<PAGE>


                                                                   Exhibit 10.3

                            GENERAL ELECTRIC COMPANY
                     GAS TURBINE SYSTEMS SOURCING OPERATION

REFERENCE:        AGREEMENT NUMBER: GE - Mid-State - 0002

BETWEEN:          General Electric Company                     (Purchaser)
                  Gas Turbine Sourcing Operation
                  300 Garlington Road
                  P.O. Box 648
                  Greenville, SC  29602-0648

And:              Mid-State Machine Products, Inc.             (Seller)
                  1501 Verti Drive
                  Winslow, Maine  04901

Whereas the parties wish to enter into a contractual relationship to establish
terms, delivery periods, and pricing for the purchase and sale of certain
machined products listed in Attachments "A" thru "D" and in consideration of
mutual promises, Purchaser and Seller agree as follows:

         CONTRACT VISION

         A commitment to fully satisfy the ultimate customer by entering into a
         long term, mutually beneficial business relationship for a competitive
         advantage through continuous improvement processes.

         MUTUAL UNDERSTANDING:

         *  build a creative partnership with multi-functional partnering teams
            to manage design integration, resource planning and quality
         *  manage the relationship not transactions
         *  commit totally to continuous improvement
         *  manage total cost for mutual profitability
         *  recognize co-destiny in business decisions through long term,
            productivity-based Agreement
         *  share forecasts, plan long-range
         *  reduce cycles through stocking programs, smooth loading and
            production control.

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.

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1.       TERM:

         The initial term of this agreement starts Nov. 1, 1998 and continues
         through those dates listed on Attachments "A" thru "D" with an option
         to extend for subsequent years.

2.       TERMINATION:

         Purchaser or Seller may terminate this agreement at any time upon 180
         days prior written notice to the other party. If the agreement is
         terminated by the purchaser other than for Seller's default, the
         purchaser is responsible to purchase from the Seller:

         *       Reserve quantities of materials that have been stocked
                 specifically for the Purchaser, provided, however, that in no
                 case shall Purchaser's obligation in this regard exceed 1
                 year's worth of requirements (prior to any reschedule) or items
                 normally stocked by Seller upon termination taking effect.
                 Purchaser will buy back in accordance with his production
                 schedule and will utilize this inventory prior to other
                 established inventories.

         *       Should potential cost reduction programs require equipment or
                 tooling which is agreed to by both parties and solely
                 beneficial to the Purchaser's process, the Purchaser will
                 reimburse the Seller for all moneys expended but not amortized
                 at the time of termination. Should this occur, Seller agrees to
                 transfer or convey titles to Purchaser any and all such tooling
                 and equipment as requested.

3.       SCOPE:

         Seller shall supply the Purchaser machined products to support the
         Industrial & Power Systems Business in accordance with the items listed
         in Attachments "A" thru "D", updated periodically to incorporate the
         latest revisions.

4.       GOAL:

         The Goal is defined as the ability of the Seller to support the
         Purchaser with quality parts, having on-time deliveries at competitive
         pricing. Both parties working together have the responsibility to
         achieve the Goal.

5.       PRICING:

         A)   Base pricing is fixed and shall not increase for the term of this
              Agreement

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


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              except for when the Purchaser makes changes in design, materials,
              or requirements (new prices shall be set on development, drawing
              amendments or additional parts subsequently amending Attachments
              "A" thru "D").

6.       PRODUCTIVITY:

         Seller will continue to implement continuous productivity gains through
         6 Sigma project activities.

         The productivity projects are jointly agreed on by both parties and
         involve the following types of activities:

                  *  Seller manufacturing process improvements, i.e.
                     (cellularization, dedicated equipment, new equipment,
                     upgraded tooling, etc.)
                  *  Seller involvement in design to assure manufacturability.
                  *  Joint effort at product standardization.
                  *  Seller will maximize productivity on fixed processes.
                  *  Seller will increase worker productivity.
                  *  Inventory control to level load shop activities and to
                     maximize repeatability of similar units.
                  *  Purchaser will evaluate suggestions on a timely basis and
                     rapidly implement those that are acceptable.
                  *  Purchaser to review their product in depth with the Seller
                     to evaluate the feasibility of the following:
                           A) Reducing testing requirements
                           B) Relaxing tolerances when possible
                           C) Developing similar shapes and features
                           D) Material substitutions
                           E) Redesigning to optimize manufacturability.
                  *  Scrap reduction for both mature and development parts.
                  *  Review of processes and equipment to ensure quality.
                  *  Added volume of similar components.

         All projects requiring Purchaser's approval will be documented and
         responded to utilizing the supplier CRS input form.

         An immediate reduction in the Seller's price will occur upon
         implementation of a productivity project funded by the Purchaser
         pursuant to Articles 4 and 5. For a productivity project funded by the
         Seller, the Seller's price will be reduced only after the Seller's is
         reimbursed for the tooling, fixturing, and/or equipment

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


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         purchased for the project by the savings generated from the project
         pursuant to Articles 4 and 5. In both cases, tooling, fixturing, and/or
         equipment as identified in the productivity project will become the
         property of Purchaser upon completion.

7.       GENERAL COST SAVINGS:

         Purchaser agrees to identify those savings and reductions gained
         through 6 Sigma project activities which are directly related to
         conducting business with the Seller and to share any savings that can
         be calculated and audited as directly attributable in terms of credit
         towards our cost reduction goals. Such examples are as listed:
                  *  Reduced transportation costs as compared to existing
                     supplier use.
                  *  Reduced applied overhead.
                  *  Reduction of total effort extended by Purchaser to maintain
                     program integrity.
                  *  Methods Changes

8.       ORDERING:

         Purchase orders shall be issued by the individual Purchaser locations
         and subject to the Standard GE Conditions of Purchase. If a conflict
         exists between the terms of this contract and the Conditions of
         Purchase, the terms of this contract will take precedence FOR
         COMMERCIAL ORDERS ONLY. On Government orders the Conditions of Purchase
         shall take precedence. The purchase order shall contain the following
         specific data:

                  A.)  Purchase order number and date
                  B.)  Location
                  C.)  The FOB point and mode of shipment
                  D.)  Name and address of the person representing the Seller
                       and Purchaser

         Purchase orders may include supplemental agreement clauses applicable
         to orders relating to the United States Government agreement and
         sub-contract. It is the intent of this agreement, that each Purchaser,
         when available, will order and invoice via Electronic Data Interchange
         (EDI), on a daily basis or as required. Each EDI order will reference
         the 1ocation's purchase order number, date ordered, and the name of the
         person entering the order. This method is solely a vehicle for
         transporting data between the parties.

         Purchaser commits to place a full 100% of its annual requirements of
         material and/or equipment covered under this Agreement with the
         exception of customer directed procurements and any notes appearing on
         attachments. Purchaser reserves the right on any purchase order issued
         hereunder for the work covered by this Agreement, to award up to 100%
         of its requirements to other suppliers in the event that one or more of
         the following occurs:

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -4-
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                  A.)  Seller ceases to remain a qualified supplier pursuant to
                       Purchaser's qualification requirements.
                  B.)  Seller is unable to meet Purchaser's delivery, quality,
                       or Goal requirements (Articles 8, 16, and 4,
                       respectively)
                  C.)  Seller is in default of any of its obligations under this
                       Agreement or under purchase order issued pursuant to this
                       Agreement.

         In the event, however, that Purchaser does not achieve this purchase
         commitment, Seller may continue the relationship, on terms stated, or
         terminate this Agreement as if Seller had given notice of termination
         pursuant to Article 2. The preceding sentence states the sole recourse
         of the Seller for any inability or failure by the Purchaser to meet the
         stated purchase commitment.

9.       CYCLE TIME:

         Seller is committed to the Goal of continuous improvement on all
         current cycle for commodities covered under this agreement.

10.      AGREEMENT ADMINISTRATION:

         Contractual agreement review meetings will be held on an as-needed
         basis, but no fewer than one (1) per calendar year, to mutually
         evaluate the performance of each of the parties. The GEPS Supplier
         Scorecard will be the basis for the review with the areas to be
         addressed will include, but not be limited, to the following:

                  - Information communication quality and accuracy
                  - Purchase volume/payment history
                  - Delivery/order lead time performance
                  - Emergency order handling
                  - Productivity teams status (i.e. Design Integration, Quality
                    and Resource Planning)
                  - Cost reductions implemented/documented

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -5-
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         At each review, the performance of each participant will be quantified
         where applicable. Goals to be achieved before the next review will be
         mutually established.

11.      FORECASTING:

         Purchaser will provide as much forecasting information as possible to
         assist Seller in establishing and maintaining adequate stocking levels
         and/or to apply effective production control techniques (i.e. level
         load shop, perform line of balance, etc.)

12.      TERMS OF PAYMENT:

         Payment by Purchaser shall be Net 45 days following the later date of
         Seller's invoices or receipt of product and services by Purchaser.
         Seller will re-bill any unearned discounts beyond 17 calendar days. GE
         Capital will negotiate payment discounts separately.

13.      INVOICING:

         Invoices will be submitted by Seller to the Purchaser location
         indicated on the purchase order. Invoices will reference Purchaser's
         purchase order number and will contain such other information as
         Purchaser may reasonably request. As referenced in Article 8 "ORDERING"
         in the future the Seller will invoice the Purchaser via Electronic Data
         Interchange (EDI). Each EDI invoice must reference the 1ocation's
         purchase order number, item number, schedule number, and other required
         data as determined by Purchaser's Accounts Payable Organization.

14.      SHIPPING TERMS:

         All shipments will be FOB Shipping Point, title to said goods to pass
         to Purchaser upon delivery to Purchaser's dock. Transportation charges
         to be billed directly to Purchaser by carrier and will be borne by
         Purchaser. Seller must use Purchaser's designated corporate- agreement
         careers which are indicated on the purchase order. Risk of loss remains
         with Seller until delivered to Purchaser.

15.      SPECIFICATIONS:

         Product supplied under this agreement to be either commercial grade or
         specialty grade as defined by Purchaser's specifications or
         manufacturer stock number. No substitutions will be allowed without
         Purchaser's written approval.

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -6-
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16.      QUALITY:

         Seller agrees to meet purchaser's quality requirements and to work
         towards the established Purchaser's goal of a 6 Sigma Quality Level.
         Purchaser requirements include:

                 * Process control of critical processes.
                 * Responding to corrective action requests.
                 * Established quality measurements.
                 * Established quality improvement measurements.
                 * A continuous improvement program to increase quality.
                 * A documented quality system.
                 * A documented quality program.
                 * Maintain ISO 9000 Certification.

         The Seller also agrees to meet all quality requirements defined in
         Purchaser's supplier product quality plans as set forth in the purchase
         order. Failure of Seller to meet Purchaser's quality and qualification
         requirements will result in disqualification.

17.      SECRECY AGREEMENT:

         The technical data and information which has been or may hereafter be
         furnished to Seller by Purchaser in connection with the Seller's supply
         of turbine related items, or purchasing services therefore, is the
         property of Purchaser, and has been furnished solely to enable Seller
         to render service to Purchaser, and has been furnished solely to enable
         Seller to render service to Purchaser and with the understanding (1)
         that Seller will not use or reproduce such technical data and
         information for any other purpose, (2) that Seller will take all
         reasonable care to ensure that such technical data and information is
         not disclosed to other parties, except to enable such parties to render
         service to Purchaser for products covered under this Agreement provided
         that in all such cases Seller shall require acceptance of this
         provision by the other party, (3) that Seller will not furnish,
         disclose, ship, export or re-export, directly or indirectly, any
         Purchaser furnished technical data or information (including computer
         software) and direct products thereof without first receiving the prior
         written consent of Purchaser and (4) that upon request Seller will
         promptly return all such technical data and information at any time
         during or after completion of such supply or purchasing services. The
         foregoing restrictions on disclosure and use of Purchaser's technical
         information and data shall not apply to any technical information and
         data which:

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -7-
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                  a.) is already in Seller's possession at the time of first
                      receipt from Purchaser; or
                  b.) is independently developed by Seller's employees who had
                      not had access to the technical information and data; or
                  c.) is or becomes part of the public domain without breach of
                      this agreement by Seller; or
                  d.) is rightfully obtained by Seller from third persons
                      without restriction or breach by this agreement by Seller.
                      Execution of this agreement by both Purchaser and Seller
                      indicates acceptance of the above provision.

18.      INDEMNIFICATION:

         The Seller agrees to hold harmless and indemnify the Purchaser (its
         Customer) and other third parties from any rightful claims for personal
         and property damage and any associated costs, including but not limited
         to legal expenses, when such claims arise out of the performance of
         this agreement and are determined to be the result of the willful
         misconduct, or negligent acts or omissions of the Seller or Seller's
         agents, employees, or subcontractors. Furthermore, Seller agrees to
         maintain and provide insurance covering these liabilities in the amount
         and form as required under the Insurance Clause of this agreement.

19.      INSURANCE:

         The Seller shall comply with the Social Security and Unemployment
         Insurance Laws, as now or hereafter enforced, and holds the Purchaser
         harmless against any demands for contribution of taxes with respect to
         the work payable under any such laws. Without limiting any of the other
         obligations or liabilities of the Seller, the Seller shall, before
         commencing work on the Purchaser's or its Customer's premises provide
         and maintain, until the work is completed and accepted by the
         Purchaser, minimum insurance coverage as follows:

<TABLE>
<CAPTION>
         TYPE OF COVERAGE                                           LIMITS
         ----------------                                           ------
<S>                                                               <C>
Workmen's Compensation, including                                 Statutory
coverage under Longshoremen's and Harbor
Worker's act, where applicable

Employer's Liability                                              $1,000,000 Each Occurrence

Comprehensive General Liability                                   $2,000,000
    Bodily Injury...                                              Combined Single Limit Property
    Damage (including coverage for damaged                        Each Occurrence
    caused by blasting, collapse or structural
    injury and/or damage to property in the
    Seller's care, custody, or control)

</TABLE>

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -8-
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<TABLE>
<CAPTION>
         TYPE OF COVERAGE                                           LIMITS
         ----------------                                           ------

<S>                                                               <C>
Contractor's Protective Liability, operations of                  $1,000,000 covering
subcontractors, where applicable                                  Combined Single Limit
Bodily Injury...                                                  Each Occurrence
Property Damage...

Contractor's Liability in accordance                              $1,000,000
with agreement(s) between Purchaser and Seller                    Combined Single Limit
Bodily Injury...                                                  Each Occurrence
Property Damage...

Comprehensive Automobile Liability covering                       $1,000,000
all owned, hired and non-owned automotive                         Combined Single Limit
equipment used by or with the permission of                       Each Occurrence
the Seller (including the loading and unloading
thereof) with the Purchaser included as an
additional insured Bodily Injury...
Property Damage...

</TABLE>

         All such insurance policies shall be delivered to the Purchaser, if and
         when directed by the Purchaser, and in any event, the Seller shall
         arrange with the insurance carriers to furnish the Purchaser with a
         completed Certificate of Insurance Form, indicating that the required
         coverage are in force and will not be canceled or changed until ten
         (10) days after written notice is given to the Purchaser.

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                       -9-
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20.      PROPRIETARY RIGHTS AND PATENT INDEMNIFICATIONS:

         (a) If Seller provides Purchaser with one of Seller's "off-the-shelf"
         items which has been designed and developed by Seller, Purchaser
         acknowledges that Seller has all proprietary rights to such items, and
         Seller provides Purchaser with a license to use such items by selling
         said items to Purchaser. Such items are subject to the patent
         indemnification provisions of Article 18 of the "Conditions of
         Purchase".

         b) If Purchaser and Seller work together to design and develop a
         product or a process, all proprietary rights in such product or process
         will belong to Purchaser. Seller agrees to assign all rights in such
         products or processes to Purchaser. Purchaser reserves the right to
         assign or license all or part of such proprietary rights to Seller on a
         case-by-case basis, depending on several factors such as the amount of
         any development funds provided by Seller, the amount of time spent by
         Seller's engineers in developing a product or process at Seller's
         expense, and the amount of risk incurred by Seller with respect to the
         final commercial acceptability of the product or process. Any such
         assignment or license will be subject to GE Corporate Policy No. 30-10.
         The patent indemnification provisions of Article 18 of the "Conditions
         of Purchase" will not apply when Purchaser owns all proprietary rights;
         however, when Purchaser assigns or licenses all or part of the
         proprietary rights to Seller, the patent indemnification provisions of
         Article 18 of the "Conditions of Purchase" will be reviewed for
         applicability on a case-by-case basis.

         (c) If Purchaser provides Seller with specifications for a product or
         process, and Purchaser has designed and developed the specifications at
         its own cost through its own employees, consultants, subcontractors,
         etc., then all proprietary rights to the product or process belong to
         Purchaser. In this case, the patent indemnification provisions of
         Article 18 of the "Conditions of Purchase" will not apply to Seller.

21.      FORCE MAJEURE:

         Neither party shall be liable to the other for default or delay in the
         performance of any of its obligations hereunder due to act of God,
         accident, fire, flood, storm, riot, war, sabotage, explosion, strike,
         government law, labor disturbance, national defense requirement,
         ordinance, rule or regulation, inability to obtain electricity or other
         type of energy, raw material, labor, equipment, or transportation, or
         any other cause beyond its reasonable control and without its fault or
         negligence, or as

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                      -10-
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         otherwise provided herein. Seller shall notify Purchaser in writing of
         any impending delay due to the occurrence of any of the preceding
         events. In the event of a partial interruption or failure of Seller's
         sources of product or distribution capability, Purchaser shall have the
         right to determine the distribution of its allocation among it's
         locations serviced from Seller's producing points.

22.      COMPLETE AGREEMENT:

         This Agreement, including all matters expressly incorporated herein by
         reference, and the partnering agreement dated May 8th 1992, constitutes
         the entire and any agreement between the parties respecting the subject
         matter hereof, and there are merged herein all prior and pre-existing
         representations and agreements made by and between Purchaser and
         Seller.

23.      NOTICES:

         Notices, reports, and other communications made with respect to this
         agreement shall be given in writing, addressed to the parties at the
         following addresses or such other addresses as may be designated in
         writing by either party to the other. All notices required to be given
         hereunder shall be effective when delivered by hand or when deposited
         in the United States Mail, with proper postage for First Class Mail
         Prepaid.

<TABLE>
<CAPTION>
To Purchasers:
<S>                                                      <C>
Manny Gaspar                                             Others on distribution:
Jay Valachovic                                           Walter Rhodes
Strategic Sourcing
General Electric Company
GE Power Systems
P.O. Box 648
Greenville, SC  29602

To Seller:                                               Others on distribution:
Richard M. Bolduc                                        Douglas Sukeforth
Outside Sales Contracts Manager                          Jim Ashton
Ralph Robbins
Manager of Sales
Mid-State Machine Products, Inc.
1501 Verti Drive
Winslow, ME 04901
(207) 873-6136

</TABLE>

24.      AMENDMENTS AND WAIVERS:

         No terms or provisions of this agreement may be changed, waived,
         discharged or terminated orally but only by an instrument in writing
         signed by the party against

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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                      -11-
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         whom the enforcement of such change, waiver, discharge or termination
         is sought.

25.      GOVERNING LAW:

         The validity, interpretation and performance of this agreement shall be
         determined in accordance with the Laws of the State of New York.

         IN WITNESS WHEREOF THE PARTIES HAVE CAUSED THIS
         AGREEMENT TO BE EXECUTED:

         PURCHASER                                       SELLER

General Electric Company                        Mid-State Machine Products, Inc.
Power Systems Sourcing Operation                1501 Verti Drive
P.O. Box 648, 300 Garlington Road               Winslow, ME  04901

Greenville, SC  29602

Signed   /s/ Manny Gaspar                       Signed   /s/  Richard M. Bolduc
      ----------------------------                    --------------------------
By:      Manny Gaspar                           By:      Richard M. Bolduc

Title:   Strategic Sourcing                     Title:   Outside Sales Contracts
                                                         Manager

Date     12/01/98                               Date     12/01/98
    ------------------------------                  ----------------------------

Signed: /s/  Jay B. Valachovic                  Signed: /s/  Ralph Robbins
       ---------------------------                     -------------------------

By:      Jay Valachovic                         By:      Ralph Robbins

Title:   Strategic Sourcing                     Title:   Manager of Sales

Date:            12/01/98                       Date:    12/01/98
       ---------------------------                   --------------------------

rbgeagre

November 9, 1998


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*  This portion of the agreement has been omitted and filed with the
   Securities and Exchange Commission pursuant to a request for confidential
   treatment in accordance with Rule 406 of Regulation C.


                                      -12-
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                              STANDARD SCRAP AGREEMENT
                                        *



* This portion of the agreement has been omitted and filed with the
  Securities and Exchange Commission pursuant to a request for confidential
  treatment in accordance with Rule 406 of Regulation C.


<PAGE>


                                                                   ATTACHMENT A
                                        *



* This portion of the agreement has been omitted and filed with the
  Securities and Exchange Commission pursuant to a request for confidential
  treatment in accordance with Rule 406 of Regulation C.

<PAGE>


                                                                   ATTACHMENT B
                                        *



* This portion of the agreement has been omitted and filed with the
  Securities and Exchange Commission pursuant to a request for confidential
  treatment in accordance with Rule 406 of Regulation C.


<PAGE>


                                                                   ATTACHMENT C
                                        *



* This portion of the agreement has been omitted and filed with the
  Securities and Exchange Commission pursuant to a request for confidential
  treatment in accordance with Rule 406 of Regulation C.

<PAGE>


                                                                   ATTACHMENT D
                                        *



* This portion of the agreement has been omitted and filed with the
  Securities and Exchange Commission pursuant to a request for confidential
  treatment in accordance with Rule 406 of Regulation C.