EXHIBIT 10.03


June 5, 2001

International Knife & Saw, Inc. ("IKS")
ATTN:  William Schult
1299 Cox Avenue
Erlanger, KY 41018

Dear Sirs:

    By this letter the undersigned  agree,  upon their acquisition of all of the
shares of IKS Klingelnberg GmbH ("IKSK"),  to cause IKSK to continue the current
trading   arrangement   between  IKS  and  IKSK  regarding   products  currently
manufactured  by IKSK and purchased by IKS ("IKSK  products") for a period of 18
months from the date of this letter (the  "Term"),  subject to and in accordance
with the following:

    1. During the Term, IKS agrees to purchase the IKSK products,  and any other
products to the extent available from IKSK, exclusively from IKSK. Excepted from
this  exclusivity  obligation  will be purchases by IKS for purposes  other than
resale to third parties.

    2.  Subject to the terms of this  letter  agreement  IKSK will not sell IKSK
products  in North  America to third  parties for a period of 12 months from the
date of this letter agreement (the "NC Term").  Excepted from this will be sales
by IKSK to third parties consistent with past practices.

    3. IKSK shall have the right to terminate the TA with immediate effect if:

    (a)  there is any  change  in the  ownership  and/or  control  of IKS or its
business,  the  result of which is that IKS or the  business  of IKS is owned or
controlled, directly or indirectly, completely or (in IKSK's good faith opinion)
materially by any competitor of IKSK; or

    (b) IKS  defaults  in and does not cure within 10 days of its receipt of any
notice  of  default  of any  material  element  of the  TA,  including,  without
limitation,  any significant  variance from historical  norms of  order/purchase
volume, payment terms, etc; or

    (c) IKS defaults in its performance under item 1.

    4. In the event of a termination  pursuant to item 3, (a) IKSK will agree to
fulfill all previously  accepted orders from IKS on a C.O.D.  basis and (b) IKSK
will not be restricted under item 2.



International Knife & Saw, Inc. ("IKS")
ATTN: William Schult
June 5, 2001
Page Two

    5. It is  understood  and agreed  that  IKSK,  the  undersigned,  and/or any
affiliate of any of same may acquire and/or enter into transactions with persons
or entities that  currently  compete with IKS ("IKS  Competitors").  In any such
case,  during the NC term, in addition to item 2, IKSK, the undersigned,  and/or
any affiliate of any of same agree that:

    (a) they will not share with the IKS Competitor any confidential competitive
information concerning IKS; and

    (b) to the extent it is within  their  control,  they will  restrict the IKS
Competitor from selling to existing IKS customers any products that compete with
IKSK products then being sold to such customers by IKS except to the extent that
the IKS  Competitor  already  may be selling  such  competing  products  to such
customers.

    Please indicate your agreement to and acceptance of the foregoing by signing
below.

TKM


By: /s/ Thomas Meyer                          /s/ Diether Klingelnberg
   -----------------------------              -----------------------------
    Thomas Meyer                               Diether Klingelnberg



Agreed and Accepted:


IKS


By: /s/ W. Schult                         Date: June 5, 2001
   -----------------------------
   W. Schult