DISTRIBUTORSHIP AGREEMENT


          Between             EXOLON-ESK COMPANY
                              1000 East Niagara Street
                              Tonawanda, New York  14150
                              (hereinafter referred to as the
          "Distributor")
          and
                              ELEKTROSCHMELZWERK KEMPTEN GMBH
                              Hanns-Seidel-Platz 4
                              D-81737 Munchen
                              (hereinafter referred to as "ESK")


          1.   Subject and Definitions
          1.1  Subject to the terms and conditions of this Agreement, ESK
               hereby appoints the Distributor its sole and exclusive
               Distributor of the products listed as follows:  SIC MICRO
               GRITS F 280 and finer ("Products") in the Territory as
               defined in Section 1.2 hereof.

          1.2  The Territory shall be the United States of America and its
               territories (including the Commonwealth of Puerto Rico),
               Canada and Central America.  Central America shall be part
               of the territory only under the provision that companies who
               had been customers of Distributor under this Agreement in
               the territory of the US and/or Canada transfer their
               activities to a Central American Country and provided that
               the Products for those former activities in the US and
               Canada have been supplied by Distributor.

          1.3  This Agreement shall become effective on January 1, 1998,
               and the initial term thereof shall expire on December 31,
               1999; provided, however, that the term of this Agreement
               shall be automatically extended for an additional successive
               two years term, commencing on January 1, 1999, and each
               succeeding anniversary thereafter unless either party shall
               give written notice of termination by June 30 of the
               contract year of the original term or the renewal term
               hereof then in effect, in which event this Agreement shall
               terminate on the following December 31 of the same contract
               year.

          1.4  As used in this Agreement, "Buyer" shall mean the original
               ultimate purchaser or user of any of the Products, after
               purchase from Distributor or from any middleman, who has
               ultimately acquired the Product in question in any series of
               non-final sales originating with Distributor.

          2.   Promotion and Sale
          2.1  Distributor shall use its best efforts to develop and
               exploit the maximum sales potential for the entire line of
               the Products in the Territory.

          2.2  Distributor shall suitably promote the Products in the
               Territory through the appropriate means.

          2.3  Distributor shall maintain a sales force, which shall (a) be
               properly trained, (b) competently promote and sell the
               Products and (c) maintain the good will of customers
               throughout the Territory.

          2.4  ESK shall provide Distributor such technical assistance as
               may reasonably be required by Distributor in the promotion
               and sale of the Products, and the cost of such technical
               assistance shall be borne by ESK, except however that
               Distributor shall reimburse ESK for all travel, meal,
               lodging, and related out-of-pocket expenses incurred by
               personnel of ESK or its affiliates while in the Territory in
               providing such technical assistance when such assistance is
               requested by Distributor.

          2.5  ESK's and Distributor's personnel shall have the right
               periodically to visit each other.  Both parties shall assist
               where necessary in making arrangements for such visits. 
               Deficiencies in regard to proper storage of the inventory,
               prompt processing of customer orders, inquiries or
               complaints, appropriate limitation of warranties and
               liability (as previously agreed upon by the parties), and
               maintenance of appropriate inventory of Products noted
               during such visits to such centers or otherwise shall be
               remedied without delay by the responsible party.

          2.6  The parties shall consult with one another concerning each
               other's performance of its obligations under this section 2
               and they shall render to each other such assistance as it
               deems appropriate.

          3.   Reports; Planning
          3.1  Not more than twenty-one (21) days after each June 30 and
               January 31, while this Agreement is in force, DISTRIBUTOR
               shall mail a report in writing to ESK.  In such semi-annual
               report DISTRIBUTOR shall:
               (a)  advise ESK of the inventories of the Products held, if
                    any, at the end of the just-completed quarter, by
                    classes and subclasses, in a form mutually agreed upon
                    by the parties hereto, showing grade, size, and product
                    type to the extent differentiated on each parties
                    records, cost thereof and quantity on hand;
               (b)  advise ESK of its anticipated requirements, if any, of
                    the Products in the coming two calendar quarters;
                    thereafter the parties shall jointly plan each other's
                    inventory requirements, if any, and determine the
                    quantities of the Products by classes and subclasses to
                    be ordered by Distributor from ESK.

          3.2  In November of each year during the term of this Agreement,
               Distributor shall furnish ESK with a report on its marketing
               plans for the coming calendar year and setting forth the
               activities of the competition, the market for the Products,
               the price structure of the market, and reactions of its
               customers to the Products.

          3.3  Within ninety days (90) after the end of each fiscal year
               (or portion thereof) of Distributor falling within the term
               hereof, Distributor shall furnish to ESK a report of the
               total gross sales in tonnage with the average price per ton
               for each such Product during such year.  ESK shall furnish
               to Distributor a report with their direct sales value in the
               Territory of such Products provided Distributor will furnish
               a similar report regarding sales of said Products purchased
               from other parties.

          4.   Prices, Payment, Sales and Delivery Terms
          4.1  Distributor will purchase the Products for its own account
               from ESK at the net list prices set by ESK for the
               Territory, CIF Tonawanda or CIF at other ports of entry of
               the Territory (based on the latest edition of INCO-terms). 
               Title to the Products and risk of loss thereof shall pass
               from ESK to Distributor, irrespective of any agreement
               between them as to purchase of insurance or shipment terms,
               upon delivery by ESK of the Products to the carrier loaded
               on board at the port of shipment.  The port of entry shall
               be mutually agreed upon by ESK and Distributor.  Prices are
               subject to change from time to time by ESK upon sixty (60)
               days written notice to Distributor prior to the effective
               date of any such change.  Price changes shall not apply to
               orders submitted before the expiration of the sixty-day
               period unless delivery is scheduled by Distributor to take
               place after such period expires, provided, however, that
               Distributor's scheduling of such delivery conforms to the
               normal and customary delivery schedules arranged between
               Distributor and ESK previously and is for normal and
               customary quantities of Products previously ordered by
               Distributor from ESK.

          4.2  Distributor shall be invoiced in American currency and
               payment of the invoice prices shall be made in such
               currency.  Payment terms shall be net sixty (60) days from
               B/L.  All bank fees and other charges and expenses shall be
               paid by buyer.  Any sum not paid when due shall accrue
               interest at a varying rate equal to three points above the
               varying discount rate in effect from time to time as
               announced by the Federal Reserve.  Any demand or collection
               of interest by seller shall not be deemed in lieu of any
               other claim for damages which seller may have.

          4.3  Terms and conditions of sale set forth in Section 6 shall be
               governed by the actual ESK General Conditions of Sale
               (Export), as by attached document A.

               Such terms and conditions may only be modified upon the
               parties' prior mutual written consent.  Any terms and
               conditions appearing on any quotation, purchase order, or
               acknowledgment form of either party made hereto in
               connection with any sales transactions within the framework
               of this Agreement shall be without force or effect.

          4.4  In the event that either party intends to grant any lien or
               security interest in its inventory (other than machinery and
               parts inventory) to secure obligations of any kind, that
               party will, prior to such grant of any such lien or security
               interest, grant to the other party, as security for its
               payment to the other party of any and all amounts due under
               any section of this paragraph 4 or any other provision of
               this Agreement, including any and all attorney's fees and
               legal costs incurred in enforcing this Agreement or
               collecting any monies due for any reason, a first security
               interest and lien in their inventory to the extent such


               inventory is comprised of any Products sold or purchased
               pursuant to this Agreement, as well as all products derived
               from such Products, all rights of either party as a seller
               or a buyer of such Products or products derived from such
               Products under Article 2 of the Uniform Commercial Code, all
               such Products or products derived from the Products which
               are sold or transferred which have been subsequently
               returned, reclaimed or repossessed, and all proceeds
               thereof, including any cash or accounts receivable resulting
               from the sale or purchase of such inventory or proceeds of
               any insurance policy (collectively, the "Collateral").  Both
               parties agree to keep the inventory identified so that it
               can be distinguished from any goods not subject to this
               security interest, to keep such inventory insured against
               the customary casualties and risks for at least its
               replacement costs, to protect the inventory from waste,
               damage by the elements, theft and vandalism, and to pay all
               taxes of any kind which may be imposed upon the inventory or
               which, if not paid, could result in a lien upon the
               inventory.  Both parties agree that in the event they intend
               to grant such lien or security interest to another, it will
               at any time and from time to time execute any financing and
               continuation statements reasonably requested by the other
               party to perfect or to continue the perfection of such
               security interest and further appoints the other party its
               attorney-in-fact to execute and file such financing and
               continuation statements if it fails to execute and deliver
               the same within 5 days after the same is requested.  The
               parties warrant that such security interest shall be
               superior to any and all liens and encumbrances upon such
               Collateral.  Failure of either party to observe the
               covenants and warranties of this Section 4.4, or to observe
               the other covenants, warranties and agreements of this
               Agreement, or to pay any sum when due under this Agreement
               shall constitute grounds, at its option, to declare all sums
               immediately due and owing and to exercise its rights under
               this Section 4.4.  Any rights of the parties under this
               Section 4.4 are cumulative of any other rights and remedies
               which it may have at law or in equity.

          5.   Sales by ESK in the Territory
          5.1  Notwithstanding section 1 hereof and subject to the
               following conditions, ESK shall have the right after
               consulting with Distributor, to sell and to make delivery of
               the Products to those customers who ask to deal directly
               with ESK.  In regard to such customers, ESK hereby appoints
               Distributor its exclusive sales representative for the
               Territory during the term hereof, and Distributor agrees to
               cooperate with ESK to promote and bring about such business
               between ESK and such customers who wish to deal directly
               with ESK, but the acceptance or refusal of such orders
               procured by Distributor from such customers for ESK shall in
               all instances be reserved to ESK, and ESK, not Distributor,
               shall establish the selling prices as well as the terms and
               conditions of sale and delivery to such customers, provided,
               however, that ESK shall not make such sales at prices which
               are less than the prices for Distributor for sales to its
               customers of the same product of the same quality in the
               same quantity and under the same delivery and payment terms.


          5.2  In such cases of direct sale by ESK, ESK shall pay to
               Distributor, in consideration of the performance of
               Distributor's obligations hereunder, a commission equal to
               3% of the invoice amount during 2 (two) years and 2% for the
               subsequent years of the invoice amount charged by ESK to
               such customers (less freight, taxes, insurance, customs
               duties, and any discounts, rebates, and allowances) and in
               fact paid by such customers.  If for any reason any orders
               shall remain unexecuted or unpaid after reasonable attempts
               at collection have been made by ESK, Distributor shall have
               no claim for any compensation or allowance with respect
               thereto.

          5.3  Notwithstanding Section 5.2 hereof, Distributor shall have
               no claim for commissions on triangle and switch business
               into third countries, nor shall any commission be paid to
               Distributor in the event that American, Central American
               (following section 1.2) or Canadian companies purchase
               Products, in their own name and on their own account, for
               direct or indirect shipment to a location outside the
               Territory.

          6.   Terms and Conditions of Sale and Delivery
          6.1  Any delivery dates given to Distributor by ESK are estimates
               only, and shall not bind ESK to ship or deliver the Products
               on the dates indicated, although ESK will use its best
               efforts to meet such delivery dates, and ESK shall not be
               liable for any direct, indirect, consequential or special
               damages as a result of delay.  In the event that ESK fails
               to make delivery within the time agreed upon by ESK and
               Distributor, and within a reasonable period thereafter,
               Distributor's sole remedy shall be to cancel its order.  ESK
               reserves the right to make partial shipments of the Products
               ordered and to submit separate invoices to Distributor for
               such partial shipments.

          6.2  If Distributor shall default in the timely performance of
               its obligations in regard to any order or invoice, or any
               partial shipment under a larger order, ESK may suspend its
               performance under any subsequent order or in regard to any
               further partial shipments under such larger order unless and
               until Distributor shall have cured such default.

          6.3  The term "force majeure" means any cause not within the
               reasonable control of the party affected thereby, including
               without limitation acts of God, fire, flood, explosion,
               riot, rebellion, revolution, strikes or labor disturbances,
               war, embargoes, shortages or raw materials or transportation
               or fuel or electric power, failure or destruction of
               production facilities, and any governmental decree.  The
               occurrence of force majeure shall not excuse either party
               from the performance of its obligations to the other party,
               but shall only suspend the same during the continuance of
               the force majeure.  If any force majeure shall prevail for
               45 consecutive days, either party shall have the right to
               terminate at once by written notice to the other party that
               portion of any order between Distributor and ESK which is
               still fully executory on the part of both parties.  Neither
               party shall be liable to the other party for any direct,
               indirect, consequential, incidental or special damages
               arising out of or relating to the suspension or termination
               of any contractual relationship between the parties as a
               result of force majeure; the occurrence and the termination
               of such force majeure shall be promptly communicated to the
               other party.

          6.4  The provisions hereof may be changed by specific written
               agreement as regards any individual case.

          7.   Expenses of Performance
               Unless otherwise herein provided, each of the parties hereto
               shall bear the entire cost of performing its obligations
               hereunder.

          8.   Limitation of Warranty
          8.1  ESK warrants only that the Products sold to Distributor
               under this Agreement will meet ESK's specifications or the
               relevant sample or any independent standard  expressly
               accepted by ESK, under normal use in accord with ESK's
               specifications and instructions.  If any failure to conform
               to this warranty is reported to ESK in writing within thirty
               (30) days after the date of the receipt of the Products by
               Distributor or any Buyer receiving Products through
               Distributor (in the case of any nonconformity discoverable
               through reasonable inspection by Distributor or such Buyer)
               or within thirty (30) days after the discovery of the
               nonconformity (in the case of any nonconformity not
               discoverable through such reasonable inspection, but in any
               event notice of any nonconformity, whether or not
               discoverable by reasonable inspection, must be given to ESK
               within one hundred eighty (180) days after delivery of the
               Products to Buyer), ESK, upon being satisfied of the
               existence of such nonconformity, will correct the same by,
               at the Distributor's option, delivering replacement Products
               or refunding the purchase price (or, where appropriate, the
               unit price for such relevant quantity of the Products as
               have the nonconformity) paid by Distributor or Buyer.  If
               the Products are found by ESK to be nonconforming, ESK will
               pay shipping costs for return.  No Products shall be
               returned to ESK, however, without its express written
               consent.

               The foregoing warranty is the sole warranty of ESK.  All
               other warranties, express or implied, including warranties
               of merchantability and fitness for purpose, are excluded and
               disclaimed.

          9.   Product Liability Insurance
               The parties shall each carry product liability insurance,
               covering the Products which are subject to this Agreement
               and shall provide proof thereof upon request of the other
               party.

          10.  Termination
          10.1 This Agreement may be terminated:
               (a)  as set forth in section 1.3

               (b)  at once by either party if the other party hereto
                    commits a material breach or default under this
                    Agreement, which breach or default shall not be
                    remedied within 30 days after the giving of notice
                    thereof to the party in breach or default; or
               (c)  at once by either party if the other party hereto is
                    unable to pay its debts as they fall due for a period
                    of sixty (60) days or enters into liquidation or
                    dissolution or becomes insolvent, or if a trustee or
                    receiver is appointed for such party, whether by
                    voluntary act or otherwise, or if any proceeding is
                    instituted by or against such party under the
                    provisions of any bankruptcy act or amendment thereto
                    and is not dismissed within sixty (60) days; or

               (d)  at once by either party if (i) either direct or
                    indirect control of the Common Stock, Class A Common
                    Stock, Series A Preferred Stock or Series B Preferred
                    Stock, of Distributor is transferred, either
                    voluntarily or involuntarily, to any person or entity
                    other than the current control groups; or (ii) if all
                    or a substantial part of the assets of either party
                    shall be sold in other than the ordinary course of
                    business; or (iii) if either party attempts to assign
                    this Agreement without the other party's prior written
                    consent.

          10.2 It is expressly understood and agreed that neither party
               hereto is under any obligation to continue this Agreement in
               effect, nor to continue the arrangement established
               hereunder, after termination of this Agreement in accordance
               with this section 10.  Both parties recognize the necessity
               of making expenditures in preparing to perform and in
               performing this Agreement, and they recognize the
               possibility and the likelihood of losses or damages
               resulting from its termination.  The parties nevertheless
               agree that no party shall be liable to the other for
               termination of this Agreement in accordance with this
               section 10, and each party specifically agrees not to hold
               the other liable for any losses or damages resulting from
               such termination, including, but not limited to, loss of or
               damage to investments, leases and sales, advertising and
               promotional activities, whether incurred in connection with
               the preparation to perform or the performance of this
               Agreement or in the expectation of its renewal or extension.

          10.3 After notice of termination is given by either party under
               this section 10, the parties are entitled to restrict or
               even stop entirely deliveries or acceptance of deliveries of
               the Products, including deliveries on orders already
               received at the time of notice of termination.  However, ESK
               is required to make the Products available to Distributor in
               order to enable Distributor to maintain its own legally
               binding delivery commitments existing before termination
               becomes effective for delivery contracts signed by
               Distributor for up to one year commitments.

          11.  Special and Consequential Damages
               The parties agree that the remedies provided in this
               Agreement are adequate, and that therefore no party shall be
               liable to the other for special or consequential damages
               arising from the breach of any obligation hereunder or for
               any other reason whatsoever other than as specifically
               provided for herein.

          12.  Miscellaneous Provisions
          12.1 The relationship between Distributor and ESK is that of
               independent contractor and not of employer-employee or
               principal-agent.  Distributor is not the legal
               representative of ESK, and ESK is not the legal
               representative of Distributor, and no party shall hold
               itself out as such.  Neither Distributor nor ESK has the
               right or authority to assume or undertake any obligation or
               make any representation on behalf of the other.

          12.2 Both parties acknowledge and agree that any internal and
               confidential knowledge or information or trade secrets about
               the activities, processes or products of either party
               hereto, which the other shall receive or learn in the
               performance of its obligations hereunder,  shall be kept
               strictly confidential and secret, even after termination of
               this Agreement, and shall not be used by such other party
               hereto in its own business without the prior written consent
               of the owner of the same or unless pursuant to a separate
               license agreement between the parties or unless the same
               shall have become known in the industry through no fault of
               the party seeking to use the other's information or unless
               the same shall have become known to such party from other
               sources not involving a breach of any contractual
               obligation.  Each party shall be responsible for seeing that
               its own employees and agents observe the terms of this
               Agreement.

          12.3 ESK agrees to inform Distributor of all inquiries and orders
               received by it directly from the Territory for delivery in
               the Territory of the Products.  In return, Distributor shall
               send to ESK all inquiries and orders received by it either
               for delivery outside the Territory or in regard to customers
               who wish to deal directly with ESK.

          12.4 This Agreement, including any claims arising out of or
               connected with this Agreement, may not be assigned by either
               party except with the prior written consent of the other
               party.

          12.5 The failure of any party hereto to require the performance
               of any term of this Agreement or waiver by any party of any
               breach under this Agreement shall not prevent a subsequent
               enforcement of such term nor be deemed waiver of any
               subsequent breach.  Subject to the provisions of section 10
               hereof in regard to notice of default and right to cure,
               time is of the essence in the performance of each party's
               obligations hereunder.

          12.6 The captions set forth herein are for convenience of
               reference only and shall not be considered as part hereof or
               in any way to limit or amplify the terms and provisions
               hereof.

          13.  Notices
               Any notice required or permitted to be given hereunder shall
               be in writing and shall be deemed to have been given after
               the same has been mailed by registered or certified mail
               (air mail if overseas), return receipt requested, to the
               respective addresses appearing on the first page of this
               instrument, or to such other addresses as the parties may
               from time to time designate in writing.

          14.  Controversies
               Any controversy or claim arising out of or relating to this
               Agreement, or the negotiation or breach thereof, shall be
               settled by arbitration in accordance with the Rules of the
               American Arbitration Association, and the judgment upon the
               award rendered by the Arbitrator(s) may be entered in any
               court having jurisdiction thereof.  The arbitration shall be
               held in such location as shall be mutually agreeable to the
               parties, but in the absence of such agreement in New York,
               New York.

          15.  Modifications
               Modifications to this Agreement must be confirmed by both
               parties in writing prior to the effective date.

          16.  Severability of the Contract
               Should any provision of this contract lack validity or
               become void, the remaining provisions hereof will remain in
               force.

          17.  Applicable Law
               This contract is subject to and shall be construed in
               accordance with the law of the State of New York.

               IN WITNESS WHEREOF, the parties have duly executed this
          Agreement this ___ day of July, 1997.

          ELEKTROSCHMELZWERK KEMPTEN GMBH         EXOLON-ESK COMPANY


          By:                                     By: J. Fred Silver,
                                                      President