Second Amended and Restated Loan Agreement

         THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT  (this  "Agreement") is
entered  into  as  of  July  31,  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 Amended and Restated Loan Agreement between the Borrower
and the Bank dated January 21, 1999.

         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:

         $3,450,000 Committed Line of Credit, to be automatically  reduced to an
amount equal to $3,200,000  from and after November 1, 1999 (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:  July 31,  2000,  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 has  previously  paid to the Bank a
             facility fee in the amount of $48,000.  In  addition,  the Borrower
             shall pay a renewal  fee to the Bank in an amount  equal to $15,000
             on or before July 31, 1999.

<PAGE>
             (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,  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 has previously paid to the Bank
                  a  facility  fee in the amount of  $12,000,  which was paid 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 twelve month period which ended
                        on May 31, 1999 (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  $1,086,717  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  Second  Amended and Restated  Loan  Agreement
dated July 31, 1999 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 31st day
of  July  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 Second Amended and Restated Loan Agreement  dated July 31, 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


<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)
either  $3,450,000  at all times on or before  October 31, 1999 or $3,200,000 at
all times thereafter (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 either
$2,500,000 at all times on or before October 31, 1999 or $2,250,000 at all times
thereafter 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

                                     - 21 -

<PAGE>

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 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;


                                     - 22 -

<PAGE>
                  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 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;


                                     - 23 -

<PAGE>

                  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  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

                                     - 24 -

<PAGE>

                           interest  therein,  including  but not limited to any
                           notices or filings  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 -
                  $5,000,000 between July 31, 1999
                  and October 31, 1999)                   $________________

6)       Borrowing Base Availability - Inventory
                  (Lesser of 50% of Line 3 or $2,250,000 -
                  $2,500,000 between July 31, 1999 and
                  October 31, 1999)                       $________________

7)       Total Borrowing Base Availability

                                     - 27 -

<PAGE>

                  (Lesser of Line 4 plus Line 6 or $3,200,000 -
                  $3,450,000 between July 31, 1999 and
                  October 31, 1999)                       $_______________


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

9)       Borrowing Base Availability
                  ($3,200,000 minus Line 7 - $3,450,000
                  between July 31, 1999 and October 31,
                  1999)                                   $________________

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

         To induce PNC Bank, National Association ("PNC Bank") to grant advances
or other  financial  accommodations  to us  pursuant  to the terms of our Second
Amended and Restated Loan Agreement  dated as of July 31, 1999 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



                                     - 28 -

<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.


                                     - 29 -