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                                                                   Exhibit 10.20


                                   AGREEMENT

                                    Between

                             BREMEN, INDIANA PLANT
                                of SKF USA, INC.

                                      and

                          INTERNATIONAL UNION, UNITED

                           AUTOMOBILE, AEROSPACE AND

                        AGRICULTURAL WORKERS OF AMERICA,

                                     U.A.W.

                                   Local 1368

                            Effective July 20, 1996
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                                     INDEX

Article                                                                     Page

     I       Agreement ..................................................... 1

    II       Union Recognition ............................................. 1

   III       Agency Shop and Check-off ..................................... 2

    IV       Cooperative Union Management .................................. 3

     V       Rights and Functions of Management ............................ 4

    VI       Strikes and Lockouts .......................................... 4

   VII       Production Standards and Incentive Pay ........................ 5

  VIII       Job Evaluation Plan ........................................... 6

    IX       Hours of Work and Overtime Pay ................................ 7

     X       Vacations and Vacation Pay ................................... 10

    XI       Holidays ..................................................... 12

   XII       Seniority .................................................... 13

  XIII       Settlement of Differences .................................... 19

   XIV       Wages and Rates of Pay ....................................... 21

    XV       Insurance Benefits and Pensions .............................. 22

   XVI       Jury Duty, Bereavement and Military Reserve Pay .............. 23

  XVII       Safety and health ............................................ 23

 XVIII       Plant Rules .................................................. 24

   XIX       Leave of Absence ............................................. 24

    XX       Amendments and Modifications ................................. 25

   XXI       Termination and Notice ....................................... 26

             Rates of Pay by Labor Grade .................................. 28

             Memo of Understanding ..................................... 34-41
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                                   AGREEMENT

                                   ARTICLE I

Section 1.

      This agreement, dated the 20th July 1996, is entered into between the
      Bremen, Indiana plant of SKF USA. INC., (hereinafter called the "Company")
      and the INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL
      IMPLEMENT WORKERS OF AMERICA (UAW) and its Local 1368 (hereinafter called
      the "Union").

Section 2.

      In consideration of this Agreement, the parties agree that it is the
      intent and purpose of the parties hereto that this Agreement is the
      complete Agreement covering rates of pay, hours of work and working
      conditions to be observed between the parties, and to provide orderly
      relationships between the Company and the Union, and to secure prompt
      disposition of differences between the parties pertaining to the
      compliance with or application of this Agreement.

Section 3.

      In recognition of its responsibility as the exclusive agent of the
      employees, the Union agrees that it will actively cooperate in
      discouraging absenteeism and tardiness, and that it will actively support
      proper Company efforts to eliminate waste, improve quality, prevent
      accidents, and strengthen good will between the Company, the employees,
      the customers, the Union and the public. The Union also confirms that it
      subscribes to the concept of a fair day's work for a fair day's pay.

                                   ARTICLE II
                               Union Recognition

Section 1.

      The Company recognizes the Union as the sole collective bargaining agency
      with respect to rates of pay,


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      hours of work, and conditions of employment for employees engaged on jobs
      in the Company's Bremen, Indiana plant.

Section 2.

      The term "employee" as used in this Agreement shall apply to all
      production and maintenance workers engaged on jobs in the Company's
      Bremen, Indiana plant who are on an hourly or incentive basis, but
      excludes watchmen, salaried employees and supervisory employees with
      authority to hire, promote, discharge, discipline or otherwise effect
      changes in the status of employees or effectively to recommend such
      action. Nor does the term "employee" apply with respect to those part-time
      employees who are hired by the Company to perform certain functions in
      accordance with an Agreement between the Company and civic officials
      involving the utilization of part-time high school students.

                                  ARTICLE Ill
                           Agency Shop and Check-off

Section 1.

      Each employee who on the effective date of this Agreement is a member of
      the Union in good standing and each employee who becomes a member after
      that date shall, as a condition of employment, maintain his membership in
      the Union.

      Each employee hired on or after August 12, 1972, shall as a condition of
      employment, beginning on the 30th day following the beginning of such
      employment acquire and maintain membership in the Union.

Section 2.

      The Company, for those employees who have heretofore, or hereafter by
      written authorization so directed, shall deduct from the first pay of each
      month the proper Union dues for the previous month, an initiation fee for
      new members, the assessments and promptly remit same to the International
      Secretary-Treasurer of the Union. Changes in dues and assess-


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      ments will be made only as authorized in writing by the International
      Secretary-Treasurer of the Union to the Company.

                                   ARTICLE IV
                          Cooperative Union Management

Section 1.

      The Company and the Union agree that they will not discriminate in the
      hiring or employees, or in their training, upgrading, downgrading,
      promotion, transfer, layoff, discipline, discharge or otherwise because of
      race, creed, color or national origin, age, union affiliation, sex or
      marital status.

Section 2.

      The Company and the Union recognize the advisability of making every
      effort to constantly improve relationships between the Company, the Union
      and all employees. To this end, a committee composed of two members of the
      Union and two members of management shall meet for one hour at least once
      a month on Company time to discuss problems and/or grievances which may
      cause a disruption in relationships or to suggest means of improving
      relationships. The General Manager and the International Representative
      may attend these meetings. The purpose of these meetings is to prevent,
      where possible, the use of the Arbitration Clause of this Agreement, as
      such is both costly to the parties and further, bilateral good faith
      collective bargaining is ineffective when a third party is called for the
      purposes of determining the intent of the Agreement.

Section 8.

      a)    It is the duty of every employee to apply himself diligently to his
            work during all of his working hours and to this end the Union will
            support the Company's efforts to curb absenteeism and the practices
            which curtail production; to eliminate waste and inefficiency; to
            improve the quality of workmanship; to prevent accidents, and to
            promote good will between the Company and the employees.


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      b)    The Union will cooperate wholeheartedly with the Company in a
            concerted drive for better quality and quantity of production. It
            should be the responsibility of each employee to see that the work
            performed is up to required standards and that no defective work is
            concealed.

                                   ARTICLE V
                       Rights and Functions of Management

Section 1.

      The control of all matters relative to the management and operation of the
      plant and the operation of the Company's business which was vested in the
      Company prior to the execution of this Agreement shall continue as a
      management right, except as these matters may be expressly limited by the
      terms of this Agreement. The Company and the Union in the exercise of
      their rights shall observe the provisions of this Agreement.

Section 2.

      The violation by either party of any provision of this Agreement shall not
      render the Agreement inoperative, and the sole and exclusive method of
      remedying any dispute which may arise hereunder shall be Article XIII,
      Settlement of Differences.

                                   ARTICLE VI
                              Strikes and Lockouts

Section 1.

      During the existence of this Agreement, the Union agrees that neither it
      nor any employee shall engage in any strikes, work stoppages, or slowing
      down of work, or any other interference with the normal production of the
      plant, or shipments from the plant of products produced herein, or
      shipments of necessary materials to the plant. Any violation of this
      Section by any employee shall be cause for dismissal or suspension.

      In the event there is an interruption of production because of a concerted
      action, the Union, through the


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      International Representative and Local President, shall immediately direct
      cessation of such interruption.

Section 2.

      The Company, for itself, its supervisors and authorized representatives,
      agrees that during the term of this Agreement there shall be no lockouts
      in the Company's plant.

                                  ARTICLE VII
                     Production Standards and Incentive Pay

Section 1.

      It is understood that the Company may make, at any time, motion, time or
      methods studies required for the efficient operation of its business, and
      may establish standards and levels of performance, and may audit its
      standards when it deems this to be necessary in the interest of its
      business. New equipment or machinery will be rated within ninety (90)
      days. If no rates are applied during this period, the affected employee
      will be paid four (4) labor grades above his base rate for 90 days. If
      rates are not then instituted, the employee will be paid an additional
      labor grade until rates are established.

Section 2.

      Once a production standard has been established, the equity of such a
      standard may be challenged under the procedure set forth in Article XIII,
      Settlement of Differences. Should the Union dispute the equity or fairness
      of a production standard, the Company will review with a proper Union
      steward, upon his request, the data relating to the production standard.

Section 3.

      A production standard may be changed whenever a substantial and continuing
      change in material, method, specifications, or equipment, or an
      accumulation of such changes, or an obvious clerical error or mechanical
      error has occurred, that has a substantial effect on the productivity of
      the job.

Section 4.

      It is recognized that the Company has the right to institute incentive
      standards, with the understanding that such incentive standards shall be
      set in such a manner so that qualified operators working at a nor-


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      mal pace can produce work at 100% of standard. Wherever an incentive
      standard is established, the bonus payment shall not be less than 1% of
      base rate for each 1% increase above standard, and all incentive pay shall
      be calculated on a weekly bases. The equity of any standard shall be
      subject to the grievance procedure and the data shall be made available
      for review by a designated local union official or any International time
      study representative. The Company guarantees that all incentive standards
      shall be paid off of the base rates as outlined in Appendix "A".

Section 5.

      When an employee performs any work which does not meet the required
      specifications, he shall not receive any pay or credit for the work except
      for his guaranteed base rate on a weekly basis. However, when the cause
      for rework is beyond the operator's control, this provision will not
      apply.

                                  ARTICLE VIII
                              Job Evaluation Plan

Section 1.

      Jobs shall be classified in their appropriate work grades by the Company,
      using the National Metal Trades Associate's Job Evaluation Plan. Job
      descriptions, labor grades, and rates of pay have been prepared and are in
      effect for all present jobs. When conditions warrant such action, the
      Company will establish new job classifications, change, or add to and
      remove jobs or job descriptions. When new jobs are established, or changes
      or additions made to existing jobs, new job descriptions will be drawn and
      evaluated by the Company in accordance with the NMTA Job Evaluation Plan.
      Union must be furnished a current copy of the NMTA Job Evaluation Plan
      being use by the Company.

Section 2.

      All job rates of pay in effect at the time of this Agreement are effective
      and properly evaluated and shall not be subject to process under the
      grievance procedure section of this contract. Any new or changed job or


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      job rate may be subject to processing under Article XIII, Settlement of
      Differences. Such processing shall be confined to the result of the
      application of the NMTA Job Evaluation Plan. The Plan itself shall not be
      subject to processing under Article XIII, Settlement of Differences, nor
      shall it be, in any manner or detail, subject to arbitration under this
      Agreement.

Section 3

      (a)   Rates of pay and effective date thereof are listed for each of the
            labor grades as outlined in Appendix "A" of this Agreement

Section 4.

      The following method will be used in determining the work grade to be
      assigned to a job:

            The job will be analyzed and reviewed by the Company's Job Analyst
            who will write up a description of the general details considered
            necessary to describe the principal functions of the job identified,
            which description shall not be construed as a detailed description
            of all of the work requirements that may be inherent in any given
            job. A copy of all job descriptions shall be made available to the
            Union for their inspection and review.

                                   ARTICLE IX

                         Hours of Work and Overtime Pay

Section 1.

            This Article is intended only to provide a basis for calculating
            overtime. It shall not be construed by the Union or any of its
            members as limiting or guaranteeing the number of hours to be worked
            by an individual employee or group of employees per day or per week.

Section 2. Work Week.

            A normal work week shall consist of five consecutive eight hour days
            from Monday through Friday except where off standard work weeks are
            established, in which event the work week shall consist of five
            consecutive days followed by two days of rest.


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Section 3.

      A day shall he defined as a consecutive 24-hour period beginning with the
starting time of an employee's shift. Eight continuous hours of work,
interrupted by regularly scheduled lunch periods shall constitute a day's work.

Section 4. Standard Schedules.

      Except where an off-standard work week is established, the standard one,
two, three, and four shift schedules listed below shall be the hours of work,
unless by agreement between the Union and the Company they are altered.

     One shift operation:                     7:00 a.m. to 3:30 p.m.

     Two shift operation:                     7:00 a.m. to 3:30 p.m.
                                              3:30 p.m. to 12:00 midnight

     Three shift operation:                   7:00 a.m. to 3:30 p.m.
                               3:00 p.m to 11:00 p.m. and 11:00 p.m to 7:00 a.m.

     Four shift operation:

             A       B            C                     D
Sunday      Off     Off      Sat. 11:00 p.m.      3-11
                             Sun. 7:00 a.m.

Monday      7-3     Off      Sun. 11:00 p.m.      3-11
                             Mon. 7:00 a.m

Tuesday     7-3     3-11     Mon. 11:00 p.m.      Off
                             Tues. 7:00 a.m

Wednesday   7-3     3-11     Tues. 11:00 p.m.     Off
                             Wed.   7:00 a.m

Thursday    7-3     3-11     Off                  Wed.  11:00 p.m.
                                                  Thurs. 7:00 a.m.

Friday      7-3     3-11     Off.                 Thurs.  11:00 p.m.
                                                  Fri.     7:00 a.m.

Saturday    Off     3-11     Fri.  11:00 p.m.     7-3
                             Sat.   7:00 a.m.

      Employees working on the B shift shall be paid at time and 1/8 for hours
worked on Saturday.

      Employees working on the C and D shifts shall be paid at time and 1/8 for
hours worked on Saturday and time and 1/4 for hours worked on Sunday.

      Employees on the B shift will be paid the second shift premium and
employees on the C and D shifts will be paid the third shift premium.

      No employee hired prior to 7/21/90 will be obligated to work on the D
shift.


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Section 5. Division of Overtime and Overtime Pay.

      All overtime shall be distributed as equally as practicable within the
department, classification and shift in accordance with the respective
departmental agreements. Overtime scheduling shall be compulsory for 48 hours
where scheduled absences and vacations must be covered. In the case of scheduled
vacations and scheduled absences, employers will be polled by seniority to fill
in. If there are no volunteers, the least senior employees in the classification
will be assigned. An excused absence is the exception to these rules. On a daily
basis, notification for scheduled overtime will be at least four (4) hours prior
to the end of a shift. Whenever possible, notification for sixth and seventh day
overtime will be posted prior to the end of the shift on the third working day
of the scheduled week.

      A. Except as provided in B, below, time and one-half shall he paid for all
hours or parts of hours worked:

            (1)   In excess of eight (8) hours in any one work day.

            (2)   In excess of forty (40) hours in any one work week.

            (3)   On Saturday, except for off-standard work weeks.

            (4)   On the sixth day of their scheduled work week for employees on
                  off-standard work weeks.

      B. Double time shall be paid for all hours or parts of hours worked:

            (1)   On Sundays, except for off-standard work weeks.

            (2)   On the seventh day of their scheduled work week for employees
                  on off-standard work weeks.

      C. Overtime rates and premium rates shall not be paid to employees on more
than one overtime or premium basis whether hourly, daily, or weekly.

      D. Company liability with respect to mis-scheduling of overtime shall be
limited to a make-up turn. In the event that an employee is bypassed for a
make-up turn the Company will be liable for payment. An employee who is not
notified for an overtime turn within contractural limits shall not be charged
with a turn. An employee scheduled to work on his 6th or 7th day shall have a 24
hour notice of cancellation of such work except in


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            emergencies. If notice is not given, the employee scheduled will
            receive 4 hours pay at the appropriate rate.

      E.    If a holiday falls on Friday or Monday and overtime is scheduled on
            the succeeding or preceding Saturday, it will be on a voluntary
            basis.

Section 6. Call In Pay.

      Employees called into work within a twenty-four (24) hours period from the
      starting time of their shift shall be guaranteed a minimum of four (4)
      hours pay at time and one-half.

Section 7.

      Employees who report for work as scheduled or who report for work upon
      notification to report shall, regardless of whether or not work is
      available for them be guaranteed a report in pay of no less than four (4)
      hours at their regularly assigned personal rate.

      A. Employees will not be paid under this Section if:

            (1)   They are unfit for work;

            (2)   Work is unavailable as a result of causes beyond the control
                  of management;

            (3)   They are notified not to report for work with 24 hours notice;

            (4)   They refuse to perform work available within their department
                  unless such work is not available and they refuse to perform
                  other work for which they are qualified.

                                   ARTICLE X
                           Vacations and Vacation Pay

Section 1.

      The vacation year shall begin on January 1 and end on December 31. The
      period for taking vacation time off shall begin with the first full week
      in January and end with the last full week in December, with the
      understanding that this period shall not detract from the Company's right
      to establish a vacation shutdown period. However, if there is a vacation
      shutdown the period for such shutdown shall be limited to the months of
      June, July and August. Plant shutdown shall be posted by the end of the
      first full week of the year.


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Section 1a.

      Tool room and maintenance employees will be given 120 days notice prior to
      the plant shutdown if they are not scheduled to work. If the Company fails
      to provide such notice, time off during the shutdown for the affected
      employees will not be charged to vacation.

Section 2.

      Each employee who is actively on the payroll on December 31, or the Sunday
      closest to December 31, shall be entitled to his full vacation benefits
      notwithstanding the fact that his services may have been terminated for
      any reason in the ensuing year prior to the receipt of vacation pay.

Section 3.

      Employees who were not on the active payroll on December 31 or the Sunday
      closest to December 31, but who become active thereafter as a result of
      recall or return from a leave of absence will receive vacation pay on a
      prorated basis computed at one-twelfth (1/12th) of his benefit for each
      full month of service in the current vacation year. Employees recalled on
      or before the 15th of any month shall be given credit for the full month.

      Employees whose benefits are computed under this Section 3 shall forfeit
      such benefits if:

      (a) They are discharged; or

      (b) They resign without giving five (5) days' written notice to the
          Company.

Section 4.

      Effective January 1, 1982, vacation benefits for eligible full time
      employees shall be as follows:


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      Accredited Service                                       
      Prior to December 31                             Vacation
      of Vacation Year            Vacation Time        Pay Hours
      
      1 year to 2 years           1 week and 1 day         68
      2 years to 10 years         2 weeks and 1 day       108
      10 years to 15 years        3 weeks and 1 day       148
      15 years to 20 years        3 weeks and 4 days      172
      20 years and over           4 weeks and 1 day       188
      
      An employee will receive vacation pay at his straight time average hourly
      rate based upon its highest 8 weeks earnings during the first six months
      of the calendar year. For an employee who takes his vacation prior to
      July, his straight time average hourly rate will be based on his highest 8
      weeks earnings during the last 6 months of the previous calendar year.

                                   ARTICLE XI
                                    HOLIDAYS

Section 1.        

      The following days are those to which the provisions of this Article
      apply:

      Day Before New Year's Day               New Year's Day
      Good Friday                             Memorial Day
      Independence Day                        Labor Day
      Thanksgiving Day                        Day After Thanksgiving Day
      Day Before Christmas                    Christmas Day
      
      * Four (4) Personal Holidays
      
      
      * (Except when July 4th falls on a Tuesday or Thursday in a given year, in
        which case one of the holidays will be either on the Monday preceding 
        July 4 or on the Friday following July 4.

      All employees with ninety (90) days continuous full time employment shall
      be eligible to receive holiday pay provided they are on a working status
      at the time of the holiday, and work the scheduled hours on the working
      days before and after the holiday or the day in which the holiday is
      celebrated, unless the employee is excused for legitimate reasons. No more
      than 8 hours will be scheduled on those days and the Company will be
      liable for hours scheduled if it does not provide the work.


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Section 2. Holiday Pay

      (a)   Any work performed on a holiday shall be on a voluntary basis and
            the employee shall be paid double time for all hours worked in
            addition to the regular holiday pay.

      (b)   If a holiday falls during a paid vacation, the employee will receive
            an extra day off with pay or may be paid in lieu of the holiday.

      (c)   Pay for the above-mentioned holidays shall be on a one pay basis
            only. There shall be no pyramiding of overtime pay for holidays.
            Regular holiday pay shall be on the basis of eight (8) hours at the
            employee's personal base rate.

                                  ARTICLE XII
                                   Seniority

Section 1.

      The Company hereby recognizes the principle of seniority and all seniority
      provisions shall operate on a departmental basis in accordance with the
      procedures hereinafter listed in this Article.

      A.    Seniority shall accumulate from the original date of employment for
            every employee covered by this Agreement and said seniority rights
            shall cease upon the occurrence of any of the following acts or
            conditions:

            (1)   A voluntary resignation or quit.

            (2)   A discharge for cause.

            (3)   A layoff of more than 42 months or a leave of absence of more
                  than one (1) year's duration, however, in the case of a
                  medical leave such leave may be extended by mutual agreement.

            (4)   Failure to report for work within five (5) working days from
                  the date of recall from lay-off or leave of absence.

            (5)   Failure to request excused absence after three (3) days.


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            (6)   When an employee with less than one (1) year's service is laid
                  off, such employee shall have recall rights not to exceed one
                  (1) year.


            (7)   The Company will inform the Union President three days prior
                  to the advent of a layoff and/or a recall to and from the
                  street. An employee who is initially bumped will be notified
                  three (3) days in advance.

      All employees with less than ninety (90) days of continuous service shall
      be considered probationary employees. After completion of the ninety (90)
      days' probationary period, the employee's record of continuous service
      will date back to the original date of his employment.

Section 2.

      Seniority shall at all times be recognized for the purposes of upgrading
      and layoff and recall provided the employee possesses the necessary skill
      and ability to perform the job in question.

Section 3. Job Opening and Upgrading Procedure.

      (a)   When a job is declared open by the Company there shall be a shift
            preference right which will operate within the department and
            classification involved before the open job is posted.

            1.    If no employee in the plant has recall rights to the open
                  job, it will be posted plantwide so that any employee
                  previously qualified on the job may bid before an employee
                  laid off from the Company who has rights to that job is
                  recalled. If no person on layoff fills the open job, it will
                  be posted plantwide so that any employee will have the chance
                  to bid before hiring from outside. This in not applicable to
                  grades 10, 11, and 12.

      (b)   When a job is posted for bid, it shall remain on the bulletin board
            for a period of 4 days including Saturdays, Sundays and holidays.
            Employees will also have the right to designate in advance with the
            Company personnel office, their desire to upgrade to specific jobs.

      (c)   Any successful applicant for a job who moves into a new department
            shall take all his seniority into that department after the period
            of ninety (90) continuous days of work within the new department.


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            In the event of work force reduction probationary employees will be
            considered as without seniority rights and will be laid off prior to
            any other employees in the department.

            With respect to those employees who have less than ninety (90) days
            in a department and are not probationary employees. Company
            seniority will determine which employee will be affected in case of
            layoff.

      (d)   Any employee who fails to meet job requirements on any job where he
            is a successful bidder shall be returned to his former job,
            department and shift.

      (e)   After any upgrading or bidding, an employee will be restricted from
            bidding again for another job for a period of nine (9) months. This
            restriction will be waived in the event that an opening occurs in
            maintenance or in the tool room for L.G. six and above. If after
            bidding on a posted job an employee is disqualified by the Company,
            he may bid on another posted job at any time, provided all means for
            filling that job have been exhausted in conformance with Article XII
            of the Agreement. After an employee has bid on a job he may
            disqualify himself on that job at any time prior to the passage of
            forty-five (45) days or the Company may disqualify him in a ninety
            (90) day period.

            After an employee has been disqualified from a job by the Company,
            he may bid on that job again after a one year period; however, if he
            is again disqualified from the job he will not be permitted to bid
            it in the future

      (f)   Downward moves will only be permitted in the case of advanced age,
            health or other special conditions subject to management's approval.
            The one exception will be for a downward or lateral bid to an
            opening in maintenance or tool room (labor grade 6 and above).

            In the case of an application for a downward move due to age or
            health, the Joint Union-Management Seniority Committee will endeavor
            to seek placement of the employee in a job he is able to per-


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            form at base rate earnings as close as possible to his present base
            rate provided he has the ability and seniority to hold such job.

      (g)   Any incapacitated employee who is unable to perform the work in his
            classification shall be given consideration by the Company for
            another job that he is able to perform during his period of
            incapacitation. If he is assigned a job, he shall be paid at the
            rate of that job. "Employees with medical limitations working in the
            plant must provide the Company with monthly updates from a physician
            selected by the Company and at the Company's expense. However, if
            there is a dispute between the Company doctor and the employee's
            personal physician, a third doctor will be consulted to settle the
            issue." The third doctor will be at the Company's expense.

      (h)   Consistent with the terms of this contract, an employee will have
            the right to move laterally on an open job.

Section 4. Lay-Offs

      When an employee is laid off from his department and job classification he
      shall have the option of retrograding in compliance with (b) below or he
      may displace the least senior employee in his labor grade in his unit. If
      his seniority precludes the displacement of any employee in his labor
      grade, he may bump the least senior employee on a lower base rate job
      within the unit.

      (a)   When a move has been effectuated under the seniority provisions of
            the contract, the affected employee will be allowed to exercise a
            shift preference so long as it is consistent with his seniority.

      (b)   In the event of a lay-off, the affected employee will be given the
            opportunity, seniority permitting, to retrograde into any job
            previously qualified on while in the employ of the Company.
            Retrograde may mean upward, downward or lateral movement.

      (c)   After an employee has exhausted all seniority moves under the
            provisions of the contract, he will be given the opportunity to bump
            a less senior employee, providing he can perform that job
            proficiently within a three (3) week period.

      (d)   After an employee has exhausted all seniority


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            moves under the provisions of the contract, he will be recalled to
            any job by seniority in Labor Grade 9 or below provided he hasn't
            waived his rights to that job and he will be given up to three weeks
            to demonstrate proficiency on the job. This section is not
            applicable to maintenance and tool room jobs.

      (e)   When an employee is laid off, he will be asked whether he will
            accept recall to any job or just his own. If the employee waives
            recall to other jobs, he will be recalled only to his own job. If
            the employee accepts recall to jobs other than his own, he may not
            refuse those jobs when offered. An employee, on layoff, may revise
            his status concerning the job or jobs to which he'll return by
            notifying the Company in writing. Such notification may be made no
            more than twice a year during any given layoff. Recall rights are
            for 42 months.

      (f)   If an employee is recalled by the Company and subsequently
            disqualifies himself or is disqualified by the Company, his
            subsequent placement will be in accordance with Section 4 (a), (b),
            (c) and (d).

Section 5.

      This Article does not limit or guarantee the number of hours to be worked
      by any department or any employee. In the event of a curtailed work week
      the days worked shall be consecutive beginning on Monday except for
      off-standard work schedules. If curtailment is necessary beyond four (4)
      weeks, the Union may discuss alternatives with the Company.

Section 6.

      Bulletin Boards shall be provided for all seniority lists and other Union
      purposes as well. It is understood that the Union officers shall submit
      any document to be posted on the bulletin boards to the appropriate
      representative of management for his approval prior to posting.


                                       17
<PAGE>

Section 7.

            It is understood that the following Union officers shall have top
      seniority during their respective terms of office:

                  1. President

                  2. Vice President

                  3. Financial Secretary

                  4. Recording Secretary

                  5. Bargaining Committee Members

            This seniority shall be for the purpose of layoff and recall only.
      The four top Union officers shall be assigned to the first shift.

Section 8.

            The committeeman on each shift shall hold top seniority on his
      respective shift for the purpose of layoff and recall only. This seniority
      shall not take precedence over the officers as listed in Section 7.

Section 9.

            It is understood that any employee promoted from the bargaining unit
      will have 60 days to return with his accumulated seniority except for 30
      days. If the employee does not return to the bargaining unit in that time,
      he will lose all his seniority and may return thereafter only as a new
      employee. Any return to the bargaining unit must be to a posted job. If
      there is no posted job, the affected employee may bump the least senior
      employee whose job he can perform. The job in question must be labor grade
      7 and below. This section does not apply to any employee who left the
      bargaining unit prior to July 21, 1978.

Section 10.

            Employees applying for jobs in Labor Grade 8 and above shall be
      required to pass a job test in connection with job openings in such labor
      grades. The following procedure will apply:

                  The Company will pay 100% of tuition for any required courses.

                  Testing will be administered and evaluated by an independent
                  agency.

                  Openings will he filled from within on a seniority


                                       18
<PAGE>

      basis providing applicants pass the test. If no one qualifies, the Company
      may seek outside applicants. A joint Union-Company trades committee will
      be established to oversee the program.

      To attain L.G. 12, an employee must become progressively adept at
      performing the duties of each higher grade. The applicant will require a
      minimum of two years of successful work in on-the-job training or
      successfully complete 350 hours of training at an accredited technical
      school outside of Company hours.

      If an opening occurs in the Toolroom and it cannot be filled with a
      qualified employee either in or out of the plant, the Company will
      establish a training program to fill the job.

                                  ARTICLE XIII
                           Settlement of Differences

Section 1.

      A grievance shall be defined as any dispute which arises between the
      Company and the Union over the compliance with or application of this
      Agreement as it pertains to any bargaining unit employee other than a
      probationary employee, and all such differences shall be settled in the
      following manner.

      Step I. Between the employee and his foreman; or at the request of either
      the committeeman or the employee, between the employee, committeeman and
      fore man. If the dispute is not settled in accordance with an oral
      discussion between the foreman, the employee and/or the committeeman, then
      the dispute may be reduced to writing and submitted to Step 2 within two
      (2) days from the date of the initial discussion.

      Step II. Within five (5) days from the date of receipt of a written
      grievance, it shall be heard by the Step II committee which shall consist
      of two representatives of management and two representatives of the local
      Union, or as a minimal requirement a date will be set for the hearing
      without exception. If the dispute still remains unsettled, it may be
      placed by the Union on the Third Step Agenda within seven (7) days
      following the hearing in Step II.

      Step III. The Step III committee shall hear all cases which have been
      unresolved in Step II and said committee shall consist of two
      representatives of management and two representatives of the local Union.
      In addition, the General Manager and a representative of the International
      Union may sit in on any third step hearing. In the event that the dispute
      is not resolved in the third step, the Union may file the said


                                       19
<PAGE>

      difference for arbitration within ten (10) working days after the date of
      the third step meeting, but the said ten (10) days may be waived by mutual
      agreement between the Union and the Company so as to further discuss the
      subject of the dispute under the cooperative management clause of this
      Agreement.

      If a grievance in Step 2 is not heard within the 5 day limit it will be
      placed immediately on the third step agenda.

Section 2.

      If a grievance hereunder is referred to arbitration, the parties will use
      the arbitration procedures of the Federal Mediation Service. If a
      grievance is submitted to arbitration, the decision of the arbitrator
      shall be final and binding on both parties and any cost with respect to
      said arbitration shall be borne equally between the parties.

Section 3.

      In connection with the settlement of grievances, the Company hereby agrees
      to be liable to pay up to two (2) hours per month for no more than three
      (3) Union representatives engaged in the hearing of disputes under this
      Section of the Labor Agreement. No issue in dispute under this Labor
      Agreement shall be arbitrable unless the said issue involves the meaning,
      application of, or compliance with a specific provision of this Agreement
      or the intent thereof. The arbitrator shall not add to, subtract from, or
      modify any of the provisions of this Agreement, and shall not reverse
      management's decision except when, in the judgment of the arbitrator,
      management has acted without just cause. The arbitrator's award shall in
      no case be retroactive beyond thirty (30) days prior to the filing of the
      written grievance which constituted the issue in question.

Section 4.

      Except for grievances involving seniority, all grievances must be filed
      within thirty (30) working days from the date of its occurrence. In no
      case, however, shall the Company's liability for retroactive pay exceed a
      period of thirty (30) days prior to the date on which the grievance is
      filed. Grievances not so filed shall be deemed to have been waived and
      shall not be raised thereafter. Grievances resolved in either Step


                                       20
<PAGE>

      I, Step II, or Step III above shall be considered satisfactorily settled,
      closed on the record, and shall not be reopened.

Section 5.

            Grievances which shall arise between the Union and the Company
      concerning employee discipline shall have priority over all other cases
      under this Article XIII of the Labor Agreement.

                                   ARTICLE XIV
                             Wages and Rates of Pay

Section 1.

      Top wage rates for all labor grades are listed below:

          Labor    July 20    Labor    July 20    Labor    July 20
          Grade     1996      Grade     1996      Grade     1996

            1      $11.09       5      $11.64       9      $12.02
            2       11.22       6       11.79      10       12.11
            3       11.43       7       11.87      11       12.19
            4       11.54       8       11.95      12       12.27

Each grade will be increased by another $0.30 effective July 19, 1997. Each
grade will be increased by another $0.30 effective July 18, 1998. Employees
hired between July 21, 1984 and July 17, 1996 will have their rates increased by
an additional .l0 cents on July 20, 1996 by an additional .10 cents on July
19, 1997 and by an additional .05 cents on July 18, 1998. This amount of .25
per hour is in addition to the general increases granted under this Labor
Agreement.

Section 2.

            New employees without previous experience will be hired at the
      appropriate rate as shown on the progression rate scales outlined in
      Appendix "A" of this Agreement.

Section 3.

            Employees who have some experience will be placed at a rate on the
      progression rate scale commensurate with their experience and ability to
      perform the job between the minimum hiring rate for the labor grade up to
      and including the full job rate if the employee is fully qualified. In no
      case shall any employee receive less than his present rate when he is
      accepted for training on another job provided the move is lateral or up.

Section 4.

            Any employee on a progression rate shall be reviewed periodically
      and appropriate adjustments shall be made


                                       21
<PAGE>

      on the basis of the review period until the employee reaches the full rate
      of the job. Employees in Labor Grade 9 and below shall be reviewed every
      thirty (30) days and adjustments will be automatic unless the employee is
      removed from the job. Employees in Labor Grades 10, 11, and 12 shall be
      reviewed every 30 days and adjustments will be made on the same basis as
      Labor Grades 9 and below.

Section 5.

      Employees working on a scheduled second shift shall be paid a night shift
      premium of 20(cent) per hour. Employees working on a scheduled third
      shift shall be paid a night shift premium of 22(cent) per hour. Employees
      assigned to one shift shall not receive a premium applicable to another
      shift for any reason.

Section 6.

      Any employee on transfer to another job shall be paid the rate of his job
      or the rate of the job to which he is transferred, whichever is higher.
      An incentive employee will be paid five (5) labor grades higher than his
      base rate in those cases where the job to which he is transferred causes a
      loss of earnings. Temporary transfers will not exceed ninety (90) days in
      a year unless otherwise agreed to. If a transfer exceeds ninety (90) days,
      the job will be posted. The Company will not use the temporary transfer
      provision in cases involving the use of employees working out of their job
      descriptions for periods of less than four (4) hours duration.

                                   ARTICLE XV
                        Insurance Benefits and Pensions

Section 1.

      A Pension Agreement and Insurance Program have been provided in Agreements
      which are separate and apart from this contract booklet.

Section 2.

      With respect to pension service credits, all active employment time
      accrued prior to the acquisition of the Bremen Bearing Company by S K F
      Industries, Inc., shall be counted as years of service for pension
      eligibility purposes.


                                       22
<PAGE>

Section 3.

      Each employee will be provided with a booklet outlining the pension and
      insurance benefits.

                                  ARTICLE XVI
                Jury Duty, Bereavement and Military Reserve Pay

Section 1. Jury Duty Pay.

      Any employee who is called for Jury Duty service shall be excused from
      work for the days on which he serves and he shall receive for each such
      day of jury service on which he otherwise would have worked, the
      difference between eight (8) times his assigned base rate and the payment
      he receives for jury service. The employee will present proof of service
      and the amount of pay received therefor.

Section 2. Bereavement Pay.

      Employees will be paid by the Company for time lost due to death in the
      immediate family. Such pay to be no more than their assigned rate for a
      period not in excess of three (3) work days. Immediate family includes
      mother, father of employee, husband or wife, children, brother or sister,
      mother-in-law, father-in-law, grandchildren, stepchildren, stepparents,
      grandparents, son-in-law and daughter-in-law.

Section 3. Military Reserve Training Pay.

      An active employee who is required to attend Military Reserve Training
      Encampment will receive the difference in pay between his assigned base
      rate and payment received for his military service. Payment hereunder
      shall be based on proof of service and shall not exceed a period of eighty
      (80) hours.

                                  ARTICLE XVII
                               Safety and Health

Section 1.

      Heating, lighting, toilet, locker and sanitary facilities and all
      protective devices necessary to protect the health of employees shall be
      provided by the Company as prescribed under the Laws of the State of
      Indiana and the United States. The Union will at all times cooperate with
      and assist the Company in maintaining and improving safety and health
      conditions in the plant.


                                       23
<PAGE>

                                 ARTICLE XVIII
                                  Plant Rules

Section 1.

      The Union recognizes that it is necessary for the Company to issue rules
      from time to time governing the conduct of employees and that it is the
      duty of each employee to familiarize himself with such rules and
      regulations. This does not constitute acceptance by the Union of any
      specific rules not in compliance with the provisions of this Agreement.

                                  ARTICLE XIX
                                Leave of Absence

Section 1.

      A.    Employees who are to be absent for more than one week for personal
            illness or physical disability and who have acquired one (1) year of
            service with the Company, will be granted a leave of absence up to
            one (1) year. (Employees with sixty (60) days seniority but less
            than one (1) year of service will be granted a leave of absence for
            the period equal to their length of service.) Leaves of absence will
            only be granted upon written request and when accompanied by a
            physician's statement. Such leaves will be granted without pay
            except seniority will accumulate for the duration of the leave.
            Requests for personal leaves of absence for unusual reasons may be
            made through the Plant Manager. Such leaves, if granted, shall not
            be in excess of two weeks.

      B.    Employees applying for a leave of absence or returning from a leave
            of absence may be subject to a medical examination and approval by a
            Company appointed physician.

      C.    An employee with a physician's statement must renew medical
            certification every three (3) months.

Section 2.

      Any employee who is elected or appointed to a position with the
      International Union (UAW) will be granted a leave of absence for the
      duration of his assignment upon written request by the Inter-


                                       24
<PAGE>

      national Union. Seniority will accumulate during such leave but without
      pay or other benefits except for pension purposes.

Section 3.

      A.    Failure to report to work within five days after the expiration of a
            leave of absence or extension thereof shall constitute a voluntary
            resignation.

      B.    Employees returning to work after a leave of absence will be placed
            on the same job held at the beginning of the leave based on their
            seniority and provided they are able to perform the full job
            requirements.

Section 4.

      A.    Any employee who has been granted a leave of absence and who while
            on leave of absence, seeks or accepts other employment or who
            engages in any business or occupation shall be considered as having
            voluntarily quit. Exceptions to this Section may be made by mutual
            agreement.

                                   ARTICLE XX
                          Amendments and Modifications

Section 1.

      This agreement together with the insurance plan, wages and rules referred
      to herein constitutes the entire Agreement between the Parties and
      concludes collective bargaining for its term. In the event any of the
      provisions of this Agreement shall become invalid or unenforceable by
      reason of any federal or state law or executive order now existing or
      hereafter enacted, such invalidity or unenforceability shall not have any
      effect on the remaining provisions of this Agreement.

Section 2.

      No amendments or modifications of this Agreement shall be valid except
      when committed to writing and signed by the authorized representative of
      both parties. The authorized representatives of the Union shall include
      the duly authorized representatives of the International Union and the
      duly authorized representatives of the Local Union No. 1368.


                                       25
<PAGE>

                                  ARTICLE XXI
                             Termination and Notice

Section 1.

      This agreement between the parties shall remain in force for the period
      commencing on July 20, 1996 and ending 12:00 midnight July 16, 1999 and
      shall automatically renew itself from year to year thereafter unless
      written notices of the desire to terminate or amend any portion of any of
      the terms hereof is given by either party to the other, at least sixty
      (60) days prior to July 16, 1999 or in the event this Agreement is renewed
      such notice shall then be given at least sixty (60) days prior to any
      subsequent annual expiration date.

      If notice of the desire to terminate or amend shall be given, as provided
      in the preceding paragraph, negotiations for the new or amended Agreement
      shall begin not later than ten (10) days subsequent to such notice, and
      shall continue until agreement has been reached; and during such
      negotiations this Agreement shall remain in full force and effective
      provided, however, that if negotiations continue beyond the terminal date
      of this Agreement, either party may then terminate this Agreement upon ten
      (10) days written notice to the other party.


                                       26
<PAGE>

                             MEMO OF UNDERSTANDING

      It is agreed that the foregoing language substantially represents the
terms and conditions of a new labor agreement between the Bremen Plant of SKF
U.S.A. Inc. and Local 1368 of the U.A.W.

For the Union                                For the Company

/s/ [Illegible]                              /s/ [Illegible]
-----------------------------                -----------------------------
/s/ [Illegible]                              /s/ [Illegible]
-----------------------------                -----------------------------
/s/ [Illegible]                              /s/ [Illegible]
-----------------------------                -----------------------------
/s/ [Illegible]
-----------------------------                -----------------------------
/s/ [Illegible]                              /s/ [Illegible]
-----------------------------                -----------------------------

-----------------------------                -----------------------------

  Agreed this 18th day of July, 1996.


                                       27
<PAGE>

                                  APPENDIX "A"
                            RATES OF PAY LABOR GRADE
                                 JULY 20, 1996
                     EMPLOYEES HIRED PRIOR TO JULY 21, 1984
                               PROGRESSION SCALE

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1               1                                     10.94    11.09
  2               1                            10.97    11.07    11.22
  3               1                    11.08   11.18    11.28    11.43
  4               1         11.09      11.19   11.29    11.39    11.54
  5               1         11.19      11.29   11.39    11.49    11.64
  6               1         11.34      11.44   11.54    11.64    11.79
  7               1         11.42      11.52   11.62    11.72    11.87
  8               1         11.50      11.60   11.70    11.80    11.95
  9               1         11.57      11.67   11.77    11.87    12.02
 10               1         11.66      11.76   11.86    11.96    12.11
 11               1         11.74      11.84   11.94    12.04    12.19
 12               1         11.82      11.92   12.02    12.12    12.27


                       EMPLOYEES HIRED AFTER JULY 21, 1984
                             PRIOR TO JULY 19, 1996

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1               1                                     10.79    10.94
  2               1                            10.82    10.92    11.07
  3               1                    10.93   11.03    11.13    11.28
  4               1         10.94      11.04   11.14    11.24    11.39
  5               1         11.04      11.14   11.24    11.34    11.49
  6               1         11.19      11.29   11.39    11.49    11.64
  7               1         11.27      11.37   11.47    11.57    11.72
  8               1         11.35      11.45   11.55    11.65    11.80
  9               1         11.42      11.52   11.62    11.72    11.87
 10               1         11.51      11.61   11.71    11.81    11.96
 11               1         11.59      11.69   11.79    11.89    12.04
 12               1         11.67      11.77   11.87    11.97    12.12


                                       28
<PAGE>

                      EMPLOYEES HIRED AFTER JULY 19, 1996

               REVIEW                                            FULL
LABOR        INTERVALS                                            JOB
GRADE         (MONTHS)                                           RATE
  1               1                                      7.94    8.09
  2               1                             7.97     8.07    8.22
  3               1                    8.08     8.18     8.28    8.43
  4               1          8.09      8.19     8.29     8.39    8.54
  5               1          8.19      8.29     8.39     8.49    8.64
  6               1          8.34      8.44     8.54     8.64    8.79
  7               1          8.42      8.52     8.62     8.72    8.87
  8               1          8.50      8.60     8.70     8.80    8.95
  9               1          8.57      8.67     8.77     8.87    9.02
 10               1          8.66      8.76     8.86     8.96    9.11
 11               1          8.74      8.84     8.94     9.04    9.19
 12               1          8.82      8.92     9.02     9.12    9.27


                                       29
<PAGE>

                                   APPENDIX A
                            RATES OF PAY LABOR GRADE
                                  JULY 19, 1997
                     EMPLOYEES HIRED PRIOR TO JULY 21, 1984
                                PROGRESSION SCALE

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1               1                                     11.24    11.39
  2               1                            11.27    11.37    11.52
  3               1                    11.38   11.48    11.58    11.73
  4               1         11.39      11.49   11.59    11.69    11.84
  5               1         11.49      11.59   11.69    11.79    11.94
  6               1         11.64      11.74   11.84    11.94    12.09
  7               1         11.72      11.82   11.92    12.02    12.17
  8               1         11.80      11.90   12.00    12.10    12.25
  9               1         11.87      11.97   12.07    12.17    12.32
 10               1         11.96      12.06   12.16    12.26    12.41
 11               1         12.04      12.14   12.24    12.34    12.49
 12               1         12.12      12.22   12.32    12.42    12.57

                       EMPLOYEES HIRED AFTER JULY 23, 1984
                             PRIOR TO JULY 19, 1996

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1               1                                     11.19    11.34
  2               1                            11.22    11.32    11.47
  3               1                    11.33   11.43    11.53    11.68
  4               1         11.34      11.44   11.54    11.64    11.79
  5               1         11.44      11.54   11.64    11.74    11.89
  6               1         11.59      11.69   11.79    11.89    12.04
  7               1         11.67      11.77   11.87    11.97    12.12
  8               1         11.75      11.85   11.95    12.05    12.20
  9               1         13.82      11.92   12.02    12.12    12.27
 10               1         11.91      12.01   12.11    12.21    12.36
 11               1         11.99      12.09   12.19    12.29    12.44
 12               1         12.07      12.17   12.27    12.37    12.52


                                       30
<PAGE>

                      EMPLOYEES HIRED AFTER JULY 19, 1996

               REVIEW                                            FULL
LABOR        INTERVALS                                            JOB
GRADE         (MONTHS)                                           RATE
  1               1                                      8.24    8.39
  2               1                             8.27     8.37    8.52
  3               1                    8.38     8.48     8.58    8.73
  4               1          8.39      8.49     8.59     8.69    8.84
  5               1          8.49      8.59     8.69     8.79    8.94
  6               1          8.64      8.74     8.84     8.94    9.09
  7               1          8.72      8.82     8.92     9.02    9.17
  8               1          8.80      8.90     9.00     9.10    9.25
  9               1          8.87      8.97     9.07     9.17    9.32
 10               1          8.96      9.06     9.16     9.26    9.41
 11               1          9.04      9.14     9.24     9.34    9.49
 12               1          9.12      9.22     9.32     9.42    9.57


                                       31
<PAGE>

                                  APPENDIX "A"
                            RATES OF PAY LABOR GRADE
                                 JULY 18, 1998
                     EMPLOYEES HIRED PRIOR TO JULY 21, 1984
                               PROGRESSION SCALE

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1               1                                     11.54    11.69
  2               1                            11.57    11.67    11.82
  3               1                    11.68   11.78    11.88    12.03
  4               1         11.69      11.79   11.89    11.99    12.14
  5               1         11.79      11.89   11.99    12.09    12.24
  6               1         11.94      12.04   12.14    12.24    12.39
  7               1         12.02      12.12   12.22    12.32    12.47
  8               1         12.10      12.20   12.30    12.40    12.55
  9               1         12.17      12.27   12.37    12.47    12.62
 10               1         12.26      12.36   12.46    12.56    12.71
 11               1         12.34      12.44   12.54    12.64    12.79
 12               1         12.42      12.52   12.62    12.72    12.87


                      EMPLOYEES HIRED AFTER JULY 21, 1984
                             PRIOR TO JULY 19, 1996

               REVIEW                                             FULL
LABOR        INTERVALS                                             JOB
GRADE         (MONTHS)                                            RATE
  1                1                                   11.54     11.69
  2                1                           11.57   11.67     11.82
  3                1                   11.68   11.78   11.88     12.03
  4                1        11.69      11.79   11.89   11.99     12.14
  5                1        11.79      11.89   11.99   12.09     12.24
  6                1        11.94      12.04   12.14   12.24     12.39
  7                1        12.02      12.12   12.22   12.32     12.47
  8                1        12.10      12.20   12.30   12.40     12.55
  9                1        12.17      12.27   12.37   12.47     12.62
 10                1        12.26      12.36   12.46   12.56     12.71
 11                1        12.34      12.44   12.54   12.64     12.79
 12                1        12.42      12.52   12.62   12.72     12.87


                                       32
<PAGE>

                      EMPLOYEES HIRED AFTER JULY 19, 1996

               REVIEW                                            FULL
LABOR        INTERVALS                                            JOB
GRADE         (MONTHS)                                           RATE
  1                1                                    8.54     8.69
  2                1                            8.57    8.67     8.82
  3                1                   8.68     8.78    8.88     9.03
  4                1         8.69      8.79     8.89    8.99     9.14
  5                1         8.79      8.89     8.99    9.09     9.24
  6                1         8.94      9.04     9.14    9.24     9.39
  7                1         9.02      9.12     9.22    9.32     9.47
  8                1         9.10      9.20     9.30    9.40     9.55
  9                1         9.17      9.27     9.37    9.47     9.62
 10                1         9.26      9.36     9.46    9.56     9.71
 11                1         9.34      9.44     9.54    9.64     9.79
 12                1         9.42      9.52     9.62    9.72     9.87


                                       33
<PAGE>

                            MEMO OF UNDERSTANDING #1
                                  ARTICLE XVI
                                Bereavement Pay

The three days allowed must be taken. In other words, no pay can be taken in
lieu of the time allowed off. Of course, if a person decides they only want one
or two days off and wishes to work, this is their option. The days off must be
consecutive and only at the time of the funeral. In other words, you cannot take
one day at the time of the funeral and two days two months later for the same
bereavement. In case the three days include Saturday and Sunday, the employee
will not lose two paid days, but will take two additional days for Saturday and
Sunday. For example, the employee would take off Friday, Monday and Tuesday with
pay. If the bereavement occurs during the employee's vacation, the three days
allowed should be taken immediately after the termination of the vacation time.
The vacation time does not count against the three days allowed. If a holiday
falls on one of the three days allowed, an extra day can be taken with pay.

                            MEMO OF UNDERSTANDING #2

The six (6) month and lateral move clause in the contract as waived for an
employee who returns to the Job from which he was removed, if this move is made
within one year. If his former job is posted within one year, and the employee
declines to return to this Job at this time, he loses the rights of waiver.

                            MEMO OF UNDERSTANDING #3

While it is understood that the Company may experiment with equipment, it is not
the intent of the Company to replace any bargaining unit employee with a
salaried employee through the exercise of this right. In the case of foremen,
they may perform such work under their jurisdiction as instructing,
experimenting, or relieving bottlenecks in production, but no bargaining unit
employee shall lose a work opportunity as a result.

                            MEMO OF UNDERSTANDING #4

Where a work opportunity is lost, the Company shall be liable for a minimum of 4
hours at time and one half for work performed by non-bargaining unit employees
normally performed by bargaining unit employees.


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<PAGE>

                            MEMO OF UNDERSTANDING #5

     After twelve (12) months service in labor grade 6 in the Maintenance
Department, the employee will automatically transfer to Grade 8 (General
Maintenance Mechanic) providing he can successfully pass a working test
pertaining to the Grade 8 classification.

                            MEMO OF UNDERSTANDING #6
                            ABSENTEEISM AND LATENESS

     Absenteeism and lateness records will be reviewed on a monthly basis.
Employees with an excused absence will not be affected.

     The warning system in regard to absenteeism and lateness will operate as
follows:

     1.   First - Written
     2.   Second - Written
     3.   Third - Written - 3 day suspension
     4.   Fourth - Written - Discharge

     Warning slips will be retracted from the employees records by the
following method:

     All outstanding warnings are eliminated with the advent of the new labor
agreement. A probationary period of one-hundred twenty (120) days will exist for
each warning given. If after the issuance of a warning the one-hundred twenty
(120) day period elapses and no further warnings are given, the warning will be
removed from the employee's records. The one-hundred twenty (120) day period
will prevail for each warning in the employee's file.

                            MEMO OF UNDERSTANDING #7
                                BREAK-IN PERIOD

     Effective immediately employees operating on machine controlled incentive
standards (Cut-off and Grinder) who are training new men will be paid three (3)
labor grades higher than their present classifications. Since all operators in
these two departments are Grade 6, during the time of actual training the
operators base pay will be the top step in Labor Grade 9. Training time will be
considered as time spent with a new operator. When a


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<PAGE>

new operator moves to one machine the training time will cease and the base pay
will revert back to Grade 6.

When assembly operators train other employees they will be paid the top step of
labor grade 4.

                            MEMO OF UNDERSTANDING #8

Saturday time and one-half and Sunday double time will be defined as follows:

For a one shift or two shift operation time and one-half will start at 24:00
hours Friday and cease at 24:00 hours Saturdays. Double time will start at 24:00
hours Saturdays and cease at 24:00 hours Sundays.

For a three shift operation time and one-half will start at 23:00 hours Fridays
and cease at 23:00 hours Saturdays. Double time will start at 23:00 hours
Saturdays and cease 23:00 hours Sundays.

                            MEMO OF UNDERSTANDING #9

In the event a junior worker in a department is transferred to another shift and
the transfer exceeds forty-five (45) days, a bid for a shift preference must be
posted when the vacancy is filled.

If the transfer does not exceed forty-five (45) days, the Employee that was
transferred will have to return to the shift.

                           MEMO OF UNDERSTANDING #10

Employees on temporary transfer to another department will work the hours as
scheduled in that department during the transfer. If they receive less than 16
hours notice of a temporary transfer, they shall have the option of working
either the hours scheduled in their own department or those scheduled in the
department to which the temporary move was made.

                           MEMO OF UNDERSTANDING #11
                       CONCERNING ARTICLE XII, SECTION 7

This provision protects Union officers from the vagaries of bumping/layoff
during the terms of office. Therefore they are to remain on the shift to which
they are assigned until the abolition of that shift or upon voluntary removal to
another shift.


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<PAGE>

On the other hand, this provision in no way permits a Union officer to use his
privileges for purposes of vacation or promotion preference, etc.

To allow the bumping of Union committeemen or officers without respect to shift
retention, it is technically possible to have them all confined to one shift
while the other shifts have no representation. Of course this was never the
intention, since such an eventuality would leave Company-Union contracts in an
unworkable state.

                           MEMO OF UNDERSTANDING #12

Shift preference may be exercised twice per year, but an employee must stay on
the shift for six months after exercising this right. It is the obligation of
the employee to notify the Company if he wishes a shift preference.

In exercising the shift preference, the employee will bump the least senior
employee in the same job on the shift he desires to transfer to provided his
seniority is greater. The displaced employee will then bump the least senior
employee in the same job on the next shift of priority, provided his seniority
is greater. Priority of shifts will be in day, middle and evening turn order.

                           MEMO OF UNDERSTANDING #14

If a Knobbing Department employee is not present, abrasive can be run by a
temporarily transferred employee. When the Knobbing Department is not staffed,


                                       37
<PAGE>

Knob Removal and Green Tumble parts will be gaged, run to size, and shut off, if
necessary, by either Quality Control or the Watchman. Knob removal parts when
done are to be rinsed clean and put to lime to prevent pitting.

                           MEMO OF UNDERSTANDING #15

The following will prevail for employees who are successful bidders on open jobs
but circumstances prevent them from moving:

1.   If after two (2) weeks from date of bidding the employee is still held
     within department, he will receive make up pay equal to his present step in
     the Labor Grade in which he was the successful bidder. Seniority will
     commence in the new Department at this time,

Note:

     Incentive earnings will not be calculated on the make up pay. Overtime will
     not be paid on make up pay but will be paid on hours worked at straight
     time.

2.   Successful bidders shall not be detained for any time in excess of five (5)
     weeks from their bidding date unless approved by the employee.

3.   At the time of the actual transfer the employee will automatically be
     placed at a rate on the progression rate scale per company policy.

                           MEMO OF UNDERSTANDING #16

     It is the policy of the Company to encourage its employees to prepare
     themselves voluntarily for increased responsibility by studying accredited
     semi-technical, technical, and professional subjects related to the
     Company's business. To aid the employee, the Company has instituted a
     Tuition Refund Plan by which 75% of the tuition paid by each employee will
     be refunded on approved and satisfactorily completed subjects.

                           MEMO OF UNDERSTANDING #17

     When work which the bargaining unit normally performs is to be
     subcontracted, it will be done on the basis of time or money or special
     equipment or expertise.


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<PAGE>

When work is to be contracted out, the Company will inform the Union and explain
the necessity prior to the subcontracting.

                           MEMO OF UNDERSTANDING #18

Press operators will use the lathe only for purposes of polishing tooling.

                           MEMO OF UNDERSTANDING #19

The first step of the four steps on the Progression Scale will not apply to
employees bidding to another labor grade.

The four step Progression Scale will only apply to new employees hired after
July 22, 1978.

                           MEMO OF UNDERSTANDING #20

Until such time as rates can be established in labor grades 10 through 12.
employees within those classifications will be paid at 130% of their base rates
on a weekly basis.

                           MEMO OF UNDERSTANDING #21

When an employee is laid off from a job he will have recall rights to that job
for 42 months.

                              LABOR UNITS & GRADES

UNIT #1                                       UNIT #3                         
                                                                          
Cut Off - 6                                   Assembly - 1
Heat Treat - 7                                Inspection - 2              
Grinding - 6                                  Inspection Leader - 4       
Ass'y Leader - 6                              Floor Person - 4            
Process Inspection - 6                        Roller MIC Operator - 4     
Quality Assurance - 6                         Material Handler/Sorter - 5 
Press Operators - 7                           
Flexible Worker - 7

                                              UN1T #4          
UNIT #2                                                                         
                                              Maintenance - 10 
Knobbing - 4                                                              
Liming Lead - 5                               UNIT #5               
Liming Helper - 3                                                   
Shipping & Receiving - 4                      Tool Room - 8         
Shipping Lead Person - 6                      Tool Room - 10        
Store Room Attendant - 4                      Tool Room - 11        
Waste Treatment Operator - 5                  Rool Room - 12        
Shift Helper/Sorter - 3                       Store Room Lead - 9   
                                                                    
                    
                                               LABOR UNIT               
                                               All Labor Grade #2 Jobs  

                           MEMO OF UNDERSTANDING #22

It is the obligation of the employee to notify the Company of any absence on the
first day of the occurrence. Failure to do so could result in disciplinary
action.

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<PAGE>

                           MEMO OF UNDERSTANDING #24

It is understood that the Company will not resort to a four shift basis because
of lack of available equipment due to disrepair.

                           MEMO OF UNDERSTANDING #25

The Company will supply each maintenance employee with lightweight coveralls;
however, the employee will be responsible for the garment's upkeep. In order to
receive a replacement uniform, an employee will be required to turn in the one
that has been furnished.

                           MEMO OF UNDERSTANDING #26

The Company agrees to make weekly payroll deductions for credit union. Company
assumes no obligation other than one gross deduction per employee, per payroll
period to be forwarded to one of two credit unions mutually agreed to by the
Company and the Union.

                           MEMO OF UNDERSTANDING #27

It is agreed that during the term of this contract the waste treatment
operator's shift will run from 1:00 p.m. to 9:30 p.m. with a one-half hour
unpaid lunch period.

                           MEMO OF UNDERSTANDING #28

Each week the total paid wages, excluding overtime premium, is divided by the
total hours worked. This yields the average hourly rate for the week. The eight
highest week's average hourly rate within the six-month period is used to
calculate the vacation hourly rate. This is determined by adding the average
hourly rate for the eight highest weeks and dividing the total by eight (8).

                           MEMO OF UNDERSTANDING #29

When a department is placed on a 4 shift operation, all employees in the
affected department will be assigned to that schedule only. The holiday schedule
for the 4 shift operation shall be determined by the Company and union and
posted by the beginning (January) of each year.

                           MEMO OF UNDERSTANDING #30

Employees will be allowed one day off with no pay due to the death of a spouse's
grandparents.


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<PAGE>

                           MEMO OF UNDERSTANDING #31

In the event of a workforce reduction, the employee with flexible worker
classification may be bumped the same as any other employee on the basis of his
seniority. Further, the flexible worker will be assigned to a given shift. Any
changes in the schedule is subject to union approval.

                     MEMO OF UNDERSTANDING ON EYE EXAM #32

The Company will provide one eye exam per employee during the life of the
current contract for those employees who are not presently covered by an eye
examination program.

                           MEMO OF UNDERSTANDING #33

The Company will make every effort to avoid scheduling only one employee per
shift.

                           MEMO OF UNDERSTANDING #34

Any employee hired after 7/16/93 will pay $7.00 per week toward medical
insurance for an individual and $12.00 per week for a family. Any employee hired
after 7/19/96 will pay $9.00 per week toward medical insurance for an individual
and $15.00 per week for a family.

                           MEMO OF UNDERSTANDING #35

It is not the intent of the Company to compel an employee on a Family Medical
Leave to use vacation during that period.

                           MEMO OF UNDERSTANDING #36

Employees hired after July 19, 1996, will start at $3.00 per hour lower than the
prevailing wage scale in effect for this labor agreement.

                           MEMO OF UNDERSTANDING #37

Heat Treat Operators will be paid Labor Grade 9 when they operate three (3)
furnaces.

                           MEMO OF UNDERSTANDING #38

It is understood that the Company and the Union will discuss the possibility of
replacing the present incentive system with a gainsharing program that will be
acceptable to both parties.

                           MEMO OF UNDERSTANDING #39

If an employee is on vacation the week that Union dues are withheld, the
Company agrees to provide the Union with the names along with the hourly rate
that they were paid.


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<PAGE>

                         AMENDMENT TO THE PENSION PLAN
                              FOR HOURLY EMPLOYEES
                     BREMEN, INDIANA PLANT OF SKF USA INC.

The present minimum pension formula shall be improved by increasing the pension
per month per year of service from $24.00 to $27.00 for retirements on or after
August 31 1996.

                            RETIREE HEALTH INSURANCE

Any employee retiring during the life of this agreement will have his benefits
capped at whatever the cost of those benefits on August 1, 1996. These benefits
have been capped at $234.14.

                  IMPROVEMENTS IN GROUP LIFE, ACCIDENTAL DEATH
          AND DISMEMBERMENT, AND ACCIDENT AND HEALTH INSURANCE BENEFITS
                     BREMEN, INDIANA PLANT OF SKF USA INC.

1.   The weekly accident and health benefit will be $175.00 for disabilities
     commencing on or after August 1, 1996.

2.   Effective August 1, 1985, the amount of group life and accidental death
     and dismemberment insurance active employees will be increased from $9,000
     to $10,000. Life and accidental death and dismemberment insurance for
     active employee age 66 or over will be $6,500. 

     Life insurance is continued upon retirement under Pension Plan but is
     reduced to $1,800 upon your attainment of age 66, $1,600 upon your
     attainment of age 67, $1,500 upon your attainment of age 68 and
     thereafter.

       IMPROVEMENTS IN THE MAJOR DENTAL PLAN BREMEN PLANT OF SKF USA INC.

1.   Effective September 1, 1981, the maximum benefit payable for all covered
     dental services received during any calendar year will be increased from
     $750 to $1,000.

2.   Effective September 1, 1981, payment will be provided for 100% of the Usual
     and Customary charges for the following dental care services:

          (a)  Oral examinations.
          (b)  Periapical and bitewing x-rays.
          (c)  Topical fluoride application.
          (d)  Prophylaxis, including cleaning, scaling, and polishing
          (e)  Denture repair.
          (f)  Palliative emergency treatment.
          (g)  Fillings, consisting of silver amalgam, silicate and plastic
               restoration.
          (h)  Simple extractions involving less than six teeth.


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<PAGE>

                             MAJOR MEDICAL BENEFITS
                                EFFECTIVE 9-1-96
                                Bremen, IN Plant

Major Medical benefits are determined as follows: From the Covered Medical
Expenses which are incurred in any calendar year by any enrolled member for any
and all conditions or illnesses regardless of whether related, there is
subtracted the sum of: $200.00 (the deductible amount) plus the amount under the
terms of the basic plan.

The Major Medical Expense Plan will pay 80% of the remaining Covered Medical
Expenses subject to a maximum of $1,000,000.00 for any all conditions or
illnesses regardless of whether related, for you and for each eligible
dependent, except for special provisions for treatment of mental ailments.

                                  Deductibles

The following provisions pertain to the deductible amount:

1.   A separate deductible amount is payable with respect to each calendar year
     in which Covered Medical Expenses are incurred: except that if you had
     expenses in the last three (3) months of any calendar year which could have
     been counted toward your $200.00 deductible for that year but the full
     deductible was not met, they can then be counted toward the $200.00 annual
     deductible for the next year.

2.   Each enrolled member (employee or eligible dependent) must satisfy his own
     deductible, except that:

     a.   In the case of an accident involving an employee and/or one or more
     dependents, only one deductible is applied in any calendar year with
     respect to expenses for injuries to the family members which resulted from
     that accident.

     b.   The deductible will not be applied more than three (3) times with
     respect to Covered Expenses incurred by an employee and all enrolled
     dependents in any calendar year.

3.   Basis plan deductibles or co-payments will not be eligible towards this
     Major Medical deductible.


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<PAGE>

                      BLUE CROSS HOSPITALIZATION INSURANCE
                                EFFECTIVE 9-1-96
                                Bremen, IN Plant

An individual deductible of $250.00 will apply for all in-patient
hospitalization admissions during the course of one calendar year.

The deductible will not be applied more than two times with respect to
in-patient admissions incurred by an employee and all enrolled dependents in a
calendar year.


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