LINE OF CREDIT AGREEMENT
                                     Between
                  FIRST KEYSTONE FEDERAL SAVINGS BANK ("Bank")
                                       and
                       TRANSNATIONAL INDUSTRIES, INC. and
                                   SPITZ, INC.
        (Collectively, jointly and severally referred to as "Borrower"),

                        Made this 12th day of June 1997.


                         SECTION 1 - THE LINE OF CREDIT

      1.1 Bank will lend to Spitz,  Inc.  (hereinafter  referred to as "Spitz"),
and Spitz may borrow from Bank,  the  aggregate  sum of Eight  Hundred  Thousand
($800,000.00) Dollars, (the "Loan") pursuant to the terms of this Agreement. The
indebtedness  to Bank  under the Loan is the joint and  several  obligation  and
liability of Spitz and Transnational Industries, Inc. (hereinafter collectively,
jointly and severally  referred to as the "Borrower")  evidenced by that certain
Line of Credit  Note  executed by Borrower  and  delivered  to Bank of even date
herewith  (the  "Note"),  in the full  amount of the Loan,  due and  payable  in
accordance  with the terms  thereof.  Bank has even date  herewith  extended  to
Borrower a certain  other credit  facility in the principal sum of Eight Hundred
Twenty Thousand  ($820,000.00) Dollars evidenced by that certain Promissory Note
(the "Term Note") made by Borrower and delivered to Bank even date herewith (the
"Term Loan").
      1.2 MAXIMUM  REVOLVING  CREDIT  LIMIT.  Provided  there exists no Event of
Default  hereunder (as  hereinafter  defined),  principal  advances of available
funds under the Loan shall be advanced to Spitz at Spitz's  written request from
time to time  until  July 1,  2002,  provided,  however,  the  aggregate  amount
advanced, less repayments, shall not exceed the sum

                                      (1)
<PAGE>



of Eight Hundred Thousand ($800,000.00) Dollars at any one time outstanding (the
"Maximum Credit Limit").  Bank shall not be obligated to fund all or any part of
a requested  advance  under the Loan if such advance  would cause the  aggregate
amount  advanced,   less  repayments,   to  exceed  the  Maximum  Credit  Limit.
Notwithstanding  anything herein to the contrary, Bank shall not be obligated to
fund,  and  Spitz  shall not be  permitted  to  receive,  all or any part of any
advance  requested under the Loan which advance would cause the aggregate amount
advanced under the Loan and the Term Loan,  less  repayments,  to exceed the sum
of; (i) eighty (80%) percent of the Borrower's  "Qualified Accounts  Receivable"
(as hereinafter  defined) and (ii) fifty (50%) percent of Borrower's  "Qualified
Inventory"  (as  hereinafter  defined)  and  (iii)  Five  Hundred  Two  Thousand
($502,000.00)   Dollars  representing  the  orderly  liquidation  value  of  the
Borrower's  machinery  and  equipment,  which figure may,  from time to time, be
reduced, but not increased,  by the Bank based upon any reduction in the orderly
liquidation   value  of  the   Borrower's   machinery  and  equipment   (such  a
determination to be at the Bank's sole and absolute discretion.
 "Qualified  Accounts  Receivable"  shall  mean  accounts  receivable  earned by
Borrower in the ordinary course of business for services rendered and goods sold
to customers for which there are no claims of offset or defense,  and which,  in
the  opinion of Bank,  are not of doubtful  collectability,  and which have been
outstanding  for one hundred twenty (120) days or less, as reflected on the most
recent, certified statement of accounts receivable delivered to Bank. "Qualified
Inventory"  shall be valued at the  lesser of the cost or present  market  value
determined  in  accordance  with  generally  accepted   accounting   principles,
consistently applied, and shall mean


                                      (2)
<PAGE>



all  inventory  which is in good  merchantable  condition,  is not  obsolete  or
discontinued,  which would properly be classified as "raw  materials",  "work in
process",  or "finished goods  inventory"  under generally  accepted  accounting
principles,  and which has been fully paid for from Borrower's own funds and for
which no security  interest exists except the security interest to be granted in
favor of  Lender  as  herein  contemplated.  An  account  receivable  or item of
inventory  which is at any time a  Qualified  Account  Receivable  or an item of
Qualified  Inventory,  but which subsequently fails to meet any of the foregoing
requirements,  shall cease to be a Qualified  Account  Receivable  or an item of
Qualified Inventory as the case may be, for so long as such failure continues.
      1.3 PROCEDURE FOR DISBURSEMENTS. Advance requests shall be made in writing
and signed by Charles Holmes or Paul Dailey,  the President and Chief  Financial
officer of Spitz respectively,  or such other officers and/or employees of Spitz
as Spitz may from time to time  authorize.  Spitz must  deliver to Bank  written
notice one (1)  business  day in advance of making any request for an advance of
Twenty-Five Thousand  ($25,000.00)  Dollars or more. Further,  Bank, in its sole
and absolute discretion,  may refuse to honor any request for an advance made by
any person or entity  other than Spitz  notwithstanding  any power or  authority
granted such person or entity by Spitz,  unless  Spitz has secured  Bank's prior
written  acknowledgment  and consent to the granting of such power or authority.
Advances of  available  funds  under the Loan (after any initial  advance at the
time of  closing)  shall be advanced to Spitz upon  request and  deposited  into
Spitz's account with Bank.


                                      (3)
<PAGE>



      1.4  REPAYMENT AND  INTEREST.  Interest will be calculated  for the actual
number of days that  principal is  outstanding  based on a three  hundred  sixty
(360) day year, as provided in the Note.  Borrower shall repay the Loan when and
as required under the Note.
      1.5 VOLUNTARY PREPAYMENT. Borrower may prepay the principal of the Loan in
whole at any  time,  or in part  from  time to time as set  forth  in the  Note.
Partial  prepayments  will be  applied  first on account  of  interest,  then on
account of other  sums due under the Loan,  other  than  principal,  and then on
account of principal.
                 SECTION 2 - CONDITIONS PRECEDENT TO BORROWING The obligation of
     Bank to make any advance under the Loan is subject to the
following conditions precedent:
      2.1 Borrower  shall have complied with all of the terms and  conditions of
the Bank's  Commitment Letter dated May 15, 1997 and accepted by Borrower on May
20,  1997,  including  without  limitation  the  execution  and  delivery of all
certificates and documents therein required.
      2.2 Borrower  shall execute and deliver to Bank such further  certificates
and documents as Bank may reasonably require from time to time.
      2.3 Borrower  shall not be in default of any of Borrower's  agreements and
covenants  set  forth  herein  and  Borrower  shall  not  be in  default  of any
obligation owing to Bank including,  without limitation,  Borrower's obligations
evidenced by the Note or the Term Note.
      2.4  Borrower's  representations  and warranties set forth herein shall be
and remain unbroken, true and correct.


                                      (4)
<PAGE>



             SECTION 3 -  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  
Borrower represents,warrants and covenants to Bank that:
      3.1  This  Agreement,  the  Note,  the  Security  Agreement  of even  date
herewith,  and any and all other documents executed by Borrower and delivered to
Bank in connection with the Loan (collectively the "Loan Documents") and any and
all documents  executed by Borrower and delivered to Bank in connection with the
Term Loan (collectively the "Term Loan Documents"), when executed and delivered,
will be valid and binding obligations of the Borrower, enforceable in accordance
with their respective terms.
      3.2 No event has occurred  which with the passage of time or the giving of
notice or both could be an Event of Default hereunder,  under the Loan Documents
or under the Term Loan Documents.
      3.3  There  are no  suits  in law or  equity  or  proceedings  before  any
governmental instrumentality pending, or to the knowledge of Borrower threatened
against  Borrower,  the adverse result of which would be reasonably likely to in
any material respect affect the property or operations of Borrower.
      3.4 Borrower has filed or obtained a valid  extension to file all required
Federal,  state and local tax  returns and has paid all taxes as shown to be due
on said returns.
      3.5 The facts set  forth in  Borrower's  Affidavit  of  Business  Purposes
executed and delivered unto Bank even date herewith in connection  with the Loan
are true and correct.


                                      (5)
<PAGE>



      3.6 No financing  statement (other than; (i) any which may have been filed
on behalf  of the Bank,  and (ii)  security  interests  in favor of the owner of
equipment  which may, from time to time, be leased by Borrower)  covering any of
the Collateral (as defined in the Security Agreement and in the Pledge Agreement
of even date herewith respectively) is on file in any public office; Borrower is
and will be the owner of all Collateral  (other than  equipment  which may, from
time to time, be leased by Borrower),  free of all liens and claims  whatsoever,
other than the security interest created under the Security Agreement, with full
power and authority to execute the Loan  Documents  and the Term Loan  Documents
and to perform Borrower's obligations thereunder,  and to subject the Collateral
to the security interest under the Security  Agreement and the Pledge Agreement;
and all information  with respect to Collateral and account debtors set forth in
any schedule,  certificate or other writing at any time  heretofore or hereafter
furnished by Borrower to Bank, and all other written  information  heretofore or
hereafter  furnished by Borrower to Bank, is and will be true and correct in all
material respects as of the date furnished. SECTION 4 - ADDRESSES
      4.1 Borrower's mailing address and office where Borrower keeps its records
concerning  all  accounts  receivable  is P.O.  Box 198,  Route 1, Chadds  Ford,
Pennsylvania 19317.
                  SECTION  5  -  BORROWER'S   AFFIRMATIVE   COVENANTS   
Borrower covenants that so long as any indebtedness to Bank under the Note is 
outstanding and unpaid, Borrower will:


                                      (6)
<PAGE>



      5.1 Use the proceeds of the Loan for business  purposes of Spitz only. 5.2
      Give prompt notice to Bank of all litigation or proceedings
affecting Borrower which, if adversely  determined,  may have a material adverse
effect on the financial or business condition of Borrower;  and without limiting
the foregoing,  give notice of any claim asserted against Borrower for an amount
exceeding $50,000.00.
      5.3 Furnish the following financial information to Bank at Borrower's sole
cost and expense:
           (a) Within ninety (90) days  following  the end of Borrower's  fiscal
year and each fiscal quarter, respectively, in each year, Borrower shall deliver
to Bank the Borrower's Annual Report on Form 10-KSB and quarterly report on Form
10-QSB, each of which will include financial statements  consisting of a balance
sheet,  income  statement and statement of source and  application  of funds for
Borrower.  Such financial  statements for Borrower (i) shall, in the case of the
annual  statements  be  accompanied  by an audit  opinion by a certified  public
accounting  firm selected and paid for by Borrower and  satisfactory to Bank (it
being agreed that the Borrower's  current  certified  public  accounting firm is
acceptable  to the Bank),  (ii) shall be prepared in accordance  with  generally
accepted  accounting  principles  consistently  applied,  (iii) shall be in form
reasonably satisfactory to Bank and (iv) shall be certified as true, correct and
complete by the Borrower's chief financial officer.
           (b) Within thirty (30) days of the end of each month,  Borrower shall
deliver to Bank an  accounts  receivable  aging  report  listing  all  Qualified
Accounts Receivable in a format and


                                      (7)
<PAGE>



with such  information  as Bank may  require,  which shall be certified as true,
correct and complete by the Borrower's chief financial officer.
           (c) Upon request of Bank,  within thirty (30) days of the end of each
month, Borrower shall deliver to Bank a schedule listing all Qualified Inventory
in a format  and with  such  information  as Bank may  require,  which  shall be
certified  as true,  correct and  complete  by the  Borrower's  chief  financial
officer.
           (d) Borrower shall deliver to Bank such other  financial  information
as to Borrower as Bank from time to time may request, all such information to be
provided in form and time frame reasonably satisfactory to Bank.
           (e) Within  thirty  (30) days of the date the same are due for filing
(including any available extensions properly applied for) Borrower shall deliver
to Bank copies of  Borrower's  Federal  Income Tax  Returns.  All copies of such
returns shall be certified by Borrower as true and correct and as actually filed
with the Internal Revenue Service.
      5.4 Borrower shall maintain and deliver annually to Bank, at the sole cost
and expense of  Borrower,  and in form and  substance  satisfactory  to Bank and
Bank's counsel, evidence of insurance coverage as follows:
           (a)  Original  or  certified  copies  of the  following  policies  of
insurance  maintained by Borrower at Borrower's expense,  issued by a company or
companies, in amounts, forms, and with deductibles satisfactory to the Bank:


                                      (8)
<PAGE>



                (i)  Comprehensive  general  liability  insurance  covering  all
                     operations of Borrower in connection  with the  Collateral,
                     with a combined single limit of not less than $1,000,000.00
                     per  occurrence  for bodily  injury  (including  death) and
                     property damage; and
                (ii) "All risk"  insurance with  replacement  cost  endorsement,
                     with respect to the Collateral,  in an amount not less than
                     the amount of the Loan.
           (b) The all risk coverage policy as to the Collateral  shall name the
Bank  as  loss  payee  under  a  standard  loss  payable  clause   containing  a
non-contribution  provision  excluding  the  Bank  from  the  operation  of  any
coinsurance clause in such policy.
           (c) All such  policies  shall be issued by companies  having a Best's
financial  rating of A or better  and a size class  rating of 7 or  larger,  and
shall be endorsed to require thirty (30) days notice to Bank in the event of any
cancellation or change in coverage.
      5.5  Borrower   shall   establish  and  maintain  a  significant   banking
relationship with Bank, to include,  without limitation,  Borrower's maintaining
of all operating  accounts with Bank and Borrower's  depositing of all collected
receivables through such operating accounts.
      5.6  Borrower  shall not  create or permit to exist any other  lien on, or
security interest in, the Collateral (other than security  interests in favor of
the owner of equipment  which may,  from time to time, be leased by Borrower) or
any other property of Borrower, without the prior written consent of Bank.


                                      (9)
<PAGE>



      5.7 Borrower  shall store all of  Borrower's  inventory  and  equipment at
Borrower's  place of  business  and  shall  take  such  steps as are  reasonably
necessary to safeguard and care for such inventory and  equipment.  Upon request
of Bank,  Borrower  shall  deliver to Bank copies of all invoices for  purchased
inventory.
      5.8 Borrower shall maintain as a "Minimum  Stockholders' Equity" as of the
last day of each fiscal year after the date hereof, the following:
                     For Year End              Minimum Stockholders' Equity
                    January 31, 1998              $2,500,000.00
                    January 31, 1999              $2,750,000.00
                    January 31, 2000              $3,050,000.00
                    January 31, 2001              $3,400,000.00
                    January 31, 2002              $3,840,000.00

The term  "Minimum  Stockholders'  Equity"  shall  mean the Total  Stockholders'
equity as reflected on the  Borrower's  Consolidated  Balance Sheet  included in
Borrower's  Annual  Report on form 10- KSB for the fiscal year ending on January
31.
      5.9 Borrower  shall not declare or pay any dividend  which would cause the
Minimum  Stockholders'  Equity to fall below the minimum sums set forth  herein,
nor shall Borrower  declare or pay any dividend if Bank has declared an Event of
Default under the Loan or the Term Loan during the continuance thereof.
                         SECTION 6 - EVENTS OF DEFAULT
      6.1  Each of the  following  shall  be an  event  of  default  ("Event  of
           Default") hereunder:  (a) The occurrence of an Event of Default under
           the Note, the Security
Agreement and/or the Loan Documents;


                                      (10)
<PAGE>



           (b) The occurrence of any event of default under the Term Note and/or
the Term Loan Documents;
           (c) The  continuance for thirty (30) days after notice to Borrower of
Borrower's failure to perform and/or observe as and when required any obligation
or covenant  set forth in this  Agreement  (except  for  defaults of Section 5.8
above, for which no opportunity to cure need be given);
           (d) Any financial  statement,  representation or warranty of Borrower
proves to have been materially incorrect when made;
           (e) The occurrence of any Event of Default (as defined therein) under
any other Agreement between Borrower and Bank;
           (f) Any  proceeding  under the Bankruptcy Act or under any law of the
United   States  or  of  any  state   relating  to   insolvency,   receivership,
reorganization,  or  debt  adjustment  is  instituted  by  Borrower  or if  such
proceeding  is  instituted  against  Borrower and is consented to by Borrower or
remains  undismissed  for sixty (60)  days,  or if  Borrower  is  adjudicated  a
bankrupt,  or a trust or  receiver  is  appointed  for any  substantial  part of
Borrower's  property,  or if  Borrower  makes an  assignment  for the benefit of
creditors, or becomes insolvent; or
           (g) In the Bank's sole but reasonable discretion,  a material adverse
change  occurring in the  financial  condition of Borrower  when compared to the
financial  condition  of the  Borrower  set  forth in the  financial  statements
included within the Borrower's  Annual Report on Form 10-KSB for the fiscal year
ended January 31, 1997.


                                      (11)
<PAGE>



                   SECTION 7 - REMEDIES OF BANK
      7.1 Upon  the  occurrence  and  during  the  continuance  of any  Event of
Default, Bank may, in its sole discretion do any or all of the following:
           (a)  Exercise any and all rights and remedies available to Bank at
law or in equity;
           (b) Refuse to make any further  advances  under the Loan; (c) Set-off
           any monies deposited in accounts of any nature
maintained in and with Bank by Borrower;
           (d) (i) Demand,  collect,  receive  payment of,  receipt for and give
discharges  and releases of all or any of  Borrower's  accounts  receivable  and
moneys to become due in respect thereof;  (ii) settle,  compromise,  compound or
adjust  all  or  any of  Borrower's  accounts  receivable;  (iii)  commence  and
prosecute any and all suits,  actions or  proceedings in law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
Borrower's accounts receivable or to enforce any rights in respect thereof; (iv)
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating or  pertaining to all or any of the accounts  receivable;  (v) file any
claim or take any other action or  proceeding  which Bank may deem  necessary or
appropriate  to protect and preserve  and realize upon the security  interest of
Bank in the accounts  receivable  and the proceeds  thereof;  and (vi) generally
sell,  assign,  transfer,  make any agreement  with respect to or otherwise deal
with all or any of the  Collateral  as fully and  completely  as though the Bank
were the absolute owner thereof for all purposes. Upon request


                                      (12)
<PAGE>



of Bank,  Borrower  will,  at  Borrower's  sole  cost  and  expense  during  the
continuance of an Event of Default,  notify  account  debtors to make payment to
the Bank of any amounts due or to become due thereunder; and
           (e) Exercise any and all rights and remedies  available to Bank under
the Note and Security Agreement.
      7.2 No remedy of Bank shall be exhausted by the initial exercise  thereof,
but rather  Bank may  exercise  all  remedies  from time to time and as often as
Bank, in its judgment, may deem desirable.
                     SECTION 8 - MISCELLANEOUS
      8.1   SURVIVAL   OF    REPRESENTATIONS.    All   covenants,    agreements,
representations  and  warranties  made  herein and in the Loan  Documents  shall
survive  the making by Bank of the Loan and the  execution  and  delivery of the
Loan  Documents  and shall  continue  in full  force  and  effect so long as any
indebtedness of Borrower to Bank is outstanding.
      8.2 FURTHER ASSURANCE. Borrower agrees to execute and deliver to Bank such
additional  instruments  as Bank may  reasonably  request  from  time to time to
effectuate  the purposes of this  Agreement  and to perfect and continue  Bank's
security interest in the Collateral.
      8.3  WAIVER OF BANK.  Bank shall not be deemed by any act of  omission  or
commission  to have waived any of its rights or remedies  hereunder  unless such
waiver is in writing and signed by Bank and then only to the extent specifically
set forth in such writing. A waiver on one event shall not be construed as


                                      (13)
<PAGE>



continuing  or as a bar to or waiver of any right or remedy in a subsequent
event.
      8.4 EXPENSES OF BANK.  Borrower will pay all of Bank's expenses (including
Bank's   reasonable   attorney  fees)  in  connection   with  the   transactions
contemplated   hereby,   the   preparation  of  documents   pertaining  to  such
transactions, the enforcement of this Agreement and the Note and in the exercise
by Bank of any of its  rights  hereunder,  under the  Note,  or under any of the
other Loan Documents (provided,  however,  that the Borrower's maximum liability
with respect to the Bank's  attorneys' fee in connection with the closing of the
transactions contemplated hereby shall be $5,000.00).
      8.5  NOTICES.  Any notice  required  herein to be sent to Borrower  may be
mailed by first class mail to Borrower at the address  specified  in Section 4.1
hereof,  or such other  address as Borrower may  hereafter  designate to Bank in
writing.
      8.6 SEVERABILITY. If any provision hereof is found by a court of competent
jurisdiction to be unenforceable, the parties hereto intend all other provisions
to be absolutely unaffected.
      8.7 DESCRIPTIVE HEADINGS.  The descriptive headings of the sections hereof
are for convenience of reference only and in no way affect this Agreement.
      8.8 COMPLETE  AGREEMENT.  Together  with the Note and the other  documents
delivered pursuant hereto,  this Agreement states the complete agreement between
the parties.


                                      (14)
<PAGE>



Waivers or  modifications  hereof  must be in writing  signed by the party to be
charged with the effect thereof.
      8.9  GOVERNING  LAW.  This  Agreement  and the Loan  Documents  have  been
executed  and  delivered  in the  Commonwealth  of  Pennsylvania  and  shall  be
construed in  accordance  with and governed by the laws of the  Commonwealth  of
Pennsylvania.
      8.10 INTERPRETATION. The parties agree and acknowledge that the use herein
and in other  documents being entered into between the Borrower 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 Borrower 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, Borrower 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  Borrower 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 Borrower to
cure any subsequent Event of Default.



                                      (15)
<PAGE>


      IN WITNESS WHEREOF,  and intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the day and year first above written.


                               BANK:

                               FIRST KEYSTONE FEDERAL SAVINGS
                               BANK



                               By: /s/ A. Charles Amentt Jr.             (SEAL)


                               Attest:                                   (SEAL)


Witnesses Present:             BORROWER:

                               TRANSNATIONAL INDUSTRIES, INC.


                               By:  /s/ Charles H. Holmes Jr.            (SEAL)



                               Attest:    /s/ Paul L. Dailey             (SEAL)


Witnesses Present:             BORROWER:

                               SPITZ, INC.


                               By:    /s/Charles H. Holmes Jr.           (SEAL)


                               Attest:   /s/ Paul L. Dailey              (SEAL)


                                      (16)