Exhibit 10.12

                               FIRST AMENDMENT TO
                                 LOAN AGREEMENT

      THIS FIRST AMENDMENT TO LOAN AGREEMENT ("First Amendment") is made as of
this 30th day of April, 2003, by and among FLEET CAPITAL CORPORATION ("Fleet"),
a Rhode Island corporation with an office at One South Wacker Drive, Suite 1400,
Chicago, Illinois 60606, individually as a Lender and as Agent ("Agent") for
itself and any other financial institution which is or becomes a party hereto
(each such financial institution, including Fleet, is referred to hereinafter
individually as a "Lender" and collectively as the "Lenders"), the CANADIAN
PARTICIPANTS party hereto, the U.K. PARTICIPANTS party hereto, an Affiliate of
Fleet National Bank to be incorporated under the laws of Canada or a province
thereof and to be selected by Agent, individually as a Lender and as Canadian
Agent ("Canadian Agent"), FLEET NATIONAL BANK, London U.K. branch, trading as
FleetBoston Financial, individually as a Lender and as U.K. Agent ("U.K.
Agent"), FOOTHILL CAPITAL CORPORATION, as Syndication Agent ("Syndication
Agent"), the LENDERS, KATY INDUSTRIES, INC., a Delaware corporation, with its
chief executive office and principal place of business at 765 Straits Turnpike,
Suite 2000, Middlebury, Connecticut 06762 ("Katy" or "U.S. Borrower"), WOODS
INDUSTRIES (CANADA) INC., a Canadian corporation with its chief executive office
and principal place of business at 375 Kennedy Road, Scarborough, Ont. MlK 2A3
("Woods Canada" or "Canadian Borrower") and CONTICO MANUFACTURING LIMITED ("CML"
or U.K. Borrower"), a private limited company incorporated under the laws of
England and Wales and registered with Company No. 1338772 whose registered
office is Cardrew Way, Redruth Cornwall, TR15 lST, England. Katy, Woods Canada
and CML are sometimes hereinafter referred to individually as a "Borrower" and
collectively as "Borrowers."

                              W I T N E S S E T H :

      WHEREAS, Agent, Lenders, Canadian Participants, U.K. Participants, U.K.
Agent, Syndication Agent and Borrowers entered into a certain Loan Agreement
dated as of January 31, 2003 (said Loan Agreement is hereinafter referred to as
the "Loan Agreement"); and

      WHEREAS, Borrowers desire to amend and modify certain provisions of the
Loan Agreement pursuant to the terms and conditions hereof;

      WHEREAS, subject to the terms and conditions hereof, Agent, Lenders,
Canadian Participants, U.K. Participants and U.K. Agent are willing to so amend
and modify the Loan Agreement; and

      NOW THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and any extension of credit heretofore, now or
hereafter made by Agent and Lenders to Borrowers, the parties hereto hereby
agree as follows:

1.    Definitions. All capitalized terms used herein without definition shall
      have the meanings given to them in the Loan Agreement.

2.    Permitted Distributions. Section 7.2.7 of the Loan Agreement is hereby
      deleted and the following is inserted in its stead:

<PAGE>

            "7.2.7 Distributions. Declare or make, or permit any Subsidiary of
      any Borrower to declare or make, any Distributions, except for:

                  (i) Distributions by any Subsidiary of a Borrower to such
                  Borrower;

                  (ii) Distributions paid solely in Securities of a Borrower or
                  any of its Subsidiaries including, without limitation,
                  Distributions paid by Katy solely in Securities on Katy's
                  Convertible Preferred Stock;

                  (iii) Distributions by a Borrower in amounts necessary to
                  permit such Borrower to repurchase Securities of such Borrower
                  from employees of such Borrower or any of its Subsidiaries
                  upon the termination of their employment, so long as no
                  Default or Event of Default exists at the time of or would be
                  caused by the making of such Distributions and the aggregate
                  cash amount of such Distributions, measured at the time when
                  made, does not exceed $1,000,000 in any fiscal year of Katy;

                  (iv) so long as no Default or Event of Default exists at the
                  time of or would be caused by the making of such
                  Distributions, Distributions by Katy in an amount sufficient
                  to permit Parent to pay Consolidated tax liabilities of
                  Parent, Katy and Katy's Subsidiaries relating to the business
                  of Borrowers and Borrowers' Subsidiaries, so long as Parent
                  applies the amount of such Distributions for such purpose;

                  (v) Distributions by Katy to the extent necessary to permit
                  Parent to pay administrative costs and expenses related to the
                  business of Borrowers and their Subsidiaries, not to exceed
                  $100,000 in any fiscal year of Katy, so long as Parent applies
                  the amount of such Distributions for such purpose;

                  (vi) Distributions in the form of repurchases of the Contico
                  Preferred Units consummated on the Closing Date pursuant to
                  the Contico Preferred Units Repurchase Agreement in an
                  aggregate amount not to exceed $10,000,000; and

                  (vii) Distributions in the form of repurchases of Common Stock
                  on the open public market provided that: (a) average U.S.
                  Availability for the 30 days immediately prior to any such
                  repurchase, computed on a pro forma basis after giving effect
                  to any such repurchase, equals or exceeds $10,000,000; (b)
                  U.S. Availability immediately after giving effect to any such
                  repurchase equals or exceeds $10,000,000; (c) the aggregate
                  amount of any such repurchases made within any fiscal year of
                  Borrower does not exceed $3,000,000; and (d) after giving
                  effect to any such repurchase, no Default or Event of Default
                  shall have occurred and be continuing."

3.    Continuing Effect. Except as otherwise specifically set out herein, the
      provisions of the Loan Agreement shall remain in full force and effect.


                                       2
<PAGE>

4.    Governing Law. This First Amendment and the obligations arising hereunder
      shall be governed by, and construed and enforced in accordance with, the
      laws of the State of Illinois applicable to contracts made and performed
      in such state, without regard to the principles thereof regarding
      conflicts of laws.

5.    Counterparts. This First Amendment may be executed in any number of
      separate counterparts, each of which shall, collectively and separately,
      constitute one agreement.

                            (Signature Page Follows)


                                       3
<PAGE>

              (Signature Page to First Amendment to Loan Agreement)

      IN WITNESS WHEREOF, this First Amendment has been duly executed on the
day and year specified at the beginning of this First Amendment.

                                        KATY INDUSTRIES, INC.

                                        By: /s/ Amir Rosenthal
                                           -------------------------------------
                                            Name: Amir Rosenthal
                                                 -------------------------------
                                            Title: Vice President
                                                  ------------------------------

<PAGE>

                                        CONTICO MANUFACTURING LIMITED

                                        By: /s/ Amir Rosenthal
                                           -------------------------------------
                                            Name: Amir Rosenthal
                                                 -------------------------------
                                            Title: Assistant Secretary
                                                  ------------------------------

<PAGE>

                                        WOODS INDUSTRIES (CANADA) INC.

                                        By: /s/ Amir Rosenthal
                                           -------------------------------------
                                            Name: Amir Rosenthal
                                                 -------------------------------
                                            Title: Secretary
                                                  ------------------------------

<PAGE>

                                        FLEET CAPITAL CORPORATION,
                                         as Agent and as a Lender

                                        By: /s/ Sandra J. Evans
                                           -------------------------------------
                                            Name: Sandra J. Evans
                                                 -------------------------------
                                            Title: Senior Vice President
                                                  ------------------------------

<PAGE>

                                        FOOTHILL CAPITAL CORPORATION

                                        By: /s/ Lan Wong
                                           -------------------------------------
                                            Name: Lan Wong
                                                 -------------------------------
                                            Title: AVP
                                                  ------------------------------

<PAGE>

                                        GMAC COMMERCIAL FINANCE, as a Lender

                                        By:
                                           -------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

<PAGE>

                                        LASALLE BANK NATIONAL ASSOCIATION

                                        By: /s/ Mark Mital
                                           -------------------------------------
                                            Name: MARK MITAL
                                                 -------------------------------
                                            Title: VICE PRESIDENT
                                                  ------------------------------

<PAGE>

                                        U.S.BANK NATIONAL ASSOCIATION,
                                         as a Lender

                                        By: /s/ Robin L Van Meter
                                           -------------------------------------
                                            Name: Robin L Van Meter
                                                 -------------------------------
                                            Title: Vice President
                                                  ------------------------------

<PAGE>

                                        UPS CAPITAL CORPORATION, as a Lender

                                        By: /s/ Charles Johnson
                                           -------------------------------------
                                            Name: Charles Johnson
                                                 -------------------------------
                                            Title: Senior Vice President
                                                  ------------------------------

<PAGE>

                                        FLEET NATIONAL BANK, LONDON U.K. BRANCH,
                                        trading as FleetBoston Financial, as
                                        U.K. Agent and as U.K. Lender

                                        By: /s/ V. Houghton
                                           -------------------------------------
                                            Name: V. Houghton
                                                 -------------------------------
                                            Title: AVP II
                                                  ------------------------------

<PAGE>

Accepted and Agreed to this 30th of April, 2003.

                          GUARANTORS:

                          KKTY HOLDNG C0MPANY, L.L.C.

                          By: /s/ Christopher Anderson
                             ---------------------------------------
                                   Name: Christopher Anderson
                                   Title: Authorized Manager

                          AMERICAN GAGE & MACHINE CO.

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          CONTICO INTERNATIONAL, L.L.C.

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title: Authorized Manager

                          DUCKBACK PRODUCTS, INC,

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GC/WALDOM ELECTRONICS, INC.

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GLIT/DTSCO, INC.

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GLIT/GEMTEX, INC.

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

<PAGE>

Accepted and Agreed to this 30th of April, 2003.

                          GUARANTORS:

                          KKTY HOLDNG C0MPANY, L.L.C.

                          By:
                             ---------------------------------------
                                   Name: Christopher Anderson
                                   Title: Authorized Manager

                          AMERICAN GAGE & MACHINE CO.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          CONTICO INTERNATIONAL, L.L.C.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title: Authorized Manager

                          DUCKBACK PRODUCTS, INC,

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GC/WALDOM ELECTRONICS, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GLIT/DTSCO, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          GLIT/GEMTEX, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

<PAGE>

                          HALLMARK HOLDINGS, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          PTR MACHINE CORP.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          SAVANNAH ENERGY SYSTEMS COMPANY

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          WILEN PRODUCTS, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          WJ SMITH WOOD PRESERVING COMPANY

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------

                          WOODS INDUSTRIES, INC.

                          By: /s/ Amir Rosenthal
                             ---------------------------------------
                                   Name: Amir Rosenthal
                                   Title:             Secretary
                                         ---------------------------