LOAN AGREEMENT

            THIS LOAN AGREEMENT (this  "AGREEMENT"),  is entered into as of June
2, 1998,  between THE BETHLEHEM  CORPORATION,  a Pennsylvania  corporation  (the
"BORROWER") and PNC BANK, NATIONAL  ASSOCIATION,  a national banking association
(the "BANK").

            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,  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.

<PAGE>
            (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 (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.

2.2         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).

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<PAGE>
            (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".

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


                                      -3-
<PAGE>
                  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 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


                                      -5-
<PAGE>
                  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 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.

                                      -5-
<PAGE>

            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  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


                                      -6-
<PAGE>
                  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) 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 consolidated
                  and,  if required  by the Bank in its  reasonable  discretion,
                  consolidating 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.

                                      -7-
<PAGE>
            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 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).

                                      -8-
<PAGE>

            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, if any, set forth on the Addendum, subject to
                  all applicable cure periods set forth herein.

            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 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,
                  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


                                      -9-
<PAGE>
                  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  of  investments  in  the  ordinary  course  of the
                  Borrower's business.

            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,
                  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.


                                      -10-
<PAGE>
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.

            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.

                  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.


                                      -11-
<PAGE>
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.

            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


                                      -12-
<PAGE>
                  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.

            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

                                      -13-
<PAGE>

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
1220 Market Street, 8th Floor                 1620 Pond Road, Suite 301
Wilmington, DE 19801                          Allentown, PA 18104
Facsimile No.: (302) 425-6464                 Facsimile No.: (610) 366-0955

            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.


                                      -14-
<PAGE>
            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",
                  "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


                                      -15-
<PAGE>
                  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 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


                                      -16-
<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.

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 28th day of May
1998, 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 Loan
Agreement dated June 2, 1998, 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 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.


<PAGE>
            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 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.


                                      -21-
<PAGE>
            "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
                  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


                                      -22-
<PAGE>
                  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 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;

                                      -23-
<PAGE>

            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 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.

                                      -24-
<PAGE>

            "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


<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,  and;  (4) there exists no Default or Event of Default
under the Credit Agreement.




DATE: ________________                  THE BETHLEHEM CORPORATION,
                                             a Pennsylvania corporation


                                        By:_________________________________
                                             Antoinette Martin
                                             Chief Financial Officer


                                      -27-
<PAGE>
                                    EXHIBIT B

                FORM OF ACCOUNTS RECEIVABLE AND INVENTORY REPORT







                                      -28-

<PAGE>

                             SUBORDINATION AGREEMENT

         THIS  SUBORDINATION  AGREEMENT (this "AGREEMENT") is entered into as of
the 2nd day of June,  1998,  by and among PNC BANK,  NATIONAL  ASSOCIATION  (the
"BANK"),  THE BETHLEHEM  CORPORATION  (the  "BORROWER")  and  UNIVERSAL  PROCESS
EQUIPMENT, INC. (the "CREDITOR").

                                    RECITALS

         The Bank has  established  or is  establishing  a $3,200,000  Revolving
Credit  facility  and an  $800,000  Term Loan  facility  for the  benefit of the
Borrower,  as evidenced by certain  documents,  instruments  and  agreements all
between the Bank and the Borrower (collectively, the "LOAN DOCUMENTS").

         The Creditor  has  extended or is  extending  to the  Borrower  certain
loans,  advances and extensions of credit,  as evidenced by the Promissory  Note
(as such term is defined  herein,  and also  referred to herein as the "CREDITOR
DOCUMENTS").

         The Bank and the  Creditor  hereby  desire to set forth the  respective
rights  and  obligations  each has as  against  the other  with  respect  to the
Borrower.

         NOW,  THEREFORE,  the parties  hereto,  intending to be legally  bound,
hereby agree as follows:

1.       DEFINITIONS.

         "OBLIGATIONS"   means  all   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 Bank's  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,  exclusive of all such
costs and  expenses  relating to the  salaried  employees  of the Bank,  and all
related administrative and overhead expenses of the Bank.

         "COLLATERAL"  means any  collateral  now or in the future  securing the
Obligations,  including but not limited to claims  against any guarantors of the
Obligations and any collateral securing such guarantees.


<PAGE>
         "SUBORDINATED  DEBT"  means  the  indebtedness  due  and  owing  by the
Borrower to the Creditor,  as evidenced by that certain  Promissory  Note to the
Creditor from the Borrower in the amount of $800,000 dated of even date herewith
(herein, the "Promissory Note").

2.       SUBORDINATION.  Subject  to  Section  3  hereof,  the  Creditor  hereby
irrevocably  subordinates  and  postpones the payment and the time of payment of
all the  Subordinated  Debt and all claims and demands arising  therefrom to the
Obligations  and  directs  that  the  Obligations  be paid in  full  before  the
Subordinated Debt.

3.       PAYMENTS  TO  CREDITOR.  Notwithstanding  any other  provision  of this
Agreement,  the  Borrower  shall be  entitled to pay and the  Creditor  shall be
entitled to receive, prior to the date that the Creditor receives written notice
from the Bank  either  that an Event of  Default  has  occurred  under  the Loan
Documents  or would result from such  payment,  only all  scheduled  payments of
interest  (at the current rate set forth in the  Creditor  Documents)  under the
Subordinated  Debt,  and  only  when  due.  No  payments  of  principal  on  the
Subordinated  Debt or default  interest  thereon or costs and expenses  shall be
permitted or made without the Bank's prior written consent. After the occurrence
of an Event of Default  under the Loan  Documents and receipt by the Creditor of
written  notice  thereof from the Bank to the Creditor,  the Borrower  shall not
make,  and the Creditor  shall not receive,  any direct or indirect  payments of
principal, interest, fees or expenses under the Subordinated Debt.

4.       SECURITY.  The Borrower shall not grant and the Creditor shall not take
any lien on or security interest in any of the Borrower's property, now owned or
hereafter  acquired or created,  without the prior written  consent of the Bank,
except that the  Borrower  shall be permitted  to grant a  subordinate  security
interest in the Borrower's intangible intellectual property assets and inventory
to collateralize  both the Subordinated  Debt and the  non-subordinate  debt due
from the  Borrower  to the  Creditor,  subject  in all  respects  to the  terms,
conditions and restrictions contained in this Agreement.

5.       STANDBY  LIMITATION.  Notwithstanding  any  breach  or  default  by the
Borrower under the Creditor Documents,  the Creditor shall not at any time or in
any manner  foreclose  upon,  take  possession  of, or attempt to realize on any
Collateral,  or  proceed  in any way to  enforce  any  claims it has or may have
against  the  Borrower  unless  and until the  Obligations  have been  fully and
indefeasibly paid and satisfied in full.

6.       BANKRUPTCY/PROBATE  OF BORROWER.  In the event a petition or action for
relief  shall be filed by or against the Borrower  under any federal  bankruptcy
statute  in effect  from  time to time,  or under  any  other  law  relating  to
bankruptcy, insolvency, reorganization, receivership, general assignment for the
benefit  of  creditors,   general  moratorium,   general  creditor  composition,
arrangement  or other similar  relief for debtors,  the Bank's claim (secured or
unsecured)  against the assets or estate of the Borrower  shall be  indefeasibly
paid in full  before any  payment is made to the  Creditor  on the  Subordinated
Debt, whether such payment is in cash,  securities or any other form of property
or rights.  The Obligations  shall include  interest  accruing after the date of
commencement  of any case or  proceeding  under any such  bankruptcy  statute or
related law, regardless of whether the Bank's claim for such interest is allowed
in such case or proceeding.


                                       2
<PAGE>
The Bank  may,  in its  discretion,  file a proof of claim  for or  collect  the
Creditor's claim on the  Subordinated  Debt first for the benefit of the Bank to
the extent of the unpaid  Obligations  and then for the benefit of the  Creditor
(but without  creating any duty or liability to the Creditor other than to remit
to the Creditor distributions,  if any, actually received in such proceedings or
on either or both of the proofs of claim filed in connection  with the claims of
either the  Creditor  and/or the Bank after the  Obligations  have been paid and
satisfied in full) directly from the receiver, trustee, custodian, liquidator or
representative of the Borrower's estate in such proceeding. The Borrower and the
Creditor shall furnish all assignments,  powers or other documents  requested by
the Bank to facilitate such direct collection by the Bank.

7.       RECEIPT OF  PAYMENTS  BY  CREDITOR.  Should the  Creditor  directly  or
indirectly  receive any payment or distribution  not permitted by the provisions
of this Agreement or any Collateral or proceeds  thereof,  prior to the full and
indefeasible  payment and satisfaction of the Obligations and the termination of
all financing  arrangements between the Bank and the Borrower, the Creditor will
deliver the same to the Bank in the form received (except for the endorsement or
assignment of the Creditor where necessary),  for application to the Obligations
in such order and manner as the Bank may elect. Until so delivered, the Creditor
shall hold the same, IN TRUST,  for the Bank as property of the Bank,  and shall
not  commingle  such  property of the Bank with any other  property  held by the
Creditor.  In the  event  the  Creditor  fails to make any such  endorsement  or
assignment, the Bank, or any of its officers or employees on behalf of the Bank,
is hereby irrevocably  authorized in its own name or in the name of the Creditor
to make such  endorsement or assignment and is hereby  irrevocably  appointed as
the Creditor's attorney-in-fact for those purposes.

8.       BANK'S RIGHTS.

(a)      The Creditor  hereby  consents  that at any time and from time to time,
without  further  consent of or notice to the Creditor and without in any manner
affecting,  impairing,  lessening or  releasing  any of the  provisions  of this
Agreement, the Bank may, in its sole discretion: (i) renew, compromise,  extend,
expand, postpone, waive, accelerate,  terminate, change the payment terms of, or
otherwise modify the Obligations or amend, renew,  replace or terminate the Loan
Documents  or any and all  other  agreements  now or  hereafter  related  to the
Obligations;  (ii) extend credit to the Borrower in whatever amount on a secured
or  unsecured  basis or take other  support for the  Obligations  and  exchange,
enforce, waive, sell, transfer,  collect, adjust or release any such security or
other support or any part thereof;  (iii) apply any and all payments or proceeds
of such security or other support and in any order or manner as the Bank, in its
discretion,  may  determine;  and (iv) release or substitute any party liable on
the Obligations,  any guarantor of the Obligations, or any other party providing
support for the Obligations.

(a)      This Agreement will not be affected,  impaired or released by any delay
or failure of the Bank to exercise  any of its rights and  remedies  against the
Borrower  or any  guarantor  or under  any of the  Obligations  or  against  any
Collateral,  by any failure of the Bank to take steps to perfect or maintain its
lien on, or to  preserve  any  rights to, any  Collateral  by any  irregularity,
unenforceability  or invalidity of any of the Obligations or any part thereof or
any


                                       3
<PAGE>
security or  guarantee  therefor,  or by any other event or  circumstance  which
otherwise  might  constitute  a defense  available  to, or a  discharge  of, the
Borrower or a subordinated  creditor.  Except to the extent  expressly stated in
Section 3 of this Agreement, the Creditor hereby waives demand,  presentment for
performance,  protest,  notice of dishonor  and of protest  with  respect to the
Subordinated  Debt and the  Collateral,  notice of acceptance of this Agreement,
notice of the making of any of the  Obligations  and notice of default under any
of the Obligations.

(a)      Nothing in this Agreement will obligate the Bank to grant credit to, or
continue financing arrangements with, the Borrower.

9.       CONTINUING AGREEMENT. This is a continuing agreement and will remain in
full force and effect  until all of the  Obligations  and all of the  Creditor's
obligations to the Bank have been fully performed and indefeasibly satisfied and
until all the Loan Documents have been terminated.  This Agreement will continue
to be  effective  or will be  reinstated,  as the  case  may be,  if at any time
payment of all or any part of the  Obligations is rescinded or must otherwise be
returned  by the Bank upon  insolvency,  bankruptcy,  or  reorganization  of the
Borrower or otherwise, all as though such payment had not been made.

10.      NO  CHALLENGE TO LIENS.  The Creditor  agrees that it will not make any
assertion,  claim or argument in any action,  suit or  proceeding  of any nature
whatsoever in any way challenging the priority, validity or effectiveness of the
liens and security interests granted to the Bank.

11.      DISPOSITION OR RELEASE OF COLLATERAL.

(a)      If at any time or from  time to time  the  Collateral,  or any  portion
thereof, is in any manner sold or otherwise transferred,  the Creditor's consent
to such disposition shall be automatically and irrevocably given if the Bank, in
its sole discretion and for any reason, consents to such disposition, and in any
event the  Creditor  shall not be  entitled  to receive  any  proceeds  (cash or
non-cash)  of such  disposition  unless  and  until  the  Obligations  have been
indefeasibly paid in full.

(a)      If, at any time and for any reason,  the Bank  releases its lien on the
Collateral, or any portion thereof, the Creditor shall likewise release its lien
on the property so released  from the Bank's lien,  if the Creditor has obtained
such a lien.

12.      ORDER OF  PROCEEDINGS.  Nothing in this Agreement is intended to compel
the Bank or the  Creditor  at any time to  declare  the  Borrower  in default or
compel  the Bank to  proceed  against or refrain  from  proceeding  against  any
Collateral  in any order or manner.  All rights  and  remedies  of the Bank with
respect to the Collateral,  the Borrower,  and any other obligors concerning the
Obligations are cumulative and not alternative.

                                       4

<PAGE>
13.      REPLACEMENT FINANCING; LEGEND ON CREDITOR DOCUMENTS.

(a)      The  provisions  hereof  shall  inure to the  benefit of any  financial
institution  obtained by the Borrower or the Bank to provide replacement working
capital or other financing for the Borrower in place of the Bank,  regardless of
whether any such  replacement  lender  provides its own financing or succeeds to
the Bank's financing by assignment. If requested by such replacement lender, the
Creditor shall execute with such  replacement  lender a subordination  agreement
substantially similar to this Agreement.

(a)      The Creditor also agrees that as a prior condition of any assignment of
any of its interests  under any of the Creditor  Documents,  the Creditor  shall
require the assignee to acknowledge this Agreement and agree, in writing,  to be
bound by the terms and conditions hereof.

(a)      Each and every  note now or  hereafter  issued as part of the  Creditor
Documents shall bear the following legend:

         This  [Note or other  instrument]  is  subject  to the  terms of a
         Subordination  Agreement dated as of June 2, 1998, in favor of PNC
         Bank, National Association. Notwithstanding any contrary statement
         contained in the within  instrument,  no payment on account of any
         obligation   arising  from  or  in  connection   with  the  within
         instrument  or  any  related  agreement   (whether  of  principal,
         interest or otherwise) shall be made,  paid,  received or accepted
         except  in  accordance  with  the  terms  of  said   Subordination
         Agreement.

14.      FINANCING OF FIDUCIARY.  In the event of a bankruptcy,  reorganization,
other insolvency or court proceeding for the Borrower commences,  the Bank shall
have the option (in its sole and  absolute  discretion)  to  continue to provide
financing (on terms acceptable to the Bank) of the trustee, other fiduciary,  or
of the Borrower as a  debtor-in-possession,  if the Bank deems such financing to
be in its best interests. The subordination and lien priority provisions of this
Agreement  shall  continue to apply to all advances  made during the pendency of
such  court  proceedings,  so that  the  Bank  shall  have a  prior  lien on all
Collateral,  created  before or during  such  court  proceeding,  to secure  all
Obligations,  whether  created  before  or during  such  court  proceeding.  The
Creditor  hereby waives any right it may have to object to financing by the Bank
during the pendency of such court proceeding and the Creditor's  consent to such
financing shall not be required regardless of whether the court supervising such
proceeding approves, grants or allows adequate protection to the Creditor.

15.      INVESTIGATION  OF PARTIES.  The  Creditor has entered into the Creditor
Documents  with the Borrower  and the Bank has entered  into the Loan  Documents
with the Borrower and the Creditor and the Bank have entered into this Agreement
each upon its own  independent  investigation,  and each  makes no  warranty  or
representation  as to each other with respect to the financial  condition of the
Borrower,  or its ability to repay its loans to the  Creditor or the Bank in the
future.  Nothing in this Agreement  shall be deemed to constitute this Agreement
as a security or create a joint venture or partnership  between the Creditor and
the Bank for any purpose.

                                       5
<PAGE>
16.      IMPROPER  ACTION BY CREDITOR.  If the  Creditor,  the Borrower or both,
contrary to this Agreement,  make,  attempt to or threaten to allow the Creditor
to exercise its remedies against the Borrower under the Creditor  Documents,  or
make any  payment or take any action  contrary to this  Agreement,  the Bank may
restrain  or enjoin  the  Creditor  and the  Borrower  from so  doing,  it being
expressly  understood  and agreed by the Creditor and the Borrower that: (i) the
Bank's damages from their actions may at that time be difficult to ascertain and
may be irreparable,  and (ii) the Creditor and the Borrower waive any defense or
claim that the Bank or the Borrower  cannot  demonstrate  damages or can be made
whole by the awarding of damages.

17.      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:         PNC BANK, NATIONAL ASSOCIATION
                              1035 VIRGINIA DRIVE
                              FORT WASHINGTON, PENNSYLVANIA 19034
                              ATTENTION: THOMAS R. KEISER
                              FACSIMILE NO.: (215) 773-1022

                              WITH COPIES TO: BLANK ROME COMISKY & MCCAULEY LLP
                              1220 MARKET STREET, 8TH FLOOR
                              WILMINGTON, DE 19801
                              ATTENTION: KENNETH J. MARINO, ESQUIRE
                              FACSIMILE NO.: (302) 425-6464

         TO THE CREDITOR:     UNIVERSAL PROCESS EQUIPMENT, INC.
                              P.O. BOX 338
                              ROOSEVELT, NJ 08555-0338
                              ATTENTION: RONALD H. GALE, PRESIDENT
                              FACSIMILE NO.: (609) 259-0644

                              WITH COPIES TO: UNIVERSAL PROCESS EQUIPMENT, INC.
                              1180 ROUTE 130 SOUTH
                              ROBBINSVILLE, NJ 08691
                              ATTENTION: HAROLD BOGATZ, ESQUIRE
                              FACSIMILE NO.: (609) 259-0644

                                       6
<PAGE>
         TO THE BORROWER:   THE BETHLEHEM CORPORATION
                            25TH & LENNOX STREET
                            EASTON, PENNSYLVANIA 18045
                            ATTENTION: ALAN H. SILVERSTEIN
                            FACSIMILE NO.: (610) 515-1341

                            WITH COPIES TO: THE LAW OFFICES OF KEVIN T. FOGERTY
                           1620 POND ROAD
                           ALLENTOWN, PA 18104
                           ATTENTION: KEVIN T. FOGERTY, ESQUIRE
                           FACSIMILE NO.: (610) 366-0955

18.      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 Bank's rights and remedies hereunder are cumulative and
not  exclusive  of any other  rights or  remedies  which the Bank may have under
other agreements,  at law or in equity. Nothing in this Agreement is intended to
modify,  alter,  reduce or impair any rights  which the Bank or the Creditor may
have against the Borrower  under the Loan  Documents or the Creditor  Documents,
respectively,  or under any other agreement between them, or either of them, and
the Borrower.

19.      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.

20.      CHANGES  IN  WRITING.  No  modification,  amendment  or  waiver  of any
provision of this  Agreement nor consent to any departure by the Borrower or the
Creditor 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.

21.      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, among the
parties with respect to the subject matter hereof.

22.      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.

23.      SUCCESSORS  AND ASSIGNS.  This Agreement will be binding upon and inure
to the benefit of the Borrower,  the Creditor and the Bank and their  respective
heirs, executors,  administrators,  successors and assigns;  PROVIDED,  HOWEVER,
that neither the Borrower nor the Creditor may 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. No claims or rights are intended
to be created  hereunder  for the benefit of the  Borrower or any alleged  third
party beneficiary hereof.
                                       7

<PAGE>
24.      INTERPRETATION.  In this Agreement,  unless the parties otherwise agree
in writing, the singular includes the plural and the plural the singular;  words
importing any gender include the other genders; the word "or" shall be deemed to
include  "and/or",  the words  "including",  "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. If
this  Agreement  is  executed by more than one party as Borrower or by more than
one party as Creditor, the obligations of such persons or entities will be joint
and several.

25.      GOVERNING LAW AND  JURISDICTION.  This  Agreement has been delivered to
and  accepted  by the Bank and will be deemed to be made in the State  where the
Bank's office  indicated  above is currently  located.  THIS  AGREEMENT  WILL BE
INTERPRETED AND THE RIGHTS AND  LIABILITIES OF THE PARTIES HERETO  DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS
CURRENTLY  LOCATED,  EXCLUDING ITS CONFLICT OF LAWS RULES.  Each of the Borrower
and the Creditor hereby  irrevocably  consents to the exclusive  jurisdiction of
any state or federal court for the county or judicial  district where the Bank's
office  indicated above is located,  and consents that all service of process be
sent by nationally  recognized  overnight  courier service directed to it at its
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 action,
enforcing any award or judgment or exercising any rights against the Borrower or
the Creditor  individually,  against any security or against any property of the
Borrower   within  any  other  county,   state  or  other  foreign  or  domestic
jurisdiction. The parties hereto agree that the venue provided above is the most
convenient forum for each of the parties.  Each of the Borrower and the Creditor
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Agreement.

26.      WAIVER OF JURY TRIAL.  EACH OF THE BORROWER,  THE CREDITOR 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,  THE CREDITOR AND THE BANK
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.


                                       8
<PAGE>
         WITNESS the due  execution  hereof as a document  under seal, as of the
date first written above.

[CORPORATE SEAL]                        THE BETHLEHEM CORPORATION,
                                             a Pennsylvania corporation


Attest:______________________________   By:__________________________________
                                             Alan H. Silverstein
                                             President & Chief Executive Officer

[CORPORATE SEAL]                        UNIVERSAL PROCESS EQUIPMENT, INC.,
                                             a New Jersey corporation


Attest:______________________________   By:__________________________________
                                             Ronald H. Gale, President

                                        PNC BANK, NATIONAL ASSOCIATION,
                                             a national banking association


Witness:___________________________     By:__________________________________
                                             Thomas R. Keiser, Vice President