Document:

<PAGE>

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT ("Agreement") is being executed as of January 1,
2000 (the "Effective Date"), between SFX ENTERTAINMENT, INC. (the "Employer"), a
Delaware corporation, and RICHARD A. LIESE (the "Employee"; and together with
the Employer, the "Parties"), to be effective as of the Effective Date.

     WHEREAS, the Employee has been employed since the Employer's inception as a
senior executive officer of the Employer; and

     WHEREAS, the Employer and the Employee desire to enter into this Agreement
to memorialize the terms and conditions of the Employee's employment by the
Employer;

     NOW, THEREFORE, the Parties do hereby agree as follows:

     1. Employment. The Employer hereby employs the Employee, and the Employee
hereby accepts such employment, subject to the terms and conditions set forth
below.

     2. Duties.

          2.1. Capacities

               2.1.1 Employee shall be employed as a Senior Vice President,
          Associate General Counsel and Assistant Secretary of the Employer, and
          shall have the rights and responsibilities attendant to that of an
          executive officer of similar position of a publicly traded company of
          comparable size. The Employee shall report to the Executive Vice
          President and General Counsel of the Employer, and, subject to the
          oversight and direction of such officer shall control, direct and
          supervise the day-to-day operations of the Employer's in-house law
          department and the overall legal affairs of the Employer. The Employee
          shall also perform other duties which may be reasonably assigned to
          him from time to time by the Executive Chairman and the President

                                       1
<PAGE>

          and Chief Executive Officer of the Employer, or by the Employer's
          Board of Directors (the "Board"), and that are consistent with his
          position.

               2.1.2 The Employee shall also serve as a Senior Vice President
          and Assistant Secretary of each subsidiary of the Employer.

               2.1.3 It is expressly understood that the Employee may (1) devote
          a reasonable amount of time to charitable, civic and industry-related
          boards or organizations, (2) acquire up to 10% of any securities of a
          partnership, trust, corporation or other entity so long as he remains
          a passive investor in such entity and such entity is not, directly or
          indirectly, in competition with the Employer, (3) acquire up to 0.5%
          of any securities of any publicly traded partnership, trust,
          corporation or other entity provided he remains a passive investor in
          such entity, and (4) with the express prior approval of the Executive
          Chairman of the Employer, which approval shall not be unreasonably
          withheld, serve as a director of any corporate entity; provided, that
          any such activity does not substantially interfere with the
          performance by the Employee of his duties and responsibilities under
          this Agreement and does not conflict with the business of the
          Employer..

          2.2. Additional Positions. During the Term of Employment (as defined
     in Section 4.1 hereof), the Employee agrees, and the Employer shall appoint
     the Employee, to serve as a director of the Employer and, when deemed
     necessary and appropriate by the Employer, of one or more subsidiaries of
     the Employer; provided, that the Employee shall be indemnified for serving
     in any and all such capacities on a basis no less favorable than is
     provided by the Employer's bylaws, as may be amended from time-to-time, or
     by any written agreement between the Employee and the Employer regarding
     indemnification, in a manner consistent with that provided to Senior
     Executives (as defined in Section 8.2 hereof) of the Employer, and, if ever
     not so indemnified, the Employee may, without limiting any other remedies,
     cease serving in such director positions.

          2.3. Place of Performance. In connection with his employment by the
     Employer, the Employee shall be based in New York City at the current
     corporate offices of the Employer. The

                                       2
<PAGE>

     Employee shall be provided with office space and support staff equivalent
     to that provided to him by the Employer immediately prior to the Effective
     Date.

     3. Compensation.

          3.1. Salary and Withholding.

               3.1.1 Salary. From the Effective Date through May 31, 2000, as
          compensationfor services rendered by the Employee, the Employer shall
          pay to the Employee a base salary ("Salary") in semi-monthly
          installments at an annual rate equal to One Hundred Forty-Five
          Thousand Dollars ($145,000). Commencing June 1, 2000, the Employee's
          Salary shall increase to an annual rate equal to Two Hundred
          Twenty-Five Thousand Dollars ($225,000). The Employee's Salary shall
          be reviewed by the Executive Chairman of the Employer in accordance
          with the Employer's standard policies and practices, and may be
          increased, but not decreased, at the Employer's discretion. In any
          event, the Employee's Salary shall be increased effective as of each
          anniversary of the Effective Date by 5.0% over the then effective
          Salary.

               3.1.2 Withholding for Taxes. Compensation (herein defined) shall
          be subject to any and all applicable payroll and withholding
          deductions required by the law of any jurisdiction, state or federal,
          taxing authority with respect to such Compensation.

               3.1.3 Definition of Compensation. The Salary, and the other
          perquisites set forth in this Agreement including the Benefits, are
          herein collectively referred to as the "Compensation."

          3.2. Expenses. The Employer shall reimburse the Employee, in
     accordance with the Employer's standard expense reimbursement policy, for
     reasonable expenses incurred by the Employee, upon presentation of
     documentation reasonably acceptable to the Employer in accordance with the
     policies applicable to Senior Executives of the Employer. In connection
     with such

                                       3
<PAGE>

     reimbursement, the Employer shall provide the Employee with a credit card
     or cards to be used for paying such expenses. Such card or cards shall be
     the property of the Employer and upon termination of the Term of Employment
     shall be returned to the Employer by the Employee. The Employee shall be
     responsible for and shall reimburse the Employer for any and all payments
     made by the Employer for the Employee's personal, non-reimbursable expenses
     charged on any such card or cards.

          3.3. Grant of Stock Options.

               3.3.1 Grants. The Employer shall grant to the Employee stock
          options (the "Stock Options") during the Term of Employment in a
          manner and an amount as shall be determined by the Stock Option
          Committee of the Employer, but in no event shall the grants be less
          than the largest grant made to the Employee prior to the Effective
          Date. Each Stock Option shall have an exercise price equal to the
          closing price of the Class A Common Stock of the Employer (the "Common
          Stock") on the date of the grant. Each Stock Option shall have a term
          and shall vest and become exercisable on a schedule to be determined
          by the Board or the Stock Option Committee, but in no event shall the
          vesting schedule exceed the Term of Employment, nor shall the terms
          and conditions of such options (including those terms and conditions
          described above) be any less favorable than the terms and conditions
          applicable to options granted to the other Senior Executives of
          Employer. The Employee shall be permitted to use shares of Common
          Stock to exercise the Stock Options and to pay any withholding
          obligation upon such exercise. The Stock Options shall be granted as
          incentive stock options under the Internal Revenue Code of 1986, as
          amended (the "Code"), to the extent permitted under the Code.

               3.3.2 Termination of Employment. Notwithstanding the foregoing,
          in the event that Employee ceases to be employed by the Employer for
          any reason whatsoever (including upon death or permanent and total
          disability of Employee) other than as a result of a voluntary
          termination (that is not a Constructive Termination Event or a
          termination on a Change in Control) or termination for Cause, all
          Stock Options granted pursuant to this Section 3.3 shall vest and
          become exercisable immediately, and the Employee shall retain the
          right to exercise such Stock

                                       4
<PAGE>

          Options during the remaining original term of each such option. In the
          event of the Employee's voluntary termination (that is not a
          Constructive Termination Event or a termination on a Change in
          Control) or termination for Cause, all unvested options shall be
          forfeited, all vested Stock Options shall remain exercisable until the
          first to occur of the end of the original term or one year following
          the termination of employment, and no Stock Options not as yet granted
          will be granted.

               3.3.3 Adjustments. The number of shares subject to the Stock
          Options to be granted under this Section 3.3, and the kind of shares
          subject to such options, shall be equitably adjusted to reflect any
          change in the Common Stock including, without limitation, a
          recapitalization, spin-off, stock split, consolidation, reorganization
          or merger. To the extent applicable, this Section 3.3 shall
          automatically be deemed to be modified to ensure that the Employee's
          rights with respect to acceleration of option grants, acceleration of
          option vesting and other rights are at least as favorable as the
          rights that from time to time are generally applicable to other Senior
          Executives of the Employer.

          3.4. Other Benefits. During the Term of Employment, the Employer shall
     provide the following additional benefits to the Employee:

               3.4.1 Health Insurance. Medical, dental and hospitalization
          insurance for the Employee and his family with the same scope and
          coverage and on the same terms as is provided by the Employer to other
          Senior Executives of the Employer, as may be amended from time to
          time; provided, that such insurance will have no exclusions for
          pre-existing conditions.

               3.4.2 Disability Insurance. Disability insurance in an amount and
          on the same terms consistent with insurance made available to other
          Senior Executives of the Employer, as may be amended from
          time-to-time, provided, that such insurance will have no exclusions
          for pre-existing conditions.

               3.4.3 Automobile Allowance. An automobile allowance in the amount
          of Five Hundred Dollars ($500) per month, payable to the Employee on
          the first day of each month of the Term of Employment.

                                       5
<PAGE>

               3.4.4 Other Benefit Programs. The Employee shall be entitled to
          participate in all other employee benefit programs of the Employer
          which the Board may, in its sole discretion, regularly make available
          to the other executives of the Employer (such as a stock bonus plan,
          retirement plans and fringe benefits), on terms no less favorable than
          those provided to other executives of the Employer in similar
          positions.

     The reimbursement of expenses provided for in Section 3.2, the Stock Option
awards provided for in Section 3.3, the benefits provided for in this Section
3.4 and any other benefits hereafter granted to the Employee by the Board are
hereinafter referred to as the "Benefits."

     4. Term of Employment.

          4.1. Definition of Term of Employment. The "Term of Employment", as
     used in this Agreement, shall mean the period commencing on the Effective
     Date and terminating with the first to occur of the following:

               4.1.1 May 28, 2003 (the "Term Date");

               4.1.2 Termination of the Term of Employment by the Employer
          without Cause;

               4.1.3 Termination of the Term of Employment by the Employee by
          written notice to the Employer at any time following a Constructive
          Termination Event (as such term is defined in Section 8.1 hereof); and

               4.1.4 Termination of the Term of Employment as permitted by, and
          in accordance with, the provisions of Sections 5 and 7 hereof.

                                       6
<PAGE>

          4.2. Effect of Termination of Term of Employment. Upon termination of
     the Term of Employment, the following provisions shall apply:

               4.2.1 The Employee shall no longer be employed by the Employer;

               4.2.2 The Employee shall no longer be obligated to provide any
          employment, consulting or similar services to the Employer;

               4.2.3 If the Term of Employment is terminated pursuant to
          Sections 4.1.2 or 4.1.3 hereof, then the provisions of Section 6.1
          hereof shall become effective and the Employer shall be irrevocably
          and unconditionally obligated to fulfill and discharge all of the
          obligations imposed upon it pursuant to the provisions thereof; and

               4.2.4 The Employee (or his guardian or estate, as applicable)
          shall in all events be paid within thirty (30) days following the date
          of termination of the Term of Employment, (A) all accrued but unpaid
          Salary through the date of termination, (B) all accrued vacation
          through the date of termination, and (C) all unreimbursed business
          expenses through the date of termination. In addition, the Employee
          shall retain all rights with respect to vested equity awards (and the
          applicable provisions of Section 3.3), and shall be entitled to all
          other Benefits which are provided in accordance with and subject to
          the terms of the Employer's generally applicable employee benefit
          plans, practices and policies. The payments and Benefits described in
          this Section 4.2.4 shall be referred to herein as the "Accrued
          Obligations."

     5. Termination of Employment.

          5.1. Employer's Right to Terminate the Term of Employment. During the
     Term of Employment, the Employer may terminate the Term of Employment with
     or without Cause (as herein defined) by providing written notice thereof to
     the Employee.

                                       7
<PAGE>

               5.1.1 Effect of a For Cause Termination. If the Employer
          terminates the Term of Employment for Cause, such termination shall
          take effect immediately upon written notice thereof to the Employee.
          In such event, the Employer shall provide the Employee with the
          Accrued Obligations. Upon the Employer's full, complete and timely
          fulfillment and discharge of the aforesaid obligations, all
          obligations of the Employer to the Employee hereunder shall be totally
          and completely satisfied, and the Employer shall have no further
          obligations of any type to the Employee pursuant to this Agreement
          (except as may be provided under Sections 3.3, 16 or 17 hereof).

               5.1.2 Definition of "Cause". Cause for termination of the Term of
          Employment shall exist only if, during the Term of Employment:

                    (a) The Employee is convicted of a felony involving moral
               turpitude which would render the Employee unable to perform his
               duties set forth in this Agreement; or (b) the Employee engages
               in conduct that constitutes willful gross neglect or willful
               gross misconduct in carrying out his duties under this Agreement
               resulting, in either case, in a material adverse economic effect
               upon the business of the Employer.

          For purposes of this Section 5.1, no act, or failure to act, by the
     Employee shall be considered "willful" unless committed in bad faith, and
     without a reasonable belief that the act or omission was in the best
     interests of the Employer or any of its subsidiaries.

          5.2. Termination of the Term of Employment upon Employee's Death or
     Permanent and Total Disability. The Term of Employment shall be deemed
     terminated in the event of the Employee's death or upon the termination of
     the Employee's employment following the permanent and total disability of
     the Employee during the Term of Employment.

               5.2.1 Effect. In the event of a termination of the Term of
          Employment for the death or permanent and total disability of the
          Employee, the Employer shall provide the Employee (or his guardian or
          estate, as applicable) with the Accrued Obligations. Upon the
          Employer's full, complete and timely fulfillment and discharge of the
          aforesaid obligations, all obligations of the Employer to the Employee
          hereunder shall be totally and completely satisfied, and

                                       8
<PAGE>

          the Employer shall have no further obligations of any type to the
          Employee pursuant to this Agreement (except as may be provided under
          Sections 3.3, 16 or 17 hereof).

               5.2.2 Definition and Effective Date. The Employee shall be
          considered "permanently and totally disabled" for purposes of this
          Section 5.2 if he is unable to perform with reasonable continuity his
          material duties hereunder by reason of any medically determinable
          physical or mental impairment, which inability to perform has lasted
          for a continuous period of not less than six (6) months. A termination
          for permanent and total disability shall take effect upon thirty (30)
          days written notice from the Employer to the Employee, provided the
          Employee does not return to perform his material duties with
          reasonable continuity during such 30-day period.

          5.3. Employee's Right to Terminate. The Employee may terminate the
     Term of Employment at any time, for any reason, by providing thirty (30)
     days written notice thereof to the Employer, and such termination shall not
     be deemed a breach of this Agreement.

               5.3.1 Effective Date. If the Employee so terminates the Term of
          Employment (other than under Section 4.1.3), such termination shall
          take effect upon the date designated in the notice provided to the
          Employer which shall, in no event, be earlier than thirty (30) days
          following the delivery of such notice; provided, that the Employer
          shall have the right in the event of such notice by the Employee to
          accelerate the Employee's effective date of termination to any such
          date that the Employer deems appropriate in its sole discretion.

               5.3.2 Effect. If the Employee so terminates the Term of
          Employment (other than under Section 4.1.3), the Employer shall
          provide the Employee with the Accrued Obligations. Upon the Employer's
          full, complete and timely fulfillment and discharge of the aforesaid
          obligations, all obligations of the Employer to the Employee hereunder
          shall be totally and completely satisfied and the Employer shall have
          no further obligations of any type to the Employee pursuant to this
          Agreement (except as may be provided under Sections 3.3., 7, 16 or 17
          hereof).

                                       9
<PAGE>

          5.4. Termination of Agreement upon Fulfillment of Post-Termination of
     Employment Obligations. If the Term of Employment is terminated pursuant to
     Sections 4.1.2 or 4.1.3 hereof, then this Agreement shall thereafter be
     deemed to be terminated upon the Employer's full, complete and timely
     fulfillment and discharge of all obligations imposed upon the Employer
     pursuant to the provisions of Sections 3.3, 6.1, 16 or 17 hereof.

     6. Post-Termination of Employment Obligations.

          6.1. Employer's Obligations after Termination of Term of Employment.
     If the Term of Employment is terminated pursuant to Sections 4.1.2 or 4.1.3
     hereof, then the following provisions shall apply:

               6.1.1 If the Term of Employment is so terminated, the Employer
          shall provide the Employee with the Accrued Obligations. In addition,
          the Employer shall be obligated to pay to the Employee, for a period
          of time commencing on the date of termination of the Term of
          Employment and continuing until the Term Date (herein called the
          "Surviving Obligation Period"), the Employee's Salary for the
          remaining period pursuant to this Agreement.

               6.1.2 The Employee shall continue to be entitled to participate
          during the Surviving Obligation Period in any and all of the
          profit-sharing and retirement income, stock purchase, savings,
          executive compensation plans at the same level, in the same amount and
          to the same degree the Employee was entitled to participate at the
          time of such termination, to the extent permitted by the terms of such
          plans, and applicable law. If the Employee's participation in any such
          plan is barred, the Employer shall arrange to provide the Employee
          during the Surviving Obligation Period with benefits substantially
          similar to those which he was entitled to receive under such plans
          prior to the time of such termination.

               6.1.3 The Employer shall maintain in full force and effect for
          the Employee for the longer of (a) one year after termination of the
          Term of Employment and (b) the Surviving Obligation Period, all life,
          accident, medical and health care plans and disability benefit
          programs and programs or arrangements in which the Employee was
          entitled to participate immediately prior

                                       10
<PAGE>

          to the time of such termination, provided that the Employee's
          continued participation is possible under the general terms and
          provisions of such plans and programs, and under applicable law. If
          the Employee's participation in any such plan or program is barred,
          the Employer shall arrange to provide the Employee with benefits
          substantially similar to those which he was entitled to receive under
          such plans and programs of the Employer prior to the time of such
          termination; provided, however, that the cost to the Employer to
          provide such benefits shall be no greater than the contribution made
          by the Employer for such benefits for other Senior Executives of the
          Employer. In such event, appropriate adjustment shall be made so that
          the after tax value thereof to the Employee is similar to the after
          tax value to him of the benefit plans in which the Employee is not
          eligible to participate.

          6.2 No Mitigation. Under no circumstances shall the Employee be
     required, whether by seeking other employment or otherwise, to mitigate the
     amount of any payment or benefit under this Agreement, and there shall be
     no offset against amounts due the Employee under this Agreement on account
     of any subsequent employment he may obtain or for any amount allegedly due
     to the Employer by the Employee.

     7. Employee's Rights on Change in Control.

          7.1 Employee's Right to Terminate Term of Employment. In the event of
     a Change in Control, the Employee may terminate the Term of Employment by
     providing written notice thereof (the "Termination Notice") to the Employer
     within one hundred eighty (180) days following a Change in Control (the
     "Termination Period"). If the Term of Employment is so terminated by the
     Employee, the Employer shall be obligated to pay to the Employee an amount
     equal to the greater of (i) two (2) years of the Employee's annual Salary
     in effect at the time of the Change in Control, or (ii) Four Hundred Fifty
     Thousand Dollars ($450,000), to be paid in a lump sum within thirty (30)
     days following the date of the Employee's termination of employment. In the
     event that the Employee (a) does not terminate the Term of Employment
     within the Termination Period, or (b) provides written notice to the
     Employer within the Termination Period that he will not exercise his right
     to terminate the Term of Employment under Section 7 of this Agreement, the

                                       11
<PAGE>

     Employer shall be obligated to pay to the Employee an amount equal to the
     greater of (x) fifteen (15) months of the Employee's annual Salary in
     effect at the time of the Change in Control, or (y) Two Hundred Eighty-One
     Thousand Two Hundred Fifty Dollars ($281,250), to be paid in a lump sum
     within thirty (30) days following the first to occur of (1) the expiration
     of the Termination Period without the Employee delivering a Termination
     Notice, or (2) the receipt by the Employer of the written notice delivered
     pursuant to Section 7(b) hereof.

          7.2 Additional Stock Option Grant. In the event of a Change in
     Control, the Employee shall receive fully vested stock options (the
     "Additional Stock Options") to purchase 10,000 shares of Common Stock over
     a ten-year term at an exercise price per share equal to an amount which is
     twenty percent (20%) greater than the exercise price per share of the last
     Stock Options granted to the Employee prior to the Change in Control.

          7.3 No Mitigation. Under no circumstances shall the Employee be
     required, whether by seeking other employment or otherwise, to mitigate the
     amount of any payment or benefit under this Section 7, and there shall be
     no offset against amounts due the Employee under this Section 7 on account
     of any subsequent employment he may obtain or for any amount allegedly due
     to the Employer by the Employee.

     8. Certain Definitions. As used herein, the following terms shall have the
meanings indicated below:

          8.1. Constructive Termination Event. A "Constructive Termination
     Event" shall be deemed to be the occurrence of any one or more of the
     following events during the Term of Employment:

               8.1.1 the assignment by Employer to the Employee of duties that
          are inconsistent with the Employee's office with the Employer at the
          time of such assignment, or the removal by the Employer from the
          Employee of those duties described in Section 2.1 above, including
          without limitation failure to nominate or re-nominate the Employee for
          election to the

                                       12
<PAGE>

          Board and failure of Robert F.X. Sillerman (and his affiliates) to
          vote his (and their) shares in favor of such nomination; or

               8.1.2 any removal of the Employee from, or any failure to elect
          or reelect the Employee to, the Designated Office (as defined in
          Section 8.3 hereof), except in connection with the Employee's
          promotion, with his prior written consent, to a higher office (if any)
          with the Employer; or

               8.1.3 a reduction by the Employer in the amount of the Employee's
          Salary as then in effect, or the failure of the Employer to pay such
          Salary to the Employee at the time and in the manner specified in
          Section 3 of this Agreement; or

               8.1.4 the discontinuation or material reduction by the Employer
          of the Employee's participation in any stock option or other employee
          benefit plan or arrangement (including, without limitation, any
          profit-sharing, life insurance, medical, dental, hospitalization,
          incentive compensation or retirement plan or arrangement) in which the
          Employee is a participant or the failure to grant the Stock Options;
          or

               8.1.5 the failure of the Employer to obtain the assumption by any
          successor to the Employer of the obligations imposed upon the Employer
          under this Agreement, as required by Section 15 of this Agreement; or

               8.1.6 the failure by the Employer to reimburse the Employee for
          the reasonable business expenses incurred by the Employee in the
          performance of his duties to the Employer, including, without
          limitation, reasonable expenditures for business entertainment and for
          travel in connection with the Employer's business; or

               8.1.7 the failure of the Employer to observe, fulfill or perform
          any obligation, requirement or restriction imposed upon it pursuant to
          this Agreement which is not referenced in the foregoing subsections of
          this Section 8.1, and such failure continues uncorrected

                                       13
<PAGE>

          for thirty (30) days after written notice thereof from the Employee to
          the Employer.

     The Employee's right to terminate the Term of Employment for a Constructive
Termination Event shall not be affected by his mental or physical incapacity,
and his continued employment prior to terminating employment for a Constructive
Termination Event shall not constitute consent to or a waiver of rights with
respect to, any act or failure to act constituting a Constructive Termination
Event.

          8.2. Senior Executives. The "Senior Executives" shall mean all senior
     executive officers of the Employer.

          8.3. Designated Office. The "Designated Office" shall mean Senior Vice
     President, Associate General Counsel and Assistant Secretary of the
     Employer.

          8.4. Change in Control. A "Change in Control" shall mean the
     occurrence of any one of the following events:

          (i) any "person," as such term is used in Sections 3(a)(9) and 13(d)
     of the Securities Exchange Act of 1934 (other than the Employee or entities
     controlled by the Employee), becomes a beneficial owner of 50% or more of
     the voting power of the Employer or of the Common Stock beneficially owned
     by Robert F.X. Sillerman as of the date hereof;

          (ii) all or substantially all of the assets or business of the
     Employer are disposed of pursuant to a merger, consolidation, sale or other
     transaction (unless the shareholders of the Employer, immediately prior to
     such merger, consolidation or other transaction beneficially own, directly
     or indirectly, in substantially the same proportion as they owned the
     voting power of the Employer, all of the voting power or other ownership
     interests of the entity or entities, if any, that succeed to the business
     of the Employer);

          (iii) The Employer combines with another company and, immediately
     after such combination, (A) the shareholders of the Employer immediately
     prior to the combination do not hold, directly or indirectly, more than 50%
     of the voting power of the combined company or (B) the

                                       14
<PAGE>

     members of the Board immediately prior to the Board's approval of the
     merger transaction do not constitute a majority of the combined company's
     board of directors;

          (iv) the majority of the Board consists of individuals other than
     incumbent directors (which term shall mean members of Board as of the
     Effective Date), except that any person who becomes a director subsequent
     to such date whose election or nomination was supported by two-thirds of
     the directors who then comprise the incumbent directors shall be considered
     an incumbent director.

     9. Disclosure of Confidential Information. Except to the extent (a)
authorized by the express prior consent of the Board, (b) required by law or any
legal process or (c) desirable in performing his duties under this Agreement,
the Employee will not, directly or indirectly, at any time during the Term of
Employment, or at any time subsequent to the termination of the Term of
Employment, disseminate, disclose, or divulge to any person, firm, corporation,
association or other business entity, Confidential Information (herein defined)
of the Employer. As used herein, the term "Confidential Information" means any
and all information about or relating to the trade secrets of the Employer or
any of its subsidiaries disclosed to the Employee or known by the Employee as a
consequence of or through his employment by the Employer, if such information is
not generally known in any industry in which the Employer or any of its
subsidiaries is or may become engaged during the Term of Employment. In the
event of a breach or threatened breach by the Employee of this Section 9, the
Employer shall be entitled to injunctive relief as well as other applicable
remedies at law or in equity available to the Employer against the Employee or
others.

     10. Notice. Any notice, request, reply, instruction, or other communication
provided or permitted in this Agreement must be given in writing and may be
served by depositing same in the United States mail in certified or registered
form, postage prepaid, addressed to the party or parties to be notified with
return receipt requested, or by delivering the notice in person to such party or
parties. Unless actual receipt is required by any provision of this Agreement,
notice deposited in the United States mail in the manner herein prescribed shall
be effective on dispatch. For purposes of notice, the address of the Employee,
his spouse, any purported donee or transferee or any administrator, executor or
legal representative of the Employee or his estate, as the case may be, shall be
as follows:

                                       15
<PAGE>

             The address of the Employee shall be:

                      c/o SFX Entertainment, Inc.
                      650 Madison Avenue
                      16th Floor
                      New York, New York 10022

             The address of Employer shall be:

                      SFX Entertainment, Inc.
                      650 Madison Avenue
                      New York, New York 10022
                      Attention:    Howard J. Tytel

     The Employer shall have the right from time-to-time and at any time to
change its address and shall have the right to specify as its address any other
address by giving at least ten (10) days written notice to the Employee. The
Employee shall have the right from time-to-time and at any time to change his
address and shall have the right to specify as his address any other address by
giving at least ten (10) days written notice to the Employer.

     11. Vacation. The Employee shall be entitled to a minimum of four (4) weeks
of paid vacation during each calendar year, but in no event less than the
vacation provided to other Senior Executives of the Employer.

     12. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the laws of
the State of New York.

     13. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of the Employee, and any prior employment
agreement between the Employer and the Employee shall be terminated effective as
of the Effective Date.

                                       16
<PAGE>

     14. Severability. If any provision of the Agreement is rendered or declared
illegal or unenforceable by reason of any existing or subsequently enacted
legislation or by decree of a court of last resort, the Parties shall promptly
meet and negotiate substitute provisions for those rendered or declared illegal
or unenforceable, but all remaining provisions of this Agreement shall remain in
full force and effect.

     15. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon the Employee and his heirs, executors, administrators,
legal representatives, successors and assigns and the Employer and its
successors and assigns. The Employee may not assign any rights or obligations
hereunder without the prior written consent of the Employer and, except with
respect to a successor entity (as described below), the Employer may not assign
any rights or obligations hereunder without the prior written consent of the
Employee. The Employer shall require any person who is the successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or a
substantial portion of the business or assets of the Employer to expressly
assume the obligations of the Employer hereunder. The term "Employer" as used in
this Agreement shall expressly include any such successors.

     16. Indemnification. The Employer shall indemnify the Employee and his
legal representatives to the fullest extent permitted by the laws of the State
of Delaware, and the Employee shall be entitled to the protection of such
insurance policies which the Employer maintains for the benefit of its directors
and officers, against all costs, charges or expenses whatsoever incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he or his legal representatives may be made a party
by reason of his being or having been a director of officer of the Employer, or
because of actions taken purportedly on behalf of the Employer after the
Effective Date. The Employer shall, upon request by the Employee, promptly
advance or pay any amount for costs, charge or expenses (including, without
limitation, legal fees and expenses incurred by counsel retained by the
Employee) in respect of his right to indemnification hereunder, subject to a
later determination as to the Employee's ultimate right to receive such payment.
The Employee's identification and the insurance policies maintained for his
benefit shall be at least to the same extent, of the same type and in the same
amount as that maintained by the Employer for the other Senior Executives of the
Employer, as may be amended from time-to-time.

                                       17
<PAGE>

     17. Legal Fees and Expenses. The Employee shall be entitled to receive from
the Employer the amount of his legal fees (and expenses) reasonably incurred in
connection with claims or disputes under this Agreement, if the Employee is the
prevailing party on any issue in any such dispute. The reimbursement shall be
made as soon as practicable following the resolution of such claim or dispute to
the extent the Employer receives reasonable written evidence of such fees and
expenses.

     18. Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without the
consent in writing of the Employee and the Employer. The failure of a party at
any time or times to require performance of any provision hereof shall in no
manner affect the right of such party at a later time to enforce the same. No
waiver by a party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or construed as, a further or continuing waiver of any such
breach, or a waiver of the breach of any other term or covenant contained in
this Agreement.

     19. Beneficiaries. Whenever this Agreement provides for any payment to the
Employee's estate, such payment may be made instead to such beneficiary or
beneficiaries as the Employee may have designated in a writing filed with the
Employer. The Employee shall have the right to revoke any such designation and
to redesignate a beneficiary or beneficiaries by written notice to the Employer
(and any applicable insurance company) to such effect.

     20. Resolution of Disputes. Any dispute or controversy between the parties
relating to or arising out of this Agreement or any amendment or modification
hereof shall be determined by arbitration in New York, New York by and pursuant
to the rules then prevailing of the American Arbitration Association, other than
claims for injunctive relief under Section 9 hereof. All claims for legal
remedies under this Agreement shall be limited to the actual damages of the
Employer or the Employee, respectively, but shall not limit any payments or
damages provided to the Employee

                                       18
<PAGE>

under the terms of this Agreement. The arbitration award shall be final and
binding upon the parties and judgment may be entered there on by any court of
competent jurisdiction. The service of any notice, process, motion or other
document in connection with any arbitration under this Agreement or the
enforcement of any arbitration award hereunder may be effectuated either by
personal service upon a party or by certified mail duly addressed to him or to
his executors, administrators, personal representatives, next of kin, successors
or assigns, at the last known address or addresses of such party or parties.

     21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original. It shall not be
necessary when making proof of this Agreement to account for more than one
counterpart.

     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.

SFX ENTERTAINMENT, INC.

/s/
--------------------------
Title:
Name:

/s/ Richard A. Liese
---------------------------
    Richard A. Liese<PAGE>

                                                                    Exhibit 10.3

                            DENISON HYDRAULICS, INC.

                         REVOLVING CREDIT LOAN AGREEMENT

                                   May 18,1999

<PAGE>

                                  Table of Contents

                                                                           Page

ARTICLE 1. REVOLVING CREDIT LOANS .......................................    1
   1.1 Revolving Credit Commitment ......................................    1
   1.2 Conversion Options ...............................................    2
   1.3 Revolving Credit Note ............................................    2
   1.4 Use of Revolving Credit Loan Funds ...............................    4
   1.5 Default Rate .....................................................    4
   1.6 Additional Provisions and Limitations Relating to LIBOR Rate Loans    5

ARTICLE 2. PAYMENTS, SETOFFS, SECURITY ..................................    7
   2.1 Payments .........................................................    7
   2.2 Application of Payments ..........................................    7
   2.3 Setoffs ..........................................................    7
   2.4 Collateral .......................................................    7
   2.5 Late Fee .........................................................    7
   2.6 Availability Fee .................................................    8

ARTICLE 3. EXECUTION AND CONDITIONS OF BORROWING ........................    8
   3.1 Opinion of Counsel ...............................................    8
   3.2 Resolution Authorizing Execution of Loan Documents ...............    9
   3.3 Compliance with this Agreement ...................................    9
   3.4 Incumbency Certificate ...........................................    9
   3.5 Execution and Delivery of the Promissory Notes ...................    9

ARTICLE 4. REPRESENTATIONS AND WARRANTIES ...............................   10
   4.1 Organization and Authority to Execute Documents ..................   10
   4.2 Financial Statements .............................................   10
   4.3 No Guaranties of Others' Obligations .............................   10
   4.4 Compliance with Occupational Safety & Health Act .................   10
   4.5 No Undisclosed Liabilities .......................................   10
   4.6 No Undisclosed Subsidiaries ......................................   10
   4.7 Good Title to Assets and No Undisclosed Liens ....................   11
   4.8 Possess Necessary Patents, Trademarks, and Licenses ..............   11
   4.9 No Undisclosed Interest in the Title to Assets ...................   11
  4.10 No Undisclosed Financing Statements ..............................   11
  4.11 No Lawsuits or Judgments .........................................   11
  4.12 Filing and Payment of Taxes ......................................   11
  4.13 No Default of this Agreement .....................................   12
  4.14 Insurance ........................................................   12
  4.15 No Untrue or Misleading Statements or Omissions ..................   12
  4.16 Pollutants .......................................................   12
  4.17 No Margin Activity ...............................................   12

                                      -i-

<PAGE>

  4.18      ERISA ....................................................  13
  4.19      Year 2000 ................................................  13

            ARTICLE 5. AFFIRMATIVE COVENANTS .........................  14
   5.1      Annual Financial Statements ..............................  14
   5.2      Periodic Financial Statements ............................  14
   5.3      No Default Certificate ...................................  14
   5.4      Insurance ................................................  14
   5.5      Bank One to be Primary Depository ........................  15
   5.6      Payment of Taxes .........................................  15
   5.7      Compliance with Laws .....................................  15
   5.8      Preserve and Maintain Corporate Rights ...................  15
   5.9      Payment of Legal, Filing, and Closing Costs ..............  15
   5.10     Maintain and Preserve Assets .............................  15
   5.11     ERISA ....................................................  16
   5.12     Notification of Certain Adverse Events ...................  16
   5.13     Notice of the Existence of Pollutants ....................  17
   5.14     Inspection of Books and Records ..........................  17

   ARTICLE 6. NEGATIVE COVENANTS .....................................  18
   6.1      Encumbering Assets .......................................  18
   6.2      Incurring Other Debt .....................................  18
   6.3      Guaranty of Others' Debts ................................  18
   6.4      Merger or Consolidation ..................................  18
   6.5      Transfer of Substantial Portion of Assets ................  18
   6.6      Disposing of Notes/Accounts Receivable ...................  18
   6.7      Amount of Tangible Net Worth .............................  19
   6.8      Funded Debt to EBITDA ....................................  19
   6.9      Interest Coverage Ratio ..................................  19
   6.10     Year 2000 Covenants ......................................  19
   6.11     Transactions with Affiliated Persons .....................  20

   ARTICLE 7. EVENTS OF DEFAULT AND REMEDIES .........................  20
   7.1      Events of Default ........................................  20

   ARTICLE 8. DEFINITIONS ............................................  22
   8.1      Definitions ..............................................  22
   8.2      Generally Accepted Accounting Principles .................  27

   ARTICLE 9. MISCELLANEOUS ..........................................  28
   9.1      Successors and Assigns ...................................  28
   9.2      Notices ..................................................  28
   9.3      Waiver ...................................................  28
   9.4      Duration .................................................  28
   9.5      Governing Law and Jurisdiction ...........................  29

                                      -ii-

<PAGE>

   9.6      Amendments .....................................  29
   9.7      Severability ...................................  29
   9.8      Captions .......................................  29
   9.9      Arbitration ....................................  29
   9.10     Entire Agreement ...............................  30
   9.11     Waiver Of Jury Trial ...........................  30

EXHIBIT "A" - REVOLVING CREDIT NOTE

                                     -iii-
<PAGE>

                         REVOLVING CREDIT LOAN AGREEMENT

       THIS REVOLVING CREDIT LOAN AGREEMENT ("Agreement") dated as of May 18,
1999, is entered into by and between DENISON HYDRAULICS, INC., a New York
corporation (hereinafter called "Borrower"), and BANK ONE, N.A., a national
banking association (hereinafter called "Bank One").

       WHEREAS, Borrower and Bank One are entering into this Agreement to set
forth the terms and conditions pursuant to which Bank One will provide a
revolving line of credit of $15,000,000 to Borrower; and

       WHEREAS, Borrower and Bank One desire to establish the conditions under
which the loan contemplated above will be established;

       NOW THEREFORE, Borrower and Bank One hereby agree as hereinafter set
forth.

                        ARTICLE 1. REVOLVING CREDIT LOANS

         1.1 Revolving Credit Commitment. Bank One hereby agrees on the terms
and conditions of this Agreement to lend to Borrower the maximum sum of Fifteen
Million Dollars ($15,000,000) (the "Revolving Credit Commitment"). The Revolving
Credit Commitment shall be available to Borrower, subject to the limitations
herein, in whole or part and from time to time until April 30, 2002 (the
"Termination Date"), and any amounts borrowed may be repaid in whole or in part
and reborrowed until such date. Annually, Bank One shall consider extending the
Termination Date for additional periods of one year in duration with such
decision regarding extending the Termination Date to be in Bank One's sole
discretion. Each borrowing under the Revolving Credit Commitment shall be made
in accordance with the provisions of this Section 1.1 and shall be subject to
the conditions of Article 4 (a "Revolving Credit Loan").

       Each Revolving Credit Loan shall, at the election of Borrower, be made
either in the form of (i) a Variable Rate Loan (individually a "Variable Rate
Loan" and collectively the "Variable Rate Loans") or (ii) a LIBOR Rate Loan
(individually a "LIBOR Rate Loan" and collectively the "LIBOR Rate Loans"). The
aggregate unpaid principal amount of the Variable Rate Loans and the LIBOR Rate
Loans at any one time outstanding shall not exceed the Revolving Credit
Commitment.

       Each Revolving Credit Loan shall be made pursuant to the request of
Borrower to Bank One which request for a Revolving Credit Loan shall specify (i)
the total amount of the Revolving Credit Loan (which for the initial borrowing
under a LIBOR

<PAGE>

Rate Loan shall be in an amount of not less than Five Hundred Thousand Dollars
($500,000) and each borrowing as a LIBOR Rate Loan thereafter shall be in an
amount of not less than Two Hundred Fifty Thousand Dollars ($250,000)); (ii) the
borrowing date (the "Borrowing Date"), which shall be a Business Day in the case
of a Variable Rate Loan and a London Banking Day in the case of a LIBOR Rate
Loan; and (iii) whether the Revolving Credit Loan is to be a Variable Rate Loan
or a LIBOR Rate Loan (and in the case of a LIBOR Rate Loan, the length of the
Interest Period). Requests for Variable Rate Loans may be made on the applicable
Borrowing Date. Requests for LIBOR Rate Loans shall be made at least three LIBOR
Banking Days prior to the applicable Borrowing Date.

       In the case of a request for a LIBOR Rate Loan, Bank One shall not later
than 11:00 a.m., Columbus, Ohio time two London Banking Days prior to the
Borrowing Date, give notice to Borrower, of the LIBOR Rate applicable for the
Interest Period requested by Borrower. Borrower shall, not later than 11:30
a.m., Columbus, Ohio time two LIBOR Banking Days prior to the Borrowing Date,
give notice by telephone confirmed in writing to Bank One whether it wishes (i)
to complete such borrowing in the form of a LIBOR Rate Loan; (ii) to complete
such borrowing as a Variable Rate Loan; or (iii) to cancel its request for a
Revolving Credit Loan. Failure by Borrower to timely deliver such notice shall
constitute cancellation of such request.

       1.2 Conversion Options. Borrower may elect from time to time to convert
not less than Two Hundred Fifty Thousand Dollars ($250,000) of the Variable Rate
Loans then outstanding to LIBOR Rate Loans by giving Bank One irrevocable
telephone notice of such election as provided in this Section 1.2. Each LIBOR
Rate Loan shall automatically convert to a Variable Rate Loan upon its maturity
unless Borrower elects to continue such LIBOR Rate Loan as a LIBOR Rate Loan by
giving Bank One irrevocable telephone notice of such election as provided in
this Section 1.2. Any such notice pursuant to this Section 1.2 shall be received
by Bank One at least two LIBOR Banking Days prior to the proposed conversion
date, which shall be a LIBOR Banking Day, and shall specify (i) the conversion
date and (ii) the length of the new Interest Period. If no Event of Default then
exists, such conversion shall be made on the requested conversion date.

       1.3 Revolving Credit Note. The Revolving Credit Commitment shall be
evidenced by a master promissory note (the "Revolving Credit Note") of Borrower
executed by a duly authorized officer of Borrower, which shall be in the form of
Exhibit "A" attached hereto. Each Revolving Credit Loan made by Bank One and
each payment made on account of principal on the Revolving Credit Note shall be
recorded by Bank One; provided, however, that the failure of Bank One to make
such notation shall not limit or otherwise affect the obligations of Borrower
under the Revolving Credit Note or this Agreement. The Revolving Credit Note
shall include the following terms:

                                      -2-
<PAGE>

             (a) Term. The Revolving Credit Note shall be dated as of the date
       of this Agreement and shall be due and payable in full on or before the
       Termination Date.

             (b) Interest Rate on Variable Rate Loans. From its date, each
       Variable Rate Loan shall bear interest (computed on the basis of the
       actual number of days elapsed over a Business Year) on the unpaid
       principal balance at a fluctuating rate per annum equal to the Prime
       Rate. Any change in the interest rate due to a change in the Prime Rate
       shall be effective immediately upon and after the date of each such
       change in the Prime Rate.

             Interest on the Variable Rate Loans shall be payable monthly on the
       first day of each calendar month (the "Interest Payment Date"),
       commencing on the first day of the month following the initial
       disbursement of the initial Revolving Credit Loan.

            (c) Interest Rate on LIBOR Rate Loans. From its date, each LIBOR
       Rate Loan shall bear interest during the period from the date thereof
       until and including the maturity date thereof at a rate per annum
       equal to the LIBOR Rate plus the Margin shown below applicable to
       LIBOR Rate Loans. The initial Margin for a LIBOR Rate Loan shall be
       87.5 basis points. Borrower shall be obligated to pay with respect to
       each LIBOR Rate Loan such additional amounts as shall be determined
       pursuant to Section 1.6. Any change in the interest rate due to a
       change in the Margin, as described below, shall be effective
       immediately upon and after the date of each such change in the Margin.

             Interest on LIBOR Rate Loans shall be payable on each Interest
       Payment Date and at the end of the Interest Period selected by Borrower
       for each such LIBOR Rate Loan. Interest on all LIBOR Rate Loans shall be
       calculated on the basis of the actual number of days elapsed over a
       Business Year.

             For purposes of Section 1.3(c), the Margin applicable to the LIBOR
       Rate Loans shall be determined as provided in the following table:

       If Borrower's Funded                               LIBOR
       Debt to EBITDA Ratio is:                        Rate Margin
       ------------------------                        -----------

       Equal to or greater than 3:25 to 1:00              1.25%

       Less than 3:25 to 1:00 and                         1.00%
       Equal to or greater than 2:50 to 1:00

       Less than 2:50 to 1:00                             .875%

                                      -3-
<PAGE>

       Bank One shall calculate Borrower's Funded Debt to EBITA (as defined in
       Section 6.8 hereof) on a rolling four quarter basis and adjusted at each
       fiscal quarter and promptly upon receipt of Borrower's quarterly ending
       Financial Statement beginning as of the quarter ending March 31, 1999,
       and on each quarter ending thereafter. The Margin shall be adjusted
       appropriately effective as of the date of Bank One's calculation of the
       Funded Debt to EBITDA.

             (d) Optional Repayments. Outstanding Variable Rate Loans may be
       repaid in whole or in part at any time, without premium or penalty, in
       principal amounts not less than the minimum Revolving Credit Loan for any
       borrowing (after the initial borrowing) under Section 1.1 by tender of
       payment and delivery of written, facsimile or oral notice of payment to
       Bank One not later than 1:30 p.m., Columbus, Ohio time, on the Business
       Day on which such repayment is to be made. Payments received after 1:30
       p.m. shall be deemed tendered on the following Business Day. Outstanding
       LIBOR Rate Loans may be prepaid in whole or in part at any time, so long
       as such prepayment is accompanied by a prepayment premium contemplated
       below, with such prepayments in principal amounts not less than the
       minimum Revolving Credit Loan for any borrowing (after the initial
       borrowing) under Section 1.1 by tender of payment after delivery of
       written, facsimile or oral notice of payment to Bank One not later than
       1:30 p.m., Columbus, Ohio time, five Business Days before the date such
       repayment is to be made. Interest accrued to the date of payment shall be
       due and payable on the next following Interest Payment Date unless the
       Revolving Credit Note is paid in full, in which event, accrued interest
       shall become due and payable on the payment date. The prepayment premium
       for a prepayment of a LIBOR Rate Loan shall be an amount or amounts as in
       the reasonable judgment of Bank One will compensate Bank One for any
       loss, premium or penalty incurred by it because of such prepayment of a
       LIBOR Rate Loan.

       1.4 Use of Revolving Credit Loan Funds. The funds from the Revolving
Credit Commitment shall be used by Borrower for working capital and acquisition
activities.

       1.5 Default Rate. Upon any of the Events of Default, including failure to
pay the Revolving Credit Note upon final maturity, Bank One, at its option, may,
in addition to any other remedies available to Bank One as contemplated in this
Agreement, if permitted under applicable law, do one or both of the following:
(a) increase the applicable interest rate on the outstanding principal sum under
the Revolving Credit Commitment and accrued interest to 2.00 percentage points
in excess of the Prime Rate, and (b) add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in subsection (a).

                                      -4-
<PAGE>

       1.6 Additional Provisions and Limitations Relating to LIBOR Rate Loans.
The additional provisions and limitations set forth below shall apply with
respect to LIBOR Rate Loans:

             (a) If Bank One shall, in good faith, determine that it is unable
       to reasonably ascertain the LIBOR Rate or to acquire London Interbank
       Market deposits on reasonable terms in an amount sufficient to meet a
       request for a LIBOR Rate Loan, Bank One shall promptly notify Borrower.
       In such event, Borrower may request a Variable Rate Loan of like amount
       without regard to the notice requirement of Section 1.1 or may cancel
       such request.

             (b) The obligation of Bank One to make LIBOR Rate Loans hereunder
       shall be suspended in the event that any change in any law or regulation
       or in any interpretation thereof by any governmental authority charged
       with its administration shall, in the sole opinion of Bank One, make it
       unlawful for Bank One to comply with its obligation to make or maintain
       any LIBOR Rate Loan hereunder for the duration of such illegality. Bank
       One shall promptly notify Borrower of such suspension, and, if and when,
       in the sole opinion of Bank One, such illegality ceases to exist, such
       suspension shall cease and Bank One shall promptly notify Borrower of the
       termination of such suspension.

             (c) If Bank One has LIBOR Rate Loans outstanding and there shall
      occur any change in applicable law, regulation or interpretation
      (including any request, guideline or policy not having the force of law by
      any authority charged with the administration or interpretation thereof)
      (i) which change directly affects transactions in the London Interbank
      Market, (ii) which involves new or additional taxes, reserves or deposit
      requirements in regard to the LIBOR Rate Loans or changes in the basis of
      taxation of payments on LIBOR Rate Loans, or (iii) which, if the LIBOR
      Rate Loans made hereunder by Bank One were to have been matched with
      London Interbank Market deposits corresponding in amounts to such LIBOR
      Rate Loans and having maturity dates which are the same as such LIBOR Rate
      Loans regardless of whether or not such LIBOR Rate Loans are in fact so
      matched, increases the cost to Bank One of making or maintaining the LIBOR
      Rate Loans hereunder or reduces the amount of any payments (whether of
      principal, interest or otherwise) receivable by Bank One as to any LIBOR
      Rate Loans or requires Bank One to make any payment on or calculated by
      reference to the gross amount of any sum received by it as to such LIBOR
      Rate Loans, then where the amount of any such additional cost, reduction
      or payment is deemed material by Bank One:

                         (i) Bank One shall promptly notify Borrower of the
      occurrence of such event;

                                      -5-
<PAGE>

                    (ii) Bank One shall promptly deliver to Borrower a
         certificate stating the change which has occurred, together with the
         date thereof and the amount of and the manner of calculating the
         increased cost on any outstanding LIBOR Rate Loan; and

                    (iii) upon receipt of such certificate from Bank One,
         Borrower shall pay to Bank One on demand the amount or amounts of such
         additional cost with respect to such outstanding LIBOR Rate Loan as
         additional compensation hereunder.

       (d) The certificate of Bank One delivered to Borrower as to the
additional amount payable pursuant to Section 1.6(c) shall (in the absence of
manifest error in the transmission or calculation) be conclusive evidence of the
amount thereof. The protection of this Section 1.6(d) shall be available to Bank
One regardless of any possible contention of invalidity or inapplicability of
the law, regulation or condition which has been imposed. However, if Borrower
has made a payment of any additional amounts pursuant to Section 1.6(c) and any
subsequent event occurs which reduces the amount of the increased cost incurred
by Bank One, then Bank One shall promptly refund to Borrower an amount equal to
such reduction in the amount of increased cost.

       (e) If Borrower is required to pay to Bank One any additional amount
pursuant to Sections 1.6(c) or (f), Borrower shall be entitled upon giving Bank
One not less than five days' written notice, in addition to its other rights, to
prepay any outstanding LIBOR Rate Loan with respect to which such additional
amounts of payment are required (all such prepayments shall be in full and not
in part with interest accrued to the date of such prepayments) by substituting a
Variable Rate Loan of equal principal amount therefor. As a condition of such
prepayments, Borrower shall promptly pay to Bank One, for the account of Bank
One, upon Bank One's written request such amount or amounts as in the reasonable
judgment of Bank One will compensate Bank One for any loss, premium or penalty
incurred by it because of such prepayment.

       (f) In addition to the other amounts payable hereunder, Borrower shall
pay to Bank One such additional amounts as shall compensate Bank One for
increased costs which Bank One, in its sole discretion, reasonably determines in
good faith to be allocable to LIBOR Rate Loans. Additional amounts payable under
this Section 1.6(f) shall be paid by Borrower to Bank One on the maturity of the
respective LIBOR Rate Loans, subject to receipt by Borrower from Bank One of a
certificate showing the amount and certifying as to the correctness thereof.

                                      -6-
<PAGE>

                    ARTICLE 2. PAYMENTS, SETOFFS, SECURITY

       2.1 Payments. All payments and prepayments by Borrower to be made in
respect of principal or interest on the Revolving Credit Note shall become due
at 3:00 p.m., Columbus, Ohio time on the day when due, and shall be made to Bank
One in federal funds or other immediately available lawful money of the United
States of America. Borrower acknowledges that all payments due hereunder, except
for any balloon payments, shall electronically be debited by Bank One from
Borrower's designated account when such payments are due. Whenever any payment
to be made hereunder shall be due other than on a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall in such case be included in the computation of interest or fees hereunder.

       2.2 Application of Payments. Unless otherwise agreed to, in writing, or
otherwise required by applicable law, payments will be applied first to accrued,
unpaid interest, then to principal, and any remaining amount to any unpaid
collection costs, late charges and other charges, provided, however, upon any of
the Events of Default, Bank One reserves the right to apply payments among
principal, interest, late charges, collection costs and other charges at its
discretion. All prepayments shall be applied to the indebtedness owing hereunder
in such order and manner as Bank One may from time to time determine in its
sole discretion.

       2.3 Setoffs. Upon the occurrence of any Event of Default, Bank One shall
have the right to set off against all obligations of Borrower to Bank One under
this Agreement and the Revolving Credit Note, whether matured or unmatured, all
amounts owing to Borrower by Bank One, whether or not then due and payable, and
all funds or property of Borrower on deposit in operating accounts of Borrower
with or otherwise held or in the custody of Bank One.

       2.4 Collateral. Borrower shall not be required to provide any collateral
as security for its obligations hereunder. However, on or before the date of
borrowing, Guarantor shall execute and deliver to Bank One in a form
satisfactory to Bank One, the Guaranty, whereby Guarantor shall agree to
guaranty the performance of all of Borrower's obligations hereunder.

       2.5 Late Fee. Bank One shall have the right to assess to Borrower a late
payment fee in the amount of the greater of $25.00 or 5% of the late payment of
the Revolving Credit Loan, up to the maximum amount of $1,500.00 per late
charge in the event of a default in payment that remains uncured for a period of
10 days or more. Notwithstanding the foregoing, no late payment fee shall be
assessed in the event that the late payment results from Bank One's failure to
timely withdraw funds from Borrower's account to make such payment in accordance
with the agreement between Bank One and Borrower.

                                      -7-
<PAGE>

       2.6 Availability Fee. Borrower shall pay to Bank One an availability fee
equal in amount to .10% of the average daily unused portion of the Revolving
Credit Commitment payable by Borrower to Bank One quarterly in arrears on the
last day of each March, June, September and December of each year, commencing
June 30, 1999, through the Termination Date.

                ARTICLE 3. EXECUTION AND CONDITIONS OF BORROWING

       The obligation of Bank One to make disbursements under the Revolving
Credit Note to Borrower provided for hereunder shall be subject to the following
conditions:

       3.1 Opinion of Counsel. Borrower's counsel in Ohio shall supply to Bank
One on or prior to the date of initial borrowing, an opinion satisfactory to
Bank One, which shall include. but not be limited to, opinion to the effect that
Borrower is a duly organized and existing corporation under the laws of the
State of New York; that Borrower is qualified to do business in Ohio and all
other states as shall be designated in the opinion letter where such
qualification is necessary where such failure would have a material effect on
Borrower; the the execution hereof by Borrower has been duly authorized by
appropriate corporate action; that there is no prohibition in law, in Borrower's
certificate or articles of incorporation, regulations, bylaws or in any
agreement to which Borrower is a party, which in any way restricts or prevents
the execution or carrying out of this Agreement in any respect; that this
Agreement and the Revolving Credit Note issued and delivered to Bank One
pursuant to the provisions hereof have been duly executed and are the legal,
valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their respective terms, and are in full force end effect and in
compliance with all requirements of the State of Ohio and federal law.

       Guarantor's counsel in Ohio shall supply to Bank One on or prior to the
date of initial borrowing, an opinion satisfactory to Bank One, which shall
include, but not be limited to, opinions to the effect that Guarantor is
qualified to do business in an all states as shall be designated in the opinion
letter where such qualification is necessary where such failure would have a
material effect on Guarantor; that the Guaranty has been duly executed and is
the legal, valid and binding obligation of Guarantor, enforceable against
Guarantor in accordance with its terms, and is in full force and effect and in
compliance with all requirements of the State of Ohio and federal law.

       Guarantor's counsel in England shall supply to Bank One on or prior to
the date of initial borrowing, an opinion satisfactory to Bank One, which shall
include but not be limited to, opinions to the effect that Guarantor is a duly
organized and existing corporation under English law; that the execution of the
Guaranty by Guarantor has been duly authorized by appropriate corporate action
and that all authorizations, approvals, licenses, consents, registrations, and
filings (if any) required by English law

                                      -8-
<PAGE>

for the Guarantor to guarantee the indebtedness referred to in this Agreement
have been duly obtained or effected and are in full force and effect; that there
is no prohibition in English law, in Guarantor's organizational documents,
articles of incorporation, regulations, bylaws of any agreement to which
Guarantor is a party, which in any way restricts or prevents the execution and
carrying out of the Guaranty in any respect; that the Guaranty is the legal,
valid and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, and is in full force and effect under English law;
and that a judgment that is final, granting or denying a recovery of a sum of
money obtained in a court in Ohio against Guarantor in respect of the Guaranty
would be recognized and enforced by the courts having jurisdiction over the
Guarantor in England.

       3.2 Resolution Authorizing Execution of Documents. On or prior to the
date of initial borrowing, Borrower shall furnish -to Bank One certified copies
of the resolutions of the Board of Directors of Borrower authorizing the
execution of this Agreement and the Revolving Credit Note. In addition, Borrower
shall cause Guarantor to furnish to Bank One certified copies of resolutions of
the Board of Directors of Guarantor authorizing the execution of the Guaranty

       3.3 Compliance with this Agreement. At the time of the initial borrowing,
Borrower shall be in compliance with all of the provisions, warranties, and
conditions contained in this Agreement with which it is to comply, and there
shall exist no Default as hereinafter specified, and no event shall exist or
shall have occurred which with the lapse of time or notice or both would
constitute an Event of Default

       3.4 Incumbency, Certificate. Borrower and Guarantor shall provide at the
time of the initial borrowing a Certificate of the Secretary or an Assistant
Secretary of Borrower and Guarantor, respectively, which shall certify the names
of the officers of Borrower and Guarantor authorized to sign this Agreement, the
Revolving Credit Note, the Guaranty and the other documents or certificates to
be delivered pursuant to this Agreement by Borrower or Guarantor, as applicable,
or any of its officers, together with the true signatures of such officers. Bank
One may conclusively rely an such certificates until it shall receive a further
certificate of the Secretary or an Assistant Secretary of Borrower canceling or
amending the prior certificate and submitting the signatures of the officers
named in such further certificate.

       3.5 Execution and Delivery of the Promissory Note and Guaranty. Borrower
shall have duly and validly executed, issued and delivered the Revolving Credit
Note to Bank One, and Guarantor shall have duly and validly executed, issued
and delivered the Guaranty.

                                      -9-
<PAGE>

                 ARTICLE 4. REPRESENTATIONS AND WARRANTIES

       In borrowing hereunder, Borrower represents and warrants to Bank One,
which representations and warranties shall survive the execution and delivery of
this Agreement and the Revolving Credit Note, that:

       4.1 Organization and Authority to Execute Documents. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York and is duly qualified or licensed to conduct its
activities in Ohio and in each other jurisdiction in which the nature of such
activities make such qualification necessary, and the failure so to qualify
might materially and adversely affect the business or assets of Borrower as a
whole; that the execution hereof has been duly authorized by appropriate
corporate action; there is no prohibition, either in law, in its certificate or
articles of incorporation or bylaws or in any agreement to which it is a party,
which in any way prohibits or would be violated by the execution and carrying
out of this Agreement in any respect; this Agreement has been duly executed and
is the valid and binding obligation of Borrower; and the Revolving Credit Note
issued and delivered to Bank One as payee will also be valid and binding
obligations of Borrower.

       4.2 Financial Statement Borrower has furnished to Bank One its most
recent Financial Statement dated as of December 31, 1998, which is complete,
true and correct in all material respects and which fairly reflect Borrower's
financial condition.

       4.3 No Guaranties of Others' Obligations. Borrower has made no
investments in, advances to or guaranties of the obligations of any Person,
corporation or other entity except as disclosed in the Financial Statement
referred to above or as otherwise disclosed to Bank One in writing.

       4.4 Compliance with Occupational Safety & Health Act. Borrower is not in
violation of any requirement of any applicable occupational safety and health
act or any standard, rule or order promulgated pursuant thereto or any
regulation prescribed pursuant thereto, the violation of which involves (i) the
possibility of a material adverse effect on the business, operation or condition
of Borrower or (ii) the ability of Borrower to perform this Agreement.

       4.5 No Undisclosed Liabilities. Borrower has no material liabilities,
direct or to the best of Borrower's knowledge, contingent, except as disclosed
in the above mentioned Financial Statements and except as set forth in Schedule
4.5, attached hereto.

       4.6 No Undisclosed Subsidiaries. That there exist as of the date hereof
no Subsidiaries of Borrower.

                                      -10-
<PAGE>

       4.7 Good Title to Assets and No Undisclosed Liens. Borrower has good and,
with respect to real estate, marketable title to all their respective property
and assets reflected as being owned by them in the Financial Statement referred
to in Section 4.2 above, subject to no liens, other than liens reflected on such
Financial Statement or Permitted Liens, except property and assets disposed of
since the date of such Financial Statement in the ordinary course of business.

       4.8 Possess Necessary Patents, Trademarks, and Licenses. Borrower owns or
possesses all patents trademarks service marks, trade names, copyrights,
permits and licenses, or rights with respect to the foregoing, necessary for the
present and planned future conduct of the business of Borrower, without any
known conflict with the rights of others, except as disclosed to Bank One in
writing.

       4.9 No Undisclosed Interest in the Title to Assets. None of the assets
or property, the value of which is reflected in the Financial Statement
referred to above, is held by Borrower as lessee or conditional vendee, or
pursuant to a title retention agreement of any kind, except as set forth in said
Financial Statement or the notes relating thereto or as disclosed to Bank One in
writing.

       4.10 No Undisclosed Financing Statements. No financing or continuation
which names Borrower as debtor has been filed under the Uniform Commercial Code
in any state or other jurisdiction except as disclosed to Bank One in writing
from the Chairman or the President of Borrower, and Borrower has not agreed to
or consented to cause or to permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a lien, except Permitted Liens.

       4.11 No Lawsuits or Judgements. There is no action, suit or proceeding at
law or in equity or any arbitration proceeding or investigation, inquiry or
other proceeding by or before any court or governmental instrumentality or other
agency now pending or, to the knowledge of Borrower threatened or affecting
Borrower or any property or rights of Borrower nor is there any basis therefore,
except such of the foregoing which, if adversely determined, would not in the
aggregate have a material adverse effect on Borrower or which does not seek to
enjoin the consummation of any transaction contemplated by this Agreement. No
judgment, decree or order of any federal, state or municipal court, board or
other governmental or administrative agency has been issued against or binds
Borrower which has, or is likely to have, any material adverse effect on the
business or assets or the financial condition of Borrower.

       4.12 Filing and Payment of Taxes. Borrower has duly filed or caused to be
filed all federal, state and local tax returns which are required to be filed,
and has duly paid or caused to be duly paid, to the extent required, all taxes
as shown on said

                                      -11-
<PAGE>

returns or on any assessment received by them, to the extent that such taxes
have become due.

       4.13 No Default of this Agreement. There does not exist any Event of
Default or any condition or circumstance which constitutes or with lapse of time
or the giving of notice or both would constitute an Event of Default.

       4.14 Insurance. All of the properties and operations of Borrower of a
character usually insured against by Persons of established reputation engaged
in the same or a similar business similarly situated are adequately insured, by
financially sound and reputable insurers against loss or damage of the kinds and
in the amounts customarily insured against by such Persons; and Borrower
carries, with such insurers in customary amounts, such other insurance,
including public liability insurance, as is usually carried by persons of
established reputation engaged in the same or a similar business similarly
situated.

       4.15 No Untrue or Misleading Statements or Omissions. To the best of
Borrower's knowledge, neither this Agreement nor any other agreement, instrument
or certificate contemplated by or made or delivered pursuant to or in connection
with this Agreement, contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

       4.16 Pollutants. Borrower covenants and agrees to hold harmless and
indemnify Bank One from any and all liabilities, losses, damages, penalties,
fines, claims, suits, costs, fees (including attorneys' fees), and expenses,
including, but not limited to, liability for cleanup costs, the relocation of
tenants occupying the Premises or any portion thereof, contaminant costs, bodily
injury and property damage and all costs, fees (including attorneys' fees) and
expenses incurred by Bank One for the defense of any claim or cause of action
arising from the location of Pollutants on the Premises. As the term is used
herein, "Pollutants" shall mean any solid, liquid, gaseous or thermal
containment, including smoke, vapor, soot, fumes, acids, alkalis. chemicals,
waste, petroleum products or by-products, asbestos, PCB's phosphates, lead or
other heavy metals, chlorine, radon gas "hazardous substances" as defined under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as is now of hereafter amended or supplemented, and regulations adopted
pursuant thereto, or other toxic or hazardous wastes or materials.

       4.17 No Margin Activity. Borrower is not engaged in the business of
extending or obtaining credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as is now and may from time to time hereafter be in
effect) and no part of the proceeds of any Revolving Credit Loan shall be used
to purchase or carry any such margin stock or to extend credit to others for the
purpose Of purchasing or

                                      -12-
<PAGE>

carrying any such margin stock or to reduce or retire any indebtedness incurred
for any such purpose. No part of the proceeds of any Revolving Credit Loan
hereunder will be used for any purpose which violates, or which is inconsistent
with, the provisions of Regulations G, T, U or X of the Board of Governors of
the Federal Reserve System.

       4.18 ERISA. Each Plan maintained by Borrower and by each ERISA Affiliate
complies with all material applicable requirements of ERISA and of the Code and
with all material applicable rulings and regulations issued under the provisions
of ERISA and the Code setting forth those requirements. Borrower nor any ERISA
Affiliate has engaged in any prohibited transaction (as defined in Section 406
of ERISA or Section 4975 of the Code) (i) which has not been corrected within
the correction period applicable to it under Section 502(i) of ERISA or Section
4963(e) of the Code or (ii) for which an exemption has not been obtained under
Section 408 of ERISA or Section 4975 of the Code. Borrower nor any ERISA
Affiliate is a participant in (i) any Multiemployer Plan, (ii) any other Plan
which is subject to Title IV of ERISA, or (iii) any money purchase pension plan.

       4.19 Year 2000.

             (i) All devices, systems, machinery, information technology,
       computer software and hardware, and other date sensitive technology
       (jointly and severally the "Systems") necessary for Borrower to carry on
       its business as presently conducted and as contemplated to be conducted
       in the future are Year 2000 Compliant or will be Year 2000 Compliant
       within a period of time calculated to result in no material disruption of
       any of Borrower's business operations. For purposes of these
       representations and warranties, "Year 2000 Compliant" means that such
       Systems are designed to be used prior to, during and after the Gregorian
       calendar year 2000 A.D. and will operate during each such time period
       without error relating to date data, specifically including any error
       relating to, or the product of, date data which represents or references
       different centuries or more than one century.

             (ii) Borrower has: (1) undertaken a detailed inventory, review, and
       assessment of all areas within its business and operations that could be
       adversely affected by the failure of Borrower to be Year 2000 Compliant
       on a timely basis, (2) developed a detailed plan and time line for
       becoming Year 2000 Compliant on a timely basis; and (3) to date,
       implemented that plan in accordance with that timetable in all material
       respects.

             (iii) Borrower has made inquiry of each of its key suppliers,
       vendors, and customers, and has obtained confirmations from all such
       persons, as to whether such persons have initiated programs to become
       Year 2000 Compliant and on the basis of such confirmations, Borrower
       reasonably believes that all such persons will be or try to become so
       compliant or make other suitable

                                      -13-
<PAGE>

       arrangements so as not to likely cause a material disruption of
       business. For purposes of this paragraph, "key suppliers, vendors, and
       customers" refers to those suppliers, vendors, and customers of Borrower
       whose business failure would, with reasonable probability result in a
       material adverse financial change in the business properties, or
       condition of Borrower. For purposes of this paragraph, Bank One, as a
       lender of funds under the terms of this Agreement, confirms to Borrower
       that Bank One has initiated its own corporate-wide Year 2000 program
       with respect to its lending activities.

                      ARTICLE 5. AFFIRMATIVE COVENANTS

       Until payment in full of the Revolving Credit Note and performance of all
other obligations of Borrower hereunder:

       5.1 Annual Financial Statements. Borrower shall furnish to Bank One
within one hundred twenty (120) days after the close of each fiscal year an
audited Financial Statement: which fairly reflects its financial condition.

       5.2 Periodic Financial Statements. Borrower shall furnish to Bank One
within forty-five (45) days after the close of each month of each fiscal
quarter, an internally prepared Financial Statement which fairly reflects its
financial condition and which are certified as true and correct in all material
respects subject to year-end adjustments by the Treasurer or Borrower.

       5.3 No Default Certificate. Borrower's Financial Statement called for by
the above paragraphs must be accompanied by a certificate signed by the
Treasurer, or other responsible officer of Borrower stating that, except as
disclosed in the certificate, Treasurer has no knowledge of any Event of Default
or event which, with the lapse of time or notice or both, would become an Event
of Default hereunder.

       5.4 Insurance. Borrower shall at all times.

             (a) Maintain adequate insurance upon all of its properties and
       operations of a character usually insured against by Persons of
       established reputation engaged in the same or a similar business
       similarly situated by financially sound and reputable insurers against
       loss or damage of the kinds and in the amounts customarily insured
       against by such Persons.

             (b) Maintain with such insurers in customary amounts such other
       insurance, including public liability insurance as is usually carried by
       Persons of established reputation engaged in the same or a similar
       business similarly situated.

                                      -14-
<PAGE>

             (c) At the request of Bank One, furnish a statement of its
       insurance coverage.

             (d) Bank One shall be named as loss payee on any insurance covering
       damage or losses to Borrower's equipment.

       5.5 Bank One to be Primary Depository. Bank One shall be the primary
depository and principal bank of account of Borrower.

       5.6 Payment of Taxes. Borrower shall promptly pay and discharge all taxes
and assessments levied and assessed or imposed upon its property or income taxes
as well as all claims which, if unpaid, might by law become a lien or charge
upon such property; provided, however, that nothing herein contained shall
require Borrower to pay any such taxes, assessments or claims so long as
Borrower shall in good faith contest the validity and stay the execution and
enforcement thereof.

       5.7 Compliance with laws. Borrower will promptly comply in all
substantial respects, with all applicable statutes, laws, ordinances and
governmental rules, regulations and orders to which it is subject or which are
applicable to its business, property and assets if noncompliance therewith would
materially and adversely affect its business.

       5.8 Preserve and Maintain Corporate Rights. Borrower shall preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction which it shall select, and qualify and remain qualified as a
foreign corporation in each jurisdiction where such qualification is necessary,
except such jurisdictions, if any, where the failure to preserve and maintain
its corporate existence, rights, franchises and privileges, or qualify or remain
qualified will not have a material adverse effect on the business or property of
Borrower.

       5.9 Payment of Fees and Expenses. Borrower will pay or reimburse all
reasonable fees and expenses incurred by Bank One in connection with the
collection and enforcement of this Agreement and the Revolving Credit Note.
Borrower shall, upon request, promptly reimburse Bank One for all amounts
expended, advanced or incurred by Bank One to satisfy any obligation of Borrower
under this Agreement, or in the collection and enforcement of the Revolving
Credit Note and Bank One's rights under this Agreement including all court
costs, attorneys' fees, fees of auditors and accountants and investigation
expenses reasonably incurred by Bank One in connection with such collection and
enforcement, together with interest at the post-maturity rate set forth herein
on such amount from the date of written demand by Bank One for reimbursement
until the date Bank One is actually reimbursed.

       5.10 Maintain and Preserve Assets. Borrower shall use reasonable efforts
in good faith to maintain and preserve in good working order and condition,
ordinary

                                      -15-
<PAGE>

wear and tear excepted, all of its properties necessary for the conduct of its
business, if failure to maintain and preserve such properties would over a
substantial period Of time materially and adversely affect Borrower.

       5.11 ERISA. Borrower shall furnish to Bank One. (a) promptly and in any
event within 10 days after Borrower knows or has reason to know of the
occurrence of a Reportable Event with respect to a Plan with regard to which
notice must be provided to the PBGC, a copy of such materials required to be
filed with the PBGC with respect to such Reportable Event and in each such case
a statement of the chief financial officer of Borrower setting forth details as
to such Reportable Event and the action which Borrower proposes to take with
respect thereto, (b) promptly and in any event within 10 days after Borrower
knows or has reason to know of any condition existing with respect to a Plan
which presents a material risk of termination of the Plan, imposition of an
excise tax, requirement to provide security to the Plan or incurrence of other
liability by Borrower or any ERISA Affiliate a statement of the chief financial
officer of Borrower or such ERISA Affiliate describing such condition; (c) at
least 10 days prior to the filing by any plan administrator of a Plan of a
notice of intent to terminate such Plan, a copy of such notice; (d) promptly and
in no event more than 10 days after the filing thereof with the Secretary of the
Treasury, a copy of any application by Borrower or an ERISA Affiliate for a
waiver of the minimum funding standard under section 412 of the Code; (e)
promptly and in no event more than 10 days after the filing thereof with the
Internal Revenue Service, copies of each annual report which is filed on Form
5500 together with certified financial statements for the Plan (if any) as of
the end of such year and actuarial statements on Schedule B to such form 5500;
(f) promptly and in any event within 10 days after it knows or has reason to
know of any event or condition which might constitute grounds under section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, a statement of the chief financial officer of Borrower describing such
event or condition; (g) promptly and in no event more then 10 days after receipt
thereof by Borrower or any ERISA Affiliate, a copy of each notice received by
Borrower or an ERISA Affiliate concerning the imposition of any withdrawal
liability under section 4202 of ERISA; and (h) promptly after receipt thereof a
copy of any notice Borrower or any ERISA Affiliate may receive from the PBGC or
the Internal Revenue Service with respect to any Plan or Multiemployer Plan;
provided, however, that this subsection (h) shall not apply to notices of
general application promulgated by the PBGC or the Internal Revenue Service.

       5.12 Notification of Certain Adverse Events. Borrower shall promptly
notify Bank One if Borrower learns of the occurrence of (i) any event which
constitutes a Default, together with a detailed statement by a responsible
officer of Borrower of the steps being taken to cure the effect of such Default;
or (ii) the receipt of any notice or the taking of any other action by the
holder of any promissory note, debenture or other evidence of indebtedness of
Borrower or of any security (as defined in the Securities Act of 1933, as
amended) of Borrower with respect to a claim of default,

                                      -16-
<PAGE>

together with a detailed statement by a responsible officer of Borrower
specifying the notice given or other action taken by such holder and the nature
of the claimed default and what action Borrower is taking or proposes to take
with respect thereto, or (iii) any legal, judicial or regulatory proceedings
affecting Borrower or any of the properties of Borrower in which the amount
involved is material and is not covered by insurance or which, if adversely
determined would have a material adverse effect on the financial condition of
Borrower; or (iv) any dispute between Borrower and any governmental or
regulatory body or any other Person which, it adversely determined would have a
material adverse effect on the financial condition of Borrower; or (v) any event
or condition having a material adverse effect on the financial condition of
Borrower.

       5.13 Notice of the Existence of Pollutants. Borrower shall cause any
Pollutants which are now or may hereafter be used or generated in the operations
of Borrower or any Subsidiary in hazardous quantities. as set forth in any
applicable statute, to be stored, used and disposed of in compliance with all
applicable federal, state, and local laws and regulations. Borrower will notify
Bank One immediately upon obtaining knowledge that:

             (i) any Premises are the subject of an environmental investigation
       by any federal, state or local governmental agency having jurisdiction
       over the regulation of any Pollutants, the purpose of which investigation
       is to quantify the levels of Pollutants located on such Premises, or

             (ii) Borrower or any Subsidiary has been named or is threatened to
       be named as a party responsible for the possible contamination of any
       real property or ground water with Pollutants, including, but not limited
       to the contamination of past and present waste disposal sites.

       If Borrower or any Subsidiary is notified of any event described at items
(i) or (ii) above, Borrower shall, upon reasonable request by Bank One, engage
or cause the Subsidiary to engage a firm or firms of engineers or environmental
consultants appropriately qualified to determine as quickly as practical the
extent of contamination and the potential financial liability of Borrower or the
Subsidiary with respect thereto, and Bank One shall be provided with a copy of
any report prepared by such firm or by any governmental agency as to such
matters as soon as any such report becomes available to Borrower and such
reports shall be held confidential by Bank One. The selection of any engineers
or environmental consultants engaged pursuant to the requirements of this
Section shall be subject to the approval of Bank One, which approval shall not
be unreasonably withheld.

       5.14 Inspection of Books and Records. Upon request by Bank One, Borrower
shall make available for inspection to duly authorized representatives of Bank
One any of its books and records, and shall furnish to Bank One any information
regarding its

                                      -17-
<PAGE>

business affairs and financial condition including copies of any contracts
entered into by Borrower within a reasonable time after receipt of written
request therefor.

                        ARTICLE 6. NEGATIVE COVENANTS

       Except with prior written consent of Bank One which consent shall not be
unreasonably withheld, Borrower shall not:

       6.1 Encumbering Assets. Create, incur, assume or permit to continue any
mortgage, pledge, encumbrance, lien or charge of any kind upon or security
interest in any of its property or assets, whether now owned or hereafter
acquired, except Permitted Liens as defined herein, nor promise to any other
Person other than Bank One not to create, incur, assume or permit to continue
any mortgage, pledge, encumbrance, lien or charge of any kind upon or security
interest in any of its property or assets, whether now owned or hereafter
acquired.

       6.2 Incurring Other Debt. Create, incur, assume or suffer to exist any
Debt except: (i) Debt represented by the Revolving Credit Note issued hereunder;
(ii) other indebtedness to Bank One; (iii) unsecured indebtedness to trade
creditors arising out of the ordinary course of Borrower's business; (iv)
purchase money indebtedness; (v) operating leases in which Borrower is the
lessee; and (vi) any other indebtedness, so long as the sum of indebtedness
resulting from 6.2(iv), (v) and (vi) does not exceed $1,000,000 of new
indebtedness on an annual basis.

       6.3 Guaranty of Others' Debts. Assume, guarantee, endorse, contingently
agree to purchase of otherwise become liable upon the obligation of any Person,
except for endorsements of instruments for deposit or collection in the ordinary
course of business.

       6.4 Merger or Consolidation. Merge or consolidate with any Person not
controlled by Borrower.

       6.5 Transfer of Substantial Portion of Assets. Liquidate or sell, lease,
transfer or otherwise dispose of all or a substantial pan of its assets other
than in the ordinary course of business. All proceeds from any such sale, lease
or transfer shall be remitted by Borrower to Bank One to be applied to the
Revolving Credit Note.

       6.6 Disposing of Notes/Accounts Receivable. Discount or sell any of its
notes or accounts receivable for less than their true value unless in Borrower's
ordinary course of business consistent with Borrower's prior methods of keeping
its books and records.

                                      -18-
<PAGE>

       6.7 Amount of Tangible Net Worth. Permit Tangible Net Worth to be less
than Twenty Five Million Dollars ($25,000,000) plus 50% of its Net Income after
taxes determined annually.

       6.8 Funded Debt to EBITDA. Permit the ratio of Funded Debt to EBITDA to
be no greater than 3.50 to 1.00 at any time calculated on a rolling four quarter
basis.

       6.9 Interest Coverage Ratio. Permit the Interest Coverage Ratio (defined
as the ratio of Borrower's net income, plus taxes, plus interest expense divided
by Borrower's total interest expense) to be less than 2.50 to 1.00 at any time
calculated on a rolling four quarter basis.

       6.10 Year 2000 Covenants. Borrower shall:

             (a) Furnish such additional information, statements and other
      reports with respect to Borrower's activities, course of action and
      progress towards becoming Year 2000 Compliant as Bank One may reasonably
      request from time to time.

             (b) In the event of any change in circumstances that causes any of
      Borrower's representations and warranties with respect to its being or
      becoming Year 2000 Compliant to no longer be true (hereinafter, referred
      to as a "Change in Circumstances"), then Borrower shall promptly, and in
      any event within twenty (20) days of receipt of information regarding a
      Change in Circumstances, provide Bank One with written notice (the
      "Notice") that describes in reasonable detail the Change in Circumstances
      and how such Change in Circumstances caused or will likely cause
      Borrower's representations and warranties with respect to being or
      becoming Year 2000 Compliant to no longer be true. Borrower shall, within
      ten (10) days of a request, also provide Bank One with any additional
      information Bank One requests of Borrower in connection with the Notice
      and/or a Change in Circumstances.

             (c) Give any representative of Bank One access during all business
      hours to, and permit such representative to examine, copy or make excerpts
      from, any and all books, records and documents in the possession of
      Borrower and relating to its affairs, and to inspect any of the properties
      and Systems of Borrower, and to project test the Systems to determine if
      they are Year 2000 Compliant in an integrated environment, all at the sole
      cost and expense of Bank One and without disruption to Borrower's
      business.

                                      -19-
<PAGE>

6.11 Transactions with Affiliated Persons. Borrower shall not:

            (a) Enter into any transaction, including without limitation, the
       purchase, sale or exchange of property or the rendering of any
       services, with any Affiliated Person or any officer or director
       thereof, enter into, assume or suffer to exist any employment or
       consulting contract with any Affiliated Person, except any transaction
       or contract which is in the ordinary course of Borrower's business and
       which is upon fair and reasonable terms no less favorable to Borrower
       than it would obtain in a comparable arms-length transaction.

            (b) Make any advance or loan to any Affiliated Person or any
       director or officer thereof or to any trust of which any of the
       foregoing is a beneficiary, or to any Person on the guaranty of any of
       the foregoing except any advance or loan which is in the ordinary
       course of Borrower's business and which is upon fair and reasonable
       terms no less favorable to Borrower than it would obtain in a
       comparable arms-length transaction.

            (c) Pay any fees or expenses to, or reimburse or assume any
       obligation for the reimbursement of any expenses incurred by, any
       Affiliated Person or any officer or director thereof, except as may be
       permitted in accordance with the preceding clauses of this paragraph.

                    ARTICLE 7. EVENTS OF DEFAULT AND REMEDIES

       7.1 Events of Default. if any of the following events ("Events of
Default") shall occur and be continuing:

             (a) Borrower shall default in the payment of any installment of the
       principal of the Revolving Credit Note when and as the same shall become
       due and payable, whether at the due date thereof or at a date fixed for
       prepayment or by acceleration or otherwise, provided such default shall
       continue for a period of ten (10) calendar days after written notice;

             (b) Borrower shall default in the payment of interest on the
       Revolving Credit Note, when and as the same shall become due and payable,
       whether at the due date thereof or at a date fixed for prepayment or by
       acceleration or otherwise, provided such default shall continue for a
       period of ten (10) calendar days after written notice;

             (c) Any representation or warranty made by Borrower in this
       Agreement or in connection with the Revolving Credit Loan hereunder, or
       in any report, certificate, Financial Statement or other instrument
       furnished in

                                      -20-
<PAGE>

     connection with this Agreement shall prove to be false or misleading in any
     material respect;

          (d) Borrower shall fail to observe or perform any covenant, condition
     or agreement in Article 6 of the Agreement (provided such failure shall
     continue for a period of thirty (30) days) after written notice;

          (e) Borrower shall fail to observe or perform any covenant, condition
     or agreement to be observed or performed pursuant to the terms hereof
     (other than the covenants, conditions and agreements described in
     subsections 7.1(a) through 7.1(d) above), provided such default shall
     continue unremedied for forty-five (45) days after written notice, which
     notice shall include a description of the Event of Default thereof to
     Borrower by Bank One;

          (f) Borrower or Guarantor shall default with regard to any payment of
     principal or interest on or the performance or observance of any covenant,
     condition or agreement of any other instrument of indebtedness executed by
     Borrower or Guarantor;

          (g) Final judgment for the payment of money in excess of Two Hundred
     Fifty Thousand Dollars ($250,000) shall be rendered against Borrower and
     the same shall remain undischarged for a period of thirty (30) consecutive
     days during which the execution shall not be effectively stayed;

          (h) Guarantor shall default in the payment of any amount due and
     payable under the Guaranty;

          (i) Guarantor shall fail to observe or perform any covenant, condition
     or agreement in Section 10 of the Guaranty (provided such failure shall
     continue for a period of thirty (30) days) after written notice;

          (j) Any representation or warranty made by Guarantor in the Guaranty
     shall prove to be false or misleading in any material respect;

          (k) Borrower or Guarantor shall (i) apply for or consent to the
     appointment of a receiver, trustee or liquidator for it or for any of their
     respective property, (ii) admit in writing their inability to pay their
     respective debts as they mature, (iii) make a general assignment for the
     benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, or (v)
     file a voluntary petition in bankruptcy, or a petition or an answer seeking
     reorganization or an arrangement with creditors to take advantage of any
     bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
     or liquidation law or statute, or an answer admitting the material
     allegations of a petition filed

                                      -21-
<PAGE>

       against it in any  proceeding  under any such law of if corporate
       action shall be taken by Borrower for the purpose of effecting any of
       the foregoing;

             (l) An order, judgment or decree shall be entered without to
       application, approval or consent of Borrower by any court of competent
       jurisdiction, approving a petition seeking reorganization of Borrower or
       Guarantor or appointing a receiver, trustee or liquidator of Borrower or
       Guarantor or of all or a substantial part of the assets thereof, and such
       order, judgment or decree shall continue unstayed and in effect for any
       period of sixty (60) days;

then upon the occurrence of any such Event of Default specified in subdivisions
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j) and (k) of this Section, Bank
One shall have the option to cease disbursements of the Revolving Credit Loan
and/or to terminate its commitment to lend and to declare all amounts due under
the Revolving Credit Note to be immediately due and payable both as to principal
and interest. Automatically upon the occurrence of any of the events specified
in subdivision (m) of this Section, Bank One's commitment to lend shall
terminate and all amounts due under the Revolving Credit Note shall become
immediately due and payable. In all cases, the Revolving Credit Note shall
become immediately due and payable without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the Revolving Credit Note to the contrary notwithstanding. It is
understood that the remedies of Bank One hereunder shall be cumulative in
nature rather than exclusive and that the failure of Bank One to exercise its
rights upon a Default by Borrower hereunder shall not be deemed to be a waiver
by Bank One of that Event of Default or any of its rights hereunder.

                             ARTICLE 8. DEFINITIONS

       8.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meaning:

       "Affiliated Person" shall mean any Person which owns 51% or more of the
outstanding capital stock of or of which 51% or more of the capital stock is
owned by the Borrower, including the Guarantor and any Subsidiary of the
Borrower, or any Person of which 51% or more of the capital stock is owned by
any Person which owns or is owned by the Borrower.

       "Agreement" shall mean this Loan Agreement.

       "Bank One" is defined in the preamble.

       "Borrower" is defined in the preamble.

                                      -22-
<PAGE>

       "Borrowing Date" is defined in Section 1.1.

       "Business Day" shall mean any day other than Saturdays, Sundays and other
legal holidays or days on which the principal office of the Lender is closed.

       "Business Year" shall mean a year of 360 days.

       "Change in Circumstances" is defined in Section 6.10(b).

       "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.

       "Debt" shall mean for Borrower:

            (i) any indebtedness for borrowed money which Borrower directly
       or indirectly created, incurred, assumed, endorsed (other than for
       collection in the ordinary course of business), discounted with
       recourse or in respect of which Borrower is otherwise directly or
       indirectly liable including, without limitation, indebtedness in
       effect guaranteed by Borrower through any agreement (contingent or
       otherwise) to purchase, repurchase or otherwise acquire such
       indebtedness or any security therefore, or to provide funds for the
       payment or discharge of such indebtedness or any liability of the
       obligor of such indebtedness (whether in the form of loans, advances,
       stock purchases, capital contributions or otherwise) or to maintain
       the solvency or other financial condition of the obligor of such
       indebtedness, or to make payment for any products, materials or
       supplies or for any transportation or service regardless of the
       nondelivery or nonfurnishing thereof, in any such case if the purpose
       or intent of such agreement is to provide assurance that such
       indebtedness will be paid or discharged, or that any agreement
       relating thereto will be complied with, or that the holders of such
       indebtedness will be protected against loss in respect thereof,

            (ii) any indebtedness, whether or not for borrowed money, which
       Borrower has incurred, assumed, guaranteed or with respect to which
       Borrower has become directly or indirectly liable (including, without
       limitation, through any agreement of the character referred to in
       clause (i) hereof) and which represents or has been incurred to
       finance the purchase price of any property or business, whether by
       purchase, consolidation, merger or otherwise,

              (iii) any indebtedness, whether or not for borrowed money, which
       is secured by any mortgage, pledge, security interest, lien or
       conditional sale or other title retention agreement existing on any
       property owned or held by

                                      -23-

<PAGE>

         Borrower subject thereto, whether or not Borrower has any personal
liability for such indebtedness.

         "EBITDA" shall mean the Borrower's earnings for the respective period
before deducting interest, federal, state and local taxes, depreciation and
amortization.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.

         "ERISA Affiliate" shall mean each trade or business, including
Borrower, whether or not incorporated, which together with Borrower would be
treated as a single employer under 4001 of ERISA.

         "Events of Default" shall mean any of the events specified in Section
7.1 provided that there has been satisfied any requirements in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.

         "Financial Statement" shall mean for any period a balance sheet as of
the close of the period, an operating statement for the period including
detailed expense schedules, a statement of changes in cash flows and a
reconciliation of retained earnings, all prepared in accordance with generally
accepted accounting principles applied on a consistent basis.

         "Funded Debt" shall mean all Debt of the Borrower to Bank One and any
other financial provider but shall exclude any Debt of the Borrower to the
Guarantor.

         "Guarantor" means Denison International, plc., an English company.

         "Guaranty" means the Unconditional Corporate Guaranty Agreement given
by Guarantor to Bank One dated of even date with this Agreement.

         "Interest Payment Date" is defined in Section 1.3(b).

         "Interest Period" with respect to (i) any LIBOR Rate Loan, shall mean
the period commencing on the Borrowing Date or the conversion date, as
contemplated in Section 1.2, and ending on the date one, two, three or six
months thereafter as selected by Borrower in its notice of borrowing as provided
in Section 1.1, or its notice of conversion as provided in Section 1.2.

         The foregoing provisions relating to Interest Periods are subject to
the following:

                                      -24-

<PAGE>

              (i) Any Interest Period with respect to a LIBOR Rate Loan that
       shall commence on the last London Banking Day of the calendar month (or
       on any day for which there is no numerically corresponding day in the
       appropriate subsequent calendar month) shall end on the last London
       Banking Day of the appropriate subsequent calendar month.

              (ii) Each Interest Period with respect to a LIBOR Rate Loan that
       would otherwise end on a day which is not a London Banking Day shall end
       on the next succeeding London Banking Day or, if such next succeeding
       London Banking Day falls in the next succeeding calendar month, on the
       next preceding London Banking Day.

              (iii) No Interest Period on a LIBOR Rate Loan may end after the
       Termination Date.

       "LIBOR BANKING DAYS" shall mean days which are both Business Days and
London Banking Days.

       "LIBOR RATE" shall mean with respect to each Interest Period (as
hereinafter defined), the offered rate for U.S. Dollar deposits of not less than
$1,000,000 as of 11:00 a.m. City of London, England time two London Banking
Days prior to the first date of each Interest Period as shown on the display
designated as "British Bankers Assoc. Interest Settlement Rates" on the Telerate
System ("Telerate"), Page 3750 or Page 3740, or such other page or pages as may
replace such pages on Telerate for the purpose of displaying such rate;
provided, however, that if such rate is not available on Telerate, then such
offered rate shall be otherwise independently determined by Bank One from an
alternate, substantially similar independent source available to Bank One or
shall be calculated by Bank One by a substantially similar methodology as that
theretofore used to determine such offered rate in Telerate. Each change in the
LIBOR Rate on a Revolving Credit Loan shall become effective without notice on
the commencement of each Interest Period.

       "LIBOR Rate Loan(s) is defined in Section 1.1.

       "London Banking Day(s)" shall mean day(s) on which transactions are
carried out in the London Interbank Market.

       "Margin" shall be determined as provided in Section 1.3(c).

       "Multiemployer Plan" shall mean a Plan described in 4001(a)(3) of ERISA
to which Borrower is required to contribute on behalf of any of its employees.

       "Notice" is defined in Section 6.10(b).

                                      -25-
<PAGE>

        "PBGC" shall mean the Pension Benefit Guarantee Corporation established
  pursuant to Subtitle A of Title IV of ERISA.

        "Permitted Liens" shall mean:

              (i) Liens securing taxes, assessments, fees or other governmental
       charges or levies, or the claims of materialmen, mechanics, owners,
       warehouse men, landlords, and other similar Persons;

              (ii) Liens incurred or deposits made in the ordinary course of
       business (a) in connection with workers' compensation, unemployment
       insurance, social security and other similar laws, or (b) to secure the
       performance of bids, tenders, sales, contracts, public or statutory
       obligations, customs, appeal and performance bonds, or (c) other similar
       obligations not incurred in connection with the borrowing of money, the
       obtaining of advances, or the payment of the deferred purchase price of
       property;

            (iii) Reservations, exceptions, encroachments, easements, rights
       of way, covenants, conditions, restriction, leases and other similar
       title exceptions or encumbrances affecting real property, provided
       they do not in the aggregate materially detract from the value of such
       properties or materially interfere with their use in the ordinary
       conduct of Borrower's business;

              (iv)  Liens in favor of Bank One;

              (v) Liens permitted in this Agreement and liens securing
       indebtedness permitted in Section 6.2.

       "Person" shall mean and include an individual, trust, partnership,
limited liability company, corporation, unincorporated organization and a
government or any department or agency thereof.

       "Plan" shall mean any plan, benefit or program of benefits or perquisites
which has been or is being currently provided to one or more employees or which
may in the future be established, maintained, or contributed to by Borrower (or
in which Borrower or any of its employees participate, which provides benefits
to employees or former employees of Borrower), including any "employee benefit
plan" as defined in ERISA, any payroll practice or personnel policy, and any
system of governmental or other benefits to the costs of which Borrower
contributes by any means.

       "Pollutants" is defined in Section 4.16.

       "Premises" shall mean any premises which have at any time been owned or
occupied by or have been under lease to Borrower.

                                      -26-
<PAGE>

       "Prime Rate" shall mean on any day the per annum rate published or
announced by Bank One from time to time as its prime rate, which may not be
Bank One's lowest rate.

       "Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, a withdrawal from a Plan
described in Section 4063 of ERISA, a cessation of operations described in
Section 4068(f) of ERISA, an amendment to a Plan necessitating the posting of
security under Section 401(a)(20) of the Code, or a failure to make a payment
required by Section 412(m) of the Code and Section 302(e) of ERISA when due.

       "Revolving Credit Commitment" is defined in Section 1.1.

       "Revolving Credit Loan" shall mean a loan made by Bank One to Borrower
pursuant to Section 1.1 hereof, and evidenced by the Revolving Credit Note.

       "Revolving Credit Note" shall mean the note in the form of Exhibit "A"
attached hereto executed by Borrower and delivered to Bank One.

       "Subsidiary" shall mean any corporation fifty-one percent (51%) or more
of the voting stock of which is controlled by Borrower.

       "Systems" is defined in Section 4.20(i).

       "Tangible Net Worth" shall mean the amount by which the total
consolidated assets of Borrower exceeds the sum of (i) the total consolidated
liabilities of Borrower plus (ii) consolidated Intangible Assets of Borrower.
"Intangible Assets" shall mean, goodwill, patents, trademarks, excess of cost
over book value of assets acquired, deferred research and development expenses,
deferred operational expenses, appraisal surplus and other assets.

       "Termination Date" is defined in Section 1.1.

       "Variable Rate Loan(s)" is defined in Section 1.1.

       "Year 2000 Compliant" is defined in Section 4.20(i).

       8.2 Generally Accepted Accounting Principles. All accounting terms not
specifically defined herein shall have the meanings of such terms as used in
accordance with generally accepted accounting principles in the United States
applied on a consistent basis.

                                      -27-
<PAGE>

                            ARTICLE 9. MISCELLANEOUS

       9.1 Successors and Assigns. All covenants and agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not provided that Borrower's rights under this
Agreement shall not be assignable without the prior written consent of Bank One.
Bank One shall give notice to Borrower it it sells, participates or otherwise
transfers its rights under this Agreement to any party other than Bank One
Corporation or any of Bank One Corporation's affiliates. Notwithstanding the
foregoing, this provision shall not be applicable in the event Bank One is paid
in full hereunder and the Revolving Credit Commitment is cancelled.

       9.2 Notices. Unless otherwise set forth in this agreement, all notices,
requests and demands to or upon the parties hereto to be effective shall be in
writing or by telecopy or telex and shall be deemed to have been duly given or
made when delivered by hand, or when deposited in the mail, postage prepaid,
or, in the case of facsimile notice, shall be deemed given when confirmed
addressed as follows in the case of Borrower and Bank One or to such address or
other address as may be hereafter notified by the parties hereto:

              Borrower:          Denison Hydraulics, Inc.
                                 14249 Industrial Parkway
                                 Marysville, Ohio 43040
                                 Attention: Bruce A. Smith, CFO
                                 Facsimile: (937) 644-0827

              Bank One:          Bank One, N.A.
                                 100 East Broad Street
                                 Columbus, Ohio 43271-0170
                                 Attention: David Clark, Vice President
                                 Facsimile: (614) 248-5518

       9.3 Waiver. No delay on the part of Bank One in exercising any right,
power or privilege granted hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof. The rights and remedies herein
expressly specified, are cumulative and not exclusive of any other rights and
remedies which Bank One would otherwise have.

       9.4 Duration. This Agreement and all covenants, agreements,
representations and warranties made herein and in the various certificates
delivered pursuant hereto shall survive the making of the Revolving Credit Loan
by Bank One and the execution and delivery to Bank One by Borrower of the
Revolving Credit Note

                                      -28-
<PAGE>

and shall continue in full force and effect until Borrower no longer retains
the right to borrow hereunder and the Revolving Credit Note is paid in full.

       9.5 Governing Law and Jurisdiction. This Agreement shall in all respects
be interpreted in accordance with and enforceable under the laws of the State of
Ohio. In the event of a dispute hereunder, it is agreed that exclusive venue
lies in a Court of competent jurisdiction in Franklin County, Ohio.

       9.6 Amendments. Notwithstanding any provision to the contrary contained
herein, any term of this Agreement may be amended by consent of the parties;
provided that no amendment, modification, or waiver of any provision of this
Agreement or of the Revolving Credit Note shall be effective unless the same
shall be in writing and signed by Borrower and Bank One.

       9.7 Severability. In the event that any one or more of the provisions
contained in this Agreement or in the Revolving Credit Note shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or the Revolving Credit Note.

       9.8 Captions. Section captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.

       9.9 Arbitration. Bank One and Borrower agree that upon the written demand
of either party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that proceeding, all
disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Agreement the Revolving Credit Note, and the
Guaranty, or otherwise, including without limitation contract disputes and tort
claims, shall be resolved by binding arbitration pursuant to the Commercial
Rules of the American Arbitration Association. Any arbitration proceeding held
pursuant to this arbitration provision shall be conducted in the city nearest
the Borrower's address having an AAA regional office, or at any other place
selected by mutual agreement of the parties. This arbitration provision shall
not limit the right of either party during any dispute, claim or controversy to
seek, use, and employ ancillary, or preliminary rights and/or remedies, judicial
or otherwise, for the purposes of realizing upon, preserving, protecting,
foreclosing upon or proceeding under forcible entry and detainer for possession
of, any real or personal property, and any such action shall not be deemed an
election of remedies. Such remedies include, without limitation, obtaining
injunctive relief or a temporary restraining order, invoking a power of sale
under any deed of trust or mortgage, obtaining a writ of attachment or
imposition of a receivership, or exercising any rights relating to personal
property, including taking or disposing of such property with or without
judicial process pursuant to Article 9 of the Uniform Commercial Code or when
applicable, a judgment by confession of

                                      -29-
<PAGE>

judgment. Any disputes, claim or controversies concerning the lawfulness or
reasonableness of an act, or exercise of any right or remedy concerning any
collateral, including any claim to rescind, reform, or otherwise modify any
agreement relating to the collateral, shall also be arbitrated; provided,
however that no arbitrator shall have the right or the power to enjoin or
restrain any act of either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. Nothing in this
arbitration provision shall preclude either party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding, and
the commencement of an arbitration proceeding shall be deemed the commencement
of any action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

       9.10 Entire Agreement. This Agreement (including the Exhibit and the
Schedule which are hereby incorporated herein by reference) together with all
other documents executed in connection with this Agreement constitutes the only
agreement and understanding between Bank One and Borrower and supersede any and
all prior agreements and understandings, oral or written, relating to this
Agreement and all other documents executed in connection with this Agreement.
Borrower acknowledges that it has not relied on any oral promises or
representations by Bank One other than those set forth in this Agreement and all
other documents executed in connection with this Agreement.

       9.11 Waiver of Jury Trial. BANK ONE AND BORROWER HEREBY VOLUNTARILY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE BETWEEN
BANK ONE AND BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN BANK ONE AND BORROWER
PURSUANT TO THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL
INDUCEMENT TO BANK ONE TO ENTER INTO THE TRANSACTIONS DESCRIBED IN THIS
AGREEMENT. THIS PROVISION SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
MODIFY BANK ONE'S ABILITY TO PURSUE ANY REMEDIES AVAILABLE TO IT.

                                      -30-
<PAGE>

       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.

                                      BANK ONE, N.A.

                                      By: /s/ DAVID CLARK
                                         ---------------------------
                                      David Clark, Vice President

                                      DENISON HYDRAULICS, INC.

                                      By: /s/ BRUCE A. SMITH
                                         ---------------------------

                                      Its: CHIEF FINANCIAL OFFICER
                                          --------------------------

                                      -31-
<PAGE>

                                   EXHIBIT "A"
                              REVOLVING CREDIT NOTE

$15,000,000                     COLUMBUS, OHIO                     MAY __, 1999

       On or before April 30, 2002, for value received, the undersigned promises
to Pay to the order of Bank One, N.A. (hereinafter called "Bank One") the sum of
Fifteen Million Dollars ($15,000,000) Or so much thereof as may from time to
time be outstanding, with interest (computed on the basis as determined in the
Loan Agreement, defined below) before maturity on the balance from time to time
remaining unpaid at an interest rate as determined under that certain Revolving
Credit Loan Agreement dated May 18, 1999 between the undersigned and Bank One
(the "Loan Agreement"). Interest shall be computed and payable as set forth in
the Loan Agreement. Both principal and interest are payable in lawful money of
the United States at the Main Office of Bank One, N.A., 100 East Broad Street,
Columbus, Ohio 43271-0170.

       This promissory note evidences a borrowing under and is entitled to the
benefits of the Loan Agreement. The principal may become due or may be declared
forthwith due and payable in the manner and upon the terms and conditions and
with the effect provided in the Loan Agreement.

       BANK ONE AND THE UNDERSIGNED HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN BANK ONE AND
THE UNDERSIGNED ARISING OUT OF OR IN ANY WAY RELATED TO THE RELATIONSHIP BETWEEN
BANK ONE AND THE UNDERSIGNED PURSUANT TO THIS NOTE, THE LOAN AGREEMENT, OR ANY
OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR
THEREWITH. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK ONE TO ENTER INTO THE
TRANSACTIONS DESCRIBED IN THIS AGREEMENT. THIS PROVISION SHALL NOT IN ANY WAY
AFFECT, WAIVE, LIMIT, AMEND OR MODIFY BANK ONE'S ABILITY TO PURSUE ANY REMEDIES
AVAILABLE TO IT.

       The undersigned agrees that upon the written demand of either Bank One or
the undersigned, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that proceeding, all
disputes, claims and controversies between them, whether individual, joint, or
class in nature, arising from this Note and the Loan Agreement, or otherwise,
including without limitation contract disputes and tort claims, shall be
resolved by binding arbitration pursuant to the Commercial Rules of the American
Arbitration Association.

                                      A-1
<PAGE>

Any arbitration proceeding held pursuant to this arbitration provision shall be
conducted in the city nearest the undersigned's address having an AAA regional
office, or at any other piece selected by mutual agreement of the parties. This
arbitration provision shall not limit the right of either party during any
dispute, claim or controversy to seek, use, and employ ancillary, or preliminary
rights and/or remedies, judicial or otherwise, for the purposes of realizing
upon, preserving, protecting, foreclosing upon or proceeding under forcible
entry and detainer for possession of, any real or personal property, and any
such action shall not be deemed an election of remedies. Such remedies include,
without limitation, obtaining injunctive relief or a temporary restraining
order, invoking a power of sale under any deed of trust or mortgage, obtaining a
writ of attachment or imposition of a receivership, or exercising any rights
relating to personal property, including taking or disposing of such property
with or without judicial process pursuant to Article 9 of the Uniform Commercial
Code or when applicable, a judgment by confession of judgment. Any disputes,
claims or controversies concerning the lawfulness or reasonableness of an act,
or exercise of any right or remedy concerning any collateral, including any
claim to rescind, reform, or otherwise modify any agreement relating to the
collateral, shall also be arbitrated; provided, however that no arbitrator shall
have the right or the power to enjoin or restrain any act of either Party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. Nothing in this arbitration provision shall preclude either
party from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of any action for these purposes.
The Federal Arbitration Act (Title 9 of the United States Code) shall apply to
the construction, interpretation, and enforcement of this arbitration provision.

         The undersigned hereby irrevocably authorizes any attorney-at-law to
appear for the undersigned in an action on this Note at any time after the same
becomes due in any court of record in or of the State of Ohio, and to waive the
issuing and service of process against the undersigned and to confess judgment
in favor of the holder of this Note against the undersigned for the amount that
may be due, with interest at the rate herein mentioned and cost of suit, and to
waive and release all errors in such proceedings and judgment, and all petitions
in error and rights of appeal from the judgment rendered. The foregoing warrants
of attorney shall survive any judgment, and, if any judgment be vacated for any
reason, the holder hereof nevertheless may thereafter use the foregoing warrant
of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned waives any conflict of interest in Bank One's
attorney confessing judgment against the undersigned pursuant to the foregoing
warrant of attorney and further agrees that the attorney confessing judgment
pursuant to the foregoing warrant of attorney may receive a legal fee or other
thing of value from Bank One

                                      A-2
<PAGE>

THIS NOTE HAS BEEN DELIVERED IN UNION COUNTY, OHIO AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO.

WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.

                                              DENISON HYDRAULICS. INC.

                                              By:
                                                  -----------------------------

                                              Its:
                                                  -----------------------------

                                      A-3
<PAGE>

                   UNCONDITIONAL CORPORATE GUARANTY AGREEMENT

       This UNCONDITIONAL CORPORATE GUARANTY AGREEMENT (the "Corporate Guaranty
Agreement") is entered into on May 18, 1999 by and between DENISON
INTERNATIONAL, plc., an English company (the "Guarantor"), and BANK ONE, N.A., a
national banking association (the "Bank").

                                    BACKGROUND

        The following is a mutual statement by the parties of certain factual
matters which form the basis of this Corporate Guaranty Agreement.

        A. REVOLVING CREDIT LOAN AGREEMENT. Denison Hydraulics, Inc., a New York
corporation and a wholly owned subsidiary of the Guarantor (the "Borrower"), has
requested that the Bank make a loan to the Borrower in the original principal
amount of $15,000,000 (the "Loan"). The Bank has agreed to make the Loan
pursuant to the terms and conditions of that certain Revolving Credit Loan
Agreement, dated May 18, 1999, by and between the Bank and the Borrower (the
"Loan Agreement").

       B. CORPORATE GUARANTY AGREEMENT. The Bank is willing to enter into the
Loan Agreement upon the condition that (i) all amounts owing by the Borrower
pursuant to the Loan Agreement and the Revolving Credit Note executed in
connection therewith (the "Note"), (ii) the Borrower's performance of, and
compliance with, all of the terms, covenants, conditions, stipulations and
agreements contained in the Loan Agreement and the Note, and (iii) all other
present and future obligations, agreements or indebtedness between the Borrower
and the Bank or any of the Bank's affiliates (collectively, the "Obligations"),
be guaranteed by the Guarantor. Terms used herein which are defined in the Loan
Agreement shall have the meanings set forth in the Loan Agreement, unless the
context hereof clearly requires otherwise.

                              STATEMENT OF AGREEMENT

       The Guarantor, in consideration of the premises and for the purpose of
inducing the Bank to enter into the Loan Agreement, does hereby covenant and
agree to and for the benefit of the Bank as follows:

       ss. 1. GUARANTY. In order to induce the Bank to enter into the Loan
Agreement and in consideration of the mutual promises of the Borrower, the Bank
and the Guarantor, the Guarantor hereby absolutely and unconditionally
guarantees the full and prompt payment when due, by acceleration or otherwise of
the Obligations. The

<PAGE>

 Guarantor further agrees to pay all expenses (including without limitation
 attorneys' fees and legal expenses) paid or incurred by the Bank in endeavoring
 to collect the Obligations or any part thereof and in enforcing this Corporate
 Guaranty Agreement.

       2. RESCISSION OR RETURN OF PAYMENTS. The Guarantor agrees that, if at any
time all or any part of any payment theretofore applied by the Bank to any of
the Obligations is or must be rescinded or returned by the Bank for any reason
whatsoever (including without limitation the insolvency, bankruptcy or
reorganization of the Borrower), such Obligations shall, for the purposes of
this Corporate Guaranty Agreement, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Bank, and this Corporate Guaranty Agreement shall
continue to be effective or reinstated, as the case may be, as to such
Obligations, all as though such application by the Bank had not been made.

       3. UNCONDITIONAL NONRECOURSE OBLIGATIONS. The obligations of the
Guarantor under this Corporate Guaranty Agreement are unconditional and shall
not be impaired by any action or omission to act, with or without notice to the
Guarantor, of the bank or any other holder of any of the Obligations, or by
reason of any other circumstance which might otherwise constitute a discharge or
defense of a guarantor including specifically the right to cure any default of
the Borrower in any third party. Without limitation of the foregoing, the Bank
may, from time to time, at its sole discretion and without notice to the
Guarantor, take any or all of the following actions without discharging or in
any way impairing any of the obligations of the Guarantor hereunder: (i) retain
or obtain a security interest in any property to secure any of the Obligations
or any obligation hereunder, (ii) retain or obtain the primary or secondary
obligation of any obligor or obligors, in addition to the Guarantor, with
respect to any of the Obligations, (iii) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of the
Obligations, or release or compromise any obligation of the Guarantor hereunder
or any obligation of any nature of any other obligor with respect to any of the
Obligations, (iv) release its security interest in, or surrender, release or
permit any substitution or exchange for, all or any part of any property
securing any of the Obligations or any obligation hereunder, or extend or renew
for one or more periods (whether or not longer than the original period) or
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property, and (v) resort to the Guarantor for
payment of any of the Obligations, whether or not the Bank shall have resorted
to any collateral or other property securing any of the Obligations or any
obligation hereunder or shall have proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Obligations.

       4. SET-OFFS AND CLAIMS BY THE GUARANNTOR. No set-off, counterclaim,
reduction or diminution of an obligation, or any defense of any kind or nature
(excepting payment in fact) which the Guarantor has or may have against the BANK

                                      -2-
<PAGE>

       12. EXCESS LIABILITIES. The creation or existence from time to time of
Obligations in excess of the amount evidenced by the Loan Agreement is hereby
authorized, without notice to the Guarantor and shall in no way affect or impair
the rights of the Bank and the obligations of the Guarantor under this
Corporate Guaranty Agreement.

       13. ASSIGNMENT OR TRANSFER OF LIABILITIES. The Bank may, from time to
time, without notice to the Guarantor, assign or transfer any or all of the
Obligations or any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Obligations
shall be and remain Obligations for the purposes of this Corporate Guaranty
Agreement, and each and every immediate and successive assignee or transferee of
any of the Obligations or of any such interest therein shall, to the extent of
the interest of such assignee or transferee in the Obligations, be entitled to
the benefits of this Corporate Guaranty AGREEMENT TO the same extent as if such
assignee or transferee were the transferor; provided, however, that, unless the
Bank shelf otherwise consent in writing, the Bank shall have an unimpaired
right, prior and superior to that of any such assignee or transferee, to enforce
this Corporate Guaranty Agreement, for the benefit of the Bank, as to those of
the Obligations which shall not have been assigned or transferred

       14. EVENTS OF DEFAULT. Each of the following shall constitute an event of
default, whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule or regulation of any governmental or
non-governmental body:

             (a)    An Event of Default as defined in the Loan Agreement.

             (b)    Any representation or warranty made by the Guarantor under
                    this Corporate Guaranty Agreement or any other agreement,
                    report, certificate, financial statement or other instrument
                    referred to in and furnished to the Bank in connection
                    herewith shall prove incorrect or misleading in any material
                    respect when made or when deemed to have been made.

             (c)    The Guarantor shall default in the performance or observance
                    of any agreement or covenant contained in this Corporate
                    Guaranty Agreement (other than a covenant or agreement or
                    default in the performance or observance of which is
                    elsewhere in this ss. 14 specifically dealt with) and
                    the continuance of such default for a period of forty-five
                    (45) days.

             (d)    The filing by the Guarantor of a Petition for the
                    appointment of a trustee with respect to itself or any of
                    its property.

                                      -3-
<PAGE>

             (e)    The making by the Guarantor of an assignment for the benefit
                    of creditors,

             (f)    The commencement by the Guarantor of a case in bankruptcy or
                    insolvency or for compromise, adjustment or other relief
                    under the laws of the United States or of any state relating
                    to the relief of debtors.

             (g)    The failure of the Guarantor to obtain the dismissal, within
                    sixty (60) days after service upon the Guarantor of any case
                    commenced against the Guarantor (i) for the appointment of a
                    trustee for the Guarantor, of any of its property or (ii) in
                    bankruptcy or insolvency or for compromise, adjustment or
                    other relief under the laws of the United States or of any
                    state relating to the relief of debtors.

             (h)    The failure of the Guarantor to generally pay its debts as
                    such debts become due.

             (i)    The making, or the attempted making, by the Guarantor of a
                    fraudulent conveyance within the meaning of the Uniform
                    Fraudulent Conveyances Act

         15. Consequences of Event of Default. If any Event of Default shall
have occurred and be continuing, the Bank may proceed hereunder against the
Guarantor and the Bank shall have, in its sole discretion, the right to proceed
first and directly against the Guarantor under this Corporate Guaranty Agreement
without proceeding first or concurrently against the Borrower, exhausting any
other remedies it may have (including without limitation, any remedies under the
Loan Agreement) or without resorting to any other security held by the Bank.
This is a guaranty of payment and not of collection and the Guarantor further
waives any right to require that any action first be brought against the
Borrower or any other person or party or to require THAT RESORT be had to any
security.

         16. Cumulative Remedies, Delays. No delay on the part of the Bank in
the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by the Bank of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or remedy;
nor shall any modification or waiver of any of the provisions of this Corporate
Guaranty Agreement be binding upon the Bank except as expressly set forth in a
writing duly signed and delivered by the Bank. No action of the Bank permitted
hereunder shall in any way affect or impair the rights of the Bank and the
obligations of the Guarantor under this Corporate Guaranty Agreement. For the
purpose of this Corporate Guaranty Agreement, Obligations shall include all
Obligations, notwithstanding any right or

                                      -4-
<PAGE>

 power of the Borrower or anyone else to assert any claim or defense, as to the
 invalidity or unenforceability of any such Obligations, and no such claim or
 defense shall affect or impair the obligations of the Guarantor hereunder.

         17. SUBORDINATION. The Guarantor hereby subordinates any and all claims
which it now has, or in the future may acquire, as a creditor of the Borrower to
the prior payment and satisfaction in full of this Corporate Guaranty Agreement.
If prior to the payment and satisfaction of this Corporate Guaranty Agreement,
the Guarantor would, without reference to the provisions of this ss. 17, be
entitled to receive any payment on account of any claim of this Guarantor
against the Borrower, all such Payments shall be made instead to the Bank until
the Obligations have been paid and satisfied in full, and the Guarantor hereby
so directs. If the Guarantor receives any payment on account of any claim of the
Guarantor against the Borrower, the Guarantor shall immediately pay the same
over to the Bank to be applied to the payment or satisfaction of the
Obligations, if any. Notwithstanding the foregoing, unless an Event of Default
has occurred, and any such Event of Default has not been either waived or
acknowledged to have been cured in writing by the Bank, the Guarantor may
receive and retain payments from the Borrower.

         18. NOTICES. Each notice, certificate, request or other communication
to be given or made in accordance with this Corporate Guaranty Agreement shall
be deemed to be made or given on the earlier of (i) three (3) days after the
same is mailed (first-class mail, postage prepaid) to the party to receive the
same at its address set forth below, or (ii) the date such notice is actually
received.

              It to Bank:

                    Bank One, N.A.
                    100 East Broad Street
                    Columbus, Ohio 43271-0170
                    Attention- David Clark, Vice President
                    Facsimile: (614) 248-5518

             If to the Guarantor

                    Denison International, plc.
                    142-49 Industrial Parkway
                    Marysville, Ohio 43040
                    Attention: Bruce A. Smith

                    Facsimile:  (937) 644-0827

or to such other address which the Bank or the Guarantor shelf have given to the
other.

                                      -5-
<PAGE>

       ss. 19. AMENDMENTS, MODIFICATIONS, ETC. No amendment, modification,
termination, or waiver of any provision of this Corporate Guaranty Agreement nor
consent to any departure by the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice or demand on the Guarantor in
any case shall entitle the Guarantor to any other or further notice or demand in
similar or other circumstances

       ss. 20. APPLICABLE LAW This Corporate Guaranty Agreement shall be deemed
to be a contract made under the laws of the State of Ohio and for all purposes
shall be governed by and construed in accordance with the laws of the State of
Ohio.

       ss. 21. SEVERABILITY. Any provision of this Corporate Guaranty Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction.

       ss. 22. COUNTERPARTS. This Corporate Guaranty Agreement may be signed in
any number of counterparts with the same effect as if the signatures thereto
were upon the same instrument.

       ss. 23. MERGER. This Corporate Guaranty Agreement reflects the entire
understanding of the parties with respect to its subject matter and supersedes
all prior agreements or understandings with respect thereto in their entirety.
This Corporate Guaranty Agreement may be executed simultaneously in several
counterparts, each of which shall be regarded as an original.

       ss. 24. HEADINGS. Headings of the sections of this Corporate Guaranty
Agreement are for convenience only and shall not affect the construction of this
Corporate Guaranty Agreement.

       ss. 25. EFFECTIVE DATE. This Corporate Guaranty Agreement shall become
effective upon the execution, consent or acknowledgment of a counterpart hereof
by each of the parties.

       ss. 26. WAIVER OF JURY TRIAL. THE BANK AND THE GUARANTOR HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT,
OR OTHERWISE) BETWEEN THE BANK AND THE GUARANTOR ARISING OUT OF, OR IN ANY WAY
RELATED TO, THIS CORPORATE GUARANTY AGREEMENT, ANY OTHER RELATED DOCUMENTS, OR
ANY RELATIONSHIP BETWEEN THE BANK AND THE GUARANTOR PURSUANT TO THIS CORPORATE
GUARANTY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH. THIS

                                      -6-
<PAGE>

 PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO ENTER INTO THE TRANSACTIONS
 DESCRIBED IN THIS CORPORATE GUARANTY AGREEMENT. THIS PROVISION SHALL NOT IN ANY
 WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY THE BANK'S ABILITY TO PURSUE ANY
 REMEDIES AVAILA1BLE TO IT.

       27. ARBITRATION. The Bank and the Guarantor agree that upon the written
demand of either party, whether made before or after the institution of any
legal proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Corporate Guaranty
Agreement, or otherwise, including without limitation contract disputes and tort
claims, shall be resolved by binding arbitration pursuant to the Commercial
Rules of the American Arbitration Association. Any arbitration proceeding held
pursuant to this arbitration provision shall be conducted in the city nearest
the Borrower's address having an AAA regional office, or at any other piece
selected by mutual agreement of the parties. No act to take or dispose of any
collateral contemplated in the Corporate Guaranty Agreement hereunder shall
constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This arbitration provision shall not limit the right of
either party during any dispute, claim or controversy to seek, use, and employ
ancillary, or preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of, any real or
personal property, and any such action shall not be deemed an election of
remedies. Such remedies include, without limitation, obtaining injunctive relief
or a temporary restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code or when applicable, a judgment by
confession of judgment. Any disputes, claims or controversies concerning the
lawfulness of reasonableness of an act, or exercise of any right or remedy
concerning any collateral, including any claim to rescind, reform, or otherwise
modify any agreement relating to the collateral, shall also be arbitrated;
provided, however that no arbitrator shall have the right or the power to enjoin
or restrain any act of either party. Judgment upon any award tendered by any
arbitrator may be entered in any court having jurisdiction. Nothing in this
arbitration provision shall preclude either party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches and similar doctrines which would otherwise be applicable in an
action brought by a party shall be applicable in any arbitration proceeding, and
the commencement of an arbitration proceeding shall be deemed the commencement
of any action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

         28. Confession of Judgment. The Guarantor hereby, irrevocably
authorizes any attorney-at-law to appear for the undersigned in an action on
this Corporate

                                      -7-
<PAGE>

Guaranty Agreement at any time after the same becomes effective in any court of
record in or of the State of Ohio, and to waive the issuing and service of
process against the undersigned and to confess judgment in favor of the holder
of this Corporate Guaranty Agreement against the undersigned for the amount that
may be due pursuant to the Obligations, with interest at the rate therein
mentioned and cost of suit, and to waive and release all errors in such
proceedings and judgment, and all petitions in error and rights of appeal from
the judgment rendered. The foregoing warrants of attorney shall survive any
judgment, and, if any Judgment be vacated for any reason, the holder hereof
nevertheless may thereafter use the foregoing warrant of attorney to obtain an
additional judgment or judgments against the undersigned. The undersigned waives
any conflict of interest in the Bank's attorney confessing Judgment against the
undersigned pursuant to the foregoing warrant of attorney and further agrees
that the attorney confessing judgment pursuant to the foregoing warrant of
attorney may receive a legal fee or other thing of value from the Bank.

       This Corporate Guaranty Agreement has been executed by the Guarantor and
has been acknowledged by the Bank all effective as of the date first written
above.

WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.

                                       DENISON INTERNATIONAL, plc.

                                       By:

Acknowledged and Agreed:

BANK ONE, N.A.

By:
Title:

                                      -8-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]