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                                                                   EXHIBIT 10.5

                          TECHNOLOGY TRANSFER AGREEMENT

THIS AGREEMENT is made between Schmitt Industries, Inc., an Oregon corporation
having a principal place of business at 2765 N.W. Nicolai, Portland, Oregon
97210 (hereinafter "Schmitt") and Centerline Engineering, Inc., an Illinois
corporation having a principal place of business at 1146 Beatty Mound Road,
Jerseyville, Illinois 62052 and the following individuals: Michael Harms having
a principal place of residence at R. R. #2, Box 6, Dow, Illinois 62035, Michael
Smith having a principal place of residence at 1109 Reddish Drive, Jerseyville,
Illinois 62052, and Nelson Miller having a principal place of residence at R. R.
#4, Box 136, Jerseyville, Illinois 62052, (hereinafter "Centerline").

     WHEREAS, Centerline has developed certain Technology relating to a 
non-contact gauging apparatus and method and has filed with the U.S. Patent and
Trademark Office a Patent Application directed to the Technology; and

     WHEREAS, Schmitt is desirous of acquiring from Centerline all rights in and
to said Technology.

     NOW, THEREFORE, Centerline and Schmitt, in consideration of the premises
and mutual covenants stated herein and other good and valuable consideration,
the sufficiency of which is hereby acknowledged, do hereby agree as follows:


I.   DEFINITIONS
     When used in this Agreement, the following terms shall have the meaning
indicated:

     A.   Technology:  Any invention, improvement, discovery, product,
          apparatus, method, formula or process, or patent or patent application
          with respect thereto, know-how or trade secret relating to the gauging
          of cylindrical rolls which has been developed by Centerline.

     B.   Device:  Any apparatus employing the Technology, the manufacture, use
          or sale of which by a third party would constitute an infringement of
          any claim in an issued patent (or pending application), which claim 
          covers an invention invented solely by Centerline and relating to the
          Technology.

     C.   Prototype:  The measurement machine built by Centerline and employing
          the Technology which was disclosed to Schmitt on April 17, 1998.

     D.   Patent Application:  U.S. Patent Application Serial No. 08/844,727
          filed April 18, 1997 entitled "Non-contact Gauging Apparatus And 
          Method."

     E.   Net Sales Price:  The gross amount billed for any Devices sold,
          excluding Schmitt's actual cost of transporting the Devices to its 
          customers, the actual cost 

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          of installation (if any), income or business taxes paid to any 
          governmental entity whether domestic or foreign, the actual cost of 
          insurance paid in connection with the delivery of devices to 
          customers, and the actual cost, not exceeding 24% of gross sales 
          price, of any commissions or rebates given to unrelated non-user 
          customers, distributors, or sales representatives.

II.  WARRANTY

     A.   Centerline warrants that to the best of Centerline's knowledge that
          the Technology is secret and has not been published or otherwise 
          publicly disclosed, or revealed to anyone not having an obligation of
          confidentiality to keep the Technology confidential.

     B.   Centerline warrants that it has the right and power to enter into this
          Agreement and to grant, sell, assign and transfer all rights in the 
          Technology to Schmitt.

     C.   Centerline warrants that it has not heretofore entered into any
          contract in conflict with this Agreement and has not sold, granted, 
          assigned or transferred to any third party any right, license or 
          privilege relating to the Technology.

     D.   Centerline warrants that it has not filed or caused to be filed any
          applications for letters patent in the U.S. or anywhere else in the 
          world relating to the Technology except U.S. Provisional Patent 
          Application Serial No. 60/015,670, filed April 19, 1996 and U.S. 
          Patent Application Serial No. 08/844,727, filed April 18, 1997.

     E.   Centerline warrants that it knows of no patents, trade secrets or
          proprietary rights of others which would be infringed or violated by 
          the making, using, selling, testing, promoting or distributing of 
          the Prototype by Schmitt.


III. TRANSFER OF THE TECHNOLOGY

     A.   Centerline agrees to assign to Schmitt, and hereby does assign to
          Schmitt, the entire right, title and interest in and to the 
          Technology, including, without limitation, the right to file for and
          prosecute patent applications in the name of Schmitt relating to the
          Technology wherever such right may be legally exercised.

     B.   Centerline agrees to supply to Schmitt, at no additional charge, the
          technical information and material in Centerline's possession required
          to adequately disclose the Technology, including the operation and 
          method of manufacture of 

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          the Prototype.  This technical information shall include, but is not 
          limited to, all presently existing prototypes, drawings, schematics,
          software code, blueprints, and test reports, relating to the 
          performance, function, operation, design, and manufacture of the 
          Prototype.

IV.  ROYALTIES, PAYMENTS AND RECORD KEEPING

     A.   Schmitt agrees to pay to Centerline One Hundred Thousand Dollars
          ($100,000), said fee to be paid as follows:

          1.   A payment of Twenty-Five Thousand Dollars ($25,000) shall be due
               and payable by Schmitt to Centerline upon the execution of this 
               Agreement by both parties.

          2.   A payment of Twenty-Five Thousand Dollars ($25,000) shall be due
               and payable by Schmitt to Centerline on or before May 11, 1998 
               provided that Centerline has delivered the Prototype to Schmitt
               or before May 11, 1998, and provided that by May 6, 1998, 
               Centerline has:

               a.   Obtained a new assignment of the invention disclosed and 
                    claimed in the Patent Application from all inventors to 
                    Centerline and forwarded said assignment(s) to the U.S. 
                    Patent and Trademark Office for recordation;

               b.   Assigned the Patent Application to Schmitt and forwarded 
                    said assignment to the U.S. Patent and Trademark Office for
                    recordation;

               c.   Filed with the U.S. Patent and Trademark Office an amendment
                    under Rule 312 to correct typographical errors in the Patent
                    Application;

               d.   Filed at Schmitt's expense with the U.S. Patent and 
                    Trademark Office a Petition to Correct Inventorship to 
                    correct the inventorship in the Patent Application; and

               e.   Paid the Issue Fee for the Patent Application.

          3.   A payment of Twenty-Five Thousand Dollars ($25,000) shall be due
               and payable by Schmitt to Centerline on or before July 17, 1998,
               provided that by June 30, 1998:

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               a.   Centerline personnel (including Michael Harms and Michael 
                    Smith) have cooperated with Schmitt in connection with the 
                    preparation and filing of a continuation-in-part application
                    ("the CIP Patent Application") claiming priority to the 
                    Patent Application to be prepared by Schmitt; and

               b.   Centerline has physically transferred to Schmitt all 
                    information and equipment relating to the Technology being 
                    assigned by this Agreement.

          4.   A payment of Twenty-Five Thousand Dollars ($25,000) shall be due
               and payable by Schmitt to Centerline on or before October 16, 
               1998.

     B.   Schmitt agrees to pay to Centerline a royalty of the greater of:

          1.   One Thousand Dollars ($1,000) per Device; or

          2.   Five percent (5%) of the Net Sales Price obtained from the sale
               of each Device shipped by Schmitt.

          However, Centerline hereby waives the first Fifty Thousand Dollars 
          ($50,000) of earned royalty after the date of this Agreement.

     C.   The royalties provided for under this Agreement shall be paid
          quarterly, and Schmitt agrees to pay Centerline on or before the last
          day of the months of January, April, July and October the total amount
          of royalties due and payable under this Agreement during the calendar
          quarter immediately preceding said dates.

     D.   Schmitt agrees to keep an accurate account of the operations coming
          under the scope of this Agreement and shall render a statement in 
          writing to Centerline with each royalty payment indicating how many 
          Devices have been sold and shipped during the period for which 
          royalties are being paid.


V.   PATENTS

     A.   Centerline agrees, without further consideration, to sign all lawful
          papers and to perform all other lawful acts which Schmitt may request,
          including the prompt execution of all original, divisional, 
          substitute, reissue, and other United States and foreign patent 
          applications on said Technology, including the Patent Application and
          the CIP Patent Application, and all lawful documents requested by 
          Schmitt to further the prosecution of any of such patent applications.

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     B.   Centerline agrees to cooperate at Schmitt's expense to the best of its
          ability in the execution of all lawful documents and the production of
          evidence in any nullification, reissue, extension, or infringement 
          proceedings involving any patents covering the Technology.

     C.   Centerline agrees that Schmitt may, at its sole discretion and at its
          expense, file and prosecute foreign patent applications relating to 
          the Technology.

VI.  IMPROVEMENTS

     If, during the next ten (10) years, Centerline makes any improvements 
     relating to the Technology, Centerline shall promptly communicate such 
     improvement to Schmitt and give Schmitt full information regarding the 
     improvement.  Such information may be transmitted orally, in writing, 
     and through demonstrations as the occasion requires and shall be 
     sufficient for technical personnel of the parties to understand and apply
     and evaluate the subject matter. In order to facilitate such improvements,
     Schmitt will provide to Jerseyville Precision Inc., at 1148 Beatty Mound 
     Road, Jerseyville, Illinois on behalf of Centerline, the most current model
     of the Device at no cost to Centerline or Jerseyville Precision, Inc. for 
     improvement and demonstration.  In exchange, Centerline agrees to convey 
     and assign any such improvements to Schmitt at no additional price to 
     Schmitt.

VII. NONCOMPETE

     A.   Centerline agrees that Michael Harms, Michael Smith, and Nelson
          Miller, during the term of this Agreement and thereafter for a period
          of two (2) years, will not directly or indirectly use any of the 
          Technology or perform activities relating to gauging of cylindrical 
          rolls in any business, profession, or other endeavor which is either
          directly or indirectly in competition with the business of Schmitt.

     B.   Centerline agrees that during the term of this Agreement and
          thereafter Centerline Engineering Inc. will not directly or indirectly
          use any of the Technology or perform activities relating to gauging of
          cylindrical rolls in any business, profession, or other endeavor which
          is either directly or indirectly in competition with the business of 
          Schmitt.

     C.   If any court finds the provisions in part VII. of this Agreement to be
          unreasonable, the parties agree that the court may so modify this 
          Agreement to the extent necessary to make the provisions reasonable.

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VIII. TERM AND TERMINATION

     A.   This Agreement shall become effective from the date of its execution
          and shall, unless terminated earlier by one of the parties hereto in 
          accordance with its terms, expire upon the expiration of the last 
          patent having a claim covering the Device or method of using the 
          Device, or in two (2) years from the date of its execution if no 
          patent issues.

     B.   In the event that either party defaults or breaches any of the
          provisions of this Agreement, the non-defaulting party reserves the 
          right to terminate this Agreement upon sixty (60) calendar days 
          written notice to the defaulting party; unless, however, the  
          defaulting party within the sixty (60) calendar day period referred 
          to, cures the default or breach.

IX.  GENERAL PROVISIONS

     A.   ARBITRATION:  Any controversy or claim arising out of or relating to
          this Agreement or the breach thereof shall be settled by arbitration
          in St. Louis, Missouri in accordance with the Commercial Arbitration 
          Rules of the American Arbitration Association, and judgment upon the
          award rendered by the arbitrator(s) may be entered in any Court having
          jurisdiction thereof.

     B.   ATTORNEY'S FEES:  In the event of a dispute between the parties 
          arising under this Agreement, the party prevailing in such dispute 
          shall be entitled to collect such party's costs from the other party
          including, without limitation, court and investigation costs and 
          reasonable attorney's fees and disbursements.

     C.   ASSIGNMENT:  This Agreement shall be binding by both parties to their
          successors and assignees and personal representatives, including 
          specifically Michael Harms, Michael Smith, and Nelson Miller.

     D.   INTERPRETATION AND CONSTRUCTION:  This Agreement is written and will
          be administered under the laws and applicable regulations of commerce
          of the State of Oregon.

     E.   SEVERABILITY:  In the event any one or more of the provisions
          contained in this Agreement shall for any reason be held to be 
          invalid, illegal or unenforceable in any respect, such invalidity, 
          illegality or unenforceability shall not affect the validity of 
          any other provision hereof and this Agreement shall be construed as 
          if such invalid, illegal or unenforceable provision were not 
          contained herein provided the Agreement as so modified preserves the 
          basic intent.

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     F.   WAIVER:  The failure of any party at any time to require performance
          by any other party of any of the provisions herein shall not operate
          as a waiver of the right of said party to request strict performance
          of the same or like provisions, or any other provisions hereof, at a
          later date.

     G.   ENTIRE AGREEMENT:  This Agreement represents the entire agreement
          between the parties on the subject matter hereof and supersedes all 
          prior discussions, agreements, and understandings of every kind and 
          nature between them.  No modification of this Agreement will be 
          effective unless in writing and signed by both parties.



     IN WITNESS WHEREOF, the parties hereto intending to be legally bound have
caused the presents to be signed, in duplicate, effective as of the date of the
last signature hereto.

SCHMITT INDUSTRIES, INC.                   CENTERLINE ENGINEERING INC.


/s/ Wayne A. Case                          /s/ Nelson Miller
-------------------------------------      -----------------------------------
By: Wayne A. Case                          By: Nelson Miller
Its: President                             Its: Chairman and CEO

Date:       May 8, 1998                     Date:        April 23, 1998
     --------------------------------             ----------------------------

                                           INDIVIDUALLY
                                           The following undersigned
                                           individuals agree to assist
                                           Centerline in fulfilling all of its
                                           duties and obligations outlined in
                                           this Agreement.

                                           /s/ Michael Harms
                                           -----------------------------------
                                           Michael Harms

                                           /s/ Michael Smith
                                           -----------------------------------
                                           Michael Smith

                                           /s/ Nelson Miller
                                           -----------------------------------
                                           Nelson Miller


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