TERM PROMISSORY NOTE


$3,000,000.00                 Knoxville, Tennessee                July 30, 1999


         FOR VALUE  RECEIVED,  ON OR BEFORE THE February 1, 2006 (the  "Maturity
Date"),   the  undersigned,   BETHLEHEM  ADVANCED   MATERIALS   CORPORATION,   a
Pennsylvania corporation (referred to herein as "Maker"), promises to pay to the
order  of  Bank  of  America,  N.A.,  d/b/a  NationsBank,   N.A.,  successor  to
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  from  time to time the
principal sum of THREE MILLION DOLLARS AND 00/100THS  ($3,000,000.00),  together
with interest on the outstanding  principal  balance hereof from the date hereof
until the Maturity 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 one 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").
Notwithstanding  the  foregoing,  however,  in the event Maker and The Bethlehem
Corporation  maintain  compliance with all financial and reporting covenants set
forth in the Loan Agreement  between Maker and Payee dated January 21, 1999 (the
"Loan Agreement") and the other documents relating to the indebtedness described
therein for a one year period commencing on the date of the Loan Agreement,  the
amount of "one-half of one percent  (.50%)" in the foregoing  sentence  shall be
replaced with the amount of "one quarter of one-percent (.25%)" beginning on the
first day succeeding  such one year period.  Interest shall be calculated on the
basis of a 360-day  year for each day that all or any part o f the  indebtedness
evidenced hereby shall be outstanding, to be extent permitted by applicable law.

         The aforesaid  principal amount shall be payable in seventy-eight  (78)
monthly payments on the 1st day of each successive month commencing on September
1, 1999, the amount of which monthly payments shall be calculated so as to fully
amortize the principal balance of this Note in equal monthly principal  payments
over an  assumed  amortization  period  of  seven  (7)  years  commencing  as of
September 1, 1999, provided, however, that the full principal balance hereof and
all accrued  interest  thereon  shall be due and payable,  in any event,  on the
Maturity  date.  Accrued  interest  shall  also be paid at the same time as each
monthly principal payment.

         Notwithstanding  the  foregoing,  commencing  on  October  1,  1999 and
continuing on each October 1st thereafter,  Make shall apply fifty percent (50%)
of its excess  cash flow (as  hereinafter  defined)  from the fiscal year ending
immediately prior to such date to prepayment of this Note. "Excess cash flow" as
used in the foregoing  sentence  shall mean earnings  before  interest  expense,
taxes, depreciation and amortization minus scheduled principal payments,


<PAGE>

interest expense and state and local income taxes. In addition to the foregoing,
Maker may repay this Note at any time without  premium or penalty  except in the
event the source of the funds of such prepayment is other  indebtedness and such
prepayment  occurs on or before  July 1, 2000,  in which  event  Maker shall pay
Holder a penalty equal to one percent (1%) of the principal balance of this Note
at the time of such prepayment. All prepayments of principal shall be applied in
the  inverse  order of  maturity,  or in such  other  order as the  Payee  shall
determine in its sole discretion.

         All payments in respect of the  indebtedness  evidence  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.

         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  the Loan  Agreement,  shall  occur;  or should any  default or event of
default  occur 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 evidenced 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 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 extent  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 expense 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  evidence hereby or the
enforcement or protection of the security, Maker and


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<PAGE>

any  indorsers  hereof agree to pay a reasonable  attorney's  fee, all court and
other costs and the reasonable costs of any other collection efforts.

         Presentment for payment,  demand, protest and notice of demand, protest
and  nonpayment  are hereby  waived by Maker and all other  parties  hereto.  No
failure to accelerate  the  indebtedness  evidenced  hereby by reason of default
hereunder,  acceptance of 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  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 ow 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 (I) Pledge  Agreement from The Bethlehem
Corporation  for the benefit of Payee dated  January  21,  1999,  (2) a Security
Agreement  between the Maker and Payee dated  January 21, 1999,  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  be paid in respect of the  indebtedness  evidenced
hereby shall exceed the maximum  amounts  collectible  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.



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<PAGE>

         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 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 references
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 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;
OF (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


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<PAGE>


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 OR 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.

         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  first  date  first  above
written.


                                       MAKER


                                       BETHLEHEM ADVANCED
                                       MATERIALS CORPORATION


                                       By:/s/ Antoinette L. Martin
                                          ------------------------------------
                                          Title: Chief Financial Officer



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