Document:

July 7, 2000

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

         Re:      Amendment to Commercial Revolving Line of Credit

To:      Transnational Industries, Inc. and Spitz, Inc.

         First Keystone Federal Savings Bank ("Lender") is pleased to inform you
that  the  request  of   Transnational   Industries,   Inc.   and  Spitz,   Inc.
(individually, collectively, jointly and severally, the "Borrower") to amend the
terms of the  existing  commercial  revolving  line of credit  loan  facility to
increase  the Maximum  Credit  Limit (as defined in that  certain Line Of Credit
Agreement  dated June 12, 1997  between  Lender and  Borrower,  and  hereinafter
referred to as the "Loan  Agreement") from Eight Hundred Thousand  ($800,000.00)
Dollars  (the  "Initial  Credit  Line")  to One  Million  One  Hundred  Thousand
($1,100,000.00) Dollars (the "Credit Line") has been approved in accordance with
the terms and  conditions  set forth  below,  all of which,  unless  modified by
Lender prior to closing of the Credit Line (hereinafter sometimes referred to as
the "Loan"), and accepted by Borrower, shall survive such loan closing.

         1. Loan Amount. The Initial Credit Line shall be increased to an amount
not to exceed One Million  One Hundred  Thousand  ($1,100,000.00)  Dollars  (the
"Maximum  Credit  Line  Limit"),  and shall be  disbursed  pursuant  to the Loan
Agreement,  as  hereafter  amended  pursuant to an  Amendment  No. 1 to the Loan
Agreement.

         2.  Interest.  Interest  on the  outstanding  principal  balance of the
Credit Line shall accrue at a floating  rate equal to the Wall Street Prime Rate
plus one-half (0.50%) percent (the "Credit Line Rate"), it being understood that
the Rate of interest on the Credit Line shall change as of the date of change of
the Wall Street  Prime  Rate.  The Wall  Street  Prime Rate is the "Prime  Rate"
published  in the "Money  Rates"  section  of the Wall  Street  Journal,  or the

<PAGE>

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
time period,  or if it ceases to publish a "Prime Rate", then Lender may use any
similar published prime or base rate.

         3.  Repayment.  The Credit Line will  provide  for monthly  payments of
interest only on funds advanced. The entire outstanding principal balance of the
Credit Line and accrued interest, together with any other sums payable under the
Credit Line Documents shall be due and payable on the 60th month  anniversary of
the  consummation  of the  amendments  contemplated  hereby  (the  "Credit  Line
Maturity  Date").  Monthly  installments  of interest  due under the Credit Line
shall  be due and  payable  on the  first  day of  each  calendar  month.  It is
expressly agreed and understood that nothing contained herein shall be construed
to amend or modify the terms of that  certain  Term Note (as defined in the Loan
Agreement)  or otherwise  extend the Maturity Date (as defined in the Term Note)
of the Term Loan (as defined in the Loan Agreement) beyond July 1, 2002.

         4. Loan Fees.  Unless otherwise  specified,  Loan fees shall be paid at
the Loan closing, and are as follows:

         (a)      Lender's  Attorney's Fee. Borrower shall pay the legal fees of
                  Lender's counsel (hereinafter  "Lender's Counsel") incident to
                  the   preparation  and  review  of  this  commitment  and  the
                  Additional  Credit Line Documents and closing of the Loan. The
                  estimated amount of Lender's  Counsel fee is $2,500.00,  which
                  shall be paid at the time of Loan closing.

         5.  Other  Costs.  Borrower  shall  pay all other  costs  and  expenses
incidental to amendment of the Initial Credit Line as contemplated hereby or the
preparation,  execution,  acknowledgment,   delivery  and/or  recording  of  the
Additional  Credit  Line  Documents  including,   without  limitation,   filing,
recording, notary fees and credit fees.

         6. Loan Documents.  In addition to the Credit Line Documents which have
already been executed by Borrower and delivered to Lender in connection with the
Initial Credit Line, the following  additional documents (the "Additional Credit
Line Documents")  shall be executed by Borrower and delivered to Lender, in form
and substance  satisfactory to Lender and its counsel,  as a condition precedent
to the Loan Closing,  and which  Additional  Credit Line Documents  shall,  when
executed by Borrower and delivered to Lender, constitute Credit Line Documents:

         (a)      Renewal Line of Credit Note  indicating a Maximum Credit Limit
                  of   $1,100,000.00    (containing   Confession   of   Judgment
                  provisions);

         (b)      Modification Agreement dated as of July 7, 2000;

         (c)      Affidavit of Business Purpose executed by Borrower;

                                       2
<PAGE>

         (d)      UCC-1  financing  statements to be filed with the Secretary of
                  State of Delaware against the Borrowers; and

         (e)      Such  other  documents  as  Lender  or  Lender's  Counsel  may
                  require.

         7. Loan Closing Date. Closing on the Loan shall occur on or before July
15,  2000 at such time and place as shall be  designated  by  Lender,  or Lender
shall have no obligation hereunder.

         8. Time of the Essence.  The closing date and all other dates and times
specified herein are of the essence.

         9.  Conditions of the Loan. The  obligations of Lender to fund the Loan
are expressly subject to the following  conditions which must be met to Lender's
satisfaction prior to the closing of the Loan:

         (a)      The receipt by Lender of all documents,  which, in the opinion
                  of  Lender's  counsel  are  necessary  to perfect the lien and
                  security interest of Lender; and

         (b)      Execution   and  delivery  of  the   Additional   Credit  Line
                  Documents; and

         (c)      Borrower  providing  Lender, no less than five (5) days before
                  Loan  Closing,  at Borrower's  sole cost and expense,  current
                  financial  statements of Borrower  compiled by an  independent
                  certified  public  accountant  satisfactory  to  Lender in its
                  discretion, together with evidence satisfactory to Lender that
                  there have been no material  adverse  changes in the financial
                  conditions   of  Borrower   since  the   submission  of  their
                  respective financial statements of Lender; and

         (d)      Borrower  providing  to  Lender,  no less  than  five (5) days
                  before Loan closing,  at Borrower's  sole cost and expense,  a
                  secretary's certificate, a Certificate of Good Standing issued
                  by the Secretary of State of the  Commonwealth of Pennsylvania
                  and the State of Delaware  issued not more than  fifteen  (15)
                  days  prior  to the  date of  Loan  closing,  and  appropriate
                  authorizing resolutions; and

         (e)      Borrower's payment of taxes,  documentary stamps, filing fees,
                  and other  expenses  incurred by Lender and arising  from this
                  transaction; and

         (f)      The inclusion of provisions in the Renewal Line of Credit Note
                  waiving  Borrower's  right  to a jury  trial  and  such  other
                  standard  warranties  and  covenants  as shall be  required by
                  Lender; and

                                       3
<PAGE>

         (g)      The opinion of counsel to Borrower, dated the date of the Loan
                  closing,  addressed  to  Lender,  and in  form  and  substance
                  satisfactory  to  Lender's  Counsel,  to the  effect  that the
                  Borrower is validly organized, existing, authorized to conduct
                  business,  and in good standing in Pennsylvania  and Delaware;
                  that the execution and delivery of the Additional  Credit Line
                  Documents  shall be binding upon the Borrower and  enforceable
                  against   Borrower  in   accordance   with  their   respective
                  provisions;  that such  counsel is without  any  knowledge  or
                  information  contrary to the  representations  and  warranties
                  made by  Borrower  as are more  fully set forth in the  Credit
                  Line Documents;  that no consent of any governmental authority
                  or third party is required with regard to the execution of the
                  Additional Credit Line Documents;  that Borrower has the power
                  and  authority  to  enter  into  the  Additional  Credit  Line
                  Documents and perform Borrower's obligations  thereunder,  and
                  that Borrower has duly authorized the execution of delivery of
                  the  Additional  Credit  Line  Documents;  that  there  are no
                  agreements or  instruments  to which  Borrower is bound or any
                  law,  administrative  regulation  or  court  decree  to  which
                  Borrower  is bound  which was or shall be breached or violated
                  by Borrower having executed,  delivered or performed under the
                  Additional Credit Line Documents, and that there is no pending
                  or threatened  litigation  which would affect the  Collateral,
                  Borrower's ability to perform its obligations under the Credit
                  Line Documents.

         10. Expenses Incident to Closing.  All Costs associated with the making
and  closing  of  the  Loan,  including,  without  limitation,  legal  fees  and
disbursements  of Lender's  Counsel,  recording and filing  costs,  shall be the
responsibility  of Borrower.  Such fees and expenses as are actually incurred by
Lender shall be paid to Lender whether or not the Loan closing takes place.

         11. Other Financing. It is a condition precedent to closing of the Loan
that the  Collateral  securing  this  Loan,  be free of liens and  encumbrances,
except as to those liens which have been executed by Borrower in favor of Lender
and those liens which have been approved by Lender. Borrower shall not create or
permit to exist any other lien on, or security  interest in, the  Collateral  or
any other property of Borrower, without the prior written consent of Lender.

         12. Assignment. This Commitment may not be assigned by Borrower without
the prior written consent of Lender.

         13.  Entire  Agreement.  This  commitment  letter  expresses the entire
agreement  of Lender and Borrower  with  respect to amending the Initial  Credit
Line  as   contemplated   hereby  and  supersedes  all  prior  written  or  oral
understandings;  provided,  however,  that all written and oral  representations
made by Borrower to Lender with respect to the provisions  made hereunder  shall
survive the issuance of this letter.  It is expressly agreed and understood that

                                       4
<PAGE>

except as specifically  provided for herein, all of the terms,  conditions,  and
provisions  set forth in that  certain  Commitment  Letter  dated  May 15,  1997
executed by Lender and Borrower in connection  with the initial Credit Line (the
"Original  Commitment  Letter")  shall remain in full force and effect and shall
apply to this  Commitment as if fully set forth  herein.  Time is of the essence
with respect to this letter and documentation required hereunder.

         14.  Expiration  Date.  Lender's  offer of  commitment  will expire and
become null and void on July 10, 2000 and Lender shall have no further liability
hereunder unless, on or prior to such date, this offer of commitment is accepted
in writing by Borrower and returned to Lender.

         15.  Omissions  or  Misstatements.   If  there  are  any  omissions  or
misstatements  in  the  applications  for  the  Loan  or  Borrower's   financial
statements or if any information  contained  therein or otherwise relied upon by
Lender in making the Loan becomes  inaccurate or misleading  between the date of
the Loan application and the closing date, Lender may terminate this Commitment,
whereupon Lender shall have no further liability hereunder.

         16.  Governing Law. This  Commitment,  the Loan Documents and all other
documents  which may be required to complete the Loan  transaction  contemplated
herein shall be subject to and shall be construed  according to the  substantive
laws of the Commonwealth of Pennsylvania.

         17. Capitalized Terms. Unless otherwise defined herein, all capitalized
terms shall have the meaning set forth in the Original Commitment Letter.

         This Commitment is delivered for immediate  acceptance by Borrower.  It
is understood and agreed that, when accepted, this Commitment shall constitute a
contract between Borrower,  and Lender to which the parties intend to be legally
bound. It is expressly agreed by the parties that this Commitment Letter and the
agreements herein shall survive the Loan Closing and become one of the documents
evidencing the Loan.

                                          Very truly yours,

                                          /s/ A. Charles Amentt
                                          A. CHARLES AMENTT, JR.
                                          Vice President

                                       5
<PAGE>

Intending to be legally bound hereby the  undersigned  hereby agree to the above
terms and conditions of this Loan Commitment:

                                      BORROWER:

                                      TRANSNATIONAL INDUSTRIES, INC.

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

                                      ATTEST: /s/ Paul L Dailey           (SEAL)
                                      -----------------------------

                                      BORROWER:

                                      SPITZ, INC.

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

                                      ATTEST: /s/ Paul L Dailey           (SEAL)
                                      -----------------------------

                                       6MODIFICATION AGREEMENT

         THIS MODIFICATION  AGREEMENT (the "Agreement") is made and entered into
this 7th day of July,  2000, by and between FIRST KEYSTONE FEDERAL SAVINGS BANK,
chartered  under the Laws of the United States of America,  having its principal
office at 22 West State  Street,  Media,  Pennsylvania,  19063 (the  "Bank") and
TRANSNATIONAL  INDUSTRIES,  INC.  and  SPITZ,  INC.  (hereinafter  collectively,
jointly and severally  referred to as the  "Borrower"),  with an address of P.O.
Box 198, Route 1, Chadds Ford, Pennsylvania 19317.

                                   Background

         A. Bank  extended to Borrower two credit  facilities  on June 12, 1997.
Specifically,  the Bank  extended  to  Borrower a term  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 June 12,  1997 (the "Term  Loan").  The Term Loan is not  intended to be
modified.  The Bank also extended to Borrower a revolving  line of credit not to
exceed the aggregate sum of Eight Hundred  Thousand  ($800,000.00)  Dollars (the
"Line of  Credit")  to be  advanced  pursuant  to the  terms of a Line of Credit
Agreement  between Bank and Borrower  dated June 12, 1997. The  indebtedness  to
Bank under the Line of Credit is  evidenced  by that certain Line of Credit Note
executed by Borrower  and  delivered  to Bank June 12, 1997 (the "Line of Credit
Note"). The Term Loan and the Line of Credit are secured by, among other things,
all of the  accounts,  inventory,  receivables  and  equipment of Borrower  (the
"Collateral") pursuant to that certain Security Agreement,  Pledge Agreement and
UCC-1 Financing Statements between Bank and Borrower dated June 12, 1997.

         B. Borrower has requested  Bank to reduce the rate of interest  charged
on the Line of Credit  from time to time as set forth in the Line of Credit Note
from the Wall Street Prime Rate plus two (2.0%) percent per annum to Wall Street
Prime Rate plus  one-half  (0.50%)  percent per annum,  subject,  however to the
interest rate adjustment provisions as set forth in the Line of Credit Note.

         C. Borrower has also  requested that the Line of Credit be increased to
One Million One Hundred Thousand ($1,1000,000.00) Dollars.

         D. As of the date hereof the outstanding  principal balance of the Line
of Credit Note is six hundred ninety-five thousand dollars ($695,000).

         E. Bank has no obligation to reduce the rate of interest charged on the
Line of Credit or to increase  the maximum  available  credit  under the Line of
Credit.  Bank is willing to reduce the rate and increase  the maximum  available
credit  under the Line of Credit on the terms and  conditions  set forth in this
Modification  Agreement  and in the  Renewal  Line of  Credit  Note of even date
herewith (the "Renewal Note").

                                        1

<PAGE>

                                    Agreement

         NOW THEREFORE,  in  consideration  of the sum of One ($1.00) Dollar and
other good and valuable consideration,  the receipt and sufficiency of which are
hereby  acknowledged,  and  intending to be legally  bound  hereby,  the parties
hereto hereby covenant and agree as follows:

         1.       The Background recitals are incorporated herein by reference.

         2.       Paragraph  1.1 of the Line of Credit Agreement dated June 12,
1997,  is deleted in its  entirety and the  following  inserted in its place and
stead:

         "1.1  Bank  will  lend  to  Spitz,  Inc.  (hereinafter  referred  to as
         "Spitz"),  and Spitz may borrow  from Bank,  the  aggregate  sum of One
         Million One Hundred  Thousand  ($1,100,000.00)  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
         Renewal Line of Credit Note  executed by Borrower and delivered to Bank
         July 7,  2000 (the  "Note"),  in the full  amount of the Loan,  due and
         payable in accordance with the terms thereof. Bank 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 on June 12, 1997 (the "Term Loan")."

         3. Paragraph 1.2 of the Line of Credit  Agreement  dated June 12, 1997,
is deleted in its entirety and the following inserted in its place and stead:

         "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  6,  2005,  provided,
         however,  the aggregate  amount advanced,  less  repayments,  shall not
         exceed the sum of One  Million One  Hundred  Thousand  ($1,1000,000.00)
         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

                                        2

<PAGE>

         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 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."

         4.  Paragraph  6.1 (g) of the Line of Credit  Agreement  dated June 12,
1997,  is deleted in its  entirety and the  following  inserted in its place and
stead:

         "(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, 1999."

         5.  The  Security   Agreement  dated  June  12,  1997,  (the  "Security
Agreement") is amended as follows:

         The term "Line of Credit  Note" as used in the  Security  Agreement  is
         defined to mean,  identify  and  designate  that certain Line of Credit
         Note  in  the  original   principal  sum  of  Eight  Hundred   Thousand
         ($800,000.00)  Dollars made by Borrower  and  delivered to Bank on June
         12, 1997, as renewed by and  continued in that certain  Renewal Line of
         Credit Note in the  original  principal  sum of One Million One Hundred
         Thousand ($1,100,000.00) Dollars made by Borrower and delivered to Bank
         July 7, 2000, and any extensions and/or renewals thereof.

                                        3

<PAGE>

         6. The Pledge  Agreement dated June 12, 1997, (the "Pledge  Agreement")
is amended as follows:

         The term  "Line of  Credit  Note" as used in the  Pledge  Agreement  is
         defined to mean,  identify  and  designate  that certain Line of Credit
         Note  in  the  original   principal  sum  of  Eight  Hundred   Thousand
         ($800,000.00)  Dollars made by Borrower  and  delivered to Bank on June
         12, 1997, as renewed by and  continued in that certain  Renewal Line of
         Credit Note in the  original  principal  sum of One Million One Hundred
         Thousand ($1,100,000.00) Dollars made by Borrower and delivered to Bank
         July 7, 2000, and any extensions and/or renewals thereof.

         7. It is  expressly  agreed and  understood  that  except as  expressly
provided in this  Agreement,  the terms,  conditions and provisions set forth in
the  Security  Agreement,  Pledge  Agreement,  Term Note and  related  Term Loan
documents,  and Line of Credit Agreement,  Line of Credit Note, Renewal Note and
related  Line of  Credit  documents  shall  remain in full  force and  effect in
accordance  with their  respective  terms,  conditions and  provisions.  Without
limiting the  generality of the foregoing,  nothing in this  Agreement  shall be
construed to:

                  (i) impair the validity, perfection or priority of any lien or
         security interest securing the Term Loan and/or the Line of Credit;

                  (ii) waive or impair any  rights,  powers or  remedies of Bank
         under  the  Pledge  Agreement,   Security  Agreement,  Line  of  Credit
         Agreement,  Term Note, Renewal Note or related Term Loan and/or Line of
         Credit  documents  with  respect to any defaults  thereunder  which may
         occur;

                  (iii)  require Bank to  hereafter  amend or extend the term of
         the Term Note,  Renewal Note,  the Line of Credit  Agreement,  Security
         Agreement, Pledge Agreement or the time for payment of the Term Loan or
         the Line of Credit;

                  (iv) make any loan or other extension of credit to Borrower.

         In the event of any  inconsistency  between the terms of this Agreement
and the Line of Credit Agreement and/or the Security  Agreement,  this Agreement
shall  govern.  Borrower  acknowledges  that it has  consulted  with  counsel in
connection with the  negotiation and delivery of this Agreement.  This Agreement
shall be construed  without regard to any  presumption or rule requiring that it
be  construed  against  the party  causing  this  Agreement  or any part of this
Agreement to be drafted.

         8. Borrower  acknowledges and agrees that its relationship with Bank is
one of the lender and borrower only and is not a partnership or joint venture.

                                        4

<PAGE>

         9. Borrower  hereby  ratifies and affirms all of the terms,  conditions
and provisions of the Security  Agreement,  Pledge  Agreement,  UCC-1  Financing
Statements,  Term Note,  Line of Credit  Note,  Renewal  Note and Line of Credit
Agreement to the extent the same are not otherwise modified herein.

         10. Borrower hereby represents,  warrants and covenants that all of the
representations,  warranties and covenants set forth in the Security  Agreement,
Pledge Agreement,  UCC-1 Financing  Statements,  Term Note, Line of Credit Note,
Renewal  Note and Line of Credit  Agreement  are true and correct as of the date
hereof and hereby renews the same.

         11. The Renewal Note is executed  and  delivered  in  substitution  and
replacement of the Borrower's  obligations under and the indebtedness  evidenced
by the Line of Credit  Note.  The Renewal  Note stands in the place and stead of
the Line of Credit Note and is not an additional  indebtedness or a satisfaction
of the  indebtedness  evidenced by the Line of Credit Note. The indebtedness and
obligations  evidenced  by the  Line of  Credit  Note  are  continued,  renewed,
extended  and modified by the Renewal  Note and such  indebtedness  is and shall
continue  to be secured  by the  Security  Agreement,  Pledge  Agreement,  UCC-1
Financing   Statements  and  Line  of  Credit  Agreement   without  novation  or
interruption.

         12.  Borrower  hereby   acknowledges  and  agrees  that  no  setoff  or
counterclaim to Borrower's obligations evidenced by the Renewal Note exists, and
no agreement has been made with any person under which any deduction or discount
may be claimed, that the outstanding balance of principal and interest due under
the Line of  Credit  Note as of July 7, 2000 is  $695,000  , that to the best of
Borrower's knowledge, information and belief, no Event of Default (as defined in
the Renewal  Note) has occurred  which is  continuing  and no event has occurred
which with the passage of time or the giving of notice or both,  could become an
Event of Default under the Renewal Note.

         [THIS SPACE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]

                                        5

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

EXECUTED, SEALED AND
DELIVERED IN THE PRESENCE OF:

Witnesses Present:                    BORROWER:

                                      TRANSNATIONAL INDUSTRIES, INC.

/s/ Donn Guthrie (as to both)         By: /s/ Charles H. Holmes Jr.       (SEAL)
                                      -----------------------------

                                      ATTEST: /s/ Paul L Dailey           (SEAL)
                                      -----------------------------

Witnesses Present:                    BORROWER:

                                      SPITZ, INC.

/s/ Donn Guthrie (as to both)         By: /s/ Charles H. Holmes Jr.       (SEAL)
                                      -----------------------------

                                      ATTEST: /s/ Paul L Dailey           (SEAL)
                                      -----------------------------

                                      BANK:

                                      FIRST KEYSTONE FEDERAL SAVINGS BANK

                                      By: /s/ A. Charles Amentt
                                      -----------------------------

                                       ATTEST:
                                      -----------------------------

                                        6

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