MASTER SECURED PROMISSORY NOTE


$3,000,000                     Knoxville, Tennessee           January 21, 1999

         FOR VALUE RECEIVED,  on or before July 30, 1999 (the "Maturity  Date"),
the  undersigned  BETHLEHEM  ADVANCED  MATERIALS  CORPORATION,   a  Pennsylvania
corporation  (referred  to herein as  "Maker"),  promises to pay to the order of
NATIONSBANK,  N.A., a national banking  association  organized under the laws of
the United States of America ("Payee"; Payee and any subsequent holder[s] hereof
are hereinafter  referred to  collectively  as "Holder"),  without grace, at the
office of Payee at 550 Main Street, Knoxville, Tennessee 37902, or at such other
place as  Holder  may  designate  to Maker in  writing  form  time to time,  the
principal sum of THREE MILLION AND NO/100THS DOLLARS ($3,000,000), or such other
amount as may hereafter be outstanding  hereunder  pursuant to that certain Loan
Agreement of even date herewith between Maker and Payee (the "Loan  Agreement"),
whichever is less,  together with interest on the outstanding  principal balance
hereof from date at an annual rate equal to the interest  rate  designated  from
time to time by Payee as its "Prime Rate",  plus one-half of one percent (.50%),
which rate shall be adjusted on each day that said Prime Rate changes;  provided
that  in no  event  shall  the  rate  of  interest  payable  in  respect  of the
indebtedness  evidenced  hereby exceed the maximum rate of interest from time to
time allowed to be charged by  applicable  law (the  "Maximum  Rate").  Interest
shall be  calculated at the basis of a 360-day year for each day that all or any
part of the indebtedness  evidenced  hereby shall be outstanding,  to the extent
permitted by applicable law.

         Interest only on the outstanding  principal balance hereof shall be due
and payable monthly,  in arrears,  with the first  installment  being payable on
February 1, 1999 and subsequent  installments  being payable on the first day of
each  succeeding  month  thereafter  until the Maturity  Date, at which time the
entire  outstanding  principal  balance  hereof,  together  with all accrued and
unpaid interest,  shall be due and payable in full; provided,  however,  that in
the event the Maker  executes  and  delivers  to the Payee the Term Note and the
Revolving  Credit Line Note (as defined in the Loan  Agreement) on or before the
Maturity Date, the  indebtedness  evidenced hereby shall thereafter be evidenced
by the Term Note and the Revolving Credit Line Note.

         All payments in respect to the  indebtedness  evidenced hereby shall be
made in collected funds, and shall be applied to principal, accrued interest and
charges and expenses  owing under or in connection  with this Note in such order
as Holder elects.

         The  indebtedness  evidenced hereby may be prepaid in whole or in part,
at any time and from time to time, without penalty or premium.

         Any  advance  by  Payee  to  Maker  that is not  evidenced  by  another
instrument or agreement  between the parties shall be  conclusively  presumed to
have been made  hereunder  when such advance is either (1) deposited or credited
to an  account  of Maker  with  Payee,  notwithstanding  that such  advance  was
requested,  orally or in writing,  by someone  other than Maker or that  someone
other than Maker is  authorized to draw on such account and may or does withdraw
the whole or part of such advance,  or (2) made in  accordance  with the oral or
written instructions of Maker. The entire balance of all advances hereunder that
may be outstanding from time to time shall constitute a single



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indebtedness,  and no single advance  increasing the outstanding  balance hereof
shall  itself be  considered  a separate  loan,  but rather an  increase  in the
aggregate outstanding balance of the indebtedness evidenced hereby.

         Time is of the essence of this Note. It is hereby expressly agreed that
in the event that any  default be made in the payment of  principal  or interest
when due as  stipulated  above;  or in the event that any Event of  Default,  as
defined in the Loan  Agreement,  shall occur;  or should any default or event of
default  occur  under  any  other   instrument  or  document  now  or  hereafter
evidencing,  securing or otherwise relating to the indebtedness evidenced hereby
subject to any  applicable  cure  periods;  then and in such  event,  the entire
outstanding principal balance of the indebtedness evidence hereby, together with
any other sums advanced  hereunder,  under the Loan Agreement or under any other
instrument, document or agreement now or hereafter evidencing securing or in any
way relating to the  indebtedness  evidenced  hereby,  together  with all unpaid
interest  accrued  thereon,  shall at the option of Holder and without notice to
Maker, at once become due and payable and may be collected forthwith, regardless
of the  stipulated  date of maturity.  Upon the occurrence of any default as set
forth herein,  at the option of Holder and without notice to Maker,  all accrued
and unpaid interest, if any, shall be added to the outstanding principal balance
hereof, and the entire outstanding principal balance, as so adjusted, shall bear
interest  thereafter  until  paid at a rate (the  "Default  Rate")  equal to the
lesser of (i) the rate that is four percentage  points (4%) in excess of Payee's
Prime Rate, as it varies from time to time, or (ii) the Maximum Rate, regardless
of whether  there has been an  acceleration  of the payment of  principal as set
forth herein.  All such interest shall be paid at the time of and as a condition
precedent to the curing of any such default.

         To the extend  permitted by applicable law, Maker shall pay to Holder a
late charge  equal to four  percent  (4%) of any payment  hereunder  that is not
received by Holder  within  fifteen (15) days of the date on which it is due, in
order to cover the additional  expenses  incident to the handling and processing
of delinquent payments;  provided, however, that nothing in this provision shall
be deemed to waive any other  right or remedy of the Holder  hereof by reason of
Maker's failure to make payments when due hereunder.

         In the  event  this Note is  placed  in the  hands of an  attorney  for
collection or for enforcement or protection of the security, or if Holder incurs
any costs incident to the collection of the indebtedness evidenced hereby or the
enforcement or protection of the security,  Maker and any endorsers hereof agree
to pay a  reasonable  attorney's  fee,  all  court  and  other  costs,  and  the
reasonable costs of any collection efforts.

         Presentment  for payment,  demand,  protest and  nonpayment  are hereby
waive by Maker and all other  parties  hereto.  No  failure  to  accelerate  the
indebtedness  evidenced hereby by reason of default  hereunder,  acceptance of a
past-due  installment or other  indulgences  granted from time to time, shall be
construed  as a  novation  of  this  Note  or  as a  waiver  of  such  right  of
acceleration  or of the  right  of  Holder  thereafter  to  insist  upon  strict
compliance  with the terms of this Note or to prevent the exercise of such right
of  acceleration  or any other right granted  hereunder or by  applicable  laws.
Unless  otherwise  specifically  agreed by Holder in writing,  the  liability of
Maker  and  all  other  persons  now or  hereafter  liable  for  payment  of the
indebtedness  evidenced hereby, or any portion thereof, shall not be affected by
(1) any renewal hereof or other extension of the time for

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payment  of the  indebtedness  evidenced  hereby or any  amount  due in  respect
thereof,  (2) the release of all or any part of any  collateral now or hereafter
securing  the  payment  of the  indebtedness  evidenced  hereby  or any  portion
thereof,  or (3) the release of or resort to any person now or hereafter  liable
for payment of the indebtedness  evidenced  hereby or any portion thereof.  This
Note may not be changed  orally,  but only by an agreement in writing  signed by
the party  against  whom  enforcement  of any waiver,  change,  modification  or
discharge is sought.

         The  indebtedness  and  other  obligations  evidenced  by this Note are
further  evidenced  and/or secured by a (1) Pledge  Agreement from The Bethlehem
Corporation  for the  benefit  of Payee of even date  herewith,  (2) a  Security
Agreement  between  the Maker and Payee of even date  herewith,  and (3) certain
other  instruments  and  documents  as more  particularly  described in the Loan
Agreement.

         All  agreements  herein made are expressly  limited so that in no event
whatsoever, whether by reason of advancement of proceeds hereof, acceleration of
maturity of the unpaid balance hereof or otherwise,  shall the interest and loan
charges  agreed to be paid to Holder for the use of the money  advanced or to be
advanced hereunder exceed the maximum amounts  collectible under applicable laws
in effect from time to time. If for any reason  whatsoever  the interest or loan
charges paid or contracted to be paid in respect of the  indebtedness  evidenced
thereby shall exceed the maximum amounts  collectively  under applicable laws in
effect from time to time,  then, ipso facto, the obligation to pay such interest
and/or loan charges shall be reduced to the maximum  amounts  collectible  under
applicable laws in effect from time to time, and any amounts collected by Holder
that  exceed  such  maximum  amounts  shall be applied to the  reduction  of the
principal balance remaining unpaid hereunder and/or refunded to Maker so that at
no time shall the  interest  or loan  charges  paid or payable in respect of the
indebtedness  evidenced hereby exceed the maximum amounts permitted from time to
time by applicable  law. This provision  shall control every other  provision in
any and all other  agreements and instruments now existing or hereafter  arising
between Maker and Holder with respect to the indebtedness evidenced hereby.

         This Note has been  negotiated,  executed and delivered in the State of
Tennessee,  and is  intended  as a  contract  under and shall be  construed  and
enforceable in accordance with the laws of said state, except to the extent that
Federal law may be applicable to the determination of the Maximum Rate.

         As used  herein,  the terms  "Maker"  and  "Holder"  shall be deemed to
include their respective successors,  legal representatives and assigns, whether
by  voluntary  action of the parties or by  operation  of law. In the event that
more than one person,  firm or entity is a maker hereunder then all reference to
"Maker"  shall be deemed to refer  equally to each of said  persons,  firms,  or
entities,  all of whom  shall be  jointly  and  severally  liable for all of the
obligations of Maker hereunder.

         ANY  CONTROVERSY  OR CLAIM  BETWEEN OR AMONG THE MAKER AND THE  LENDER,
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF THIS INSTRUMENT,  AGREEMENT OR
DOCUMENT OR ANY RELATED  INSTRUMENTS,  AGREEMENTS  OR  DOCUMENTS,  INCLUDING ANY
CLAIM BASED ON OR ARISING FROM AN ALLEGED  TORT,  SHALL BE DETERMINED BY BINDING
ARBITRATION  IN  ACCORDANCE  WITH  THE  FEDERAL   ARBITRATION  ACT  (OR  IF  NOT
APPLICABLE, THE

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APPLICABLE  STATE LAW),  THE RULES OF PRACTICE AND PROCEDURE FOR  ARBITRATION OF
COMMERCIAL  DISPUTES OF THE JUDICIAL  ARBITRATION AND MEDIATION  SERVICES,  INC.
(J.A.M.S.)  AND  THE  "SPECIAL  RULES"  SET  FORTH  BELOW.  IN THE  EVENT  OF AN
INCONSISTENCY,  THE SPECIAL RULES SHALL CONTROL.  JUDGMENT UPON ANY  ARBITRATION
AWARD  MAY BE  ENTERED  IN ANY  COURT  HAVING  JURISDICTION.  ANY  PARTY TO THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT MAY BRING ANY ACTION,  INCLUDING A SUMMARY OR
EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH
THIS INSTRUMENT,  AGREEMENT OR DOCUMENT RELATES IN ANY COURT HAVING JURISDICTION
OVER SUCH ACTION.

                  THE ARBITRATION SHALL BE CONDUCTED IN KNOX COUNTY,  TENNESSEE,
AND  ADMINISTERED  BY J.A.M.S.  WHO WILL APPOINT AN ARBITRATOR.  IF J.A.M.S.  IS
UNABLE  OR  LEGALLY  PRECLUDED  FROM  ADMINISTERING  THE  ARBITRATION,  THEN THE
AMERICAN  ARBITRATION  ASSOCIATION WILL SERVE. ALL ARBITRATION  HEARINGS WILL BE
COMMENCED  WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION;  FURTHER,  THE
ARBITRATOR  SHALL  ONLY,  UPON A SHOWING OR CAUSE,  BE  PERMITTED  TO EXTEND THE
COMMENCING OF SUCH HEARING FOR AN ADDITIONAL SIXTY (60) DAYS.

                  NOTHING IN THIS  INSTRUMENT,  AGREEMENT  OR DOCUMENT  SHALL BE
DEEMED TO (I) LIMIT THE  APPLICABILITY OF ANY OTHERWISE  APPLICABLE  STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT,  AGREEMENT OR
DOCUMENT;  OR (II) BE A WAIVER BY THE LENDER OF THE PROTECTION AFFORDED TO IT BY
12 U.S.C.ss.91  OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE LAW; OR (III) LIMIT THE
RIGHT OF THE LENDER: (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO)  SETOFF,  OR  (B)  TO  FORECLOSE  AGAINST  ANY  REAL  OR  PERSONAL  PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER.  THE LENDER MAY EXERCISE  SUCH SELF HELP RIGHTS,  FORECLOSE  UPON
SUCH PROPERTY,  OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,  DURING
OR AFTER THE PENDENCY OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT TO THIS
INSTRUMENT,  AGREEMENT OR DOCUMENT.  NEITHER THE EXERCISE OF SELF HELP  REMEDIES
NOR  THE  INSTITUTION  OR  MAINTENANCE  OF ANY  ACTION  FOR  FORECLOSURE  OR FOR
PROVISIONAL OR ANCILLARY  REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY,  INCLUDING  THE CLAIMANT IN SUCH ACTION,  TO ARBITRATE  THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.

         Maker  represents  to Lender  that the  proceeds of this Note are to be
used  primarily  for  business,   commercial  or  agricultural  purposes.  Maker
acknowledges  having read and  understood,  and agrees to be bound by, all terms
and conditions of this Note.


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         THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR
SUBSEQUENT  ORAL  AGREEMENTS  OF  THE  PARTIES.  THERE  ARE  NO  UNWRITTEN  ORAL
AGREEMENTS BETWEEN THE PARTIES.

         IN WITNESS  WHEREOF,  the undersigned  Maker has caused this Note to be
executed by its duly authorized officer as of the date first above written.


                                            MAKER:

                                            BETHLEHEM ADVANCED MATERIALS
                                            CORPORATION



                                            By: ________________________________
                                            Title:______________________________


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