The second arrangement is a letter of intent for an investment by the company’s
50% owned Italian joint venture, Velan Srl, of about $1.1 million for a 67%
interest in a greenfield manufacturing plant located in China. The joint
venture’s partner is a local valve manufacturer. The plant will produce
primarily API 6D pipeline valves and components, and is expected to be
operational in the first half of calendar year 2008.