TERM NOTE

                               Media, Pennsylvania


Maximum Credit Limit: $820,000.00                            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  Twenty  Thousand  ($820,000.00)  Dollars,  together  with
interest  from the date  hereof  at the per annum  rate of nine and  one-quarter
(9.250% ) percent (the "Rate"), payable in sixty (60) equal monthly installments
calculated based on a five (5) year amortization period, 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 commencing August
1, 1997, and on the first day of each and every month  thereafter,  Debtor shall
pay to Bank the  principal,  together  with interest  accruing  hereunder at the
Rate, in arrears, in sixty (60) consecutive, and successive monthly installments
in the amount of Seventeen Thousand One Hundred Twenty-One Dollars and Fifty Two
Cents  ($17,121.52)  each until July 1, 2002 (the "Maturity Date") at which time
the entire  indebtedness  evidenced  by this Note and accrued  interest  thereon
together with any other sums due and payable under this Note shall be payable in
full.
        (ii)  Interest on this Note shall be  calculated on the basis of a three
hundred sixty (360) day year, but charged for the actual number of days elapsed.

        I.  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 in the Pledge Agreement respectively.

        II.  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 in 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

                                      (1)
<PAGE>



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.

        III. 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.

        IV.  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").

        V. 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.

        VI.    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 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
occurrence  of any Event of Default  under that certain Line of Credit Note made
by Debtor and  delivered to Bank even date  herewith in the  original  principal
amount of $800,000.00, or



                                      (2)
<PAGE>



                    (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. in the sole opinion of Bank, a material  adverse  change
has occurred in the financial condition or credit rating of Debtor, 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.

               (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 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


                                      (3)
<PAGE>



secured by the  security  for this Note,  and shall be payable by Debtor to Bank
upon demand with interest at the Default Rate.

        VII.   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 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  EXERCISE  THEREOF OR BY ANY
DEFECTIVE EXERCISES THEREOF,  BUT SHALL CONTINUE AND BE EXERCISABLE FROM TIME TO
TIME UNTIL THE FULL PAYMENT OF ALL AMOUNTS DUE FROM DEBTOR TO BANK HEREUNDER.

        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 Officers of Debtor) (Initials of Officers of Debtor)



                                      (4)
<PAGE>



        VIII. 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.

        IX.  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 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.

        X. 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


                                      (5)
<PAGE>



discharge  the  liability  of Debtor,  whether  or not  granted or done with the
knowledge or consent of Debtor.

        XI. 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

                      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.

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

        XIII.  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.


                                      (6)
<PAGE>


        XIV.  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.

        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. Holmes Jr.



                                            Attest:/s/ Paul L. Dailey


                                      (7)