LINE OF CREDIT
                                      NOTE

                               Media, Pennsylvania

Maximum Credit Limit:               $800,000.00              Date: June 12, 1997

        FOR VALUE  RECEIVED,  WITHOUT  DEFALCATION  AND  INTENDING TO BE LEGALLY
BOUND  HEREBY,  Transnational  Industries,  Inc. and Spitz,  Inc.,  (hereinafter
collectively,  jointly and severally  referred to as the "Debtor"),  promises to
pay to the order of First Keystone Federal Savings Bank, a corporation organized
and  existing  under  the laws of the  United  States of  America,  (hereinafter
"Bank") at its  offices  located at 22 West State  Street,  Media,  Pennsylvania
19063 or such other place as the holder hereof may from time to time direct, the
sum of Eight Hundred Thousand  ($800,000.00)  Dollars, or so much thereof as may
be advanced  from time to time,  and remain  unpaid,  under that certain Line of
Credit  Agreement  dated even date  herewith  (the  "Line of Credit  Agreement")
payable  on the 1st day of July,  2002,  together  with  interest  from the date
hereof at the per annum rate of two (2.0% ) percent  above the Wall Street Prime
Rate  (hereinafter  defined)  in  effect  from time to time  (the  "Rate"),  the
effective  date of any  change  in the Rate to be the date of change of the Wall
Street Prime Rate, to be paid as follows:

        (i) On July 1, 1997 a payment of  interest  only on the daily  principal
balance  outstanding  from the date hereof to June 30,  1997,  and  thereafter a
payment of interest only on the daily  principal  balance  outstanding  from the
date hereof in monthly installments of said interest payable on the first day of
August,  1997, and on the same day of each month  thereafter  until July 1, 2002
(the "Maturity Date"), at which time the entire  indebtedness  evidenced by this
Note,  including,  without limitation,  the entire outstanding principal balance
and accrued interest thereon, together with any other sums due and payable under
this Note, shall be payable in full;

        (ii) The Wall Street  Prime Rate is the "Prime  Rate"  published  in the
"Money Rates" section of The Wall Street Journal, or the average "Prime Rate" if
more than one is published. If The Wall Street Journal ceases to be published or
goes on strike or is otherwise  not  published  for any period of time, or if it
ceases to publish a "Prime Rate",  then Bank may use any similar published prime
or base rate; and

        (iii) The amount of any monthly installment shall be the result obtained
by  multiplying  the  product  of the  outstanding  balance on any day times the
applicable  Rate by a fraction,  the  numerator of which is the actual number of
days  during the period for which the  calculation  is being made that any given
outstanding balance is applicable, and the denominator of which is three hundred
sixty (360).

        I.     ADVANCES:  Subject to the terms and conditions of this Note and
the Line of Credit Agreement, Bank agrees to advance to Spitz, Inc. from time to
time and until July 1, 2002,(the "Maturity Date"), such sums as Spitz, Inc. may
request, in writing, not to exceed at any time outstanding the principal sum of

                                      (1)
<PAGE>



Eight Hundred Thousand ($800,000.00)  Dollars (the "Maximum Credit  Limit").
Within the limits of this Note and the Line of Credit Agreement and prior to the
Maturity Date Spitz, Inc. may borrow, repay, and borrow again.

        II.  SECURITY:  The payment of this Note is secured by, inter alia, that
certain Security Agreement,  Pledge Agreement and UCC-1 Financing  Statements of
even date  herewith  encumbering  the  Collateral  as  defined  in the  Security
Agreement and the Pledge Agreement respectively.

        III. ADVANCES FOR PROTECTION OF SECURITY  INTEREST:  In the event Debtor
fails to pay any cost or expense relating to the protection of the Collateral as
defined in the Security  Agreement and the Pledge Agreement  respectively,  then
Bank may,  at its option and without  prior  notice,  advance  sums on behalf of
Debtor  in  payment  of any of the  aforesaid,  including,  without  limitation,
charges and claims,  prior liens and insurance premiums without prejudice to the
right of enforcement of the within indebtedness or the other remedies of Bank as
hereinafter  set forth by reason of the failure of Debtor to make payment of the
same; and all such sums so advanced by Bank shall be added to and become part of
the within  indebtedness,  with  interest on each advance at the Rate,  from the
dates of the respective expenditures,  shall be secured by the security for this
Note,  and shall be payable by Debtor to Bank upon demand.  The  production of a
receipt by the Bank shall be conclusive proof of a payment or advance authorized
hereby and the amount and validity  thereof.  The  provisions of this  paragraph
shall apply after the entry of a judgment in any  collection  action  based upon
this Note or the  security for this Note and Debtor shall be obligated to pay to
Bank any post judgment advances made by Bank pursuant to this paragraph.

        IV. REPAYMENTS:  Debtor may at any time prepay the principal outstanding
balance  hereof in whole or in part without  penalty or premium,  provided  that
Debtor gives written notice to Bank prior to or contemporaneously  with any such
prepayment of principal.  Partial  prepayments shall be applied first on account
of  interest,  then on account  of other  sums due under  this Note,  other than
principal, and then on account of principal.

        V. DEFAULT RATE OF INTEREST: In the event Debtor fails to pay any amount
due under this Note when due or as demanded,  then  interest  shall at all times
during the continuance of such payment default accrue on all sums due under this
Note at the Rate plus five (5%) percent per annum (the "Default Rate").

        VI. LATE  CHARGE:  In the event any  monthly  installment  shall  become
overdue for a period of fifteen (15) days,  Debtor shall  promptly pay to Bank a
late charge of five (5) cents for each dollar so overdue.


                                      (2)
<PAGE>



        VII.   DEFAULT.  (a)  Each of the following shall constitute an event of
default by Debtor ("Event of Default") hereunder:

                      (i)  any installment of interest, or principal and
interest,  or any other sum required  hereunder remains unpaid for the period of
fifteen (15) days after it shall become due in  accordance  with the  provisions
hereof; or

                      (ii)  the continuance for thirty (30) days after
notice of any default,  other than a monetary default, in the performance of any
of the terms, covenants,  agreements,  obligations  undertakings,  provisions or
conditions contained herein; or

                      (iii)   the occurrence of any Event of Default under the
provisions of  the Security Agreement and/or the Pledge Agreement, or

                      (iv)  the occurrence of an Event of Default under any
other   obligation  or  indebtedness  of  Debtor  to  Bank  including,   without
limitation,  the occurrance of any Event of Default under that certain Term Note
made by  Debtor  and  delivered  to Bank  even  date  herewith  in the  original
principal amount of $820,000.00, or

                      (v) in the Bank's sole but reasonable discretion, a
material  adverse  change  occurring in the  financial  condition of Debtor when
compared to the  financial  condition  of the Debtor set forth in the  financial
statements  included  within the Debtor's  Annual  Report on Form 10-KSB for the
fiscal year ended January 31,1997, or

                      (vi) any transfer,  sale or other  disposition of fifty
(50%)  percent  or  more of the  legal  or  beneficial  ownership  interests  in
Transnational Industries, Inc., or

                      (vii) any transfer, sale or other disposition of any
legal or  beneficial  ownership  interest  in Spitz,  Inc.,  other  than to Bank
pursuant to the Pledge Agreement.

               (b) Upon the occurrence and during the continuance of an Event of
Default,  the entire unpaid  principal  balance  hereof,  together with interest
accrued  thereon  at the  Rate  hereinbefore  specified  to the date of Event of
Default and  thereafter  at the Default  Rate,  and all other sums due by Debtor
hereunder,  under the Security Agreement, or under the Pledge Agreement together
with  reasonable   attorney's  fees,   shall,  upon  the  declaration  of  Bank,
immediately become due and payable without presentment, demand or further action
of any kind,  and payment of the same may be enforced and  recovered in whole or
in part at any time by the entry of judgment on this Note or any other  judicial
proceeding  and the  issuance of a writ of  execution  thereon  upon any real or
personal  property  of Debtor;  and Bank may also  recover all costs of suit and
other expenses, including the cost of the title search, in connection therewith.


                                      (3)
<PAGE>



               (c) Upon the occurrence and during the continuance of an Event of
Default and upon the  acceleration  of the entire unpaid balance of principal of
this Note,  interest  shall  continue to accrue  thereafter  at the Default Rate
until this Note,  and all sums due  hereunder,  are paid in full,  including the
period  following  the entry of any  judgment.  Interest  after  default  at the
Default Rate shall be calculated on the basis of a three hundred sixty (360) day
year, but charged for the actual number of days elapsed.

               (d) The rights and  remedies  provided  herein,  in the  Security
Agreement,  or in the Pledge  Agreement  shall be cumulative  and concurrent and
shall not be  exclusive  of any right or remedy  provided  by law,  in equity or
otherwise.  Said rights and remedies  may, at the sole  discretion  of Bank,  be
pursued  singly,  successively  or together as often as occasion  therefor shall
arise, against Debtor and/or the Collateral or any other security for this Note,
as applicable.  No failure on the part of Bank to exercise any of such rights or
remedies shall be deemed a waiver of any such rights or remedies or of any Event
of Default hereunder.

               (e) Upon the occurrence and during the continuance of an Event of
Default,  Bank shall have the right, but not the duty, to cure such default,  in
part or in its  entirety,  and all amounts  expended or debts  incurred by Bank,
including reasonable  attorneys' fees, shall be deemed to be advances to Debtor,
shall be added to the  principal  due under this  Note,  shall be secured by the
security for this Note,  and shall be payable by Debtor to Bank upon demand with
interest at the Default Rate.

        VIII.  WARRANT OF ATTORNEY.

        THE FOLLOWING  SECTION SETS FORTH  WARRANTS OF ATTORNEY FOR ANY ATTORNEY
TO CONFESS  JUDGMENTS  AGAINST DEBTOR. IN GRANTING THESE WARRANTS OF ATTORNEY TO
CONFESS  JUDGMENTS  AGAINST  DEBTOR,  DEBTOR  HEREBY  KNOWINGLY,  INTENTIONALLY,
VOLUNTARILY,  AND  UNCONDITIONALLY  WAIVES ANY AND ALL RIGHTS DEBTOR MAY HAVE TO
PRIOR NOTICE AND AN OPPORTUNITY  FOR HEARING UNDER THE RESPECTIVE  CONSTITUTIONS
AND LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AND THE UNITED STATES OF AMERICA.

        UPON  DEBTOR'S  FAILURE TO PAY ANY SUM DUE  HEREUNDER AS AND WHEN DUE OR
DEMANDED  DEBTOR DOES HEREBY  IRREVOCABLY  AUTHORIZE AND EMPOWER ANY ATTORNEY OF
THE  PROTHONOTARY OF ANY COURT OF RECORD OF THE  COMMONWEALTH OF PENNSYLVANIA OR
ELSEWHERE  TO  APPEAR  FOR  DEBTOR  IN ANY SUCH  COURT,  AND WITH OR  WITHOUT  A
COMPLAINT OR DECLARATION  FILED, IN AN APPROPRIATE ACTION BROUGHT AGAINST DEBTOR
ON THIS NOTE, TO ENTER AND CONFESS  JUDGMENT  AGAINST DEBTOR IN FAVOR OF BANK OR
ITS SUCCESSORS AND ASSIGNS, FOR THE ENTIRE AMOUNT DUE TO BANK UPON SUCH EVENT

                                      (4)
<PAGE>



OF DEFAULT  AS  PROVIDED  HEREIN,  TOGETHER  WITH  COSTS OF SUIT AND  REASONABLE
ATTORNEYS'  FEES, BUT IN NO EVENT LESS THAN FIVE THOUSAND  ($5,000.00)  DOLLARS;
AND FOR SO DOING THIS NOTE OR A COPY  HEREOF  VERIFIED BY  AFFIDAVIT  SHALL BE A
SUFFICIENT  WARRANT.  THE AUTHORITY HEREIN GRANTED TO APPEAR,  ENTER AND CONFESS
JUDGMENT SHALL NOT BE EXHAUSTED BY ANY ONE OR MORE  EXERCISES  THEREOF OR BY ANY
DEFECTIVE  EXERCISE THEREOF,  BUT SHALL CONTINUE AND BE EXERCISABLE FROM TIME TO
TIME UNTIL THE FULL PAYMENT OF ALL AMOUNTS DUE FROM DEBTOR TO BANK HEREUNDER AND
UNDER THE LINE OF CREDIT AGREEMENT IS MADE.
        DEBTOR  ACKNOWLEDGES  THAT IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN
THE REVIEW AND EXECUTION OF THIS NOTE AND FURTHER  ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE FOREGOING  PROVISIONS  CONCERNING  CONFESSION OF JUDGMENT HAVE
BEEN FULLY  EXPLAINED  TO DEBTOR BY SUCH  COUNSEL  AND AS  EVIDENCE OF SUCH FACT
SIGNS ITS INITIALS.


         (Initials of Officer of Debtor) (Initials of Officer of Debtor)

        IX.  WAIVER OF BENEFIT AND DEFECTS.  Debtor hereby waives the benefit of
any  laws  now or  hereafter  enacted  providing  for  any  stay  of  execution,
marshaling of assets,  exemption  from civil process,  redemption,  extension of
time  for  payment,  or  valuation  or  appraisement  of all or any  part of the
Collateral or any other security for this Note, exempting all or any part of the
Collateral,  or any other security for this Note from  attachment,  levy or sale
upon any such execution or conflicting  with any provision of this Note.  Debtor
waives and releases Bank and said attorney or attorneys from all errors, defects
and  imperfections  whatsoever  in  confessing  any  such  judgment  or  in  any
proceedings  relating  thereto or  instituted by Bank  hereunder.  Debtor hereby
agrees that any property that may be levied upon pursuant to a judgment obtained
under this Note may be sold upon any execution  thereon in whole or in part, and
in any manner and order that Bank, in its sole discretion may elect.

        X.  MISCELLANEOUS:  Debtor  hereby  waives  protest,  notice of protest,
presentment, dishonor, notice of dishonor and demand. Debtor agrees to reimburse
Bank for all costs and expenses  including  reasonable  counsel fees incurred by
Bank in connection  with the  enforcement  hereof.  The rights and privileges of
Bank under this Note shall inure to the benefit of its  successors  and assigns.
All representations, warranties and agreements of Debtor made in connection with
this Note shall bind Debtor's  successors and assigns.  If any provision of this
Note  shall  for any  reason  be  held  to be  invalid  or  unenforceable,  such
invalidity or unenforceability  shall not affect any other provision hereof, but
this Note shall be construed as


                                      (5)
<PAGE>



if such invalid or unenforceable provision had never been contained herein. This
Note  has  been  delivered  in,  and  shall  be  governed  by  the  laws  of the
Commonwealth of Pennsylvania.
        The  Debtor  agrees  and  acknowledges  that the use herein and in other
documents  being  entered into between the Debtor and Bank of even date herewith
of the phrase "upon the  occurrence  and during the  continuance  of an Event of
Default" and other similar  phrases,  does not mean and shall not be interpreted
to mean that, subsequent to such time as the Bank has accelerated amounts due to
it upon the occurrence of an Event of Default,  the Debtor can cure the Event of
Default  by  paying  less  than  the  amount  that  has  been  so   accelerated.
Notwithstanding  anything in the foregoing  sentence to the  contrary,  upon the
occurrence  of an Event of Default and prior to Banks  acceleration  of the sums
due or exercise of any other  remedy of Bank,  Debtor does not have the right to
cure the Event of Default, and Bank shall not be obligated to accept any payment
or other  performance  tendered  to cure the Event of Default.  Further,  in the
event Bank waives an Event of Default  and permits  Debtor to cure such Event of
Default,  such waiver shall not constitute a waiver of any  subsequent  Event of
Default  or create or be  interpreted  to create any right of Debtor to cure any
subsequent Event of Default.

        XI. NO WAIVER. The granting, with or without notice, of any extension or
extensions  of time for  payment  of any sum or sums due  hereunder,  or for the
performance of any covenant, provision, condition or agreement contained herein,
in the Security  Agreement,  or in the Pledge Agreement,  or the granting of any
other  indulgence,  or the taking or releasing or  subordinating of any security
for the indebtedness evidenced hereby, or any other modification or amendment of
this  Note,  the  Security  Agreement,  or the Pledge  Agreement  will in no way
release or discharge  the  liability  of Debtor,  whether or not granted or done
with the knowledge or consent of Debtor.

        XII. NOTICES: All notices,  invoices,  requests and other communications
hereunder  shall be in writing and shall be sent by first  class  mail,  postage
prepaid, and addressed as follows:

        For Bank:
                      First Keystone Federal Savings Bank
                      22 West State Street
                      Media, PA  19063

                      Attention: A. Charles Amentt Jr., Vice President

        For Debtor:
                      Transnational Industries, Inc.
                      P.O.Box 198
                      Route 1
                      Chadds Ford PA 19317



                                      (6)
<PAGE>



                      and

                      Spitz, Inc.
                      P.O.Box 198
                      Route 1
                      Chadds Ford PA 19317

                      Attention: Mr. Paul L. Dailey, Vice President

                      with a copy (which shall not constitute notice) to:

                      Finn Dixon & Herling LLP
                      One Landmark Square, Suite 1400
                      Stamford, CT   06901
                      Attn: David I. Albin, Esq.


        XIII.  GOVERNING  LAW:  This Note shall be governed by and  construed in
accordance with the laws of the Commonwealth of Pennsylvania.

        XIV.  JOINT AND SEVERAL  LIABILITY:  Each and every entity  signing this
Note is fully and personally  obligated to keep all of the promises made in this
Note including,  without  limitation,  the promises to pay the full amount owed.
Bank may enforce its rights  under this Note  against  each entity  signing this
Note individually or jointly.

        XV.  WAIVER OF JURY TRIAL:  BY ITS  EXECUTION AND DELIVERY OF THIS NOTE,
THE DEBTOR HEREBY KNOWINGLY,  VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT
MAY  HAVE TO A TRIAL BY JURY IN  RESPECT  OF ANY  LITIGATION  BASED  HEREON,  OR
ARISING  OUT OF,  UNDER OR IN  CONNECTION  WITH,  THIS NOTE,  THE LINE OF CREDIT
AGREEMENT,  ANY OTHER DOCUMENT OR INSTRUMENT  RELATED HERETO OR THERETO,  ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE BANK OR THE
DEBTOR IN  CONNECTION  HEREWITH  OR  THEREWITH.  THIS  PROVISION  IS A  MATERIAL
INDUCEMENT FOR THE BANK TO ENTER INTO THIS NOTE.







                                      (7)
<PAGE>


        IN WITNESS WHEREOF, and intending to be legally bound hereby, Debtor has
duly  executed  this Note the day and year first above  written and has hereunto
set hand and seal.

WITNESS:                                    DEBTOR:
                         Transnational Industries, Inc.



                                            By:/s/ Charles H. Holmes Jr.


                                            Attest:/s/ Paul L. Dailey


WITNESS:                                    DEBTOR:
                                            Spitz, Inc.



                                            By:/s/ Charles H. Homes Jr.



                                            Attest:/s/ Paul L. Dailey



                                      (8)