Engineered Carbons Claim

Dan Hyvl and Geral Nemec have reviewed the gas sales contract for Engineered
Carbons relative to Engineered's claim for approximately $190,000. The claim
probably results from a delivery by HPL off of the A/S line during the A/S
Force majure event of December 2000. Legal highlights several factors for
our consideration: (1) The contract does not have a free liquids
specification deliniated in the spec sheet. In the absence of this spec HPL
would presume that the customer provided free liquids protection at his
plant, (2) the items contained in the claim are in majority for items that
are not direct damages but rather are consequential damages (lost labor
hours). The contract does have direct but not consequential damages
obligations, (3) we do not know if this initial claim is the final claim.

Legal suggests that we have our insurance department review the claim
relative to the contract.