Exhibit

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CITY NATIONAL BANK


                       THIRD AMENDMENT TO CREDIT AGREEMENT


      This Third Amendment to Credit Agreement is entered into as of July 17,
1998, by and between Spectrum Medical Industries, Inc., a California corporation
and Spectrum Laboratories, Inc., a California corporation ("Borrower") and City
National Bank, a national banking association ("CNB").

                                    RECITALS

      A.    Borrower and CNB are parties to that certain Credit Agreement, dated
as of February 28, 1997, as amended by that certain First Amendment to Credit
Agreement dated as of October 10, 1997, and that certain Second Amendment to
Credit Agreement dated as of May 7, 1998, (the Credit Agreement, as herein
amended, hereinafter the "Credit Agreement").

      B.    Borrower and CNB desire to supplement and amend the Credit Agreement
as hereinafter set forth.

      NOW, THEREFORE, the parties agree as follows:

1.   Definitions. Capitalized terms used in this Amendment without definition
shall have the meanings set forth in the Credit Agreement.

2.   Amendments. The Credit Agreement is amended as follows:
               
      2.1    Delete the definition of Date" in its entirety and replace it with:

             "Termination Date" means October 1, 1998. Notwithstanding the
             foregoing, CNB may, as its option, terminate this Agreement
             pursuant to Section 7.3; the date of any such termination will
             become the Termination Date as that term is used in this Agreement"

      2.2    "Section 2.1.3 "Additional Term Loan Payment" is amended by
             deleting the date "July 1, 1998" from both the first sentence and
             the last sentence and replacing it with a new date "October 1,
             1998" in both the first sentence and the last sentence".

      2.3    Section 2 Loans. is amended as follows:

             Delete the following sections 2.1A, 2.1A.1, 2.1A.2, 2.1A.3

3.    Existing Agreement. Except as expressly amended herein, the Credit
Agreement shall remain in full force and effect, and in all other respects is
affirmed.




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4.    Conditions Precedent. This Amendment shall become effective upon the
fulfillment of all of the following conditions to CNB's satisfaction:

      4.1    CNB shall have received this Amendment duly executed by Borrower
      and acknowledged by the Guarantors.

5.    Counterparts.  This Amendment may be executed in any number of 
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.

6.    Governing Law.  This Amendment and the rights and obligations of the
parties hereto shall be construed in accordance with, and governed by the laws
of the State of California.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.

"Borrower"                              Spectrum Medical Industries, Inc., a
                                        California corporation

                                        By: /s/ Roy T. Eddleman
                                        ------------------------------------
                                        Roy T. Eddleman, Chairman/CEO


                                        Spectrum Laboratories, Inc., a
                                        California corporation

                                        By: /s/ Roy T. Eddleman
                                        ------------------------------------
                                        Roy T. Eddleman, Chairman/CEO


"CNB"                                   City National Bank, a national
                                        banking association

                                        By: /s/ Richard Fein
                                        ------------------------------------
                                        Richard Fein, Vice President



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CONSENT OF GUARANTORS:

      The undersigned have previously guaranteed the indebtedness of Spectrum
Medical Industries, Inc., a California corporation and Spectrum Laboratories,
Inc., a California corporation owed to CNB. The undersigned confirm that their
respective guaranties and the security given in connection therewith, if any,
shall continue in full force and effect and that each guaranty shall be a
separate and distinct obligation and apply to the indebtedness arising from the
Credit Agreement as amended herein, subject to the overall limitation as to the
amount guaranteed.


                                        /s/ Roy T. Eddleman
                                        ----------------------------------
                                        Roy T. Eddleman

                                        Spectrum Molecular Separarions, Inc., a
                                        Delaware corporation

                                        By:    /s/ Roy T. Eddleman
                                           -------------------------------
                                           Roy T. Eddleman, Chairman/CEO.


                                        Hydro-Med Products, Inc., a
                                        Texas Corporation

                                        By:   /s/ Roy T. Eddleman
                                           -------------------------------
                                           Roy T. Eddleman, Chairman/CEO.


                                        SLI Acquisition Corp., a
                                        Delaware corporation

                                        By:   /s/ Roy T. Eddleman
                                           -------------------------------
                                           Roy T. Eddleman, Chairman/CEO.

                                        Spectrum Europe B.V., a
                                        Netherlands corporation

                                        By:  /s/ Roy T. Eddleman
                                           -------------------------------
                                           Roy T. Eddleman, Chairman/CEO.


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