Amended and Restated Loan Agreement

         THIS AMENDED AND RESTATED LOAN AGREEMENT (this  "Agreement") is entered
into as of January 21, 1999 between THE BETHLEHEM  CORPORATION,  a  Pennsylvania
corporation  (the  "Borrower") and PNC BANK,  NATIONAL  ASSOCIATION,  a national
banking  association  (the  "Bank").  It amends,  restates  and  replaces  in it
entirety the similar Loan Agreement between the Borrower and the Bank dated June
2, 1998.

         The Borrower and the Bank with the intent to be legally bound, agree as
follows:

1.       Loan. The following loan and credit facilities  (collectively  referred
         to as the "Loan"), shall be subject to and governed by this Agreement:

         $3,200,000  Committed Line of Credit (the "Committed Line of Credit")
         $800,000 Term Loan (the "Term Loan")

The proceeds of each of the Committed  Line of Credit and the Term Loan shall be
used to refinance the  outstanding  balance of term and revolving  debt that the
Borrower  presently owes to CIT Group/Credit  Finance and to finance the ongoing
general  corporate and general working capital needs of the Borrower,  except as
otherwise set forth herein.

         2. Terms and Conditions. Subject to the terms and conditions hereof and
         relying upon the  representations  and warranties herein set forth, the
         Bank  agrees to make the Loan to the  Borrower at any time or from time
         to time on or after  the date  hereof in  accordance  with the terms of
         this Agreement.

         2.1 Committed  Line of Credit.  The Committed Line of Credit shall have
the following terms:

                  (a) Maturity Date:  June 1, 1999, or such later date as may be
                  designated by the Bank by written notice to the Borrower.

                  (b) Interest Rate:  Prime Rate (as defined  hereinafter)  plus
                  one and one-half  percent  (1.50%) per annum,  but in no event
                  greater  than the  maximum  rate  permitted  by law.  (As used
                  herein,  the "Prime  Rate" shall be the rate of  interest  per
                  annum  announced  by the Bank  from  time to time as its Prime
                  Rate.)

                  (c)  Facility  Fee:  The  Borrower  shall  pay to the Bank the
                  remaining  unpaid  half of a  facility  fee in the  amount  of
                  $48,000,  payable  at  closing  on the  entire  amount  of the
                  facility.

                  (d) Borrowing Base/Availability:  The Committed Line of Credit
                  shall be available in amounts  determined in  accordance  with
                  the  Borrowing  Base  Rider in the  form  attached  hereto  as
                  Exhibit A. Of such amounts,


<PAGE>
                  not more than $500,000 will be made  available to the Borrower
                  in the form of issued and outstanding  letters of credit drawn
                  to or for the account of the  Borrower,  with  maturity  dates
                  that do not exceed the then-current Maturity Date.

                  (e)  Requests.   Except  as  otherwise  provided  herein,  the
                  Borrower  may from  time to time  prior to the  Maturity  Date
                  request  the Bank to make a Loan under the  Committed  Line of
                  Credit by  delivering  to the Bank,  not later  than 2:00 p.m.
                  Eastern Standard or Daylight Savings Time, as may be in effect
                  at the time the request  for an advance is made,  a request by
                  telephone   immediately   confirmed   in  writing  by  letter,
                  facsimile  or telex in such form as the Bank shall  reasonably
                  require (a "Loan Request"),  it being understood that the Bank
                  may rely on the  authority  of any  individual  making  such a
                  telephonic  request  without the  necessity of receipt of such
                  written  confirmation.  Each Loan Request shall be irrevocable
                  and shall specify (i) the proposed  borrowing  date;  and (ii)
                  the aggregate amount of the proposed Loan. Upon the receipt by
                  the Bank of a timely and complete Loan Request, the Bank shall
                  make every reasonable  effort to fund the proposed Loan on the
                  date that it receives such Loan Request,  and shall not charge
                  interest  thereon until such time as the proceeds  thereof are
                  in fact made available to the Borrower.

                  (f)  Committed  Line of Credit  Note.  The  Obligation  of the
                  Borrower to repay the aggregate unpaid principal amount of the
                  Committed  Line of Credit,  together  with  interest  thereon,
                  shall  be  evidenced  by a  promissory  note  of the  Borrower
                  ("Committed  Line of Credit Note") payable to the order of the
                  Bank in a face  amount  equal  to the  maximum  amount  of the
                  Committed Line of Credit.

                  (g) Lockbox.  The Bank,  in its  discretion,  may  establish a
                  lockbox at the Bank to which  account  debtors of the Borrower
                  will submit all payments in respect of the Borrower's accounts
                  receivable.

                  (h)  Letter of Credit  Fees;  Renewal  Fees.  Should  the Bank
                  subsequently elect to extend the term of the Committed Line of
                  Credit  (which  decision  shall be made at the  request of the
                  Borrower and in the sole and absolute discretion of the Bank),
                  the fee due and  payable to the Bank in  connection  therewith
                  shall not exceed one-half  percent (0.50%).  In addition,  the
                  Bank shall charge fees of one and  one-half  percent per annum
                  on stand-by  letters of credit and  one-eighth  of one percent
                  (0.125%) per annum on trade letters of credit.


                                      - 2 -

<PAGE>
         2.2      Term Loan.  The Term Loan shall have the following terms:

                  (a)      Maturity Date:  June 1, 2003.

                  (b) Interest Rate: The rate of interest specified in Section 1
                  of the Term Note (as such term is defined below).

                  (c)  Facility  Fee:  The  Borrower  shall  pay to  the  Bank a
                  facility  fee in the amount of $12,000,  payable at closing on
                  the entire amount of the facility.

                  (d) Term Note.  The  Obligation  of the  Borrower to repay the
                  aggregate unpaid  principal amount of the Term Loan,  together
                  with interest thereon, shall be evidenced by a promissory note
                  of the  Borrower  (the  "Term  Note"  and  together  with  the
                  Committed  Line of Credit Note,  the  "Notes")  payable to the
                  order of the Bank in a face amount equal to the maximum amount
                  of the Term Loan.

3.       Security.  The security for repayment of the Loan shall include but not
         be  limited  to  the   collateral,   guaranties  and  other   documents
         heretofore,  contemporaneously  or hereafter  executed and delivered to
         the Bank (the "Security  Documents"),  which shall secure  repayment of
         the Loan, the Notes and all other loans, advances,  debts, liabilities,
         obligations,  covenants and duties owing by the Borrower to the Bank of
         any kind or nature,  present or future, whether or not evidenced by any
         note,   guaranty  or  other  instrument,   whether  arising  under  any
         agreement,  instrument  or document,  whether or not for the payment of
         money, whether arising by reason of an extension of credit,  opening of
         a letter of credit,  loan or guarantee or in any other manner,  whether
         arising out of  overdrafts  on deposit or other  accounts or electronic
         funds  transfers   (whether  through   automatic   clearing  houses  or
         otherwise) or out of the  non-receipt  of or inability to collect funds
         or  otherwise  not  being  made  whole in  connection  with  depository
         transfer  check  or  other  similar  arrangements,  whether  direct  or
         indirect  (including  those  acquired by assignment or  participation),
         absolute or  contingent,  joint or several,  due or to become due,  now
         existing or hereafter arising, and any amendments, extensions, renewals
         or  increases  and all costs and  expenses of the Bank  incurred in the
         documentation,  negotiation,  modification,  enforcement, collection or
         otherwise in connection  with any of the  foregoing,  including but not
         limited to reasonable  attorneys' fees and expenses,  but excluding all
         such expenses and costs relating to the salaried employees of the Bank,
         and related  administrative and overhead expenses (hereinafter referred
         to collectively as the  "Obligations").  This Agreement  (including the
         Addendum and any Riders thereto),  the Notes and the Security Documents
         are collectively referred to as the "Loan Documents".

                                      - 3 -

<PAGE>
4.       Representations and Warranties. The Borrower hereby makes the following
         representations  and  warranties  to the Bank  which  shall be true and
         correct as of the date of this  Agreement and the date of the making of
         a Loan,  and which shall be true and correct  except as  otherwise  set
         forth on the  Addendum  attached  hereto  and  incorporated  herein  by
         reference (the "Addendum").

         4.1.  Existence,  Power and Authority.  The Borrower is duly organized,
               validly  existing  and in good  standing  under  the  laws of the
               Commonwealth of  Pennsylvania  and has the power and authority to
               own and operate its assets and to conduct its  business as now or
               proposed to be carried on, and is duly qualified, licensed and in
               good  standing  to do  business  in all  jurisdictions  where its
               ownership of property or the nature of its business requires such
               qualification  or  licensing,  except  where the failure to be so
               qualified or licensed would not have a material adverse effect on
               the business,  operations or financial condition of the Borrower.
               The Borrower is duly  authorized  to execute and deliver the Loan
               Documents,  all  necessary  action to authorize the execution and
               delivery of the Loan Documents has been properly  taken,  and the
               Borrower  is and will  continue to be duly  authorized  to borrow
               under this  Agreement  and to perform  all of the other terms and
               provisions of the Loan Documents.

         4.2.  Financial Statements.  The Borrower has delivered or caused to be
               delivered to the Bank its balance sheet and income  statement for
               the  eleven  month  period  which  ended on April  30,  1998 (the
               "Historical  Financial  Statements").  The  Historical  Financial
               Statements  are  true,  complete  and  accurate  in all  material
               respects and fairly present the financial  condition,  assets and
               liabilities,  whether accrued, absolute,  contingent or otherwise
               and the  result  of the  Borrower's  operations  for  the  period
               specified therein.  The Historical Financial Statements have been
               prepared  in  accordance  with  generally   accepted   accounting
               principles  ("GAAP")  consistently  applied from period to period
               subject  in the case of  interim  statements  to normal  year-end
               adjustments and to any comments and notes acceptable to the Bank.

         4.3.  No  Material  Adverse  Change.  Since the date of the  Historical
               Financial  Statements,  the Borrower has not suffered any damage,
               destruction or loss to its assets,  and no event or condition has
               occurred or exists,  which has  resulted or could  reasonably  be
               expected to result in a material  adverse change in its business,
               assets, operations, financial condition or result of operation.

         4.4.  Binding Obligations. The Borrower has full power and authority to
               enter into the  transactions  provided for in this  Agreement and
               has been duly  authorized to do so by  appropriate  action of its
               Board of Directors; and the

                                      - 4 -

<PAGE>
               Loan Documents, when executed and delivered by the Borrower, will
               constitute  the  legal,  valid  and  binding  obligations  of the
               Borrower enforceable in accordance with their terms.

         4.5.  No  Defaults  or  Violations.  There  does not exist any Event of
               Default under this Agreement or any material default or violation
               by the  Borrower  of or under  any of the  terms,  conditions  or
               obligations of: (i) its articles or certificate of incorporation,
               regulations  or bylaws;  (ii) any material  indenture,  mortgage,
               deed of trust, franchise,  permit, contract,  agreement, or other
               instrument  to which it is a party or by which it is bound  other
               than  trade  payables  and any  legitimately  disputed  matter in
               litigation  with any vendor or  customer,  in each case where the
               amount  in  controversy  does not  exceed  $15,000  and where the
               amount in  controversy  does not exceed  $100,000 on a collective
               basis and those  litigation  matters  listed in the Addendum;  or
               (iii) any law, regulation,  ruling,  order,  injunction,  decree,
               condition or other  requirement  applicable to or imposed upon it
               by any law, the action by any court or any governmental authority
               or  agency;  and  the  consummation  of  this  Agreement  and the
               transactions set forth herein will not result in any such default
               or violation.

         4.6.  Title to  Assets.  The  Borrower  has valid  title to the  assets
               reflected on the Historical Financial Statements,  free and clear
               of all liens and  encumbrances,  except for (i) current taxes and
               assessments not yet due and payable, (ii) liens and encumbrances,
               if  any,   reflected  or  noted  in  the   Historical   Financial
               Statements,  (iii)  assets  disposed  of by the  Borrower  in the
               ordinary  course of  business  since  the date of the  Historical
               Financial  Statements,  and  (iv)  those  liens  or  encumbrances
               specified on the Addendum.

         4.7.  Litigation.   There  are  no  actions,   suits,   proceedings  or
               governmental   investigations   pending  or,  to  the  Borrower's
               knowledge,   threatened   against  the   Borrower,   which  could
               reasonably be expected to result in a material  adverse change in
               its business, assets, operations,  financial condition or results
               of operations and there is no basis known to the Borrower for any
               action, suit, proceedings or investigation which could reasonably
               be  expected  to result in such a material  adverse  change.  All
               pending or  threatened  litigation  against the Borrower of which
               Borrower has knowledge is listed on the Addendum.

         4.8.  Tax Returns.  The Borrower has filed all returns and reports that
               are  required to be filed by it in  connection  with any federal,
               state or local tax,  duty or charge  levied,  assessed or imposed
               upon  it  or  its   property  or   withheld   by  it,   including
               unemployment, social security and similar taxes

                                      - 5 -

<PAGE>

               and all of such taxes,  have been either paid or adequate reserve
               or other provision has been made.

         4.9.  Employee  Benefit Plans.  Each employee  benefit plan as to which
               the  Borrower  may have any  liability  complies in all  material
               respects   with  all   applicable   provisions  of  the  Employee
               Retirement  Income  Security  Act of  1974  ("ERISA"),  including
               minimum funding requirements,  and (i) no Prohibited  Transaction
               (as defined  under ERISA) has  occurred  with respect to any such
               plan, (ii) no Reportable  Event (as defined under Section 4043 of
               ERISA) has  occurred  with  respect to any such plan which  would
               cause the  Pension  Benefit  Guaranty  Corporation  to  institute
               proceedings  under Section 4042 of ERISA,  (iii) the Borrower has
               not withdrawn from any such plan or initiated steps to do so, and
               (iv) no steps have been taken to terminate any such plan.

         4.10. Environmental  Matters.  The  Borrower is in  compliance,  in all
               material  respects,   with  all  Environmental  Laws,  including,
               without  limitation,  all Environmental  Laws in jurisdictions in
               which the Borrower owns or operates,  or has owned or operated, a
               facility or site, stores Collateral, arranges or has arranged for
               disposal or  treatment of  hazardous  substances,  solid waste or
               other waste,  accepts or has accepted for transport any hazardous
               substances,  solid waste or other wastes or holds or has held any
               interest  in real  property  or  otherwise.  Except as  otherwise
               disclosed on the Addendum,  no  litigation or proceeding  arising
               under, relating to or in connection with any Environmental Law is
               pending or, to the best of the Borrower's  knowledge,  threatened
               against the Borrower,  any real property which the Borrower holds
               or has held an interest or any past or present  operation  of the
               Borrower. No release, threatened release or disposal of hazardous
               waste,  solid waste or other wastes is occurring,  or to the best
               of the  Borrower's  knowledge has  occurred,  on, under or to any
               real  property  in which  the  Borrower  holds  any  interest  or
               performs  any of its  operations,  in material  violation  of any
               Environmental  Law.  As  used  in this  Section,  "litigation  or
               proceeding" means any demand, claim notice, suit, suit in equity,
               action,  administrative action,  investigation or inquiry whether
               brought  by  a  governmental   authority  or  other  person,  and
               "Environmental  Laws"  means all  provisions  of laws,  statutes,
               ordinances,  rules, regulations,  permits,  licenses,  judgments,
               writs,   injunctions,   decrees,  orders,  awards  and  standards
               promulgated  by any  governmental  authority  concerning  health,
               safety and  protection  of, or  regulation  of the  discharge  of
               substances into, the environment.

         4.11. Intellectual  Property. The Borrower owns or has the right to use
               all patents,  patent  rights,  trademarks,  trade names,  service
               marks, copyrights,  intellectual property,  technology,  know-how
               and processes necessary for

                                      - 6 -

<PAGE>

               the  conduct of its  business  as  currently  conducted  that are
               material to the condition  (financial or otherwise),  business or
               operations of the Borrower.

         4.12. Regulatory  Matters.  No part of the proceeds of the Loan will be
               used for "purchasing" or "carrying" any "margin stock" within the
               respective  meanings of each of the quoted terms under Regulation
               U of the Board of Governors of the Federal  Reserve System as now
               and from time to time in effect or for any purpose which violates
               the provisions of the Regulations of such Board of Governors.

         4.13. Solvency.  As of the date hereof and after  giving  effect to the
               transactions  contemplated  by the Loan  Documents,  the Borrower
               will have  sufficient  cash flow to enable it to pay its debts as
               they mature.

         4.14. Disclosure.  None of the Loan Documents  contains or will contain
               any untrue  statement  of material  fact or omits or will omit to
               state a material fact  necessary in order to make the  statements
               contained in this Agreement or the Loan Documents not misleading.
               There is no fact known to the Borrower which materially adversely
               affects or, so far as the  Borrower can now  reasonably  foresee,
               might   materially   adversely   affect  the  business,   assets,
               operations,  financial  condition  or results of operation of the
               Borrower and which has not otherwise been fully set forth in this
               Agreement or in the Loan Documents.

5.       Affirmative  Covenants.  The  Borrower  agrees  that  from  the date of
         execution of this Agreement until all Obligations  have been fully paid
         and any commitments the Bank to the Borrower have been terminated,  the
         Borrower will:

         5.1.  Books and Records.  Maintain books and records in accordance with
               GAAP and give  representatives  of the Bank access thereto at all
               reasonable  times  following  notice  from  the  Bank,  including
               permission to examine,  copy and make  abstracts from any of such
               books and records and such other information as the Bank may from
               time to time  reasonably  request,  and the  Borrower  will  make
               available  to the Bank for  examination  copies  of any  reports,
               statements or returns which the Borrower may make to or file with
               any governmental department, bureau or agency, federal or state.

         5.2.  Interim  Financial  Statements  and  Reports;  Certificate  of No
               Default;  Accounts  Receivable.  Furnish the Bank within ten (10)
               days  after  the  end of  each  month a  detailed  report  on its
               accounts  receivable  and  inventory  status  in such  reasonable
               detail  consistent with the form currently used by the Borrower's
               management.  A copy of the most  recently  prepared  such form is
               attached  hereto as Exhibit B. In addition,  the  Borrower  shall
               also furnish the Bank with current work in process reports within
               fifteen (15)

                                      - 7 -

<PAGE>

               days after the end of each month. The Borrower shall also provide
               within  forty-five  (45) days from the end of each of its  fiscal
               quarters its Financial  Statements (as defined  hereinafter)  for
               such period,  in reasonable  detail,  certified by the President,
               Chief  Executive  Officer  or  Chief  Financial  Officer  of  the
               Borrower and prepared in accordance with GAAP applied from period
               to period.  The Borrower  shall also deliver,  within  forty-five
               (45)  days from the end of its  fiscal  quarters,  a  certificate
               signed by such officer which verifies  compliance with applicable
               financial  covenants  for the period  then ended and  whether any
               Event of Default  exists,  and, if so, the nature thereof and the
               corrective  measures  the Borrower  proposes to take.  "Financial
               Statements"  means the  Borrower's  separate  and  unconsolidated
               balance  sheets,  income  statements and statements of cash flows
               for the  year,  month or  (excepting  statements  of cash  flows)
               quarter  together  with  year-to-date   figures  and  comparative
               figures for the corresponding periods of the prior year.

         5.3.  Annual  Financial  Statements  and  Fiscal  Budget.  Furnish  the
               Borrower's  Financial  Statements  and  its  then-current  fiscal
               budget for the immediately succeeding fiscal year of the Borrower
               to the Bank within  ninety (90) days after the end of each fiscal
               year.  Those Financial  Statements will be prepared in accordance
               with  GAAP  and  audited  by  an  independent   certified  public
               accountant selected by the Borrower and satisfactory to the Bank.
               Audited  Financial   Statements  shall  contain  the  unqualified
               opinion of an  independent  certified  public  accountant and its
               examination   shall  have  been  made  in  accordance  with  GAAP
               consistently applied from period to period. Annual fiscal budgets
               shall be in such form,  format and detail as shall be  reasonably
               acceptable to the Bank.  The Borrower  will also provide  filings
               made with any  regulatory  authority  and such other  information
               reasonably requested by the Bank, from time to time.

         5.4.  Payment of Taxes and Other  Charges.  Pay and discharge  when due
               all indebtedness and all taxes, assessments,  charges, levies and
               other liabilities imposed upon the Borrower, its income, profits,
               property or  business,  except  those which  currently  are being
               contested in good faith by appropriate  proceedings and for which
               the Borrower shall have set aside adequate reserves in accordance
               with GAAP or made other adequate  provision with respect  thereto
               acceptable to the Bank.

         5.5.  Maintenance  of Existence,  Operation  and Assets.  Do all things
               necessary  to  maintain,  renew and keep in full force and effect
               its  organizational   existence  and  all  rights,   permits  and
               franchises  necessary  to enable  it to  continue  its  business;
               continue  in  operation  in  substantially  the same manner as at
               present; keep its properties in good operating condition

                                      - 8 -

<PAGE>

               and repair; and make all necessary and proper repairs,  renewals,
               replacements, additions and improvements thereto.

         5.6.  Insurance.   Maintain  with   financially   sound  and  reputable
               insurers,  insurance  with  respect to its  property and business
               against such casualties and  contingencies,  of such types and in
               such amounts as is customary for established companies engaged in
               the same or similar business and similarly  situated.  (As of the
               date of this Agreement,  the existing  insurance  coverage of the
               Borrower  has been  reviewed  and  approved  by the Bank.) In the
               event of a conflict  between the  provisions  of this Section and
               the terms of any Security  Documents  relating to insurance,  the
               provisions in the Security Documents will control.

         5.7.  Compliance  with Laws.  Comply in all material  respects with all
               laws  applicable  to the  Borrower  and to the  operation  of its
               business  (including any statute,  rule or regulation relating to
               employment  practices and pension  benefits or to  environmental,
               occupational and health standards and controls).

         5.8.  Bank  Accounts.  Establish  and  maintain  at the Bank all of the
               Borrower's primary depository accounts.

         5.9.  Financial  Covenants.  Comply with all of the financial and other
               covenants  set forth on the Addendum,  subject to all  applicable
               cure periods set forth herein,  with the understanding  that such
               compliance   shall  be  determined   based  on  the  then-current
               segregated  and  non-consolidated   financial  condition  of  the
               Borrower.

         5.10. Additional Reports.  Provide prompt written notice to the Bank of
               the  occurrence  of any of the  following  of which the  Borrower
               obtains  knowledge  (together  with a  description  of the action
               which the Borrower  proposes to take with respect  thereto):  (i)
               any Event of  Default or  potential  Event of  Default,  (ii) any
               litigation filed by or against the Borrower, (iii) any Reportable
               Event or  Prohibited  Transaction  with  respect to any  Employee
               Benefit  Plan(s)  (as  defined in ERISA) or (iv) any event  which
               might  reasonably  be  expected  to result in a material  adverse
               change in the business, assets,  operations,  financial condition
               or results of operation of the Borrower  other than disputes with
               trade debtors and any legitimately  disputed matter in litigation
               with any  vendor or  customer,  in each case  where the amount in
               controversy  does not  exceed  $15,000  and where  the  amount in
               controversy does not exceed $100,000 on a collective basis.

6.       Negative  Covenants.  The Borrower  covenants  and agrees that from the
         date of execution of this  Agreement  until all  Obligations  have been
         fully paid and any

                                      - 9 -

<PAGE>

         commitments  of the Bank to the  Borrower  have  been  terminated,  the
         Borrower  will not,  except as set forth in the  Addendum,  without the
         prior written consent of the Bank:

         6.1.  Indebtedness.  Incur any  indebtedness  for borrowed  money other
               than: (i) the Loan and any subsequent indebtedness the Bank; (ii)
               existing  indebtedness  disclosed  on the  Borrower's  Historical
               Financial   Statements   referred  to  in  Section   4.2;   (iii)
               fully-subordinated  loans (under terms and conditions  which have
               been  approved  in advance by the Bank)  from  Universal  Process
               Equipment,  Inc. ("UPE"); (iv) capital and operating leases where
               the aggregate obligations due thereunder from the Borrower in any
               fiscal year of the Borrower  does not exceed  $50,000 for capital
               leases and $50,000 for  operating  leases;  or (v) such  payables
               incurred in the  ordinary  course of  business.  (It is expressly
               acknowledged  and agreed that the Bank is  familiar  with and has
               approved  the terms of the loans  from UPE to the  Borrower  that
               existed on the date of this Agreement.)

         6.2.  Liens and Encumbrances. Except as provided in Section 4.6 and for
               a security interest in the Borrower's  capital stock in Bethlehem
               Advanced  Materials  Corporation in favor of  NationsBank,  N.A.,
               which  is  hereby  expressly   authorized   notwithstanding   any
               expressed or implied  restrictions  to the contrary in any of the
               Loan Documents,  create,  assume or permit to exist any mortgage,
               pledge,  encumbrance or other security  interest or lien upon any
               assets now owned or hereafter acquired or enter into any lease or
               any arrangement  for the  acquisition of property  subject to any
               conditional  sales agreement,  other than purchase money security
               interests.

         6.3.  Guarantees. Guarantee, endorse or voluntarily become contingently
               liable for the  obligations of any person,  firm or  corporation,
               except in connection  with the  endorsement and deposit of checks
               in the ordinary course of business for collection.

         6.4.  Loans or Advances. Purchase or hold beneficially any stock, other
               securities or evidences of  indebtedness of any loans or advances
               to, or make any investment or acquire any interest whatsoever in,
               any  other  person,  firm  or  corporation,   except  investments
               disclosed on the Borrower's  Historical  Financial  Statements or
               investments in the ordinary course of the Borrower's business and
               except for the Borrower's existing loan in the original principal
               amount of  $1,082,717  in favor of Bethlehem  Advanced  Materials
               Corporation.

         6.5.  Merger or Transfer of Assets.  Merge or consolidate  with or into
               any person,  firm or corporation,  but only if the aggregate cash
               expenditure of the Borrower in connection with any such merger or
               consolidation  exceeds  $100,000,  or lease,  sell,  transfer  or
               otherwise dispose of property or assets,

                                     - 10 -

<PAGE>

               whether now owned or hereafter acquired,  except for asset sales,
               leases and  transfers  in the ordinary  course of the  Borrower's
               business.

         6.6.  Change in Business,  Management or Ownership.  Make or permit any
               material change in the nature of its business as carried on as of
               the date  hereof,  in the  composition  of its current  executive
               management (including changes due to death or disability),  or in
               its  equity   ownership   other  than   transfers  to  heirs  and
               beneficiaries  of a stockholder  upon the death of a stockholder,
               changes  due to the  exercise of stock  options now or  hereafter
               owned by employees  or officers of the Borrower and  transfers of
               the publicly-traded  common stock of the Borrower.  (For purposes
               of this Agreement,  such current  executive  management  shall be
               limited to Alan H. Silverstein and Antoinette Martin,  unless the
               Bank  provides the Borrower  with written  notice of additions or
               deletions from such list.)

         6.7.  Dividends.   Declare  or  pay  any   dividends  on  or  make  any
               distribution with respect to any class of its equity or ownership
               interest, or purchase, redeem, retire or otherwise acquire any of
               its equity.

         6.8.  Capital  Expenditures.  Make capital  expenditures  in any fiscal
               year of the Borrower  which exceed an amount equal to $300,000 on
               an aggregate basis.

         6.9.  Use of Loan Proceeds.  Directly or indirectly permit the proceeds
               of the Loan or any part thereof to be used by Bethlehem  Advanced
               Materials Corporation.

7.       Events of  Default.  The  occurrence  of any of the  following  will be
         deemed to be an "Event of Default":

         7.1.  Payment  Default.  The Borrower  shall fail to pay any payment of
               principal or interest within ten (10) calendar days following the
               date when due, in respect of the Obligations.

         7.2.  Material Adverse Change. There shall be a material adverse change
               in the  business,  operations,  assets,  financial  condition  or
               results of operations  of the  Borrower,  which default shall not
               have been cured  within  twenty (20) days from the receipt by the
               Borrower of written notice thereof from the Bank.

         7.3.  Covenant  Default.  The Borrower shall default in the performance
               of, or violate any of, the covenants or  agreements  contained in
               this  Agreement,  which  default shall not have been cured within
               twenty  (20) days from the  receipt  by the  Borrower  of written
               notice thereof from the Bank.

                                     - 11 -

<PAGE>

         7.4.  Breach of  Warranty.  Any  Financial  Statement,  representation,
               warranty or certificate  made or furnished by the Borrower to the
               Bank in connection with this Agreement shall be materially false,
               incorrect or incomplete when made.

         7.5.  Bankruptcy or Insolvency. A proceeding shall have been instituted
               in a court having jurisdiction over the Borrower seeking a decree
               or order for relief in respect of the Borrower in an  involuntary
               case under any applicable bankruptcy,  insolvency  reorganization
               or other  similar  law and such  involuntary  case  shall  remain
               undismissed or unstayed and in effect for a period of ninety (90)
               consecutive days (provided that the Bank shall have no obligation
               to advance  additional  funds to the Borrower  during such ninety
               (90) day period), or the Borrower shall commence a voluntary case
               under any such law or consent to the  appointment  of a receiver,
               liquidator,    assignee,   custodian,   trustee,    sequestrator,
               conservator (or other similar official).

         7.6.  Other  Default.  The occurrence of an Event of Default as defined
               in the Notes or any of the Security Documents,  or a violation of
               any of the requirements set forth in the Borrowing Base Rider, or
               the  occurrence of an Event of Default  under the Loan  Documents
               which now exist or which may hereafter  exist in connection  with
               any present or future loan transaction between NationsBank,  N.A.
               and Bethlehem Advanced Materials Corporation..

               Upon  the  occurrence  of an Event  of  Default,  and at any time
thereafter,  the Bank may declare all Obligations  hereunder immediately due and
payable  will  have all  rights  and  remedies  (which  are  cumulative  and not
exclusive) specified in the Notes and the Security Documents and available under
applicable law or in equity.


8.       Conditions.  The  Bank's  obligation  to make any  advance  or fund any
         tranche  under the Loan is subject to the  following  conditions  being
         satisfied as of the date of the advance:

         8.1.  No Event of Default.  No Event of Default or event which with the
               passage of time,  provision of notice or both would constitute an
               Event of Default shall have occurred and be continuing.

         8.2.  Authorization Documents. The Borrower shall have furnished to the
               Bank  a  Secretary's   Certificate  attesting  to  the  Board  of
               Directors  authorization of the execution of this Agreement,  the
               Notes  or  any of the  Security  Documents;  or  other  proof  of
               authorization satisfactory to the Bank.

                                     - 12 -

<PAGE>

         8.3.  Delivery of Loan Documents.  The Borrower shall have delivered to
               the Bank the  Loan  Documents  and  such  other  instruments  and
               documents  which the Bank may  reasonably  request in  connection
               with the transactions provided for in this Agreement.

         8.4.  Opinion of Counsel. Counsel for the Borrower shall have delivered
               a  written  opinion,  dated  the  Closing  Date  and in form  and
               substance satisfactory to the Bank and its counsel, as to matters
               incident to the transactions  contemplated herein as the Bank may
               reasonably request.

         8.5.  Representations   and   Warranties.   The   representations   and
               warranties  of the Borrower to the Bank shall be true and correct
               in all respects.

         8.6.  Subordination  Agreement. The Bank shall have received from UPE a
               Subordination   Agreement   containing   terms   and   conditions
               acceptable to the Bank whereby UPE shall  subordinate  its claims
               against the Borrower for borrowed money (the "Subordinated Debt")
               to the  indebtedness of the Borrower to the Bank, but only to the
               extent  necessary  to permit  the  Borrower  to  comply  with the
               effective net worth  covenant  contained in this  Agreement.  All
               promissory notes evidencing the Subordinated Debt shall have been
               marked with the legend set forth in the Subordination Agreement.

         8.7.  Equity Contribution from UPE. Receipt of evidence that UPE has in
               fact  unconditionally   contributed   additional  equity  to  the
               Borrower in the form of used equipment  inventory that is similar
               to the  Borrower's  Bethlehem-Type  Equipment  with a fair-market
               value  that is  sufficient  to  cause  the  Borrower  to meet the
               minimum  effective  net  worth  and  maximum  leverage  covenants
               contained in this Agreement.

         8.8.  Equipment  Repurchase  Agreement  from UPE.  Receipt  of a signed
               agreement  from  both UPE and the  Borrower  wherein  UPE will be
               required to either  liquidate or  otherwise  purchase for its own
               account  the  Borrower's  Eligible  Inventory  on  behalf  of the
               Borrower and for the benefit of the Bank upon the occurrence of a
               payment  default  under the Loan  Documents  within  fifteen (15)
               months  from the date  that the Bank  provides  UPE with  written
               notice of an Event of  Default  arising  from the  failure of the
               Borrower to make timely payments of either  principal or interest
               due in  connection  with the  Loan to the  Bank,  subject  in all
               respects  to the terms,  restrictions  and  provisions  set forth
               therein.

         8.9.  Collateral  Assignment of Life  Insurance  Policy.  Receipt of an
               assignment of a $2,500,000 "key man" insurance policy to the Bank
               on the life of Alan H.  Silverstein  within thirty (30) days from
               the date of this Agreement.

                                     - 13 -

<PAGE>
         8.10. Mortgagee  Waiver.  Receipt  of an  executed  copy of the  Bank's
               standard  Mortgagee Waiver from Ocwen Federal Savings Bank in its
               capacity  as the holder of a mortgage  on the  Borrower's  Easton
               property.

9.       Increased  Costs.  Within twenty (20) days  following  written  demand,
         together with the written evidence of the justification  therefor,  the
         Borrower  agrees  to pay the Bank all  direct  costs  incurred  and any
         losses suffered or payments made by the Bank as a consequence of making
         the  Loan  by  reason  of  any  change  in  law  or  regulation  or its
         interpretation imposing any reserve, deposit,  allocation of capital or
         similar requirement (including without limitation,  Regulation D of the
         board of  Governors  of the Federal  Reserve  System) on the Bank,  its
         holding company or any of their respective  assets, but only if similar
         payment demands are made by the Bank against all of its  then-currently
         similarly situated customers and borrowers.

10.      Miscellaneous.

         10.1. Notices. All notices, demands, requests,  consents, approvals and
               other  communications  required or permitted hereunder must be in
               writing  and  will  be   effective   upon  receipt  if  delivered
               personally  to such party,  or if sent by facsimile  transmission
               with  confirmation  of  delivery,  or  by  nationally  recognized
               overnight  courier service,  to the address set forth below or to
               such other  address as any party may give to the other in writing
               for such purpose:


To the Bank:                                 To the Borrower:

PNC Bank, N.A.                               The Bethlehem Corporation
1035 Virginia Drive                          25th & Lennox Streets
Fort Washington, PA 19034                    Easton, PA 18045
Attention: Thomas R. Keiser                  Attention: Alan H. Silverstein
Facsimile No.:  (215) 591-1022               Facsimile No.: (610) 515-1341

With copies to:                              With copies to:

Kenneth J. Marino, Esquire                   Kevin T. Fogerty, Esquire
Blank Rome Comisky & McCauley LLP            The Law Office of Kevin T. Fogerty
1201 Market Street, 21st Floor               1620 Pond Road, Suite 301
Wilmington, DE 19801                         Allentown, PA 18104
Facsimile No.: (302) 425-6464                Facsimile No.: (610) 366-0955



                                     - 14 -

<PAGE>

         10.2. Preservation  of Rights.  No delay or omission on the part of the
               Bank to exercise any right or power arising hereunder will impair
               any such  right or power or be  considered  a waiver  of any such
               right or power or any acquiescence  therein,  nor will the action
               or  inaction  of the Bank  impair  any  right  or  power  arising
               hereunder.  The rights  and  remedies  hereunder  of the Bank are
               cumulative  and not  exclusive  of any other  rights or  remedies
               which  the Bank may have  under  other  agreements,  at law or in
               equity.

         10.3. Illegality.  In case any one or more of the provisions  contained
               in this Agreement should be invalid,  illegal or unenforceable in
               any respect,  the validity,  legality and  enforceability  of the
               remaining  provisions  contained  herein  shall not in any way be
               affected or impaired thereby.

         10.4. Changes in Writing.  No modification,  amendment or waiver of any
               provision of this  Agreement  nor consent to any departure by the
               Borrower  therefrom,  will in any event be  effective  unless the
               same is in writing and signed by the Bank and then such waiver or
               consent shall be effective only in the specific  instance and for
               the  purpose  for  which  given.  No  notice  to or demand on the
               Borrower in any case will  entitle  the  Borrower to any other or
               further   notice  or  demand  in  the  same,   similar  or  other
               circumstance.

         10.5. Entire  Agreement.  This  Agreement  (including the documents and
               instruments  referred to herein) constitutes the entire agreement
               and  supersedes all other prior  agreements  and  understandings,
               both  written and oral,  between the parties  with respect to the
               subject matter hereof.

         10.6. Counterparts.  This  Agreement  may be  signed  in any  number of
               counterpart   copies  and  by  the  parties  hereto  on  separate
               counterparts,  but all such copies shall  constitute  one and the
               same instrument.

         10.7. Successors  and Assigns.  This Agreement will be binding upon and
               inure to the  benefit  of the  Borrower  and the  Bank and  their
               respective,  successors and assigns; provided,  however, that the
               Borrower  may not  assign  this  Agreement  in  whole  or in part
               without the prior written consent of the Bank and the Bank at any
               time may assign this  Agreement  in whole or in part,  upon prior
               written notice to Borrower.

         10.8. Interpretation.  In  this  Agreement,  unless  the  Bank  and the
               Borrower  otherwise agree in writing,  the singular  includes the
               plural and the plural the  singular;  words  importing any gender
               include  the other  genders;  references  to  statutes  are to be
               construed as including  all statutory  provisions  consolidating,
               amending  or  replacing  the statute  referred  to; the word "or"
               shall be deemed to include "and/or", the words "including",

                                     - 15 -

<PAGE>

               "includes"  and  "include"  shall be deemed to be followed by the
               words "without limitation";  references to articles, sections (or
               subdivisions  of  sections)  or  exhibits  are to  those  of this
               Agreement   unless   otherwise   indicated;   and  references  to
               agreements and other  contractual  instruments shall be deemed to
               include all subsequent amendments and other modifications to such
               instruments,  but only to the extent  such  amendments  and other
               modifications  are not prohibited by the terms of this Agreement.
               Section  headings in this Agreement are included for  convenience
               of  reference  only  and  shall  not  constitute  a part  of this
               Agreement for any other purpose.  Unless  otherwise  specified in
               this Agreement, all accounting terms shall be interpreted and all
               accounting  determinations shall be made in accordance with GAAP.
               If this Agreement is executed by more than one party as Borrower,
               the  obligations  of such  persons or entities  will be joint and
               several.

         10.9. Assignments   and   Participation.   Notwithstanding   any  other
               provisions  of this  Agreement,  the Bank may, at any time in its
               sole  discretion,  without  any  notice  to the  Borrower,  sell,
               assign, transfer, negotiate, grant participation in, or otherwise
               dispose  of all or any part of the Bank's  interest  in the Loan.
               The Borrower hereby  authorizes the Bank to provide,  without any
               notice to the Borrower,  any information concerning the Borrower,
               including  information  pertaining  to the  Borrower's  financial
               condition,  business operations or general  creditworthiness,  to
               any person or entity which may succeed to or  participate  in all
               or any part of the Bank's  interest  in the Loan,  provided  that
               such person or entity agrees to maintain the  confidentiality  of
               such information. The Bank agrees that it will otherwise maintain
               the  confidentiality  of  any  proprietary   information  in  its
               possession   concerning  the  Borrower  which  is  not  otherwise
               available to the public.

         10.10.Governing Law and Jurisdiction. This Agreement has been delivered
               to and  accepted by the Bank and will be deemed to be made in the
               Commonwealth of Pennsylvania.  THIS AGREEMENT WILL BE INTERPRETED
               AND THE RIGHTS AND  LIABILITIES OF THE PARTIES HERETO  DETERMINED
               IN ACCORDANCE WITH THE LAWS OF THE  COMMONWEALTH OF PENNSYLVANIA,
               EXCLUDING  ITS  CONFLICT  OF  LAWS  RULES.  The  Borrower  hereby
               irrevocably  consents to the exclusive  jurisdiction of any state
               or federal court seated in Philadelphia County, Pennsylvania, and
               consents  that  all  service  of  process  be sent by  nationally
               recognized  overnight courier service directed to the Borrower at
               the Borrower's  address set forth herein and service so made will
               be deemed to be completed on the business day after  deposit with
               such courier;  provided that nothing  contained in this Agreement
               will prevent the Bank from bringing any

                                     - 16 -

<PAGE>

               action,  enforcing any award or judgment or exercising any rights
               against  the  Borrower  individually,  against  any  security  or
               against any  property of the  Borrower  within any other  county,
               state or other foreign or domestic jurisdiction. the Bank and the
               Borrower  agree  that  the  venue  provided  above  is  the  most
               convenient forum for both the Bank and the Borrower. The Borrower
               waives any objection to venue and any  objection  based on a more
               convenient forum in any action instituted under this Agreement.

       10.11.  WAIVER  OF  JURY  TRIAL.  EACH  OF  THE  BORROWER  AND  THE  BANK
               IRREVOCABLY  WAIVES  ANY AND ALL  RIGHT IT MAY HAVE TO A TRIAL BY
               JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO
               THIS  AGREEMENT,  ANY DOCUMENTS  EXECUTED IN CONNECTION WITH THIS
               AGREEMENT  OR  ANY  TRANSACTION   CONTEMPLATED  IN  ANY  OF  SUCH
               DOCUMENTS.  THE  BORROWER  AND  THE  BANK  ACKNOWLEDGE  THAT  THE
               FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

The Borrower  acknowledges that it has read and understood all the provisions of
this  Agreement,  including  the waiver of jury trial,  and has been  advised by
counsel as necessary or appropriate.

         WITNESS the due  execution of this Loan  Agreement as a document  under
seal, as of the date first written above.


[CORPORATE SEAL]                          THE BETHLEHEM CORPORATION,
                                             a Pennsylvania corporation


Attest:________________________           By:__________________________(SEAL)
                                             Alan H. Silverstein
                                             President & Chief Executive Officer



                                          PNC BANK, NATIONAL ASSOCIATION,
                                          a national banking association


Witness:______________________            By:__________________________(SEAL)
                                             Thomas R. Keiser
                                             Vice President

                                     - 17 -

<PAGE>

         ADDENDUM to that certain Loan Agreement  dated June 2, 1998 between The
Bethlehem  Corporation as the Borrower and PNC Bank, National Association as the
Bank.

I.    FINANCIAL COVENANTS

A)       Minimum  Fixed Charge  Coverage  Ratio - On a continuous  basis,  to be
         tested  by the Bank at  least  quarterly  as of the end of each  fiscal
         quarter of the Borrower,  the  Borrower's  Fixed Charge  Coverage Ratio
         shall equal or exceed  1.20 to 1.00.  (Herein,  the term "Fixed  Charge
         Coverage  Ratio" shall be determined in accordance  with GAAP and shall
         equal  the  sum of the  Borrower's  net  income  and  depreciation  and
         amortization  expenses for the immediately  preceding twelve (12) month
         period  divided  by  the  sum  of  the  Borrower's   unfunded   capital
         expenditures,  interest  expenses and current  maturities  of long-term
         debt over that same twelve (12) month period.

B)       Minimum  Effective Net Worth - On a continuous  basis,  to be tested by
         the Bank at least quarterly as of the end of each fiscal quarter of the
         Borrower,  the  Borrower's  Effective  Net Worth  shall equal or exceed
         $1,000,000 at all times from and after the closing date through May 31,
         1998, and  thereafter an amount equal to the sum of $1,000,000  plus an
         amount equal to one hundred percent (100%) of the Borrower's annual net
         income  during  each  fiscal  year of the  Borrower  from and after the
         fiscal year ending on May 31, 1998.  (Herein,  the term  "Effective Net
         Worth" shall be determined in accordance  with GAAP and shall equal the
         sum  of  the  shareholder  equity  of  the  Borrower  plus  all  fully-
         subordinated   debt  of  the  Borrower  minus  all  of  the  Borrower's
         intangible assets.)

C)       Maximum  Leverage  Ratio - On a continuous  basis,  to be tested by the
         Bank at least  quarterly  as of the end of each  fiscal  quarter of the
         Borrower,  the Borrower's  Leverage Ratio shall not exceed (i) 14.00 to
         1.00 from the closing date through May 30, 1998, (ii) 7.50 to 1.00 from
         May 31, 1998 through May 30, 1999 and (iii) 4.00 to 1.00 from and after
         May 31, 1999. (Herein, the term "Leverage Ratio" shall be determined in
         accordance  with GAAP and shall equal the sum of the  Borrower's  total
         liabilities minus all fully-subordinated debt divided by the sum of the
         Borrower's Effective Net Worth.)



                                     - 18 -

<PAGE>

II.      PERMITTED ENCUMBRANCES

                  None

III.     PENDING LITIGATION

         Steven Rule v. The  Bethlehem  Corporation,  et al.,  Civil  Action No.
97003066 22- 2 (C.C.P.  Bucks) - This is a products  liability  action involving
(at this juncture)  approximately eight Defendants and Additional  Defendants at
this juncture;  the primary  Defendants  are  manufacturers  of  fire-protective
garments  worn by the  Plaintiff,  when he was operating a piece of equipment --
allegedly designed, manufactured and sold by the Bethlehem Corporation --, and a
fire  resulted  and he was burned;  the case is in the  discovery  phase;  it is
believed  that the  claims  against  Bethlehem  are  questionable,  and that the
Plaintiff's  primary  focus  is  against  the  manufacturers  of the  protective
clothing and various  component  parts,  which allegedly  failed and resulted in
burn injuries.

         Westinghouse  Electric  Corp.  v.  Bethlehem  Corp.,  Civil  Action No.
1996-C- 8149 (C.C.P.  Northampton) - Westinghouse has sued to recover $39,056.22
for services allegedly rendered; Bethlehem has counterclaimed for damages caused
by the poor  quality of services  rendered,  and is also  defending on the basis
that the services  rendered by Westinghouse were of little or no value; the case
is in the middle of discovery.

         SI Handling Systems,  Inc. v. The Bethlehem Corporation - The Complaint
in this case was just filed on May 18,  1998;  it is a suit for  $27,880.59  for
goods and services  allegedly  rendered;  Bethlehem intends to assert by defense
and  counterclaim  the poor  quality of the  services  rendered,  and to recover
damages  resulting from failure to properly perform under the agreement  between
the parties.

IV.      ENVIRONMENTAL MATTERS

                  None




                                     - 19 -

<PAGE>

                                    EXHIBIT A
                              Borrowing Base Rider

                  THIS BORROWING BASE RIDER  ("Rider") is executed this 21st day
of January  1999,  by and  between THE  BETHLEHEM  CORPORATION,  a  Pennsylvania
corporation (the "Borrower"),  and PNC BANK,  NATIONAL  ASSOCIATION,  a national
banking association (the "Bank").  This Rider is incorporated into and made part
of that certain  Amended and Restated Loan Agreement dated January 21, 1999, and
also into such other  financing  documents  and  security  agreements  as may be
executed  and  delivered  pursuant to said Loan  Agreement  (all such  documents
including this Rider are collectively referred to as the "Loan Documents").  All
initially  capitalized  terms not otherwise defined in this Rider shall have the
same meanings ascribed to such terms in the other Loan Documents.

                  Pursuant to the Loan Documents, the Bank has extended a "Loan"
to the Borrower  which  includes a "Committed  Line of Credit,"  under which the
Borrower may borrow,  repay and reborrow funds at any time prior to the Maturity
Date  (such  portion  of the Loan  being  referred  to  together  herein  as the
"Facility").  As a condition to the Bank's willingness to extend the Facility to
the Borrower, the Bank and the Borrower are entering into this Rider in order to
set forth their agreement  regarding the maximum amount which may be outstanding
under the Facility at any time, and for the other purposes set forth below:

                  NOW,   THEREFORE,   in  consideration  of  the  foregoing  and
intending to be legally bound, the parties hereto covenant and agree as follows:

                  1. Limitations on Borrowings  Under Facility.  Notwithstanding
any  provisions to the contrary in any of the other Loan  Documents,  at no time
shall the aggregate  principal  amounts of  indebtedness  outstanding at any one
time under the Facility  exceed the Borrowing  Base at such time. If at any time
the aggregate  principal amount of indebtedness  outstanding  under the Facility
exceeds the  limitation  set forth in this  Section 1 for any  reason,  then the
Borrower  shall  immediately  repay  the  amount  of such  excess to the Bank in
immediately available funds.

                  2.  Borrowing  Base  Certificates.  In addition to any and all
provisions  of the  other  Loan  Documents  which  establish  conditions  to the
Borrower's  ability to request and obtain any advance  under the  Facility,  the
Borrower may not request an advance under the Facility  unless a Borrowing  Base
Certificate  shall have been  delivered  to the Bank via  telecopy  by 2:00 p.m.
Eastern  Standard or Daylight  Savings Time, as may be in effect at the time the
request  for an  advance  is made,  on the date of such  proposed  advance.  The
Borrower  shall also  deliver an updated  Borrowing  Base  Certificate  upon the
Bank's  request  and in no event  later  than on or before  the 10th day of each
month or the first  business  day  thereafter  if such day falls on a weekend or
holiday,  if no new  advances  have been  requested  by the  Borrower  under the
Facility since the date of the preceding  Borrowing Base Certificate.  Each such
Borrowing Base Certificate shall

                                     - 20 -

<PAGE>

be in form and substance  identical to the attached  Schedule A hereto and shall
separately  track advances under the Facility which are supported by each of the
four (4) existing categories of Eligible Inventory that are described below.

                  3. Certain  Defined Terms.  In addition to the words and terms
defined elsewhere in this Rider or in the other Loan Documents,  as used in this
Rider, the following words and terms shall have the following meanings:

                  "Account" shall mean an "account" or a "general intangible" as
defined in the Uniform  Commercial Code as in effect in the  jurisdiction  whose
Law governs the perfection of the Bank's security interest therein,  whether now
owned or hereafter acquired or arising.

                  "Account Debtor" shall mean, with respect to any Account, each
Person who is obligated to make payments to the Borrower on such Account.

                  "Affiliate"  of the Borrower or any Account  Debtor shall mean
(a) any Person who (either alone or with a group of Persons, and either directly
or  indirectly  through  one  or  more  intermediaries)  is in  control  of,  is
controlled  by or is under  common  control  with the  Borrower or such  Account
Debtor, (b) any director, officer, partner, employee or agent of the Borrower or
such Account Debtor,  and (c) any member of the immediate  family of any natural
person  described  in the  preceding  clauses  (a) and (b). A Person or group of
Persons  shall be deemed to be in control of the  Borrower or an Account  Debtor
when such  Person or group of Persons  possesses,  directly or  indirectly,  the
power to direct or cause the  direction  of the  management  or  policies of the
Borrower  or such  Account  Debtor,  whether  through  the  ownership  of voting
securities, by contract or otherwise.

                  "Bethlehem-Type   Equipment"   shall  mean  the  used   resale
equipment  inventory of the Borrower that is similar to the new resale equipment
inventory that is currently  being  manufactured  by the Borrower except for the
fact that it was originally manufactured by an entity other than the Borrower

                  "Borrowing  Base"  shall  mean at any time the  lesser  of (a)
$3,200,000 (the maximum principal amount of the Facility) and (b) the sum of (i)
60% of Qualified  Accounts at such time and (ii) the lesser of $2,250,000 or 50%
of  Eligible  Inventory  at such time.  The value at any time of the  collateral
described in this definition shall be determined by reference to the most recent
Borrowing Base Certificate delivered by the Borrower to the Bank.

                  "Borrowing  Base  Certificate"  shall mean each Borrowing Base
Certificate to be delivered by the Borrower to the Bank pursuant to Section 2 of
this Rider, in substantially  the form attached as Exhibit A to this Rider, with
blanks appropriately  completed, as amended,  supplemented or otherwise modified
from time to

                                     - 21 -

<PAGE>

time. References in the Borrowing Base Certificate to the "Loan Agreement" shall
be deemed to be references to this Rider and the other Loan Documents.

                  "Eligible  Inventory"  shall  mean,  collectively,  all of the
Borrower's then-current  Bethlehem-Type  Equipment,  New Bethlehem Equipment and
Used Bethlehem Equipment.

                  "Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.

                  "Lien" shall mean any  mortgage,  pledge,  security  interest,
bailment,  encumbrance,  claim,  lien  or  charge  of any  kind,  including  any
agreement  to give any of the  foregoing,  any  conditional  sale or other title
retention  agreement and any lease in the nature  thereof,  and the filing of or
agreement to give any financing statement under the Uniform Commercial Code.

                  "New Bethlehem  Equipment" shall mean the new resale equipment
inventory of the Borrower that was  manufactured by the Borrower but has not yet
been sold by the Borrower.

                  "Official   Body"  shall  mean  any  government  or  political
subdivision  or  any  agency,  authority,   bureau,  central  bank,  commission,
department or instrumentality of any government or political subdivision, or any
court,  tribunal,  grand jury or  arbitrator,  in each case  whether  foreign or
domestic.

                  "Person"  shall  mean  an  individual,   sole  proprietorship,
corporation,  partnership (general or limited),  trust,  business trust, limited
liability company,  unincorporated  organization or association,  joint venture,
joint-stock company, Official Body, or any other entity of whatever nature.

                  "Qualified  Accounts" shall mean Accounts which are and at all
times continue to be acceptable to the Bank in its sole discretion. Standards of
acceptability include but are not limited to the following conditions:

                  a.       The Account duly complies with all  applicable  Laws,
                           whether  Federal,  state or local,  including but not
                           limited to usury Laws,  the Federal  Truth in Lending
                           Act, the Federal Consumer Credit  Protection Act, the
                           Fair Credit  Billing  Act,  and  Regulation  Z of the
                           Board of Governors of the Federal Reserve Systems;

                  b.       The Account was not  originated  in or subject to the
                           Laws of a  jurisdiction  whose  Laws  would  make the
                           account or the grant of

                                     - 22 -

<PAGE>

                           the  security  interest  in the  Account  to the Bank
                           unlawful, invalid or unenforceable;

                  c.       The  Account  was   originated  by  the  Borrower  in
                           connection with the sale of goods or the rendering of
                           services by the  Borrower in the  ordinary  course of
                           business under an enforceable contract, and such sale
                           has  been   consummated  and  such  goods  have  been
                           delivered or such services have been rendered so that
                           the  performance of such contracts has been completed
                           by the  Borrower  and by all  parties  other than the
                           Account  Debtor,  or the cost thereof has been billed
                           to the Account  Debtor prior to delivery  pursuant to
                           an existing  milestone or  installment-based  billing
                           arrangement;

                  d.       The  Account  is  evidenced  by a written  invoice or
                           other  documentation and arises from a contract,  all
                           of which are in form and  substance  satisfactory  to
                           the Bank;

                  e.       The Account does not arise out of a contract with, or
                           order from,  an Account  Debtor  that,  by its terms,
                           forbids or makes void or  unenforceable  the grant of
                           the security  interest by the Borrower to the Bank in
                           and to the Account arising with respect thereto;

                  f.       The title of the Borrower to the Account and,  except
                           as to the Account  Debtor,  to any  related  goods is
                           absolute  and is not subject to any Lien except Liens
                           in favor of the Bank;

                  g.       The Account  provides  for  payment in United  States
                           Dollars by the Account Debtor;

                  h.       The  Account  shall have  amounts  owing that are not
                           less than the amounts represented by the Borrower;

                  i.       The portion of the  Account for which  income has not
                           yet  been  earned  or  which   constitutes   unearned
                           discount, services charges or deferred interest shall
                           be ineligible;

                  j.       The Account shall be eligible only to the extent that
                           it is not subject to any defense, claim of reduction,
                           counterclaim,  set-off, recoupment, or any dispute or
                           claim for credits,  allowances or  adjustments by the
                           Account Debtor because of returned, inferior, damaged
                           goods or  unsatisfactory  service,  or for any  other
                           reason;

                  k.       The goods the sale of which gave rise to the  Account
                           were  shipped or delivered or provided to the Account
                           Debtor on an absolute sale

                                     - 23 -

<PAGE>

                           basis or on a bill and hold sale basis,  but not on a
                           consignment  sale basis,  a guaranteed  sale basis, a
                           sale or  return  basis,  or on the basis of any other
                           similar  terms  making the Account  Debtor's  payment
                           obligations conditional, or the cost thereof has been
                           billed  to  the  Account  Debtor  prior  to  delivery
                           pursuant    to    an    existing     milestone     or
                           installment-based billing arrangement;

                  l.       The  Account  Debtor has not  returned,  rejected  or
                           refused to retain, or otherwise notified the Borrower
                           of any dispute concerning,  or claimed  nonconformity
                           of,  any of the  goods  from the  sale of  which  the
                           Account arose;

                  m.       No  default  exists  under the  Account  by any party
                           thereto,  and all rights and remedies of the Borrower
                           under  the  Account  are  freely  assignable  by  the
                           Borrower;

                  n.       The  Account has not been  outstanding  for more than
                           ninety  (90)  days past the  invoice  date and is not
                           subject to "dating" terms;

                  o.       The Account  shall be  ineligible  to the extent that
                           the  aggregate  amount  of all  the  Accounts  of the
                           Account Debtor and its  Affiliates  exceed 70% of all
                           of the Borrower's Accounts;

                  p.       The  Borrower  has  not  received  any  note,   trade
                           acceptance,  draft, chattel paper or other instrument
                           with  respect  to, or in  payment  of,  the  Account,
                           unless, if any such instrument has been received, the
                           Borrower  immediately  notifies  the Bank and, at the
                           Bank's request, endorses or assigns and delivers such
                           instrument to the Bank;

                  q.       The  Borrower  has not received any notice of (i) the
                           filing  by or  against  the  Account  Debtor  of  any
                           proceeding in bankruptcy,  receivership,  insolvency,
                           reorganization,  liquidation,  conservatorship or any
                           similar  proceeding,  or (ii) any  assignment  by the
                           Account  Debtor for the  benefit of  creditors.  Upon
                           receipt by the Borrower of any such  notice,  it will
                           give the Bank prompt written notice thereof;

                  r.       The  Account  Debtor  is  not  an  Affiliate  of  the
                           Borrower;

                  s.       The Account shall be ineligible if the Account Debtor
                           is an Official  Body,  unless the Borrower shall have
                           taken all  actions  deemed  necessary  by the Bank in
                           order  to  perfect  the  Bank's   security   interest
                           therein,  including but not limited to any notices or
                           filings

                                     - 24 -

<PAGE>
                           required  under the Assignment of Claims Act of 1940,
                           as amended, or other applicable Laws; and

                  t.       The  Bank  has not  deemed  such  Account  ineligible
                           because of uncertainty about the  creditworthiness of
                           the Account Debtor  (including,  without  limitation,
                           unsatisfactory  past  experiences  of the Borrower or
                           the Bank with the Account Debtor) or because the Bank
                           otherwise makes a reasonable  determination  that the
                           collateral  value  of  the  Account  to the  Bank  is
                           impaired or that the Bank's  ability to realize  such
                           value is insecure.

         Standards of acceptability  shall be fixed and may be revised from time
to time by mutual  agreement  of Bank and  Borrower.  In the case of any dispute
about  whether  an  Account  is or has  ceased to be a  Qualified  Account,  the
decision of the Bank shall be final.

                           "Used Bethlehem Equipment" shall mean the used resale
equipment inventory of the Borrower that was originally manufactured and sold by
the Borrower, but was subsequently re-acquired by the Borrower.

                  4.  Governing  Law.  THIS  RIDER WILL BE  INTERPRETED  AND THE
RIGHTS AND  LIABILITIES OF THE PARTIES HERETO  DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF PENNsYLVANIA, EXCLUDING ITS CONFLICTS OF LAW RuLES.

                  5.  Counterparts.  This  Rider may be signed in any  number of
counterpart copies and by the parties hereto on separate  counterparts,  but all
such copies shall constitute one and the same instrument.

                  WITNESS the due  execution of this  Borrowing  Base Rider as a
document under seal, as of the date first written above.

[CORPORATE SEAL]                        THE BETHLEHEM CORPORATION,
                                            a Pennsylvania corporation

Attest:________________________         By:__________________________(SEAL)
                                           Alan H. Silverstein
                                           President & Chief Executive Officer

[CORPORATE SEAL]                        PNC BANK, NATIONAL ASSOCIATION,
                                            a national banking association

Witness:______________________          By:__________________________(SEAL)
                                           Thomas R. Keiser, Vice President

                                     - 25 -

<PAGE>
                                   SCHEDULE A

                                FORM OF BORROWING
                                BASE CERTIFICATE


1)       Total Accounts Receivable                        $__________________

2)       Less:    Unqualified Receivables

         C)       Over 90 Days Due                        $________________

         D)       Retention                               $________________

         E)       Foreign Not Supported By
                  Letter of Credit                        $________________

         F)       Over-Concentration Limit                $________________

         G)       Others                                  $________________

                                            TOTAL         $__________________

3)       Total Qualified Accounts
                  (Line 1 minus Line 2)                   $__________________

4)       Borrowing Base Availability - Accounts Receivable
                  (60% of Line 3)                         $__________________

5)       Total Qualified Inventory (By Sub-Category)

         A)       Bethlehem-Type Equipment                $______________

         B)       New Bethlehem Equipment                 $______________

         C)       Used Bethlehem Equipment                $______________

                     TOTAL (Not to exceed $4,500,000)     $__________________

6)       Borrowing Base Availability - Inventory
                  (Lesser of 50% of Line 3 or
                  $2,250,000.)                            $__________________

7)       Total Borrowing Base Availability
                  (Lesser of Line 4 plus Line 6
                  or $3,200,000)                          $__________________



                                     - 26 -

<PAGE>

8)       Revolving Loan Outstanding
                  (Not to exceed Line 7)                  $___________________

9)       Borrowing Base Availability
                  ($3,200,000 minus Line 7)               $___________________



--------------------------------------------------------------------------------


         To induce PNC Bank, National Association ("PNC Bank") to grant advances
or  other  financial  accommodations  to us  pursuant  to the  terms of our Loan
Agreement  dated as of June 2, 1998 with PNC Bank,  as the same may be extended,
amended,  and/or restated from time to time (the "Credit Agreement"),  we hereby
certify, represent and warrant the following to the PNC Bank, all as of the date
hereof:  (1) the foregoing  statements of our accounts  receivable and inventory
described  above  are true  and  complete;  (2) the  total  eligible  collateral
described  above  at  Lines  three  (3) and five  (5)  represent  only  Eligible
Inventory  and  Qualified  Accounts,  as those  terms are  defined in the Credit
Agreement;  (3) we are in compliance with all of the terms and provisions of the
Credit  Agreement;  (4) there  exists no Default  or Event of Default  under the
Credit  Agreement;  and (5) the  current  unpaid  balance of all  principal  and
interest  due in  connection  with  all  existing  loans  or  advances  from The
Bethlehem   Corporation   to  Bethlehem   Advanced   Materials   Corporation  is
$___________________.




DATE: ________________                      THE BETHLEHEM CORPORATION,
                                            a Pennsylvania corporation


                                            By:_________________________________
                                               Antoinette Martin
                                               Chief Financial Officer



                                     - 27 -

<PAGE>

                                    EXHIBIT B

                FORM OF ACCOUNTS RECEIVABLE AND INVENTORY REPORT

         The Exhibit B attached to the  original  Loan  Agreement by and between
the Borrower and the Bank dated June 2, 1998 is hereby incorporated by reference
into this Agreement as Exhibit B hereto.

                                     - 28 -