AGREEMENT BETWEEN





                            THE BETHLEHEM CORPORATION




                                       AND





                 THE BETHLEHEM CORPORATION EMPLOYEES ASSOCIATION







                                EFFECTIVE DATES:

                         AUGUST 1, 1998 TO JULY 31, 2001



<PAGE>
                                TABLE OF CONTENTS
                                -----------------
ARTICLE                                                                    PAGE
-------                                                                    ----

   I                 Intent and Purpose                                     3
                                                                            
   II                Recognition, Association Membership and Check-off      3
                                                                            
   III               Management                                             4
                                                                            
   IV                Wages                                                  6
                                                                            
   V                 Hours of Work                                          7
                                                                            
   VI                Travel Time and Expenses                               10
                                                                            
   VII               Holidays                                               12
                                                                            
   VIII              Paid Vacations                                         14
                                                                            
   IX                Seniority                                              17
                                                                            
   X                 Promotion Outside Bargaining Unit                      22
                                                                            
   XI                Adjustments and Grievances                             23
                                                                            
   XII               Suspension and Discharge                               25
                                                                            
   XIII              Safety and Health                                      26
                                                                            
   XIV               Funeral Leave                                          27
                                                                            
   XV                Miscellaneous                                          28
                                                                            
   XVI               Insurance and Pensions                                 28
                                                                            
                                       2
<PAGE>

   XVII              Association Responsibility                             32
                                                                            
   XVIII             Saving Clause                                          32
                                                                            
   XIX               Termination Date                                       32
                                                                            
   XX                Supplemental Agreement                                 34
                                                                        

                  THIS AGREEMENT executed and effective as of August 1, 1998, by
THE BETHLEHEM CORPORATION, its successors or assigns, hereinafter referred to as
the CORPORATION, and THE BETHLEHEM CORPORATION EMPLOYEE ASSOCIATION, hereinafter
referred  to as the  ASSOCIATION,  as the agent for and  acting on behalf of the
Corporation's "employees" as the term is defined in Article I hereof, witnesseth
that the parties have agreed as follows:


                                    ARTICLE I

                               INTENT AND PURPOSE

                  SECTION A. It is the intent and purpose of the parties  hereto
to promote and improve  industrial and economic  relationships  and to set forth
herein the basic  agreement  covering rates of pay, hours of work and conditions
of employment to be observed  between the parties  hereto.  It is understood and
agreed that the term "employees" for the purpose of this Agreement shall include
the full time and regular part-time production and maintenance  employees of The
Bethlehem  Corporation  fabrication  and  machining  operations  at its  Easton,
Pennsylvania  facility,  including  truck  drivers,  store clerks,  shipping and
receiving clerks and inspectors; but excluding dispatchers,  timekeepers, office
clerical employees, guards and supervisors as defined in the Act.

                  SECTION B. It is the continuing  policy of the Corporation and
the  Association  that the provisions of this Agreement  shall be applied to all
employees in  accordance  with its terms  without  regard to race,  sex,  color,
religious creed or national origin.


                                   ARTICLE II

                RECOGNITION ASSOCIATION MEMBERSHIP AND CHECK-OFF

                  SECTION  A.  RECOGNITION.   The  Corporation   recognizes  the
Association as the sole collective bargaining agency for all of its employees as
defined in Article I of 


                                       3
<PAGE>

this  Agreement  at the  Corporation's  Easton  plant.  During work  hours,  the
Association will not conduct any business which is not  specifically  identified
with the joint administration of the Labor Agreement.

                  SECTION B. ASSOCIATION MEMBERSHIP. Each employee who on August
1,1998 is a member of the  Association  in good  standing and each  employee who
becomes a member after that date shall,  as a condition of employment,  maintain
the employee's membership in the Association for the duration of this Agreement.
All applicants  for  employment  who are hired and qualify as "employees"  under
Article I,  Section A, shall become a member of the  Association  not later than
thirty working days following the beginning of the  employee's  employment.  The
foregoing  provisions  shall be effective in accordance and consistent  with the
applicable provisions of federal and state law.

                  (a) At the time of an employee's  employment  the  Corporation
will suggest that each new employee voluntarily execute an authorization for the
check-off  of  Association  dues  in  the  form  agreed  upon.  A copy  of  such
authorization  card for the check-off of Association  dues shall be forwarded to
the Treasurer of the Association.

                  (b) For the purpose of this  Section,  employees  shall not be
deemed to have lost their  membership in the  Association in good standing until
the Treasurer of the  Association  shall have  determined that the membership of
such employee in the Association is not in good standing as provided for in this
Article, and shall have given the Corporation notice in writing of that fact.

                                   ARTICLE III

                                   MANAGEMENT

                  SECTION A. The  management  of the shops and the  direction of
the working  forces,  including  the right to hire,  suspend,  or discharge  for
proper cause, or to transfer,  classify,  assign work to employees, the right to
relieve  employees  from duty  because of lack of work,  to  maintain  order and
efficiency in its plants and operations, to control the use of all equipment and
other property of the Corporation, to determine manufacturing methods, processes
and products,  and to contract out work presently  being performed by employees,
shall  vest  exclusively  in the  Corporation.  The  Corporation  shall meet and
discuss any proposed rules and regulations with the committee of the Association
in advance of adoption.  The rules and regulations  shall not be inconsistent or
in conflict with the provisions of this agreement.


                  SECTION B. The Corporation  shall have the right to establish,
maintain and enforce  reasonable  rules and  regulations to insure orderly plant
operations, it being understood and agreed that such rules and regulations shall
not be inconsistent  or in conflict with the provisions of this  Agreement.  The
Corporation  shall  furnish  the  

                                       4
<PAGE>

Association with a copy of all such rules and regulations as well as all changes
therein.  The  Corporation  shall  meet  and  discuss  any  proposed  rules  and
regulations  with the  Committee  of the  Association  in advance  of  adoption.
Discipline shall be administered without discrimination to all employees subject
to discipline.

                                        5
<PAGE>
                                   ARTICLE IV

                                      WAGES

                  SECTION  A.  The  basic  hourly  rates  for  the  term of this
Agreement shall be as follows:

                          Hourly Rate     Hourly Rate       Hourly Rate
                          Saturday         Sunday           Tuesday
         LABOR GRADE    AUGUST 1, 1998   AUGUST 1, 1999   AUGUST 1, 2000
         -----------    --------------   --------------   --------------
              1          $    9.97       $   10.27       $   10.57
              2              10.18           10.48           10.78
              3              10.71           11.01           11.31
              4              11.41           11.71           12.01
              5              11.88           12.18           12.48
              6              12.41           12.71           13.01
              7              13.19           13.49           13.79
              8              13.67           13.97           14.27
              9              14.64           14.94           15.24
             10              15.27           15.57           15.87
             11              15.55           15.85           16.15
             12              15.83           16.13           16.43

                  SECTION B. In the event an individual  employee's regular wage
rate is changed,  the Chief Shop  Steward and the  Recording  Secretary  must be
notified in writing by the Corporation of such change.

                  SECTION C. SHIFT DIFFERENTIAL.  The shift differential for the
second  shift is  thirty-five  Cents  ($.35) per hour and Forty Cents ($.40) per
hour for the third shift.

                  (a) Any employee regularly  scheduled to commence work between
12:00 noon and 9:59 p.m.  shall be  considered  an employee of the second shift.
Any employee  regularly  scheduled to commence  work between 10:00 p.m. and 4:49
a.m. shall be considered an employee of the third shift.

                  (b) In  computing  overtime on a daily and weekly  basis,  the
wage allowances described hereinabove,  respectively,  shall be used in addition
to the regular hourly basic rate, and such wage allowances shall also be used in
computing the vacation pay of employees.

                  SECTION D.  ALLOWANCE  FOR JURY  SERVICE.  An employee  who is
called for jury  service  shall be excused from work for the days on which he or
she serves, and the employee shall receive, for each such day of jury service on
which the employee otherwise would have worked, the difference between eight (8)
times the  employee's  

                                        6
<PAGE>

regular  straight-time  hourly day-rate (as computed for holiday  allowance) and
the payment the employee  receives for jury  service.  The employee will present
proof of service and the amount of pay received therefor.



                                    ARTICLE V

                                  HOURS OF WORK



SECTION A. (a) A normal work day shall consist of eight (8)  consecutive  hours,
exclusive  of lunch  period,  within a  calendar  day or  twenty-four  (24) hour
period. The normal hours of work are:


    MANUFACTURING SHOPS       LUNCH BREAK             COFFEE BREAK

    7:00 a.m. - 3:30 p.m.     12:00 - 12:30 p.m.      9:00 - 9:10 a.m.
                              (30 min. unpaid)

    3:30 p.m. - 11:30 p.m.    8:30 - 8:40 p.m.        5:30 - 5:40 p.m.
                              (10 min. paid)

    11:30 p.m. - 7:00 a.m.    3:30 - 3:40 a.m.        2:00 - 2:10 a.m.
                              (10 min. paid)

                         (8 hrs. Monday through Friday)

                  Normal  hours  of work  can be  changed  by  mutual  agreement
between the Corporation and the Association.  The Corporation reserves the right
to increase the hours on any shift and adjust the  starting  times of the shifts
to meet production needs. The Association must be notified of these changes.

                  (b) A normal work week shall  consist of five (5)  consecutive
work days beginning on Monday and ending on Friday.

                  (c) The  foregoing  provisions  of this Section A shall not be
construed as guaranteeing to any employee any number of hours of work per day or
per week.

                  SECTION B. There shall be a recognized and controlled ten (10)
minute  coffee  break on each shift.  The shop whistle will signal the start and
stop of the break period.  No other coffee break other than this ten (10) minute
period will be permitted.

                  SECTION C. The last ten (10)  minutes  of each shift  shall be
designated  as  wash-up  time,  and  during  this  period  each  employee  is to
straighten up his or her work area, put tools away and wash up.  Additional time
will be granted to those  employees,  


                                        7
<PAGE>

only by the direction of their immediate  supervisor,  where it is necessary for
them to take care of cleaning up work areas and equipment  and  returning  large
quantities of tools either to the tool room or their tool boxes. This additional
time will be  completely  at the  discretion  and  direction  of the  employee's
immediate supervisor.

                  SECTION  D. (a) Time and  one-half  shall be paid for all time
worked by an employee:

                        (i) in  excess  of  eight  (8)  hours  in any  one  day,
                        exclusive of lunch period,  commencing when the employee
                        starts to work.

                        (ii) in excess of forty (40) hours within any one week.

                        (iii)  for all work  performed  on  shifts  starting  on
                        Saturday including the third shift which begins at 11:30
                        p.m. Friday.

                        (iv) during scheduled lunch periods.  Unscheduled  lunch
                        periods  taken  by  employees  who have  performed  work
                        during scheduled lunch periods, shall not be paid for by
                        the Corporation, unless mutually agreed upon.

(b) Double time shall be paid for all time worked by an employee:

                        (i) on shifts  starting  on Sunday  including  the third
                        shift which  begins at 11:30 p.m.  Saturday  night,  but
                        excluding  the third  shift  which  begins at 11:30 p.m.
                        Sunday night.

                        (ii) in excess of twelve (12)  consecutive  hours in any
                        one day  provided  the employee is not already on double
                        time.  For the  purposes  of this  subsection  (ii),  an
                        employee  will be  considered as having worked in excess
                        of twelve (12)  consecutive  hours even though he or she
                        has  taken a break  of two (2)  hours  or less  with the
                        approval of the employee's foreman.

                  SECTION E.  REPORTING PAY. (a) In the event an employee is not
notified  not to report  for work and does  report  for work and upon  reporting
finds there is no work to be  performed,  he or she shall receive four (4) hours
pay at the employee's  regular hourly rate, except where the employee was absent
from work on the previously  scheduled  working day,  unless on that  previously
scheduled working day the employee notified the Corporation that he or she would
be available for work on the next  scheduled  work day. In the event an employee
reports  for work and  actually  begins  work and works less than four (4) hours
because  of lack of work,  he or she  shall  receive  four (4)  hours pay at the
employee's  regular  hourly rate,  except in cases of  emergency,  fire,  flood,
strikes,  acts  of God  or  other  similar  causes  beyond  the  control  of the
Corporation.  This exception applies to this entire  paragraph.  Such employees,
however, have the option to perform such work as they may be reasonably expected
to perform

                                       8

<PAGE>

when offered to them by the Corporation, or they may conclude their shift and be
paid for actual hours worked only.

                  (b) An  employee  who is  scheduled  to work  for a  specified
number of hours on either a Saturday or Sunday shall be entitled to work for the
number of hours so scheduled. The Corporation reserves the right to assign other
work which the employee is capable of performing in order to provide  sufficient
work for the scheduled  hours.  The employee has the option of performing  these
work duties to which assigned or concluding the employee's  shift and being paid
for actual hours worked only.

                  SECTION  F.  CALL-IN  PAY.  In  cases  of  emergency,  when an
employee  has left the plant and is called  back to work at times other than the
employee's scheduled shift, he or she shall receive the greater amount of either
four  (4)  hours at the  employee's  regular  straight  time  rate,  or time and
one-half for hours  actually  worked.  In the event the  call-out  runs into the
employee's scheduled shift, he or she shall receive the applicable overtime rate
from the time employee  begins work until the beginning of employee's  scheduled
shift.

                  SECTION  G. (a)  Overtime  work shall be divided as equally as
practicable  among the  employees in their  respective  departments  who perform
similar work.

                  A record of all such weekly  overtime  worked by the employees
will be kept by the  Corporation  and shall be available  for  inspection by the
shop  employees.  An audit of overtime  records may be conducted each quarter by
the Grievance Committee.

                  An employee who is requested  to work  overtime in  accordance
with the  "notice-in-advance"  provision  outlined  in  paragraph  (b),  and who
refuses to work, will be charged with the scheduled amount of overtime worked by
the employee  accepting the overtime  assignment.  An employee requested to work
overtime but not provided with "notice-in-advance", and who refuses to work will
not be charged with any overtime for that particular day.

                  Overtime  worked out of an employee's  regular  classification
shall be charged against the employee's regular classification.

                  Employees  working on jobs  during  regular  hours  shall have
preference for overtime occurring during the normal work day on the same jobs.

                  (b) The parties  recognize  that the needs of the operation of
the  business  and plant of the  Corporation  from time to time  require work in
excess of the scheduled hours; therefore, the parties agree to cooperate in such
instances  giving  due  recognition  to the  needs of the  Corporation,  and the
employees  agree to perform such overtime work unless the employees so requested
to work  overtime  would  be  inconvenienced.  The  Corporation  will,  whenever
practicable  give  employees  asked to work  beyond  the end of their  scheduled
hours,  two (2) hours' notice in advance of the 

                                       9
<PAGE>
end of their scheduled  hours. An employee not regularly  scheduled for Saturday
work will, whenever practicable, when asked to work Saturday, be notified before
the end of the employee's scheduled hours on the preceding Thursday. An employee
not regularly scheduled for Sunday or holiday work will,  whenever  practicable,
be  notified  forty-eight  (48)  hours in advance of any Sunday or holiday to be
worked.

                  (c)  Overtime  payments  shall  not  be  duplicated,  and  the
employee shall not be paid twice for the same hours worked.

                  SECTION H. When an  employee  has worked in excess of ten (10)
hours on any shift,  the  Corporation  will provide the employee  with food at a
cost not in excess of Five Dollars ($5.00) together with any tax imposed thereon
provided the employee has not been given a reasonable  opportunity to arrange in
advance for the food. In the event the Corporation does not provide food for the
employee, the Corporation will pay the employee Five Dollars ($5.00).

                  SECTION  I. To insure  orderly  operation  of the  plant,  the
Association  recognizes the  responsibility of all employees to report regularly
for work unless prevented by illness or other justifiable reasons. Employees who
are expected to report for work on Saturday and/or Sunday shall also be required
to report off.

                  Employees  are  required to notify the shop in which they work
by telephone of their absence and the reason  therefor on the first day thereof,
except in case of an emergency when this is not possible. All such notifications
must be made prior to the start of the shift in which the  employee is scheduled
to work. Employees should call in to Telephone Number (610) 258-7111.

                  SECTION J. Any employee who is scheduled to or actually  works
twelve  (12) hours or more in any day shall  receive a thirty  (30)  minute paid
lunch period.

                  SECTION K. Pay days will be on alternate Thursdays.  Such days
may be changed by the Corporation for reasons beyond its control including,  but
not limited to, machine  breakdown or one or more holidays  occurring during the
week. Pay checks will be distributed no later than 2:30PM on pay days.

                                   ARTICLE VI

                            TRAVEL TIME AND EXPENSES

                  SECTION  A.  Travel  on  Corporation   assignments   shall  be
compensated  for actual  time  spent on such  travel at the  employees'  regular
straight  time  rate of pay.  Such  compensation  shall be paid for the hours an
employee is traveling during the period when the employee is normally  scheduled
to work. The time and method of travel shall be subject to  instructions  by the
Corporation.


                                       10
<PAGE>

                  SECTION B. When an  employee  is required to be away from home
overnight on Corporation  assignments,  he or she shall be  compensated  for all
hours  worked and travel  time  subject to the  provisions  of Section A of this
Article  VI.  In no event  shall  such  employee  receive  less pay than if that
employee  had worked at the  Corporation's  plant  where he or she is  regularly
assigned.  Beginning on the third consecutive day that an employee has been away
from the plant the employee  shall receive an  additional  Ten Per Cent (10%) of
his or her regular straight time rate for all hours worked and travel time until
the  employee  returns to the plant.  If an employee is away from the plant on a
Saturday or a Sunday and does not either work or travel on such days,  he or she
shall receive eight (8) hours pay at the employee's  regular  straight time rate
of pay.

                  SECTION C. The Corporation  shall  reimburse all  pre-approved
living expenses  incurred by the employee while away from the plant to which the
employee is regularly  assigned,  provided that no such  reimbursement  shall be
made for any  particular day unless the employee is required to use a hotel or a
motel because the distance between the employee's work at the end of the day and
the employee's home prohibits the employee's return.

                                       11
<PAGE>
                                   ARTICLE VII

                                    HOLIDAYS

SECTION A.        The following shall be recognized as paid holidays:

                  1. New Year's Day
                  2. Good Friday
                  3. Memorial Day
                  4. Independence Day
                  5. Labor Day
                  6. Thanksgiving Day
                  7. The day after Thanksgiving
                  8. December 24th
                  9. Christmas
                  10. December 31st
                  11. One (1) Floating Holiday each Contract Year'

                  The one (1)  additional  floating  holiday each  contract year
shall be chosen by each  employee upon at least  twenty-four  (24) hours advance
notice to the  Corporation.  It is further  agreed  that the  scheduling  of the
holiday is subject to the operating requirements of the Corporation.

                  SECTION  B. When a paid  holiday  falls on a Sunday,  then the
following  Monday shall be recognized as the legal paid holiday unless the State
or Nation  proclaims  another  date, in which event that date shall be observed.
When a paid  holiday  falls on a Saturday,  then the  previous  Friday  shall be
recognized as the legal holiday,  unless the State or Nation  proclaims  another
date, in which event that date shall be observed.

                  SECTION C. PAID  HOLIDAYS.  (a) Each employee who qualified as
provided in (c) who does not work on the  holiday,  will be paid eight (8) hours
at the employee's  straight time hourly rate for each of the holidays enumerated
in  Section A hereof,  unless  the  employee  has  voluntarily  quit or has been
discharged prior to observance of such holiday.

                  (b) Each employee who qualified as hereinafter provided in (c)
who performs  work on a shift  starting on any holiday  enumerated in Section A,
will be paid  double  time for  work  performed  on the  holiday  shift,  and in
addition will be paid eight (8) hours' holiday pay at his regular  straight time
rate.

                  (c) In order for an employee to qualify for the holiday pay:


                        (i) New employees must have no less than seventy (70) 

                                       12
<PAGE>

                        calendar  days  seniority to his or her credit as of the
                        date of the occurrence of the holiday.

                        (ii) The employee must be actively employed and not in a
                        state of lay-off,  leave of absence,  or other condition
                        which makes his or her service  unavailable  (except for
                        compensable   injury   under   Pennsylvania    Workmen's
                        Compensation  Law  or  sickness  and  accident)  to  the
                        Corporation.

                        (iii) The employee  must have worked or have an approved
                        absence  in the pay  period  in  which  the  holiday  is
                        observed,  except those employees who have been recalled
                        from  lay-off  after  having  been  laid off  more  than
                        twenty-eight  (28) days unless recalled to work prior to
                        the day on which the holiday is observed.

                        (iv) An  employee  who has been laid off because of lack
                        of work shall be eligible  for holiday pay  provided the
                        employee worked within  twenty-eight  (28) days prior to
                        the date on which the holiday occurred.

                        (v) Employees who are scheduled to work on a holiday and
                        who have been notified of such  scheduling in accordance
                        with  Article  V,  Section G, and who agree to work on a
                        holiday,  but who fail to work as scheduled  and agreed,
                        shall not receive holiday pay for said holiday. However,
                        failure  to  work as  agreed  because  of an  unforeseen
                        situation  beyond the control of the employee,  will not
                        result in loss of holiday pay.

                        (vi) The Corporation  and the Association  must mutually
                        agree to  change  the date on which a  holiday  is to be
                        observed.

                  (d) A  holiday  for which the  employee  receives  pay will be
considered as a day worked when computing vacation and pension benefits only.


                                       13

<PAGE>

                                  ARTICLE VIII

                                 PAID VACATIONS

                  SECTION A. The  Corporation  agrees that during each  vacation
year June 1 to May 31 of this  Agreement such employees as qualify in accordance
with the following  requirements shall receive a vacation of either one (1), two
(2), three (3), four (4), or five (5) weeks  depending upon length of continuous
service  completed  prior to June 1st of each calendar  year. A week's  vacation
shall consist of seven (7) consecutive days.

                  SECTION B.  Effective  with the June 1, 1994 vacation  period,
all  currently  active  employees  as of July 23,  1994 had the  option of being
grandfathered into the existing Vacation Schedule which is designated  "Schedule
A". All employees hired after July 23, 1994 will be governed by "Schedule B" for
vacation purposes.


                                   SCHEDULE A"

       Years of Continuous Service                         Vacation Time
          On Or Before 5/31/94                             Off With Pay
          --------------------                             ------------

       Less than 6 months                                  0
       6 mos. but less than 1 yr                           3 days
       1 yr. but less than 2 yrs                           1 week
       2 yrs. but less than 3 yrs                          1 week & 1 day
       3 yrs. but less than 4 yrs                          1 week & 2 days
       4 yrs. but less than 5 yrs                          1 week & 3 days
       5 yrs. but less than 6 yrs                          2 weeks
       6 yrs. but less than 7 yrs                          2 weeks & 1 day
       7 yrs. but less than 8 yrs                          2 weeks & 2 days
       8 yrs. but less than 9 yrs                          2 weeks & 3 days
       9 yrs. but less than 10 yrs                         2 weeks & 4 days
      10 yrs. but less than 15 yrs                         3 weeks
      15 yrs. but less than 25 yrs                         4 weeks
      25 yrs. and over                                     5 weeks


                                       14
<PAGE>

                                  "SCHEDULE B"

    Years of Continuous Service                                  Vacation Time
     On Or Before 5/31/94                                          Off With Pay
     --------------------                                          ------------

     Less than 6 months                                             0 days
     6 mos. but less than 1 yr                                      1 week
     1 yr. but less than 7 yrs                                      2 weeks
     7 yrs. but less than 15 yrs                                    3 weeks
     After 15 years                                                 4 weeks


                  SECTION C.  Vacation  pay will be computed  once each year for
each  employee.  The  Corporation  will use the following two methods to compute
vacation pay, and the employee will be paid the greater amount:

                  (1) Vacation pay for the entire  vacation period June 1 to May
31 shall be a percentage of the individual employee's earnings for the full year
ending with the pay period immediately preceding June 1st of each calendar year,
subject  to  Section D of  Article  VIII.  This  method of  calculation  will be
eliminated for all employees hired after 8/1/98. For current employees,  and any
employees on layoff for two (2) years prior to 8/1/98, the Corporation agrees to
abide by the current contract language.

             Vacation Time                       Percentage Amount
             Off With Pay                         Of Vacation Pay
             ------------                         ---------------
             3 days                                     1.2%
             1 week                                     2.0%
             ------                                     ----
             1 week & 1 day                             2.4%
             1 week & 2 days                            2.8%
             1 week & 3 days                            3.2%
             2 weeks                                    4.0%
             -------                                    ----
             2 weeks & 1 day                            4.4%
             2 weeks & 2 days                           4.8%
             2 weeks & 3 days                           5.2%
             2 weeks & 4 days                           5.6%
             3 weeks                                    6.0%
             -------                                    ----
             4 weeks                                    8.0%
             -------                                    ----
             5 weeks                                   10.0%

                                      or,

                  (2)  Vacation  pay shall be based upon the  employee's  hourly
rate on May 31st.  Vacation pay is computed on basis of eight (8) straight  time
hours equals one day and forty (40)  straight  time hours equals one week. To be
eligible  for a full  vacation  in any  



                                       15
<PAGE>

vacation year during the term of this  Agreement,  an employee must (a) have six
(6) months of  continuous  service prior to May 31st of any calendar  year;  (b)
have worked at least  1,500 hours in the twelve (12) month  period from June 1st
to May 31st.  If an employee  works in excess of 1,000 hours but less than 1,500
hours in the twelve (12) month  period from June 1st to May 31st,  the  employee
shall  be  entitled  to a pro  rata  vacation  based  upon  the  ratio  that the
employee's  hours worked bear to 2,000  multiplied  by the  applicable  vacation
entitlement set forth.

                  An  employee  who works less than 1,000 hours from June 1st to
May 31st shall not be  entitled to a  vacation.  For the purpose of  determining
hours worked,  time lost for sickness or compensable  accidents shall be counted
as hours worked up to eight (8) hours per day.

                  Vacation  time for which  the  employee  receives  pay will be
considered as time worked when computing vacation and pension benefits only.

                  Employees  may use up to a  maximum  of five (5) of his or her
vacation days per year as sick days without prior approval, as normally required
for vacation purposes providing reporting-off procedures are followed.

                  SECTION D. (a) All  vacations  must be taken  between June 1st
and May 31st of the following  year,  and whenever  possible the employee  shall
have the  privilege of selecting  the time within said period which the employee
desires  for his or her  vacation,  but  the  final  selection  rests  with  the
Corporation in order to insure an orderly operation of the plant.

                  (b) The Corporation will limit vacation shutdown to a one week
period falling between Christmas and New Year's holiday.

                  SECTION  E. (a)  Employees  who  prior to June 1st of any year
quit, take a leave of absence or are discharged and have not worked in excess of
1,000  hours in the twelve  (12) month  period June 1st to May 31st shall not be
eligible to receive any benefits under this article.

                  (b) Employees  who are  otherwise  eligible for a vacation but
are laid off shall receive such vacation pay as is due them.

                  (c)  Employees who retire or die prior to June 1st of any year
shall be entitled  to vacation  pay  prorated  as of the date of  retirement  or
death, and paid at the next available pay period.

                  (d) Retired  employees shall be paid at the time of retirement
for any  vacation  to  which  they may  then be  entitled,  and paid at the next
available or reasonable pay period.

                                       16
<PAGE>

                  Should an employee  die at the time the employee has not taken
his or her full vacation or when the employee is otherwise  entitled to vacation
pay, the employee's beneficiary shall receive the balance of the vacation pay to
which the deceased employee was entitled.

                  SECTION  F. Paid  holidays  as listed in  Article  VII of this
Agreement falling within an employee's vacation period are also to be counted as
vacation days for which the employee  shall receive  payment in accordance  with
the provisions of said Article VII.

                                   ARTICLE IX
                                    SENIORITY

                  SECTION A. (a)  Seniority  shall be based upon and  defined as
the length of service of the employees  employed by the  Corporation,  beginning
with the last hiring date of the  employee  involved.  The "last hiring date" as
herein  provided  shall be  defined  to mean the period of time since such date,
during which any such employee's seniority has not been canceled as provided and
defined  in  Section 1 of this  Article  IX or any other  applicable  collective
bargaining  agreement  entered  into  by  the  Corporation  and  any  collective
bargaining  representative.  Seniority  shall be  maintained  and  applied as to
layoffs, increase of forces, transfer and promotion to non-supervisory jobs on a
plant-wide basis as herein and hereinafter provided.

                  (b) Employees  shall have a preference as to shift  assignment
according to their seniority within their job classification.  However,  nothing
in this section shall limit the right of the Corporation to assign  employees to
any shift in order to maintain  efficiency through a balance of necessary skills
and experience.

                  SECTION B.  LAYOFFS  AND  RECALLS.  (a) It is  understood  and
agreed  between the parties  hereto that in all cases of increases and decreases
of the working  forces  length of continuous  service  shall be the  determining
factor,  providing  the  employee  involved  has the ability to perform the work
required.

                  However,  any employee  before being laid off may bump back to
any equal or lower  rated job  within  any  occupation  which the  employee  had
previously  held or to any other equal or lower rated job which the  employee is
capable of performing  within any  occupation  providing his or her seniority is
greater than the employee on that particular job.

                  (b) DIVISION OF WORK. When work becomes unavailable for one or
more  employees  performing  the same type of work,  on any  calendar day of the
week,  the senior  employee  or  employees  shall be  retained  unless  they are
reassigned to other duties by the Corporation.  If they are not reassigned,  and
provided they are competent to do the work,  said  employees may exercise  their
seniority  in a bump  fashion by bumping  junior  employees in the same or lower
labor grade.

                  If an error is made in administering the bumping procedure, or
if there is not 



                                       17
<PAGE>

sufficient time to contact and assign each employee  affected in a one-day bump,
the Corporation and Association  will then meet for the purpose of attempting to
provide a solution for any problem which might have arisen.

                  (c) If, as a result of a decrease in work other than decreases
which may occur  from day to day,  the  average  scheduled  hours of work of the
employees  throughout  the plant  shall be reduced  for a period of one month to
thirty-two (32) hours per week and if, in the judgment of the  Management,  that
level of work will  continue for an extended  period of time,  the plant manager
will discuss with the appropriate  Association  officials the question whether a
decrease  of the  working  force  shall  be  effected  in  accordance  with  the
provisions  of this  article or  whether  the  available  hours of work shall be
distributed among the employees in such unit so far as shall be practicable with
due regard for the particular skills and abilities  required to perform the work
available there. If the plant manager and such Association  officials shall fail
to agree,  the  working  force  shall be  reduced  to an extent  which  shall be
sufficient to enable the remaining employees to average-forty (40) hours of work
per week.

                  (d) An employee  shall not be  reassigned  to perform the same
type of work on a  different  shift until at least  twenty-four  (24) hours have
elapsed since the regularly  scheduled starting time of the said employee on the
last shift worked by him; provided, however, that in the interest of maintaining
uninterrupted  and  economic  production,  the  Corporation  may so  schedule an
employee.  An employee can be reassigned to perform the same type of work on the
same shift on which the employee was regularly  scheduled  despite the fact that
twenty-four (24) hours have not elapsed since the regularly  scheduled  starting
time of said  employee on the last shift  worked by the  employee and that by so
doing the  Corporation  would be obliged to pay overtime under the terms of this
Agreement.

                  (e) When  plant  operations  resume on a normal  or  increased
schedule,  the employees  affected shall be restored to their previous or normal
status or recalled in the reverse order in which they were laid off. An employee
will have the option to refuse  recall if the job to which the employee is being
recalled is not his or her regular job.

                  When  reasonably  possible;  the  Corporation  will notify the
Chief Shop Steward about an employee who is being recalled from lay-off,  on the
same day that the Corporation notifies the Employee.

                  (f) In all cases of increase or decrease of the working forces
the following local Association officers:  President, Vice President, Chief Shop
Steward,  Recording  Secretary  and  Treasurer,  the  members  of the  Grievance
Committee and the Shop Stewards,  shall be given  preference  without regard for
seniority,  provided there is work available in the plant which they are capable
of doing. Such preferential seniority for Shop Stewards shall be confined to the
departments in which they function as Shop Stewards.


                                       18
<PAGE>
                  (g) TEMPORARY  EMERGENCY LAY-OFF.  Defined as the relieving of
any employee from duty or the temporary  laying off of an employee  because of a
temporary emergency brought about by reason of power breakdown,  flood, fire, or
other problems beyond the reasonable  control of the  Corporation  which require
temporary cessation of one or more operations.

                  In the  interest of  maintaining  uninterrupted  and  economic
production,  the Corporation  shall not be obligated to lay off the employees in
the strict order of their seniority, but it must make a reasonable effort to lay
off the employees in the strict order of their seniority.  A temproray emergency
layoff shall not be more than 3 days, after which normal lay-off procedures will
be followed.

                  (h) An  employee  shall be given  two (2)  work  days'  notice
before being laid off out of the plant.

                  (i) An employee  who  requests  an  out-of-turn  lay-off,  and
providing the  Corporation  grants such request,  must sign a statement in which
the employee waives  employee's  recall rights to all jobs except the employee's
regular job.

                  SECTION  C.  INCAPACITATED   EMPLOYEES.  If  employees  become
incapable  of doing  their  regular  work  through  no fault of their  own,  the
employee so affected  shall be entitled to other work in the plant in accordance
with their seniority  status,  provided they have the necessary ability required
to perform such work, and do not displace any other employee.

                  SECTION D. TRANSFER AND  PROMOTIONS.  Seniority as it shall be
maintained and applied to promotions, transfer and promotional transfers: (a)(i)
In the  event a  vacancy  occurs on any  permanent  job,  or should a new job be
established  within  the  scope of the  bargaining  unit,  notification  of such
vacancy  or  establishment  of such new job shall be  posted  on the  department
bulletin  board  for  a  period  of  three  (3)  days.  Upon  request  from  the
Association,  the Corporation will extend the job posting for two (2) additional
days to provide  time for the  Association  to contact an employee who is absent
from  work or laid  off.  A  vacancy  will not be deemed to exist if there is an
employee either on lay-off or in a lower rated job who formerly held the job now
open and who lost it by reason of a shortage  of work.  The  notification  shall
contain the job title,  the grading and the shift to which the job is  presently
assigned.

                  Such jobs shall be filled by  employees  throughout  the plant
whenever  possible.  In all such cases,  the length of service  (seniority rank)
shall be the determining  factor  providing the employee is qualified to perform
the  work.   Transfers  under  this  provision  shall  represent  a  promotional
opportunity for the employee involved.

                  Not withstanding any provision of this Section D (a)(i) to the
contrary,  an employee  having in excess of ten (10) years'  seniority  shall be
entitled  to bid  upon a  vacancy  that  occurs  in any  permanent  job or newly
established  job of equal or lower 


                                       19

<PAGE>

rank in the plant.  Such employee shall be awarded the job if (1) the employee's
seniority in the plant is greater than the other employees  under  consideration
for the job and (2) the employee's  fitness and ability are substantially  equal
to such other employees. If such employee is awarded the job, the employee shall
not be eligible again for promotion under this Section D and shall remain in the
job for twelve (12) full months before he or she may bid on another job vacancy.

                        (ii)  Eligible  employees  not claiming such posted jobs
                        within the agreed upon time shall forfeit their right in
                        such cases and wait until the next job posting occurs.

                        (iii) In the  event  of  disputes,  the job in  question
                        shall be considered  only  temporarily  filled until the
                        matter is properly  disposed of through the  established
                        grievance  procedure.  In no case shall  this  provision
                        involve back pay beyond the date on which the  grievance
                        was filed.

                  (b) The  Corporation for its convenience may from time to time
make transfers of employees from one job classification to another in accordance
with the rules set forth in  paragraph 5 of the  Supplemental  Agreement of July
23, 1994.  The reasons for such  transfer may include but are not limited to the
following:

                        (i) To  fill  vacancies  on a  temporary  basis  pending
                        permanent  filling  of  such  vacancies  under  the  job
                        posting procedure;

                        (ii) To  replace  the  employees  who are  absent  or on
                        vacation  or who  have  failed  to-report  for  work  as
                        scheduled;

                        (iii) To provide  for the  remainder  of the  employee's
                        shift for an employee  who has no work  remaining in the
                        employee's regular job classification.  The employee has
                        the  option  of  performing   assigned  work  duties  or
                        concluding  his or her shift and being  paid for  actual
                        hours worked only.

                        (iv) To fill a job  pending  the  recall of an  employee
                        from lay-off;

                        (v) To provide  additional workers needed for particular
                        work.  Such  workers  shall be  selected  from among the
                        employees in equal or  lower-rated  job  classifications
                        from  the job  classification  usually  performing  such
                        work.

                        (vi) To  perform  work  of an  intermittent  nature  not
                        requiring an employee for a full shift.

                        (vii)  A   temporary   transfer   is  defined  as  being
                        forty-five  (45)  work  days.  The  parties,  by  mutual
                        consent, can extend the 45-work day limit.

                                       20
<PAGE>

                  SECTION E. NEW EMPLOYEES.  New employees must have accumulated
seventy (70) calendar days of service  before they have seniority  rights.  Upon
completion of such seventy (70) calendar days,  their  seniority shall date from
the original date of employment. During such seventy (70) calendar day period, a
new employee may be  transferred,  laid off or discharged as the Corporation may
determine  but not in any manner that will deprive any other  employee of his or
her rights under this Agreement.

                  SECTION F. SENIORITY  LISTS.  (a) Seniority  lists showing the
proper  seniority dates of the employees must be posted on April 1st and October
1st of each year in the  appropriate  departments,  and shall be  changed by the
Corporation  semi-annually  so as to include the names of new employees who have
attained  seniority status, or corrections that have been noted,  since the date
of last semiannual posting.

                  The Corporation will provide the Association's  Secretary with
an expanded copy of the Seniority List.

                  SECTION  G.  LEAVES OF  ABSENCE.  Leaves of  absence  shall be
permitted  in  cases  mutually  agreed  to be  worthy,  and in  such  cases  the
employee's seniority shall continue to accumulate.

                  SECTION H. MILITARY SERVICE.  Employees,  other than temporary
employees,  who enter the armed forces of the United  States or who have left or
who subsequent to the date hereof leave their positions for the purpose of being
inducted into,  enlisting in,  determining their physical fitness to enter or to
perform  training duty in said armed  forces,  shall be reinstated in accordance
with the applicable Federal statutes.

                  Except as may be otherwise  provided in the applicable Federal
statutes,  any employee who voluntarily re-enlists for additional service at the
end of the  employee's  initial  term of  active  service  shall  not  have  any
seniority or other rights under this clause.

                  SECTION I.  CANCELLATION  OF  SENIORITY.  The  seniority of an
employee  shall be canceled  under any of the  following  circumstances:  if the
employee

                  (a) Is justifiably discharged;

                  (b) Voluntarily quits;

                  (c) Is absent for any reason, which absence continues for more
than  two (2)  years.  In  cases  where  sickness  and  accident,  or  Workman's
Compensation is involved,  then the two (2) years shall start after coverage has
been exhausted;

                                       21
<PAGE>

                  (d) Does not return to work within five (5) working days after
written notice by the  Corporation to the employee's  last address  appearing on
the  Corporation's  records.  The  Corporation  shall notify the  Association in
writing at the same time the employee is notified to return to work;

                  (e) Fails to return to work at the proper  time after leave of
absence;

                  (f) Is absent from work for five (5) consecutive  working days
without giving notice to the Corporation;

                  SECTION J. The Corporation shall give written  notification to
the Association of all promotions to non-supervisory  jobs, layoffs,  transfers,
recalls,  discharges or disciplinary  actions. If no written protest is received
by the Corporation from the Association or from the individuals  involved within
five (5)  working  days  from the date  such  notification  is  received  by the
Association,  no further grievance relative thereto shall be valid.  Retroactive
pay in such cases  shall not be for a period  greater  than the day on which the
written grievance was filed.

                  SECTION K. The  seniority  provisions of this Article IX shall
be applied to Working Leaders as follows:

                  (a) For  purposes of lay-off and  recall,  a Working  Leader's
seniority shall be based upon and defined as the length of service.

                  (b) For purposes of lay-off and recall,  a Working Leader will
be  considered  to be an occupant of the job  classification  which the employee
held immediately prior to the employee's promotion to Working Leader.

                  (c)  Each  Working   Leader  will   participate   in  overtime
opportunities in accordance with the employee's departmental seniority.

                  (d) Working  Leaders are not  employed  to  supervise,  but in
addition  to working  are asked to convey the  foremen's  instructions  to their
group, and to make such reports as to the progress of the job and maintenance as
are required by the foreman. Working Leaders are not to discipline any employee.


                                    ARTICLE X
                        PROMOTION OUTSIDE BARGAINING UNIT

                  Whenever  possible,  Management will consider  bargaining unit
members for promotion to positions outside the bargaining unit.

                  To allow such employees some measure of seniority  security in
accepting  promotion  outside the bargaining unit, it is agreed that an employee
accepting  a  


                                       22
<PAGE>

promotion will retain his or her seniority  which the employee  accumulated as a
bargaining  unit  member  for a  period  of one (1)  year  from the date of such
promotion.

                  At the  expiration of such  one-year  period the employee will
lose his or her seniority unless the Corporation and Association  mutually agree
to continue the employee's seniority.

                  Employees who accepted a position  outside the bargaining unit
prior to the date of this Agreement  shall retain their  seniority in accordance
with the provisions of the collective bargaining agreement in effect at the time
of their promotion.

                  A  non-bargaining  unit employee who returns to the bargaining
unit cannot upon the employee's  return to the unit displace any bargaining unit
employee  currently  at  work.  Conditions  of  the  employee's  return  to  the
bargaining unit will be mutually agreed to by the Corporation and Association.

                                   ARTICLE XI

                           ADJUSTMENTS AND GRIEVANCES

                  SECTION  A.   Should  any   differences   arise   between  the
Corporation  and  the  Association  as to the  meaning  and  application  of the
provisions of this Agreement or as to any question  relating to wages,  hours of
work and other conditions of employment of any employee,  there shall not be any
suspension of work because of such  differences,  but an earnest effort shall be
made to settle them  promptly  and in  accordance  with the  provisions  of this
Agreement in the manner hereinafter set forth.

                  If  an  employee   shall  believe  that  the  employee  has  a
justifiable  request or  complaint,  the  employee  must discuss such request or
complaint  with his or her  foreman  within  twenty-four  (24)  hours  after the
incident occurs, with the steward of employee's  department being present, in an
attempt to satisfactorily  settle the request or complaint.  Any such request or
complaint  which  shall not be  disposed  of within  two (2) work days and which
shall be presented  in writing,  as  hereinafter  provided,  shall  constitute a
grievance and shall be handled under the procedure set forth in this Article.

                  STEP NO. 1. Such  grievance  shall be stated in  writing  on a
form to be furnished by the Corporation,  which shall be dated and signed by the
employee  involved,  and two (2) copies of such grievance  shall be delivered by
the steward of such shop to the foreman involved. Such foreman shall note in the
appropriate place on such form the employee's  disposition of such grievance and
shall sign and date the  notation  and return one (1) copy of such  grievance to
the steward and deliver or send one (1) copy thereof to the  Personnel  Manager.
Any  grievance  which  shall not be disposed of within one (1) work day after it
shall have been so presented to the foreman may be appealed to Step No. 2 of the
grievance procedure.

                                       23
<PAGE>


                  STEP NO. 2.  Unless  such  grievance  shall be appealed to the
General  Foreman for such shop or other  designated  Corporation  representative
within three (3) work days after such disposition thereof by such foreman,  such
grievance  shall  be  deemed  to have  been  settled  in  accordance  with  such
disposition and no appeal therefrom shall thereafter be taken.

                  If such grievance shall be so appealed,  it shall be discussed
by the General Foreman for such shop and Personnel Manager,  or other designated
representative,  and the Chief Steward and  Departmental  Steward  thereof in an
effort to settle such grievance.  The discussion shall be held, and such General
Foreman and Personnel Manager, or other designated representative, shall dispose
of such  grievance  within  not more than  five (5) work days  after the date on
which such  grievance  shall have been so appealed.  If the General  Foreman and
Personnel Manager, or other designated representative,  shall fail to provide an
opportunity for discussion or fail to dispose of such grievance  within the five
(5) work days,  such  grievance  may be appealed to Step No. 3 of the  grievance
procedure.

                  STEP NO. 3.  Unless such  grievance  shall be appealed to Step
No.  3 within  five  (5) work  days of such  disposition  in Step  No.  2,  such
grievance  shall.  be  deemed  to have  been  settled  in  accordance  with such
disposition and no appeal therefrom shall thereafter be taken.

                  If such grievance shall be so appealed,  a meeting between the
Personnel Manager and Plant Manager, or other designated representative, and the
designated  Grievance Committee of the Association shall be held within five (5)
work  days of such  appeal  in an  effort  to  settle  such  grievance.  If such
grievance  shall not have been  disposed  of within  eight (8) work days of such
appeal to Step No.  3,  such  grievance  may be  appealed  to Step No. 4 of this
grievance procedure.

                  STEP NO. 4. Unless  such  grievance  shall be appealed  within
five (5) work days of such  disposition  in Step No. 3, it shall be deemed to be
settled in  accordance  with such  disposition,  and no appeal  therefrom  shall
thereafter be taken.

                  If  agreement  cannot be reached in the manner set forth above
on such grievance,  the matter shall then be immediately referred to arbitration
in the following manner:

                  (a) If the Corporation  and the Association  cannot agree upon
an impartial  arbitrator,  on demand of either of the parties to this Agreement,
the American  Arbitration  Association shall appoint an impartial arbitrator who
shall   arbitrate  the  disputed   matter  in  accordance  with  its  rules  and
regulations.  Once a disputed matter has been so appealed,  such appointment and
the decision of the arbitrator so made shall be final and binding on each of the
parties hereto including the aggrieved employee or employees.

                                       24
<PAGE>

                  The Arbitrator shall have the power to interpret the terms and
provisions  of this  Agreement and to render  decisions on disputes  thereunder,
except,  however,  no Arbitrator  shall have the power to render  decisions that
would expand or nullify any of the terms and provisions of this Agreement.

                  (b) The  cost of the  impartial  Arbitrator  shall  be  shared
equally  by  both  parties.  All  other  costs  incidental  to  the  arbitration
proceedings shall be borne by the party incurring the cost.

                  (c) No post hearing brief will be filed by either party.

                  SECTION  B.  The  time  elements  in the  preceding  grievance
procedure  shall have meant to exclude  Saturdays,  Sundays  and  holidays.  Any
extension of time in any step of this procedure must be by mutual agreement. For
purposes of counting  days, the day of  disposition  shall be excluded,  but the
last day for filing an appeal shall be included.

                  SECTION C. An employee  who claims to have a  grievance  shall
present such grievance  orally to the foreman  involved within  twenty-four (24)
hours after the event has occurred giving rise to the grievance. If the employee
could not reasonably have known of such event due to his or her absence from the
plant, the employee shall file the grievance within twenty-four (24) hours after
his or her return to the plant.

                  No grievance shall be made retroactive  prior to five (5) work
days prior to the date such  grievance  was first  submitted  in written form in
Step No. 1.

                  SECTION  D.  The  Grievance  Committee  shall  consist  of the
President  of the  Association,  the Chief Shop  Steward  and three (3)  elected
members of the Association  who will be elected  according to the by-laws of the
Association.  The President or the Chief Shop Steward shall have the right to go
from one shop to another on  grievances  without  loss of pay upon  approval  of
their  respective  foremen.  A  reasonable  effort shall be made to conduct this
business during the normal lunch period.

                  SECTION E. Members of the Grievance Committee will not be paid
by the Corporation for attending grievance meetings.  No grievance meeting will'
be scheduled to begin after 1:00 p.m.

                                   ARTICLE XII

                            SUSPENSION AND DISCHARGE

                  In the event an employee is  suspended or  discharged  and the
employee  believes he or she has been unjustly dealt with, the employee may file
a grievance  and such  grievance  shall be  processed  under  Article XI of this
Agreement, beginning with the third step thereof.

                                       25
<PAGE>
                  The  grievance  shall  contain  the  date  and  nature  of the
suspension or discharge, and the employee shall have five (5) work days from the
date of such suspension or discharge to file the grievance. In no case following
the  expiration  of five  (5) work  days  referred  to  herein  may a  grievance
regarding  suspension or discharge be presented.  The Corporation will meet with
the Grievance Committee before it discharges any employee.

                  The Corporation will disregard any  disciplinary  record in an
employee's personnel file after twelve (12) months have elapsed from the date of
the employee's most recent disciplinary infraction.


                                  ARTICLE XIII

                                SAFETY AND HEALTH

                  The  Corporation  shall continue to make such  provisions that
are  required  for the safety and  health of its  employees  during the hours of
employment.

                  A plant safety team shall be established consisting of two (2)
members of Management and three (3) members  appointed by the Association.  This
safety  team must meet at least once each  thirty  (30) days for the  purpose of
reviewing and resolving the problems and conditions  which involve the safety of
the employees. The safety team shall send a report, signed by all of the members
present,  to the  Plant  Manager,  the Vice  President  of  Operations,  and the
Association's Secretary.

All accidents that result in personal injury and/or property damage,  regardless
of how minor, must be reported to a supervisor.

                  The minutes of each monthly Safety Committee  Meeting shall be
posted not later than seven (7) working days after each meeting.

                  If reasonable action is not taken to an unsafe condition,  the
Association  has the right to present a grievance  starting in Step No. 3 of the
grievance procedure.

                  No employee shall be required to work on any job which, in the
opinion of the  majority  of the  safety  committee,  is  unsafe,  nor shall any
employee be penalized for failure to work under such conditions.  Notice of such
unsafe  conditions  shall  be  given  to the  Corporation  immediately  upon its
discovery by the safety committee.

                  An employee who uses  prescription  glasses in the performance
of  employee's  job duties  will be  reimbursed  Fifty  ($50.00)  Dollars by the
Corporation  once each  twelve  (12)  months  upon  presenting  verification  of
purchase of safety  prescription  glasses  


                                       26
<PAGE>

which meet or exceed the standard set
forth in Z-87.1-1989 of the American National Standards Institute.



                                   ARTICLE XIV
                                  FUNERAL LEAVE

                  SECTION A. When a death occurs in the  immediate  family,  the
employee  shall be  permitted  three  (3)  days'  absence  without  loss of pay.
Reimbursement of pay shall be twenty-four (24) hours at the employee's  straight
time hourly rate. The immediate family shall constitute a husband, wife, father,
mother,  sister,  brother,  son,  daughter,  father-in-law,   mother-in-law  and
grandparents of the employee.  One (1) day's paid absence shall be permitted for
stepmother, step-father for funeral leave.

                  An  employee  who  attends the funeral of an aunt or uncle (or
spouse's aunt or uncle), brother-in law, sister-in-law,  step son/daughter, will
be granted a one (1) day unpaid excused absence.

                  Saturday and Sunday shall not be  considered  as working days.
Proof of time of death and burial must be submitted to the Accounting Department
in order to be compensated for the lost time outlined above.

                  If an employee is on vacation and a death occurs in employee's
immediate  family,  his or her  vacation  will be extended by the number of week
days lost, due to the above incident, not to exceed three (3) days.

                  If during a normal  work week as  defined in Article V, a paid
holiday is observed  not earlier  than the date of death nor later than the date
of burial,  the employee can extend the  employee's  funeral  leave by eight (8)
working hours for each paid holiday observed,  beginning on date of death to and
including date of burial.


                                       27
<PAGE>

                                   ARTICLE XV

                                  MISCELLANEOUS

                  SECTION  A.  One  special  bulletin  board  for the use of the
Association  shall be  erected  in each  Department  at such  places as shall be
agreed  upon  by  the   President  of  the   Association   and  the   designated
representative  of the  Corporation.  Said  bulletin  board  may be used only to
notify Association members of official Association business, except that notices
of a  non-partisan  civic  nature  may  be  posted  if  first  submitted  to the
designated  Corporation  representative and approved by him. The decision of the
Corporation  shall be final and  binding.  All notices of  official  Association
business-shall  be signed by the  President,  Secretary or Chief Shop Steward of
the Association.

                  SECTION B. FOREMEN AND OTHER SUPERVISORS. The primary function
of a foreman and other supervisors is supervision. Foreman and other supervisors
shall not perform work  customarily  assigned to members of the bargaining  unit
when their performance of such work will cause members of the bargaining unit to
be sent home or  prevent  the  recall of  laid-off  members or the hiring of new
employees.

                  SECTION C. The  Corporation  will provide,  and split the cost
with the Employee Association,  for copies of this contract in mini-booklet form
to all existing employees and new hires during the contract period.

                                   ARTICLE XVI

                             INSURANCE AND PENSIONS

                  SECTION A. The  Corporation  agrees to provide life  insurance
coverage for each employee as follows:

                             August 1, 1998 $15,000

                  Each  new  employee  shall  not  be  eligible  for  such  life
insurance  until the first of the month following  thirty (30) days'  employment
with the Corporation.

                  Each  employee  shall  be  required  to pass a  pre-employment
physical  examination.  Employees  who are  re-hired or laid off for more than a
thirty-day (30) period may also be required to take a physical examination.

                  Upon  death  for any  cause,  whether  on or off the job,  the
beneficiary named on the employee's policy shall receive the amount of insurance
stated on such employee's policy.

                                       28
<PAGE>

An employee  who  completes  at least  twenty (20) years of  employment  and has
attained  the age of at least  sixty-five  (65) years may retire  with a paid-up
life  insurance  policy  in the  amount of Two  Thousand  Five  Hundred  Dollars
($2,500.00).

                  An hourly employee who has completed at least twenty-five (25)
years of credited  service and- has attained the age of at least  sixty-two (62)
years may  retire  with a paid-up  life  insurance  policy in the  amount of One
Thousand Two Hundred Fifty Dollars ($1,250.00).

                  In case of a  temporary  lay-off of thirty  (30) days or less,
the  Corporation  shall  keep the  employee's  life  insurance  in  effect.  All
insurance's shall cease at termination of employment, except for employees under
eligible retirement as defined hereinbefore.

                  SECTION B. The  Corporation  agrees to provide  insurance  for
each  employee for  accidents or sickness off the job that prevents the employee
from  working.  Employees  shall  receive  weekly  payments  for  a  maximum  of
twenty-six  (26) weeks beginning on the day of the accident or on the eighth day
of illness.  For new cases only,  on each one of the three  following  effective
dates the Corporation will pay:

           August 1, 1998 $325 per week for the life of this agreement

                  In cases of illness or accident off the job, the employee must
report  employee's  absence from work to the  Personnel  Manager and request the
proper  report form,  provided by the insurance  company,  be mailed to him. The
employee's  doctor shall fill out what is required on such form.  The form shall
be returned to the  Corporation  for  completion and forwarding to the insurance
company.

                  Upon  release by  employee's  physician,  the  employee  shall
report to the Dispensary before employee may return to work. The Corporation may
require the employee to be examined by the  Corporation's  physician.  The above
insurance ceases upon termination of employment.

                  SECTION C.  Effective  August 1, 1998,  the  Corporation  will
absorb the entire cost of providing U. S.  Healthcare or its  equivalent for the
duration of this Agreement.  An employee may elect to be covered under either of
two (2) U. S. Health Care Plans as follows:

1. Premiere
2. Patriot XV Liberty D

                  (1) The  limitation on the amount of benefits  provided  under
the Major Medical Plan is One Million Dollars ($1,000,000.00).

                  (2)  For  employees  who  retire  at age 62 up to age 65 on or
after  August l, 1998,  the  Corporation  agrees to  purchase  for such  retired
employees  U.  S.   Healthcare,   or  


                                       29
<PAGE>

equivalent  coverage  under one of the  Corporation's  approved  plans where the
Corporation's  contribution shall be limited to $115.00 per month if married and
$58.00 per month if single.

                  (3) The Corporation agrees to purchase for employees age 65 or
older who retire on or after August 1, 1998 coverage U.S. Healthcare Medicare V,
or equivalent. The Corporation's contribution shall not exceed $115.00 per month
if an  employee  is  married  and $58.00  per month if  single.  Any  subsequent
increase in the cost of the  retiree's  medical  insurance  plan will be paid in
total by the retiree.

                  (4) In the event an  employee is out on leave which is covered
by the Corporation's accident and sickness policy, the Corporation will continue
to provide medical coverage on the following basis:

                  (a) After one (l) year of service -- 50% of the  premium  cost
that the Corporation was contributing prior to the leave.

                  (b)  After  two (2)  years of  service  or more -- 100% of the
premium cost that the Corporation, under the U.S. Healthcare Premium Plan or its
equivalent, was contributing prior to the leave.

                  If the employee remains on sickness and accident leave beyond
the twenty-six (26) week maximum coverage period,  the Corporation will continue
to provide medical  coverage in accordance with the above standards for a period
not to exceed  two (2) years  provided  the  employee's  seniority  has not been
canceled and that the employee  elects  medical  coverage under the U. S. Health
Care  "Premier  Plan" on the  earliest  date  that  such  employee  may elect to
transfer to the Premier Plan. In the event the employee was already  enrolled in
the Premier Plan, the employee must remain in the Premier Plan or lose the right
to the Corporation's contribution.

For those employees and/or their families covered by the  Corporation's  present
carrier,   where  the  employee  co-pay  charge  is  twenty  five  dollars,  the
Corporation will reimburse the employees for every co-pay charge incurred by the
employee  and /or his or her family (if family  coverage is  provided)  over ten
such charges over a twelve month period.  The employee will be  responsible  for
providing the Corporation with proof of same.

Durable medical coverage will continue.

                  SECTION D. The  insurance  coverage  provided for in Section C
above  shall be made  effective  in  accordance  with the terms  and  conditions
specified in the Agreements  entered into by the Corporation  with any insurance
carrier, or with U. S. Health Care.

                                       30
<PAGE>

                  The foregoing program of social insurance benefits provided in
Sections  A, B and C shall  be in  substitution  for any  and  all  other  plans
providing for insurance  benefits to covered employees for sickness and accident
and  hospitalization  benefits.  It is intended that the provisions for sickness
and  accident  benefits  which  shall be  included  in such  program  of  social
insurance  benefits shall comply with and be in substitution  for provisions for
similar benefits which shall be provided for under such law or laws, the cost to
the Corporation of such benefits under such law or laws,  shall be deducted from
the amount which the  Corporation  is required to  contribute  to the program of
social insurance benefits as provided for herein and an appropriate readjustment
shall be made in the benefits provided for under such program.

                  SECTION  E.  (1)  The  Corporation  and the  Association  have
entered  into two pension  Agreements.  One  pension  agreement  (The  Bethlehem
Corporation  Retirement  Income Plan,  commonly referred to as the Easton Hourly
Pension Plan) dated as of June 8, 1964 and as amended as of June 15, 1967,  June
15, 1970,  June 22, 1974,  November 16, 1975, June 23, 1977, June 15, 1979, July
21, 1980, June 12, 1984, August 12, 1987, July 23, 1991 and July 23, 1994.

                                       and

one pension agreement (The Bethlehem Corporation  Employees' Association Pension
Plan,  commonly  referred to as The Bethlehem  Hourly  Pension Plan) dated as of
January 2, 1970 and  amended as of  October 1, 1970,  October 1, 1974,  June 23,
1977,  June 15, 1979,  July 21, 1980,  June 12, 1984,  August 12, 1987, July 23,
1991 and July 23, 1994.

                  References therein to the "Existing  Agreement" shall be taken
as reference to the Agreement  dated July 23, 1994. Each pension  agreement,  as
amended,  shall  become  effective  as of that  date and  remain  in  effect  in
accordance with its terms.

                  (2) The pension agreements shall be amended so that no further
benefits will accrue after December 31, 1994 and the retirement benefits accrued
as of that date will be fully  protected.  The  Corporation  will fully fund the
pension plans in accordance with ERISA guidelines.

                  (3) Effective January 1, 1995, the Corporation has established
a 401(k) plan which will have  provisions  in  accordance  with the Plan Summary
dated July 18,  1994.  Payroll  deductions  will be  transferred  into the 401 K
accounts within two weeks following payday. All contributions by the Corporation
shall be  delivered  to the trustee not later than the date fixed by law for the
filing of the Corporation's  Federal Income Tax return (including any extensions
of time granted by the Internal  Revenue  Service for filing such  return).  The
Federal tax return is due September 15th of each year.

                                       31

<PAGE>

                                  ARTICLE XVII

                           ASSOCIATION RESPONSIBILITY

                  The  parties  hereto  agree that this  Agreement  provides  an
orderly and  expeditious  method for the  adjustment of  differences  that might
arise  between  them  during  the  tenure  of  this  Agreement;  therefore,  the
Association  agrees it will not  authorize  any strikes of the  employees at the
Plants of the Corporation for its duration.

                  In the  event of an  unauthorized  strike,  work  stoppage  or
interruption or impeding of work on the part of any employee or employees during
the life of this  Agreement,  the  Association  agrees that it will  immediately
(within  twenty-four  [24]  hours  after  notification  by the  Corporation,  by
registered  mail or personal  messenger,  that a strike is in progress)  disavow
responsibility  for the strike and order the  striking  employee or employees to
return to work promptly.  Therefore,  consistent with the above, the Corporation
agrees that it will not bring legal action against the Association or any of its
officers,  agents, or members to establish  responsibility for such unauthorized
strike or any damage resultant therefrom. The sole recourse and exclusive remedy
for the  Corporation in such an event shall be to impose  disciplinary  measures
upon  the  employees  involved,  in  accordance  with  the  provisions  of  this
Agreement.

                  In the  event  that  any  employee  fails  to  return  to work
promptly after such disavowal and order to return to work, the Corporation  will
be free to  discharge  or  otherwise  discipline  employee  without  necessarily
discharging or disciplining  all employees so involved and such action shall not
be held to be discriminatory.  Any arbitration case shall be limited only to the
question of whether the employee did or did not encourage or  participate in the
strike and the extent of the disciplinary penalty cannot be questioned.

                                  ARTICLE XVIII

                                 SAVINGS CLAUSE

                  If any Article,  Section or Paragraph of this Agreement  shall
be rendered null and void as a result of any Federal, State, County or Municipal
legislation,  only that  Article,  Section or  Paragraph  so  affected  shall be
re-negotiated to conform to said State or Federal laws, and the other provisions
of this Agreement shall not be affected.

                                   ARTICLE XIX

                                TERMINATION DATE

                  SECTION A. This Agreement and the two Pension Agreements dated
January 2, 1970, as amended, and June 22, 1964, as amended, shall constitute the
entire  agreement  between the Corporation and the  Association.  This Agreement
shall remain in full force and effect until 11:59 p.m. July 31, 2001,  and shall
thereafter be continued for one (1) year and from year to year thereafter unless
notice of termination in writing via registered mail is given by either party at
least sixty (60) days before the next annual expiration date.

                                       32
<PAGE>


                  SECTION B. TO CHANGE, AMEND OR SUPPLEMENT. Should either party
desire to change,  amend,  or supplement this Agreement of August 1, 1998, or as
of any subsequent  date thereto,  such party may do so by giving the other party
written  notice of at least  thirty  (30)  calendar  days prior to the date upon
which it  desires  to do so,  and such  party  shall  state in such  notice  the
specific Article,  Section or Sub-Section thereof it desires to change, amend or
supplement.  Within  thirty (30) days after the receipt of such notice by either
of the parties hereto, a conference date shall be mutually agreed upon.





                                       33


<PAGE>

IN WITNESS  WHEREOF,  the  Corporation has caused these presents to be signed by
its duly authorized  agents and said Association has caused these presents to be
executed  by the  signatures  of its duly  authorized  agents  this first day of
August 1998.

         THE BETHLEHEM CORPORATION           THE BETHLEHEM CORPORATION
             EMPLOYEES ASSOCIATION

         ------------------------------      -----------------------------
         Clark Gable                         Paul A. Geisewite

         ------------------------------      -----------------------------
         Donald A. Fehr                      Bradley D. Smith, Sr.

         ------------------------------
         Dennis Pfeiffer

         ------------------------------
         Dale Stocker

         ------------------------------
         David King, Jr.

         ------------------------------
         Richard Freeman

         ------------------------------
         Stephen Domyan

         ------------------------------
         Ronald S. Ardelean

                                    Addendum

                             SUPPLEMENTAL AGREEMENT

This  Supplemental  Agreement  dated as of July 23, 1994 is entered into between
The  Bethlehem   Corporation,   Easton,  PA  (hereinafter  referred  to  as  the
"Corporation") and The Bethlehem Corporation Employees' Association (hereinafter
referred  to as the  "Association")  on behalf of itself and its members who are
employees of the Corporation.

                                       34
<PAGE>

NOW, THEREFORE, THIS AGREEMENT WlTNESSETH:

1. Effective as of July 23, 1994 the minimum hiring-in rate for trainees will be
Labor Grade 1 for the first four months.  Trainees  shall progress in accordance
with  the   following   progression   schedule  and  subject  to  the  following
regulations:

A. The parties  recognize  the need for a clearly  defined  Trainee  Progression
Schedule under which an  inexperienced  employee may advance as he increases his
knowledge  of the job until he attains the rate of the grade in which his job is
classified. The method of selection of trainees is as follows:

                  Whenever a TRAINEE opening is available,  the Corporation will
not post such opening in the  traditional  sense,  but rather will post a notice
inviting all interested employees to apply for such opening.

                  The General  Foreman of the department  involved and the Plant
Manager, together with the Personnel Manager, will compare the qualifications of
all the interested  applicants.  The final  selection of candidates will be made
based on the  capability  each  candidate is considered  to have for  eventually
acquiring the skill of the particular job.

                          TRAINEE PROGRESSION SCHEDULE
     Automatic Progression               Merit Progression
<TABLE>
<CAPTION>
     Hire  4     8     12    18    24    30    36    42    48     54     60    66
Gr.  Gr.   Mos.  Mos.  Mos.  Mos.  Mos.  Mos.  Mos.  Mos.  Mos.   Mos.   Mos.  Mos.
<S>  <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>   <C>    <C>    <C>   <C>

                                  LABOR GRADE
1    1
2    1     2
3    1     2     3
4    1     2     3     4
5    1     2     3     4     5
6    1     2     3     4     5     6
7    1     2     3     4     5     6     7
8    1     2     3     4     5     6     7     8
9    1     2     3     4     5     6     7     8     9
10   1     2     3     4     5     6     7     8     9     10
11   1     2     3     4     5     6     7     8     9     10     11
12   1     2     3     4     5     6     7     8     9     10     11     12
13   1     2     3     4     5     6     7     8     9     10     11     12    13

</TABLE>

NOTE: Advancement of a Trainee shall be by automatic progression in any grade up
to and  including  Grade 4.  Thereafter,  such  advancement  shall be on a merit
basis.


                                       35
<PAGE>

                  If there are no applicants  indicating interest in the TRAINEE
opportunity  or if no  applicants  are deemed  sufficiently  qualified  for such
TRAINEE  job,  the  Corporation  may fill such  opening by assigning or hire new
employees at its discretion.

                  While in training, all TRAINEES will be considered to hold the
job  classification  of the job for which they are being  trained,  and such job
classification  will determine a trainee's  rights as to transfer and promotion,
layoffs and recalls.

B.                Within the limitations of the Trainee Progression Schedule the
                  Corporation may:

                  (i)               hire  a  new  employee  at  any  rate  at or
                                    between  the Hire  Rate and the Job Rate for
                                    the  grade in which  the  employee's  job is
                                    classified   according  to  the   employee's
                                    previous experience.

                  (ii)              progress trainees in Grades 2, 3 and 4 on an
                                    automatic   basis  in  accordance  with  the
                                    intervals  and  increases  specified  in the
                                    Trainee Progression Schedule.

                  (iii)             progress trainees in the first four steps of
                                    Grades 5 to 13 that is up to and including a
                                    basic rate of Labor Grade 4 or an  automatic
                                    basis in  accordance  with the intervals and
                                    increases    specified    in   the   Trainee
                                    Progression Schedule.

                  (iv)              progress trainees in all steps subsequent to
                                    the  fourth  step of  Grades 5 to 13 that is
                                    after  attainment  of a basic  rate of Labor
                                    Grade 4 on a merit basis in accordance  with
                                    the intervals and increases specified in the
                                    Trainee Progression Schedule.

                  (v)               progress a trainee at a faster rate, if such
                                    trainee's performance warrants it.

C. The  Corporation  may, at its discretion,  withhold an automatic  progression
increase  if, in its  judgment,  a  trainee's  progress  does not  warrant  such
increase, provided the Corporation does not require the trainee to continue as a
trainee on the job on which he was  previously  being  trained and in connection
with which he was being considered for a progression increase.

D.  Whenever  a  merit  progression  increase  is  withheld  under  the  Trainee
Progression  Schedule,  the Plant Manager  shall submit his reasons  therefor in
writing to the Personnel  Manager of the Corporation,  who shall within ten (10)
days  thereafter  advise the  President  of the  Association  of the name of the
trainee and the reasons why the merit progression increase was withheld. In such
cases,  the  trainee's  progress  shall be reviewed  three months  thereafter to
determine  whether he shall be given the merit progression  increase  previously
withheld.

                                       36
<PAGE>

E. The  determination as to whether a trainee shall receive a merit  progression
increase  shall not be  subject to the  Grievance  Procedure  unless  such merit
progression  increase has been withheld  after being  reviewed at the end of two
regular six-month review periods.

F. If a trainee has progressed  through the first four steps of any grade and is
receiving  a rate of  Labor  Grade 4 or more on the job for  which  he is  being
trained and he is subsequently  taken off such a job because of lack of work and
transferred to another job which carries a basic rate of more than Labor Grade 4
he shall begin work as a trainee on the job to which he is transferred at a rate
of Labor  Grade 4. If the basic rate for the job to which he is  transferred  is
Labor Grade 4 or less, he shall begin work at the basic rate for the job.

2. The Corporation and the Association have agreed on the  classification of all
existing jobs in the Corporation into thirteen (13) labor grades.

3. The Corporation and the Association  have copies of job  descriptions for all
jobs in the  Corporation  as of July  21,  1980.  The job  descriptions  are not
intended  to  describe  or  set  out in  complete  detail  all  the  duties  and
responsibilities  which go with any job.  The job  descriptions  set  forth  the
general duties considered necessary to evaluate the job in the factors of skill,
effort,  responsibility  and job  conditions  and  shall not be  construed  as a
detailed  description  or  statement  of all the work  requirements  that may be
inherent in the job. No grievance may be filed in  connection  with approved job
descriptions.  Jobs  referred to herein as "craft jobs" have been  designated as
such on the job description.

(a) The association  will submit a list of jobs to the  Corporation.  These jobs
are to be reviewed  and  approved by the parties  within a mutually  agreed time
period.

4. No employee  who prior to July 21,  1980 has a personal  rate above the basic
rate  established  for  his job  will  be  reduced  unless  reclassified  into a
different  job through the operation of the  "Seniority"  section of the present
Agreement.  An employee  reclassified in accordance  with these  provisions upon
being  transferred  back into the job in which he had a personal rate shall have
it restored.  An employee whose  connection  with the  Corporation is terminated
under  conditions  whereby his  seniority  is canceled  in  accordance  with the
"Seniority"  section of the present  Agreement  will not have his personal  rate
restored on re-hire.

5.  Transfers of employees  from one job  classification  to another may be made
from time to time for the convenience of the Corporation. These transfers can be
made during any scheduled shift including Saturdays and Sundays. An employee who
is temporarily  transferred for the convenience of the Corporation shall receive
the rate of the job to which he is  transferred  or the rate of the job on which
he has been working, whichever is higher. An employee who is transferred in lieu
of lay-off shall receive the rate of the job to which he is transferred.

                                       37
<PAGE>

6. The  Corporation  may establish a new job or change the work assignment of an
existing job so as to require a change in grade.  In such event,  the  following
procedure shall apply:

A. As promptly as  practicable  but not later than sixty (60) days after the new
or  changed  job  goes  into  operation,  the  Corporation  will  prepare  a job
description  and a  proposed  classification  by grade  and  submit  them to the
Association.

B. Within seven (7) calendar days thereafter,  the Association shall return said
description and  classification by grade with his approval noted thereon or with
its disapproval noted thereon and accompanied by a request for a conference.

C. If the Association  approved said description and  classification by grade or
fails  to  return  them  in  seven  (7)  calendar  days,  said  description  and
classification  by grade  shall  become  effective  as of the day the new job is
filled or the change made.

D. If after the conference  called for in paragraph B above, the Corporation and
the Association are unable to agree, the description and classification by grade
shall be put into effect subject to paragraph E below.

E. Any employee or employees,  affected by the  establishment  of a new job or a
change in the description or an existing job and the  classification by grade of
such  new or  changed  job,  may  file  a  grievance  through  a  member  of the
Association's  Grievance  Committee  as  provided  in the Third  Step  procedure
established by the Grievance Section of the present  Agreement,  unless prior to
its filing said  description and  classification  by grade have been accepted by
the Association.

F. Any revised job  description  and  classification  by grade  resulting from a
conference  between the Corporation and the Association  shall be retroactive to
the  date  the  new  job  is  filled  or  the  change  made,  except  that  such
retro-activity shall not extend back for more than ninety (90) days prior to the
date  of the  Corporation's  submission  of the  job  description  and  proposed
classification by grade. Any revised job description and classification by grade
resulting from the filing and processing of a grievance  shall be retroactive to
the  date  the  new  job  is  filled  or  the  change  made,  except  that  such
retro-actively shall not extend back for more than ninety (90) days prior to the
date of the filing of the grievance.

7.  The job  description  and  labor  grades  established  by this  Supplemental
Agreement,  except as modified  pursuant to Section 6 above,  shall  continue in
full force and  effect  unless the  Corporation  terminates  any job or such job
remains continuously unfilled for the period of a calendar year.

8. The  Corporation  shall  have  the sole  right to  determine  the  number  of
employees required in each and every job classification throughout the plant.

                                       38
<PAGE>

9. For the purposes of training employees for higher rated job  classifications,
an  employee  in  a  lower  rated  job  classification  shall  accept  temporary
assignments  of work  normally  performed  by  employees  in a higher  rated job
classification.  While performing such work, the employee shall receive the rate
of pay for his regular job classification or a higher rate of pay based upon the
efficiency and ability of the employee to perform the work temporarily assigned.

                                       39