10-K

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
	THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2005

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                          to                                        

Commission File: 0-3136

RAVEN INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

South Dakota	46-0246171
(State of incorporation)	(IRS Employer Identification No.)

205 E. 6th Street, P.O. Box 5107
Sioux Falls, South Dakota 57117-5107
(Address of principal executive offices)

(605) 336-2750
(Registrant’s telephone number including area code)

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

None

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

Common stock, $1 par value
(Title of each class)

Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to such filing requirements for the past ninety days. þ Yes o No

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

Indicate by check mark (“X”) whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act.) þ Yes o No

The aggregate market value of the registrant’s common stock held by nonaffiliates at July 31, 2004 was approximately $297,995,628. The aggregate market value was computed by reference to the closing price (as adjusted for the two-for-one stock split on October 15, 2004), as reported on the NASDAQ National Market System, $19.06, on July 31, 2004, which was as of the last business day of the registrant’s most recently completed second fiscal quarter.

Shares of common stock outstanding at March 23, 2005: 18,028,086.

DOCUMENTS INCORPORATED BY REFERENCE

The following terms - the company, Raven or the registrant - are intended to apply to Raven Industries, Inc. and its consolidated subsidiaries listed in Exhibit 21 to this report, unless the context indicates otherwise.

The following table shows, except as otherwise noted, the location of information, required in this Form 10-K, in the registrant’s Annual Report to Shareholders for the year ended January 31, 2005 and the Proxy Statement for the registrant’s 2005 annual meeting, a definitive copy of which will be filed in April 2005. All such information set forth under the heading “Reference” below is included herein or incorporated herein by reference. A copy of the registrant’s Annual Report to Shareholders for the year ended January 31, 2005 is included as an exhibit to this report.

PART I.	ITEM IN FORM 10-K		REFERENCE
Item 1.	Business		Business, pages 4-7, this document;
				Business Segments pages 1, 16 and
				38 of the Annual Report to
				Shareholders
Item 2.	Properties		Properties, pages 7-8, this document
Item 3.	Pending Legal Proceedings		Pending Legal Proceedings, page 8, this
				document
Item 4.	Submission of Matters to a Vote of Security Holders		Submission of Matters to a Vote of
				Security Holders, page 8, this
				document
PART II.
Item 5.	Market for the Registrant’s Common Equity and Related		Page 8, this document, Quarterly
		Shareholder Matters		Information (unaudited), page 26,
				Eleven-year Financial Summary,
				pages 14-15, and inside back cover,
				Annual Report to Shareholders
Item 6.	Selected Financial Data		Eleven-year Financial Summary,
				pages 14-15, Annual Report to Shareholders
Item 7.	Management’s Discussion and Analysis		Financial Review and Analysis, pages 17-
		of Financial Condition and Results of		25, Annual Report to Shareholders
		Operations
Item 7A.	Quantitative and Qualitative Disclosures		Page 9, this document
		About Market Risk
Item 8.	Financial Statements and		Pages 28-39, Annual Report to
		Supplementary Data		Shareholders
Item 9.	Changes In and Disagreements With		Changes In and Disagreements With
		Auditors on Accounting and Financial		Auditors on Accounting and Financial
		Disclosure		Disclosure, page 9, this document
Item 9A.	Controls and Procedures		Page 27, Annual Report to Shareholders

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PART III.
Item 10.	Directors and Executive Officers of the		Pages 9-10, this document
		Registrant	Election of Directors, Executive
				Compensation, Board of Directors
				and Committees, Corporate
				Governance and Other Matters,
				Proxy Statement
Item 11.	Executive Compensation		Executive Compensation, Proxy
				Statement
Item 12.	Security Ownership of Certain Beneficial		Ownership of Common Stock, Proxy
		Owners and Management and		Statement, Annual Report to
		Related Shareholder Matters		Shareholders and page 10, this
				document
Item 13.	Certain Relationships and Related		Election of Directors, Proxy Statement
		Transactions
Item 14.	Principal Accounting Fees and Services		Independent Registered Public
				Accounting Firm Fees, Proxy
				Statement
PART IV.
Item 15.	Exhibits, Financial Statement Schedule		Exhibits, Financial Statement Schedule,
				pages 10-12, this document.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements. Certain information included in this Form 10-K and other materials filed or to be filed by the company with the Securities and Exchange Commission (as well as information included in statements made or to be made by the company) contains statements that are forward-looking. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there is no assurance that such expectations will be achieved. Such assumptions involve important risks and uncertainties that could significantly affect results in the future. These risks and uncertainties include, but are not limited to, those relating to weather conditions, which could affect certain of the company’s primary markets, such as agriculture and construction, or changes in competition, raw material availability, technology or relationships with the company’s largest customers, any of which could adversely impact any of the company’s product lines. The foregoing list is not exhaustive and the company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.

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TABLE OF CONTENTS

	Item 1. Business
	Item 2. Properties
	Item 3. Pending Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 5. Market for the Registrant’s Common Equity and Related Shareholder Matters
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 10. Directors and Executive Officers of the Registrant
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
	Item 13. Certain Relationships and Related Transactions
	Item 14. Principal Accounting Fees and Services
	Item 15. Exhibits, Financial Statement Schedule
SIGNATURES
Asset Purchase Agreement
2005 Annual Report to Shareholders
Subsidiaries
Consent of Independent Registered Public Accounting Firm
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certifications Pursuant to Section 906

RAVEN INDUSTRIES, INC.
FORM 10-K
FISCAL YEAR ENDED JANUARY 31, 2005

Item 1. Business

General
Raven Industries, Inc., was incorporated in February 1956 under the laws of the State of South Dakota and began operations later that same year. Raven is an industrial manufacturer providing a variety of products to customers throughout North America. The company began operations as a manufacturer of high-altitude research balloons before diversifying into the industrial, agricultural, construction and military/aerospace markets. The company employs approximately 805 persons on active status in four states and is headquartered at 205 E. Sixth Street, Sioux Falls, SD 57104 - telephone (605) 336-2750. The company’s Internet address is located at http//www.ravenind.com and its common stock trades on the NASDAQ National Market System under the symbol RAVN. During fiscal 2004 the company adopted a Code of Ethics applicable to all officers, directors, and employees and which is available on the website.

All reports (including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K) and proxy and information statements filed with the Securities and Exchange Commission (SEC) are available through a link from the company’s web site to the SEC web site. All such information is available as soon as reasonably practicable after it has been electronically filed. Filings can also be obtained free of charge by contacting the company, the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549, through its web site at http://www.sec.gov, or by calling the SEC at 1-800-SEC-0330.

The company has four ongoing business segments consisting of three Raven divisions and one subsidiary: Electronic Systems Division, Flow Controls Division, Engineered Films Division, and Aerostar International, Inc. (Aerostar). Beta Raven, a wholly owned subsidiary, was partially merged into the Electronic Systems Division in fiscal 2002 and the remaining operating assets were sold to a third party or liquidated into Raven Industries, Inc. in fiscal 2003. Many of the past and present product lines are an extension of technology and production methods developed in the original balloon business. Product lines have been grouped in these segments based on common technologies, production methods and raw materials; however, more than one business segment may serve each of the product markets identified above. Page 16 of the company’s Annual Report to Shareholders, incorporated herein by reference, provides financial information concerning the business segments, including sold businesses.

Following is a summary of company net sales by principal product categories (dollars in thousands):

	FY 2005		FY 2004		FY 2003
Reinforced plastic sheeting	$	58,657	$	42,636	$	35,096
Electronics manufacturing services		47,049		44,307		38,589
Agricultural flow control devices and accessories		37,004		31,413		23,071
Cargo parachutes/parachute-related products		7,887		6,828		813
Uniforms and protective wear		6,822		5,730		4,957
Other		10,667		11,813		17,063
Total ongoing operation sales		168,086		142,727		119,589
Businesses sold:
Feedmill controls		—		—		1,314
Total sales	$	168,086	$	142,727	$	120,903

Business Segments
Flow Controls
Products in this segment are electronic speed and global positioning system (GPS)-based, location compensated application control products. They are used primarily for precision farming applications, as well as marine navigation. The company has developed new products for field location control and chemical

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injection. In February 2005, the company acquired the assets of Montgomery Industries, Inc. a privately-held Saskatchewan, Canada company, to expand its precision agriculture product base and its international presence.

Home office personnel sell flow control devices directly to original equipment manufacturers (OEMs) and independent third-party distributors. In fiscal 2004, the segment began expanding their marketing and distribution plans through on-site precision agriculture representatives in key geographic areas. The company’s competitive advantage in this segment is product reliability, ease of use, product availability and service after the sale.

Engineered Films
This segment produces rugged reinforced plastic sheeting for industrial, construction and agricultural applications.

The company’s sales force sells plastic sheeting to independent third-party distributors in each of the various markets it serves. The company extrudes a significant portion of the film converted for its commercial products and believes it is one of the largest sheeting converters in the United States. A number of suppliers of sheeting compete with Raven on both price and product availability. To increase production, a $7.3 million two-year capital investment plan was completed in fiscal 2003 including a new extruder believed to be one of the largest in North America, nearly doubling capacity. In fiscal 2005 and 2006, investment resumed with capital expenditures for new extrusion technology and lamination and warehouse capacity.

Electronic Systems
The company has focused this segment’s capabilities in electronics manufacturing services (EMS) for commercial customers with a focus on high-mix, low-volume production. Historically, the company’s Electronic Systems segment provided a variety of assemblies and controls to the United States Department of Defense and other military contractors. Assemblies manufactured by the Electronic Systems segment include communication, environmental control, computer and other products where high quality is critical.

EMS sales are made in response to competitive bid requests by commercial customers and military contractors. The level and nature of competition varies with the type of product, but the company frequently competes with a number of EMS manufacturers on any given bid request. The markets in which the company participates are highly competitive, with customers having many suppliers to choose from.

Aerostar
The Aerostar subsidiary produces and sells custom-shaped advertising inflatables that have a number of uses including parade floats and advertising media. It also sells high altitude balloons for public and commercial research. In fiscal 2003, the subsidiary was awarded a $7.65 million contract to produce cargo parachutes for the US Army. Shipments were substantially completed during fiscal 2004, but a $7.75 million add-on to the contract was received in fiscal 2004. The second year contract ramped up to full delivery rates for the first three quarters of fiscal 2005. At that point, deliveries originally scheduled through January 2005 were rescheduled by the US Army through October 2005. The company is the originator of modern hot-air ballooning and continues to be a leader in design and technical expertise. Aerostar also manufactures other sewn and sealed products on a contract basis. It continues to produce uniforms and protective wear for US government agencies as a subcontractor. The subsidiary was previously in the cold-weather commercial outerwear business, but with the closure of a sewing plant in fiscal 2003 and prior plant sales, has now exited that business.

Aerostar sells inflatable displays directly to corporate customers, advertising agencies, and public relations firms, and are subject to varying levels of competition. Generally, the more customized the product, the greater the company’s market share. Hot-air balloons are sold through an independent third-party dealer network.

Government sales are made in response to competitive bid requests. High-altitude research balloons are sold directly to public agencies (usually funded by the National Aeronautics and Space Administration) or commercial users. Demand for these products is small but stable. Aerostar is the largest balloon supplier for high-altitude research in the United States.

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Sold Businesses
The Beta Raven Industrial Controls Division produced and sold computerized process-control systems directly to feedmills and to other markets. The business was sold during fiscal 2003. In prior years, the company has disposed of its pickup-truck topper (fiscal 2000) and plastic tank businesses (fiscal 2001).

Major Customer Information
No one customer accounted for 10% or more of consolidated sales in fiscal 2005 or more than 10 percent of the company’s consolidated accounts receivable at January 31, 2005. In fiscal 2003, one customer in the Electronic Systems segment accounted for $12.9 million, or 10.7%, of the company’s consolidated sales. No customers reached the 10% threshold in fiscal 2004. Two customers in the Electronic Systems segment accounted for more than 48% of the segment’s sales in fiscal 2005. The loss of these accounts would adversely affect profitability; however, the company believes its relationships with these customers are strong. In addition, the breadth of the company’s product lines helps protect it from the impact of losing any single customer.

Seasonal Working Capital Requirements
Some seasonal demand exists in Flow Control’s agricultural market. The Flow Controls Division builds product in the fall for winter/spring delivery. Certain sales to agricultural customers offer spring dating terms for late fall and early winter shipments. The resulting fluctuations in inventory and accounts receivable balances may require, and have required, seasonal short-term financing.

Financial Instruments
The principal financial instruments the company maintains are in short-term investments, accounts receivable and long-term debt. The company believes that the interest rate, credit and market risk related to these accounts is not significant. The company manages the risk associated with these accounts through periodic reviews of the carrying value of assets and liabilities and establishment of appropriate allowances in connection with the company policies. Except for operating leases, the company does not enter into hedging, derivative instruments, or off balance sheet financing.

Raw Materials
The company obtains a wide variety of materials from numerous vendors. Principal materials include numerous electronic components for the Electronic Systems and Flow Controls segments, various plastic resins for the Engineered Films segment and fabrics for the Aerostar segment. The company has not experienced any significant shortages or other problems in purchasing raw materials to date, and alternative sources of supply are generally available. However, predicting future material shortages and the related potential impact on Raven is not possible.

Patents
The company owns a number of patents. However, Raven does not believe that its business, as a whole, is materially dependent on any one patent or related group of patents. It believes the successful manufacture and sale of its products generally depend more upon its technical expertise and manufacturing skills.

Research and Development
The business segments conduct ongoing research and development efforts. Most of the company’s research and development expenditures are directed toward new products in the Flow Controls segment. Total company research and development costs are disclosed in Note 1 to the Consolidated Financial Statements located on page 33 of the 2005 Annual Report to Shareholders, incorporated herein by reference.

Environmental Matters
Except as described below, the company believes that, in all material respects, it is in compliance with applicable federal, state and local environmental laws and regulations. Expenditures relating to compliance for operating facilities incurred in the past have not significantly affected the company’s capital expenditures, earnings or competitive position.

In connection with the sale of substantially all of the assets of the company’s Glasstite, Inc. subsidiary in fiscal 2000, the company has agreed to assume responsibility for the investigation and remediation of any pre-

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October 29, 1999 environmental contamination at the company’s Glasstite pickup-truck topper facility in Dunnell, Minnesota as required by the Minnesota Pollution Control Agency (MPCA) or the United States Environmental Protection Agency (EPA).

Also, in connection with the sale of substantially all of the assets of the company’s Plastic Tank Division in fiscal 2001, the company has agreed to assume responsibility for the investigation and remediation of any pre-August 28, 2000 environmental contamination at the property located at 1813 E Avenue, Sioux Falls, S.D. in accordance with the South Dakota Department of Environment and Natural Resources (DENR).

The company and the purchasers of the company’s Glasstite subsidiary and Plastic Tank Division have conducted environmental assessments of the properties used in these businesses. Although these assessments are still being evaluated by the MPCA and DENR, respectively, on the basis of the data available, there is no reason to believe that any activities which might be required as a result of the findings of the assessments will have a material effect on the company’s results of operations, financial position or cash flow of the company. The company had accrued approximately $145,000 at January 31, 2005, its best estimate of probable costs to be incurred related to these matters.

Backlog
As of February 1, 2005, the company’s backlog of firm orders totaled $43.6 million. Backlog amounts as of February 1, 2004 and 2003 were $47.1 million and $42.8 million, respectively.

Employees
As of January 31, 2005, the company had approximately 860 employees, 805 in an active status. Following is a summary of active employees by segment: Electronic Systems - 240; Flow Controls - 210; Engineered Films - 120; Aerostar - 190; Administration - 45. Management believes its employee relations are satisfactory.

Item 2. Properties

The company maintains the following properties in connection with its operations, all of which the company owns, unless indicated otherwise:

	Square			Business
Location	Feet		Function	Segments
Sioux Falls, SD		150,000	Corporate office; electronics	All
			manufacturing
		69,300	Plastic sheeting manufacturing	Engineered Films
		59,000	Plastic sheeting and hot-air	Engineered Films;
			balloon manufacturing	Aerostar
		30,800	Warehouse and offices	Engineered Films
		27,000	Offices and material handling	Aerostar
			facility
		25,300	Inflatable manufacturing	Aerostar
		24,000	Electronics manufacturing	Electronic Systems
		10,200	Machine shop	Flow Controls
		*15,470	Warehouse	Engineered Films
		7,800	Training/meeting center	Flow Controls
Sulphur Springs, TX		63,900	Research balloon	Aerostar
			manufacturing
Springfield, OH		30,000	Warehouse	Engineered Films
Huron, SD		24,100	Sewing plant	Aerostar
St. Louis, MO		21,000	Electronics manufacturing	Electronic Systems
Madison, SD		20,000	Sewing plant	Aerostar
Austin, TX		*12,000	Product development and	Flow Controls
			manufacturing
Stockholm, SK		*6,800	Electronics manufacturing	Flow Controls

* Leased

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Most of the company’s manufacturing plants also serve as distribution centers and contain offices for sales, engineering and manufacturing support staff. The company believes that its properties are, in all material respects, in good condition and are adequate to meet existing production needs, although the company is building a 26,000 square foot addition in Sioux Falls for its Engineered Films Division. This division will also be purchasing additional space as described in Note 14 to the Consolidated Financial Statements located on page 38 of the 2005 Annual Report to Shareholders, incorporated herein by reference. The company owns 6.95 acres of undeveloped land adjacent to the other owned property in Sioux Falls, which is available for expansion.

Item 3. Pending Legal Proceedings

The company is responsible for investigation and remediation of environmental contamination at two of its sold facilities (see “Item 1, Business — Environmental Matters”). In addition, the company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of its business. The potential costs and liability of such claims cannot be determined at this time. Management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows.

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

There were no matters submitted during the fourth quarter to a vote of security holders of the company.

Item 5. Market for the Registrant’s Common Equity and Related Shareholder Matters

Incorporated by reference to pages 26 (Quarterly Information), 14-15 (Eleven-year Financial Summary), and inside back cover of the 2005 Annual Report to Shareholders.

Repurchases of the company’s common stock during the fourth quarter of fiscal 2005 were as follows:

							Max. # (or approx $
					Total # shares		value of shares
					purchased as part		that may yet be
					of Publicly		purchased under the
Period	Total Number		Average price		Announced Plan		Plans
November 2004		15,000	$	21.07		15,000	$	1,183,950
December 2004		52,000	$	19.44		52,000	$	173,310
January 2005		9,500	$	18.18		9,500	$	485
Total Fourth Quarter		76,500	$	19.60		76,500

The company repurchases stock under an authorization from its Board of Directors. It has not publicly announced its repurchase plans, other than to indicate a willingness to buy less than 2% of shares outstanding on an annual basis. Under a resolution from the Board of Directors, dated March 12, 2005, the company has authority to repurchase up to $1.0 million of stock on the open market. The Board of Directors has renewed these authorizations quarterly; there is no assurance the Board will continue this practice.

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Item 6. Selected Financial Data

Incorporated by reference to pages 14-15 of the company’s Annual Report to Shareholders.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Incorporated by reference to pages 17-25 of the company’s Annual Report to Shareholders.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The exposure to market risks pertains mainly to changes in interest rates on cash and cash equivalents and short-term investments. The company’s debt consists of capital leases, all of which have fixed interest rates. The company does not expect operating results or cash flows to be significantly affected by changes in interest rates. Additionally, the company has no derivative contracts and typically buys materials and sells products in US dollars.

Item 8. Financial Statements and Supplementary Data

Incorporated by reference to pages 28-39 of the company’s Annual Report to Shareholders.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Incorporated by reference to page 27 of the company’s Annual Report to Shareholders.

Item 10. Directors and Executive Officers of the Registrant

Incorporated by reference to the sections entitled “Election of Directors,” “Executive Compensation,” “Board of Directors and Committees,” “Corporate Governance,” and “Other Matters” within the company’s Proxy Statement relating to its 2005 Annual Meeting of Shareholders.

	Executive Officers
Name		Age		Position
Ronald M. Moquist			59	President and Chief Executive Officer
Thomas Iacarella			51	Vice President and Chief Financial Officer
Barbara K. Ohme			57	Vice President - Administration
Daniel A. Rykhus			40	Executive Vice President

Each of the above executive officers serves at the pleasure of the Board of Directors on a year-to-year basis.

Mr. Moquist has been President and Chief Executive Officer of the company since 2000. He served as the Executive Vice President of Raven from 1985 through 2000. He joined the company in 1975 as Sales and Marketing Manager.

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Mr. Iacarella has been the company’s Chief Financial Officer, Secretary and Treasurer since 1998. He joined Raven as Corporate Controller in 1991. Prior to joining the company, he held positions with Tonka Corporation and Ernst & Young, LLP.

Ms. Ohme was named Vice President - Administration on February 1, 2004. She joined Raven as Employment Manager in 1987.

Mr. Rykhus was named Executive Vice President and General Manager, Flow Controls Division on April 1, 2004. He joined the company as Director of World Class Manufacturing in 1990.

Item 11. Executive Compensation

Incorporated by reference to the section entitled “Executive Compensation” within the company’s Proxy Statement relating to its 2005 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

Incorporated by reference to the section entitled “Ownership of Common Stock” within the company’s Proxy Statement relating to its 2005 Annual Meeting of Shareholders.

The number of shares to be issued upon exercise and the number of shares remaining available for future issuance under the company’s equity compensation plans at January 31, 2005 is presented in the following table.

Equity Compensation Plan Information

	Number of securities		Weighted-average
	to be issued upon		exercise price of		Number of
	exercise of		outstanding		securities available
Plan Category	outstanding options		options		for future issuance
Equity compensation plans approved by security holders (1)		323,076	$	5.27		655,700
Equity compensation plans not approved by security holders	None		None		None

⁽¹⁾ Description of plan is included in Note 11 to the Consolidated Financial Statements located on page 37 of the 2005 Annual Report to Shareholders incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

Incorporated by reference to the section entitled “Election of Directors,” contained in the company’s Proxy Statement relating to its 2005 Annual Meeting of Shareholders.

Item 14. Principal Accounting Fees and Services

Incorporate by reference to the section entitled “Independent Registered Public Accounting Firm Fees,” contained in the company’s Proxy Statement relating to its 2005 Annual Meeting of Shareholders.

Item 15. Exhibits, Financial Statement Schedule

(a)   Consolidated Financial Statements and Schedule

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1.   Incorporated by reference from the attached exhibit containing the 2005 Annual Report
to Shareholders:
  Consolidated Balance Sheets
  Consolidated Statements of Income
  Consolidated Statements of Shareholders’ Equity and
     Comprehensive Income
  Consolidated Statements of Cash Flows
  Notes to Financial Statements
  Report of Independent Registered Public Accounting Firm

2.	Included in Part II:
	Report of Independent Registered Public Accounting Firm on Financial      Statement Schedule Schedule II - Valuation and Qualifying Accounts

The following schedules are omitted as they are not applicable or are not required: I, III and IV.

(b)	Exhibits Filed
	The following exhibits are filed as part of this report:

Exhibit
Number	Description
2(a)	Asset Purchase Agreement dated February 17, 2005 by and among Raven Industries, Montgomery Industries and others.
3(a)	Articles of Incorporation of Raven Industries, Inc. and all amendments thereto.*
3(b)	Bylaws of Raven Industries, Inc.*
3(c)	Extract of Shareholders Resolution adopted on April 7, 1962 with respect to the bylaws of Raven Industries, Inc.*
10(a)	Employment Agreement between Raven Industries, Inc. and Daniel Rykhus dated as of April 1, 2004 (incorporated by reference to Exhibit 10(a) of the company’s Form 10-Q for the quarter ended April 30, 2004).
10(b)	Change in Control Agreement between Raven Industries, Inc. and Daniel Rykhus dated as of April 1, 2004 (incorporated by reference to Exhibit 10(b) of the company’s Form 10-Q for the quarter ended April 30, 2004).
10(c)	Change in Control Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of March 17, 1989.*
10(d)	Change in Control Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of August 1, 1998 (incorporated by reference to Exhibit 10.1 of the company’s Form 10-Q for the quarter ended July 31, 1998).
10(e)	Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of February 1, 2004.**
10(f)	Employment Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of February 1, 2004.**

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10(g)	Schedule A to Employment Agreements between Raven Industries, Inc. and Ronald M. Moquist and Thomas Iacarella dated as of February 1, 2004.**
10(h)	Employment Agreement between Raven Industries, Inc. and Barbara Ohme dated as of February 1, 2004.**
10(i)	Change in Control Agreement between Raven Industries, Inc. and Barbara Ohme dated as of February 1, 2004.**
10(j)	Trust Agreement between Raven Industries, Inc. and Norwest Bank South Dakota, N.A. dated April 26, 1989. *
10(k)	Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated by reference to Exhibit A to the company’s definitive Proxy Statement filed April 19, 2000).
13	2005 Annual Report to Shareholders (only those portions specifically incorporated herein by reference shall be deemed filed with the Commission).
21	Subsidiaries of the Registrant.
23	Consent of Independent Registered Public Accounting Firm.
31(a)	Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act.
31(b)	Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act.
32	Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

*	Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the year ended January 31, 1989.
**	Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the year ended January 31, 2004.

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SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RAVEN INDUSTRIES, INC.
(Registrant)

March 31, 2005	By:	/S/ Ronald M. Moquist
Date		Ronald M. Moquist
		President (Principal Executive Officer and Director)

          Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

March 31, 2005	/S/ Ronald M. Moquist
Date	Ronald M. Moquist
	President (Principal Executive Officer and Director)
March 31, 2005	/S/ Thomas Iacarella
Date	Thomas Iacarella
	Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Directors:

March 31, 2005	/S/ Conrad J. Hoigaard
Date	Conrad J. Hoigaard
March 31, 2005	/S/ Anthony W. Bour
Date	Anthony W. Bour
March 31, 2005	/S/ David A. Christensen
Date	David A. Christensen
March 31, 2005	/S/ Thomas S. Everist
Date	Thomas S. Everist
March 31, 2005	/S/ Mark E. Griffin
Date	Mark E. Griffin
March 31, 2005	/S/ Cynthia H. Milligan
Date	Cynthia H. Milligan

13

Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule

To the Board of Directors and Shareholders of Raven Industries, Inc.:

Our audits of the consolidated financial statements, of management’s assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated March 24, 2005 appearing in the 2005 Annual Report to Shareholders of Raven Industries, Inc. (which report, consolidated financial statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
March 24, 2005

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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

for the years ended January 31, 2005, 2004 and 2003

(Dollars in thousands)

Column A	Column B		Column C				Column D			Column E
			Additions
	Balance at		Charged to			Charged to	Deductions
	Beginning		Costs and			Other	From			Balance at
Description	of Year		Expenses			Accounts	Reserves (1)			End of Year
Deducted in the balance sheet from the asset to which it applies:
Allowance for doubtful accounts:
Year ended January 31, 2005	$	265	$	34		None	$	34		$	265
Year ended January 31, 2004	$	240	$	67		None	$	42		$	265
Year ended January 31, 2003	$	310	$	(125	)	None	$	(55	)	$	240

Note:

(1) Represents uncollectible accounts receivable written off during the year, net of recoveries.

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EX-2.(A)

Exhibit 2(a)

ASSET PURCHASE AGREEMENT

BY AND AMONG

RAVEN INDUSTRIES, INC., and
3098103 NOVA SCOTIA LIMITED
(collectively, the “Buyers”),

101066275 SASKATCHEWAN LTD.
MONTGOMERY INDUSTRIES INC.,
SHIVAK HOLDINGS LTD., and
STANISLAUS M. (“MONTY”) SHIVAK
(collectively, the “Selling Parties”).

Dated: February 17, 2005

Table of Contents

1.	DEFINITIONS AND USAGE	2
	1.1 Definitions	2
	1.2 Usage	2
2.	SALE AND TRANSFER OF ASSETS; CLOSING	3
	2.1 Assets to be Acquired	3
	2.2 Excluded Assets	4
	2.3 Consideration	4
	2.4 Assumed Liabilities	5
	2.5 Allocation	6
	2.6 Closings	6
	2.7 Determination of Deferred Amount	6
	2.8 Future Payment Amounts	7
	2.9 Material Consents	8
	2.10 Transfer Taxes	9
3.	REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES	9
	3.1 Organization and Good Standing	9
	3.2 Enforceability; Authority; No Conflict	10
	3.3 Capitalization	11
	3.4 Financial Statements	11
	3.5 Books and Records	11
	3.6 Sufficiency of Assets	11
	3.7 Title to Assets; Encumbrances	11
	3.8 Real Property	11
	3.9 Condition of Facilities	12
	3.10 Accounts Receivable	12
	3.11 Inventories	13
	3.12 No Undisclosed Liabilities	13
	3.13 Taxes	13
	3.14 No Material Adverse Change	13
	3.15 Employee Plans	13
	3.16 Compliance with Legal Requirements; Governmental Authorizations	14
	3.17 Legal Proceedings; Orders	15
	3.18 Absence of Certain Changes and Events	16
	3.19 Contracts; No Defaults	17
	3.20 Insurance	19
	3.21 Intellectual Property Assets	19
	3.22 Environmental Matters	22
	3.23 Product Liability	24
	3.24 Employees	24
	3.25 Labor Disputes; Compliance	25
	3.26 Affiliated Transactions	25
	3.27 Brokers or Finders	25

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	3.28 Termination of Marketing Agreement	25
	3.29 Residency	26
	3.30 GST Registration	26
	3.31 Disclosure	26
4.	REPRESENTATIONS AND WARRANTIES OF BUYERS	26
	4.1 Organization and Good Standing	26
	4.2 Authority; No Conflict	26
	4.3 Certain Proceedings	27
	4.4 Brokers or Finders	27
	4.5 GST Registration	27
5.	PRE-CLOSING COVENANTS	27
	5.1 Access and Investigation	27
	5.2 Operation of the Business by Seller	27
	5.3 Negative Covenant	29
	5.4 Required Approvals	29
	5.5 Notification	29
	5.6 No Negotiation	29
	5.7 Best Efforts	29
	5.8 Payment of Liabilities	30
6.	CONDITIONS PRECEDENT TO BUYERS’ OBLIGATION TO CLOSE	30
	6.1 Accuracy of Representations	30
	6.2 Seller’s Performance	30
	6.3 Consents	30
	6.4 Seller Closing Documents	30
	6.5 No Conflict	31
7.	CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE	32
	7.1 Accuracy of Representations	32
	7.2 Buyers’ Performance	32
	7.3 Buyer Closing Documents	32
8.	TERMINATION.	32
	8.1 Termination Events	32
	8.2 Effect of Termination	33
9.	COVENANTS	33
	9.1 Employees and Employee Benefits	33
	9.2 Payment of All Taxes Resulting from Sale of Assets by Seller	36
	9.3 Payment of Other Retained Liabilities	36
	9.4 Assumption of Certain Warranty Obligations by Buyer	36
	9.5 Restrictions on Seller Dissolution and Distributions	37
	9.6 Removal of Excluded Assets	37
	9.7 Reports and Returns	37
	9.8 Assistance in Proceedings	37
	9.9 Noncompetition, Nonsolicitation and Nondisparagement	37
	9.10 Customer and Other Business Relationships	39

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	9.11 Retention of and Access to Records	39
	9.12 Confidential Information	39
	9.13 Further Assurances	40
	9.14 Retail Sales Tax Certificate	40
	9.15 Workers’ Compensation Board Certificate	40
	9.16 Investment Canada	40
10.	INDEMNIFICATION; REMEDIES	40
	10.1 Survival	40
	10.2 Indemnification and Reimbursement by Seller	41
	10.3 Indemnification and Reimbursement by Buyers	41
	10.4 Limitations on Amount – Selling Parties	42
	10.5 Limitations on Amount – Buyers	42
	10.6 Right of Setoff	42
	10.7 Third-Party Claims	43
	10.8 Other Claims	44
11.	GENERAL PROVISIONS	44
	11.1 Expenses	44
	11.2 Notices	44
	11.3 Dispute Resolution	45
	11.4 Enforcement of Agreement	46
	11.5 Waiver; Remedies Cumulative	46
	11.6 Entire Agreement and Modification	47
	11.7 Disclosure Schedules	47
	11.8 Assignments, Successors and No Third-Party Rights	47
	11.9 Severability	48
	11.10   Construction	48
	11.11   Time of Essence	48
	11.12   Governing Law	48
	11.13   Counterparts	48
	11.14   Seller’s Obligations	48

iv

ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT (this “Agreement”) is dated as of February 17, 2005, by and among 3098103 NOVA SCOTIA LIMITED, a company incorporated under the laws of the Province of Nova Scotia (“Buyer”), RAVEN INDUSTRIES, INC., a South Dakota corporation (“Raven,” and together with Buyer, the “Buyers”), 101066275 SASKATCHEWAN LTD., a corporation organized under the laws of the Province of Saskatchewan (“Seller”), MONTGOMERY INDUSTRIES INC., a corporation organized under the laws of the Province of Saskatchewan (“Montgomery”), STANISLAUS M. (“Monty”) SHIVAK, an individual residing in the Province of Saskatchewan (“Shivak”), and SHIVAK HOLDINGS LTD., a corporation organized under the laws of the Province of Saskatchewan (“Shareholder,” and together with Montgomery and Shivak, the “Principals;” Seller and the Principals are sometimes referred to collectively as the “Selling Parties”).

BACKGROUND

     A. Shareholder, which is wholly-owned by Shivak and Becky Shivak, his spouse, owns a majority of the outstanding capital stock of Montgomery, which in turns owns all of the outstanding capital stock of Seller, and Shivak is the president and a director of each of Seller, Montgomery and Shareholder.

     B. Until February 11, 2005, Montgomery had been engaged in the business of manufacturing and selling (directly or indirectly through third parties) a product known as the Autoboom, an automatic boom height control system for agricultural spray booms.

     C. Until February 11, 2005, Shareholder had owned certain of the Intellectual Property Assets used in the Business.

     D. As of February 11, 2005, Montgomery and Shareholder assigned to Seller all of the assets used in or relating to the Business (as defined herein), other than the Excluded Assets (as defined herein).

     E. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Assets (as defined herein) used in or relating to the Business (as defined herein), except for all Intellectual Property used in the Business.

     F. Seller desires to sell to Raven, and Raven intends to purchase from Seller, all of the Intellectual Property used in or relating to the Business.

     G. Buyers do not intend to assume any of the liabilities of any Selling Party or any liabilities otherwise relating to the Business, except those specifically set forth in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and intending to be legally bound, the parties hereby agree as follows:

AGREEMENT

1.   DEFINITIONS AND USAGE

     1.1 Definitions. For purposes of this Agreement, the terms and variations thereof have the meanings specified or referred to in the Appendix of Definitions attached hereto.

     1.2 Usage.

          (a) Interpretation. In this Agreement, unless a clear contrary intention appears:

    (i) the singular number includes the plural number and vice versa;

    (ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

    (iii) reference to any gender includes each other gender;

    (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof;

    (v) reference to any Legal Requirement means such Legal Requirement as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder, and reference to any section or other provision of any Legal Requirement means that provision of such Legal Requirement from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;

    (vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Article, Section or other provision hereof;

    (vii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

    (viii) “or” is used in the inclusive sense of “and/or”;

    (ix) with respect to the determination of any period of time, “from” means “from and including” and “to” means “to but excluding”;

    (x) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; and

    (xi) references to all forms of currency shall mean United States Dollars.

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          (b) Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP.

          (c) Legal Representation of the Parties. This Agreement was negotiated by the parties with the benefit of legal representation, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party shall not apply to any construction or interpretation hereof.

2.   SALE AND TRANSFER OF ASSETS; CLOSING

     2.1 Assets to be Acquired. Upon the terms and subject to the conditions set forth in this Agreement, at each of the Closings, but effective as of the Effective Time, Seller (or the Selling Parties if any Assets are not owned by Seller) shall sell, convey, assign, transfer and deliver to Buyer and Raven, and Buyer and Raven shall collectively purchase and acquire from Seller, free and clear of any Encumbrances, all of the Seller’s (or the Selling Parties’ with regard to Assets not owned by Seller) right, title and interest in and to all of Seller’s (or the Selling Parties’ with regard to Assets not owned by Seller) property and assets, real, personal or mixed, tangible and intangible, of every kind and description, wherever located (the “Assets”), except the Excluded Assets (as defined in Section 2.2, below), including the following (all such Assets conveyed hereunder to Buyer, as described in paragraph (a) below, and to Raven, as described in paragraph (b) below, collectively referred to hereinafter as the “Acquired Assets”):

          (a) Assets Acquired by Buyer. The following Assets will be conveyed to Buyer at the First Closing:

    (i) all Tangible Personal Property, including those items described in Schedule 2.1(i)(i);

    (ii) all Inventories;

    (iii) all Accounts Receivable;

    (iv) all cash and cash equivalents;

    (v) all Seller Contracts and all outstanding offers or solicitations made by or to Seller to enter into any Contract;

    (vi) all Governmental Authorizations and all pending applications therefore or renewals thereof, in each case to the extent transferable to Buyer, including those listed in Schedule 3.16(b);

    (vii) all data and Records related to the operations of Seller, Montgomery or the Business, including client and customer lists and Records, referral sources, research and development reports and Records, production reports and Records, service and warranty Records, equipment logs, operating guides and manuals, financial and accounting Records, creative materials, advertising materials, promotional materials, studies, reports,

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correspondence and other similar documents and Records and, subject to Legal Requirements, copies of all personnel Records; provided however, that Seller shall be entitled to retain one copy of all such Records;

    (viii) all of the Selling Parties’ rights, claims, credits, causes of action or rights of set-off against third parties relating to the Acquired Assets, including without limitation, rights under manufacturers’ or vendors’ warranties; and

    (ix) all deferred charges, advance payments, prepaid items (other than insurance), security and other deposits, claims for refunds (other than refunds of Taxes), rights to receive or claims for insurance proceeds.

          (b) Assets Acquired by Raven. At the Second Closing, Raven will acquire from the Selling Parties all of the intangible rights and property of the Selling Parties used in or relating to the Business, including the Intellectual Property Assets, going concern value, goodwill, telephone, telecopy and e-mail addresses and listings;

     Notwithstanding the foregoing, except for the Assumed Liabilities, the transfer of the Acquired Assets pursuant to this Agreement shall not include the assumption of any Liability related to either the Business or the Assets.

     2.2 Excluded Assets. Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, Acquired Assets shall not include any of the following Assets:

          (a) rights of Seller under this Agreement and under those Seller Contracts, if any, identified on Schedule 2.2(a);

          (b) all of Seller’s (or Montgomery’s) interest in any Real Property, including any Real Property Lease;

          (c) Tax records and returns of Seller or Montgomery, all deferred tax balances, and all refunds or claims for refunds of Taxes previously paid by Seller or Montgomery (or paid by a Related Person of Seller on behalf of, or for the benefit of, Seller);

          (d) the corporate minute books and stock ledgers of Seller;

          (e) the employment Records of all employees of Seller;

          (f) the capital stock or other equity securities of Seller; and

          (g) those Assets, if any, expressly designated in Schedule 2.2(g) whether or not duplicative of any of the above-listed Excluded Assets.

     2.3 Consideration. The consideration for the Acquired Assets (the “Purchase Price”) shall be as follows: (A) cash consideration consisting of (i) Two Million Six Hundred Fifteen Thousand and No/100 Dollars ($2,615,000.00) (the “Closing Payment”), (ii) the Deferred Amount, and (iii) the Future Payment Amounts; plus (B) the assumption of the Assumed Liabilities. Subject

4

to the terms of this Agreement and the Transaction Documents, Buyers will deliver the cash consideration portion of the Purchase Price to Seller in three (3) portions as follows:

          (a) Cash at Closing. The Closing Payment to Seller by wire transfer or delivery of other immediately available funds at the Second Closing.

          (b) Deferred Amount. The Deferred Amount shall be paid by Raven within sixty (60) days of the Second Closing, in accordance with Section 2.7.

          (c) Future Payment Amounts. Raven shall pay the Future Payment Amounts in quarterly installments following the Second Closing, as described in Section 2.8.

Subject to the payment of the Deferred Amount and the Future Payment Amount, the balance of the Purchase Price shall be deemed paid at First Closing by the execution and delivery of the Assignment and Assumption Agreement.

     2.4 Assumed Liabilities. Effective as of the Effective Time, Buyer shall assume and agree to discharge only those Liabilities of Seller specified in subparagraphs (a) through (c) below or specifically listed on Schedule 2.4 (the “Assumed Liabilities”):

          (a) any and all Liabilities of Seller arising out of Seller Contracts acquired by Buyer arising after the First Closing and specified on Schedule 2.4;

          (b) any and all Liabilities of Seller arising out of vendor and supplier arrangements, purchase orders and customer relationships arising after the First Closing and specified on Schedule 2.4; and

          (c) open accounts payable of Seller specified on Schedule 2.4.

Except as expressly set forth in this Section 2.4, Buyers shall not assume or be responsible at any time for any Liability or commitment of Seller, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, or otherwise, including any Liabilities or commitments of Seller incident to, arising out of or incurred with respect to, this Agreement and the Contemplated Transactions (including any and all sales, income or other Taxes arising herefrom or therefrom other than any Tax for which Buyers are liable under any Legal Requirement). Without limiting the generality of the foregoing, Seller expressly acknowledges and agrees that Seller shall retain, and that Buyers shall not assume or otherwise be obligated to pay, perform, defend or discharge, (a) any Liability of Seller or Montgomery for Taxes, whether measured by income or otherwise, (b) any Liability of Seller or Montgomery in connection with any employees or employee benefit plan, program or agreement, (c) any Liability of Seller or Montgomery under any Legal Requirement relating to health, safety, hazardous materials and environmental matters applicable to the Business and/or the Facilities (whether or not owned by Seller) arising prior to the Second Closing, (d) any product liability pertaining to products sold or manufactured by Seller or Montgomery prior to the Second Closing, (e) any Liability of Seller or Montgomery relating to any default taking place before the Second Closing under any of the Assumed Liabilities to the extent such default created or increased the Liability, (f) any obligation of the Seller or Montgomery to their respective shareholders (or other equity owners), any Related Person of Seller or Montgomery or shareholder of

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Seller or Montgomery or any party claiming to have a right to acquire any capital stock or other securities of Seller or Montgomery, or (g) any Liability of any of the Selling Parties arising under or relating to that certain Marketing Agreement dated December 20, 2003 (the “Marketing Agreement”), by and between Seller and Maxim Marketing Inc. (“Maxim”), or any other Liability in any way related to or arising out of the relationship between any of the Selling Parties and Maxim. Seller further agrees to satisfy and discharge as the same shall become due all Liabilities of Seller not specifically assumed by Buyer hereunder.

     2.5 Allocation. The Purchase Price shall be allocated among the Acquired Assets as follows: (i) an amount equal to the Seller’s aggregate book value of the Acquired Assets being sold pursuant to Section 2.1(a) shall be allocated among such assets in accordance with Seller’s book value for such assets on the First Closing; and (ii) the balance of the Purchase Price shall be allocated to the assets being sold pursuant to Section 2.1(b). After the Second Closing, the parties shall make consistent use of this allocation and fair market value for all Tax purposes and in all filings, declarations and reports with CRA and other applicable governmental authorities in respect thereof. In any Proceeding related to the determination of any Tax, neither Buyer nor Seller shall contend or represent that such allocation is not a correct allocation.

     2.6 Closings. The purchase and sale of the portion of the Acquired Assets being sold and assigned by Seller to Buyer, as described in Section 2.1(a) (the “First Closing”), will take place at the offices of Maslon Edelman Borman & Brand, LLP, 90 South Seventh Street, Suite 3300, Minneapolis, Minnesota 55402, commencing at 5:00 p.m. (local time) on February 17, 2005, unless Buyer and Seller otherwise agree. The purchase and sale of the portion of the Acquired Assets being sold and assigned by Seller to Raven, as described in Section 2.1(b) (the “Second Closing” and together with the First Closing, the “Closings”), will take place at the offices of Maslon Edelman Borman & Brand, LLP, 90 South Seventh Street, Suite 3300, Minneapolis, Minnesota 55402, commencing at 5:00 p.m. (local time) on February 18, 2005, unless Buyer and Seller otherwise agree.

     2.7 Determination of Deferred Amount. The “Deferred Amount,” which may be a positive or negative number, is an amount equal to Two Hundred Thousand and No/100 Dollars ($200,000.00), plus (or minus) the agreed-upon book value of the Net Tangible Assets (or liabilities, if a negative number), as determined in accordance with this Section 2.7. Raven shall pay to Seller (in the event the Deferred Amount is a positive number), or Seller shall pay to Raven (in the event the Deferred Amount is a negative number), the Deferred Amount on or before the third (3rd) Business Day immediately following the final determination of the Deferred Amount. The Deferred Amount will be determined as follows:

          (a) Within twenty-one (21) days following the First Closing, Raven shall prepare and deliver to Seller a statement of the Net Tangible Assets as of the Effective Time (“Final Statement of Net Tangible Assets”), which shall reflect values for the Net Tangible Assets as of the Effective Time, and is prepared in a manner consistent with the statement of Net Tangible Assets as of November 30, 2004 attached hereto as Exhibit 2.7 (the “November Statement of Net Tangible Assets”). In preparing the Final Statement of Net Tangible Assets, to the extent asset values are booked in Canadian dollars, such values shall be converted to United States dollars based on the exchange rate for the previous Business Day from the date the Final Statement of Net Tangible

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Assets is prepared and delivered, as published by the Federal Reserve Bank of New York. If within 7 days following delivery by Raven of the Final Statement of Net Tangible Assets, as prepared by Raven, and Raven’s determination of the Deferred Amount, Seller has not given Raven written notice of its objection to the Raven’s determination of the Deferred Amount (which notice shall state in reasonable detail the basis of Seller’s objection), then the Deferred Amount as determined by Raven shall be final and binding on the Parties.

          (b) If Seller duly gives Raven notice of objection to the Deferred Amount as determined by Raven, and if Seller and Buyer, within 7 days of Raven’s receipt of such objection notice, fail to resolve all their differences with respect to the calculation of a final and binding Deferred Amount, each of Raven and Seller shall submit for resolution its proposed Final Statement of Net Tangible Assets and its calculation of the Deferred Amount to an independent chartered accounting firm of national standing that is mutually acceptable to Raven and Seller, in the event that they cannot agree as to such accounting firm, to a national independent chartered accounting firm chosen by the President of the American Arbitration Association (“AAA”) on application of such parties. Such submission to a mutually acceptable accounting firm or such application to the AAA, as the case may be, shall be within 45 days of Second Closing. In the event that application is made to the AAA, then, within two (2) Business Days of the selection by the President of the AAA of such national independent accounting firm, each of Raven and Seller shall submit to such firm its Final Statement of Net Tangible Assets and its calculation of the Deferred Amount. Such firm shall audit each item in dispute and prepare a final and binding Final Statement of Net Tangible Assets and, based thereon, determine the final Deferred Amount in accordance with this Agreement. Raven and Seller shall adjust the Deferred Amount of the Purchase Price in accordance with such determination. The fees and expenses of such national independent accounting firm employed pursuant to this paragraph shall be borne by the party whose position with respect to the final Deferred Amount is accepted by such accounting firm, and, if neither party’s position is accepted in its entirety by such accounting firm, then the accounting firm shall determine the extent of each party’s responsibility to pay such accounting firm’s fees.

     2.8 Future Payment Amounts. Following the Second Closing, Seller shall be entitled to receive additional cash payments (the “Future Payment Amounts”) consisting of an Installment Amount (as defined below) and an Earn-Out Amount (as defined below) from Raven in accordance with this Section 2.8.

          (a) Installment Payments. An amount of Eight Hundred Thousand and No/100 Dollars ($800,000.00) (the “Installment Amount”). The Installment Amount shall be payable in quarterly installments equal to six percent (6%) of Net Sales up to an aggregate amount within forty-five (45) days following the end of each quarter beginning with the quarter ended April 30, 2005 and continuing each quarterly period thereafter until the earlier of January 31, 2013 or until the maximum Installment Amount has been paid in full. If the aggregate amount of Net Sales does not reach Thirteen Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 ($13,333,333.33) by January 31, 2013, the Purchase Price for the Intellectual Property Assets being acquired by Raven shall be reduced by the amount of six percent (6%) of the difference between Thirteen Million Three Hundred Thirty Three Thousand Thirty-Three and 33/100 ($13,333,333.33) and the actual aggregate Net Sales, and the Installment Amount shall be reduced by a corresponding amount.

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          (b) Earn-Out Amount. An additional future amount equal to six percent (6%) of aggregate Net Sales in excess of Thirteen Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($13,333,333.33), to a maximum of Thirty Million Four Hundred Sixteen Thousand Six Hundred Sixty-Six and No/Dollars ($30,416,666.00) of future aggregate Net Sales (the “Earn-Out Amount”). The Earn-Out Amount shall be payable in quarterly installments within forty-five (45) days following the end of each quarter, beginning with the quarter ended April 30, 2005, and continuing each quarter thereafter until the maximum Earn-Out Amount has been paid.

          (c) License by Raven. If, following the Second Closing and prior to the satisfaction of Raven’s obligations under paragraphs (a) and (b) above, Raven licenses or otherwise transfers to a third party that is not a Related Party of Raven all of the technology relating to or used in the manufacture of a Business Product in exchange for a royalty or other future right to payment, then Seller also shall be entitled to receive twenty-five percent (25%) of such future payments if and to the extent received by Raven (or any Related Party of Raven) in satisfaction of Raven’s then remaining obligation to pay the Installment Amount and the Earn-Out Amount.

          (d) Sale or Disposition by Raven. In the event Raven sells or otherwise assigns all or substantially all of the Acquired Assets, including the technology relating to or used in the manufacture of a Business Product, to a third party that is not a Related Party of Raven, the terms of such transaction shall provide that the purchaser or assignor of such Acquired Assets shall assume Raven’s obligations under this Section 2.8, and Raven shall obtain and deliver to Seller a written acknowledgment directed to Seller from such Transferee.

          (e) Delivery of Statements; Inspection. In connection with each payment of the Future Payment Amounts, Raven shall deliver to Seller a statement showing in reasonable detail a calculation of the Future Payment Amounts for each quarterly period. If there are no Net Sales in any quarterly period, Buyer shall deliver a statement to Seller so indicating. In order for Seller to determine the correctness of any installment of the Future Payment Amounts payable under this Agreement, upon reasonable notice to Buyer, Buyer shall make its records available to Seller for inspection for three (3) years after each such quarterly payment. Seller may inspect the records of Buyer relating to the Business during regular business hours by an accountant selected by Seller solely for the purpose of verifying the Net Sales used in calculating the Future Payment Amounts. Seller will be entirely responsible for the costs of any such inspection.

     2.9 Material Consents. If and to the extent that any of the Material Consents required under Section 6.3 to have been obtained prior to the First Closing have not been so obtained or are otherwise not in full force and effect, then, notwithstanding anything in Section 2.1 or Section 2.4 to the contrary, neither this Agreement nor the Assignment and Assumption Agreement nor any other of the Transaction Documents shall constitute a sale, assignment, assumption, transfer, conveyance or delivery or an attempted sale, assignment, assumption, transfer, conveyance or delivery of the any Seller Contract to which such Material Consents relate and, following the First Closing, Seller shall use its Best Efforts to obtain such Material Consents as quickly as practicable. Pending the obtaining of such Material Consents, the parties shall cooperate with each other in any reasonable and lawful arrangements designed to provide to Buyer the benefits of use of the applicable Seller Contract for its term (or any right or benefit arising thereunder, including the enforcement for the benefit of Buyer of

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any and all rights of Seller against a third party thereunder). Once such a Material Consent for the sale, assignment, assumption, transfer, conveyance and delivery of a Seller Contract is obtained, Seller shall promptly assign, transfer, convey and deliver such Seller Contract to Buyer, and Buyer shall assume the obligations of Seller thereunder from and after the date of assignment to Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Assignment and Assumption Agreement (which special-purpose agreement the parties shall prepare, execute and deliver in good faith at the time of such transfer, all at no additional cost to Buyer).

     2.10 Transfer Taxes. Buyer shall be liable for and shall pay any federal and provincial sales taxes payable by Buyer in connection with the transfer of the Acquired Assets by Seller to Buyer under applicable Legal Requirements. The parties understand that the Intellectual Property Assets are being sold to Raven and that federal sales tax relating thereto will be required to be paid at the Second Closing. However, Raven will be a registrant for purposes of Part IV of the ETA prior to the First Closing, and therefore is expected to be eligible for a refund of such federal sales taxes. Raven will indemnify Seller for any GST required to be collected from Raven or Buyer on the transfer of the Acquired Assets.

3.   REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES

The Selling Parties represent and warrant to Buyers as follows:

     3.1 Organization and Good Standing.

          (a) Seller is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full corporate power and authority to conduct the Business, to own or use the Assets that it purports to own or use, and to perform all its obligations under the Seller Contracts. Seller is duly qualified to do business as a foreign corporation and is in good standing under the laws of each province and state and other jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. Montgomery is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full corporate power and authority to conduct the Business during the period in which it owned the Assets, to own or use the Assets that it purported to own or use during such period, and to perform all its obligations under the Seller Contracts. Montgomery is duly qualified to do business as a foreign corporation and is in good standing under the laws of each province and state and other jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. Shareholder is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full corporate power and authority to conduct its business, to own or use the Assets that it purported to own during the period in which it owned any Assets. Shareholder is duly qualified to do business as a foreign corporation and is in good standing under the laws of each province and state and other jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification. Schedule 3.1 contains a complete and accurate list of every jurisdiction in which Seller, Montgomery and Shareholder, respectively, are qualified to do business.

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          (b) Seller has no Subsidiary and does not own any shares of capital stock or other securities of any other Person.

     3.2 Enforceability; Authority; No Conflict.

          (a) Upon the execution and delivery by it, this Agreement and the other Transaction Documents to which it is a party constitute the legal, valid and binding obligation of the Selling Parties, as applicable, enforceable against it in accordance with its terms. Each Selling Party has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its respective obligations hereunder and thereunder, and such action has been duly authorized by all necessary action by the board of directors (or equivalent governing body) of each Selling Party and by special resolution of the shareholders of Seller.

          (b) Except as set forth in Schedule 3.2(b), neither the execution and delivery of any of the Transaction Documents nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):

    (i) Breach (A) any provision of any of the Governing Documents of any Selling Party or (B) any resolution adopted by the board of directors or shareholders of any Selling Party;

    (ii) Breach or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which any Selling Party, or any of the Acquired Asset, may be subject;

    (iii) contravene, conflict with or result in a violation or breach of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by a Selling Party or that otherwise relates to the Acquired Assets or to the Business;

    (iv) cause Buyer to become subject to, or to become liable for the payment of, any Tax, except as described in Section 2.10;

    (v) Breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Seller Contract; or

    (vi) result in the imposition or creation of any Encumbrance upon or with respect to any of the Acquired Assets.

          (c) Except as set forth in Schedule 3.2(c), none of the Selling Parties is required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

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     3.3 Capitalization. The authorized capital stock of Seller consists of an unlimited number of share Classes A through H, of which 100 Class A shares of common stock are issued and outstanding, all of which are, and on the First Closing shall be, owned by the Persons listed on Schedule 3.3 and in the amounts listed thereon free and clear of all Encumbrances. The authorized capital stock of Montgomery consists of an unlimited number of share Classes A, B, C and D, all issued shares of which are, and on the First Closing shall be, owned by the Persons listed on Schedule 3.3 and in the amounts listed thereon free and clear of all Encumbrances. Shareholder is wholly owned by Shivak and his spouse, Becky Shivak.

     3.4 Financial Statements. Montgomery has delivered to Buyers an unaudited balance sheet of Montgomery as of November 30, 2004 (the “Balance Sheet”), and the related unaudited statements of income, changes in owners’ equity and cash flows for the 12-month period then ended, including the notes thereto. Such financial statements fairly present (and the financial statements delivered pursuant to Section 2.7 will fairly present) the financial condition and the results of operations, changes in owners’ equity and cash flows of Montgomery as at the respective dates of and for the 12 months ended November 30, 2004, all in accordance with GAAP. The financial statements referred to in this Section 3.4 and those to be delivered pursuant to Section 2.7 reflect and will reflect the consistent application of such accounting principles throughout the periods involved, except as disclosed in the notes to such financial statements. The financial statements have been and will be prepared from and are in accordance with the accounting Records of Montgomery.

     3.5 Books and Records. The books of account and other financial Records of each of Seller and Montgomery, all of which have been made available to Buyer, are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The corporate minute books of each of Seller and Montgomery, all of which have been made available to Buyer, contain accurate and complete Records of all meetings held of, and corporate action taken by the members or other equity holders of each of Seller and Montgomery, respectively, and by the board of directors and committees of the board of directors of Seller and Montgomery, respectively. No meeting of the board of directors of either Seller or Montgomery, or any committee thereof, has been held for which minutes have not been prepared or are not contained in such minute books.

     3.6 Sufficiency of Assets. Except for the Excluded Assets, the Acquired Assets constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated by Seller, and in the manner formerly operated by Montgomery prior to February 11, 2005.

     3.7 Title to Assets; Encumbrances. Except for the Excluded Assets and as set forth on Schedule 3.7, Seller owns good and transferable title to all of the Acquired Assets free and clear of any Encumbrances. The Selling Parties warrant to Buyer that, at the time of the First Closing and the Second Closing, respectively, all Acquired Assets shall be free and clear of all Encumbrances.

     3.8 Real Property. Seller does not own or hold an ownership interest in any Real Property. Schedule 3.8 contains a correct legal description, street address and tax parcel identification number of all tracts, parcels and subdivided lots in which Seller has a leasehold interest

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and an accurate description (by location, name of lessor, date of Lease and term expiry date) of all Real Property Leases.

     3.9 Condition of Facilities.

          (a) Use of the Real Property for the various purposes for which it is presently being used is permitted as of right under all applicable zoning legal requirements and is not subject to “permitted nonconforming” use or structure classifications. All Improvements are in compliance with all applicable Legal Requirements, including those pertaining to zoning, building and the disabled, are in good repair and in good condition, ordinary wear and tear excepted, and are free from latent and patent defects. No part of any Improvement encroaches on any real property not included in the Real Property, and there are no buildings, structures, fixtures or other Improvements primarily situated on adjoining property which encroach on any part of the Land. The Land for each owned Facility abuts on and has direct vehicular access to a public road or has access to a public road via a permanent, irrevocable, appurtenant easement benefiting such Land and comprising a part of the Real Property, is supplied with public or quasi-public utilities and other services appropriate for the operation of the Facilities located thereon and is not located within any flood plain or area subject to wetlands regulation or any similar restriction. There is no existing or proposed plan to modify or realign any street or highway or any existing or proposed eminent domain proceeding that would result in the taking of all or any part of any Facility or that would prevent or hinder the continued use of any Facility as heretofore used in the conduct of the Business.

          (b) Each item of Tangible Personal Property is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the Ordinary Course of Business and is free from latent and patent defects. No item of Tangible Personal Property is in need of repair or replacement other than as part of routine maintenance in the Ordinary Course of Business. Except as disclosed in Schedule 3.9(b), all Tangible Personal Property used in the Business is in the possession of Seller.

     3.10 Accounts Receivable. All Accounts Receivable that are reflected on the Balance Sheet and that will be reflected on the Final Statement of Net Tangible Assets represent or will represent, as the case may be, valid obligations arising from sales actually made or services actually performed by Seller or Montgomery in the Ordinary Course of Business. Except to the extent paid prior to the First Closing, such Accounts Receivable are or will be as of the First Closing current and collectible net of the respective reserves shown on the Balance Sheet or the Final Statement of Net Tangible Assets (which reserves are, and shall be, adequate and calculated consistent with past practice and, in the case of the reserve on the Final Statement of Net Tangible Assets, will not represent a material adverse change in the composition of such Accounts Receivable in terms of aging). Subject to such reserves, each of such Accounts Receivable either has been or will be collected in full, without any setoff, within one hundred twenty (120) days after the day on which it first becomes due and payable. There is no contest, claim, defense or right of setoff, other than returns in the Ordinary Course of Business of Seller (or of Montgomery during the period prior to February 11, 2005), under any Contract with any account debtor of an Account Receivable relating to the amount or validity of such Account Receivable. Schedule 3.10 contains a complete and accurate list of all Accounts Receivable as of the date of the Balance Sheet, which list sets forth the aging of each such Account Receivable.

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     3.11 Inventories. All items included in the Inventories that are reflected on the Balance Sheet and that will be reflected on the Final Statement of Net Tangible Assets consist, or will consist, as the case may be, of a quality and quantity usable and, with respect to finished goods, saleable, within 90 days in the Ordinary Course of Business of Seller (or of Montgomery during the period prior to February 11, 2005) except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Balance Sheet or on the accounting Records of Seller or Montgomery as of the First Closing, as the case may be. Seller is not in possession of any item of Inventory not owned by Seller, including goods already sold. Unless otherwise agreed by the parties, any items that would otherwise be included as Inventory shall be deemed to be obsolete, and, therefore, not included as Inventory, if such items have been on hand for more than 180 days. All of the Inventories have been valued at the lower of cost or market value on a first in, first out basis. Inventories now on hand that were purchased after the date of the Balance Sheet were purchased in the Ordinary Course of Business of Seller (or Montgomery, if purchased prior to February 11, 2005) at a cost not exceeding market prices prevailing at the time of purchase. The quantities of each item of Inventories (whether raw materials, work-in-process or finished goods) are not excessive but are reasonable in the present circumstances of Seller. Work-in-process Inventories are reflected in the Balance Sheet, and will be reflected in the Final Statement of Net Tangible Assets, in accordance with GAAP.

     3.12 No Undisclosed Liabilities. Except as set forth in Schedule 3.12, neither Seller nor Montgomery has any Liability except for Liabilities reflected or reserved against in the Balance Sheet and current liabilities incurred in the Ordinary Course of Business of Seller and Montgomery since the date of the Balance Sheet.

     3.13 Taxes. Seller and Montgomery have filed or caused to be filed on a timely basis all Tax Returns and all reports with respect to Taxes that are or were required to be filed pursuant to applicable Legal Requirements. Seller and Montgomery have paid, or made provision for the payment of, all Taxes that have or may have become due for all periods covered by the Tax Returns or otherwise, or pursuant to any assessment received by either Seller or Montgomery. Except as provided in Schedule 3.13, (a) neither Seller nor Montgomery are currently the beneficiary of any extension of time within which to file any Tax Return, and (b) there are no Encumbrances on any of the Acquired Assets that arose in connection with any failure (or alleged failure) to pay any Tax and none of the Selling Parties has any Knowledge of any basis for assertion of any claims attributable to Taxes which, if adversely determined, would result in any such Encumbrance.

     3.14 No Material Adverse Change. Since the date of the Balance Sheet, there has not been any material adverse change in the Business or the Assets, or the operations, prospects, results of operations or condition (financial or other) of Seller or Montgomery (other than as a result of Montgomery’s transfer of the Assets to Seller on February 11, 2005) (a “Material Adverse Effect”), and no event has occurred or circumstance exists that could reasonably be expected to have a Material Adverse Effect.

     3.15 Employee Plans.

          (a) Schedule 3.15(a) identifies each retirement, pension, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance,

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medical, hospital, dental, vision care, drug, sick leave, disability, salary contribution, legal benefits, unemployment benefits, vacation, incentive or other compensation plan or arrangement or other employee benefit that is maintained, or otherwise contributed to or required to be contributed to, by the Selling Parties relating to the Business or the Acquired Assets for the benefit of employees or former employees of the Seller or Montgomery (the “Employee Plans”) and a true, complete and up to date copy of each Employee Plan has been furnished to the Buyers, including all previous versions and merged plans. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations that are applicable to such Employee Plan. The Selling Parties have delivered to the Buyer the actuarial valuations, if any, prepared for each Employee Plan. Except as described in Schedule 3.15(a):

    (i) all contributions to, and payments from, each Employee Plan that may have been required to be made in accordance with the terms of any such Employee Plan, or with the recommendation of the actuary for such Employee Plan, and, where applicable, the laws of the jurisdictions that govern such Employee Plan, have been made in a timely manner;

    (ii) all material reports, returns and similar documents (including applications for approval of contributions) with respect to any Employee Plan required to be filed with any government agency or distributed to any Employee Plan participant have been duly filed in a timely manner or distributed;

    (iii) there are no pending investigations by any governmental or regulatory agency or authority involving or relating to any Employee Plan, no threatened or pending claims (except for claims for benefits payable in the normal operation of the Employee Plans), suits or proceedings against any Employee Plan or asserting any rights or claims to benefits under any Employee Plan that could give rise to any liability in the event of such investigation, claim, suit or proceeding;

    (iv) no notice has been received by any Selling Party of any complaints or other proceedings of any kind involving Seller, Montgomery or, to the Selling Parties’ knowledge, any of the employees of Seller or Montgomery before any pension board or committee relating to any Employee Plan or to the Business or the Acquired Assets; and

    (v) the assets of each Employee Plan are at least equal to the liabilities of such Employee Plans based on the actuarial assumptions utilized in the most recent valuation preformed by the actuary for such Employee Plan, and neither the Buyer nor any party associated or affiliated with the Buyer will incur any liability with respect to any Employee Plan as a result of the transactions contemplated by this Agreement.

          (b) Employee Accruals. All accruals for unpaid vacation pay, premiums for unemployment insurance, health premiums, Canada Pension Plan premiums, accrued wages, salaries and commissions and employee benefit plan payments have been reflected in the books and records of the Seller.

     3.16 Compliance with Legal Requirements; Governmental Authorizations.

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          (a) Except as set forth in Schedule 3.16(a):

    (i) Seller has been and is in full compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of the Business or the ownership or use of any of the Acquired Assets;

    (ii) no event has occurred or circumstance exists that (with or without notice or lapse of time) (A) may constitute or result in a violation by either Seller or Montgomery of, or a failure on the part of either Seller or Montgomery to comply with, any Legal Requirement or (B) may give rise to any obligation on the part of either Seller or Montgomery to undertake, or to bear all or any portion of the cost of, any Remedial Action of any nature; and

    (iii) None of the Selling Parties has received any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement relating to the Assets or the Business or (B) any actual, alleged, possible or potential obligation on the part of any Selling Party to undertake, or to bear all or any portion of the cost of, any Remedial Action of any nature relating to the Assets or the Business.

     (b) Schedule 3.16(b) contains a complete and accurate list of each Governmental Authorization that is held by a Selling Party and that relates to the Business or the Acquired Assets. Each Governmental Authorization listed or required to be listed in Schedule 3.16(b) is valid and in full force and effect. The Governmental Authorizations listed in Schedule 3.16(b) collectively constitute all of the Governmental Authorizations necessary to permit Seller to lawfully conduct and operate the Business and to permit Seller to own and use the Acquired Assets in the manner in which it currently owns and uses the Acquired Assets.

     3.17 Legal Proceedings; Orders.

          (a) Except as set forth in Schedule 3.17(a), there is no pending or, to the Knowledge of any Selling Party, threatened Proceeding:

    (i) by or against any Selling Party or that otherwise relates to or may affect the Business or any of the Acquired Assets; or

    (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions.

To the Knowledge of any of the Selling Parties, no event has occurred or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Proceeding. The Selling Parties have delivered to Buyers copies of all pleadings, correspondence and other documents relating to each Proceeding listed in Schedule 3.17(a). There are no Proceedings listed or required to be listed in Schedule 3.17(a) that could reasonably be expected to have a Material Adverse Effect.

          (b) Except as set forth in Schedule 3.17(b):

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    (i) there is no Order to which Seller, Montgomery, the Business or any of the Acquired Assets is subject; and

    (ii) to the Knowledge of the Selling Parties, no officer, director, agent or employee of Seller or Montgomery is subject to any Order that prohibits such officer, director, agent or employee from engaging in or continuing any conduct, activity or practice relating to the Business.

          (c) Except as set forth in Schedule 3.17(c):

    (i) Each Selling Party has been and is in compliance with all of the terms and requirements of each Order to which it, the Business or any of the Acquired Assets is or has been subject;

    (ii) no event has occurred or circumstance exists that is reasonably likely to constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any term or requirement of any Order to which any Selling Party, the Business or any of the Acquired Assets is subject; and

    (iii) None of the Selling Parties has received any notice or other communication (whether oral or written) from any Governmental Body or any other Person regarding any actual, alleged, possible or potential violation of, or failure to comply with, any term or requirement of any Order to which Seller, Montgomery, the Business or any of the Acquired Assets is subject.

     3.18 Absence of Certain Changes and Events. Except as set forth in Schedule 3.18, since the date of the Balance Sheet, Seller and Montgomery have collectively conducted the Business only in the Ordinary Course of Business and there has not been any:

          (a) change in Seller’s or Montgomery’s authorized or issued capital stock, grant of any stock option or right to purchase shares of capital stock or equity securities of Seller or Montgomery or issuance of any security convertible into such capital stock or equity securities;

          (b) amendment to the Governing Documents of Seller or Montgomery;

          (c) payment (except in the Ordinary Course of Business) or increase by Seller or Montgomery of any bonuses, salaries or other compensation to any of its respective directors, officers or employees or entry into any employment, severance or similar Contract with any such director, officer or employee;

          (d) adoption of, amendment to or increase in the payments to or benefits under, any Employee Plan;

          (e) damage to or destruction or loss of any property or assets used in the Business, whether or not covered by insurance;

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          (f) entry into, termination of or receipt of notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit or similar Contract to which Seller or Montgomery is a party, or (ii) any Contract or transaction involving a total remaining commitment by Seller or Montgomery of at least $5,000;

          (g) other than Montgomery’s and Shareholder’s transfer of the Assets to Seller on February 11, 2005, sale (other than sales of Inventories in the Ordinary Course of Business), lease or other disposition of any asset or property of the Selling Parties used in the Business (including the Intellectual Property Assets) or the creation of any Encumbrance on any Asset;

          (h) cancellation or waiver of any claims or rights with a value to Seller or Montgomery in excess of $5,000;

          (i) indication by any customer or supplier of an intention to discontinue or change the terms of its relationship with Seller or Montgomery;

          (j) material change in the accounting methods used by Seller or Montgomery; or

          (k) Contract by either Seller or Montgomery to do any of the foregoing.

     3.19 Contracts; No Defaults.

          (a) Schedule 3.19(a) contains an accurate and complete list, and the Selling Parties have delivered to Buyers accurate and complete copies, of:

    (i) each Seller Contract that involves performance of services or delivery of goods or materials by Seller or Montgomery of an amount or value in excess of $5,000;

    (ii) each Seller Contract that involves performance of services or delivery of goods or materials to Seller or Montgomery of an amount or value in excess of $5,000;

    (iii) each Seller Contract that was not entered into in the Ordinary Course of Business and that involves expenditures or receipts of Seller or Montgomery in excess of $5,000;

    (iv) each Seller Contract affecting the ownership of, leasing of, title to, use of or any leasehold or other interest in any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $5,000 and with a term of less than one year);

    (v) each Seller Contract with any labor union or other employee representative of a group of employees relating to wages, hours and other conditions of employment;

    (vi) each Seller Contract (however named) involving a sharing of profits, losses, costs or liabilities by Seller or Montgomery with any other Person;

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    (vii) each Seller Contract containing covenants that in any way purport to restrict the Business activity or limit the freedom of Seller or Montgomery to engage in any line of business or to compete with any Person;

    (viii) each Seller Contract providing for payments to or by any Person based on sales, purchases or profits, other than direct payments for goods;

    (ix) each power of attorney of Seller or Montgomery that is currently effective and outstanding;

    (x) each Seller Contract entered into other than in the Ordinary Course of Business that contains or provides for an express undertaking by Seller or Montgomery to be responsible for consequential damages;

    (xi) each Seller Contract for capital expenditures in excess of $5,000;

    (xii) each written warranty, guaranty and/or other similar undertaking with respect to contractual performance extended by Seller other than in the Ordinary Course of Business; and

    (xiii) each amendment, supplement and modification (whether oral or written) in respect of any of the foregoing.

Schedule 3.19(a) sets forth reasonably complete details concerning such Contracts, including the parties to the Contracts, the date of the Contracts, the amount of the remaining commitment of Seller or Montgomery, as applicable, under the Contracts and the location of Seller’s office where details relating to the Contracts are located.

          (b) Except as set forth in Schedule 3.19(b), neither Shareholder nor Shivak have, and neither may acquire, any rights under, and neither have or may become subject to any obligation or liability under, any Contract that relates to the Business or any of the Acquired Assets.

          (c) Except as set forth in Schedule 3.19(c):

    (i) each Contract identified or required to be identified in Schedule 3.19(a) and which is to be assigned to or assumed by Buyer under this Agreement is in full force and effect and is valid and enforceable in accordance with its terms;

    (ii) each Contract identified or required to be identified in Schedule 3.19(a) and which is being assigned to or assumed by Buyer is assignable by Seller to Buyer without the consent of any other Person; and

    (iii) to the Knowledge of the Selling Parties, no Contract identified or required to be identified in Schedule 3.19(a) and which is to be assigned to or assumed by Buyer under this Agreement could reasonably be expected to have, upon completion or performance thereof, a Material Adverse Affect.

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          (d) Except as set forth in Schedule 3.19(d):

    (i) Seller or Montgomery has been and is in compliance with all applicable terms and requirements of each Seller Contract that is being assumed by Buyer;

    (ii) each other Person that has or had any obligation or liability under any Seller Contract that is being assigned to Buyer has been and is in full compliance with all applicable terms and requirements of such Contract;

    (iii) no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with or result in a Breach of, or give Seller, Montgomery or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Seller Contract that is being assigned to or assumed by Buyer;

    (iv) no event has occurred or circumstance exists under or by virtue of any Contract that (with or without notice or lapse of time) would cause the creation of any Encumbrance affecting any of the Acquired Assets; and

    (v) None of the Selling Parties have given to or received from any other Person any notice or other communication (whether oral or written) regarding any actual, alleged, possible or potential violation or Breach of, or default under, any Contract that is being assigned to or assumed by Buyers hereunder.

          (e) There are no renegotiations of, attempts to renegotiate or outstanding rights to renegotiate any material amounts paid or payable to Seller or Montgomery under current or completed Contracts with any Person having the contractual or statutory right to demand or require such renegotiation and no such Person has made written demand for such renegotiation.

          (f) Each Contract relating to the sale, design, manufacture or provision of products or services by Seller or Montgomery has been entered into in the Ordinary Course of Business of Seller and Montgomery and has been entered into without the commission of any act alone or in concert with any other Person, or any consideration having been paid or promised, that is or would be in violation of any Legal Requirement.

     3.20 Insurance. All of the Acquired Assets are adequately insured for Seller’s benefit and will be so insured through the First Closing and Seller’s or Montgomery’s insurance policies are sufficient for compliance by such party with all applicable Legal Requirements and all material Contracts. None of the Selling Parties has received notice of any pending or threatened termination or non-renewal with respect to any insurance policy listed or required to be listed on Schedule 3.20, and neither Seller nor Montgomery is in default with respect to any obligation pursuant to any such insurance policy. Other than described on Schedule 3.20, there are no pending claims against such insurance by Seller or Montgomery as to which insurers are defending under reservation of rights or have denied liability.

     3.21 Intellectual Property Assets.

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          (a) The term “Intellectual Property Assets” means all intellectual property owned or licensed (as licensor or licensee) by the Selling Parties and used in connection with, or otherwise relating to, the Business, including:

    (i) Montgomery’s name, all assumed fictional business names, trade names, registered and unregistered trademarks, service marks and applications, including, without limitation, the “Autoboom” trade name (collectively, “Marks”);

    (ii) all patents, patent applications and inventions and discoveries that may be patentable (collectively, “Patents”);

    (iii) all registered and unregistered copyrights in both published works and unpublished works (collectively, “Copyrights”);

    (iv) confidential or proprietary information that comprises all know-how, trade secrets, Software, technical information, data, process technology, plans, product designs, drawings and blue prints (collectively, “Trade Secrets”); and

    (v) all rights in Internet web sites and Internet domain names, if any, presently used by the Selling Parties (collectively “Net Names”).

          (b) Schedule 3.21(b) contains a complete and accurate list and summary description, including any royalties paid or received by any of the Selling Parties, and the Selling Parties have delivered to Buyers accurate and complete copies, of all Seller Contracts relating to the Intellectual Property Assets. There are no outstanding and, to the Selling Parties’ Knowledge, no threatened disputes or disagreements with respect to any such Contract.

          (c) Except as set forth in Schedule 3.21(c), the Intellectual Property Assets are all those necessary for the operation of the Business. The Selling Parties collectively own or are the licenses of all right, title and interest in and to each of the Intellectual Property Assets, free and clear of all Encumbrances, and have the right to use without payment to a Third Party all of the Intellectual Property Assets, other than in respect of licenses listed in Schedule 3.21(c).

          (d) Patents. Schedule 3.21(d) contains a complete and accurate list and summary description of all Patents.

    (i) All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination and maintenance fees and proofs of working or use), are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Second Closing.

    (ii) No issued Patent or Patent subject to a pending application has been or is now involved in any interference, reissue, reexamination, or opposition Proceeding. To the Selling Parties’ Knowledge, except as set forth on Schedule 3.21(d), there is no potentially interfering patent or patent application of any Third Party.

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    (iii) Except as set forth in Schedule 3.21(d), (A) no Patent is infringed or, to Seller’s Knowledge, has been challenged or threatened in any way and (B) none of the products manufactured or sold, nor any process or know-how used, by Seller infringes or is alleged to infringe any patent or other proprietary right of any other Person.

    (iv) All products made, used or sold under an issued Patent have been marked with the proper patent notice.

          (e) Marks. Schedule 3.21(e) contains a complete and accurate list and summary description of all Marks.

    (i) All Marks that have been registered with the Canadian Intellectual Property Office are currently in compliance with all formal Legal Requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are valid and enforceable and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Second Closing.

    (ii) No Mark has been or is now involved in any opposition, invalidation or cancellation Proceeding and, to Seller’s Knowledge, no such action is threatened with respect to any of the Marks.

    (iii) To the Selling Parties’ Knowledge, there is no potentially interfering trademark or trademark application of any other Person.

    (iv) No Mark is infringed or, to the Selling Parties’ Knowledge, has been challenged or threatened in any way. None of the Marks used by Seller infringes or is alleged to infringe any trade name, trademark or service mark of any other Person.

    (v) All products and materials containing a registered Mark bear the proper federal registration notice where permitted by law, except as set forth on Schedule 3.21(e).

          (f) Copyrights. Schedule 3.21(f) contains a complete and accurate list and summary description of all Copyrights.

    (i) All of the registered Copyrights are currently in compliance with formal Legal Requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the date of the Second Closing.

    (ii) No Copyright is infringed or, to the Selling Parties’ Knowledge, has been challenged or threatened in any way. None of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any Third Party or is a derivative work based upon the work of any other Person.

    (iii) All works encompassed by the Copyrights have been marked with the proper copyright notice.

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          (g) Trade Secrets. Schedule 3.21(g) sets forth a complete and accurate list and summary description of all Trade Secrets. With respect to each Trade Secret, the documentation relating to such Trade Secret is current, accurate and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. The Selling Parties have taken all reasonable precautions to protect the secrecy, confidentiality and value of all Trade Secrets. The Selling Parties have good title to and an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature and, to the Selling Parties’ knowledge, have not been used, divulged or appropriated either for the benefit of any Person (other than Seller) or to the detriment of the Selling Parties. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way or infringes any intellectual property right of any other Person.

          (h) Net Names. Schedule 3.21(h) contains a complete and accurate list and summary description of all Net Names. All Net Names have been registered in the name of Seller and are in compliance with all formal Legal Requirements. No Net Name has been or is now involved in any dispute, opposition, invalidation or cancellation Proceeding and, to the Selling Parties’ Knowledge, no such action is threatened with respect to any Net Name. To the Selling Parties’ Knowledge, there is no domain name application pending of any other person which would or would potentially interfere with or infringe any Net Name. No Net Name is infringed or, to the Selling Parties’ Knowledge, has been challenged, interfered with or threatened in any way. No Net Name infringes, interferes with or is alleged to interfere with or infringe the trademark, copyright or domain name of any other Person.

     3.22 Environmental Matters. Except as disclosed in Schedule 3.22:

          (a) The Selling Parties are, and at all times have been, in full compliance with, and have not been and are not in violation of or liable under, any Environmental Law. None of the Selling Parties has any basis to expect, nor has any of them or any other Person for whose conduct they are or may be held to be responsible received, any actual or threatened order, notice or other communication from (i) any Governmental Body or private citizen acting in the public interest or (ii) the current or prior owner or operator of any Facilities, of any actual or potential violation or failure to comply with any Environmental Law, or of any actual or threatened obligation to undertake or bear the cost of any Environmental, Health and Safety Liabilities with respect to any Facility or other property or asset (whether real, personal or mixed) in which Seller has or had an interest, or with respect to any property or Facility at or to which Hazardous Materials were generated, manufactured, refined, transferred, imported, used or processed by Seller or any other Person for whose conduct it is or may be held responsible, or from which Hazardous Materials have been transported, treated, stored, handled, transferred, disposed, recycled or received.

          (b) There are no pending or, to the Knowledge of any of the Selling Parties, threatened claims, Encumbrances, or other restrictions of any nature resulting from any Environmental, Health and Safety Liabilities or arising under or pursuant to any Environmental Law with respect to or affecting any Facility or any other property or asset (whether real, personal or mixed) in which Seller has or had an interest.

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          (c) None of the Selling Parties has any Knowledge of or any basis to expect, nor has any of them, or any other Person for whose conduct they are or may be held responsible, received, any citation, directive, inquiry, notice, Order, summons, warning or other communication that relates to Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential violation or failure to comply with any Environmental Law, or of any alleged, actual, or potential obligation to undertake or bear the cost of any Environmental, Health and Safety Liabilities with respect to any Facility or property or asset (whether real, personal or mixed) in which Seller or Montgomery has or had an interest, or with respect to any property or facility to which Hazardous Materials generated, manufactured, refined, transferred, imported, used or processed by Seller or Montgomery or any other Person for whose conduct Seller or Montgomery is or may be held responsible, have been transported, treated, stored, handled, transferred, disposed, recycled or received.

          (d) None of the Selling Parties, nor any other Person for whose conduct any Selling Party is or may be held responsible, has any Environmental, Health and Safety Liabilities with respect to any Facility or, to the Knowledge of the Selling Parties, with respect to any other property or asset (whether real, personal or mixed) in which Seller or Montgomery (or their respective predecessors) has or had an interest or at any property geologically or hydrologically adjoining any Facility or any such other property or asset.

          (e) There are no Hazardous Materials present on or in the Environment at any Facility or at any geologically or hydrologically adjoining property, including any Hazardous Materials contained in barrels, aboveground or underground storage tanks, landfills, land deposits, dumps, equipment (whether movable or fixed) or other containers, either temporary or permanent, and deposited or located in land, water, sumps, or any other part of the Facility or such adjoining property, or incorporated into any structure therein or thereon, except in full compliance with all applicable Environmental Laws. None of the Selling Parties, nor any Person for whose conduct a Selling Party is or may be held responsible, or to the Knowledge of the Selling Parties, any other Person, has permitted or conducted, or is aware of, any Hazardous Activity conducted with respect to any Facility or any other property or Assets (whether real, personal or mixed) in which Seller has or had an interest except in full compliance with all applicable Environmental Laws.

          (f) During any period in which either Seller or Montgomery has operated at or from any Facility, there has been no Release or, to the Knowledge of the Selling Parties, Threat of Release, of any Hazardous Materials at or from any Facility or at any other location where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by any Facility, or from any other property or asset (whether real, personal or mixed) in which Seller or Montgomery has or had an interest, or to the Knowledge of the Selling Parties any geologically or hydrologically adjoining property, whether by Seller, Montgomery or any other Person.

     (g) To the Knowledge of the Selling Parties, at any time not covered by paragraph (f) above, there have been no Release or Threat of Release, of any Hazardous Materials at or from any Facility or at any other location where any Hazardous Materials were generated, manufactured, refined, transferred, produced, imported, used, or processed from or by any Facility, or from any other property or asset (whether real, personal or mixed) in which any Selling Party has or had an

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interest, or any geologically or hydrologically adjoining property, whether by Seller, Montgomery or any other Person.

          (h) The Selling Parties have delivered to Buyers true and complete copies and results of any reports, studies, analyses, tests, or monitoring possessed or initiated by any Selling Party pertaining to Hazardous Materials or Hazardous Activities in, on, or under the Facilities, or concerning compliance, by the Selling Parties or any other Person for whose conduct a Selling Party is or may be held responsible, with Environmental Laws.

     3.23 Product Liability. Other than as described on Schedule 3.23, there has been no claim, notice of claim, recall, demand, investigation or other indication received by Seller or Montgomery concerning potential or alleged defective products (other than customer dissatisfaction returns in the Ordinary Course of Business). There is no material product quality, design, engineering or safety issue concerning any product manufactured, distributed or sold by Seller or Montgomery. All products sold by Seller or Montgomery have complied with all governmental, trade association and other mandatory and voluntary requirements, specifications and other forms of guidance

     3.24 Employees.

          (a) Schedule 3.24(a) contains a complete and accurate list of the following information for each employee, director, independent contractor, consultant and agent of Seller or Montgomery, including each employee on leave of absence or layoff status: employer; name; job title; date of hiring or engagement; date of commencement of employment or engagement; current compensation paid or payable and any change in compensation since December 1, 2004; sick and vacation leave that is accrued but unused; and service credited for purposes of vesting and eligibility to participate under any Employee Plan, or any other employee or director benefit plan.

          (b) To the Knowledge of the Selling Parties, no officer, director, agent, employee, consultant, or contractor of Seller or Montgomery is bound by any Contract that purports to limit the ability of such officer, director, agent, employee, consultant, or contractor (i) to engage in or continue or perform any conduct, activity, duties or practice relating to the Business or (ii) to assign to Seller or to any other Person any rights to any invention, improvement, or discovery. No former or current employee of Seller or Montgomery is a party to, or is otherwise bound by, any Contract that in any way adversely affected, affects, or will affect the ability of Seller, Montgomery or Buyer to conduct the Business as heretofore carried on by Seller and Montgomery.

          (c) Except as described in Schedule 3.24(c), there are no complaints, claims or charges outstanding, or to the Knowledge of the Selling Parties, anticipated, nor are there any orders, decisions, directions or convictions currently registered or outstanding by any tribunal or agency against or in respect of the Seller or Montgomery under or in respect of any employment legislation in any jurisdiction. Schedule 3.24(c) lists all employees in respect of whom the Seller or Montgomery has been advised by the Workers’ Compensation Board that such employees are in receipt of benefits under The Workers’ Compensation Act, 1979 (Saskatchewan). The Seller and Montgomery are each in compliance with The Labour Standards Act (Saskatchewan), The Workers’ Compensation Act, 1979 (Saskatchewan), The Occupational Health and Safety Act and other

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applicable employment legislation in all jurisdictions and without limiting the generality of the foregoing: (i) there are no reviews pending before the Workers’ Compensation Board involving the Seller or Montgomery; (ii) all levies, assessments and penalties made against the Seller or Montgomery pursuant to The Workers’ Compensation Act, 1979 (Saskatchewan) have been paid by the Seller or Montgomery; (iii) there has been no change in the rating assessment applicable to the Seller, Montgomery or the Business under The Workers’ Compensation Act, 1979 (Saskatchewan) during the past five years, except as described in Schedule 3.24(c) (iv) none of the Selling Parties have any Knowledge of any audit currently being performed by the Workers’ Compensation Board; and none is aware of any current or proposed complaints, investigations, prosecutions or orders under The Occupational Health and Safety Act, 1979 (Saskatchewan) and/or the Criminal Code (Canada); and (v) all payments required to be made in trust to the director in respect of termination and/or severance pay under The Labour Standards Act (Saskatchewan) in respect of any employees who have been employed by the Seller or Montgomery or in the Business have been made.

     3.25 Labor Disputes; Compliance. Except as disclosed in Schedule 3.25, neither Seller nor Montgomery has made any Contracts with any labour union or employee association nor made commitments to or conducted negotiations with any labour union or employee association with respect to any future agreements and, none of the Selling Parties has Knowledge of any current attempts to organize or establish any labour union or employee association with respect to any employees of the Seller, Montgomery or the Business nor is there any certification of any such union with regard to a bargaining unit nor any pending application before the Saskatchewan Labour Relations Board. None of the Selling Parties has Knowledge of any facts that would give rise to an application for successorship. Other than grievances brought in the Ordinary Course of Business of Seller or Montgomery, none of which could, individually or collectively with other such grievances, have a Material Adverse Effect on the Business or the right or the ability of the Seller or the Buyer to carry on the Business substantially in the manner in which it has heretofore been carried on, there are no grievances against the Seller or Montgomery, respectively, of which the Seller or Montgomery have received written notice under any collective agreement. Schedule 3.25 describes all work stoppages and strikes (legal or otherwise) that the Business has experienced, including the dates and length of each such occurrence.

     3.26 Affiliated Transactions. All loans, sales, purchases and other transactions between or among any of the Selling Parties or any other Related Person of a Selling Party which are currently in effect are described in Schedule 3.26.

     3.27 Brokers or Finders. None of the Selling Parties nor any of their respective Representatives have incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payments in connection with the sale of the Business or the Acquired Assets or the Contemplated Transactions.

     3.28 Termination of Marketing Agreement. The Marketing Agreement will be duly and validly terminated by Montgomery effective as of the Second Closing and neither Seller nor Montgomery has any further obligation to Maxim under such Agreement or otherwise relating to or arising under Seller’s or Montgomery’s business relationship with Maxim. Montgomery’s termination of the Marketing Agreement did not violate any Legal Requirement.

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     3.29 Residency. Seller is a resident of Canada for the purposes of the Tax Act.

     3.30 GST Registration. Seller is a registrant for purposes of Part IX of the ETA whose registration number is 853 535 979.

     3.31 Disclosure.

          (a) No representation or warranty or other statement made by the Selling Parties in this Agreement, the Disclosure Schedules, any supplement to the Disclosure Schedules, the certificates delivered pursuant to Section 6.4 or otherwise in connection with the Contemplated Transactions contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.

          (b) The Selling Parties have no Knowledge of any fact that has specific application to Seller, Montgomery, the Business or the Acquired Assets (other than general economic or industry conditions) and that could reasonably be expected to have a Material Adverse Affect that has not been set forth in this Agreement or the Disclosure Schedules.

4.   REPRESENTATIONS AND WARRANTIES OF BUYERS

Buyer and Raven, respectively, represent and warrant to the Selling Parties as follows:

     4.1 Organization and Good Standing. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Province of Nova Scotia. Raven is a corporation duly organized, validly existing and in good standing under the laws of the State of South Dakota.

     4.2 Authority; No Conflict.

          (a) This Agreement constitutes the legal, valid and binding obligation of Buyers, enforceable against each of them in accordance with its terms. Upon the execution and delivery by Buyers of each of the Transaction Documents to which Buyer or Raven, respectively, is a party (collectively, the “Buyer Closing Documents”), each of the Buyer Closing Documents will constitute the legal, valid and binding obligation of Buyer or Raven, as applicable, enforceable against Buyer or Raven, as applicable, in accordance with its respective terms. Buyer and Raven each have the absolute and unrestricted right, power and authority to execute and deliver this Agreement and the other Buyer Closing Documents and to perform its respective obligations under this Agreement and the other Buyer Closing Documents, and such action has been duly authorized by all necessary corporate action of each of Buyer and Raven, respectively.

          (b) Neither the execution and delivery of any of the Buyer Closing Documents by Buyer or Raven nor the consummation or performance of any of the Contemplated Transactions by Buyer or Raven will give any Person the right to prevent, delay or otherwise interfere with any of the Contemplated Transactions pursuant to:

    (i) any provision of Buyer’s or Raven’s respective Governing Documents;

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    (ii) any resolution adopted by the board of directors or shareholders of Buyer and Raven, respectively;

    (iii) any Legal Requirement or Order to which Buyer or Raven, respectively, may be subject; or

    (iv) any Contract to which Buyer or Raven, respectively, is a party or by which Buyer or Raven, respectively, may be bound.

Neither Buyer nor Raven is or will not be required to obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

     4.3 Certain Proceedings. There is no pending Proceeding that has been commenced against Buyer or Raven and that challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Contemplated Transactions. To Buyers’ Knowledge, no such Proceeding has been threatened.

     4.4 Brokers or Finders. Neither Buyer, Raven nor any of their respective Representatives has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Contemplated Transactions.

     4.5 GST Registration. Buyer is a registrant for purposes of Part IX of the ETA whose registration number is 853 670 636.

5.   PRE-CLOSING COVENANTS.

     5.1 Access and Investigation. Between the date of this Agreement and the Second Closing, and upon reasonable advance notice received from Buyer, Seller shall (and the Selling Parties shall cause Seller to) (a) afford Buyers and their Representatives full and free access, during regular business hours, to Seller’s personnel, properties, Contracts, Governmental Authorizations, books and Records and other documents and data, such rights of access to be exercised in a manner that does not unreasonably interfere with the operations of Seller; (b) furnish Buyers with copies of all such Contracts, Governmental Authorizations, books and Records and other existing documents and data as Buyer may reasonably request; (c) furnish Buyers with such additional financial, operating and other relevant data and information as Buyers may reasonably request; and (d) otherwise cooperate and assist, to the extent reasonably requested by Buyers, with Buyers’ investigation of the properties, assets and financial condition related to Seller. In addition, Buyer shall have the right to have the Facilities and Tangible Personal Property inspected by Buyer, at Buyer’s sole cost and expense, for purposes of determining the physical condition of the Facilities and Tangible Personal Property.

     5.2 Operation of the Business by Seller. Between the date of this Agreement and the Second Closing, Seller shall (and the Selling Parties shall cause Seller to):

          (a) operate the Business only in the Ordinary Course of Business;

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          (b) except as otherwise directed by Buyer in writing, and without making any commitment on Buyer’s behalf, use its Best Efforts to preserve intact its current business organization, keep available the services of its officers, employees and agents and maintain its relations and good will with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with it;

          (c) confer with Buyer prior to implementing operational decisions of a material nature;

          (d) otherwise report periodically to Buyer concerning the status of its business, operations and finances;

          (e) make no material changes in management personnel without prior consultation with Buyer;

          (f) maintain the Assets in a state of repair and condition that complies with Legal Requirements and is consistent with the requirements and normal conduct of Seller’s business;

          (g) keep in full force and effect, without amendment, all material rights relating to Seller’s business;

          (h) comply with all Legal Requirements and contractual obligations applicable to the operations of Seller’s business;

          (i) continue in full force and effect the insurance coverage under the policies set forth in Section 3.20 or substantially equivalent policies;

          (j) except as required to comply applicable Legal Requirements, not amend, modify or terminate any Employee Plan without the express written consent of Buyer, and except as required under the provisions of any Employee Plan, not make any contributions to or with respect to any Employee Plan without the express written consent of Buyer, provided that Seller shall contribute that amount of cash to each Employee Plan necessary to fully fund all of the benefit liabilities of such Employee Plan on a plan-termination basis as of the First Closing;

          (k) cooperate with Buyer and assist Buyer in identifying the Governmental Authorizations required by Buyer to operate the business from and after the Second Closing and either transferring existing Governmental Authorizations of Seller or Montgomery to Buyer, where permissible, or obtaining new Governmental Authorizations for Buyer;

          (l) upon request from time to time, execute and deliver all documents, make all truthful oaths, testify in any Proceedings and do all other acts that may be reasonably necessary or desirable in the opinion of Buyer to consummate the Contemplated Transactions, all without further consideration; and

          (m) maintain all books and Records of Seller or Montgomery relating to the Business in the Ordinary Course of Business.

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     5.3 Negative Covenant. Except as otherwise expressly permitted herein, between the date of this Agreement and the Second Closing, Seller shall not, and none of the other Selling Parties shall permit Seller to, without the prior written Consent of Buyer, (a) take any affirmative action, or fail to take any reasonable action within its control, as a result of which any of the changes or events listed in Sections 3.14 or 3.18 would be likely to occur; (b) make any modification to any material Contract or Governmental Authorization; (c) allow the levels of raw materials, supplies or other materials included in the Inventories to vary materially from the levels customarily maintained; or (d) enter into any compromise or settlement of any litigation, proceeding or governmental investigation relating to the Assets, the Business or the Assumed Liabilities.

     5.4 Required Approvals. As promptly as practicable after the date of this Agreement, Seller shall make all filings required by Legal Requirements to be made by it in order to consummate the Contemplated Transactions. The Selling Parties also shall cooperate with Buyers and their Representatives with respect to all filings that Buyers elect to make or, pursuant to Legal Requirements, shall be required to make in connection with the Contemplated Transactions. The Selling Parties also shall cooperate with Buyers and their Representatives in obtaining all Material Consents.

     5.5 Notification. Between the date of this Agreement and the Second Closing, the Selling Parties shall promptly notify Buyers in writing if any of them becomes aware of (a) any fact or condition that causes or constitutes a Breach of any of the Selling Parties’ representations and warranties made as of the date of this Agreement or (b) the occurrence after the date of this Agreement of any fact or condition that would or be reasonably likely to (except as expressly contemplated by this Agreement) cause or constitute a Breach of any such representation or warranty had that representation or warranty been made as of the time of the occurrence of, or Seller’s or any other Selling Party’s discovery of, such fact or condition. Should any such fact or condition require any change to the Disclosure Schedules, the Selling Parties shall promptly deliver to Buyer a supplement to the Disclosure Schedules specifying such change. Such delivery shall not affect any rights of Buyer under Section 8.2 and Article 10. During the same period, the Selling Parties also shall promptly notify Buyer of the occurrence of any Breach of any covenant of the Selling Parties in this Article 5 or of the occurrence of any event that may make the satisfaction of the conditions in Article 6 impossible or unlikely.

     5.6 No Negotiation. Until such time as this Agreement shall be terminated pursuant to Section 8.1, none of the Selling Parties shall directly or indirectly solicit, initiate, encourage or entertain any inquiries or proposals from, discuss or negotiate with, provide any nonpublic information to or consider the merits of any inquiries or proposals from any Person (other than Buyers) relating to any business combination transaction involving Seller, including the sale by Montgomery of Seller’s stock, the merger or consolidation of Seller or the sale the Business or any of the Assets (other than in the Ordinary Course of Business). The Selling Parties shall notify Buyers of any such inquiry or proposal within twenty-four (24) hours of receipt or awareness of the same by any Selling Party.

     5.7 Best Efforts. The Selling Parties shall use their Best Efforts to cause the conditions in Article 6 to be satisfied, and Buyers shall use their Best Efforts to cause the conditions in Article 7 to be satisfied.

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     5.8 Payment of Liabilities. Seller shall pay or otherwise satisfy in the Ordinary Course of Business all of its Liabilities and obligations.

6.   CONDITIONS PRECEDENT TO BUYERS’ OBLIGATION TO CLOSE

Buyers’ obligation to purchase the Acquired Assets and to take the other actions required to be taken by Buyer and/or Raven at the First Closing and/or Second Closing, as applicable, is subject to the satisfaction, at or prior to the respective Closing, of each of the following conditions (any of which may be waived by Buyers, in whole or in part):

     6.1 Accuracy of Representations. All of the Selling Parties’ representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), shall have been accurate in all material respects as of the date of this Agreement, and, if either Closing occurs on a date subsequent thereto, shall be accurate in all material respects as of the time of such Closing as if then made, without giving effect to any supplement to the Disclosure Schedules.

     6.2 Seller’s Performance. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closings (considered collectively), and each of these covenants and obligations (considered individually), shall have been duly performed and complied with in all material respects.

     6.3 Consents. Each of the Consents identified in Exhibit 6.3 (the “Material Consents”) shall have been obtained and be in full force and effect.

     6.4 Seller Closing Documents. The Selling Parties, as the case may be, shall deliver, or cause to be delivered, to Buyer or Raven, as appropriate:

          (a) a bill of sale, in form and substance acceptable to Buyer (the “Bill of Sale”) and executed by the Selling Parties, for all of the Acquired Assets that are Tangible Personal Property;

          (b) an assignment, in form and substance acceptable to Buyer (the “Assignment and Assumption Agreement”) and executed by the Selling Parties, of all of the Acquired Assets that are intangible personal property, which assignment shall also contain Buyer’s undertaking and assumption of the Assumed Liabilities;

          (c) assignments to Raven of all Intellectual Property Assets, including all registered Marks, Patents and Copyrights, each in form and substance satisfactory to Raven and executed by the appropriate Selling Party or Parties;

          (d) an employment agreement, in form and substance satisfactory to Buyer, executed by Shivak (the “Employment Agreement”);

          (e) a real property lease agreement between Buyer and Shareholder relating to the lease by Buyer of the Facilities owned by Shareholder and used in the Business;

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          (f) a certificate of the Secretary of Seller certifying, as complete and accurate as of the First Closing, attached copies of the Governing Documents of Seller, certifying and attaching all requisite resolutions or actions of Seller’s board of directors (or equivalent) approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Contemplated Transactions and certifying to the incumbency and signatures of the officers of Seller executing this Agreement and each of the other Transaction Documents;

          (g) a certificate of the Secretary of Shareholder certifying, as complete and accurate as of the First Closing, attached copies of the Governing Documents of Shareholder, certifying and attaching all requisite resolutions or actions of Shareholder’s board of directors (or equivalent) approving the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Contemplated Transactions and certifying to the incumbency and signatures of the officers of Shareholder executing this Agreement and each of the other Transaction Documents;

          (h) a certificate signed by the president of Seller and Shareholder, dated as of the First Closing or Second Closing, as applicable, stating that the conditions specified in Section 6.1 and Section 6.2 have been fully satisfied;

          (i) an opinion of Seller’s Counsel, dated as of the First Closing or the Second Closing, as applicable, in form and substance acceptable to Buyers;

          (j) releases, acceptable to Buyers, of all Encumbrances on the Acquired Assets;

          (k) certificates dated as of a date not earlier than the thirtieth (30th) day immediately preceding the First Closing as to the good standing of Seller and Shareholder and payment of all applicable provincial Taxes by Seller and Shareholder, executed by the appropriate officials of the Province of Saskatchewan and each jurisdiction in which Seller is licensed or qualified to do business as a foreign corporation as specified in Schedule 3.1;

          (l) the certificate and articles of incorporation and all amendments thereto of Seller, duly certified as of a date not later than the date that is thirty (30) days immediately preceding the First Closing, by the Director of the Corporations Branch of the jurisdiction of Seller’s incorporation; and

          (m) such other documents relating to the Contemplated Transactions as Buyer may reasonably request that are customary for similar transactions.

     6.5 No Conflict. Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), contravene or conflict with or result in a violation of or cause Buyer or Raven or any Related Person of Buyer or Raven to suffer any adverse consequence under (a) any applicable Legal Requirement or Order or (b) any Legal Requirement or Order that has been published, introduced or otherwise proposed by or before any Governmental Body, excluding Bulk Sales Laws.

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7.   CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

The Selling Parties’ obligation to sell the Acquired Assets and to take the other actions required to be taken by any Selling Party at the First or Second Closing, as applicable, is subject to the satisfaction, at or prior to such Closing, of each of the following conditions (any of which may be waived by Seller in whole or in part):

     7.1 Accuracy of Representations. All of Buyer’s and Raven’s respective representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually), shall have been accurate in all material respects as of the date of this Agreement and shall be accurate in all material respects as of the time of the First or Second Closing, as applicable, as if then made.

     7.2 Buyers’ Performance. All of the covenants and obligations that Buyers are required to perform or to comply with pursuant to this Agreement at or prior to the Closings (considered collectively), and each of these covenants and obligations (considered individually), shall have been performed and complied with in all material respects.

     7.3 Buyer Closing Documents. Buyer and/or Raven, as appropriate, shall have, or shall have cause to be, delivered to the Selling Parties:

          (a) the Assignment and Assumption Agreement executed by Buyer;

          (b) the Employment Agreement executed by Buyer;

          (c) a certificate signed by the president or chief financial officer of each of Buyer and Raven, dated the First Closing or the Second Closing, as applicable, stating that the conditions specified in Section 7.1 and Section 7.2 have been fully satisfied;

          (d) a certificate of the Secretaries of each of Buyer and Raven certifying and attaching all requisite resolutions or actions of their respective boards of directors approving the execution and delivery of this Agreement and the other Transaction Document to which it is a party and the consummation of the Contemplated Transactions and certifying to the incumbency and signatures of the officers of Buyer or Raven, as appropriate, executing this Agreement and the other Transaction Documents to which it is a party; and

          (e) such other documents relating to the Contemplated Transactions as Seller may reasonably request that are customary for similar transactions.

8.   TERMINATION.

     8.1 Termination Events. By notice given prior to or at either of the Closings, subject to Section 8.2, this Agreement may be terminated as follows:

          (a) by Buyers if a material Breach of any provision of this Agreement has been committed by a Selling Party and such Breach has not been waived by Buyers;

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          (b) by Seller if a material Breach of any provision of this Agreement has been committed by Buyer or Raven and such Breach has not been waived by Seller;

          (c) by Buyer if any condition in Article 6 has not been satisfied as of the date specified for each Closing in Section 2.6 or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Buyer or Raven to comply with its obligations under this Agreement), and Buyers have not waived such condition on or before such date;

          (d) by Seller if any condition in Article 7 has not been satisfied as of the date specified for each Closing in Section 2.6 or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of a Selling Party to comply with their obligations under this Agreement), and Seller has not waived such condition on or before such date;

          (e) by mutual consent of the parties;

          (f) by Buyers if the Closings have not occurred on or before February 28, 2005, or such later date as the parties may agree upon, unless Buyer or Raven is in material Breach of this Agreement; or

          (g) by the Selling Parties if the Closings have not occurred on or before February 28, 2005, or such later date as the parties may agree upon, unless a Selling Party is in material Breach of this Agreement.

     8.2 Effect of Termination. Each party’s right of termination under Section 8.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 8.1, all obligations of the parties under this Agreement will terminate, except that the obligations of the parties in this Section 8.2 and in Sections 9.12 and 11.1 will survive, provided, however, that, if this Agreement is terminated because of a Breach of this Agreement by the nonterminating party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.

9.   COVENANTS

     9.1 Employees and Employee Benefits.

          (a) Information on Active Employees. For the purpose of this Agreement, the term “Active Employees” shall mean all employees employed on the First Closing by Montgomery or Seller for the Business who are employed exclusively in the Business as currently conducted, including employees on temporary leave of absence, including family medical leave, military leave, temporary disability or sick leave, but excluding employees on long-term disability leave. Montgomery or Seller shall continue to employ all current employees until the First Closing, except for any employees who, prior to the First Closing: are terminated for cause; are terminated with the Buyer’s consent, which consent shall not be unreasonably withheld; voluntarily resign; or retire.

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          (b) Employment of Active Employees by Buyer.

     (i) Buyer is not obligated to hire any Active Employee but may interview all Active Employees. Buyer will provide Seller with a list of Active Employees to whom Buyer has made an offer of employment that has been accepted to be effective on the First Closing Date (the “Hired Active Employees”). Subject to Legal Requirements, Buyer will have reasonable access to the Facilities and personnel Records (including performance appraisals, disciplinary actions, grievances and medical Records) of Montgomery or Seller for the purpose of preparing for and conducting employment interviews with all Active Employees and will conduct the interviews as expeditiously as possible prior to the First Closing. Access will be provided by Montgomery and Seller upon reasonable prior notice during normal business hours. Effective immediately before the First Closing, Montgomery and Seller will terminate the employment of all of its Hired Active Employees.

     (ii) None of the Selling Parties nor their Related Persons shall solicit the continued employment of any Active Employee (unless and until Buyer has informed Seller in writing that the particular Active Employee will not receive any employment offer from Buyer) or the employment of any Hired Active Employee after the First Closing and for a period of three (3) years thereafter.

     (iii) It is understood and agreed that (A) Buyer’s expressed intention to extend offers of employment as set forth in this section shall not constitute any commitment, Contract or understanding (expressed or implied) of any obligation on the part of Buyer to a post-Closing employment relationship of any fixed term or duration or upon any terms or conditions other than those that Buyer may establish pursuant to individual offers of employment, and (B) employment offered by Buyer is “at will” and may be terminated by Buyer or by an employee at any time for any reason (subject to any written commitments to the contrary made by Buyer or an employee and Legal Requirements). Nothing in this Agreement shall be deemed to prevent or restrict in any way the right of Buyer to terminate, reassign, promote or demote any of the Hired Active Employees after the First Closing or to change adversely or favorably the title, powers, duties, responsibilities, functions, locations, salaries, other compensation or terms or conditions of employment of such employees.

          (c) Salaries and Benefits.

     (i) Seller or Montgomery shall be responsible for (A) the payment of all wages and other remuneration due to Active Employees with respect to their services as employees of Seller and Montgomery through the close of business on the First Closing, including pro rata bonus payments and all vacation pay earned prior to the First Closing; (B) the payment of any termination or severance payments and the provision of any applicable health plan continuation coverage; and (C) any and all payments to employees required under The Labour Standards Act (Saskatchewan) and any other applicable legislation pertaining to such employees.

     (ii) Seller or Montgomery shall be liable for any claims made or incurred by Active Employees and their beneficiaries through the First Closing under the Employee

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Plans. For purposes of the immediately preceding sentence, a charge will be deemed incurred, in the case of hospital, medical or dental benefits, when the services that are the subject of the charge are performed and, in the case of other benefits (such as disability or life insurance), when an event has occurred or when a condition has been diagnosed that entitles the employee to the benefit.

          (d) Seller’s and Montgomery’s Retirement and Savings Plans.

     (i) All Hired Active Employees who are participants in Seller’s and Montgomery’s retirement plans shall retain their accrued benefits under Seller’s and Montgomery’s retirement plans as of the First Closing, and Seller and Montgomery (or Seller’s and Montgomery’s retirement plans) shall retain sole liability for the payment of such benefits as and when such Hired Active Employees become eligible therefor under such plans. All Hired Active Employees shall become fully vested in their accrued benefits under Seller’s and Montgomery’s retirement plans as of the First Closing, and Seller and Montgomery will so amend such plans if necessary to achieve this result. Seller and Montgomery shall cause the assets of each Employee Plan to equal or exceed the benefit liabilities of such Employee Plan on a plan-termination basis as of the Effective Time.

     (ii) Seller and Montgomery will cause its savings plan to be amended in order to provide that the Hired Active Employees shall be fully vested in their accounts under such plan as of the First Closing and all payments thereafter shall be made from such plan as provided in the plan.

          (e) No Transfer of Assets. None of the Selling Parties nor their respective Related Persons will make any transfer of pension or other employee benefit plan assets to Buyer.

          (f) Collective Bargaining Matters. Buyer will set its own initial terms and conditions of employment for the Hired Active Employees and others it may hire, including work rules, benefits and salary and wage structure, all as permitted by law. Buyer is not obligated to assume any collective bargaining agreements under this Agreement. Seller and Montgomery shall be solely liable for any severance payment required to be made to its employees due to the Contemplated Transactions. Any bargaining obligations of Buyer with any union with respect to bargaining unit employees subsequent to the First Closing, whether such obligations arise before or after the First Closing, shall be the sole responsibility of Buyer.

          (g) General Employee Provisions.

     (i) Seller and Buyer shall give any notices required by Legal Requirements and take whatever other actions with respect to the plans, programs and policies described in this Section 9.1 as may be necessary to carry out the arrangements described in this Section 9.1.

     (ii) Seller and Buyer shall provide each other with such plan documents and summary plan descriptions, employee data or other information as may be reasonably required to carry out the arrangements described in this Section 9.1.

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     (iii) If any of the arrangements described in this Section 9.1 are determined by any Governmental Body to be prohibited by law, Seller and Buyer shall modify such arrangements to as closely as possible reflect their expressed intent and retain the allocation of economic benefits and burdens to the parties contemplated herein in a manner that is not prohibited by law.

     (iv) Buyers shall not assume any liability for accrued benefits under any of the Employee Plans. Seller shall indemnify and hold Buyers harmless from and against all expenses, claims, damages and losses of any nature whatsoever, suffered or incurred by Buyers as a result of or arising directly or indirectly out of, in connection with or pursuant to any claims by any Active Employees or any other employees of the Business or of the Seller or Montgomery. Such indemnity does not apply to claims by Hired Active Employees as against Buyer which relate solely to the Hired Active Employees’ employment with Buyer following the First Closing Date.

     (v) Buyer shall not have any responsibility, liability or obligation, whether to Active Employees, former employees, their beneficiaries or to any other Person, with respect to any employee benefit plans, practices, programs or arrangements (including the establishment, operation or termination thereof maintained by Seller or Montgomery.

     9.2 Payment of All Taxes Resulting from Sale of Assets by Seller. Except as contemplated by Section 2.10, Seller shall pay in a timely manner all Taxes resulting from or payable in connection with the sale of the Acquired Assets pursuant to this Agreement, regardless of the Person on whom such Taxes are imposed by Legal Requirements.

     9.3 Payment of Other Retained Liabilities. In addition to payment of Taxes pursuant to Section 9.2, the Selling Parties shall pay, or make adequate provision for the payment, in full all of all Liabilities (except Assumed Liabilities) of Seller. If any such Liabilities are not so paid or provided for, or if Buyer reasonably determines that failure to make any payments will impair Buyer’s use or enjoyment of the Acquired Assets or conduct of the Business with the Acquired Assets, Buyer may, at any time after the First Closing, elect to make all such payments directly (but shall have no obligation to do so) and either set off and deduct the full amount of all such payments from any amounts due from Buyer to Seller under any of the Transaction Documents or seek reimbursement from Seller under Section 10.2 of this Agreement (without reference to any limitation contained therein or in Section 10.4).

     9.4 Assumption of Certain Warranty Obligations by Buyer. Buyer shall satisfy Warranty Claims arising from products or services of Seller sold or provided by Seller and Montgomery prior to the First Closing. For purposes of this Agreement, “Warranty Claims” shall mean claims to repair or replace products or services sold or provided by Seller or Montgomery prior to the First Closing and shall exclude any claims for personal injuries or torts resulting from such products or services. Subject to the Deductible described in Section 10.4, the Seller shall be fully liable for payment to Buyer for any Warranty Claims that Buyer satisfies provided that Buyer satisfies such claims (i) by first attempting to repair or replace the subject product or service to the extent reasonably practicable (in which case the amount of such Warranty Claim shall be the actual cost to Buyer to repair or replace without any markup) and (ii) in accordance with the terms and

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conditions of the warranty policies and procedures followed by Seller and Montgomery immediately prior to the First Closing. In the event any Warranty Claims are asserted against Seller or Montgomery, then Seller shall give prompt notice thereof to Buyer in order to permit Buyer the necessary time to exercise its rights and obligations hereunder, evaluate the merits and defend, settle or compromise such Warranty Claim. Buyer may not settle or compromise a single Warranty Claim that exceeds Ten Thousand Dollars ($10,000) without the prior consent of Seller, which shall not be unreasonably withheld or delayed. Within ten (10) days after the end of each quarter following the First Closing, beginning with the quarter ended April 30, 2005, Buyer shall provide a statement to Seller for all such Warranty Claims, indicating the product that is the basis of each such Warranty Claim, the date the product was sold, and the purchaser of the product and will specify Warranty Claim payments, adjustments, returns, and replacements. Notwithstanding anything contained in this section, Buyer shall not be required to satisfy any Warranty Claims if Seller has not paid Buyer, within fourteen (14) days, for any Warranty Claims satisfied that have been invoiced by Buyer to Seller, after the Deductible has been satisfied. Buyer may determine, acting reasonably, whether each warranty claim is valid and may refuse to honor claims it so determines to be invalid.

     9.5 Restrictions on Seller Dissolution and Distributions. Seller shall not dissolve, or make any distribution of the proceeds received pursuant to this Agreement, until thirty (30) days after the completion of all procedures contemplated by Section 2.7.

     9.6 Removal of Excluded Assets. On or before the First Closing, Seller shall remove all Excluded Assets from all Facilities and other Real Property to be occupied by Buyer. Such removal shall be done in such manner as to avoid any damage to the Facilities and other properties to be occupied by Buyer and any disruption of the business operations to be conducted by Buyer after the First Closing. Any damage to the Assets or to the Facilities resulting from such removal shall be paid by Seller at the First Closing. Should Seller fail to remove the Excluded Assets as required by this Section, Buyer shall have the right, but not the obligation, (a) to remove the Excluded Assets at Seller’s sole cost and expense; (b) to store the Excluded Assets and to charge Seller all storage costs associated therewith; (c) to treat the Excluded Assets as unclaimed and to proceed to dispose of the same under the laws governing unclaimed property; or (d) to exercise any other right or remedy conferred by this Agreement or otherwise available at law or in equity. Seller shall promptly reimburse Buyer for all costs and expenses incurred by Buyer in connection with any Excluded Assets not removed by Seller on or before the First Closing.

     9.7 Reports and Returns. Seller shall promptly after the First Closing prepare and file all reports and returns required by Legal Requirements relating to the Business as conducted using the Acquired Assets, to and including the Effective Time.

     9.8 Assistance in Proceedings. Seller will cooperate with Buyer and its counsel in the contest or defense of, and make available its personnel and provide any testimony and access to its books and Records in connection with, any Proceeding involving or relating to (a) any Contemplated Transaction or (b) any action, activity, circumstance, condition, conduct, event, fact, failure to act, incident, occurrence, plan, practice, situation, status or transaction on or before the Second Closing involving Seller or the Business.

     9.9 Noncompetition, Nonsolicitation and Nondisparagement.

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          (a) Noncompetition. For a period of five (5) years after the Second Closing (the “Noncompete Period”), none of the Selling Parties shall, anywhere in the United States and Canada, directly or indirectly invest in, own, manage, operate, finance, control, advise, render services to or guarantee the obligations of any Person engaged in or planning to become engaged in the Restricted Business (as herein after defined); provided, however, that the Selling Parties may purchase or otherwise acquire up to (but not more than) an aggregate of three percent (3%) of any class of the securities of any Person (but may not otherwise participate in the activities of such Person) if such securities are listed on any national or regional securities exchange or securities market or are otherwise publicly-traded securities in the United States or Canada. “Restricted Business” means the Business and any business any part of which competes with, directly or indirectly, the Business. Restricted Business also includes any business in which any Selling Party is currently discussing internally with the intent of entering into within the next two year period and which relates to agricultural spray booms, the Autoboom and any technology derived from or relating to the technology underlying the Autoboom.

          (b) Nonsolicitation. For a period of three (3) years after the Second Closing (the “Nonsolicitation Period”), none of the Selling Parties shall, directly or indirectly:

     (i) solicit the business of any Person who is a customer of Buyer;

     (ii) cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Buyer to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer;

     (iii) cause, induce or attempt to cause or induce any customer, supplier, licensee, licensor, franchisee, employee, consultant or other business relation of Seller on the Second Closing or within the year preceding the First Closing to cease doing business with Buyer, to deal with any competitor of Buyer or in any way interfere with its relationship with Buyer; or

     (iv) hire, retain or attempt to hire or retain any employee or independent contractor of Buyer or in any way interfere with the relationship between Buyer and any of its employees or independent contractors.

          (c) Nondisparagement. After the First Closing, none of the Selling Parties will disparage Buyer or Raven or any of Buyer’s or Raven’s shareholders, directors, officers, employees or agents.

          (d) Modification of Covenant. If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Section 9.9(a) through (c) is invalid or unenforceable, then the parties agree that the court or tribunal will have the power to reduce the scope, duration or geographic area of the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. This Section 9.9 will be enforceable as so modified after the expiration of the time within which the judgment may be appealed. This Section 9.9 is reasonable

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and necessary to protect and preserve Buyers’ legitimate business interests and the value of the Assets and to prevent any unfair advantage conferred on the Selling Parties.

          (e) Injunctive Relief. In recognition of the irreparable harm that a violation of this Section 9.9 would cause Buyers, each of the Selling Parties agree that Buyers shall have the right to enforce this agreement by specific remedies, which shall include, among other things, temporary restraining orders and temporary and permanent injunctions. In the event of any such violation, each of the Selling Parties agree to be liable for, jointly and severally, and pay the reasonable attorneys’ fees incurred by Buyers in pursuing any of its rights with respect to such violation or violations in addition to the actual damages sustained by Buyers as a result thereof.

          (f) Extension for Breach. The duration of the Noncompete Period and the Nonsolicitation Period shall be extended beyond the time period set forth herein for a period equal to the duration of any breach or default of either such covenant by any of the Selling Parties.

     9.10 Customer and Other Business Relationships. After the First Closing, Seller will cooperate with Buyer in its efforts to continue and maintain for the benefit of Buyer those business relationships of Seller existing prior to the First Closing and relating to the business to be operated by Buyer after the First Closing, including relationships with lessors, employees, regulatory authorities, licensors, customers, suppliers and others, and Seller will satisfy the all Liabilities (other than Assumed Liabilities) in a manner that is not detrimental to any of such relationships. Seller will refer to Buyer all inquiries relating to such business. Seller nor any of its respective members, officers, employees, agents shall take any action that would tend to diminish the value of the Acquired Assets after the First Closing or that would interfere with the business of Buyer to be engaged in after the First Closing, including disparaging the name or business of Buyer or any Related Party of Buyer (including Raven).

     9.11 Retention of and Access to Records. After the First Closing, Seller shall provide Buyer and its Representatives reasonable access to Records that are Excluded Assets, during normal business hours and on at least three days’ prior written notice, for any reasonable business purpose specified by Buyer in such notice.

     9.12 Confidential Information. Each of the Selling Parties acknowledges that he, she or it has, will or may have access to and become informed of Confidential Information which is a competitive asset of Seller, Buyers or their respective Related Parties. As used herein, “Confidential Information” shall mean information that is proprietary to Seller, Buyers or their respective Related Parties or the Business or proprietary to others and entrusted to Seller, Buyers or their respective Related Parties, whether or not trade secrets, and such information included in the Acquired Assets. Confidential Information includes, but is not limited to, information relating to business plans and to business as conducted or anticipated to be conducted by Seller, Buyers and their respective Related Parties and to their past, current or anticipated businesses (including without limitation information relating to the Business). Confidential Information also includes, without limitation, customer lists and information concerning purchasing, accounting, marketing, selling, products and services of Seller, Buyer, and their respective Related Parties and shall further include the same aforementioned Confidential Information with respect to the Acquired Assets purchased by Buyers pursuant to the Agreement. Confidential Information shall not include any information that (i) is known to receiving

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party prior to receipt from disclosing party, (ii) is or becomes available to the public without a breach of this Agreement or rights of the disclosing party, (iii) is lawfully obtained from a third party without breach of this Agreement or any other agreement; or (iv) is required by law to be disclosed in response to a valid order of a Governmental Body, if the disclosing party receives prompt notice of such order and the receiving party reasonably cooperates with attempts to obtain a protective order. Each of the Selling Parties agrees that he, she or it will keep all Confidential Information in strict confidence and to never directly or indirectly make known, divulge, reveal, furnish, make available, or use any Confidential Information, except that Shivak shall be allowed to disclose Confidential Information in connection with carrying out his duties as an employee of Buyer following the First Closing.

     9.13 Further Assurances. The parties shall cooperate reasonably with each other and with their respective Representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and shall (a) furnish upon request to each other such further information; (b) execute and deliver to each other such other documents; and (c) do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the Contemplated Transactions.

     9.14 Retail Sales Tax Certificate. Within 30 days following the First Closing, Seller shall deliver to Buyer a certificate issued by the Minister pursuant to subsection 51(2) of The Revenue and Financial Services Act (Saskatchewan).

     9.15 Workers’ Compensation Board Certificate. Within 30 days following the First Closing, Seller shall deliver to Buyer a certificate issued by the Workers’ Compensation Board pursuant to section 155 of The Workers’ Compensation Act, 1979 (Saskatchewan).

     9.16 Investment Canada. To the extent required, Buyer shall provide any applicable notice of this transaction in accordance with the provisions of the Investment Canada Act.

10.   INDEMNIFICATION; REMEDIES

     10.1 Survival. All representations and warranties in this Agreement, the Disclosure Schedules, the supplements to the Disclosure Schedules, the certificates delivered pursuant to Section 6.4 and any other certificate or document delivered pursuant to this Agreement shall survive the Second Closing for a period of two (2) years; provided, however, that the representations and warranties of the Selling Parties contained in Sections 3.6, 3.7, 3.13, 3.21, 3.22, 3.27 and 3.28 (as such representations and warranties are updated by a certificate or document delivered pursuant to this Agreement) shall survive indefinitely. The right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations shall not be affected by any investigation (including any environmental investigation or assessment) conducted with respect to, or any Knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Second Closing, with respect to the accuracy or inaccuracy of or compliance with any such representation, warranty, covenant or obligation. The waiver of any condition based upon the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, reimbursement or other remedy based upon such representations, warranties, covenants and obligations.

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     10.2 Indemnification and Reimbursement by Seller. From and after the First Closing, Seller will indemnify and hold harmless Buyers and their respective Representatives, shareholders, subsidiaries and Related Persons (collectively, the “Buyer Indemnified Persons”), and will reimburse the Buyer Indemnified Persons for any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees and expenses) or diminution of value, whether or not involving a Third-Party Claim (collectively, “Damages”), arising from or in connection with:

          (a) any Breach of any representation or warranty made by Seller in (i) this Agreement, including the Disclosure Schedules (without giving effect to any supplement to the Disclosure Schedules) and each of the other Transaction Documents, and (ii) any supplements to the Disclosure Schedules;

          (b) any Breach of any covenant or obligation of Seller in this Agreement or in any of the other Transaction Documents;

          (c) any Liability arising out of the ownership or operation of the Acquired Assets prior to the Effective Time other than the Assumed Liabilities;

          (d) any brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding made, or alleged to have been made, by any Person with Seller (or any Person acting on their behalf) in connection with any of the Contemplated Transactions;

          (e) any product or component thereof manufactured by or shipped, or any services provided by, Seller, in whole or in part, prior to the First Closing, including, without limitation, Warranty Claims satisfied by Buyer in the manner described in Section 9.4;

          (f) any noncompliance with any Bulk Sales Laws or fraudulent transfer law in respect of the Contemplated Transactions;

          (g) any liability under any applicable legislations caused by any action of Seller prior to the First Closing or by Buyer’s decision not to hire previous employees of Seller;

          (h) any Employee Plan established or maintained by Seller; or

          (i) all Liabilities (other than Assumed Liabilities), including, without limitation, all Liabilities arising out of or relating in any way to the Marketing Agreement or the Selling Parties’ relationship with Maxim.

     10.3 Indemnification and Reimbursement by Buyers. From and after the First Closing, Buyers will indemnify and hold harmless Selling Parties, and will reimburse Selling Parties, for any Damages arising from or in connection with:

          (a) any Breach of any representation or warranty made by Buyer or Raven in this Agreement or in any of the other Transaction Documents;

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          (b) any Breach of any covenant or obligation of Buyer or Raven in this Agreement or in any of the other Transaction Documents;

          (c) any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by such Person with Buyer or Raven (or any Person acting on Buyer’s or Raven’s behalf) in connection with any of the Contemplated Transactions; or

          (d) any Assumed Liabilities.

     10.4 Limitations on Amount – Selling Parties. None of the Selling Parties shall have any liability (for indemnification or otherwise) with respect to claims under Section 10.2(a) and Warranty Claims until the total of all Damages with respect to such matters exceed $25,000.00 (the “Deductible”), and in such event, Seller shall then be liable for all Damages that exceed the amount of the Deductible. However, this Section 10.4 will not apply to claims under Section 10.2(b) through 10.2(i) (other than Warranty Claims satisfied by Buyer as provided in Section 9.4, which shall be subject to the Deductible) or to matters arising in respect of Sections 3.7, 3.13, 3.15, 3.21, 3.27, or 3.28, or to any Breach of any of Seller’s representations and warranties of which the Seller had Knowledge at any time prior to the date on which such representation and warranty is made or any intentional Breach by Seller of any covenant or obligation, and Seller will be liable for all Damages with respect to such Breaches. Notwithstanding anything to the contrary contained in this Article 10, to the extent Buyer makes a claim against Seller under this Article 10 for Damages resulting from a Breach of the representations and warranties contained in Section 3.10 because of an unpaid Account Receivable, and following the date such claim is satisfied by Seller, Buyer subsequently receives a payment in satisfaction of such Account Receivable, Buyer shall promptly reimburse Seller to the extent of such payment (or credit toward the Deductible if the Deductible has not yet been reached). Buyer shall use its reasonable efforts to collect all receivables regardless of whether they are in excess of one hundred twenty (120) days.

     10.5 Limitations on Amount – Buyers. Buyers will not have any liability (for indemnification or otherwise) with respect to claims under Section 10.3(a) until the total of all Damages with respect to such matters exceeds the Deductible, and in such event, Buyers shall then be liable for all Damages that exceed the amount of the Deductible. However, this Section 10.5 will not apply to claims under Section 10.3(b) through (d) or matters arising in respect of Section 4.4 or to any Breach of any either Buyers’ representations and warranties of which Buyers had Knowledge at any time prior to the date on which such representation and warranty is made or any intentional Breach by Buyer or Raven of any covenant or obligation, and Buyers will be liable for all Damages with respect to such Breaches.

     10.6 Right of Setoff. Upon notice to Seller specifying in reasonable detail the basis therefor, Buyers may set off any amount to which it may be entitled under this Section 10 against amounts otherwise payable under any of the Transaction Documents, including, without limitation, the Deferred Amount and the Future Payment Amount. Upon notice to Buyers specifying in reasonable detail the basis therefor, Seller may set off any amount which may be payable by it under this Section 10 against amounts otherwise receivable under any of the Transaction Documents. Neither the exercise of nor the failure to exercise such right of setoff will constitute an election of

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remedies or limit Buyers or Seller, as the case may be, in any manner in the enforcement of any other remedies that may be available to it.

     10.7 Third-Party Claims.

          (a) Promptly after receipt by a Person entitled to indemnity under Section 10.2 or 10.3 (an “Indemnified Person”) of notice of the assertion of a Third-Party Claim against it, such Indemnified Person shall give notice to the Person obligated to indemnify under such Section (an “Indemnifying Person”) of the assertion of such Third-Party Claim, provided that the failure to notify the Indemnifying Person will not relieve the Indemnifying Person of any liability that it may have to any Indemnified Person, except to the extent that the Indemnifying Person demonstrates that the defense of such Third-Party Claim is prejudiced by the Indemnified Person’s failure to give such notice.

          (b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to Section 10.7(a) of the assertion of a Third-Party Claim, the Indemnifying Person shall be entitled to participate in the defense of such Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying Person is also a Person against whom the Third-Party Claim is made and the Indemnified Person determines in good faith that joint representation would be inappropriate or (ii) the Indemnifying Person fails to provide reasonable assurance to the Indemnified Person of its financial capacity to defend such Third-Party Claim and provide indemnification with respect to such Third-Party Claim), to assume the defense of such Third-Party Claim with counsel satisfactory to the Indemnified Person. After notice from the Indemnifying Person to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person shall not, so long as it diligently conducts such defense, be liable to the Indemnified Person under this Article 10 for any fees of other counsel or any other expenses with respect to the defense of such Third-Party Claim, in each case subsequently incurred by the Indemnified Person in connection with the defense of such Third-Party Claim, other than reasonable costs of investigation. If the Indemnifying Person assumes the defense of a Third-Party Claim, (i) such assumption will conclusively establish for purposes of this Agreement that the claims made in that Third-Party Claim are within the scope of and subject to indemnification, and (ii) no compromise or settlement of such Third-Party Claims may be effected by the Indemnifying Person without the Indemnified Person’s Consent unless (A) there is no finding or admission of any violation of Legal Requirement or any violation of the rights of any Person; (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Person; and (C) the Indemnified Person shall have no liability with respect to any compromise or settlement of such Third-Party Claims effected without its Consent. If notice is given to an Indemnifying Person of the assertion of any Third-Party Claim and the Indemnifying Person does not, within ten (10) days after the Indemnified Person’s notice is given, give notice to the Indemnified Person of its election to assume the defense of such Third-Party Claim, the Indemnifying Person will be bound by any determination made in such Third-Party Claim or any compromise or settlement effected by the Indemnified Person.

          (c) Notwithstanding the foregoing, if an Indemnified Person determines in good faith that there is a reasonable probability that a Third-Party Claim may adversely affect it or its Related Persons other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Indemnified Person may, by notice to the Indemnifying

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Person, assume the exclusive right to defend, compromise or settle such Third-Party Claim, but the Indemnifying Person will not be bound by any determination of any Third-Party Claim so defended for the purposes of this Agreement or any compromise or settlement effected without its Consent (which may not be unreasonably withheld).

          (d) Notwithstanding the provisions of Section 11.3, the Selling Parties hereby consent to the nonexclusive jurisdiction of any court in which a Proceeding in respect of a Third-Party Claim is brought against any Buyer Indemnified Person for purposes of any claim that a Buyer Indemnified Person may have under this Agreement with respect to such Proceeding or the matters alleged therein and agree that process may be served on Seller with respect to such a claim anywhere in the world.

          (e) With respect to any Third-Party Claim subject to indemnification under this Article 10: (i) both the Indemnified Person and the Indemnifying Person, as the case may be, shall keep the other Person fully informed of the status of such Third-Party Claim and any related Proceedings at all stages thereof where such Person is not represented by its own counsel, and (ii) the parties agree (each at its own expense) to render to each other such assistance as they may reasonably require of each other and to cooperate in good faith with each other in order to ensure the proper and adequate defense of any Third-Party Claim.

          (f) With respect to any Third-Party Claim subject to indemnification under this Article 10, the parties agree to cooperate in such a manner as to preserve in full (to the extent possible) the confidentiality of all Confidential Information and the attorney-client and work-product privileges. In connection therewith, each party agrees that: (i) it will use its Best Efforts, in respect of any Third-Party Claim in which it has assumed or participated in the defense, to avoid production of Confidential Information (consistent with applicable law and rules of procedure), and (ii) all communications between any party hereto and counsel responsible for or participating in the defense of any Third-Party Claim shall, to the extent possible, be made so as to preserve any applicable attorney-client or work-product privilege.

     10.8 Other Claims. A claim for indemnification for any matter not involving a Third-Party Claim may be asserted by notice to the party from whom indemnification is sought and shall be paid promptly after such notice.

11.   GENERAL PROVISIONS

     11.1 Expenses Except as otherwise provided in this Agreement, each party to this Agreement will bear its respective fees and expenses incurred in connection with the preparation, negotiation, execution and performance of this Agreement and the Contemplated Transactions, including all fees and expense of its Representatives.

     11.2 Notices All notices, Consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt

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requested, in each case to the following addresses, facsimile numbers or e-mail addresses and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number, e-mail address or person as a party may designate by notice to the other parties):

If to Seller, Montgomery, Shareholder or Shivak:

Monty Shivak
P.O. Box 419
Stockholm, SK
S0A 3Y0
Attention: Monty Shivak, President
Facsimile: (306) 793-2156

with a copy to:

McDougall Gauley
Barristers and Solicitors
700, 2010 – 11^th Avenue
Regina, Saskatchewan
S4P 0J3
Attn: Murray Sawatzky
Facsimile: (306) 359-0785

If to Buyer or Raven:

Raven Industries, Inc.
PO Box 5107
Sioux Falls, SD 57117-5107
Attention: Thomas Iacarella
Facsimile: (605) 335-0209

with a copy to:

Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: William M. Mower, Esq.
Facsimile: (612) 642-8358

     11.3 Dispute Resolution. All disputes arising under this Agreement shall be resolved by arbitration pursuant to the commercial rules of the American Arbitration Association (“AAA”) then in effect before a single arbitrator. The arbitrator must be a retired judge of a state or federal court of the United States or a licensed lawyer with at least ten (10) years of corporate or commercial law experience from a law firm with at least 10 attorneys and at least an AV rating by Martindale Hubbell. A list of ten (10) potential arbitrators shall be obtained from the AAA. Each party to the

45

dispute shall rank the potential arbitrators from one to ten with ten being the most desirable. The arbitrator who receives the most points shall be the arbitrator for such dispute. If there is a tie, a random drawing shall be held and the first arbitrator chosen shall be the arbitrator for such dispute. All disputes shall be arbitrated in Sioux Falls, South Dakota. The award rendered by the arbitrator shall be final and binding on the parties and may be entered in any court having jurisdiction thereof.

          (a) Each party shall have discovery rights as provided by the Federal (United States) Rules of Civil Procedure within the limits imposed by the arbitrator; provided, however, that all such discovery shall be commenced and concluded within ninety (90) days of the selection of the arbitrator.

          (b) It is the intent of the parties that any arbitration shall be concluded as quickly as reasonably practicable. Unless the parties otherwise agree, once commenced, the hearing on the disputed matters shall be held four days a week until concluded, with each hearing date to begin at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrator shall use all reasonable efforts to issue the final award or awards within a period of five (5) business days after closure of the proceedings. Failure of the arbitrator to meet the time limits of this Section shall not be a basis for challenging the award.

          (c) The arbitrator shall instruct the non-prevailing parties to pay and the non-prevailing party shall pay all costs of the proceedings, including the fees and expenses of the arbitrators and the reasonable attorneys’ fees and expenses of the prevailing parties. If the arbitrator determine that there is not a prevailing party, each party shall be instructed to bear its own costs and to pay one-half of the fees and expenses of the arbitrators.

          (d) Nothing contained herein shall bar any party hereto from seeking equitable relief in a court of competent jurisdiction.

          (e) All parties to this Agreement hereby submit to the jurisdiction of any court of competent jurisdiction, including without limitation the courts of the State of South Dakota, for purposes of registering and/or enforcing any such arbitration award as an order or judgment of that court. The parties further agree that any such order or judgment may be enforced through any other courts of competent jurisdiction, including without limitation the courts of the Province of Saskatchewan.

     11.4 Enforcement of Agreement. The Selling Parties acknowledge and agree that Buyers would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any Breach of this Agreement by a Selling Party could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which Buyer or Raven may be entitled, at law or in equity, it shall be entitled to enforce any provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent Breaches or threatened Breaches of any of the provisions of this Agreement, without posting any bond or other undertaking.

     11.5 Waiver; Remedies Cumulative. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither any failure nor any delay by any party in exercising any right, power or privilege under this Agreement or any of the documents referred to in

46

this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or any of the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of that party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

     11.6 Entire Agreement and Modification. This Agreement supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter (including any letter of intent and any confidentiality agreement between either Buyer or Raven and any of the Selling Parties) and constitutes (along with the Disclosure Schedules, Exhibits and other documents delivered pursuant to this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by the party to be charged with the amendment.

     11.7 Disclosure Schedules.

          (a) The information in the Disclosure Schedules constitutes (i) exceptions to particular representations, warranties, covenants and obligations of the Selling Parties as set forth in this Agreement or (ii) descriptions or lists of Assets and Liabilities and other items referred to in this Agreement. If there is any inconsistency between the statements in this Agreement and those in the Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules with respect to a specifically identified representation or warranty), the statements in this Agreement will control.

          (b) The statements in the Disclosure Schedules, and those in any supplement thereto, relate only to the provisions in the Section of this Agreement to which they expressly relate and not to any other provision in this Agreement.

     11.8 Assignments, Successors and No Third-Party Rights. No party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other parties, except that Buyer or Raven may assign any of its rights and delegate any of its obligations under this Agreement to any of its respective Subsidiaries and may collaterally assign its respective rights hereunder to any financial institution providing financing in connection with the Contemplated Transactions. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties. Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this Section 11.8.

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     11.9 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

     11.10 Construction. The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Articles,” “Sections” and “Schedules” refer to the corresponding Articles, Sections and Schedules of this Agreement and the Disclosure Schedules.

     11.11 Time of Essence. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

     11.12 Governing Law. This Agreement will be governed by and construed under the laws of the State of South Dakota without regard to conflicts-of-laws principles that would require the application of any other law.

     11.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes.

     11.14 Seller’s Obligations. The Principals shall be jointly and severally liable for all of the obligations of Seller hereunder. Where in this Agreement provision is made for any action to be taken or not taken by Seller, the Principals, jointly and severally, undertake to cause Seller to take or not take such action, as the case may be. Without limiting the generality of the foregoing, the Principals shall be jointly and severally liable with Seller for the indemnities set forth in Article 10.

Signature page follows.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

SELLER:		BUYER:
101066275 Saskatchewan Ltd.		3098103 Nova Scotia Limited
By:	/s/ Stanislaus M. (“Monty”) Shivak	By:	/s/ Thomas Iacarella
	Stanislaus M. (“Monty”) Shivak	Name:	Thomas Iacarella
	President	Its:	Treasurer
MONTGOMERY:		RAVEN:
Montgomery Industries Inc.		Raven Industries, Inc.
By:	/s/ Stanislaus M. (“Monty”) Shivak	By:	/s/ Ronald M. Moquist
	Stanislaus M. (“Monty”) Shivak	Name:	Ronald M. Moquist
	President	Its:	President and CEO
SHAREHOLDER:
Shivak Holdings Ltd.
By:	/s/ Stanislaus M. (“Monty”) Shivak
	Stanislaus M. (“Monty”) Shivak
	President
By:	/s/ Stanislaus M. (“Monty”) Shivak
	Stanislaus M. (“Monty”) Shivak

Signature Page to Asset Purchase Agreement

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Appendix of Definitions

“Accounts Receivable”: (a) All trade accounts receivable and other rights to payment from customers of Seller and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of Seller, (b) all other accounts or notes receivable of Seller and the full benefit of all security for such accounts or notes and (c) any claim, remedy or other right related to any of the foregoing.

“Acquired Assets”: as defined in Section 2.1.

“Active Employees”: as defined in Section 9.1.

“Assets”: as defined in Section 2.1.

“Assignment and Assumption Agreement”: as defined in Section 6.4(b).

“Assumed Liabilities”: as defined in Section 2.4.

“Balance Sheet”: as defined in Section 3.4.

“Best Efforts”: The efforts that a prudent Person desirous of achieving a result would use in similar circumstances to achieve that result as expeditiously as possible, provided, however, that a Person required to use Best Efforts under this Agreement will not be thereby required to take actions that would result in a material adverse change in the benefits to such Person of this Agreement and the Contemplated Transactions or to dispose of or make any change to the Business, expend any material funds or incur any other material burden.

“Bill of Sale”: as defined in Section 6.4(a).

“Breach”: Any breach of, or any inaccuracy in, any representation or warranty or any breach of, or failure to perform or comply with, any covenant or obligation, in or of this Agreement or any other Contract, or any event which with the passing of time or the giving of notice, or both, would constitute such a breach, inaccuracy or failure.

“Bulk Sales Laws”: The bulk-transfer provisions pursuant to any applicable legislation in effect (or any similar law).

“Business”: Seller’s, and previous to February 11, 2005, Montgomery’s, business of being engaged in the manufacture and sale (either directly or by third party) of a product or products known as the “Autoboom,” an automatic boom height control system using ground wheel or ultrasonic sensing for agricultural spray booms, and related parts and equipment.

“Business Day”: Any day other than (a) Saturday or Sunday or (b) any other day on which banks in the United States or Saskatchewan are customarily closed.

“Buyer”: as defined in the first paragraph of this Agreement.

“Buyer Closing Documents”: as defined in Section 4.2.

“Buyers”: as defined in the first paragraph of this Agreement.

“Buyer Indemnified Persons”: as defined in Section 10.2.

“Closings”: as defined in Section 2.6.

“Closing Payment”: as defined in Section 2.3.

“Confidential Information”: as defined in Section 9.12.

“Consent”: Any approval, consent, ratification, waiver or other authorization.

“Contemplated Transactions”: All of the transactions contemplated by the Transaction Documents.

“Contract”: Any agreement, contract, Lease, consensual obligation, promise or undertaking (whether written or oral and whether express or implied), whether or not legally binding.

“Copyrights”: as defined in Section 3.21(a)(iii).

“CRA”: the Canada Revenue Agency or its successor, and any similar taxing authority within any applicable jurisdiction.

“Damages”: as defined in Section 10.2.

“Deductible”: as defined in Section 10.4.

“Deferred Amount”: as defined in Section 2.7.

“Disclosure Schedules”: The Disclosure Schedules attached to and incorporated in this Agreement and delivered by Seller to Buyer concurrently with the execution and delivery of this Agreement.

“Earn-Out Amount”: as defined in Section 2.8.

“Effective Time”: 5:00 p.m. (Central time) on the respective Closings.

“Employee Plan”: as defined in Section 3.15(a).

“Employment Agreement”: as defined in Section 6.4(d).

“Encumbrance”: Any charge, claim, community, family or other marital property interest, condition, equitable interest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

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“Environmental, Health and Safety Liabilities”: Any cost, damages, expense, liability, obligation or other responsibility arising from or under any Environmental Law or Occupational Safety and Health Law, including those consisting of or relating to:

     (a) any environmental, health or safety matter or condition (including on-site or off-site contamination, occupational safety and health and regulation of any chemical substance or product);

     (b) any fine, penalty, judgment, award, settlement, legal or administrative proceeding, damages, loss, claim, demand or response, remedial or inspection cost or expense arising under any Environmental Law or Occupational Safety and Health Law;

     (c) financial responsibility under any Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any cleanup, removal, containment or other remediation or response actions (“Cleanup”) required by any Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages; or

     (d) any other compliance, corrective or remedial measure required under any Environmental Law or Occupational Safety and Health Law.

The terms “removal,” “remedial” and “response action” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA).

“Environment”: soil, land surface or subsurface strata, surface waters (including navigable waters and ocean waters), groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource.

“Environmental Law”: Any Legal Requirement that requires or relates to:

     (a) advising appropriate authorities, employees or the public of intended or actual Releases of pollutants or hazardous substances or materials, violations of discharge limits or other prohibitions and the commencement of activities, such as resource extraction or construction, that could have significant impact on the Environment;

     (b) preventing or reducing to acceptable levels the Release of pollutants or hazardous substances or materials into the Environment;

     (c) reducing the quantities, preventing the Release or minimizing the hazardous characteristics of wastes that are generated;

     (d) assuring that products are designed, formulated, packaged and used so that they do not present unreasonable risks to human health or the Environment when used or disposed of;

     (e) protecting resources, species or ecological amenities;

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     (f) reducing to acceptable levels the risks inherent in the transportation of hazardous substances, pollutants, oil or other potentially harmful substances;

     (g) cleaning up pollutants that have been Released, preventing the Threat of Release or paying the costs of such clean up or prevention; or

     (h) making responsible parties pay private parties, or groups of them, for damages done to their health or the Environment or permitting self-appointed representatives of the public interest to recover for injuries done to public assets.

“ETA”: the Excise Tax Act (Canada), as amended.

“Exchange Act”: The United States Securities Exchange Act of 1934, as amended.

“Excluded Assets”: as defined in Section 2.2.

“Facilities”: Any real property, leasehold or other interest in real property currently owned or operated by Seller, including the Tangible Personal Property used or operated by Seller at the respective locations of Seller’s real property.

“Final Statement of Net Tangible Assets”: as defined in Section 2.7(a).

“First Closing”: as defined in Section 2.6.

“Future Payment Amounts”: as defined in Section 2.8

“GAAP”: Generally accepted accounting principles for financial reporting in Canada, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared.

“Governing Documents”: With respect to any particular entity, (a) if a corporation, the articles or certificate of incorporation and the bylaws; (b) if a general partnership, the partnership agreement and any statement of partnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (d) if a limited liability company, the articles of organization and operating agreement; (e) if another type of Person, any other charter or similar document adopted or filed in connection with the creation, formation or organization of the Person; (f) all equity holders’ agreements, voting agreements, voting trust agreements, joint venture agreements, registration rights agreements or other agreements or documents relating to the organization, management or operation of any Person or relating to the rights, duties and obligations of the equity holders of any Person; and (g) any amendment or supplement to any of the foregoing.

“Governmental Authorization”: Any Consent, license, registration or permit issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“Governmental Body”: Any:

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     (a) nation, state, province, county, city, town, borough, village, district or other jurisdiction;

     (b) federal, state, provincial, local, municipal, foreign or other government;

     (c) governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers);

     (d) multinational organization or body;

     (e) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or

     (f) official of any of the foregoing.

“Hazardous Activity”: The distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of groundwater) of Hazardous Material in, on, under, about or from any of the Facilities or any part thereof into the Environment and any other act, business, operation or thing that increases the danger, or risk of danger, or poses an unreasonable risk of harm, to persons or property on or off the Facilities.

“Hazardous Materials”: Any substance, material or waste which is or will foreseeably be regulated by any Governmental Body, including any material, substance or waste which is defined as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “toxic waste” or “toxic substance” under any provision of Environmental Law, and including petroleum, petroleum products, asbestos, presumed asbestos-containing material or asbestos-containing material, urea formaldehyde and polychlorinated biphenyls.

“Hired Active Employees”: as defined in Section 9.1

“Improvements”: All buildings, structures, fixtures and improvements located on the Land or included in the Acquired Assets, including those under construction.

“Indemnified Person”: as defined in Section 10.7.

“Indemnifying Person”: as defined in Section 10.7.

“Installment Amount”: as defined in Section 2.8

“Intellectual Property Assets”: as defined in Section 3.21(a).

“Inventories”: All inventories of Seller, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller in the production of finished goods.

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“Knowledge”: An individual will be deemed to have Knowledge of a particular fact or other matter if:

     (a) that individual is actually aware of that fact or matter; or

     (b) a prudent individual could be expected to discover or otherwise become aware of that fact or matter in the course of conducting a reasonably comprehensive investigation regarding the accuracy of any representation or warranty contained in this Agreement.

A Person (other than an individual) will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor or trustee of that Person (or in any similar capacity) has, or at any time had, Knowledge of that fact or other matter (as set forth in (a) and (b) above), and any such individual (and any individual party to this Agreement) will be deemed to have conducted a reasonably comprehensive investigation regarding the accuracy of the representations and warranties made herein by that Person or individual.

“Land”: parcels and tracts of land in which Seller or Montgomery has an ownership or leasehold interest.

“Lease”: Any Real Property Lease or any lease or rental agreement, license, right to use or installment and conditional sale agreement to which Seller is a party and any other Seller Contract pertaining to the leasing or use of any Tangible Personal Property.

“Legal Requirement”: Any federal, state, provincial, local, municipal, foreign, international, multinational or other constitution, law, ordinance, principle of common law, code, regulation, statute or treaty.

“Liability”: With respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

“Marketing Agreement”: as defined in Section 2.4.

“Marks”: as defined in Section 3.21(a)(i).

“Material Adverse Effect”: as defined in Section 3.14.

“Material Consents”: as defined in Section 6.3.

“Maxim”: as defined in Section 2.4.

“Net Names”: as defined in Section 3.21(a).

6

“Net Sales”: The total invoiced value of all sales of Business Products after the First Closing made by Buyers or their Related Parties, less deductions for customer discounts, allowances or returns. For purposes hereof, “Business Products” shall mean the products and equipment currently sold by Seller in the conduct of the Business, including, without limitation, the Autoboom product and related parts and equipment, including any successor or derivative product of Seller that is developed in the future utilizing the same base technology utilized in Seller’s current products. Without limiting the generality of the foregoing, Net Sales does not include sales of any products or equipment currently manufactured or sold by Buyers (or their Related Persons), or any future products that Raven (or any Related Person of Raven) will sell that does not utilize any current technology of Seller, even if such Raven product or equipment is hereafter sold for use with any of Seller’s Business Products. Further, in the event that after the First Closing, Buyer sells any product that integrates in one unit a Business Product with a product of Buyer or Raven, there shall be included in Net Sales an amount equal to the price of such integrated unit less the list price of such unit if it were sold without any Business Product integrated therein.

“Net Tangible Assets”: The book value of the assets, exclusive of Intellectual Property Assets, used in the Business (as listed on Exhibit 2.7) and being sold and assigned hereunder, less Assumed Liabilities.

“November Statement of Net Tangible Assets”: as defined in Section 2.7(a) and attached hereto as Exhibit 2.7.

“Occupational Safety and Health Law”: any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program designed to provide safe and healthful working conditions.

“Order”: Any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator.

“Ordinary Course of Business”: An action taken by a Person will be deemed to have been taken in the Ordinary Course of Business only if that action:

     (a) is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person;

     (b) does not require authorization by the board of directors or shareholders of such Person (or by any Person or group of Persons exercising similar authority) and does not require any other separate or special authorization of any nature; and

     (c) is similar in nature, scope and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal, day-to-day operations of other Persons that are in the same line of business as such Person.

“Patents”: as defined in Section 3.21(a)(ii).

7

“Person”: An individual, partnership, corporation, business trust, limited liability company, unlimited liability company, limited liability partnership, limited partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Body.

“Principals”: as defined in the first paragraph of this Agreement.

“Proceeding”: Any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“Purchase Price”: as defined in Section 2.3.

“Raven”: as defined in the first paragraph of this Agreement.

“Real Property”: the Land, including all (a) buildings, structures, fixtures and improvements located on the Land or included in the Assets, including those under construction and (b) privileges, rights, easements, hereditaments and appurtenances belonging to or for the benefit of the Land.

“Real Property Lease”: Any lease or rental agreement pertaining to the occupancy of any improved space on any real property used or occupied by Seller.

“Record”: Information pertaining to the Business and/or the Assets that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“Related Person”: With respect to a particular individual:

          (a) each other member of such individual’s Family;

          (b) any Person that is directly or indirectly controlled by any one or more members of such individual’s Family;

          (c) any Person in which members of such individual’s Family hold (individually or in the aggregate) a Material Interest; or

          (d) any Person with respect to which one or more members of such individual’s Family serves as a director, officer, partner, executor or trustee (or in a similar capacity).

With respect to a specified Person other than an individual, a Related Person shall mean:

          (a) any Person that directly or indirectly controls, is directly or indirectly controlled by or is directly or indirectly under common control with such specified Person;

          (b) any Person that holds a Material Interest in such specified Person;

          (c) each Person that serves as a director, officer, partner, executor or trustee of such specified Person (or in a similar capacity);

8

          (d) any Person in which such specified Person holds a Material Interest; or

          (e) any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity).

For purposes of this definition, (a) “control” (including “controlling,” “controlled by,” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and shall be construed as such term is used in the rules promulgated under the Securities Act; (b) the “Family” of an individual includes (i) the individual, (ii) the individual’s spouse, (iii) any other natural person who is related to the individual or the individual’s spouse within the second degree and (iv) any other natural person who resides with such individual; and (c) “Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of voting securities or other voting interests representing at least ten percent (10%) of the outstanding voting power of a Person or equity securities or other equity interests representing at least ten percent (10%) of the outstanding equity securities or equity interests in a Person.

“Release”: Any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property.

“Remedial Action”: All actions, including any capital expenditures, required or voluntarily undertaken (a) to clean up, remove, treat or in any other way address any Hazardous Material or other substance; (b) to prevent the Release or Threat of Release or to minimize the further Release of any Hazardous Material or other substance so it does not migrate or endanger or threaten to endanger public health or welfare or the Environment; (c) to perform pre-remedial studies and investigations or post-remedial monitoring and care; or (d) to bring all Facilities and the operations conducted thereon into compliance with Environmental Laws and environmental Governmental Authorizations.

“Representative”: With respect to a particular Person, any director, officer, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

“Second Closing”: as defined in Section 2.6.

“Securities Act”: The United States Securities Act of 1933, as amended.

“Seller”: as defined in the first paragraph of this Agreement.

“Seller Contract”: Any Contract (a) under which Seller or Montgomery has or may acquire any rights or benefits; (b) under which Seller or Montgomery has or may become subject to any obligation or liability; or (c) by which Seller, Montgomery or any of the Acquired Assets may become bound.

“Selling Parties”: as defined in the first paragraph of this Agreement.

9

“Seller’s Counsel”: the law firm of McDougall Gauley, Barristers and Solicitors.

“Software”: All computer software and subsequent versions thereof, including source code, object, executable or binary code, objects, comments, screens, user interfaces, report formats, templates, menus, buttons and icons and all files, data, materials, manuals, design notes and other items and documentation related thereto or associated therewith.

“Statement of Net Tangible Assets”: as defined in Section 2.7(a).

“Subsidiary”: With respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred), are held by the Owner or one or more of its Subsidiaries.

“Tangible Personal Property”: All machinery, equipment, tools, furniture, office equipment, computer hardware, supplies, materials, vehicles and other items of tangible personal property (other than Inventories) of every kind owned or leased by Seller or Montgomery (wherever located and whether or not carried on Seller’s or Montgomery’s books), together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto.

“Tax”: Any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other Contract.

“Tax Act”: The Income Tax Act (Canada), as amended, and any similar legislation in any jurisdiction, including any applicable provincial, federal or state legislation.

“Tax Return”: Any return (including any information return), report, statement, schedule, notice, form, declaration, claim for refund or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

“Third Party”: A Person that is not a party to this Agreement.

“Third-Party Claim”: Any claim against any Indemnified Person by a Third Party, whether or not involving a Proceeding.

10

“Threat of Release”: A reasonable likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment that may result from such Release.

“Trade Secrets”: as defined in Section 3.21(a).

“Transaction Documents”: This Agreement and all other agreement, documents or instruments to be delivered pursuant to the provisions hereof, including Section 6.4 hereof.

“Warranty Claims”: as defined in Section 9.4.

11

Exhibits and Schedules

Exhibits
	2.7		Statement of Net Tangible Assets
	6.3		Material Consents
Schedules
	2.1		Tangible Personal Property
	2.2	(a)	Excluded Assets – Seller Contracts
	2.2	(g)	Other Excluded Assets
	2.4		Assumed Liabilities
	3.1		Business Qualifications
	3.2	(b)	Noncontravention
	3.2	(c)	Consents
	3.3		Capitalization
	3.7		Title to Assets
	3.8		Real Property Leases
	3.9	(b)	Condition of Tangible Personal Property
	3.10		Accounts Receivable
	3.12		Liabilities
	3.13		Taxes
	3.15	(a)	Employee Plans
	3.16	(a)	Compliance with Legal Requirements
	3.16	(b)	Governmental Authorizations
	3.17	(a)	Legal Proceedings
	3.17	(b)	Orders
	3.17	(c)	Compliance with Orders
	3.18		Absence of Changes
	3.19	(a)	List of Seller Contracts
	3.19	(b)	Rights of Principals under Seller Contracts
	3.19	(c)	Validity of Seller Contracts
	3.19	(d)	Compliance with Seller Contracts
	3.20		Insurance
	3.21	(b)	Seller Contracts relating to Intellectual Property Assets
	3.21	(c)	Encumbrances/Unassigned Intellectual Property
	3.21	(d)	Patents
	3.21	(e)	Marks
	3.21	(f)	Copyrights
	3.21	(g)	Trade Secrets
	3.21	(h)	Net Names
	3.22		Environmental Matters
	3.23		Product Liability Matters

Schedules
	3.24	(a)	List of Employees
	3.24	(c)	Employee Complaints, Proceedings
	3.25		Labor Matters
	3.26		Affiliated Transactions

The exhibits and schedules listed above have been intentionally omitted. The Registrant agrees to furnish supplementally a copy of any such omitted item to the Commission upon request.

EX-13

EXHIBIT 13

Business Profile

Founded in 1956, Raven today is an industrial manufacturer with four operating units. The company has divested lower-performing assets, simplified its product bases, and enhanced profitability (cash return on invested capital) and shareholder value–a strategy of “Improve, innovate, grow.”

Operating Unit Products Markets Competitive Strengths

Flow Controls

• Computerized control hardware • Agriculture OEMs and sprayer • Market leader for

and software for precision farming            manufacturers ag sprayer controls

· Leading developer of • Agricultural equipment after • Strong brand recognition and

GPS-based control systems            market distribution network

· Precision application of pesticides, • Marine navigation • Wide range of precision

fertilizer and road de-icers            agricultural products Engineered Films • Rugged reinforced plastic • Manufactured housing and RVs• Vertically integrated sheeting . Temporary grain covers for            manufacturing capabilities agriculture • Broad product line

· Temporary building construction • Superior target marketing

enclosures • High productivity and

· Pond lining and containment for            low-cost structure

oil exploration Electronic Systems • Electronics Manufacturing• Primarily industrial OEMs in• Advanced manufacturing, Services (EMS)North Americatechnology • Fortune 500 companies that• Full-service provider, from contract their low-volume,engineering and manufacturing high-mix productionto customer service • ISO 9001 •Military cargo parachutes • US and foreign governments• Reputation for innovation and •Government service uniforms • NASA            quality •High-altitude research balloons • Promotional and advertising * ^{Sole source in us for} scientific •Custom-shaped inflatables            markets, including Disney ^balloons and Macy’s• Best technology

Raven 2005 Annual Report                    page 1

Eleven-Year Financial Summary

	For the years ended January 31,
Dollars in thousands, except per-share data	2005			2004			2003
OPERATIONS FOR THE YEAR
Net sales
Ongoing operations	$	168,086		$	142,727		$	119,589
Sold businesses(a)		—			—			1,314
Total		168,086			142,727			120,903
Gross profit		43,200			33,759			27,515
Operating income
Ongoing operations		27,862			21,981			16,861
Sold businesses(a)		—			(355	)		204
Total		27,862			21,626			17,065
Income before income taxes		27,955			21,716			17,254
Net income	$	17,891		$	13,836		$	11,185
Net income % of sales		10.6	%		9.7	%		9.3	%
Net income % of beginning equity		26.9	%		23.8	%		21.5	%
Cash dividends	$	15,298	(b)	$	3,075		$	2,563
FINANCIAL POSITION
Current assets	$	61,592		$	55,710		$	49,351
Current liabilities		20,950			11,895			13,167
Working capital	$	40,642		$	43,815		$	36,184
Current ratio		2.94			4.68			3.75
Property, plant and equipment	$	19,964		$	15,950		$	16,455
Total assets		88,509			79,508			72,816
Long-term debt, less current portion		—			57			151
Shareholders’ equity	$	66,082		$	66,471		$	58,236
Long-term debt / total capitalization		0.0	%		0.1	%		0.3	%
Inventory turnover (CGS / year-end inventory)		5.4			6.5			4.4
CASH FLOWS PROVIDED BY (USED IN)
Operating activities	$	18,871		$	19,732		$	12,735
Investing activities		(7,631	)		(4,352	)		(9,166	)
Financing activities		(19,063	)		(6,155	)		(5,830	)
Increase (decrease) in cash and cash equivalents		(7,823	)		9,225			(2,261	)
COMMON STOCK DATA
Net income per share – basic	$	0.99		$	0.77		$	0.61
Net income per share – diluted		0.97			0.75			0.60
Cash dividends per share		0.85	(b)		0.17			0.14
Book value per share		3.67			3.68			3.21
Stock price range during year
High	$	26.94		$	15.23		$	9.20
Low		13.08			7.56			4.38
Close	$	18.38		$	14.11		$	7.91
Shares outstanding, year-end (in thousands)		17,999			18,041			18,133
Number of shareholders, year-end		6,269			3,560			2,781
OTHER DATA
Price / earnings ratio		18.9			18.8			13.2
Average number of employees		807			770			758
Sales per employee	$	208		$	185		$	160
Backlog	$	43,646		$	47,120		$	42,826

All per-share, shares outstanding and market price data reflect the October 2004 two-for-one stock split, the January 2003 two-for-one stock split and the July 2001 three-for-two stock split. All other figures are as reported.

Price / earnings ratio is determined as closing stock price divided by net income per share-diluted.

(a)	During the second quarter of fiscal 2003, the company sold its Beta Raven Industrial Controls Division. In fiscal 2001, 2000 and 1996, the company sold its Plastic Tank, Glasstite and Astoria businesses, respectively.
(b)	Includes a special dividend of $.625 per share that was paid during the second quarter of fiscal 2005.

page 14

For the years ended January 31,
	2002(h)			2001(h)			2000(h)			1999(h)			1998(h)			1997(h)			1996(h)			1995(h)
	$	112,018		$	113,360		$	107,862		$	108,408		$	104,489		$	101,869		$	84,379		$	87,458
		6,497			19,498			42,523			46,798			47,679			39,576			38,010			35,889
		118,515			132,858			150,385			155,206			152,168			141,445			122,389			123,347
		23,851			21,123			24,217			24,441			24,929			25,287			22,660			23,968
		13,788			7,417	(c)		7,971			8,220			9,555			9,321			7,692			10,470
		(613	)		3,331	(d)		2,606	(e)		1,453			1,007			2,650			1,869			466	(g)
		13,175			10,748			10,577			9,673			10,562			11,971			9,561			10,936
		13,565			10,924			10,503			9,649			12,540	(f)		11,915			9,566			9,372
	$	8,847		$	6,411	(c)(d)	$	6,762	(e)	$	6,182		$	8,062		$	7,688		$	6,197		$	6,088	(g)
		7.5	%		4.8	%		4.5	%		4.0	%		5.3	%		5.4	%		5.1	%		4.9	%
		18.4	%		11.8	%		10.9	%		10.0	%		14.2	%		15.6	%		13.6	%		14.8	%
	$	2,371		$	2,399		$	2,895		$	2,944		$	2,709		$	2,367		$	2,130		$	1,843
	$	45,308		$	51,817		$	55,371		$	60,279		$	57,285		$	56,696		$	45,695		$	43,795
		13,810			13,935			14,702			15,128			17,816			20,016			14,771			15,078
	$	31,498		$	37,882		$	40,669		$	45,151		$	39,469		$	36,680		$	30,924		$	28,717
		3.28			3.72			3.77			3.98			3.22			2.83			3.09			2.90
	$	14,059		$	11,647		$	15,068		$	19,563		$	19,817		$	18,142		$	18,069		$	18,570
		67,836			65,656			74,047			83,657			82,066			80,662			67,553			65,636
		280			2,013			3,024			4,572			1,128			3,181			2,816			4,179
	$	52,032		$	47,989		$	54,519		$	62,293		$	61,563		$	56,729		$	49,151		$	45,526
		0.5	%		4.0	%		5.3	%		6.8	%		1.8	%		5.3	%		5.4	%		8.4	%
		5.0			5.9			5.2			4.9			4.8			4.5			4.1			4.4
	$	18,496		$	9,441		$	10,375		$	8,326		$	9,274		$	7,088		$	9,687		$	7,452
		(13,152	)		9,752			6,323			(3,127	)		(4,979	)		(5,090	)		(4,158	)		(10,000	)
		(8,539	)		(14,227	)		(16,326	)		(2,714	)		(4,884	)		(2,363	)		(4,029	)		406
		(3,195	)		4,966			372			2,485			(589	)		(365	)		1,500			(2,142	)
	$	0.48		$	0.31		$	0.26		$	0.22		$	0.28		$	0.27		$	0.22		$	0.22
		0.47			0.31			0.26			0.22			0.28			0.27			0.22			0.21
		0.13			0.12			0.11			0.10			0.09			0.08			0.08			0.07
		2.82			2.53			2.32			2.21			2.13			1.96			1.74			1.60
	$	5.88		$	3.48		$	3.04		$	3.79		$	4.29		$	3.92		$	3.46		$	4.08
		3.02			1.88			2.25			2.54			3.27			2.67			2.58			3.00
	$	5.64		$	3.04		$	2.40		$	2.67		$	3.77		$	3.75		$	3.21		$	3.13
		18,424			18,956			23,496			28,164			28,944			29,016			28,296			28,410
		2,387			2,460			2,749			3,014			3,221			3,011			3,190			3,031
		12.1			9.8			9.2			12.4			13.7			13.9			14.9			14.9
		838			1,043			1,320			1,445			1,511			1,387			1,368			1,414
	$	141		$	127		$	114		$	107		$	101		$	102		$	89		$	87
	$	33,834		$	38,239		$	44,935		$	47,431		$	47,154		$	38,102		$	32,539		$	29,661

(c)	Includes $2.6 million of business repositioning charges, net of gains on plant sales, primarily in Electronic Systems Division and Aerostar.
(d)	Includes the $3.1 million pretax gain ($1.4 million net of tax) on the sale of the company’s Plastic Tank Division.
(e)	Includes the $1.2 million pretax gain ($764,000 net of tax) on the sale of assets of the company’s Glasstite subsidiary.
(f)	Includes the $1.8 million pretax gain ($1.2 million net of tax) on sale of an investment in an affiliate.
(g)	Includes $1.8 million of business repositioning charges at the company’s Beta Raven Industrial Controls Division.
(h)	Amounts for these years are unaudited.

Raven 2005 Annual Report                     page 15

Business Segments

	For the years ended January 31
Dollars in thousands	2005			2004			2003			2002(j)			2001(j)			2000(j)
FLOW CONTROLS DIVISION
Sales	$	40,726		$	35,059		$	28,496		$	23,178		$	16,758		$	13,520
Operating income		10,516	(a)		8,254			6,897			5,509	(c)		3,985			2,873
Assets		23,701			19,304			21,483			20,313			9,578			7,096
Capital expenditures		1,372			341			729			677			327			202
Depreciation & amortization		876			1,004			948			443			353			351
ENGINEERED FILMS DIVISION
Sales	$	58,657		$	42,636		$	35,096		$	35,796		$	35,403		$	30,868
Operating income		15,739			10,563			10,030			8,257			7,397			6,274
Assets		25,181			15,941			17,244			13,691			11,520			12,001
Capital expenditures		3,960			712			4,080			3,178			633			764
Depreciation & amortization		1,403			1,611			1,475			1,001			946			993
ELECTRONIC SYSTEMS DIVISION
Sales	$	47,049		$	44,307		$	38,589		$	32,289		$	32,039		$	30,176
Operating income (loss)		4,492			5,797			4,022			2,264			(542	)(e)		1,632
Assets		17,382			14,975			14,528			13,910			15,359			18,846
Capital expenditures		1,201			841			395			774			1,492			1,168
Depreciation & amortization		880			850			978			1,101			1,089			1,032
AEROSTAR
Sales	$	21,654		$	20,725		$	17,408		$	20,755		$	29,160		$	33,298
Operating income		3,609			3,092	(b)		1,012			2,907	(d)		2,996			3,282
Assets		7,492			7,756			7,032			7,150			8,872			12,778
Capital expenditures		542			1,130			570			256			163			145
Depreciation & amortization		389			436			374			347			367			454
SOLD BUSINESSES(h)
Sales	$	—		$	—		$	1,314		$	6,497		$	19,498		$	42,523
Operating income (loss)		—			(355	)		204			(613	)		3,331	(f)		2,606	(g)
Assets		—			—			—			1,102			4,805			13,475
Capital expenditures		—			—			7			52			246			1,172
Depreciation & amortization		—			—			20			76			718			1,831
REPORTABLE SEGMENTS TOTAL
Sales	$	168,086		$	142,727		$	120,903		$	118,515		$	132,858		$	150,385
Operating income		34,356	(a)		27,351	(b)		22,165			18,324	(c,d)		17,167	(e,f)		16,667	(g)
Assets		73,756			57,976			60,287			56,166			50,134			64,196
Capital expenditures		7,075			3,024			5,781			4,937			2,861			3,451
Depreciation & amortization		3,548			3,901			3,795			2,968			3,473			4,661
CORPORATE & OTHER(i)
Operating (loss)	$	(6,494	)	$	(5,725	)	$	(5,100	)	$	(5,149	)	$	(6,419	)	$	(6,090	)
Assets		14,753			21,532			12,529			11,670			15,522			9,851
Capital expenditures		466			306			252			157			229			188
Depreciation & amortization		293			244			171			177			194			223
TOTAL COMPANY
Sales	$	168,086		$	142,727		$	120,903		$	118,515		$	132,858		$	150,385
Operating income		27,862	(a)		21,626	(b)		17,065			13,175	(c,d)		10,748	(e,f)		10,577	(g)
Assets		88,509			79,508			72,816			67,836			65,656			74,047
Capital expenditures		7,541			3,330			6,033			5,094			3,090			3,639
Depreciation & amortization		3,841			4,145			3,966			3,145			3,667			4,884

(a)	Includes a $1.3 million pretax writeoff of assets related to the Fluent Systems product line (See Note 4).
(b)	Includes $182,000 of pretax gain on plant sale.
(c)	Includes a $550,000 in-process research and development charge related to the Starlink acquisition.
(d)	Includes $414,000 of pretax gains on plant sales.
(e)	Includes $1.8 million of business repositioning charges in the Electronic Systems Division and $2.6 million for the total company.
(f)	Includes a $3.1 million pretax gain on the sale of the company’s Plastic Tank Division.
(g)	Includes a $1.2 million pretax gain on the sale of the company’s Glasstite business.
(h)	Operating income for sold businesses includes administrative expenses directly attributable to the sold businesses.
(i)	Operating loss consists of administrative expenses — assets are principally cash, investments, deferred taxes and notes receivable.
(j)	Amounts for 2002, 2001 and 2000 are unaudited.

page 16

Financial Review and Analysis

RESULTS OF OPERATIONS

The following table presents comparative financial performance for the past three years:

	For the years ended January 31
	2005							2004							2003
				%		%					%		%					%		%
Dollars in thousands, except per-share data				Sales		Change					Sales		Change					Sales		Change
Net sales	$	168,086			100.0		+17.8	$	142,727			100.0		+18.1	$	120,903			100.0		+ 2.0
Gross profit		43,200			25.7		+28.0		33,759			23.7		+22.7		27,515			22.8		+15.4
Operating expenses		14,056			8.4		+17.5		11,960			8.4		+12.5		10,629			8.8		– 3.7
Loss (gain) on disposition of businesses and assets		1,282							173							(179	)
Operating income		27,862			16.6		+28.8		21,626			15.2		+26.7		17,065			14.1		+29.5
Income before income taxes		27,955			16.6		+28.7		21,716			15.2		+25.9		17,254			14.3		+27.2
Income taxes		10,064			6.0		+27.7		7,880			5.5		+29.8		6,069			5.0		+28.6
Net income	$	17,891			10.6		+29.3	$	13,836			9.7		+23.7	$	11,185			9.3		+26.4
Net income per share — diluted	$	0.97					+29.3	$	0.75					+25.0	$	0.60					+28.8
Effective income tax rate		36.0	%				– 0.8		36.3	%				+ 3.1		35.2	%				+ 1.1

EXECUTIVE SUMMARY

Consolidated Operating Results

Fiscal 2005 was another record-breaking year for the company, exceeding fiscal 2004 record-setting results with $17.9 million in net income and $0.97 of earnings per diluted share. This represents growth in net income and diluted earnings per share of 29.3%. Net sales reached a record $168.1 million, surpassing fiscal 2004 by $25.4 million, or 17.8%. Driving the income and sales increases were strong performances in the company’s Engineered Films and Flow Controls segments. Results for fiscal 2004 were also a record, with net income of $13.8 million, or $0.75 per diluted share.

During fiscal 2005, the company split its stock two-for-one and paid dividends of 22 cents per share, adjusted for the stock split, or 5 1/2 cents per quarter. A one-time special dividend of 62 1/2 cents per share, which totaled $11.3 million, was also distributed to shareholders. In fiscal 2004, the company increased its quarterly dividend from 3 1/2 cents to 4 1/2 cents per share. Capital expenditures totaled $7.5 million for fiscal 2005, which was significantly higher than the $3.3 million spent in fiscal 2004. Fiscal 2005 capital spending in the Engineered Films segment to increase extrusion capacity totaled almost $4.0 million.

Management has planned for another year of double-digit profit growth, based on continuing agricultural demand for precision agriculture products and carryover demand for plastic sheeting, with another year of record sales and profits in fiscal 2006.

The following discussion highlights the consolidated operating results. Results at the divisional and subsidiary level are more fully explained in the segment discussions that follow. In addition, the company has undertaken divestitures and repositioning activities in fiscal 2003 and fiscal 2004, which are more fully explained under “Divestitures and Repositioning Activities.” The company’s high-altitude research balloon operation, formerly in the Engineered Films segment, is included with Aerostar results as a result of a change in the company’s organizational structure. Prior year results have been reclassified to reflect this change.

Fiscal 2005 versus fiscal 2004

Net sales of $168.1 million were 17.8% higher than fiscal 2004, with all segments recording increases over their fiscal 2004 revenue levels. Operating income rose $6.2 million, reaching $27.9 million. Profit gains were a result of significant sales increases in the company’s higher-margin product lines. Flow Controls’ net sales of $40.7 million were $5.7 million, or 16.2% ahead of fiscal 2004, due to the strong agricultural economy and new product introductions while operating income rose 27.4% to $10.5 million. Engineered Films posted the largest revenue gain, increasing net sales by 37.6%, or $16.0 million. The severe hurricane season resulted in disaster film sales of $9.1 million in fiscal 2005. This segment also recorded the largest operating income gain of $5.2 million, a 49.0% increase over fiscal 2004 results. Electronic Systems’ net sales of $47.0 million were $2.7 million higher than fiscal 2004, although the increase in revenue did not result in positive profit growth. Electronic Systems’ operating income decreased $1.3 million from the prior year due to unfavorable product mix and start-up issues with a new customer. Aerostar recorded a modest net sales increase over fiscal 2004 of 4.5%, while operating income of $3.6 million rose 16.7%. Fiscal 2004 results include an operating loss of $355,000 for ongoing environmental and legal liabilities associated with previously sold businesses.

Raven 2005 Annual Report                     page 17

Fiscal 2004 versus fiscal 2003

Net sales of $142.7 million and operating income of $21.6 million represented 18.1% and 26.7% growth over fiscal 2003. All segments achieved sales growth over fiscal 2003 and gains in operating income were a result of increased gross profits in all the segments. An increase in special-order chemical injection system sales and new product sales drove Flow Controls’ sales up to $35.1 million, a $6.6 million sales jump. Operating income in this segment reached $8.3 million. Engineered Films sales of $42.6 million were up 21.5% over fiscal 2003, but material pricing pressures kept operating income relatively flat at $10.6 million. Electronic Systems increased sales 14.8% to $44.3 million while growing operating income to $5.8 million, or 44.1%, from a selective customer base generating new and expanded orders. Aerostar executed a strong turnaround in fiscal 2004, increasing sales from $17.4 million to $20.7 million, and increasing operating income by $2.1 million to $3.1 million, largely due to a US Army cargo parachute contract. Fiscal 2004 results include an operating loss of $355,000 for ongoing environmental and legal liabilities associated with previously sold businesses. Fiscal 2003 results include $1.3 million in net sales and $204,000 of operating income related to operations of Sold Businesses.

FISCAL 2005 PERFORMANCE MEASURES

The company’s net income as a percent of net sales has steadily risen over the last five years, reaching 10.6% for fiscal 2005. In terms of average assets, net income was 21.3%. This highlights the company’s effective use of its assets to generate income. Finally, as a percent of beginning equity for fiscal 2005, net income improved to 26.9%, generating shareholder value.

	2005			2004			2003			2002			2001			2000
Net income as % of
Net sales		10.6	%		9.7	%		9.3	%		7.5	%		4.8	%		4.5	%
Average assets		21.3	%		18.2	%		15.9	%		13.3	%		9.2	%		8.6	%
Beginning equity		26.9	%		23.8	%		21.5	%		18.4	%		11.8	%		10.9	%

DIVESTITURES AND OTHER REPOSITIONING ACTIVITIES

During fiscal 2004 and 2003, the company closed and downsized business units that did not provide proper returns on investment. While the company will continue to review the utilization of invested capital, management believes this activity was substantially completed in fiscal 2003.

Fiscal 2004 Activities

Fiscal 2004 divestiture activities were limited to the sale, by the company’s Aerostar subsidiary, of a sewing plant closed in fiscal 2003. The sale of that plant and its related equipment resulted in cash proceeds of $196,000 and a pretax gain of $182,000. This gain was offset by a $355,000 loss from increased liabilities for environmental or legal issues related to previously sold businesses, as estimated by the company and its advisors.

Fiscal 2003 Activities

During fiscal 2003, the former Beta Raven Industrial Controls Division was sold. A pretax gain of $104,000 and $577,000 of cash proceeds were realized on the completion of the disposal of that subsidiary. An Aerostar sewing plant was closed during the third quarter as well. The remainder of the pretax net gain of $179,000 related to the collection of a previously discounted note receivable, net of increased anticipated costs from ongoing environmental and legal liabilities from previously sold businesses.

Sold Businesses

Fiscal 2003 net sales from Sold Businesses of $1.3 million were entirely composed of Beta Raven Industrial Controls Division operations. Operating income totaled $204,000, which included $179,000 of gains on asset sales.

page 18

SEGMENT ANALYSIS

SALES AND OPERATING INCOME BY SEGMENT

	2005				2004				2003
			%				%				%
Dollars in thousands	amount		change		amount		change		amount		change
SALES
Flow Controls	$	40,726		+16.2	$	35,059		+23.0	$	28,496		+22.9
Engineered Films		58,657		+37.6		42,636		+21.5		35,096		–12.9
Electronic Systems		47,049		+ 6.2		44,307		+14.8		38,589		+19.5
Aerostar		21,654		+ 4.5		20,725		+19.1		17,408		+7.0
Total ongoing		168,086		+17.8		142,727		+19.3		119,589		+6.8
Sold businesses		—				—				1,314		–79.8
Total	$	168,086		+17.8	$	142,727		+18.1	$	120,903		+2.0

	2005					2004					2003
				%					%					%
Dollars in thousands	amount			sales		amount			sales		amount			sales
OPERATING INCOME (LOSS)
Flow Controls	$	10,516			25.8	$	8,254			23.5	$	6,897			24.2
Engineered Films		15,739			26.8		10,563			24.8		10,030			28.6
Electronic Systems		4,492			9.5		5,797			13.1		4,022			10.4
Aerostar		3,609			16.7		3,092			14.9		1,012			5.8
Corporate expenses		(6,494	)				(5,725	)				(5,100	)
Total ongoing		27,862			16.6		21,981			15.4		16,861			14.1
Sold businesses		—					(355	)				204
Total	$	27,862			16.6	$	21,626			15.2	$	17,065			14.1

FLOW CONTROLS

The Flow Controls Division (FCD) provides electronic speed and Global Positioning System (GPS)-based, location-compensated application-control products for the agriculture, marine navigation and other niche markets.

Fiscal 2005 versus fiscal 2004

FCD increased sales 16.2% over fiscal 2004 to reach $40.7 million, despite the decrease of $6.0 million in sales recorded last year under a special order for chemical injection systems. Improved farm incomes, new product sales, value-engineering activities, and an increase in market share contributed to the fiscal 2005 revenue growth. As a percentage of net sales, gross profits increased from 30.4% to 36.7%. Fiscal 2005 operating income of $10.5 million grew 27.4% due to the higher sales level, high-margin product sales, and value engineering activities. The operating income growth was tempered by a $1.3 million writeoff against inventory, fixed assets and intangible assets from the segment’s December 2003 acquisition of Fluent Systems, LLC. Also, selling expenses rose $729,000, or 30.4%, due to continued investment in the segment’s precision agriculture distribution plan.

Fiscal 2004 versus fiscal 2003

Net sales of $35.1 million grew 23.0% from fiscal 2003 net sales of $28.5 million. Shipments of $6.0 million under a special order for chemical injection systems during the first half of fiscal 2004 were $2.8 million higher than fiscal 2003 shipments. The division’s precision agriculture distribution plan, comprised of new product introductions, improvements on existing products and an expanded customer base, helped drive the remaining growth. Operating income of $8.3 million surpassed fiscal 2003 operating income by $1.4 million. Higher sales levels in turn produced increased gross profits, but were partially offset by a $678,000, or 39.5%, increase in selling expenses. As a percentage of net sales, gross profits were 30.4% as compared to 29.8% for fiscal 2003. Selling expenses rose sharply from personnel and advertising costs associated with the new precision agriculture distribution plan. Additionally, fiscal 2003 bad debt expense was favorable due to the collection of a receivable for which an allowance had previously been established.

Prospects

FCD continues to focus on gaining market share in the precision agriculture market; developing new, innovative products; and improving its existing products through value-engineering efforts. New product growth will be aided by the February 2005 acquisition of a Canadian company that has developed an automatic boom height control system and market expansion into international markets, particularly South America. These factors are expected to contribute to revenue growth in the 15-20% range in the upcoming year.

Raven 2005 Annual Report                     page 19

ENGINEERED FILMS

The Engineered Films Division (EFD) produces rugged reinforced plastic sheeting for industrial, construction, manufactured housing and agriculture applications.

Fiscal 2005 versus fiscal 2004

Fiscal 2005 net sales of $58.7 million surpassed fiscal 2004 net sales by $16.0 million, or 37.6%. As a result of the severe hurricane season, disaster film sales of $9.1 million, including $5.0 million of fourth-quarter shipments, boosted the sales level for the current fiscal year. The segment also recorded fiscal 2005 net sales gains in the pit lining, manufactured housing, and agricultural markets. Fiscal 2005 operating income climbed to $15.7 million, a $5.2 million, or 49.0%, increase over fiscal 2004 results. The profit impact of the higher sales level was partially offset by increased selling expenses, which rose $461,000, or 21.3%, due to higher personnel and advertising expenses. As a percentage of net sales, gross profits increased from 30.0% to 31.4%. The fiscal 2005 gross profit rate reflects favorable plant utilization due to the higher sales level that has been partially offset by higher raw material costs experienced by EFD in the current fiscal year.

Fiscal 2004 versus fiscal 2003

The segment’s net sales exceeded fiscal 2003 net sales by $7.5 million to reach $42.6 million. Fiscal year 2004 saw an upturn in pit-lining, industrial-market and vapor-barrier sales. Construction sales remained steady and agriculture sales increased. Despite the sales growth, gross profits increased only 6.7%. Combined with a $231,000, or 12.0%, increase in selling expenses, operating income increased $533,000. Selling expenses grew as a result of additional sales personnel as the division worked to expand its new product sales and market penetration. As a percentage of net sales, gross profits declined from 34.2% to 30.0%, reflecting the fluctuation in raw material costs between the years.

Prospects

Additional extrusion capacity, which will be brought online at the beginning of fiscal 2006, will enable EFD to continue its revenue growth in the markets it currently serves as well as open new market possibilities. Absent reorders for hurricane film, sales growth could fall to the 5% range in fiscal 2006. Volatility in resin prices could impact gross profit rates, although the segment adjusts selling prices whenever possible to pass along the raw material cost increases.

ELECTRONIC SYSTEMS

The Electronic Systems Division (ESD) is a total-solutions provider of electronics manufacturing services, primarily to North American original equipment manufacturers.

Fiscal 2005 versus fiscal 2004

Electronic Systems’ net sales for fiscal 2005 reached $47.0 million, an increase of $2.7 million, or 6.2% over fiscal 2004 net sales. Operating income fell behind fiscal 2004 results, decreasing by $1.3 million. Fiscal 2005 net sales were positively impacted by shipments made to a new customer, although low profit margins due to high start-up costs did not result in a corresponding increase in operating income. Slightly higher personnel costs in fiscal 2005 accounted for selling expenses increasing 6.9% to $823,000. As a percentage of sales, gross profits declined to 11.3% as compared to 14.8% for fiscal 2004, reflecting the start-up costs.

Fiscal 2004 versus fiscal 2003

Segment net sales rose 14.8%, or $5.7 million, to $44.3 million over fiscal 2003 net sales. Increased demand for our customers’ products fueled the increase. Operating income increased $1.8 million over fiscal 2003 operating income of $4.0 million. Gross profit growth was the main contributor, as selling expenses remained relatively flat. Gross profit margins improved from 12.4% in fiscal 2003 to 14.8% in 2004. The improvement was a result of production efficiencies and better capacity utilization.

page 20

Prospects

ESD’s business model of providing low-volume, high-mix contract manufacturing services continues to serve the segment well, although increased manufacturing efficiencies will be sought in fiscal 2006. The segment will continue to focus on reducing cycle time in all areas of manufacturing and looks for sales growth in the 10% range for fiscal 2006, with profit margins moving toward fiscal 2004 levels.

AEROSTAR

The Aerostar segment manufactures military cargo parachutes, government service uniforms, custom-shaped inflatable products, and high-altitude balloons for public and commercial research.

Fiscal 2005 versus fiscal 2004

Aerostar’s fiscal 2005 net sales of $21.7 million were $929,000, or 4.5%, above fiscal 2004 net sales. Sales growth in parachute products, military decoys, and uniforms were partially offset by declines in the segment’s sales of hot-air balloons, commercial inflatable products, and high-altitude research balloons. Fourth-quarter sales of $4.0 million were down 16.0% from the prior year. The lower fourth-quarter sales reflect a reduced shipping schedule for Army cargo parachutes and resulted in a $97,000 fourth-quarter operating loss. For the full year, fiscal 2005 operating income increased $517,000, or 16.7%, over fiscal 2004 results due to relatively high profitability realized on the parachute products and military decoys. As a percentage of sales, gross profit increased from 18.1% for fiscal 2004 to 21.1% for the current fiscal year. Selling expenses rose to $950,000 in fiscal 2005, an increase of $117,000, or 14.0%. Most of the selling expense increase was due to an increased emphasis on attaining government contract business.

Fiscal 2004 versus fiscal 2003

Aerostar had a strong turnaround in fiscal 2004, pulling net sales up 19.1% over fiscal 2003 results to $20.7 million. Shipments under the US Army cargo parachute contract secured in fiscal 2003 increased $6.0 million, which offset the loss in sales from discontinued outerwear lines, lower advertising-inflatables sales, and a decrease in research balloon sales of $1.1 million. Operating income of $3.1 million displayed a similarly strong turnaround as compared to operating income of $1.0 million in fiscal 2003, driven by gross profit increases and selling expense decreases. The restructuring that the subsidiary has undergone in the past three fiscal years has resulted in the elimination of cold-weather outerwear business and a diminished focus on hot-air balloon sales. Operating income includes a $182,000 gain on the sale of a sewing plant closed in fiscal 2003. Gross profits increased as a percentage of sales from 11.7% to 18.1%, largely on the strength of the cargo parachute contract and improved margins on other sewn and sealed products. Fiscal 2003 profits were also depressed by $306,000 of inventory obsolescence charges on hot-air balloon and apparel operations and start-up costs incurred for parachute manufacturing.

Prospects

The first half of fiscal 2006 will reflect substantially lower parachute shipments as compared to the first six months of fiscal 2005. Interest in high-altitude research balloon projects is increasing and may partially offset these losses. Fiscal 2006 results will depend on obtaining new government contracts where Aerostar can leverage its capacity and experience. Aerostar targets overall sales growth in the 5-10% range in the coming fiscal year.

Raven 2005 Annual Report                     page 21

EXPENSES, INCOME TAXES AND OTHER

Corporate expenses increased 13.4% over fiscal 2004 to $6.5 million for fiscal 2005. Higher professional service fees accounted for nearly half of the $769,000 increase, with the remaining increase due to higher personnel costs. As a percentage of sales, corporate expenses were 3.9% of net sales for fiscal 2005 as compared to fiscal 2004’s 4.0% of net sales. Fiscal 2004 corporate expenses of $5.7 million increased 12.3% over fiscal 2003. Personnel costs accounted for nearly half of the growth, a result of additional staff and increased compensation and insurance expenses. Fiscal 2005 interest expense of $35,000 decreased $36,000 from fiscal 2004 and consisted of interest on capital leases and deferred acquisition payments from the Starlink and System Integrators acquisitions. No borrowings were made in fiscal 2005. For fiscal 2004, interest expense increased slightly from $63,000 in fiscal 2003 to $70,000. In addition to interest incurred on the company’s capital leases and deferred acquisition payments during fiscal 2004, interest expense was recorded on payments related to a previously accrued tax dispute settlement. Fiscal 2005 other income of $128,000 declined from $160,000 in fiscal 2004. The main component of other income is interest income, which was reduced in fiscal 2005 due to lower cash levels that resulted from the $11.3 million special dividend payout in May 2004. Fiscal 2005’s effective income tax rate of 36.0% was slightly lower than the 36.3% effective rate for fiscal 2004. Fiscal 2004’s tax rate of 36.3% was higher than the 35.2% effective rate for fiscal 2003 due to state income taxes, higher nondeductible expenses, and the impact of graduated rates.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes cash provided by (used in) the company’s business activities for the past three fiscal years:

Dollars in thousands	2005			2004			2003
Operating activities	$	18,871		$	19,732		$	12,735
Investing activities		(7,631	)		(4,352	)		(9,166	)
Financing activities		(19,063	)		(6,155	)		(5,830	)

OPERATING ACTIVITIES AND CASH POSITION

The company’s cash flow from operations totaled $51.3 million over the past three years compared to net income of $42.9 million over the same period. Cash flow from operations in fiscal 2005 totaled $18.9 million, an $861,000 decrease as compared to cash inflows in fiscal 2004. The rise in net income and higher accounts payable balances at fiscal 2005 year-end were offset by higher accounts receivable and inventory levels. Fiscal 2005 net income was $4.1 million higher than fiscal 2004 while accounts payable increased by $6.6 million due to the higher inventory levels and to the extenstion of payment terms on certain vendor invoices. Fiscal 2005’s ending accounts receivable balance was $25.4 million, an increase of nearly $7.0 million from fiscal 2004. Accounts receivable balances for the company’s Engineered Films and Flow Controls segments were substantially higher at fiscal 2005 year-end as compared to their fiscal 2004 year-ending balances due to higher sales levels. Fiscal 2005 inventory levels in Engineered Films, Electronic Systems, and Flow Controls were up as compared to January 31, 2004, with Engineered Films accounting for over half of the increase. Fiscal 2004 operating cash flows were $19.7 million as compared to cash flows of $12.7 million for fiscal 2003. The rise in net income and cash generated from inventory reductions were the main drivers for the fiscal 2004 increase in operating cash flows as compared to fiscal 2003.

Cash, cash equivalents and short-term investments totaled $9.6 million at January 31, 2005, which represents an $8.8 million decrease from one year earlier. Higher working capital requirements, increased capital expenditures, and the $11.3 million special dividend have generated the decline in available cash at fiscal 2005 year-end. The company expects that cash and short-term investments, combined with continued positive operating cash flows, will continue to be sufficient to fund day-to-day operations. The company utilized its short-term credit facility to fund the Flow Controls’ Canadian acquisition in February 2005, borrowing $3.0 million against its line of credit.

page 22

INVESTING ACTIVITIES

The company used $7.6 million of cash for investing activities in fiscal 2005 versus $4.4 million for fiscal 2004. Fiscal 2005 capital expenditures of $7.5 million increased by $4.2 million from fiscal 2004, with over half of the investment being made in the Engineered Films segment for additional extrusion capacity. A $650,000 investment was made during fiscal 2005 in an unconsolidated real estate affiliate and $1.0 million of short-term investments were liquidated. Fiscal 2004 cash used in investing activities included the acquisition of Fluent Systems, LLC for $1.0 million and the purchase of a formerly leased Aerostar facility for $1.0 million. Short-term investments of $4.0 million were purchased in fiscal 2003 with excess cash. Fiscal 2006 capital expenditures are planned to reach $10 million — primarily for additional Engineered Films capacity.

FINANCING ACTIVITIES

Fiscal 2005 cash used in financing activities increased significantly to $19.1 million as compared to $6.2 million expended in fiscal 2004. The increase in cash used was due primarily to the $11.3 million special dividend paid in May 2004. The company’s main financing activities continue to be the payment of dividends and the repurchase of company stock. The company increased its quarterly dividend on a per-share basis for the eighteenth consecutive year. Dividends, excluding the special 62 1/2 cent dividend, increased 29.4% over fiscal 2004, and purchases of 186,500 treasury shares at an average price of $18.87 were made during the year. In fiscal 2004, 288,350 shares were repurchased at an average price of $10.64 while 502,460 shares at an average price of $6.62 were repurchased in fiscal 2003.

No borrowings were made in fiscal 2005. The remaining debt of the company consists of capital leases assumed in the acquisition of Starlink that are scheduled to be repaid in fiscal 2006. The company utilized its short-term credit facility early in fiscal 2006, borrowing in February 2005 to fund its Flow Controls’ acquisition.

Contractual obligations consist of capital leases and non-cancelable operating leases for facilities and equipment, and unconditional purchase obligations primarily for raw materials. Letters of credit have been issued for workers’ compensation insurance obligations that remain from the period of self-insurance (February 1, 2001, and prior). In the event the bank chooses not to renew the company’s line of credit, the letters of credit would cease and alternative methods of support for the insurance obligations would be necessary that would be more expensive and require additional cash outlays. The company believes the chances of such an event are remote. In fiscal 2005, the company entered into an agreement to purchase for $1.8 million a building to be used in the Engineered Films segment. The agreement required an earnest payment of $25,000 at signing with the remainder due upon closing, on or before May 1, 2006. A summary of the obligations and commitments at January 31, 2005, for the next five years is shown below.

					FY 2007-		FY 2009-
Dollars in thousands	Total		FY 2006		FY 2008		FY 2010
Contractual Obligations:
Line of credit(a)	$	—	$	—	$	—	$	—
Capital leases		61		61		—		—
Operating leases		562		222		329		11
Unconditional purchase obligations		16,952		16,952		—		—
Real estate purchase agreement		1,775		1,775		—		—
		19,350		19,010		329		11
Other Commercial Commitments:
Letters of credit		2,032		2,032		—		—
	$	21,382	$	21,042	$	329	$	11

(a) $7.0 million line bears interest at 5.25% as of January 31, 2005, and expires May 2005.

CAPITAL REQUIREMENTS

The company maintains an excellent financial condition and capacity for growth. Management continues to look for opportunities to expand its core businesses through acquisitions or internal growth. The company has the capacity to assume additional financing and will do so if the appropriate strategic opportunity presents itself. Capital expenditures for fiscal 2006 are forecast in the $10 million range, with over half of these expenditures supporting Engineered Films with extrusion equipment and facilities capacity. The company intends to return approximately 30% of its earnings to shareholders in the form of dividends. Stock repurchases are anticipated to continue as a means to return additional cash to shareholders and increase the leverage of the company’s balance sheet. Although the cash generated from operations and the availability of cash under existing credit facilities is anticipated to be sufficient to fund these initiatives, the company has explored long-term debt financing.

Raven 2005 Annual Report                     page 23

CRITICAL ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS

CRITICAL ACCOUNTING POLICIES

Critical accounting policies for the company are those policies that require the application of judgment when valuing assets and liabilities on the company’s balance sheet. These policies are discussed immediately below because a fluctuation in actual results versus expected results could materially affect our operating results and because the policies require significant judgments and estimates to be made. Our accounting related to these policies is initially based on our best estimates at the time of original entry in our accounting records. Adjustments are periodically recorded when our actual experience differs from the expected experience underlying the estimates. These adjustments could be material if our experience were to change significantly in a short period of time. The company, other than utilizing operating leases, does not enter into off-balance sheet financing or derivatives.

The company’s most difficult accounting decision is determining inventory value at the lower of cost or market. Typically, when a product reaches the end of its life cycle, inventory value declines slowly or the product has alternative uses. Management uses its computerized manufacturing resources planning data to help determine if inventory is slow-moving or has become obsolete due to an engineering change. The company closely reviews items that have balances in excess of the prior year’s requirements or that have been dropped from production requirements. Despite these reviews, technological or strategic decisions, made by management or the company’s customers, may result in unexpected excess material. In the Electronic Systems Division, the company typically has recourse to customers for obsolete or excess material. Under terms of the contract, the customers may have to take delivery of the material or compensate the company accordingly. In every operating unit of the company, management must manage obsolete inventory risk. The accounting judgment ultimately made is an evaluation of the success that division management will have in controlling inventory risk and mitigating the impact of obsolescence when it does occur.

Determining the level of the allowance for doubtful accounts, warranty and self-insurance accruals represent management’s best estimate of future events. Historical levels of activity or assistance from advisors may be used in certain circumstances, but knowledge of the current financial climate or the impact of a new product on these accruals always tempers evaluation of the historical data.

The company periodically assesses goodwill and other intangible assets for impairment, at the segment level, using fair value measurement techniques. Estimates of fair value are primarily determined using discounted cash flows, market comparisons and recent transactions. These valuation methodologies use significant estimates and assumptions, which include projected future cash flows, including timing and the risks inherent in future cash flows, perpetual growth rates and determination of appropriate market comparables.

NEW ACCOUNTING STANDARDS

In November 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 151, Inventory Costs – An Amendment of ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). In addition, SFAS No. 151 requires that allocation of fixed-production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The company believes that it is currently in compliance with SFAS No. 151 and does not expect adoption of this revised statement to have a significant effect on consolidated results of operations or financial position.

page 24

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 153, Exchanges of Nonmonetary Assets – An Amendment of APB Opinion No. 29. This statement amends APB Opinion No. 29 and is based on the principle that exchanges of nonmonetary assets should be measured on the fair value of the assets exchanged. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement will not have a significant effect on the consolidated results of operations or financial position.

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 123 (Revised 2004), Share-Based Payment, or SFAS No. 123R, which is a revision of SFAS No. 123. SFAS No. 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. SFAS No. 123R is effective for the company beginning July 1, 2005. The company began expensing stock options in fiscal 2003 utilizing the modified prospective method and does not expect adoption of this revised statement will have a significant effect on consolidated results of operations or financial position.

RECENTLY PASSED LEGISLATION

On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the “Act”). The Act provides a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010. In return, the Act also provides for a two-year phaseout of the existing extraterritorial income exclusion (ETI) for foreign sales that was viewed to be inconsistent with international trade protocols by the European Union. The company expects the net effect of the phaseout of the ETI and the phase-in of this new deduction to result in a decrease in the effective tax rate for fiscal years 2006 and 2007 of less than one percentage point, based on current earnings levels. In the long term, the company expects that the new deduction will result in a decrease of the annual effective tax rate by up to an additional two percentage points based on current earnings levels.

Under the guidance in FASB Staff Position No. FSP 109-1, Application of FASB Statement No. 109, “Accounting for Income Taxes,” to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, the deduction will be treated as a “special deduction” as described in FASB Statement No. 109. As such, the special deduction has no effect on deferred tax assets and liabilities existing at the enactment date. Rather, the impact of this deduction will be reported in the period in which the deduction is claimed on our tax return.

Raven 2005 Annual Report                     page 25

Monthly Closing Stock Price and Volume

Quarterly Information (Unaudited)

														Net Income				Common Stock				Cash
Dollars in thousands,	Net		Gross		Operating			Pretax			Net			Per Share(a)(b)				Market Price(b)				Dividends
except per-share data	Sales		Profit		Income			Income			Income			Basic		Diluted		High		Low		Per Share(b)
FISCAL 2005
First Quarter	$	38,408	$	11,678	$	8,451		$	8,475		$	5,415		$	0.30	$	0.29	$	17.17	$	13.65	$	0.055
Second Quarter		37,077		8,759		5,651			5,677			3,642			0.20		0.20		19.43		13.08		0.680	(c)
Third Quarter		48,597		12,962		8,099	(d)		8,115	(d)		5,194	(d)		0.29		0.28		23.89		17.41		0.055
Fourth Quarter		44,004		9,801		5,661			5,688			3,640			0.20		0.20		26.94		17.05		0.055
Total Year	$	168,086	$	43,200	$	27,862		$	27,955		$	17,891		$	0.99	$	0.97	$	26.94	$	13.08	$	0.845
FISCAL 2004
First Quarter	$	36,942	$	9,437	$	6,544		$	6,556		$	4,183		$	0.23	$	0.23	$	9.50	$	7.56	$	0.040
Second Quarter		36,110		7,811		4,937			4,976			3,163			0.17		0.17		11.00		7.90		0.040
Third Quarter		36,081		9,219		6,121			6,126			3,902			0.22		0.21		13.73		10.62		0.045
Fourth Quarter		33,594		7,292		4,024			4,058			2,588			0.14		0.14		15.23		11.89		0.045
Total Year	$	142,727	$	33,759	$	21,626		$	21,716		$	13,836		$	0.77	$	0.75	$	15.23	$	7.56	$	0.170
FISCAL 2003
First Quarter	$	30,974	$	8,150	$	5,304		$	5,320		$	3,458		$	0.19	$	0.18	$	6.09	$	4.38	$	0.035
Second Quarter		29,692		5,996		3,532			3,569			2,320			0.13		0.12		7.22		5.38		0.035
Third Quarter		31,423		7,332		4,872			4,939			3,210			0.18		0.17		7.00		5.83		0.035
Fourth Quarter		28,814		6,037		3,357			3,426			2,197			0.12		0.12		9.20		6.70		0.035
Total Year	$	120,903	$	27,515	$	17,065		$	17,254		$	11,185		$	0.61	$	0.60	$	9.20	$	4.38	$	0.140

(a)	Net income per share is computed discretely by quarter and may not add to the full year.
(b)	All per-share and market price data reflect the October 2004 and January 2003 two-for-one stock splits.
(c)	A special dividend of $.625 per share was paid during the second quarter of fiscal 2005.
(d)	Includes a pretax $1.3 million ($845,000 net of tax) writeoff of assets related to the Fluent Systems product line (See Note 4).

page 26

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed our internal control over financial reporting in relation to criteria described in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment using those criteria, we concluded that, as of January 31, 2005, our internal control over financial reporting was effective.

Our management’s assessment of the effectiveness of our internal control over financial reporting as of January 31, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page 39 of this Annual Report.

Ronald M. Moquist	Thomas Iacarella
President & Chief Executive Officer	Vice President & Chief Financial Officer
March 24, 2005

Raven 2005 Annual Report                     page 27

Consolidated Balance Sheets

	As of January 31
Dollars in thousands, except per-share data	2005		2004		2003
ASSETS
Current assets
Cash and cash equivalents	$	6,619	$	14,442	$	5,217
Short-term investments		3,000		4,000		4,000
Accounts receivable, net		25,370		18,454		16,468
Inventories, net		23,315		16,763		21,366
Deferred income taxes		1,465		1,313		1,493
Prepaid expenses and other current assets		1,823		738		807
Total current assets		61,592		55,710		49,351
Property, plant and equipment, net		19,964		15,950		16,455
Goodwill		5,933		6,776		5,933
Other assets, net		1,020		1,072		1,077
Total assets	$	88,509	$	79,508	$	72,816
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	57	$	72	$	119
Accounts payable		10,322		3,666		5,291
Accrued liabilities		9,716		7,784		7,157
Customer advances		855		373		600
Total current liabilities		20,950		11,895		13,167
Long-term debt, less current portion		—		57		151
Other liabilities, primarily compensation and benefits		1,477		1,085		1,262
Commitments and contingencies
Shareholders’ equity		66,082		66,471		58,236
Common shares, par value $1.00 per share
Authorized — 100,000,000
Outstanding — 2005: 17,999,468; 2004: 18,041,088
(9,020,544 pre-split); 2003: 18,132,724 (9,066,362 pre-split)
Total liabilities and shareholders’ equity	$	88,509	$	79,508	$	72,816

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

page 28

Consolidated Statements of Income

	For the years ended January 31
Dollars in thousands, except per-share data	2005			2004			2003
Net sales	$	168,086		$	142,727		$	120,903
Cost of goods sold		124,886			108,968			93,388
Gross profit		43,200			33,759			27,515
Selling, general and administrative expenses		14,056			11,960			10,629
Loss (gain) on disposition of businesses and assets, net		1,282			173			(179	)
Operating income		27,862			21,626			17,065
Interest expense		35			70			63
Other income, net		(128	)		(160	)		(252	)
Income before income taxes		27,955			21,716			17,254
Income taxes		10,064			7,880			6,069
Net income	$	17,891		$	13,836		$	11,185
Net income per common share
— basic	$	0.99		$	0.77		$	0.61
— diluted	$	0.97		$	0.75		$	0.60

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

Raven 2005 Annual Report                     page 29

Consolidated Statements of Shareholders’ Equity
and Comprehensive Income

	$1 Par
	Common			Paid-in			Treasury stock						Retained
Dollars in thousands, except per-share data	Stock			Capital			Shares			Cost			Earnings			Total
Balance January 31, 2002	$	7,875		$	1,222			(3,269,019	)	$	(31,789	)	$	74,724		$	52,032
SFAS 123 adoption adjustment		—			478			—			—			—			478
Net and comprehensive income		—			—			—			—			11,185			11,185
Cash dividends ($.140 per share)(a)		—			—			—			—			(2,563	)		(2,563	)
Two-for-one stock split		7,875			(1,682	)		(3,269,019	)		—			(6,193	)		—
Purchase of stock		—			—			(251,230	)		(3,324	)		—			(3,324	)
Purchase and retirement of stock		(70	)		(835	)		—			—			—			(905	)
Employees’ stock options exercised		176			917			—			—			—			1,093
Stock compensation expense		—			174			—			—			—			174
Tax benefit from exercise of stock options		—			66			—			—			—			66
Balance January 31, 2003		15,856			340			(6,789,268	)		(35,113	)		77,153			58,236
Net and comprehensive income		—			—			—			—			13,836			13,836
Cash dividends ($.170 per share)(a)		—			—			—			—			(3,075	)		(3,075	)
Purchase of stock		—			—			(144,175	)		(3,068	)		—			(3,068	)
Purchase and retirement of stock		(39	)		(804	)		—			—			—			(843	)
Employees’ stock options exercised		137			435			—			—			—			572
Stock compensation expense		—			282			—			—			—			282
Tax benefit from exercise of stock options		—			531			—			—			—			531
Balance January 31, 2004		15,954			784			(6,933,443	)		(38,181	)		87,914			66,471
Net and comprehensive income		—			—			—			—			17,891			17,891
Cash dividends ($.220 per share)		—			—			—			—			(3,971	)		(3,971	)
Cash dividend — Special ($.625 per share)		—			—			—			—			(11,327	)		(11,327	)
Two-for-one stock split		15,954			(411	)		(6,933,443	)		—			(15,543	)		—
Purchase of stock		—			—			(186,500	)		(3,519	)		—			(3,519	)
Purchase and retirement of stock		(40	)		(646	)		—			—			—			(686	)
Employees’ stock options exercised		185			327			—			—			—			512
Stock compensation expense		—			309			—			—			—			309
Tax benefit from exercise of stock options		—			402			—			—			—			402
Balance January 31, 2005	$	32,053		$	765			(14,053,386	)	$	(41,700	)	$	74,964		$	66,082

(a) Reflects the January 2003 and October 2004 two-for-one stock splits.

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

page 30

Consolidated Statements of Cash Flows

	For the years ended January 31
Dollars in thousands	2005			2004			2003
Cash flows from operating activities
Net income	$	17,891		$	13,836		$	11,185
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,410			3,674			3,541
Amortization		431			471			425
Provision for losses on accounts receivable, net of recoveries		34			67			(100	)
(Gain) loss on disposition of businesses and assets		1,282			173			(179	)
Deferred income taxes		(31	)		254			1,157
Stock compensation expense		309			282			174
Change in operating assets and liabilities, net of effects from the acquisition and sale of businesses		(4,669	)		850			(3,470	)
Other operating activities, net		214			125			2
Net cash provided by operating activities		18,871			19,732			12,735
Cash flows from investing activities
Capital expenditures		(7,541	)		(3,330	)		(6,033	)
Purchase of short-term investments		(3,000	)		(4,000	)		(5,000	)
Sale of short-term investments		4,000			4,000			1,000
Acquisition of businesses		(414	)		(1,038	)		(57	)
Sales of businesses and assets, net of cash sold		—			257			927
Investment in unconsolidated affiliate		(650	)		—			—
Other investing activities, net		(26	)		(241	)		(3	)
Net cash used in investing activities		(7,631	)		(4,352	)		(9,166	)
Cash flows from financing activities
Proceeds from borrowing under line of credit		—			—			1,025
Repayment on borrowing under line of credit		—			—			(1,025	)
Long-term debt principal payments		(72	)		(141	)		(131	)
Dividends paid		(15,298	)		(3,075	)		(2,563	)
Purchase of treasury stock		(3,519	)		(3,068	)		(3,324	)
Other financing activities, net		(174	)		129			188
Net cash used in financing activities		(19,063	)		(6,155	)		(5,830	)
Net increase (decrease) in cash and cash equivalents		(7,823	)		9,225			(2,261	)
Cash and cash equivalents at beginning of year		14,442			5,217			7,478
Cash and cash equivalents at end of year	$	6,619		$	14,442		$	5,217

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

Raven 2005 Annual Report                     page 31

Notes to Financial Statements

Note 1. Summary of Significant Accounting Policies

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Raven Industries, Inc. and its wholly owned subsidiaries (the “company”). The company is an industrial manufacturer providing a variety of products to customers within the industrial, agricultural, construction and military/aerospace markets primarily in North America. The company operates three divisions (Flow Controls, Engineered Films and Electronic Systems) in addition to a wholly owned subsidiary, Aerostar International, Inc. (Aerostar). All significant intercompany balances and transactions have been eliminated in consolidation. The company has a 50% ownership investment in Zip City Partners, LLC. The equity method is used to account for this investment.

USE OF ESTIMATES

The preparation of the company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

CASH AND CASH EQUIVALENTS

The company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalent balances are principally concentrated in checking and savings accounts with Wells Fargo Bank.

SHORT-TERM INVESTMENTS

The investments consist of fully insured certificates of deposit with varying maturities, all less than 12 months from the balance sheet date. Rates on the deposits at January 31, 2005 range from 1.55% to 2.4%.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the company’s best estimate of the amount of problable credit losses based on historical write-off experience by segment and an estimate of the collectibility of any known problem accounts.

INVENTORY VALUATION

Inventories are stated at the lower of cost or market, with cost determined on the first-in, first-out basis. Market value encompasses consideration of all business factors including price, contract terms and usefulness.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost and are depreciated over the estimated useful lives of the assets using accelerated methods. The estimated useful lives used for computing depreciation are as follows:

Buildings and improvements
Machinery and equipment 7 to 39 years
3 to 7 years

Maintenance and repairs are charged to expense in the year incurred and renewals and betterments are capitalized. The cost and related accumulated depreciation of assets sold or disposed of are removed from the accounts and the resulting gain or loss is reflected in operations.

INTANGIBLE ASSETS

Intangible assets, primarily comprised of technologies acquired through acquisition, are recorded at cost net of accumulated amortization. Amortization is computed on a straight-line basis over estimated useful lives ranging from 3 to 20 years. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in each reporting period.

GOODWILL

The company recognizes the excess cost of an acquired entity over the net amount assigned to assets acquired, including intangible assets with indefinite lives, and liabilities assumed, as goodwill. Goodwill and intangible assets with indefinite lives are tested for impairment on an annual basis during the fourth quarter, and between annual tests whenever there is an impairment indicated. Fair values are estimated based on future cash flows and are compared with the corresponding carrying value of the related asset.

LONG-LIVED ASSETS

The company periodically assesses the recoverability of long-lived and intangible assets using fair value measurement techniques, where fair value is calculated based upon anticipated future earnings and undiscounted operating cash flows. If the fair value is less than the carrying amount of the asset, an impairment loss is recognized to the extent the carrying value exceeds the fair value of the asset.

page 32

INSURANCE OBLIGATIONS

The company employs insurance policies covering workers’ compensation and general liability costs. Liabilities are accrued related to claims filed and estimates for claims incurred but not reported. To the extent these obligations will be reimbursed by insurance, the expected reimbursement is included as a component of other current assets.

CONTINGENCIES

The company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of business. An estimate of the loss on these matters is charged to operations when it is probable that an asset has been impaired or a liability has been incurred, and the amount of the loss can be reasonably estimated. The settlement of such claims cannot be determined at this time; however, management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe that the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows.

REVENUE RECOGNITION

The company recognizes revenue and records revenues upon shipment of products. The company sells directly to customers or distributors who incur the expense and commitment for any post-sale obligations beyond stated warranty terms. Estimated returns, allowances or warranty charges are recognized upon shipment of a product. The company does not typically require collateral from its customers. Shipping and handling costs are classified as a component of cost of goods sold.

WARRANTIES

Accruals necessary for product warranties are estimated based upon historical warranty costs and average time elapsed between purchases and returns for each division. Any warranty issues that are unusual in nature are accrued individually.

RESEARCH AND DEVELOPMENT

Research and development expenditures of $2.0 million in fiscal 2005, $1.7 million in fiscal 2004, and $1.3 million in fiscal 2003 were charged to cost of goods sold in the year incurred. Expenditures are principally composed of labor and material costs.

STOCK-BASED COMPENSATION

The company records compensation expense related to its stock-based compensation plan using the fair value method permitted by SFAS No. 123, “Accounting for Stock-Based Compensation” under the modified prospective method outlined by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure.”

INCOME TAXES

Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities and reserves. Judgmental reserves are maintained for income tax audits and other tax issues. Deferred income taxes reflect temporary differences between assets and liabilities reported on the company’s balance sheet and their tax bases. These differences are measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will impact taxable income. Deferred tax assets are reduced by a valuation allowance to reflect realizable value, when necessary.

STOCK SPLITS

The company completed two-for-one stock splits effected in the form of a 100% stock dividend on October 15, 2004, and January 15, 2003. All per-share information reflects the effect of these stock splits.

NEW ACCOUNTING STANDARDS

In November 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 151, Inventory Costs – An Amendment of ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). In addition, SFAS No. 151 requires that allocation of fixed-production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The company believes that it is currently in compliance with SFAS No. 151 and does not expect adoption of this revised statement to have a significant effect on consolidated results of operations or financial position.

Raven 2005 Annual Report                     page 33

Notes to Financial Statements (continued)

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 153, Exchanges of Nonmonetary Assets –An Amendment of APB Opinion No. 29. This statement amends APB Opinion No. 29 and is based on the principle that exchanges of nonmonetary assets should be measured on the fair value of the assets exchanged. SFAS 153 is effective for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement will not have a significant effect on the consolidated results of operations or financial position.

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS No. 123 (Revised 2004), Share-Based Payment, or SFAS No. 123R, which is a revision of SFAS No. 123. SFAS No. 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options to be recognized in the income statement based on their fair values. SFAS No. 123R is effective for the company beginning July 1, 2005. The company began expensing stock options in fiscal 2003 utilizing the modified prospective method and does not expect adoption of this revised statement will have a significant effect on consolidated results of operations or financial position.

RECENTLY PASSED LEGISLATION

On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the “Act”). The Act provides a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010. In return, the Act also provides for a two-year phaseout of the existing extraterritorial income exclusion (ETI) for foreign sales that was viewed to be inconsistent with international trade protocols by the European Union.

Under the guidance in FASB Staff Position No. FSP 109-1, Application of FASB Statement No. 109, “Accounting for Income Taxes,” to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, the deduction will be treated as a “special deduction” as described in FASB Statement No. 109. As such, the special deduction has no effect on deferred tax assets and liabilities existing at the enactment date. Rather, the impact of this deduction will be reported in the period in which the deduction is claimed on our tax return.

Note 2. Selected Balance Sheet Information

Following are the components of selected balance sheet items:

	As of January 31
Dollars in thousands	2005			2004			2003
Accounts receivable, net:
Trade accounts	$	25,635		$	18,719		$	16,708
Allowance for doubtful accounts		(265	)		(265	)		(240	)
	$	25,370		$	18,454		$	16,468
Inventories, net:
Finished goods	$	3,538		$	2,500		$	5,290
In process		2,820			2,120			2,275
Materials		16,957			12,143			13,801
	$	23,315		$	16,763		$	21,366
Property, plant and equipment, net:
Land	$	1,084		$	1,110		$	1,091
Building and improvements		15,184			13,049			12,154
Machinery and equipment		36,486			32,479			32,248
Accumulated depreciation		(32,790	)		(30,688	)		(29,038	)
	$	19,964		$	15,950		$	16,455
Other assets, net:
Amortizable assets:
Purchased technology	$	1,080		$	1,250		$	1,080
Other intangibles		946			1,136			884
Accumulated amortization		(1,831	)		(1,494	)		(1,027	)
		195			892			937
Investment in unconsolidated affiliate		650			—			—
Other, net		175			180			140
	$	1,020		$	1,072		$	1,077
Accrued liabilities:
Salaries and benefits	$	1,992		$	1,875		$	1,766
Vacation		1,852			1,638			1,627
401(k) contributions		980			906			782
Insurance obligations		1,541			524			1,045
Income taxes		567			267			276
Profit sharing		900			544			406
Deferred acquisition payments		—			389			—
Other		1,884			1,641			1,255
	$	9,716		$	7,784		$	7,157

Note 3. Supplemental Cash Flow Information

	For the years ended January 31
Dollars in thousands	2005			2004			2003
Changes in operating assets and liabilities, net of effects from the purchase and sale of businesses:
Accounts receivable	$	(6,950	)	$	(2,072	)	$	(304	)
Inventories		(6,704	)		4,603			(2,671	)
Prepaid expenses and other assets		150			(16	)		15
Accounts payable		6,576			(1,625	)		560
Accrued and other liabilities		1,777			187			(1,153	)
Customer advances		482			(227	)		83
	$	(4,669	)	$	850		$	(3,470	)
Cash paid during the year for:
Interest	$	77		$	50		$	44
Income taxes		9,596			7,014			4,852

Cash flows from investing activities in fiscal 2005 include $409,000 of payments related to acquisitions that were deferred under their respective purchase agreements.

page 34

Note 4. Fluent Systems

On December 19, 2003, the company acquired substantially all of the assets of Fluent Systems, LLC for $1.0 million in cash and a payment deferred until December 2004, which was valued at $60,000. This start-up company had developed a wireless liquid level monitoring system used with anhydrous ammonia tanks. Of the purchase price, $79,000 was assigned to equipment, $195,000 was assigned to intangible assets, $19,000 to current liabilities assumed and $848,000 to goodwill, which is fully deductible for tax purposes. The operation was assigned to the Flow Controls segment. Pro forma earnings are not presented due to the immateriality of the acquisition to the consolidated operations.

The results of operations were included in the consolidated financial statements from the date of acquisition. In the third quarter of fiscal 2005, Flow Controls decided to abandon the Fluent Systems product line resulting in a $1.3 million pretax writeoff of inventory, equipment, intangible assets and goodwill.

Note 5. Divestitures and Other Repositioning Activities

Fiscal 2004 divestiture activities were limited to the sale by the company’s Aerostar subsidiary of a sewing plant closed in fiscal 2003. The sale of that plant and its related equipment resulted in cash proceeds of $196,000 and a pretax gain of $182,000. This gain was offset by a $355,000 loss from increased liabilities for environmental or legal issues related to previously sold operations, as estimated by the company and its advisors. At January 31, 2005, the company had an undiscounted accrual remaining of $145,000 for environmental monitoring and clean-up costs of sold operations.

During fiscal 2003, the former Beta Raven Industrial Controls Division was sold. A pretax gain of $104,000 and $577,000 of cash proceeds were realized on the completion of the disposal of that subsidiary. An Aerostar sewing plant was closed during the third quarter as well. The remainder of the pretax net gain of $179,000 related to the collection of a previously discounted note receivable, net of increased anticipated costs from ongoing liabilities from previously sold businesses.

Note 6. Goodwill and Other Intangibles

Goodwill

The changes in the carrying amount of goodwill by reporting segment are shown below:

	Flow			Engineered		Electronic
Dollars in thousands	Controls			Films		Systems		Aerostar		Total
Balance at January 31, 2002	$	4,947		$	96	$	356	$	464	$	5,863
Purchase price adjustments		(7	)		—		77		—		70
Balance at January 31, 2003		4,940			96		433		464		5,933
Goodwill acquired during year		843			—		—		—		843
Balance at January 31, 2004		5,783			96		433		464		6,776
Adjustment		5			—		—		—		5
Writeoff of Fluent Systems		(848	)		—		—		—		(848	)
Balance at January 31, 2005	$	4,940		$	96	$	433	$	464	$	5,933

Intangible Assets

Estimated future amortization expense based on the current carrying value of amortizable intangible assets for fiscal periods 2006 through 2010 is $79,000, $62,000, $6,000, $5,000, and $4,000, respectively.

Note 7. Employee Retirement Benefits

The company has a 401(k) plan covering substantially all employees and contributed 3% of qualified payroll. The company’s contribution expense was $836,000, $817,000 and $715,000 for fiscal 2005, 2004 and 2003, respectively.

In addition, the company provides postretirement medical and other benefits to senior executive officers and senior managers. The company accounts for these benefits in accordance with SFAS No. 106, “Accounting for Postretirement Benefits Other Than Pensions.” There are no assets held for the plans and any obligations are covered through the company’s operating cash and investments. The liability and expense reflected in the balance sheet and income statement are as follows:

	As of January 31
Dollars in thousands	2005			2004			2003
Beginning balance	$	1,212		$	1,102		$	969
Employer expense		391			316			306
Retiree benefits paid		(156	)		(206	)		(173	)
Ending balance		1,447			1,212			1,102
Current portion		(180	)		(200	)		(150	)
Long-term portion	$	1,267		$	1,012		$	952
Discount rate		7.0	%		7.0	%		8.0	%
Wage inflation rate		4.0	%		4.0	%		4.0	%
Medical inflation rate		7.0	%		7.0	%		7.0	%

The accumulated benefit obligation based upon the rates noted in the table above was approximately $2.7 million, $2.4 million and $2.2 million at January 31, 2005, 2004 and 2003, respectively. No material fluctuations in retiree benefits are expected in future years.

Raven 2005 Annual Report                     page 35

Notes to Financial Statements (continued)

Note 8. Warranties

Changes in the warranty accrual were as follows:

	As of January 31
Dollars in thousands	2005			2004			2003
Beginning balance	$	263		$	156		$	248
Accrual for warranties		932			863			584
Settlements made (in cash or in kind)		(743	)		(756	)		(576	)
Sale of businesses		—			—			(100	)
Ending balance	$	452		$	263		$	156

Note 9. Income Taxes

The reconciliation of income tax computed at the federal statutory rate to the company’s effective income tax rate is as follows:

	For the years ended
	January 31
	2005			2004			2003
Tax at U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of U.S. federal benefit		0.9			0.9			0.4
Nondeductible stock option expense		0.3			0.3			0.3
Impact of graduated rates		—			—			(0.6	)
Other, net		(0.2	)		0.1			0.1
		36.0	%		36.3	%		35.2	%

Significant components of the company’s income tax provision are as follows:

	For the years ended
	January 31
Dollars in thousands	2005			2004		2003
Income taxes:
Currently payable	$	10,095		$	7,626	$	4,912
Deferred		(31	)		254		1,157
	$	10,064		$	7,880	$	6,069

Significant components of the company’s deferred tax assets and liabilities are as follows:

	As of January 31
Dollars in thousands	2005			2004			2003
Current deferred tax assets:
Accounts receivable	$	93		$	93		$	84
Inventory valuation		237			182			194
Accrued vacation		591			532			508
Insurance obligations		161			183			369
Other accrued liabilities		383			323			338
		1,465			1,313			1,493
Non-current deferred tax assets (liabilities):
Accrued compensation and benefits		443			354			333
Depreciation and amortization		(771	)		(502	)		(380	)
Other		118			75			53
		(210	)		(73	)		6
Net deferred tax asset	$	1,255		$	1,240		$	1,499

Note 10. Financing Arrangements

Raven has an uncollateralized credit agreement providing a line of credit of $7.0 million which expires in May 2005. Letters of credit totaling $2.0 million have been issued under the line, primarily to support self-insured workers’ compensation bonding requirements. No borrowings were outstanding as of January 31, 2005, 2004 or 2003, and $5.0 million was available at January 31, 2005. The credit agreement contains certain restrictive covenants that, among other things, require maintenance of certain levels of net worth and working capital. Borrowings on the credit line bore interest as of January 31, 2005, 2004 and 2003 at 5.25%, 4.00% and 4.25%, respectively. The weighted-average interest rate for borrowing under the short-term credit line in fiscal 2003 was 4.6%. There were no borrowings under the credit line in fiscal years 2005 or 2004.

Wells Fargo Bank, N.A. provides the company’s line of credit. One member of the company’s board of directors is also on the board of directors of Wells Fargo & Co., the parent company of Wells Fargo Bank, N.A.

The company leases certain transportation, equipment and facilities under operating leases. Total rent and lease expense was $305,000, $355,000 and $446,000 in fiscal 2005, 2004 and 2003, respectively. Future minimum lease payments under non-cancelable operating leases for fiscal periods 2006 to 2010 are $222,000, $185,000, $144,000, $6,000, and $5,000 with all leases scheduled to expire by fiscal 2010.

page 36

Note 11. Stock Options

Senior officers and key employees of the company have been granted options to purchase stock under the company’s 2000 Stock Option and Compensation Plan (“Plan”). The Plan, administered by the board of directors, allows for either incentive or non-qualified options with terms not to exceed ten years. There are 655,700 shares of the company’s common stock reserved for future option grants under the plan at January 31, 2005. Options are granted with exercise prices not less than market value at the date of grant. These stock options vest over a four-year period and expire after five years.

Effective February 1, 2002, the company adopted the fair value recognition provisions of SFAS No. 123 “Accounting for Stock-Based Compensation.” Under the modified prospective method of adoption selected by the company pursuant to the provisions of SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure,” compensation cost recognized in fiscal year 2003 is the same as that which would have been recognized had the recognition provisions of SFAS No. 123 been applied from its original effective date. Stock compensation expense for fiscal years 2005, 2004 and 2003 was $309,000, $282,000 and $174,000, respectively.

The weighted average grant date fair value of each option granted was $5.91, $4.11 and $1.89 in fiscal 2005, 2004 and 2003, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions by grant year.

	For the years ended January 31
	2005			2004			2003
Risk-free interest rate		3.51	%		3.02	%		3.02	%
Expected dividend yield		1.07	%		1.33	%		2.00	%
Expected volatility factor		34.92	%		35.89	%		33.57	%
Expected option term (in years)		4.5			4.5			4.5

Information regarding option activity is as follows:

	For the years ended January 31
	2005					2004					2003
				weighted					weighted					weighted
				average					average					average
				exercise					exercise					exercise
	options			price		options			price		options			price
Outstanding at beginning of year		723,676		$	5.89		872,112		$	3.72		1,102,608		$	3.05
Granted		86,600			22.00		129,000			13.50		152,800			7.00
Exercised		(184,600	)		2.77		(274,436	)		2.61		(353,892	)		3.09
Forfeited		(13,500	)		9.79		(3,000	)		2.65		(29,404	)		3.14
Outstanding at end of year		612,176		$	9.02		723,676		$	5.89		872,112		$	3.72
Options exercisable at end of year		323,076		$	5.27		326,608		$	3.57		414,146		$	2.78

The following table contains information about stock options outstanding at January 31, 2005:

		Remaining
Exercise		Contractual		Number		Number
Price		Life (Years)		Outstanding		Exercisable
$	2.67		0.75		106,876		106,876
	4.38		1.75		149,400		112,050
	7.00		2.75		147,300		73,650
	13.50		3.75		122,000		30,500
	22.00		4.75		86,600		—
					612,176		323,076

Note 12. Net Income Per Share

Basic net income per share is computed by dividing net income by the weighted-average common shares outstanding. Common shares outstanding represent common shares issued less shares purchased and held in treasury. Share and per-share data in the net income per-share computation have been restated to reflect the October 15, 2004, and January 15, 2003, two-for-one stock splits. Diluted net income per share is computed by dividing net income by the weighted-average common and common equivalent shares outstanding, which includes the shares issuable upon exercise of employee stock options, net of shares assumed purchased with the option proceeds. Certain outstanding options were excluded from the diluted net income per-share calculations because their exercise prices were greater than the average market price of the company’s common stock during those periods. For fiscal 2005, 2004 and 2003, 21,650, 32,250 and 38,200 options, respectively, were excluded from the diluted net income per-share calculation. Details of the computation are presented below.

	For the years ended January 31
Dollars in thousands,
except per-share amounts	2005		2004		2003
Net income	$	17,891	$	13,836	$	11,185
Weighted-average common shares outstanding		18,066,223		18,081,712		18,302,930
Dilutive impact of stock options		344,104		407,868		392,720
Weighted-average common and common-equivalent shares outstanding		18,410,327		18,489,580		18,695,650
Net income per common share:
— basic	$	0.99	$	0.77	$	0.61
— diluted	$	0.97	$	0.75	$	0.60

Raven 2005 Annual Report                     page 37

Notes to Financial Statements (continued)

Note 13. Business Segments and Major Customer Information

The company’s reportable segments are defined by their common technologies, production processes and inventories. These segments reflect the organization of the company into three Raven divisions, each with a Divisional Vice President, and one subsidiary. The Industrial Controls Division of Beta Raven, sold in fiscal 2003, is included under the caption “Sold Businesses.” During fiscal 2005, the company’s high-altitude research balloon operation, formerly in the Engineered Films segment, moved under the management of Aerostar. As a result of this change in the company’s organizational structure, the financial results of those operations have been included in Aerostar’s segment disclosures.

The company measures the performance of its segments based on their operating income exclusive of administrative and general expenses. The accounting policies of the operating segments are the same as those described in Note 1, Summary of Significant Accounting Policies. Other income, interest expense and income taxes are not allocated to individual operating segments, and assets not identifiable to an individual segment are included as corporate assets. Segment information is reported consistent with the company’s management reporting structure as required by SFAS No. 131 “Disclosures about Segments of an Enterprise and Related Information.”

No customer accounted for more than 10% of the company’s consolidated sales or accounts receivable in fiscal 2005 or 2004. In fiscal 2003, one customer in the Electronic Systems segment accounted for $12.9 million, or 10.7%, of the company’s consolidated sales, although no customer accounted for more than 10% of accounts receivable.

The company had sales of $11.0 million for the year ended January 31, 2005, to countries outside the United States, primarily to Canada. Sales were included in the Flow Controls, Engineered Films, Electronic Systems and Aerostar segments totaling $5.0 million, $621,000, $4.8 million and $474,000, respectively.

Market and segment information for 2005, 2004 and 2003 is presented on pages 1 and 16 of this annual report.

Note 14. Commitment to Purchase Engineered Films Facility

In fiscal 2005, the company entered into an agreement to purchase for $1.8 million a building to be used in the Engineered Films segment. The agreement required an earnest payment of $25,000 at signing with the remainder due upon closing, on or before May 1, 2006.

Note 15. Subsequent Event

On February 17, 2005, the company entered into a purchase agreement to buy substantially all of the assets of Montgomery Industries, Inc., a privately held Canadian corporation, for $2.8 million in cash plus the assumption of certain liabilities and a quarterly payment of six percent on future sales of Montgomery products up to a maximum of $1.825 million.

Montgomery has developed and sold an automatic boom height control system under the name “Autoboom” for agricultural sprayers designed to successfully maintain optimum boom height in uneven terrain without compromising the speed with which the sprayer can be operated. This operation will be combined into the company’s Flow Controls segment.

Note 16. Quarterly Information (Unaudited)

The company’s quarterly information is presented on page 26.

page 38

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Raven Industries, Inc:

We have completed an integrated audit of Raven Industries, Inc.’s 2005 consolidated financial statements and of its internal control over financial reporting as of January 31, 2005, and audits of its 2004 and 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of shareholders’ equity and comprehensive income and of cash flows present fairly, in all material respects, the financial position of Raven Industries, Inc. and its subsidiaries at January 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control over Financial Reporting appearing on page 27 of the 2005 Annual Report to Shareholders, that the Company maintained effective internal control over financial reporting as of January 31, 2005 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2005, based on criteria established in Internal Control – Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
March 24, 2005

Raven 2005 Annual Report                     page 39

Investor Information

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP
Minneapolis, MN

Stock Transfer Agent & Registrar

Wells Fargo Bank, N.A.
161 N. Concord Exchange
P.O. Box 64854
S. St. Paul, MN 55164-0854
Phone: 1-800-468-9716

Form 10-K

Upon written request, Raven Industries, Inc.’s form 10-K for the fiscal year ended January 31, 2005, which has been filed with the Securities and Exchange Commission, is available free of charge.

Direct inquires to:

Raven Industries, Inc.
Attention: Investor Relations
P.O. Box 5107
Sioux Falls, SD 57117-5107
Phone: 605-336-2750

Raven Website
www.ravenind.com

Stock Quotations
Listed on the Nasdaq Stock Market—RAVN

Annual Meeting

May 26, 2005, 9:00 a.m.
Washington Pavilion of Arts and Science
301 S. Main Avenue
Sioux Falls, SD

Raven Industries, Inc. is an Equal Employment Opportunity Employer with an approved affirmative action plan.

Dividend Reinvestment Plan

Raven Industries, Inc. sponsors a Dividend Reinvestment Plan whereby shareholders can purchase additional Raven common stock without the payment of any brokerage commission or fees. For more information on how you can take advantage of this plan, contact your broker, our stock transfer agent or write: Investor Relations; P.O. Box 5107, Sioux Falls, SD 57117-5107

SIC Codes:
3672, 3081, 3829

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act provides a “safe harbor” for forward-looking statements. Certain information included in this Annual Report and other materials filed or to be filed by the company with the Securities and Exchange Commission (as well as information included in statements made or to be made by the company) contains statements that are forward-looking. Although the company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there is no assurance that such expectations will be achieved. Such assumptions involve important risks and uncertainties that could significantly affect results in the future. These risks and uncertainties include, but are not limited to, those relating to weather conditions, which could affect certain of the company’s primary markets, such as agriculture and construction, or changes in competition, raw material availability, technology or relationships with the company’s largest customers, any of which could adversely impact any of the company’s product lines. The foregoing list is not exhaustive and the company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.

Design: Creative Design Board, Chicago, IL

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

NAME OF SUBSIDIARY	JURISDICTION
Aerostar International, Inc.	South Dakota, USA
GTH, Inc.	Minnesota, USA
(formerly known as Glasstite, Inc.)
Raven Industries Canada, Inc.	Nova Scotia, CANADA

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 33-38614 and 333-41352) of Raven Industries, Inc. of our report dated March 24, 2005 relating to the financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 24, 2005 relating to the financial statement schedule, which appears in this Form 10-K.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
March 31, 2005

EX-31.(A)

Exhibit 31(a)

CERTIFICATION OF CEO PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002

          I, Ronald M. Moquist, certify that:

1.	I have reviewed this annual report on Form 10-K of Raven Industries, Inc. (the “Registrant”);
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.   The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or others performing the equivalent function):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Date: March 31, 2005		/s/ Ronald M. Moquist
		Ronald M. Moquist
	President and Chief Executive Officer

EX-31.(B)

Exhibit 31(b)

CERTIFICATION OF CFO PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002

          I, Thomas Iacarella, certify that:

1.	I have reviewed this annual report on Form 10-K of Raven Industries, Inc. (the “Registrant”);
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; and
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this annual report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.   The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or others performing the equivalent function):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls over financial reporting.

Date: March 31, 2005		/s/ Thomas Iacarella
		Thomas Iacarella
	Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO
SECTION 906 OF SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report of Raven Industries, Inc. (the “company”) on Form 10-K for the year ending January 31, 2005, the undersigned, Ronald M. Moquist and Thomas Iacarella, hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: March 31, 2005
	/s/ Ronald M. Moquist
	Ronald M. Moquist
	President and Chief Executive Officer
	/s/ Thomas Iacarella
	Thomas Iacarella
	Vice President and Chief Financial Officer