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                                                                    EXHIBIT 10.4

                              SUBSIDIARY GUARANTY


       This Subsidiary Guaranty dated as of March 23, 1998 (this "Agreement")
is made by the undersigned subsidiaries of Denali Incorporated, a Delaware
corporation (each subsidiary a "Guarantor"), in favor of NationsBank of Texas,
N.A., in its capacity as agent (the "Agent") for certain financial institutions
which are or may become parties to the Credit Agreement described below.

                                  INTRODUCTION

       This Agreement is given in connection with the Amended and Restated
Credit Agreement dated as of  March 23, 1998 (as amended, restated, modified,
or supplemented from time to time, the "Credit Agreement", the defined terms of
which are used herein unless otherwise defined herein) among Denali
Incorporated, a Delaware corporation ("Denali"), Fluid Containment, Inc.,
Ershigs, Inc., SEFCO, Inc., Biloxi Ershigs, Inc., certain financial
institutions which are or may become parties thereto (the "Banks"), and the
Agent.  Each Guarantor is a Subsidiary of Denali.  Because each Guarantor
receives and, as a result of its ownership by Denali, expects to continue to
receive financial and management support from Denali, each Guarantor will
obtain substantial benefit from the extensions of credit expected to be made to
the Borrowers under the Credit Agreement.

       This Agreement is an amendment and restatement of the Unconditional
Guaranty executed in connection with the Existing Credit Agreement, not a new
or substitute guaranty agreement or a novation of the Unconditional Guaranty
executed in connection with the Existing Credit Agreement.

       Therefore, to induce the Agent and the Banks to enter into the Credit
Agreement, each Guarantor jointly and severally agrees with the Agent as
follows:

Section 1.    Guaranty.  Each Guarantor irrevocably and jointly and severally
guarantees to the Agent the full payment when due of (a) all principal,
interest, fees, reimbursements, indemnifications, and other amounts now or
hereafter owed by the Borrowers to the Agent and the Banks and, with respect to
the Interest Hedge Agreements, the Banks and their Affiliates under the terms
of the Credit Agreement, the Interest Hedge Agreements, and the other Loan
Documents, including amounts owed under the terms of the Credit Agreement and
the other Loan Documents for which the Borrowers have obtained relief under
bankruptcy or other laws providing for relief from creditors, and (b) any
increases,
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extensions, and rearrangements of the foregoing obligations under any
amendments, supplements, and other modifications of the documents and
agreements creating the foregoing obligations (collectively, the "Guaranteed
Obligations").  This is a guaranty of payment and not merely a guaranty of
collection, and each Guarantor is liable as a primary obligor.  If any of the
Guaranteed Obligations is not punctually paid when due, whether by maturity,
acceleration, or otherwise, and the Agent shall notify any Guarantor of such
default and make demand for payment hereunder, each Guarantor shall, after
receipt of written notice from the Agent, immediately pay to the Agent the full
amount of the Guaranteed Obligations which are due and payable.  Each Guarantor
shall make each payment to the Agent in Dollars in immediately available funds
as directed by the Agent.  The Agent is hereby authorized at any time following
any demand for payment hereunder to set off and apply any indebtedness owed by
the Agent to any Guarantor against any and all of the obligations of such
Guarantor under this Agreement.  The Agent agrees to promptly notify such
Guarantor after any such setoff and application, but the failure to give such
notice shall not affect the validity of such setoff and application.

Section 2.    Guaranty Absolute.

       2.1    This Agreement shall be deemed accepted by the Agent for the
benefit of itself and the Banks upon receipt, and the obligations of the
Guarantors under this Agreement are effective immediately and are continuing
and cover all Guaranteed Obligations arising prior to and after the date
hereof.  This Agreement may not be revoked by any Guarantor and shall continue
to be effective with respect to Guaranteed Obligations arising or created after
any attempted revocation by any Guarantor.

       2.2    Each Guarantor guarantees that the Guaranteed Obligations will be
paid strictly in accordance with the terms of the Credit Agreement and the
other Loan Documents, regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Banks with respect thereto.  Each Guarantor agrees
that such Guarantor's obligations under this Agreement shall not be released,
diminished, or impaired by, and waives any rights which such Guarantor might
otherwise have which relate to:

              (a)    Any lack of validity or enforceability of the Guaranteed
Obligations, any of the Loan Documents, or any other agreement or instrument
relating thereto; any increase, reduction, extension, or rearrangement of the
Guaranteed Obligations; any amendment, supplement, or other modification of the
Loan Documents; any waiver or consent granted under the Loan Documents,
including waivers of the payment and performance of the Guaranteed Obligations;
or any sale, assignment, delegation, or other transfer of the Guaranteed
Obligations or the Loan Documents;




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              (b)    Any grant of any security or support for the Guaranteed
Obligations or any impairment of any security or support for the Guaranteed
Obligations, including any full or partial release of any Borrower, any
Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations; any change in the organization or structure of any
Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations; or the insolvency, bankruptcy,
liquidation, or dissolution of any Borrower, any Guarantor, or any other Person
liable for the payment or performance of the Guaranteed Obligations;

              (c)    The manner of applying payments on the Guaranteed
Obligations or the proceeds of any security or support for the Guaranteed
Obligations against the Guaranteed Obligations;

              (d)    The failure to give notice of the occurrence of any of the
events or actions referred to in this Section 2.2, notice of any default or
event of default, however denominated, under the Loan Documents, notice of
intent to demand, notice of demand, notice of presentment for payment, notice
of nonpayment, notice of intent to protest, notice of protest, notice of grace,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
notice of bringing of action to enforce the payment or performance of the
Guaranteed Obligations, notice of any sale or foreclosure of any collateral for
the Guaranteed Obligations, notice of any transfer of the Guaranteed
Obligations, notice of the financial condition of or other circumstances
regarding any Borrower, any Guarantor, or any other Person liable for the
Guaranteed Obligations, or any other notice of any kind relating to the
Guaranteed Obligations (and the parties intend that no Guarantor shall be
considered a "Debtor" as defined in Section 9.105 of the Texas Business and
Commerce Code for the purpose of notices required to be given to a Debtor
thereunder); or

              (e)    Any other action taken or omitted which affects the
Guaranteed Obligations, whether or not such action or omission prejudices any
Guarantor or increases the likelihood that any Guarantor will be required to
pay the Guaranteed Obligations pursuant to the terms hereof.  It is the
unambiguous and unequivocal intention of each Guarantor that such Guarantor
shall be obligated to pay the Guaranteed Obligations when due, notwithstanding
any occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not particularly described
herein.

       2.3    This Agreement shall continue to be effective or be reinstated,
as the case may be, if any payment on the Guaranteed Obligations must be
refunded for any reason including any bankruptcy proceeding.  In the event that
the Agent or any Bank must refund any payment received against the Guaranteed
Obligations, any prior release from the terms of this Agreement given to any
Guarantor by the Agent shall be without effect, and this Agreement





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shall be reinstated in full force and effect.  It is the intention of each
Guarantor that such Guarantor's obligations hereunder shall not be discharged
except by final payment of the Guaranteed Obligations.

       2.4    (a)    Each Guarantor is a Subsidiary of Denali and receives and,
because of its ownership by Denali, expects to continue to receive business
opportunities, financial support, and management support from Denali.  Each
Guarantor has agreed to enter into this Agreement so that the Borrowers can
receive the benefits of the Guaranteed Obligations and Denali can continue to
provide these services to such Guarantor.

              (b)    In consummating the transactions contemplated by the Loan
Documents, no Guarantor intends to disturb, delay, hinder, or defraud either
present or future creditors of such Guarantor.  Each Guarantor is familiar
with, and has independently reviewed books and records regarding, the financial
condition of each Borrower and is familiar with the value of the security and
support for the payment and performance of the Guaranteed Obligations.  Based
upon such examination, and taking into account the fairly discounted value of
such Guarantor's contingent obligations under this Agreement and the value of
the subrogation and contribution claims such Guarantor could make in connection
with this Agreement, and assuming each of the transactions contemplated by the
Loan Documents is consummated and each Borrower makes full use of the credit
facilities thereunder, the present realizable fair market value of the assets
of such Guarantor exceeds the total obligations of such Guarantor, and such
Guarantor is able to realize upon its assets and pay its obligations as such
obligations mature in the normal course of business.

              (c)    If notwithstanding the foregoing it is judicially
determined with respect to any Guarantor that entering into this Agreement
would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, then such Guarantor shall be liable
under this Agreement only for amounts aggregating up to the largest amount that
would not render such Guarantor's obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any state law.

              (d)    Each Guarantor agrees that such Guarantor and any other
guarantor of the Guaranteed Obligations shall have rights of contribution and
subrogation against each other with respect to any payments made in connection
with the Guaranteed Obligations.

Section 3.    Unimpaired Collection.

       3.1    There are no conditions precedent to the enforcement of this
Agreement, except as expressly contained herein.  It shall not be necessary for
the Agent, in order to





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enforce payment by any Guarantor under this Agreement, to show any proof of any
Borrower's default, to exhaust the Agent's remedies against any Borrower, any
Guarantor, or any other Person liable for the payment or performance of the
Guaranteed Obligations, to enforce any security or support for the payment or
performance of the Guaranteed Obligations, or to enforce any other means of
obtaining payment or performance of the Guaranteed Obligations.  Each Guarantor
waives any rights under Chapter 34 of the Texas Business and Commerce Code,
Section 17.001 of the Texas Civil Practice and Remedies Code, and Rule 31 of
the Texas Rules of Civil Procedure related to the foregoing.  Neither the Agent
nor the Banks shall be required to mitigate damages or take any other action to
reduce, collect, or enforce the Guaranteed Obligations.

       3.2    With respect to each Guarantor, all Subordinated Obligations of
such Guarantor (as defined below) shall be subordinate and junior in right of
payment and collection to the payment and collection in full of all Guaranteed
Obligations as described below:

              (a)    As used herein, the term "Subordinated Obligations" for a
Guarantor means: (i) all present and future indebtedness, liabilities, and
obligations of any kind owed to such Guarantor by any Borrower, any other
Credit Party, or any other Person liable for the payment or performance of the
Guaranteed Obligations to such Guarantor, including debt obligations, equity
obligations, and other contractual obligations requiring payments of any kind
to be made to such Guarantor and including any right of subrogation (including
any statutory rights of subrogation under Section 509 of the Bankruptcy Code,
11 U.S.C. Section  509, or under Chapter 34 of the Texas Business and Commerce
Code), contribution, indemnification, reimbursement, exoneration, or any right
to participate in any claim or remedy of the Agent against any Borrower, any
Guarantor, or any Person liable for the payment or performance of the
Guaranteed Obligations, or any collateral which the Agent now has or may
acquire, and (ii) any increases, extensions, and rearrangements of the
foregoing obligations under any amendments, supplements, and other
modifications of the documents and agreements creating the foregoing
obligations.

              (b)    Until all Guaranteed Obligations have been irrevocably
paid in full (and therefore the payment thereof is no longer subject to being
set aside or returned under the law), such Guarantor agrees not to take any
action to enforce payment of the Subordinated Obligations of such Guarantor,
but this standstill is not intended as a permanent waiver of the subrogation,
contribution, indemnification, reimbursement, exoneration, participation, or
other rights of such Guarantor.

              (c)    Upon any receivership, insolvency proceeding, bankruptcy
proceeding, assignment for the benefit of creditors, reorganization,
arrangement with creditors, sale of





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assets for creditors, dissolution, liquidation, or marshaling of the assets of
any Borrower, any Guarantor, or any other Person liable for the payment or
performance of the Guaranteed Obligations, all amounts due with respect to the
Guaranteed Obligations shall be paid in full before such Guarantor shall be
entitled to collect or receive any payment with respect to the Subordinated
Obligations of such Guarantor, and all payments to which such Guarantor would
be entitled to collect or receive on the Subordinated Obligations of such
Guarantor shall be paid over to the Agent for application to the Guaranteed
Obligations.

              (d)    Following notice from the Agent to any Borrower that a
Default exists and that no further payments shall be made on the Subordinated
Obligations of such Guarantor, all amounts due with respect to the Guaranteed
Obligations shall be paid in full before such Guarantor shall be entitled to
collect or receive any payment with respect to the Subordinated Obligations of
such Guarantor.

              (e)    Any lien, security interest, or assignment securing the
repayment of the Subordinated Obligations of such Guarantor shall be fully
subordinate to any lien, security interest, or assignment in favor of the Agent
which secures the Guaranteed Obligations.  At the request of the Agent, such
Guarantor will take any and all steps necessary to fully evidence the
subordination granted hereunder, including amending or terminating financing
statements and executing and recording subordinations of liens.

              (f)    This is an absolute and irrevocable agreement of
subordination and the Agent may, without notice to such Guarantor, take any
action described in Section 2.2 without impairing or releasing the obligations
of such Guarantor hereunder.

              (g)    Such Guarantor shall not assign or otherwise transfer to
any other Person any interest in the Subordinated Obligations of such Guarantor
without the prior written permission of the Agent and unless such Guarantor
causes the assignee or other transferee to execute and deliver to the Agent a
subordination agreement in substantially the form of the subordination
provisions in this Agreement.

              (h)    If any amount shall be paid to such Guarantor in violation
of this Section 3.2, such amount shall be held in trust for the benefit of the
Agent and immediately turned over to the Agent, with any necessary endorsement,
to be applied to the Guaranteed Obligations.

Section 4.    Miscellaneous.

       4.1    Each Guarantor hereby affirms and shall comply with the
representations, warranties, and covenants made by the Borrowers in the Credit
Agreement to the extent that





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such representations, warranties, and covenants are applicable to such
Guarantor, including all of the covenants in Section 5 of the Credit Agreement.

       4.2    Each Guarantor shall pay to the Agent on demand (without
duplication) (a) all reasonable out-of-pocket costs and expenses of the Agent
in connection with the preparation, execution, delivery, administration,
modification, and amendment of this Agreement and the other Loan Documents to
which such Guarantor is a party, including the reasonable fees and
out-of-pocket expenses of outside counsel for the Agent with respect to
advising the Agent as to its rights and responsibilities under this Agreement
and the Loan Documents to which such Guarantor is a party, and (b) all costs
and expenses of the Agent and the Banks in connection with the preservation or
enforcement of the Agent's rights under this Agreement and the other Loan
Documents to which such Guarantor is a party, whether through negotiations,
legal proceedings, or otherwise, including fees and expenses of counsel for the
Agent.  The provisions of this paragraph shall survive any purported
termination of this Agreement and the Loan Documents that does not expressly
reference this paragraph.

       4.3    Each Guarantor agrees to protect, defend, indemnify, and hold
harmless the Agent, each Bank, and each of their respective Related Parties
(collectively, the "Indemnified Parties"), from and against all demands,
claims, actions, suits, damages, judgments, fines, penalties, liabilities, and
costs and expenses (without duplication), including reasonable costs of
attorneys and related costs of experts such as accountants (collectively, the
"Indemnified Liabilities"), actually incurred by the Indemnified Parties which
are related to any litigation or proceeding relating to this Agreement, the
Loan Documents, or the transactions contemplated thereunder, INCLUDING
INDEMNIFIED LIABILITIES CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but
not Indemnified Liabilities which are a result of any Indemnified Party's gross
negligence or willful misconduct.  The provisions of this paragraph shall
survive any purported termination of this Agreement and the Loan Documents that
does not expressly reference this paragraph.

       4.4    Each Guarantor agrees that this Agreement shall be governed by
the laws of the State of Texas.  If any provision in this Agreement is held to
be unenforceable, such provision shall be severed and the remaining provisions
shall remain in full force and effect.  All representations, warranties, and
covenants of any Guarantor in this Agreement shall survive the execution of
this Agreement and any other contract or agreement.  If a due date for an
amount payable is not specified in this Agreement, the due date shall be the
date on which the Agent demands payment therefor.  The Agent's remedies under
this Agreement and the Loan Documents to which any Guarantor is a party shall
be cumulative, and no delay in enforcing this Agreement and the Loan Documents
to which such Guarantor is a party shall act as a waiver of the Agent's rights
thereunder.  The provisions of this Agreement may be waived or amended only in
a writing signed by the party against whom enforcement is





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sought.  This Agreement shall bind and inure to the benefit of each Guarantor
and the Agent, the Banks and their respective successors and assigns.  Each
Guarantor may not assign its rights or delegate its duties under this
Agreement.  The Agent may assign its rights and delegate its duties under this
Agreement in accordance with the terms of the Credit Agreement.  This Agreement
may be executed in multiple counterparts each of which shall constitute one and
the same agreement.  Unless otherwise specified, all notices and other
communications between such Guarantor and the Agent provided for in this
Agreement and the Loan Documents to which such Guarantor is a party shall be in
writing, including telecopy, and delivered or transmitted to the addresses set
forth below, or to such other address as shall be designated by such Guarantor
or the Agent in written notice to the other party.  All such notices shall be
effective at the times provided for in Section 8.6 of the Credit Agreement.

If to any Guarantor:

       [Guarantor]
       c/o Denali Incorporated
       1360 Post Oak Boulevard, Suite 2470
       Houston, Texas 77056
       Attn:  R. Kevin Andrews
       Telephone:  (713) 627-0933
       Telecopier:  (713) 627-0937

If to the Agent:

       NationsBank of Texas, N.A.,
       700 Louisiana, 7th Floor
       Houston, Texas 77002
       Attn: Mark W. Montgomery
       Telephone:    (713) 247-7155
       Telecopier:   (713) 247-7175

       4.5    Any present or future Subsidiary of Denali may become a Guarantor
under and a party to this Agreement by executing and delivering to the Agent a
Joinder Agreement in accordance with Section 5.19 of the Credit Agreement or by
otherwise assuming in writing in favor of the Agent the liabilities of a
Guarantor under this Agreement.  Upon execution and delivery of a Joinder
Agreement or otherwise assuming the liabilities of a Guarantor under this
Agreement such Subsidiary shall be deemed to be a Guarantor under this
Agreement and a party to this Agreement for all purposes hereunder.





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       4.6    WAIVER OF JURY TRIAL.  EACH GUARANTOR IRREVOCABLY WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.



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THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

       EXECUTED as of the date first above written.



                                           CONTAINMENT SOLUTIONS, INC.
                                           DENALI MANAGEMENT, INC.
                                           ERSHIGS BILOXI, INC.
                                           ERSHIGS, INC.
                                           FLUID CONTAINMENT PROPERTY, INC.
                                           INSTRUMENTATION SOLUTIONS, INC.
                                           SPECIALTY SOLUTIONS, INC.


                                           By: /s/ R. Kevin Andrews             
                                              ----------------------------------
                                                  R. Kevin Andrews
                                                  Treasurer


                                           FLUID CONTAINMENT, INC.
                                           SEFCO, INC.
                                           HOOVER CONTAINMENT, INC.


                                           By: /s/ Cathy L. Smith               
                                              ----------------------------------
                                                  Cathy L. Smith
                                                  Secretary





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