Ex 10.22

                              KATY INDUSTRIES, INC.

                                 THIRD AMENDMENT
                               TO CREDIT AGREEMENT

            This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated
as of April 29, 2002 and entered into by and among KATY INDUSTRIES, INC., a
Delaware corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and
collectively as "Lenders"), DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly
Bankers Trust Company), as agent for Lenders (in such capacity, "Agent"), and
for purposes of Section 4 hereof, the Credit Support Parties (as defined in
Section 4 hereof) listed on the signature pages hereof, and is made with
reference to that certain Credit Agreement dated as of June 28, 2001, by and
among Company, Lenders and Agent, as amended by that certain First Amendment
thereto dated as of September 27, 2001 and that certain Second Amendment thereto
dated as of November 26, 2001 (as so amended, the "Credit Agreement").
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.

                                    RECITALS

            WHEREAS, Company has requested that Lenders amend the Credit
Agreement (i) to permit SESCO's transfer of its interest in the SESCO Facility
(defined below) to NEWCO (defined below) and the other transactions contemplated
by that certain Agreement To Enter Into a Joint Venture dated as of March 14,
2002 by and among Company, SESCO, Katy-Seghers, Inc., Montenay Power
Corporation, Montenay Savannah Operations Inc., Montenay Savannah GP Inc., and
Montenay Savannah Limited Partnership, and (ii) with respect to certain other
matters.

            NOW, THEREFORE, subject to the terms and conditions of this
Amendment and in consideration of the premises and the agreements, provisions
and covenants herein contained, the parties hereto agree as follows:

            Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

            1.1 Amendments to Section 1: Provisions Relating to Defined Terms

            A. Subsection 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions, which shall be inserted in proper
alphabetical order:

            "`Authority' means the Resource Recovery Development Authority for
            the City of Savannah, a public body corporate and politic created
            and existing pursuant to O.C.G.A.ss.36-63-1, et seq., as amended."

            "`City' means the Mayor and the Aldermen of the City of Savannah,
            Georgia, a municipal corporation and political subdivision of the
            State of Georgia."

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            "`Contributed Assets' has the meaning assigned to that term in the
            SESCO Joint Venture Agreement."

            "`Energy Purchaser' means Kerr-McGee Pigments (Savannah), Inc., a
            Georgia corporation, and its successors and assigns."

            "`Existing SESCO Documents' means collectively, (i) the SESCO
            Guaranty, (ii) the SESCO Loan Agreement, (iii) the SESCO Service
            Agreement, (iv) the SESCO Steam Agreement, and (v) any other
            agreements, documents and instruments delivered pursuant to or in
            connection with the agreements described in the foregoing clauses
            (other than the SESCO/Montenay Transaction Documents), in each case
            (for clauses (i) through (v) above) as any such agreement or
            document may be amended from time to time after the Third Amendment
            Effective Date to the extent permitted by subsection 7.15A."

            "`Katy Guaranty' means that certain Guaranty dated as of April 29,
            2002 by Company in favor of the Authority, as such guaranty may be
            amended from time to time after the Third Amendment Effective Date
            to the extent permitted under subsection 7.15A."

            "`Katy Letter Agreement' means that certain letter agreement dated
            as of April 29, 2002 by and between Company and NEWCO, as such
            agreement may be amended from time to time after the Third Amendment
            Effective Date to the extent permitted under subsection 7.15A."

            "`Katy Seghers' means Katy-Seghers, Inc., a Delaware corporation and
            a Subsidiary of Company."

            "`Montenay' means Montenay Savannah GP Inc., a Delaware corporation,
            a wholly-owned Subsidiary of Montenay Corp., and the general partner
            of NEWCO."

            "`Montenay Corp.' means Montenay Power Corporation, a Delaware
            corporation."

            "`Montenay Operations' means Montenay Savannah Operations Inc., a
            Delaware corporation."

            "`NEWCO' means Montenay Savannah Limited Partnership, a Delaware
            limited partnership."

            "`NEWCO LP Agreement' means that certain Amended and Restated
            Agreement of Limited Partnership of NEWCO dated as of April 29, 2002
            by and between SESCO and Montenay, as such agreement may be amended
            from time to time after the Third Amendment Effective Date to the
            extent permitted under subsection 7.15A."


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            "`Operating Guaranty Agreement' means that certain Operating
            Guaranty Agreement dated as of April 29, 2002 by and between Company
            and Montenay Corp., as such agreement may be amended from time to
            time after the Third Amendment Effective Date to the extent
            permitted under subsection 7.15A."

            "`Operating Services Agreement' means that certain Operating
            Services Agreement dated as of April 29, 2002 by and between
            Montenay Operations and NEWCO, as such agreement may be amended from
            time to time after the Third Amendment Effective Date to the extent
            permitted under subsection 7.15A."

            "`Seghers Grate Technology' means that certain technology commonly
            known as the Seghers grate technology, as further described on
            Schedule 3.13(b) to the SESCO Joint Venture Agreement."

            "`SESCO Assignment and Assumption Agreement' means that certain
            Assignment and Assumption Agreement dated as of April 29, 2002 by
            and between SESCO and NEWCO, as such agreement may be amended from
            time to time after the Third Amendment Effective Date to the extent
            permitted under subsection 7.15A."

            "`SESCO Facility' means the waste-to-energy facility located in the
            County of Chatham, near Savannah, Georgia, owned and operated by
            SESCO or its successor operator."

            "`SESCO Joint Venture Agreement' means that certain Agreement to
            Enter into a Joint Venture dated as of March 14, 2002 by and among
            SESCO, Company, Katy Seghers, Montenay Corp., Montenay Operations,
            Montenay and NEWCO, as such agreement may be amended from time to
            time after the Third Amendment Effective Date to the extent
            permitted under subsection 7.15A."

            "`SESCO Limited Partnership Interest Purchase Agreement' means that
            certain Limited Partnership Interest Purchase Agreement dated as of
            April 29, 2002 by and between SESCO and Montenay Corp., as such
            agreement may be amended from time to time after the Third Amendment
            Effective Date to the extent permitted under subsection 7.15A."

            "`SESCO Note' means that certain promissory note dated April 29,
            2002 issued by SESCO to the Authority in the original principal
            amount of $6,600,000, as such promissory note may be amended from
            time to time after the Third Amendment Effective Date to the extent
            permitted under subsection 7.15A."

            "`SESCO Pledge Agreement' means that certain Partnership Interest
            Pledge Agreement dated as of April 29, 2002 by and between SESCO and
            the Authority, as such agreement may be amended from time to time
            after the Third Amendment Effective Date to the extent permitted
            under subsection 7.15A."

            "`SESCO/Montenay Transaction' means SESCO's transfer of its interest
            in the SESCO Facility and the other Contributed Assets to NEWCO, in
            accordance with


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<PAGE>

            the NEWCO LP Agreement, and the other transactions contemplated by
            the SESCO/Montenay Transaction Documents, including, without
            limitation, (i) SESCO's assignment of the SESCO Service Agreement to
            NEWCO and (ii) Montenay Operations' entering into of the Operating
            Services Agreement pursuant to which Montenay Operations assumes the
            obligations of SESCO as operator under the SESCO Service Agreement."

            "`SESCO/Montenay Transaction Documents' means collectively, (i) the
            SESCO Joint Venture Agreement, (ii) the NEWCO LP Agreement, (iii)
            the SESCO Note, (iv) the SESCO Pledge Agreement, (v) the Katy
            Guaranty, (vi) the Operating Services Agreement, (vii) the SESCO
            Assignment and Assumption Agreement, (viii) the SESCO Limited
            Partnership Interest Purchase Agreement, (ix) the Katy Letter
            Agreement, (x) that certain Transfer of Limited Partner Interest
            dated as of April 29, 2002 by and among SESCO, Montenay Corp. and
            Montenay, (xi) that certain Bill of Sale and Assignment dated as of
            April 29, 2002 by and between Company and Katy Seghers, (xii) that
            certain Warranty Bill of Sale dated as of April 29, 2002 by SESCO,
            (xiii) the Operating Guaranty Agreement, and (xiv) any agreement or
            document entered into by any Loan Party in connection with any of
            the foregoing, in each case (for clauses (i) through (xiv) above) as
            any such agreement or document may be amended from time to time
            after the Third Amendment Effective Date to the extent permitted by
            subsection 7.15A."

            "`Third Amendment' means that certain Third Amendment to Credit
            Agreement dated as of April 29, 2002 among Company, Agent and
            Lenders."

            "`Third Amendment Effective Date' has the meaning assigned to that
            term in the Third Amendment."

            B. Subsection 1.1 of the Credit Agreement is hereby further amended
by inserting at the end of the definition of the term "Consolidated Leverage
Ratio" the following proviso: "; provided, that in calculating the Consolidated
Leverage Ratio for purposes of subsection 7.6A, the principal amount outstanding
under the SESCO Note shall be excluded from Consolidated Total Debt (it being
understood that the principal amount outstanding under the SESCO Note shall not
be excluded from Consolidated Total Debt in calculating the Consolidated
Leverage Ratio for any other purpose (including without limitation for purposes
of determining the interest rate pursuant to subsection 2.2A))."

            C. Subsection 1.1 of the Credit Agreement is hereby further amended
by inserting the phrase ", the SESCO/Montenay Transaction Documents," after the
reference to "the Management Agreement," appearing in the fourth line of the
definition of "Related Agreements."

            D. Subsection 1.1 of the Credit Agreement is hereby further amended
by adding at the end of clause (iv) of the definition of the term "Restricted
Junior Payment" the phrase "or the SESCO Note or any payment under the Katy
Guaranty or any payment under the Katy Letter Agreement."


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<PAGE>

            1.2 Amendments to Section 3: Letters of Credit

            A. Subsection 3.1B of the Credit Agreement is hereby amended by
inserting the phrase "and in the case of a Commercial Letter of Credit, to Agent
and LaSalle Bank National Association," immediately after the word "Agent"
appearing in the second line of clause (i).

            B. Subsection 3.1B of the Credit Agreement is hereby further amended
by deleting the last sentence contained in clause (ii) thereof and substituting
the following therefor:

            "In the event that all other Revolving Lenders shall have declined
            to issue such Standby Letter of Credit, notwithstanding the prior
            election of Agent not to issue such Standby Letter of Credit, Agent
            shall be obligated to issue such Standby Letter of Credit and shall
            be the Issuing Lender with respect thereto, notwithstanding the fact
            that the Letter of Credit Usage with respect to such Standby Letter
            of Credit and with respect to all other Letters of Credit issued by
            Agent, when aggregated with Agent's outstanding Revolving Loans, may
            exceed Agent's Revolving Loan Commitment then in effect; provided
            that Agent shall not be obligated to issue any Letter of Credit
            denominated in a foreign currency which in the judgment of Agent is
            not readily and freely available. In the event that all other
            Lenders shall have declined to issue such Commercial Letter of
            Credit, then notwithstanding the prior election of LaSalle Bank
            National Association not to issue such Commercial Letter of Credit,
            so long as LaSalle Bank National Association is a party hereto,
            LaSalle Bank National Association shall be obligated to issue such
            Commercial Letter of Credit and shall be the Issuing Lender with
            respect thereto, notwithstanding the fact that the Letter of Credit
            Usage with respect to such Commercial Letter of Credit and with
            respect to all other Letters of Credit issued by LaSalle Bank
            National Association, when aggregated with LaSalle Bank National
            Association's outstanding Revolving Loans, may exceed LaSalle Bank
            National Association's Revolving Loan Commitment then in effect;
            provided that LaSalle Bank National Association shall not be
            obligated to issue any Letter of Credit denominated in a foreign
            currency which in the judgment of LaSalle Bank National Association
            is not readily and freely available. In the event that LaSalle Bank
            National Association ceases to be a party hereto, Agent shall
            determine which Lender shall undertake the rights and obligations of
            LaSalle Bank National Association under this subsection 3.1B."

            1.3 Amendments to Section 5: Representations and Warranties

            A. Subsection 5.21 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

            "5.21 SESCO.


                        (i) Company and its Subsidiaries do not guaranty
            (pursuant to the SESCO Guaranty or otherwise) any of SESCO's
            obligations under the SESCO


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<PAGE>

            Loan Agreement or any repayment obligations in respect of the
            principal and interest on the bonds issued in 1984, 1992 or 2001,
            the proceeds of which were loaned to SESCO pursuant to the SESCO
            Loan Agreement. Each of SESCO and NEWCO are in full compliance under
            the SESCO Service Agreement and the SESCO Steam Agreement except
            where failure to be in compliance could not adversely affect any
            Loan Party, Agent or any Lenders and there has not occurred any
            "Event of Default" as defined in the SESCO Service Agreement by
            SESCO, Company or NEWCO. Company and its Subsidiaries are not aware
            of any Environmental Claims relating to SESCO, the SESCO Facility or
            SESCO's business operations."

            B. Section 5 of the Credit Agreement is hereby further amended by
adding thereto at the end thereof the following:

            "5.22 SESCO/Montenay Transaction Documents.

                  A. Company has delivered to Lenders complete and correct
            copies of the SESCO/Montenay Transaction Documents, in each case as
            in effect as of the Third Amendment Effective Date, and of all
            exhibits and schedules thereto.

                  B. The representations and warranties made by Company and its
            Affiliates contained in the SESCO/Montenay Transaction Documents are
            true, correct and complete in all material respects on and as of the
            date made or deemed made and Company and its Affiliates have
            performed in all material respects all agreements and satisfied all
            conditions which the SESCO/Montenay Transaction Documents provide
            shall be performed or satisfied by Company and its Affiliates on or
            before the Third Amendment Effective Date.

                  C. Notwithstanding anything in the SESCO/Montenay Transaction
            Documents to the contrary, the representations and warranties of
            Company set forth in subsection 5.22B shall, solely for purposes of
            this Agreement, survive the Third Amendment Effective Date for the
            benefit of Lenders.

                  D. All Governmental Authorizations and all consents of other
            Persons have been obtained, in each case that are necessary or
            advisable in connection with the SESCO/Montenay Transaction, the
            related financings and the other transactions contemplated by the
            SESCO/Montenay Transaction Documents. Each such Governmental
            Authorization or consent is in full force and effect. All applicable
            waiting periods have expired without any action being taken or
            threatened by any competent authority or other Person that would
            restrain, prevent or otherwise impose adverse conditions on the
            SESCO/Montenay Transaction, the related financings and the other
            transactions contemplated by the SESCO/Montenay Transaction
            Documents. No action, request for stay, petition for review or
            rehearing, reconsideration, or appeal with respect to any of the
            foregoing is pending, and the time for any applicable Government
            Authority to take action to set aside its consent on its own motion
            has expired.


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<PAGE>

                  E. Company and its Affiliates have all requisite corporate or
            other entity power and authority to enter into SESCO/Montenay
            Transaction Documents to which they are a party and to carry out the
            transactions contemplated by, and perform their respective
            obligations under, the SESCO/Montenay Transaction Documents.

                  F. The execution and delivery of the SESCO/Montenay
            Transaction Documents by Company and its Affiliates and the
            performance of the SESCO/Montenay Transaction Documents by Company
            and its Affiliates have been duly authorized by all necessary
            corporate or other entity action.

                  G. Company and its Affiliates have duly executed and delivered
            the SESCO/Montenay Transaction Documents to which they are a party
            and the SESCO/Montenay Transaction Documents to which they are a
            party are the legally valid and binding obligations of Company and
            its Affiliates, enforceable against Company and its Affiliates in
            accordance with their respective terms, except as may be limited by
            bankruptcy, insolvency, reorganization, moratorium or similar laws
            relating to or limiting creditors' rights generally or by equitable
            principles relating to enforceability. Montenay and its Affiliates
            have duly executed and delivered the SESCO/Montenay Transaction
            Documents to which they are a party and the SESCO/Montenay
            Transaction Documents to which they are a party are the legally
            valid binding obligations of Montenay and its Affiliates,
            enforceable against Montenay and its Affiliates in accordance with
            their respective terms, except as may be limited by bankruptcy,
            insolvency, reorganization, moratorium or similar laws relating to
            or limiting creditors' rights generally or by equitable principles
            relating to enforceability.

                  H. The Operating Services Agreement has been fully executed
            and delivered and is in full force and effect, and SESCO has no
            further obligations as operator in respect of the SESCO Service
            Agreement. All Governmental Authorizations and all consents of other
            Persons (including, without limitation, the City, the Authority and
            the Energy Purchaser) have been obtained, in each case that are
            necessary or advisable in connection with the replacement of SESCO
            by Montenay Operations as operator of the SESCO Facility, and all
            conditions required to be performed or satisfied in connection with
            such replacement have been satisfied. The experience of Montenay
            Operations or the parent company that owns 100% of the outstanding
            capital stock of Montenay Operations in operating mass-burn resource
            recovery facilities similar to the SESCO Facility equals or exceeds
            that of Company and SESCO, as determined by a nationally recognized
            engineer.

                  I. Company and its Subsidiaries (other than SESCO) do not have
            any obligations under any Existing SESCO Documents or SESCO/Montenay
            Transaction Documents other than Company's obligations in respect of
            the SESCO Guaranty, the Katy Guaranty and the Katy Letter Agreement
            and Katy Seghers' and Company's obligations in respect of the
            Seghers Grate Technology under the SESCO Joint Venture Agreement.


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<PAGE>

                  J. SESCO does not have any obligations under any Existing
            SESCO Documents or SESCO/Montenay Transaction Documents other than
            SESCO's obligations in respect of the Excluded Liabilities (as
            defined in the SESCO Joint Venture Agreement), the SESCO Note, the
            SESCO Pledge Agreement, the SESCO Limited Partnership Interest
            Purchase Agreement, the NEWCO LP Agreement and the SESCO Loan
            Agreement (for so long as SESCO shall remain a limited partner of
            NEWCO and there shall not be a novation under the SESCO Loan
            Agreement pursuant to the SESCO Assignment and Assumption Agreement
            with respect to SESCO's liability and obligation to repay debt
            arising out of the SESCO Loan Agreement).

                  K. SESCO's interest in and rights to NDS (as defined in
            Section 8.01 of the SESCO Service Agreement) payments shall continue
            on and after the Third Amendment Effective Date for so long as SESCO
            shall remain a limited partner of NEWCO.

                  L. No material and adverse tax consequences to any Loan Party
            shall result from the consummation of the transactions contemplated
            by the SESCO/Montenay Transaction Documents.

                  M. On and after the Third Amendment Effective Date, NEWCO
            shall not be accounted for as a subsidiary of Company on the
            consolidated balance sheet of Company, in conformity with GAAP.

                  O. None of the amendments to the Existing SESCO Documents made
            in connection with the Revenue Refunding Bonds (Savannah
            Waste-to-Energy Project), Series 2001 issued by the Authority to
            refinance the Revenue Refunding Bonds (Savannah Energy Systems
            Company Project), Series 1992 issued in 1992 by the Authority
            constitute a material amendment to, or a waiver of any material
            rights of Company or any of its Subsidiaries under, or a termination
            or agreement to terminate, any Existing SESCO Documents, in each
            case in a manner that could adversely affect Agent or Lenders.
            Neither Company nor any of its Subsidiaries executed and delivered
            any new agreements or any amendments to the Existing SESCO Documents
            in connection with the issuance of the Revenue Refunding Bonds
            (Savannah Energy Systems Company Project), Series 2001 issued by the
            Authority, except for the Third Amendment to Loan Agreement between
            the Authority and SESCO dated as of September 1, 2001, the Second
            Amendment to Deed to Secure Debt and Security Agreement between
            SESCO and the Authority dated as of September 1, 2001, and the Third
            Amendment Amending Exhibit X among the City, the Authority, SESCO,
            the Company and the Bank of New York, as trustee, dated as of
            September 1, 2001, a copy of each of which, in each case as in
            effect as of the Third Amendment Effective Date, and all exhibits
            and schedules thereto, has been delivered to Agent."


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<PAGE>

            1.4 Amendments to Section 6: Company's Affirmative Covenants

            A. Subsection 6.5 of the Credit Agreement is hereby amended by
inserting the following proviso before the "." contained in the penultimate
sentence therein:

            "; provided, that, notwithstanding anything to the contrary in this
            Agreement, the assets of any Domestic Subsidiary acquired by Company
            after the Third Amendment Effective Date shall not be included in
            the calculation of the Revolving Borrowing Base unless and until the
            first such audit has occurred with respect to such Domestic
            Subsidiary and is satisfactory to Agent".

            B. Section 6 of the Credit Agreement is hereby further amended by
adding thereto at the end thereof the following:

            "6.13 SESCO.

                  Company shall not, and shall not permit any of its
            Subsidiaries to, (x) purchase Montenay's interest in NEWCO as its
            general partner and/or assume responsibility for the maintenance and
            operation of the SESCO Facility, or (y) cause Montenay (or its
            designee) to purchase its limited partnership interest in NEWCO and
            transfer any liability or obligation related to the SESCO Facility
            then remaining with SESCO to NEWCO pursuant to Section 2.6(a) of the
            NEWCO LP Agreement without the prior written consent of Requisite
            Lenders. Company shall not, and shall not permit any of its
            Subsidiaries to, take any other action (other than electing to
            terminate the SESCO Guaranty pursuant to Section 3(a)(i) of the
            Operating Guaranty Agreement) which shall have the effect of
            terminating any of Montenay Corp.'s indemnification obligations
            under Section 11.2(b)(ii) or any other section of the Operating
            Guaranty Agreement without the consent of Requisite Lenders. Company
            shall, and shall cause each of its Subsidiaries to, diligently
            enforce all of their respective rights (including, without
            limitation, their indemnification rights) under the SESCO/Montenay
            Transaction Documents."

            1.5 Amendments to Section 7: Company's Negative Covenants

            A. Subsection 7.1 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (vi), (ii) deleting the "." at the
end of clause (vii) and substituting "; and" therefor, and (iii) adding the
following clause (viii) at the end thereof:

            "(viii) SESCO may become and remain liable with respect to
            Indebtedness evidenced by the SESCO Note, provided that the
            aggregate outstanding principal amount of such SESCO Note shall not
            exceed $6,600,000 (as such initial principal amount is reduced from
            time to time by any payments thereof) at any time."


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<PAGE>

            B. Subsection 7.2A of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (vii), (ii) deleting the "." at the
end of clause (viii) and substituting "; and" therefor, and (iii) adding the
following clause (ix) at the end thereof:

            "(ix) Liens granted by SESCO to the Authority pursuant to the SESCO
            Pledge Agreement."

            C. Subsection 7.3(ii)(b) of the Credit Agreement is hereby amended
by deleting the phrase "$750,000 in any Fiscal Year" set forth therein and
substituting therefor the phrase "the following amounts for the following
periods: (1) $750,000 for the period from the Closing Date to the Third
Amendment Effective Date; (2) $800,000 for the period after the Third Amendment
Effective Date to December 31, 2002; (3) $1,000,000 in calendar years 2003 and
2004; (4) $1,050,000 in calendar year 2005; (5) $1,100,000 in calendar years
2006 and 2007; and (6) $550,000 in calendar year 2008 and, in the case of
clauses (2) through (6), only to the extent used for the sole purpose of making
payments on the SESCO Note".

            D. Subsection 7.3 of the Credit Agreement is hereby further amended
by (i) deleting the word "and" at the end of clause (x), (ii) deleting the "."
at the end of clause (xi) and substituting "; and" therefor, and (iii) adding
the following clause (xii) at the end thereof:

            "(xii) SESCO may own the limited partnership interest in NEWCO
            transferred to SESCO on the Third Amendment Effective Date in
            accordance with the SESCO/Montenay Transaction Documents."

            E. Subsection 7.5 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (iii) and (ii) adding the following
clauses (v) and (vi) at the end thereof:

            ", (v) SESCO may make the scheduled principal payments on the SESCO
            Note, and Company may make payments under the Katy Guaranty to pay
            its obligations under the Katy Guaranty in respect of the scheduled
            principal payments on the SESCO Note, in each case so long as the
            aggregate amount paid by SESCO and Company does not exceed the
            following amounts in the following calendar years: $800,000 in
            calendar year 2002; $1,000,000 in calendar years 2003 and 2004;
            $1,050,000 in calendar year 2005; $1,100,000 in calendar years 2006
            and 2007; and $550,000 in calendar year 2008, and (vi) Company may
            prepay the SESCO Note pursuant to the Katy Letter Agreement upon the
            satisfaction of the following condition: the repayment of all
            outstanding Revolving Loans (other than in connection with the
            refinancing or the replacement of the credit facilities hereunder);
            provided, that the amount of such prepayment of the SESCO Note shall
            not exceed the aggregate amount of cash and Cash Equivalents owned
            by Company and its Subsidiaries immediately after (and after giving
            effect to) such repayment of all outstanding Revolving Loans;
            provided, further, that Company shall not borrow under this
            Agreement in order to fund such prepayment of the SESCO Note."


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<PAGE>

            F. Subsection 7.7 of the Credit Agreement is hereby amended by (i)
deleting the word "and" at the end of clause (v), (ii) deleting the "." at the
end of clause (vi) and substituting "; and" therefor, and (iii) adding the
following clause (vii) at the end thereof:

            "(vii) SESCO may transfer its interest in the SESCO Facility and the
            other Contributed Assets to NEWCO in accordance with the NEWCO LP
            Agreement, and each of Company and Katy Seghers may transfer all of
            their respective rights in and to the Seghers Grate Technology to
            Montenay Corp. in accordance with the SESCO Joint Venture
            Agreement."

            G. Subsection 7.12 of the Credit Agreement is hereby amended by
adding the following sentence at the end thereof:

            "Company shall not, and shall not permit any of its Subsidiaries to,
            directly or indirectly, enter into or permit to exist any
            transaction (including, without limitation, the purchase, sale,
            lease or exchange of any property or the rendering of any service)
            with SESCO or NEWCO other than the transactions contemplated by the
            SESCO/Montenay Transaction Documents executed and delivered on or
            before the Third Amendment Effective Date."

            H. Subsection 7.15A of the Credit Agreement is hereby amended by
inserting after the reference "Closing Date" appearing therein the phrase
"(except in the case of the SESCO Loan Agreement, the SESCO Service Agreement,
the SESCO Steam Agreement and the SESCO Guaranty to the extent amended by the
SESCO/Montenay Transaction Documents executed and delivered on or before the
Third Amendment Effective Date, a copy of which has been delivered to Agent on
or before the Third Amendment Effective Date) or any SESCO/Montenay Transaction
Documents (as in effect on the Third Amendment Effective Date)".

            1.6 Amendments to Section 8: Events of Default

            Subsection 8.17 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

            "8.17 SESCO.

                        (i) The occurrence and continuance of an "Event of
            Default" as defined in the SESCO Service Agreement by SESCO, Company
            or NEWCO that would entitle (upon the granting of any necessary
            consents) the Authority or the Trustee (as defined in the SESCO
            Service Agreement) to terminate the SESCO Service Agreement; (ii)
            the payment by Company of an aggregate amount exceeding $1,000,000
            under the SESCO Guaranty (whether in one payment or in multiple
            payments) or the occurrence of any event (including a call on the
            SESCO Guaranty) which would obligate Company to make a payment or
            payments in an aggregate amount exceeding $1,000,000 under the SESCO
            Guaranty; (iii) the occurrence and continuance of a default by
            Montenay Corp. of any of its obligations under the Operating
            Guaranty Agreement that could adversely affect any Loan Party, Agent
            or any Lenders; (iv) the termination of the SESCO Steam


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<PAGE>

            Agreement; or (v) the SESCO/Montenay Transaction, or any of the
            other transactions to be consummated on or prior to the Third
            Amendment Effective Date pursuant to the SESCO/Montenay Transaction
            Documents shall not be consummated in accordance with this Agreement
            and the applicable SESCO/Montenay Transaction Documents on or prior
            to the Third Amendment Effective Date, or the SESCO/Montenay
            Transaction or any of the other such transactions shall be unwound,
            reversed or otherwise rescinded in whole or in material part for any
            reason (other than any such unwinding, reversal or rescission in
            material part that could not adversely affect any Loan Party, Agent
            or any Lenders):".

            Section 2. CONDITIONS TO EFFECTIVENESS

            Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "Third Amendment
Effective Date"):

            A. On or before the Third Amendment Effective Date, Company shall
deliver to Lenders (or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the following, each,
unless otherwise noted, dated the Third Amendment Effective Date:

            1. Officer's Certificates of Company, dated a recent date prior to
      the Third Amendment Effective Date, certifying that (a) there has been no
      change in any of the Loan Parties' Organizational Documents from the date
      of the Credit Agreement, and (b) the resolutions attached thereto adopted
      by the Governing Bodies of Company, Katy Seghers and SESCO approving and
      authorizing the execution, delivery, and performance of this Amendment and
      the SESCO/Montenay Transaction Documents are in full force and effect
      without modification or amendment;

            2. Signature and incumbency certificates of the officers of Company,
      Katy Seghers and SESCO;

            3. A good standing certificate of Company, Katy Seghers and NEWCO
      from the Secretary of State of the jurisdiction of its organization, each
      dated a recent date prior to the Third Amendment Effective Date;

            4. Ten (10) executed copies of this Amendment executed by Company
      and each Credit Support Party;

            5. Executed copies of the SESCO/Montenay Transaction Documents
      (including all schedules, exhibits and amendments thereto), each in form
      and substance satisfactory to Agent;


                                       12
<PAGE>

            6. Evidence in form and substance satisfactory to Agent (including
      without limitation an Officers' Certificate to the effect set forth in
      clauses (i) - (v) below) that:

                  (i) the SESCO/Montenay Transaction Documents shall be in full
            force and effect and shall not have been amended, supplemented,
            waived or otherwise modified without the consent of Agent;

                  (ii) all conditions to the SESCO/Montenay Transaction set
            forth in the SESCO/Montenay Transaction Documents shall have been
            satisfied in all material respects or the fulfillment of any such
            conditions shall have been waived with the consent of Agent;

                  (iii) the SESCO/Montenay Transaction shall have occurred in
            accordance with the SESCO/Montenay Transaction Documents;

                  (iv) the aggregate original principal amount of the SESCO Note
            shall not exceed $6,600,000; and

                  (v) the Operating Services Agreement shall have been fully
            executed and delivered, and SESCO shall have no further obligations
            as operator in respect of the SESCO Service Agreement; all
            Governmental Authorizations and all consents of other Persons
            (including, without limitation, the City, the Authority and the
            Energy Purchaser) shall have been obtained, in each case that are
            necessary or advisable in connection with the replacement of SESCO
            by Montenay Operations as operator of the SESCO Facility and in
            connection with the consummation of the SESCO/Montenay Transaction,
            and all conditions required to be performed or satisfied in
            connection with such replacement shall have been satisfied.

            7. Evidence, in form and substance satisfactory to Agent, from a
      nationally recognized engineer or a consultant satisfactory to Agent, to
      the effect that the experience of Montenay Operations or the parent
      company that owns 100% of the outstanding capital stock of Montenay
      Operations in operating mass-burn resource recovery facilities similar to
      the SESCO Facility equals or exceeds that of Company and SESCO.

            8. An Officers' Certificate of Company, in form and substance
      satisfactory to Agent, to the effect that the representations and
      warranties in Section 5 of the Credit Agreement are true, correct and
      complete in all material respects on and as of the Third Amendment
      Effective Date (both before and after giving effect to the SESCO/Montenay
      Transaction and this Amendment) to the same extent as though made on and
      as of that date (or, to the extent such representations and warranties
      specifically relate to an earlier date, that such representations and
      warranties were true, correct and complete in all material respects on and
      as of such earlier date) and that Company and the other Loan Parties shall
      have performed in all material respects all agreements and satisfied all
      conditions which this Amendment, the Credit Agreement as amended by this
      Amendment, and the other Loan Documents provide shall be performed or
      satisfied by


                                       13
<PAGE>

      Company and its Subsidiaries on or before the Third Amendment Effective
      Date except as otherwise disclosed to and agreed to in writing by Agent.

            B. On or before the Third Amendment Effective Date, Requisite
Lenders, LaSalle Bank National Association and Deutsche Bank, AG shall deliver
to Agent copies of this Amendment executed by Requisite Lenders, LaSalle Bank
National Association and Deutsche Bank, AG.

            C. On or before the Third Amendment Effective Date, Lenders and
their respective counsel shall have received (i) originally executed copies of
one or more favorable written opinions of Hunton & Williams, in each case
counsel to Loan Parties, in form and substance satisfactory to Agent and its
counsel, dated as of the Third Amendment Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit A to this
Amendment and as to such other matters as Agent acting on behalf of Lenders may
reasonably request and (ii) copies of all opinions issued by counsel to any
party to the SESCO/Montenay Transaction Documents or issued to any party to the
SESCO/Montenay Transaction Documents relating to any transactions occurring on
or about the Third Amendment Effective Date pursuant to any of the
SESCO/Montenay Transaction Documents (including, without limitation, the
opinions referenced in Exhibits D, Q and R of the SESCO Joint Venture
Agreement), each of which opinions issued by counsel to any Loan Party shall be
accompanied by a written authorization from counsel issuing such opinion stating
that Agent and Lenders may rely on such opinions as though such opinions were
addressed to Agent and Lenders.

            D. On or before the Third Amendment Effective Date, all corporate
and other proceedings taken or to be taken in connection with this Amendment and
all documents incidental thereto not previously found acceptable by Agent,
acting on behalf of Lenders, and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents as
Agent may reasonably request.

            Section 3. REPRESENTATIONS AND WARRANTIES

            In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:

            A. Corporate Power and Authority. Each Loan Party has all requisite
corporate or other entity power and authority to enter into this Amendment and
each of the SESCO/Montenay Transaction Documents to which it is a party and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the "Amended Agreement") and
each of the SESCO/Montenay Transaction Documents to which it is a party.

            B. Authorization of Agreements. The execution and delivery of this
Amendment and each of the SESCO/Montenay Transaction Documents to which it is a
party and the performance of the Amended Agreement and each of the
SESCO/Montenay Transaction


                                       14
<PAGE>

Documents to which it is a party have been duly authorized by all necessary
corporate or other entity action on the part of each Loan Party.

            C. No Conflict. The execution, delivery and performance by each Loan
Party of this Amendment and each of the SESCO/Montenay Transaction Documents to
which it is a party and the performance by such Loan Party of the Amended
Agreement and each of the SESCO/Montenay Transaction Documents to which it is a
party do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to the Loan Parties, the
Organizational Documents of the Loan Parties or any order, judgment or decree of
any court or other Government Authority binding on the Loan Parties, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of the Loan Parties,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Loan Parties (other than Liens created under any of
the Loan Documents in favor of Agent on behalf of Lenders and Liens granted by
SESCO to the Authority pursuant to the SESCO Pledge Agreement), or (iv) require
any approval of members or stockholders or any approval or consent of any Person
under any Contractual Obligation of the Loan Parties, except for such approvals
or consents which will be obtained on or before the Third Amendment Effective
Date and disclosed in writing to Lenders.

            D. Governmental Consents. The execution, delivery and performance by
the Loan Parties of this Amendment and each of the SESCO/Montenay Transaction
Documents to which they are a party and the performance by Loan Parties of the
Amended Agreement and each of the SESCO/Montenay Transaction Documents to which
they are a party do not and will not require any Governmental Authorization
(other than any Governmental Authorizations obtained on or before the Third
Amendment Effective Date and disclosed in writing to Lenders).

            E. Binding Obligation. This Amendment and each of the SESCO/Montenay
Transaction Documents to which any Loan Party is a party have been duly executed
and delivered by the Loan Parties party thereto and this Amendment, the Amended
Agreement and each of the SESCO/Montenay Transaction Documents to which any Loan
Party is a party are the legally valid and binding obligations of such Loan
Parties party thereto, enforceable against the Loan Parties in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.

            F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Third Amendment Effective Date (both before and after
giving effect to the SESCO/Montenay Transaction and this Amendment) to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.

            G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment and the


                                       15
<PAGE>

SESCO/Montenay Transaction Documents that would constitute an Event of Default
or a Potential Event of Default.

            Section 4. ACKNOWLEDGEMENT AND CONSENT

            Holdings and each of the Subsidiary Guarantors is a party to certain
of the Holdings Guaranty and Subsidiary Guaranty and the Collateral Documents
and Company is a party to certain of the Collateral Documents. Company, Holdings
and each of the Subsidiary Guarantors are collectively referred to herein as the
"Credit Support Parties," and the Guaranties and Collateral Documents are
collectively referred to herein as the "Credit Support Documents."

            Each Credit Support Party hereby acknowledges that it has reviewed
the terms and provisions of the Credit Agreement and this Amendment and consents
to the amendment of the Credit Agreement effected pursuant to this Amendment.
Each Credit Support Party hereby confirms that each Credit Support Document to
which it is a party or otherwise bound and all Collateral encumbered thereby
will continue to guaranty or secure, as the case may be, to the fullest extent
possible the payment and performance of all "Obligations," "Guarantied
Obligations" and "Secured Obligations," as the case may be (in each case as such
terms are defined in the applicable Credit Support Document), including without
limitation the payment and performance of all such "Obligations," "Guarantied
Obligations" or "Secured Obligations," as the case may be, in respect of the
Obligations of Company now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.

            Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Third Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

            Each Credit Support Party (other than Company) acknowledges and
agrees that (i) notwithstanding the conditions to effectiveness set forth in
this Amendment, such Credit Support Party is not required by the terms of the
Credit Agreement or any other Loan Document to consent to the amendments to the
Credit Agreement effected pursuant to this Amendment, and (ii) nothing in the
Credit Agreement, this Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to the
Credit Agreement.


                                       16
<PAGE>

            Section 5. MISCELLANEOUS

            A. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.

            (i) On and after the Third Amendment Effective Date, each reference
      in the Credit Agreement to "this Agreement", "hereunder", "hereof",
      "herein" or words of like import referring to the Credit Agreement, and
      each reference in the other Loan Documents to the "Credit Agreement",
      "thereunder", "thereof" or words of like import referring to the Credit
      Agreement shall mean and be a reference to the Amended Agreement.

            (ii) Except as specifically amended by this Amendment, the Credit
      Agreement and the other Loan Documents shall remain in full force and
      effect and are hereby ratified and confirmed.

            (iii) The execution, delivery and performance of this Amendment
      shall not, except as expressly provided herein, constitute a waiver of any
      provision of, or operate as a waiver of any right, power or remedy of
      Agent or any Lender under, the Credit Agreement or any of the other Loan
      Documents.

            B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.

            C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

            D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE
APPLICATION OF ANOTHER LAW.

            E. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Section 1 hereof, the effectiveness of which is governed by
Section 2 hereof) shall become effective upon the execution of a counterpart
hereof by Company, Requisite Lenders, LaSalle Bank National Association,
Deutsche Bank, AG and each of the Credit Support Parties and


                                       17
<PAGE>

receipt by Company and Agent of written or telephonic notification of such
execution and authorization of delivery thereof.

            F. Name Change. On and after the Third Amendment Effective Date,
each reference in the Credit Agreement and the other Loan Documents to "Bankers
Trust Company" shall mean and be a reference to "Deutsche Bank Trust Company
Americas."

            G. Change of Notice Address under each of the Loan Documents.
Company and its Subsidiaries hereby notify Agent and each Lender that their
notice address under each of the Loan Documents shall be c/o Katy Industries,
Inc., 765 Straits Turnpike, Suite 2000, Middlebury, CT 06762, Attn: Amir
Rosenthal, Facsimile No.: (203) 598-0712.

                  [Remainder of page intentionally left blank]


                                       18
<PAGE>


            IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

                                  KATY INDUSTRIES, INC.

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


                                  KKTY HOLDING COMPANY, L.L.C. (for
                                  purposes of Section 4 only) as a Credit
                                  Support Party

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


                                  AETNA LIQUIDATING COMPANY
                                  (for purposes of Section 4 only) as a Credit
                                   Support Party

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


                                  ALL RISK MANAGEMENT SERVICES, INC.
                                  (for purposes of Section 4 only) as a
                                  Credit Support Party

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


                                  AMERICAN GAGE & MACHINE COMPANY
                                  (for purposes of Section 4 only) as a
                                  Credit Support Party

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


                                      S-1
<PAGE>

                                  ASHFORD HOLDING CORPORATION
                                  (for purposes of Section 4 only) as a Credit
                                  Support Party

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


                                  BACH SIMPSON, INC.
                                  (for purposes of Section 4 only) as a Credit
                                  Support Party

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


                                  BLUFF CITY BUILDING CORP.
                                  (for purposes of Section 4 only) as a Credit
                                  Support Party

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


                                  CAPACITY MANAGERS INTERNATIONAL, INC.
                                  (for purposes of Section 4 only) as a
                                  Credit Support Party

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


                                  CHATHAM RESOURCE RECOVERY SYSTEMS, INC.
                                  (for purposes of Section 4 only) as a
                                  Credit Support Party

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


                                      S-2
<PAGE>

                               CONTICO INTERNATIONAL, L.L.C. (for purposes
                               of Section 4 only) as a Credit Support Party

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


                               DUCKBACK PRODUCTS, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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

                               E-R LIQUIDATING COMPANY, INC. (for purposes
                               of Section 4 only) as a Credit Support Party

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

                               FULTON IRON WORKS COMPANY (for purposes of
                               Section 4 only) as a Credit Support Party

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


                               GC/WALDOM ELECTRONICS, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-3
<PAGE>

                               GLIT/DISCO, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               GLIT/GEMTEX, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               GLIT, INC. (for purposes of Section 4 only)
                               as a Credit Support Party

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


                               HALLMARK HOLDINGS, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               HAMILTON METALS, L.P.
                               By: HPMNC, Inc., its General Partner
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-4
<PAGE>

                               HERMANN LOEWENSTEIN, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               HPM OF PENNSYLVANIA, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               HPMNC, INC. (for purposes of Section 4 only)
                               as a Credit Support Party

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


                               JEI LIQUIDATING, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               KATY INTERNATIONAL INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-5
<PAGE>

                               KATY INTERNATIONAL, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               KATY OIL COMPANY OF INDONESIA (for purposes of
                               Section 4 only) as a Credit Support Party

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


                               KATY-SEGHERS, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               KATY-TEWEH PETROLEUM COMPANY (for purposes
                               of Section 4 only) as a Credit Support Party

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


                                      S-6
<PAGE>

                               K-S ENERGY CORP. (for purposes of Section 4
                               only) as a Credit Support Party

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


                               MICROTRON ABRASIVES, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               PANHANDLE INDUSTRIAL COMPANY, INC. (for
                               purposes of Section 4 only) as a Credit
                               Support Party

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


                               PTR MACHINE CORP.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               PRIMARY COATINGS, INC.
                                (for purposes of Section 4 only) as a Credit
                                Support Party

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


                                      S-7
<PAGE>

                               PROCESS METALS COMPANY (for purposes of
                               Section 4 only) as a Credit Support Party

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


                               SAVANNAH ENERGY CONSTRUCTION COMPANY, INC.
                               (for purposes of Section 4 only) as a Credit
                                Support Party

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


                               SAVANNAH ENERGY SYSTEMS COMPANY (for purposes of
                               Section 4 only) as a Credit Support Party

                               By:
                                  ----------------------------------------------
                                    Name: Ernest R. Bennett
                                    Title: President


                               SIMPSON ELECTRIC BUILDING CO. (for purposes
                               of Section 4 only) as a Credit Support Party

                               By:
                                  ----------------------------------------------
                                    Name: Amir Rosenthal
                                    Title: President


                                      S-8
<PAGE>

                               SPIRAL STEP-TOOL COMPANY (for purposes of
                               Section 4 only) as a Credit Support Party

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


                               STERLING-SALEM CORPORATION
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               TTI HOLDINGS, INC.
                                (for purposes of Section 4 only) as a Credit
                                Support Party

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


                               TRANS-CONTINENTAL LEATHERS, INC. (for
                               purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-9
<PAGE>

                               WABASH HOLDING CORP. (for purposes of
                               Section 4 only) as a Credit Support Party

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


                               WILEN PRODUCTS, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               WOODS INDUSTRIES, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                               WP LIQUIDATING CORP.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-10
<PAGE>

                               W. J. SMITH WOOD PRESERVING COMPANY (for
                               purposes of Section 4 only) as a Credit
                               Support Party

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


                               CRL EXPORT, INC.
                               (for purposes of Section 4 only) as a Credit
                               Support Party

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


                                      S-11
<PAGE>

                               DEUTSCHE BANK TRUST COMPANY AMERICAS
                               (formerly Bankers Trust Company),
                               Individually and as Agent

                               By:
                                  ----------------------------------------------
                                    Name: Sebastiano A. Cardone
                                    Title: Director


                                      S-12
<PAGE>

                                FIRSTAR BANK N.A.,
                                as a Lender

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


                                      S-13
<PAGE>

                                THE PROVIDENT BANK,
                                as a Lender

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


                                      S-14
<PAGE>

                                FOOTHILL CAPITAL CORPORATION,
                                as a Lender

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


                                      S-15
<PAGE>

                                LASALLE BANK NATIONAL ASSOCIATION, as the
                                new Issuing Lender and as a Lender

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


                                      S-16
<PAGE>

                                GMAC COMMERCIAL CREDIT L.L.C.,
                                as a Lender

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


                                      S-17
<PAGE>

                                UPS CAPITAL CORPORATION,
                                as a Lender

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


                                      S-18
<PAGE>

                                DEUTSCHE BANK, AG,  New York Branch
                                as the Issuing Lender being replaced

                                By:
                                  ----------------------------------------------
                                    Name: Sebastiano A. Cardone
                                    Title:  Director


                                      S-19
<PAGE>

                                  EXHIBIT A

                [FORM OF OPINION OF COUNSEL TO KATY ENTITIES]

                                [SEE ATTACHED]