Deutsche Bank
                                                       Filiale Remscheid
                                                       Blumenstra(beta)e 33
                                                       42849 Remscheid

IKS Klingelnberg GmbH
Attention: Thomas Meyer
In der Fleute 18
42897 Remscheid

Confirmation of Conditions

Dear Mr. Meyer:

In reference to our conversations, we would like to confirm to you, that we have
already  made  the  following  lines  of  credit  / loans  available  to the IKS
Klingelnberg  GmbH  Group  -  Germany,  within  the  framework  of  our  general
conditions (AGB). For information on the durations, conditions,  collaterals and
covenants, we refer you to the specific loan agreements.

Working Capital Line of Credit in the amount of                     DM 7,500,000

Loan through KfW (government agency) to IKS Klingelnberg GmbH
for the acquisition of the Rolf Meyer company                       DM 5,000,000

Loan through KfW (government agency) to IKS Klingelnberg GmbH
for the acquisition of the China Joint Venture                      DM 2,500,000

Loan through KfW (government agency) to IKS Klingelnberg GmbH
for the mortgage of the factory/office building in Remscheid        DM 3,771,000

Loan through KfW (government agency) to IKS Falzmesser GmbH
for the acquisition of the Rolf Meyer Company                       DM 5,000,000

Loan through KfW (government agency) to IKS Messerfabrik
Geringswalde GmbH                                                   DM   731,000

Deutsche Bank Investment Loan to IKS Messerfabrik Geringswalde      DM   504,000
GmbH

In addition to these loans / lines of credit,  we are prepared
to make available to IKS  Klingelnberg  GmbH,  Remscheid,  an 
additional line of credit for future investments/acquisitions 
in the amount up to with a duration of up to 10 years in 
accordance with framework of our general conditions (AGB).          DM 8,500,000




We will mutually  agree on the conditions of this line of credit at a given time
in connection with the then current market conditions.

The assets  which will be  acquired  with these  funds will  generally  serve as
collateral  for this loan.  In addition,  International  Knife & Saw,  Inc. must
confirm that its loan to IKS  Klingelnberg  GmbH in the amount of DM 9.4 million
will not have to be paid back  until all of the loans  from us have  first  been
paid back.

If you are in  agreement  with  the  content  of this  letter,  please  sign the
enclosed copy and send it back to us.

We thank you for your trust in us, wish you the best in your future  plans,  and
hope for a continued cooperative and confident relationship.

Deutsche Bank


Muller Jakobi