Loan Agreement



                             dated as of January 1, 1993

                                     between the


                            Village of Hennepin, Illinois


                                        and



                                 Exolon-ESK Company



                        _____________________________________

                   Industrial Development Revenue Refunding Bonds
                            (Exolon-ESK Company Project)
                                     Series 1993
                        _____________________________________





                                   Loan Agreement
                                  Table of Contents
                                                                 Page
          Article I      Definitions                                      1

          Article II     Representations                                  1
          Section 2.1.   Representations of Issuer                        1
          Section 2.2.   Representations of Company                       3

          Article III    Completion of the Project                        5
          Section 3.1.   Project Complete                                 5
          Section 3.2.   Project Description                              5
          Section 3.3.   Operation of Project                             5

          Article IV     Issuance of Bonds; Loan to Company               5
          Section 4.1.   Issuance of Bonds                                5

          Article V      Repayment of Loan                                6
          Section 5.1.   Repayment of Loan                                6
          Section 5.2.   Additional Payments                              7
          Section 5.3.   Prepayments                                      7
          Section 5.4.   Payments Upon Determination of Taxability        7
          Section 5.5.   Obligations of Company Unconditional             7

          Article VI     Other Company Agreements                         8
          Section 6.1.   Maintenance of Existence                         8
          Section 6.2.   Financial Statements                             8
          Section 6.3.   Payment of Taxes                                 8
          Section 6.4.   Arbitrage                                        9
          Section 6.5.   Company's Obligation with Respect to 
                         Exclusion of Interest Paid on the Bonds          9
          Section 6.6.   Maintenance of Insurance                        10
          Section 6.7.   Maintenance of Property                         10
          Section 6.8.   Access to the Project and Inspection            10
          Section 6.9.   Negative Covenant                               10

          Article VII    No Recourse to Issuer                           11
          Section 7.1.   No Recourse to Issuer                           11
          Section 7.2.   Indemnification                                 11

          Article VIII   Assignment                                      11
          Section 8.1.   Assignment by Company                           11
          Section 8.2.   Assignment by Issuer                            11

          Article IX     Defaults and Remedies                           12
          Section 9.1.   Remedies on Default                             12
          Section 9.2.   Delay Not Waiver                                12
          Section 9.3.   Attorneys' Fees and Expenses                    12

          Article X      Miscellaneous                                   12
          Section 10.1.  Notices                                         12
          Section 10.2.  Binding Effect                                  12
          Section 10.3.  Severability                                    13
          Section 10.4.  Amendments                                      13
          Section 10.5.  Right of Company To Perform Issuer's Agreements 13
          Section 10.6.  Applicable Law                                  13
          Section 10.7.  Captions                                        13
          Section 10.8.  Complete Agreement                              13
          Section 10.9.  Termination                                     13
          Section 10.10. Counterparts                                    14

          Exhibit A   Description of the Project
          Schedule 2.2(d)   Litigation
          Schedule 2.2(h)   Legal Requirements
          Schedule 2.2(i)   Properties and Assets


               Loan Agreement dated as of January 1, 1993, between the
               Village of Hennepin, Putnam County, Illinois, a political
               subdivision of the State of Illinois (the  Issuer ), and
               Exolon-ESK Company, a Delaware corporation (the  Company ).

               The Industrial Project Revenue Bond Act, Ill. Rev. Stat.,
          ch. 29, paragraph 11-74-1 through 11-74-14, inclusive, as
          amended, empowers the Issuer to issue its revenue bonds for the
          purpose of financing an industrial project, including the
          refunding of revenue bonds previously issued by it.  On December
          28, 1984, the Issuer issued its Industrial Revenue Bonds, Series
          1984 (Exolon-ESK Company Project) (the  Prior Bonds ) for the
          purpose of refinancing costs of the Project (as described in
          Exhibit A hereto).

               The Issuer proposes to issue $8,000,000 Industrial
          Development Revenue Refunding Bonds (Exolon-ESK Company Project)
          Series 1993 pursuant to the Indenture in order to provide funds
          for the refunding of the Prior Bonds and to loan the proceeds of
          the Bonds to the Company, and the Company desires to use the
          proceeds to pay a portion of the cost of the refunding of the
          Prior Bonds, all on the terms and conditions set forth in this
          Loan Agreement.

               Accordingly, the Issuer and the Company hereby agree as
          follows:

                                      Article I

                                     Definitions

               For all purposes of this Loan Agreement, unless the context
          clearly requires otherwise, all terms defined in Article I of the
          Indenture or Article I of the Covenant Agreement have the same
          meanings in this Loan Agreement.

                Indenture  means the Indenture of Trust relating to the
          Bonds, dated as of the date of this Loan Agreement, between the
          Issuer and American National Bank and Trust Company of Chicago,
          as Trustee, as such Indenture of Trust may be amended or
          supplemented from time to time in accordance with its terms.

                                     Article II

                                   Representations


               Section 2.1.   Representations of Issuer.  The Issuer
                              represents as follows:

               (a)  The Issuer (1) is a political subdivision duly
          organized and existing under the laws of the State, (2) has full
          power and authority to enter into the transactions contemplated
          by this Loan Agreement and by the Indenture and to carry out its
          obligations under this Loan Agreement and the Indenture,
          including the issuance of the Bonds, (3) is not in default under
          any provisions of the laws of the State and (4) by proper
          corporate action has duly authorized the execution and delivery
          of this Loan Agreement, the Bonds and the Indenture.

               (b)  Under existing statutes and decisions, no taxes on
          income or profits are imposed on the Issuer.  The Issuer will not
          knowingly take or omit to take any action reasonably within its
          control which action or omission would impair the exclusion of
          interest paid on the Bonds from the federal gross income of the
          owners of the Bonds.

               (c)  Neither the execution and delivery by the Issuer of
          this Loan Agreement nor the consummation by the Issuer of the
          transactions contemplated by this Loan Agreement conflicts with,
          will result in a breach of or default under or will (except with
          respect to the lien of the Indenture) result in the imposition of
          any lien on any property of the Issuer pursuant to the terms,
          conditions or provisions of any statute, order, rule, regulation,
          agreement or instrument to which the Issuer is a party or by
          which it is bound.

               (d)  Each of this Loan Agreement and the Indenture has been
          duly authorized, executed and delivered by the Issuer and each
          constitutes the legal, valid and binding obligation of the Issuer
          enforceable against the Issuer in accordance with its terms.

               (e)  There is no litigation or proceeding pending, or to the
          knowledge of the Issuer threatened, against the Issuer, or to the
          knowledge of the Issuer affecting it, which would adversely
          affect the validity of this Loan Agreement, the Indenture or the
          Bonds or the ability of the Issuer to comply with its obligations
          under this Loan Agreement, the Indenture or the Bonds.

               (f)  The Issuer is not in default under any of the
          provisions of the laws of the State which would affect its
          existence or its powers referred to in the preceding subsection
          (a).

               (g)  The Issuer hereby finds and determines that, based on
          representations of the Company, all requirements of the Act have
          been complied with and that the refinancing of the Project
          through the issuance of the Bonds will further the public
          purposes of the Act.

               (h)  No member, director, officer or official of the Issuer
          has any pecuniary interest in any employment, financing,
          agreement or other contract with the Company or in the
          transactions contemplated by this Loan Agreement.

               (i)  The Issuer will apply the proceeds from the sale of the
          Bonds as specified in the Indenture and this Loan Agreement.  So
          long as any of the Bonds remain outstanding and except as may be
          authorized by the Indenture, the Issuer will not issue or sell
          any bonds or obligations, other than the Bonds, the principal of
          or interest on which will be payable from the property described
          in the granting clause of the Indenture.

               Section 2.2.   Representations of Company.  The Company
          represents as follows:

               (a)  The Company (1) is a corporation duly incorporated and
          in good standing in the state of Delaware, (2) is duly qualified
          to transact business and in good standing in the State and each
          other jurisdiction where its ownership or lease of property or
          the conduct of its business require such qualification, (3) is
          not in violation of any provision of its certificate of
          incorporation or its by-laws, (4) has full corporate power to own
          its properties and conduct its business, (5) has full legal
          right, power and authority to enter into this Loan Agreement and
          the Covenant Agreement and consummate all transactions
          contemplated by this Loan Agreement and the Covenant Agreement
          and (6) by proper corporate action has duly authorized the
          execution and delivery of this Loan Agreement and the Covenant
          Agreement.

               (b)  Neither the execution and delivery by the Company of
          this Loan Agreement or the Covenant Agreement nor the
          consummation by the Company of the transactions contemplated by
          this Loan Agreement and the Covenant Agreement conflicts with,
          will result in a breach of or default under or will result in the
          imposition of any lien on any property of the Company pursuant to
          the certificate of incorporation or by-laws of the Company or the
          terms, conditions or provisions of any statute, order, rule,
          regulation, indenture, agreement or instrument to which the
          Company is a party or by which it is bound.

               (c)  Each of this Loan Agreement and the Covenant Agreement
          has been duly authorized, executed and delivered by the Company
          and constitutes the legal, valid and binding obligation of the
          Company enforceable in accordance with its terms.

               (d)  There is no litigation or proceeding pending, or to the
          knowledge of the Company threatened, against the Company or any
          Subsidiary which could adversely affect the validity of this Loan
          Agreement or the Covenant Agreement or the ability of the Company
          to comply with its obligations under this Loan Agreement or,
          except as identified on Schedule 2.2(d) attached hereto, which
          could have a material adverse effect on the financial position,
          results of operations, business, properties or prospects of the
          Company and its Subsidiaries taken as a whole.

               (e)  The information contained in the Tax Exemption
          Certificate and Agreement, the Project Certificate and all other
          written information relating to the Project provided by the
          Company to the Issuer and bond counsel for the Bonds is true and
          correct in all material respects.

               (f)  (i) The Financial Statements as of December 31, 1991,
          1990 and 1989 and for each of the three years then ended,
          reported on by Arthur Andersen & Co., copies of which have been
          delivered to the Initial Purchaser, fairly present, in all
          material respects, the financial position of the Company and its
          Subsidiaries as of such dates and the results of their operation
          and their cash flows for each of the three years then ended in
          conformity with GAAP; and (ii) the unaudited Financial Statements
          as of September 30, 1992 and September 30, 1991 and for the nine
          months then ended, copies of which have been delivered to the
          Initial Purchaser fairly present, in all material respects, the
          consolidated financial position of the Company and its
          Subsidiaries as of such dates and the results of their operations
          and their cash flows for the periods then ended in conformity
          with GAAP (subject to normal year-end adjustments).

               (g)  Since December 31, 1991, there has been no material
          adverse change in the financial position, results of operations,
          business, properties or prospects of the Company and its
          Subsidiaries taken as a whole.

               (h)  Except as otherwise disclosed in the Placement
          Memorandum or in Schedule 2.2(h) attached hereto, the Company and
          each Subsidiary is in compliance in all material respects with
          all Legal Requirements affecting the Company or such Subsidiary,
          and all material Governmental Approvals necessary for the use or
          occupancy of their respective properties or the conduct of their
          business have been obtained by the Company and its Subsidiaries
          and are in full force and effect.

               (i)  All properties and assets of the Company and each
          Subsidiary are owned by the Company or such Subsidiary free and
          clear of all liens, encumbrances, security interest and pledges
          except (i) liens for taxes not yet due or being contested in good
          faith and by appropriate proceedings for which adequate reserves
          with respect thereto are maintained on the books of the Company
          in accordance with GAAP; (ii) carriers', warehousemen's,
          mechanics', materialmen's, repairmen's or other liens arising in
          the ordinary course of business which are not overdue for a
          period of more than 30 days or which are being contested in good
          faith by appropriate proceedings; (iii) easements, rights-of-way,
          restrictions and other similar encumbrances that do not
          materially impair the use or value of the properties or assets of
          the Company or such Subsidiary; (iv) liens in favor of the United
          States of America for amounts paid to the Company or any
          Subsidiary as progress payments under government contracts
          entered into by it; (v) liens described in the Financial
          Statements referred to in paragraph (f) above or otherwise
          disclosed to the Initial Purchaser in writing; and (vi) liens
          encumbrances, securities interest and pledges identified in
          Schedule 2.2(1) attached hereto.

               (j)  No condemnation or eminent domain proceeding has been
          commenced or, to the knowledge of the Company, is threatened
          against any material property of the Company or any Subsidiary.

               (k)  The information contained in the Placement Memorandum
          and any other written information furnished to the Initial
          Purchaser is true, correct and complete in all material respects
          and does not contain any untrue statement of a material fact or
          omit to state a material fact necessary to make the statements
          contained therein not misleading.  There is no fact that the
          Company has not disclosed to the Issuer, bond counsel for the
          Bonds and the Initial Purchaser in writing that materially and
          adversely affects or in the future may (so far as the Company can
          now reasonably foresee) materially and adversely affect the
          financial position, results of operations, business, properties
          or prospects of the Company and its Subsidiaries taken as a whole
          or the ability of the Company to perform its obligations under
          this Loan Agreement and the Covenant Agreement or any documents
          contemplated hereby or thereby.

               (1)  All representations of the Company contained herein or
          in any certificate or other instrument delivered by the Company
          in connection herewith shall survive the execution and delivery
          thereof and issuance, sale and delivery of the Bonds.

                                     Article III

                              Completion of the Project

               Section 3.1.   Project Complete.  The acquisition,
          construction and installation of the Project has been completed
          as contemplated in accordance with the documents executed in
          connection with the issuance by the Issuer of the Industrial
          Project Revenue Bonds, Series A (ESK Corporation Project) dated
          February 1, 1979 (the  Series 1979 Bonds ) which were refunded by
          the Issuer's Industrial Development Revenue Bonds, Series 1984
          ESK Corporation Project dated February 15, 1984 which were
          refunded by the Prior Bonds.

                    Section 3.2.   Project Description.  The Company will
          not make any material change in the Project description contained
          in Exhibit A unless the Trustee and the Issuer receive an Opinion
          of Tax Counsel to the effect that such change will not impair the
          exclusion of interest on the Bonds from the gross income of
          holders of the Bonds for Federal income tax purposes.  The cost
          of the Project for federal tax purposes, including the portion
          paid for from proceeds of the Series 1979 Bonds, including
          investment income, is set forth in Exhibit A.  The provisions of
          this Section will not prohibit the Company from disposing of
          depreciated or worn out equipment.

               Section 3.3.   Operation of Project.  So long as the Company
          operates the Project, it will operate it as an  industrial
          project  as contemplated by the Act and will operate the Project
          in such a manner such that it will not impair the exclusion of
          interest on the Bonds from gross income of the holders of the
          Bonds for Federal income tax purposes under the Code and the
          regulations promulgated and proposed thereunder

                                     Article IV

                         Issuance of Bonds; Loan to Company

               Section 4.1.   Issuance of Bonds; Loan to Company.  In order
          to refund the Prior Bonds, the Issuer will issue, sell and
          deliver the Bonds to the initial purchasers thereof and deposit
          the proceeds of the Bonds with the Trustee as provided in Article
          IV of the Indenture.  Such deposit shall constitute a loan to the
          Company under this Loan Agreement.  The Issuer authorizes the
          Trustee to disburse the proceeds of the Bonds in accordance with
          Section 4.01 of the Indenture.  If the funds held pursuant to the
          Prior Indenture are not sufficient to accomplish the refunding of
          the Prior Bonds within 10 Business Days of Closing, the Company
          shall at its own expense and without any right of reimbursement
          in respect thereof immediately pay all amounts necessary to
          accomplish such refunding.  The Company hereby approves the
          Indenture and the issuance by the Issuer of the Bonds.

                                      Article V

                                  Repayment of Loan

               Section 5.1.   Repayment of Loan.  The Company will repay
          the loan made to it under Section 4.1 as follows:  

               (i)  On the 1st day of March, 1993 and on the 1st day of
          each month thereafter to and including the 1st day of July, 1993
          the Company shall pay to the Trustee an amount which is not less
          than one-fifth of the interest on the Bonds which will become due
          on July 1, 1993; provided if the Bonds are initially delivered
          after March 1, 1993 such payments due on or before March 1, 1993
          shall be proportionally increased to reach the same result.  On
          the 1st day of August, 1993 and on the 1st day of each month
          thereafter the Company shall pay to the Trustee an amount which
          is not less than the sum of one-sixth (1/6) of the interest which
          will become due on the next or current interest payment date on
          the outstanding Bonds and one-twelfth (1/12) of the principal of
          the outstanding Bonds which will become due on the next
          succeeding or current principal payment date by maturity,
          mandatory sinking fund redemption or extraordinary mandatory
          redemption.  No such payment need be made however to the extent
          that there is a sufficient amount already on deposit with the
          Trustee and available for such purpose to be applied to such next
          interest payment or maturity, mandatory sinking fund redemption
          or extraordinary mandatory redemption payment.  If the 1st day of
          any month is not a Business Day, the payment herein required to
          be made shall be made on the next succeeding Business Day.

               (ii) On or before 11:00 a.m. (local time at the principal
          corporate trust office of the Trustee) on each day on which any
          payment of either principal of, premium, if any and interest on
          the Bonds, or both, shall become due (whether at maturity, or
          upon redemption or acceleration or otherwise), the Company will
          pay an amount which, together with other moneys held by the
          Trustee under the Indenture and available therefor, will enable
          the Trustee to make such payment in full in a timely manner.

               If the Company defaults in any payment required by this
          Section, the Company will pay interest (to the extent allowed by
          law) on such amount until paid at the rate provided for in the
          Bonds.

               In furtherance of the foregoing, so long as any Bonds are
          outstanding the Company will pay all amounts required to prevent
          any deficiency or default in any payment of the Bonds, including
          any deficiency caused by an act or failure to act by the Trustee,
          the Company, the Issuer or any other person.

               All amounts payable under this Section by the Company are
          assigned by the Issuer to the Trustee pursuant to the Indenture
          for the benefit of the Bondholders.  The Company consents to such
          assignment.  Accordingly, the Company will pay directly to the
          Trustee at its principal corporate trust office all payments
          payable by the Company pursuant to this Section.

               Section 5.2.   Additional Payments.  The Company will also
          pay the following within 30 days after receipt of a bill
          therefor:

               (a)  The reasonable fees and expenses of the Issuer in
          connection with this Loan Agreement and the Bonds, such fees and
          expenses to be paid directly to the Issuer; provided that the
          Company Representative shall have approved such expenses in
          writing prior to their incurrence.

               (b)  (i) The fees and expenses of the Trustee and all other
          fiduciaries and agents serving under the Indenture (including any
          expenses in connection with any redemption of the Bonds), and
          (ii) all fees and expenses, including attorneys' fees, of the
          Trustee for any extraordinary services rendered by it under the
          Indenture.  All such fees and expenses are to be paid directly to
          the Trustee or other fiduciary or agent for its own account as
          and when such fees and expenses become due and payable.

               Section 5.3.   Prepayments.  The Company may prepay to the
          Trustee all or any part of the amounts payable under Section 5.1
          at the times and subject to the conditions that Bonds are subject
          to redemption as described in the Bonds.  A prepayment shall not
          relieve the Company of its obligations under this Loan Agreement
          until all the Bonds have been paid or provision for the payment
          of all the Bonds has been made in accordance with the Indenture. 
          In the event of a mandatory redemption of the Bonds, the Company
          will prepay all amounts necessary for such redemption.

               Section 5.4.   Payments Upon Determination of Taxability. 
          The Company shall pay on demand to any former holder of the Bonds
          all amounts required to be paid by the Issuer pursuant to
          Section 5.02 of the Indenture.

               Section 5.5.   Obligations of Company Unconditional.  The
          obligations of the Company to make the payments required by
          Sections 5.1, 5.3 and 5.4 and to perform its other agreements
          contained in this Loan Agreement shall be absolute and
          unconditional.  Until the principal of and interest on the Bonds
          shall have been fully paid or provision for the payment of the
          Bonds made in accordance with the Indenture, the Company (a) will
          not suspend or discontinue any payments provided for in Section
          5.1 hereof, (b) will perform all its other agreements in this
          Loan Agreement and (c) will not terminate this Loan Agreement for
          any cause including any acts or circumstances that may constitute
          failure of consideration, destruction of or damage to the
          Project, commercial frustration of purpose, any change in the
          laws of the United States or of the State or any political
          subdivision of either or any failure of the Issuer to perform any
          of its agreements, whether express or implied, or any duty,
          liability or obligation arising from or connected with this Loan
          Agreement.

                                     Article VI

                              Other Company Agreements

               Section 6.1.   Maintenance of Existence.  The Company agrees
          that during the term of this Loan Agreement and so long as any
          Bond is outstanding, it will maintain its corporate existence,
          will continue to be a corporation in good standing under the laws
          of the State of Delaware and qualified to do business in the
          States of New York and Illinois, will not dissolve or otherwise
          dispose of all or substantially all of its assets and will not
          consolidate with or merge into another legal entity or permit one
          or more other legal entities (other than one or more subsidiaries
          of the Company) to consolidate with or merge into it, except
          pursuant to the settlement agreement dated as of May 29, 1992
          between the Company and Wacker Chemical Corporation, or sell or
          otherwise transfer to another legal entity all or substantially
          all its assets as an entirety and dissolve, unless (a) in the
          case of any merger or consolidation, the Company is the surviving
          corporation, or (b)(i) the surviving, resulting or transferee
          legal entity is organized and existing under the laws of the
          United States, a state thereof or the District of Columbia, and
          (if not the Company) assumes in writing all the obligations of
          the Company under this Loan Agreement, (ii) no event which
          constitutes, or which with the giving of notice or the lapse of
          time or both would constitute an Event of Default shall have
          occurred and be continuing immediately after such merger,
          consolidation or transfer and (iii) no such merger, consolidation
          or transfer shall result in a reduction in any rating then in
          effect on the Bonds.  As long as the Covenant Agreement shall
          remain in effect, no such dissolution, disposal of assets,
          consolidation or merger shall occur except in compliance with the
          Covenant Agreement.

               Section 6.2.   Financial Statements.  The Company shall
          deliver to the Trustee and any Major Bondholder and, upon
          request, shall deliver to the Issuer (a) as soon as practicable
          and in any event within forty-five (45) days after the end of
          each of the first three quarterly periods of each fiscal year of
          the Company, the unaudited financial report of the Company for
          such quarter and (b) as soon as practicable and in any event
          within ninety (90) days after the end of each fiscal year of the
          Company, the financial report of the Company for such fiscal year
          audited by a firm of independent certified public accountants
          regularly retained by the Company.  Each such report to the
          Trustee and such Bondholders will be accompanied by a  no default
          certificate  evidencing compliance with the Company Covenants.

               Section 6.3.   Payment of Taxes.  The Company will, and will
          cause each Subsidiary to, pay and discharge promptly all lawful
          taxes, assessments and other governmental charges or levies
          imposed upon the Project, or upon any part thereof, as well as
          all claims of any kind (including claims for labor, materials and
          supplies) which, if unpaid, might by law become a lien or charge
          upon the Project or any other property of the Company or such
          Subsidiary; provided that the Company shall not be required to
          pay any such tax, assessment, charge, levy or claim (i) if the
          amount, applicability or validity thereof shall currently be
          contested in good faith by appropriate proceedings promptly
          initiated and diligently conducted; (ii) if the Company shall
          have set aside on its books reserves (segregated to the extent
          required by GAAP) with respect thereto deemed adequate by the
          Company; and (iii) if failure to make such payment will not
          impair the use of the Project by the Company or such Subsidiary.

               Section 6.4.   Arbitrage.  The Company covenants with the
          Issuer and for and on behalf of the purchasers and owners of the
          Bonds from time to time outstanding that so long as any of the
          Bonds remain outstanding, moneys on deposit in any fund in
          connection with the Bonds, whether or not such moneys were
          derived from the proceeds of the sale of the Bonds or from any
          other sources, will not be used in a manner which will cause the
          Bonds to be  arbitrage bonds  within the meaning of Section 148
          of the Code, and any lawful regulations promulgated thereunder,
          as the same exist on this date, or may from time to time
          hereafter be amended, supplemented or revised.  The Company also
          covenants for the benefit of the Bondholders to comply with all
          of the provisions of the Tax Exemption Certificate and Agreement
          and the Project Certificate.  The Company reserves the right,
          however, to make any investment of such moneys permitted by State
          law, if, when and to the extent that said Section 148 or
          regulations promulgated thereunder shall be repealed or relaxed
          or shall be held void by final judgment of a court of competent
          jurisdiction, but only if any investment made by virtue of such
          repeal, relaxation or decision would not, in the written Opinion
          of Tax Counsel, result in making the interest on the Bonds
          includible in the federal gross income of the owners of the
          Bonds.

               Section 6.5.   Company's Obligation with Respect to
          Exclusion of Interest Paid on the Bonds;.  Notwithstanding any
          other provision hereof, the Company covenants and agrees that it
          will not take or authorize or permit, to the extent such action
          is within the control of the Company, any action to be taken with
          respect to the Project, or the proceeds of the Bonds (including
          investment earnings thereon), or any other proceeds derived
          directly or indirectly in connection with the Project, which will
          result in the loss of the exclusion of interest on the Bonds from
          the federal gross income of the owners of the Bonds under Section
          103 of the Code (except for any Bond during any period while any
          such Bond is held by a person referred to in Section 103(b)(13)
          of the 1954 Code); and the Company also will not omit to take any
          action in its power which, if omitted, would cause the above
          result.  The inclusion of interest on any Bond in the computation
          of the adjustment used in determining the alternative minimum tax
          for certain corporations, the environmental tax imposed by
          Section 59A of the Code or the branch profits tax on foreign
          corporations imposed by Section 884 of the Code does not
          constitute a loss of the exclusion from federal gross income of
          interest on the Bonds under Section 103 of the Code within the
          meaning of this Section.  This provision shall control in case of
          conflict or ambiguity with any other provision of this Loan
          Agreement.

               The Company covenants and agrees to notify the Trustee, each
          Major Bondholder and the Issuer of the occurrence of any event of
          which the Company has notice and which event would require the
          Company to prepay the amounts due hereunder because of a
          redemption upon a Determination of Taxability (as defined in the
          Form of Bond attached to the Indenture as Exhibit A).
          The Company covenants and agrees that upon the enactment of
          appropriate changes to the Code it will, at its own expense, use
          all reasonable efforts to cause to be delivered to the Trustee
          the Opinion of Tax Counsel referred to in Section 3.02(b) of the
          Indenture.

               Section 6.6.   Maintenance of Insurance.  The Company
          agrees, as long as any Bonds are outstanding, to maintain and to
          cause each Subsidiary to maintain, insurance with respect to the
          Project and all of its other property, including business
          interruption insurance and liability insurance, with responsible
          and reputable insurance companies or associations in such amounts
          and covering such risks as are usually carried by companies
          engaged in similar businesses and owning similar properties in
          the same general area.  Evidence of insurance shall be provided
          to the Trustee and each Major Bondholder.

               Section 6.7.   Maintenance of Property.  The Company will,
          and will cause each Subsidiary to, as long as any Bonds are
          outstanding, maintain and preserve the Project and their other
          properties, real or personal, in good working order and
          condition, ordinary wear and tear excepted, it being understood
          that this agreement relates only to the good working order and
          condition of such property and shall not be construed as an
          agreement of the Company not to dispose of such property by sale,
          lease, transfer or otherwise in the ordinary course of business.

               Section 6.8.   Access to the Project and Inspection.  The
          Trustee, the Issuer, and the owners of 25% or more of outstanding
          principal amount of the Bonds shall have the right, at all
          reasonable times upon the furnishing of reasonable notice under
          the circumstances to the Company, to enter upon and to examine
          and inspect the Project.  The Trustee, the Issuer, such
          Bondholders and their duly authorized agents shall also have such
          right of access to the Project as may be reasonably necessary for
          the proper maintenance of the Project, in the event of failure by
          the Company to perform its obligations relating to maintenance
          under this Loan Agreement.  The Company hereby covenants to
          execute, acknowledge and deliver all such further documents, and
          do all such other acts and things as may be necessary to grant to
          the Trustee, the Issuer and such Bondholders such right of entry. 
          The Trustee, The Issuer and such Bondholders shall also be
          permitted, at all reasonable times, to examine the books and
          records of the Company with respect to the obligations of the
          Company hereunder, but neither shall be entitled to access to
          trade secrets or other proprietary information (other than
          financial information) of the Company.

               Section 6.9.   Negative Covenant;.  So long as any of the
          Bonds remain outstanding, the Company will not, without the
          written consent of the holders of at least a majority in
          aggregate principal amount of the outstanding Bonds, sell,
          transfer, convey, encumber, mortgage or otherwise dispose of the
          Project or substantially all thereof except as permitted by
          Section 6.1 and except as permitted in the Covenant Agreement.

                                     Article VII

                       No Recourse to Issuer; indemnification

               Section 7.1.   No Recourse to Issuer.  The Issuer will not
          be obligated to pay the Bonds except from revenues provided by
          the Company.  The issuance of the Bonds will not directly or
          indirectly or contingently obligate the Issuer or the State to
          levy or pledge any form of taxation whatever or to make any
          appropriation for their payment.  Neither the Issuer nor any
          member or officer of the Issuer nor any person executing the
          Bonds shall be liable personally for the Bonds or be subject to
          any personal liability or accountability by reason of the
          issuance of the Bonds.

               Section 7.2.   Indemnification;.  The Company during the
          term of this Loan Agreement releases the Issuer, the Trustee and
          their officers from and covenants and agrees that the Issuer, the
          Trustee and their officers shall not be liable for, and agrees to
          indemnify and hold the Issuer and the Trustee harmless against,
          any loss or damage to property or any injury to or death of any
          person occurring on or about or resulting from any defect in the
          Project, provided that the indemnity provided in this sentence
          shall be effective only to the extent of any loss that may be
          sustained by the Issuer, the Trustee or their officers or agents
          in excess of the net proceeds received by the Issuer or the
          Trustee from any insurance carried with respect to the loss
          sustained, and provided further, that the indemnity shall not be
          effective for damages that result from the negligence or wilful
          misconduct on the part of the Issuer, the Trustee or their
          officers or agents.  The Company will also indemnify and save
          harmless the Issuer, the Trustee and their officers or agents
          from and against any and all losses, costs, charges, expenses,
          judgments and liabilities imposed upon or asserted against them
          with respect to the Project on account of any failure on the part
          of the Company to perform or comply with any of the provisions of
          this Loan Agreement.

                                    Article VIII

                                     Assignment

               Section 8.1.   Assignment by Company.  The Company may
          assign its rights and obligations under this Loan Agreement
          without the consent of either the Issuer or the Trustee, but no
          assignment will relieve the Company from primary liability for
          any obligations under this Loan Agreement.

               Section 8.2.   Assignment by Issuer.  The Issuer will assign
          its rights under and interest in this Loan Agreement (except for
          the Unassigned Rights) to the Trustee pursuant to the Indenture
          as security for the payment of the Bonds.  Otherwise, the Issuer
          will not sell, assign or otherwise dispose of its rights under or
          interest in this Loan Agreement nor create or permit to exist any
          lien, encumbrance or other security interest in or on such rights
          or interest.

                                     Article IX

                                Defaults and Remedies

               Section 9.1.   Remedies on Default.  Whenever any Event of
          Default under the Indenture has occurred and is continuing, the
          Trustee may take whatever action may appear necessary or
          desirable to collect the payments then due and to become due or
          to enforce performance of any agreement of the Company in this
          Loan Agreement.

               In addition, if an Event of Default is continuing with
          respect to any of the Unassigned Rights, the Issuer may take
          whatever action may appear necessary or desirable to it to
          enforce performance by the Company of such Unassigned Rights.

               Any amounts collected pursuant to action taken under this
          Section (except for amounts payable directly to the Issuer or the
          Trustee pursuant to Section 5.2, 7.2 and 9.3) shall be applied in
          accordance with the Indenture.

               Nothing in this Loan Agreement shall be construed to permit
          the Issuer, the Trustee, any Bondholder or any receiver in any
          proceeding brought under the Indenture to take possession of or
          exclude the Company from possession of the Project by reason of
          the occurrence of an Event of Default.

               Section 9.2.   Delay Not Waiver; Remedies.  A delay or
          omission by the Issuer or the Trustee in exercising any right or
          remedy accruing upon an Event of Default shall not impair the
          right or remedy or constitute a waiver of or acquiescence in the
          Event of Default.  No remedy is exclusive of any other remedy. 
          All available remedies are cumulative.

               Section 9.3.   Attorneys' Fees and Expenses.  If the Company
          should default under any provision of this Loan Agreement and the
          Issuer should employ attorneys or incur other expenses for the
          collection of the payments due under this Loan Agreement, the
          Company will on demand pay to the Issuer the reasonable fees of
          such attorneys and such other reasonable expenses so incurred by
          the Issuer.

                                      Article X

                                    Miscellaneous

               Section 10.1.  Notices.  All notices or other communications
          hereunder shall be sufficiently given and shall be deemed given
          when delivered or mailed as provided in the Indenture.

               Section 10.2.  Binding Effect.  This Loan Agreement shall
          inure to the benefit of and shall be binding upon the Issuer, the
          Company and their respective successors and assigns, subject,
          however, to the limitations contained in Section 6.1.

               Section 10.3.  Severability.  If any provision of this Loan
          Agreement shall be determined to be unenforceable at any time,
          that shall not affect any other provision of this Loan Agreement
          or the enforceability of that provision at any other time.

               Section 10.4.  Amendments.  After the issuance of the Bonds,
          this Loan Agreement may not be effectively amended or terminated
          without the written consent of the Trustee and in accordance with
          the provisions of the Indenture.

               Section 10.5.  Right of Company To Perform Issuer's
          Agreements;.  The Issuer irrevocably authorizes and empowers the
          Company to perform in the name and on behalf of the Issuer any
          agreement made by the Issuer in this Loan Agreement or in the
          Indenture which the Issuer fails to perform in a timely fashion
          if the continuance of such failure could result in an Event of
          Default.  This Section will not require the Company to perform
          any agreement of the Issuer.

               Section 10.6.  Applicable Law.  This Loan Agreement shall be
          governed by and construed in accordance with the laws of the
          State.

               Section 10.7.  Captions; References to Sections.  The
          captions in this Loan Agreement are for convenience only and do
          not define or limit the scope or intent of any provisions or
          Sections of this Loan Agreement.  References to Articles and
          Sections are to the Articles and Sections of this Loan Agreement,
          unless the context otherwise requires.

               Section 10.8.  Complete Agreement.  This Loan Agreement
          represents the entire agreement between the Issuer and the
          Company with respect to its subject matter.

               Section 10.9.  Termination.  When no Bonds are Outstanding
          under the Indenture, the Company and the Issuer shall not have
          any further obligations under this Loan Agreement; provided that
          the Company's covenants in Sections 6.4 and 6.5 and the
          provisions of Section 5.3 with respect to mandatory redemption of
          the Bonds shall survive so long as any Bond remains unpaid, and
          the provisions of Sections 5.4 and 7.2 shall survive the
          termination of this Loan Agreement.

               Section 10.10. Counterparts.  This Loan Agreement may be
          signed in several counterparts.  Each will be an original, but
          all of them together constitute the same instrument.

                                        Village of Hennepin, Putnam County,
                                        Illinois


                                        By   Jack Grant
                                             Village President
          [Seal]

          Attest:


          By   Kathleen Spratt
               Village Clerk


                                        Exolon-ESK Company





                                        By   William H. Nehill
                                        Its  Executive Vice President