted in tandem with an Option, the
exercise price with respect to shares under the tandem Option.

3.2. Eligibility. Subject to the provisions of the Plan, the
Committee shall designate the Participants to whom Stock Appreciation
Rights are to be granted under the Plan, shall determine the exercise
price or a method by which the price shall be established with respect to
each such Stock Appreciation Right and shall determine the number of
shares of Stock on which each Stock Appreciation Right is based. A Stock
Appreciation Right may be granted in connection with all or any portion of
a previously or contemporaneously-granted Option or not in connection with
an Option. If a Stock Appreciation Right is granted in connection with an
Option then, in the discretion of the Committee, the Stock Appreciation
Right may, but need not, be granted in tandem with the Option.

3.3. Exercise. The exercise of Stock Appreciation Rights shall be
subject to the following:

(a) If a Stock Appreciation Right is not in tandem with an Option,
then the Stock Appreciation Right shall be exercisable in
accordance with the terms established by the Committee in
connection with such right; and may include, without limitation,
conditions relating to completion of a specified period of
service, achievement of performance standards prior to exercise
of the Stock Appreciation Right or achievement of objectives
relating to Stock ownership by the Participant. The Committee,
in its sole discretion, may accelerate the vesting of any Stock
Appreciation Right under circumstances designated by it at the
time the Stock Appreciation Right is granted or thereafter. No
Stock Appreciation Right subject to this paragraph may be
exercised by a Participant after the Expiration Date (as defined
in subsection 3.6) applicable to that Stock Appreciation Right.

(b) If a Stock Appreciation Right is in tandem with an Option, then
the Stock Appreciation Right shall be exercisable at the time
the tandem Option is exercisable. The exercise of a Stock
Appreciation Right will result in the surrender of the
corresponding rights under the tandem Option.

3.4. Settlement of Award. Upon the exercise of a Stock Appreciation
Right, the value to be distributed to the Participant, in accordance with
subsection 3.1, shall be distributed in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash or in a combination
thereof, in the agreement of the Committee and the Participant.

3.5. Post-Exercise Limitations. The Committee, in its discretion,
may impose such transfer restrictions on shares of Stock acquired pursuant
to the exercise of a Stock Appreciation Right as it determines to be
desirable.

3.6. Expiration Date. If a Stock Appreciation Right is in tandem
with an Option, then the "Expiration Date" for the Stock Appreciation
Right shall be the Expiration Date for the related Option. If a Stock
Appreciation Right is not in tandem with an Option, then the "Expiration
Date" for the Stock Appreciation Right shall be the date established as
the Expiration Date by the Committee; provided, however, that subject to
the following provisions of this subsection, the Expiration Date with
respect to any Stock Appreciation Right shall not be later than the
earliest to occur of:

(a) the ten-year anniversary of the date on which the Stock
Appreciation Right is granted;

(b) if the Participant's Date of Termination occurs by reason of
death or Disability, 90 days after such Date of Termination; or

(d) if the Participant's Date of Termination occurs by reason other
than Retirement, death, Disability or Cause, such Date of
Termination; or

(e) if the Participant's Date of Termination occurs for reasons of
Cause, such Date of Termination.

SECTION 4

STOCK AWARDS

4.1. Definition. Subject to the terms of this Section, a Stock
Award under the Plan is a grant of shares of Stock to a Participant, the
earning, vesting or distribution of which is subject to one or more
conditions established by the Committee. Such conditions may relate to
events (such as performance or continued employment) occurring before or
after the date the Stock Award is granted, or the date the Stock is earned
by, vested in or delivered to the Participant. If the vesting of Stock
Awards is subject to conditions occurring after the date of grant, the
period beginning on the date of grant of a Stock Award and ending on the
vesting or forfeiture of such Stock (as applicable) is referred to as the
"Restricted Period". Stock Awards may provide for delivery of the shares
of Stock at the time of grant or may provide for a deferred distribution
date. A Stock Award may, but need not, be made in conjunction with a
cash-based incentive compensation program maintained by the Company and
may, but need not, be in lieu of cash otherwise awardable under such
program.

4.2. Eligibility. The Committee shall designate the Participants to
whom Stock Awards are to be granted and the number of shares of Stock that
are subject to each such Award.

4.3. Terms and Conditions of Awards. Stock Awards granted to
Participants under the Plan shall be subject to the following terms and
conditions:

(a) Beginning on the date of grant (or, if later, the date of
distribution) of shares of Stock comprising a Stock Award, and
including any applicable Restricted Period, the Participant as
owner of such shares shall have the right to vote such shares.

(b) Payment of dividends with respect to Stock Awards shall be
subject to the following:

(i) On and after date that a Participant has a fully earned and
vested right to the shares comprising a Stock Award, and
the shares have been distributed to the Participant, the
Participant shall have all dividend rights (and other
rights) of a stockholder with respect to such shares.

(ii) Prior to the date that a Participant has a fully earned and
vested right to the shares comprising a Stock Award, the
Committee, in its sole discretion, may award Dividend
Rights with respect to such shares.

(iii) On and after the date that a Participant has a fully earned
and vested right to the shares comprising a Stock Award,
but before the shares have been distributed to the
Participant, the Participant shall be entitled to Dividend
Rights with respect to such shares, at the time and in the
form determined by the Committee.

(iv) A "Dividend Right" with respect to shares comprising a
Stock Award shall entitle the Participant, as of each
dividend payment date, to an amount equal to the dividends
payable with respect to a share of Stock multiplied by the
number of such shares. Dividend Rights shall be settled in
cash or in shares of Stock, as determined by the Committee,
shall be payable at the time and in the form determined by
the Committee and shall be subject to such other terms and
conditions as the Committee may determine.

SECTION 5

STOCK PURCHASE PROGRAM

5.1. Purchase of Stock. The Committee may, from time to time,
establish one or more programs under which Participants will be permitted
to purchase shares of Stock under the Plan and shall designate the
Participants eligible to participate under such Stock purchase programs.
The purchase price for shares of Stock available under such programs, and
other terms and conditions of such programs, shall be established by the
Committee; provided, however, that with respect to shares of Stock
purchased under a program that does not result in an award of matching
shares (as provided in subsection 5.2), the purchase price may not be less
than 50% of the Fair Market Value of the Stock at the time of purchase
(or, in the Committee's discretion, the average stock value over a period
determined by the Committee), and further provided that the purchase price
may not be less than par value.

5.2. Matching Shares. Except as otherwise provided in subsection
5.1, any Stock purchase program established by the Committee under this
Section may provide for the award of matching shares of Stock.

5.3. Restrictions on Shares. The Committee may impose such
restrictions with respect to shares purchased under subsection 5.1, or
matching shares awarded pursuant to subsection 5.2, as the Committee
determines to be appropriate. Such restrictions may include, without
limitation, restrictions of the type that may be imposed with respect to
Stock Awards under Section 4.

SECTION 6

PERFORMANCE UNITS

6.1. Definition. Subject to the terms of this Section, the Award of
Performance Units under the Plan entitles the Participant to receive value
for the units at the end of a Performance Period to the extent provided
under the Award. The number of units earned, and the value received for
them, will be contingent on the degree to which the performance measures
established at the time of grant of the Award are met. For purposes of
the Plan, the "Performance Period" with respect to the award of any
Performance Units shall be the period over which the applicable
performance is to be measured.

6.2. Eligibility. The Committee shall designate the Participants to
whom Performance Units are to be granted and the number of units subject
to each such Award.

6.3. Terms and Conditions of Awards. For each Participant, the
Committee will determine the value of units, which may be stated either in
cash or in units representing shares of Stock; the performance measures
used for determining whether the Performance Units are earned; the
Performance Period during which the performance measures will apply; the
relationship between the level of achievement of the performance measures
and the degree to which Performance Units are earned; whether, during or
after the Performance Period, any revision to the performance measures or
Performance Period should be made to reflect significant events or changes
that occur during the Performance Period; and the number of earned
Performance Units that will be paid in cash and the number of earned
Performance Units to be paid in shares of Stock.

6.4. Settlement. Settlement of Performance Units shall be subject
to the following:

(a) The Committee will compare the actual performance to the
performance measures established for the Performance Period and
determine the number of units as to which settlement is to be
made, and the value of such units.

(b) Settlement of units earned shall be wholly in cash, wholly in
Stock or in a combination of the two and distributed in a lump
sum or installments, as determined by the Committee.

(i) For Performance Units stated in units representing shares
of Stock when granted, either one share of Stock will be
distributed for each unit earned or cash will be
distributed for each unit earned equal to either (A) the
Fair Market Value of a share of Stock at the end of the
Performance Period or (B) the average Stock value over a
period determined by the Committee.

(ii) For Performance Units stated in cash when granted, the
value of each unit earned will be distributed in its
initial cash value or shares of Stock will be distributed
based on the cash value of the units earned divided by (A)
the Fair Market Value of a share of Stock at the end of the
Performance Period or (B) the average Stock value over a
period determined by the Committee.

(c) Shares of Stock distributed in settlement of the units shall be
subject to such vesting requirements and other conditions, if
any, as the Committee shall determine. Such vesting
restrictions may include, without limitation, restrictions of
the type that may be imposed with respect to Stock Awards under
Section 4.

6.5. Termination during Performance Period. If a Participant's Date
of Termination occurs during a Performance Period with respect to any
Performance Units granted to him, the Committee may determine that the
Participant will be entitled to settlement of all or any portion of the
Performance Units as to which he would otherwise be eligible and may
accelerate the determination of the value and settlement of such
Performance Units or make such other adjustments as the Committee, in its
sole discretion, deems desirable.

SECTION 7

OPERATION AND ADMINISTRATION

7.1. Effective Date. The Plan shall be effective as of the date it
is adopted by the Board of Directors of the Company (the "Board");
provided, however, that Awards granted under the Plan prior to its
approval by stockholders will be contingent on approval of the Plan by the
Company's stockholders. The Plan shall be unlimited in duration and, in
the event of Plan termination, shall remain in effect as long as any
shares of Stock awarded under it are outstanding and not fully vested;
provided, however, that no new Awards shall be made under the Plan on or
after the tenth anniversary of the date on which the Plan is adopted by
the Board.

7.2. Shares Subject to Plan. The shares of Stock with respect to
which Awards may be made under the Plan shall be shares currently
authorized but unissued or currently held or subsequently acquired by the
Company as treasury shares, including shares purchased in the open market
or in private transactions. Subject to the provisions of subsection 7.4,
the number of shares of Stock which may be issued with respect to Awards
under the Plan shall not exceed 5,000,000 shares in the aggregate. Except
as otherwise provided herein, any shares subject to an Award which for any
reason expires or is terminated without issuance of shares (whether or not
cash or other consideration is paid to a Participant in respect of such
shares) shall again be available under the Plan.

7.3. Individual Limits on Awards. Notwithstanding any other
provision of the Plan to the contrary, no Participant shall receive any
Award of an Option or Stock Appreciation Right under the Plan to the
extent that the sum of:

(a) the number of shares of Stock subject to such Award;

(b) the number of shares of Stock subject to all other prior Awards
of Options and Stock Appreciation Rights under the Plan during
the one-year period ending on the date of the Award; and

(c) the number of shares of Stock subject to all other prior stock
options and stock appreciation rights granted to the Participant
under other plans or arrangements of the Company and Related
Companies during the one-year period ending on the date of the
Award;

would exceed the Participant's Individual Limit under the Plan. The
determination made under the foregoing provisions of this subsection shall
be based on the shares subject to the awards at the time of grant,
regardless of when the awards become exercisable. Subject to the
provisions of subsection 7.4, a Participant's "Individual Limit" shall be
1,000,000 shares.

7.4. Adjustments to Shares.

(a) If the Company shall effect any subdivision or consolidation of
shares of Stock or other capital readjustment, payment of stock
dividend, stock split, combination of shares or recapitalization
or other increase or reduction of the number of shares of Stock
outstanding without receiving compensation therefor in money,
services or property, then the Committee shall adjust (i) the
number of shares of Stock available under the Plan; (ii) the
number of shares available under any individual or other limits;
(iii) the number of shares of Stock subject to outstanding
Awards; and (iv) the per-share price under any outstanding Award
to the extent that the Participant is required to pay a purchase
price per share with respect to the Award.

(b) If the Company is reorganized, merged or consolidated or is
party to a plan of exchange with another corporation, pursuant
to which reorganization, merger, consolidation or plan of
exchange, the stockholders of the Company receive any shares of
stock or other securities or property, or the Company shall
distribute securities of another corporation to its
stockholders, there shall be substituted for the shares subject
to outstanding Awards an appropriate number of shares of each
class of stock or amount of other securities or property which
were distributed to the stockholders of the Company in respect
of such shares, subject to the following:

(i) If the Committee determines that the substitution described
in accordance with the foregoing provisions of this
paragraph would not be fully consistent with the purposes
of the Plan or the purposes of the outstanding Awards under
the Plan, the Committee may make such other adjustments to
the Awards to the extent that the Committee determines such
adjustments are consistent with the purposes of the Plan
and of the affected Awards.

(ii) All or any of the Awards may be cancelled by the Committee
on or immediately prior to the effective date of the
applicable transaction, but only if the Committee gives
reasonable advance notice of the cancellation to each
affected Participant, and only if either: (A) the
Participant is permitted to exercise the Award for a
reasonable period prior to the effective date of the
cancellation; or (B) the Participant receives payment or
other benefits that the Committee determines to be
reasonable compensation for the value of the cancelled
Awards.

(iii) Upon the occurrence of a reorganization of the Company or
any other event described in this paragraph (b), the
Company will use its best efforts to cause any successor to
the Company to be substituted for the Company under the
Plan;

(c) Upon (or, in the discretion of the Committee, immediately prior
to) the sale to (or exchange with) a third party unrelated to
the Company of all or substantially all of the assets of the
Company, all Awards shall be cancelled. If Awards are cancelled
under this paragraph, then, with respect to any affected
Participant, either:

(i) the Participant shall be provided with reasonable advance
notice of the cancellation, and the Participant shall be
permitted to exercise the Award for a reasonable period
prior to the effective date of the cancellation; or

(ii) the Participant shall receive payment or other benefits
that the Committee determines to be reasonable compensation
for the value of the cancelled Awards.

The foregoing provisions of this paragraph shall also apply to
the sale of all or substantially all of the assets of the
Company to a related party, if the Committee determines such
application is appropriate.

(d) In determining what action, if any, is necessary or appropriate
under the foregoing provisions of this subsection, the Committee
shall act in a manner that it determines to be consistent with
the purposes of the Plan and of the affected Awards and in a
manner that it determines to be necessary to preserve the
benefits and potential benefits of the affected Awards for the
Participants and the Company.

(e) The existence of this Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Company's Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any
part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.

(f) Except as expressly provided by the terms of this Plan, the
issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for
cash or property or for labor or services, either upon direct
sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall
not affect, and no adjustment by reason thereof, shall be made
with respect to Awards then outstanding hereunder.

(g) Awards under the Plan are subject to adjustment under this
subsection only during the period in which they are considered
to be outstanding under the Plan. For purposes of this
subsection, an Award is considered "outstanding" on any date if
the Participant's ability to obtain all benefits with respect to
the Award is subject to limits imposed by the Plan (including
any limits imposed by the Agreement reflecting the Award). The
determination of whether an Award is outstanding shall be made
by the Committee.

7.5. Limit on Distribution. Distribution of shares of Stock or
other amounts under the Plan shall be subject to the following:

(a) Notwithstanding any other provision of the Plan, the Company
shall have no liability to deliver any shares of Stock under the
Plan or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all
applicable laws and the applicable requirements of any
securities exchange or similar entity.

(b) In the case of a Participant who is subject to Section 16(a) and
16(b) of the Securities Exchange Act of 1934, the Committee may,
at any time, add such conditions and limitations to any Award to
such Participant, or any feature of any such Award, as the
Committee, in its sole discretion, deems necessary or desirable
to comply with Section 16(a) or 16(b) and the rules and
regulations thereunder or to obtain any exemption therefrom.

7.6. Liability for Cash Payments. Subject to the provisions of this
Section, each Related Company shall be liable for payment of cash due
under the Plan with respect to any Participant to the extent that such
benefits are attributable to the service rendered for that Related Company
by the Participant. Any disputes relating to liability of a Related
Company for cash payments shall be resolved by the Committee.

7.7. Performance-Based Compensation. To the extent that the
Committee determines that it is necessary or desirable to conform any
Awards under the Plan with the requirements applicable to "Performance-
Based Compensation", as that term is used in Code section 162(m)(4)(C), it
may, at or prior to the time an Award is granted, take such steps and
impose such restrictions with respect to such Award as it determines to be
necessary to satisfy such requirements including, without limitation:

(a) The establishment of performance goals that must be satisfied
prior to the payment or distribution of benefits under such
Awards.

(b) The submission of such Awards and performance goals to the
Company's stockholders for approval and making the receipt of
benefits under such Awards contingent on receipt of such
approval.

(c) Providing that no payment or distribution be made under such
Awards unless the Committee certifies that the goals and the
applicable terms of the Plan and Agreement reflecting the Awards
have been satisfied.

To the extent that the Committee determines that the foregoing
requirements relating to Performance-Based Compensation do not apply to
Awards under the Plan because the Awards constitute Options or Stock
Appreciation Rights, the Committee may, at the time the Award is granted,
conform the Awards to alternative methods of satisfying the requirements
applicable to Performance-Based Compensation.

7.8. Withholding. All Awards and other payments under the Plan are
subject to withholding of all applicable taxes, which withholding
obligations may be satisfied, with the consent of the Committee, through
the surrender of shares of Stock which the Participant already owns or to
which a Participant is otherwise entitled under the Plan.

7.9. Transferability. Awards under the Plan are not transferable
except as designated by the Participant by will or by the laws of descent
and distribution or pursuant to a qualified domestic relations order as
defined by the Code, Title I of the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder. To the extent that the
Participant who receives an Award under the Plan has the right to exercise
such Award, the Award may be exercised during the lifetime of the
Participant only by the Participant. Notwithstanding the foregoing
provisions of this subsection, the Committee may permit Awards under the
Plan to be transferred to or for the benefit of the Participant's family
(including, without limitation, to a trust for the benefit of a
Participant's family), subject to such limits as the Committee may
establish. In no event shall an Incentive Stock Option be transferable to
the extent that such transferability would violate the requirements
applicable to such option under Code section 422.

7.10. Notices. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the
Company, at its principal executive offices. The Committee may, by
advance written notice to affected persons, revise such notice procedure
from time to time. Any notice required under the Plan (other than a
notice of election) may be waived by the person entitled to notice.

7.11. Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any Participant
or other person entitled to benefits under the Plan, and any permitted
modification or revocation thereof, shall be in writing filed with the
Committee at such times, in such form, and subject to such restrictions
and limitations, not inconsistent with the terms of the Plan, as the
Committee shall require.

7.12. Agreement With Company. At the time of an Award to a
Participant under the Plan, the Committee may require a Participant to
enter into an agreement with the Company (the "Agreement") in a form
specified by the Committee, agreeing to the terms and conditions of the
Plan and to such additional terms and conditions, not inconsistent with
the Plan, as the Committee may, in its sole discretion, prescribe.

7.13. Limitation of Implied Rights.

(a) Neither a Participant nor any other person shall, by reason of
the Plan, acquire any right in or title to any assets, funds or
property of the Company or any Related Company whatsoever,
including, without limitation, any specific funds, assets, or
other property which the Company or any Related Company, in its
sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual
right to the amounts, if any, payable under the Plan, unsecured
by any assets of the Company and any Related Company. Nothing
contained in the Plan shall constitute a guarantee by the
Company or any Related Company that the assets of such companies
shall be sufficient to pay any benefits to any person.

(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any employee the right
to be retained in the employ of the Company or any Related
Company, nor any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the
terms of the Plan. Except as otherwise provided in the Plan, no
Award under the Plan shall confer upon the holder thereof any
right as a stockholder of the Company prior to the date on which
he fulfills all service requirements and other conditions for
receipt of such rights and shares of Stock are registered in his
name.

7.14. Evidence. Evidence required of anyone under the Plan may be
by certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable, and signed, made or
presented by the proper party or parties.

7.15. Action by Company or Related Company. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members
of the board (including a committee of the board) who are duly authorized
to act for the board or (except to the extent prohibited by applicable law
or the rules of any stock exchange) by a duly authorized officer of the
company.

7.16. Gender and Number. Where the context admits, words in any
gender shall include any other gender, words in the singular shall include
the plural and the plural shall include the singular.

7.17. Termination for Cause. Unless the Committee determines
otherwise, all of a Participant's outstanding and unexercised Awards
whether vested or unvested under the Plan shall be forfeited on the
Participant's Date of Termination if the Participant's employment with the
Company or a Related Company is terminated for Cause.

SECTION 8

COMMITTEE

8.1. Administration. The authority to control and manage the
operation and administration of the Plan shall be vested in a committee
(the "Committee") in accordance with this Section 8.

8.2. Selection of Committee. The Committee shall be selected by the
Board, and shall consist of not fewer than two members of the Board or
such greater number as may be required for compliance with Rule 16b-3
issued under the Securities Exchange Act of 1934, none of whom shall be
eligible to receive Awards under the Plan.

8.3. Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:

(a) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to select employees to receive
Awards, to determine the time or times of receipt, to determine
the types of Awards and the number of shares covered by the
Awards, to establish the terms, conditions, performance
criteria, restrictions, and other provisions of such Awards,
including the vesting provisions applicable to such Awards, and
to cancel or suspend Awards, provided that the cancelled or
suspended Award is replaced with an Award of at least equal
value. In making such Award determinations, the Committee may
take into account the nature of services rendered by the
respective employee, his present and potential contribution to
the Company's success and such other factors as the Committee
deems relevant.

(b) Subject to the provisions of the Plan, the Committee will have
the authority and discretion to determine the extent to which
Awards under the Plan will be structured to conform to the
requirements applicable to Performance-Based Compensation, and
to take such action, establish such procedures, and impose such
restrictions at the time such Awards are granted as the
Committee determines to be necessary or appropriate to conform
to such requirements.

(c) The Committee will have the authority and discretion to
interpret the Plan, to establish, and to prospectively amend and
rescind any rules and regulations relating to the Plan, to
determine the terms and provisions of any agreements made
pursuant to the Plan and to make all other determinations that
may be necessary or advisable for the administration of the
Plan.

(d) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan is final and binding on all persons.

(e) Except as otherwise expressly provided in the Plan, where the
Committee is authorized to make a determination with respect to
any Award.

8.4. Delegation by Committee. Except to the extent prohibited by
applicable law or the rules of any stock exchange, the Committee may
allocate all or any portion of its responsibilities and powers to any one
or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any time.

8.5. Information to be Furnished to Committee. The Company and
Related Companies shall furnish the Committee with such data and
information as may be required for it to discharge its duties. The
records of the Company and Related Companies as to an employee's or
Participant's employment (or other provision of services), termination of
employment (or cessation of the provision of services), leave of absence,
reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee considers desirable to carry out the terms of
the Plan.

8.6. Liability and Indemnification of Committee. No member or
authorized delegate of the Committee shall be liable to any person for any
action taken or omitted in connection with the administration of the Plan
unless attributable to his own fraud or willful misconduct. The
Committee, the individual members thereof, and persons acting as the
authorized delegates of the Committee under the Plan, shall be indemnified
by the Company against any and all liabilities, losses, costs and expenses
(including legal fees and expenses) of whatsoever kind and nature which
may be imposed on, incurred by or asserted against the Committee or its
members or authorized delegates by reason of the performance of a
Committee function if the Committee or its members or authorized delegates
did not act dishonestly or in willful violation of the law or regulation
under which such liability, loss, cost or expense arises. This
indemnification shall not duplicate but may supplement any coverage
available under any applicable insurance.

SECTION 9

CHANGE IN CONTROL

Except as otherwise provided in the Plan or in the Agreement reflecting
the applicable Award, upon the occurrence of a Change in Control (i) all
outstanding Options and Stock Appreciation Rights shall become immediately
exercisable, (ii) all shares of Restricted Stock and Performance Stock
shall become fully vested, (iii) all vesting restrictions imposed under
subsection 6.3 (relating to restrictions on shares purchased by
Participants and matching shares) shall cease to apply, and (iv)
Performance Units may be paid out in such manner and amounts as determined
by the Committee. For purposes of the Plan, a "Change in Control" shall
be deemed to occur on the earliest of the existence of both of the
following events:

(a) the stockholders of the Company approve a definitive agreement
to merge the Company into or consolidate the Company with
another entity, sell or otherwise dispose of all or
substantially all of its assets or adopt a plan of liquidation,
provided, however, that a Change in Control shall not be deemed
to have occurred by reason of a transaction, or a substantially
concurrent or otherwise related series of transactions, upon the
completion of which 51% or more of the beneficial ownership of
the voting power of the Company, the surviving corporation or
corporation directly or indirectly controlling the Company or
the surviving corporation, as the case may be, is held by the
same persons (as defined below) (although not necessarily in the
same proportion) as held the beneficial ownership of the voting
power of the Company immediately prior to the transaction or the
substantially concurrent or otherwise related series of
transactions, except that upon the completion thereof, employees
or employee benefit plans of the Company may be a new holder of
such beneficial ownership; and

(b) at any time during any period of two consecutive years,
individuals who at the beginning of such period were members of
the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors (unless
the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at
least two-thirds of the directors still in office at the time of
such election or nomination who were directors at the beginning
of such period).

Notwithstanding the foregoing provisions of this Section 9, a Change in
Control will not be deemed to occur solely because (i) the Company effects
any primary offering of equity securities, including an initial public
offering, or (ii) of the occurrence of a transaction or series of
transactions in which either or both of the Company's two largest
stockholders, determined as of the date the Plan is adopted, disposes of
all or a portion of its interest in the Company; provided that such
transaction or series of transactions does not result in a person being
the beneficial owner of 51% or more of the voting power of the Company who
was not previously such an owner.

SECTION 10

AMENDMENT AND TERMINATION

The Board may, at any time, amend or terminate the Plan, provided
that, no amendment or termination may materially adversely affect the
rights of any Participant or beneficiary under any Award made under the
Plan prior to the date such amendment is adopted by the Board.

EXHIBIT 11

<TABLE>
LADISH CO., INC.

COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK

(In thousands except share and per share data)
<CAPTION>

Year Ended December 31, Period Ended September 30,
1994 1995 1996 1996 1997
(unaudited)
<S> <C> <C> <C> <C> <C>
COMPUTATIONS FOR STATEMENTS OF NET
INCOME:
Primary earnings per share of common stock
(average share outstanding):
Net Income (loss) from continuing
operations $(17,028) $(22,146) $2,135 $2,163 $13,762
Interest Savings(1) -- -- 306 273 --
--------- -------- -------- -------- --------
Net Income (loss) from continuing
operations, adjusted (17,028) (22,146) 2,441 2,436 13,762
Discontinued Operations 221 1,214 (8,856) 72 --
--------- -------- -------- -------- --------
Net Income (loss) $(16,807) $(20,932) $(6,415) $2,508 $13,762
========= ======== ======== ======== ========
Average shares of common stock
outstanding 5,023,353 5,029,517 5,091,957 5,075,828 5,180,011

Incremental shares applicable to common
stock options and warrants(1) -- -- 7,070,580 6,637,247 7,464,067
--------- --------- ---------- ---------- ----------
Average common shares adjusted 5,023,353 5,029,517 12,162,537 11,713,075 12,644,078
========= ========= ========== ========== ==========

Primary and fully diluted earnings per
share from:
Continued operations $ (3.39) $ (4.40) $ 0.20 $ 0.21 $ 1.09
Discontinued operations 0.04 .24 (.73) -- --
------ ------ ------ ------ ------
$ (3.35) $ (4.16) $ (0.53) $ 0.21 $ 1.09
====== ====== ====== ====== ======

(1) Interest savings driven by application of the modified treasury stock method on proceeds received from the assumed
exercise of common stock options and warrants.
</TABLE>

Exhibit 21

Subsidiaries of the Registrant

The Registrant has one subsidiary, Stowe Machine Co., Inc., a Nevada
Corporation, which has no trade names other than its corporate name.

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Milwaukee, Wisconsin
December 18, 1997

Exhibit 23.2

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 24, 1997, with respect to the financial
statements of Stowe Machine Company Incorporated, included in the Registration
Statement (Form S-1) and related Prospectus of Ladish Co., Inc. for the
Registration of shares of its common stock.

ERNST & YOUNG LLP

Hartford, Connecticut
December 19, 1997

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 693
<SECURITIES> 0
<RECEIVABLES> 33,435
<ALLOWANCES> (300)
<INVENTORY> 48,509
<CURRENT-ASSETS> 84,454
<PP&E> 123,123
<DEPRECIATION> (39,718)
<TOTAL-ASSETS> 171,092
<CURRENT-LIABILITIES> 61,402
<BONDS> 33,235
0
0
<COMMON> 52
<OTHER-SE> (1,468)
<TOTAL-LIABILITY-AND-EQUITY> 171,092
<SALES> 157,072
<TOTAL-REVENUES> 157,072
<CGS> 134,055
<TOTAL-COSTS> 139,662
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,659
<INCOME-PRETAX> 14,894
<INCOME-TAX> 1,132
<INCOME-CONTINUING> 13,762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,762
<EPS-PRIMARY> 2.67
<EPS-DILUTED> 1.11

</TABLE>