Document:

<PAGE>

                                                                    EXHIBIT 10.1

                             KATY INDUSTRIES, INC.

                          FIRST AMENDMENT AND WAIVER
                              TO CREDIT AGREEMENT

          This FIRST AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this "Amendment")
is dated as of September 27, 2001 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"), BANKERS TRUST COMPANY ("BTCo"), 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 (the "Credit Agreement"), by and among Company, Lenders and
Agent.  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
to either waive or amend certain requirements of Company and its Subsidiaries
with respect to certain of the Deposit Accounts of Loan Parties:

          NOW, THEREFORE, 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

          A.   Subsection 2.10A of the Credit Agreement is hereby amended by (i)
deleting the reference to "30 days" appearing in subsections
2.10A(iii)(c)(1)(II) and 2.10A(iii)(d) and substituting in each case therefor
"150 days", and (ii) adding at the end of subsection 2.10A of the Credit
Agreement the following:

     "provided, that notwithstanding anything to the contrary set forth in this
      --------
     Agreement, (x) neither the 30 day extension grantable by Agent pursuant to
     subsection 6.12 nor the 30 day grace period under subsection 8.5 hereof
     shall be applicable to the requirements set forth in subsections
     2.10A(iii)(c)(1)(II) and 2.10A(iii)(d), and (y) an extension of the date by
     which the requirements of subsection 2.10A(iii)(c)(1)(II) are to be
     fulfilled shall not be deemed to be a waiver of any eligibility
     requirements for any Inventory or Accounts Receivable, including without
     limitation the eligibility requirements set forth in clause (ii)(2) of the
     proviso of each of the definitions of 'Eligible U.K. Accounts Receivable'
     and 'Eligible U.K. Inventory.'"

          B.   Subsection 6.1 of the Credit Agreement is hereby amended by (i)
deleting the "and" appearing at the end of clause (xix) thereof, (ii) deleting
the "." appearing at the end of clause (xx) thereof and substituting "; and"
therefor, and (iii) adding the following clause at the end thereof:
<PAGE>

          "(xxi)  Historical Information:  (x) by October 25, 2001 historical
                  ----------------------
     information regarding the preferential creditors of the U.K. division of
     Contico for the twelve month period ended September 30, 2001 in such format
     and detail as are satisfactory to Agent and thereafter (y) within 30 days
     after the end of each Fiscal Quarter historical information regarding the
     preferential creditors of the U.K. division of Contico for the twelve month
     period then ended in such format and detail as are satisfactory to Agent."

          C.   Subsection 6.10F. of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:

     "(i) Within 120 days of the Closing Date, Company shall deliver to Agent an
     appraisal of the Inventory of the U.K. division of Contico in form and
     substance satisfactory to Agent; provided, that notwithstanding anything to
                                      --------
     the contrary set forth in this Agreement, the 30 day grace period under
     subsection 8.5 hereof shall not be applicable to the requirements set forth
     in this subsection 6.10F(i), and (ii) within 60 days of the Closing Date,
     Company shall deliver to Agent a collateral examination report of the
     Inventory and Accounts of the U.K. division of Contico in form and
     substance satisfactory to Agent."

          D.   Subsection 6.12 of the Credit Agreement is hereby amended by
adding the following paragraph at the end thereof:

          "Notwithstanding subsection 2.10 or the foregoing paragraph of this
     subsection 6.12, Company shall not be obligated to enter into a Blocked
     Account Agreement (or for the Deposit Accounts described in clause (vii)
     below, Company shall be given an extension to enter into a Blocked Account
     Agreement) with respect to the following Deposit Accounts:  1178 maintained
     with First Community Credit Union, 942-901-9522 maintained with Fleet Bank,
     271050-30011 maintained with Bank of America, 1005039241 maintained with
     Firstar, 169-0504400 maintained with Firstar of Northwest County, 1036-
     5617-9787 maintained with US Bank, 103656179779 maintained with US Bank,
     0032-5164-6420 maintained with Bank of America, 000-880-4 maintained with
     First State Bank, 600-361798 maintained with First State Bank, 1067977
     maintained with Tri Counties Bank, 91524 maintained with Amcore Bank,
     328270020683 maintained with Key Bank, 5216433779 BB&T North Carolina,
     137480 maintained with Darby Bank & Trust, 137499 maintained with Darby
     Bank & Trust, 021-844-2366 maintained with Fulton Bank, 3500720218
     maintained with Firstar, 100-1108677 maintained with Firstar, 5590034673
     maintained with LaSalle Bank, 5590034707 maintained with LaSalle Bank,
     5590034715 maintained with LaSalle Bank, 5590034616 maintained with LaSalle
     Bank, 6000203892 maintained with Key Bank, 5590034541 maintained with
     LaSalle Bank, 5590034574 maintained with LaSalle Bank, 3500720143
     maintained with LaSalle Bank, 5590034673 maintained with LaSalle Bank,
     5800283029 maintained with LaSalle Bank, 5590034582 maintained with LaSalle
     Bank, 5590034566 maintained with LaSalle Bank, 5590034590 maintained with
     LaSalle Bank, 5590034608 maintained with LaSalle Bank, 5590034624
     maintained with LaSalle
<PAGE>

     Bank, 5590034632 maintained with LaSalle Bank, 5590034640 maintained with
     LaSalle Bank, 5590020185 maintained with LaSalle Bank, 5590034657
     maintained with LaSalle Bank, 5800283078 maintained with LaSalle Bank,
     5590034699 maintained with LaSalle Bank, 5800285719 maintained with LaSalle
     Bank, 5800285701 maintained with LaSalle Bank, 5899285859 maintained with
     LaSalle Bank, 5800285693 maintained by LaSalle Bank, 021-844-2358 with
     Fulton Bank and 021-844-2374 maintained with Fulton Bank; provided, that
                                                               --------  ----
     Company shall, and shall cause each of its Subsidiaries to, comply with
     each of the following requirements at all times:

                    (i)    Company shall, and shall cause its Subsidiaries to,
          maintain Deposit Account Box 1178 solely as a safety deposit account
          and such Deposit Account shall not at any time receive or hold any
          monies;

                    (ii)   Company shall, and shall cause its Subsidiaries to,
          permit deposits into Deposit Account Nos. 942-901-9522, 5590034616 and
          5590034715, which deposits shall be solely comprised of insurance
          proceeds payable to the employees of the Company and its Subsidiaries
          under health insurance policies;

                    (iii)  Company shall not, and shall not permit its
          Subsidiaries to, permit the outstanding balance of Deposit Accounts
          No. 137480, and 91524 to exceed $10,000 at any time;

                    (iv)   Company shall not, and shall not permit its
          Subsidiaries to, permit the outstanding balance of Deposit Accounts
          Nos. 271050-30011, 1005039241, 600-361798 and 169-0504400 to exceed
          $5,000 at any time;

                    (v)    Company shall, and shall cause its Subsidiaries, to
          (i) prevent any deposits from being made into Deposit Account Nos.
          1036-5617-9787 and 103656179779 any time after October 15, 2001 and
          (ii) close such Deposit Accounts by no later than November 30, 2001
          and provide Agent with satisfactory evidence of same on or before such
          date;

                    (vi)   Company shall not, and shall not permit its
          Subsidiaries to, permit (A) Deposit Account No. 6000203892 to receive
          deposits from any Loan Party or any other Person other than any
          deposit to be used solely by the applicable Loan Party for payments
          required to be made by such Loan Party under such Loan Party's pension
          plans within 30 days of such deposit or (B) the outstanding balance of
          such Deposit Account to exceed $100,000 at any time;

                    (vii)  Company shall and shall cause its Subsidiaries to
          enter into a Blocked Account Agreement with respect to Deposit Account
          Nos. 021-844-2358, 5590034541, 5590034574, 3500720143, 5590034673,
          5800283029, 5590034582, 5590034566, 5590034590, 5590034608,
          5590034624, 5590034632, 5590034640, 5590020185, 5590034657,
          5800283078, 000-880-
<PAGE>

          4, 5216433779, 137499, 021-844-2366, 3500720218, 328270020683,
          5590034673, 0032-5164-6420, 1067977, 5590034707, 5590034699,
          5800285719, 5800285701, 5800285859, 5800285693 and 100-1108677 with
          the applicable financial institutions within 150 days of the Closing
          Date; provided that so long as any such Deposit Account is a
                --------
          disbursement Deposit Account, the Blocked Account Agreement with
          respect to such Deposit Account shall not require an automatic daily
          transfer to the BTCo Account but shall give "control" of such Deposit
          Account to Agent (as such term is defined in Revised Article 9) and

                    (viii) Company shall not, and shall not permit its
          Subsidiaries to, permit (A) Deposit Account No. 021-844-2374 to
          receive deposits from any Loan Party or any other Person other than
          any deposit to be used solely by the applicable Loan Party for the
          payment of withholding and other payroll taxes owed by such Loan Party
          to either state or federal government within 30 days of such deposit
          or (B) the outstanding balance of such Deposit Account to exceed
          $200,000.00 at any time."

          E.   Subsection 7.17 of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:

          "Except as permitted in subsection 2.10A(iii) and the second paragraph
     of subsection 6.12, Company shall not, and shall not permit any of its
     Domestic Subsidiaries to, maintain any Deposit Account which is not a Lock
     Box Account or a Concentration Account or a disbursement account under the
     exclusive dominion and control of Agent.  Except as permitted in subsection
     2.10A(iii), Company shall not permit Woods or Glit to maintain any Deposit
     Account which is not a Lock Box Account or which is not subject to a
     Blocked Account Agreement."

          F.   Subsection 8.3 of the Credit Agreement is hereby amended by
deleting in its entirety and substituting the following in lieu thereof:

          "Failure of Company to perform or comply with any term or condition
     contained in subsections 2.5 or 6.2 or Section 7 or the second paragraph of
     subsection 6.12 of this Agreement or failure of Holdings to perform or
     comply with any term or condition contained in subsection 10(a) or Section
     11 of the Holdings Guaranty."

          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 "First Amendment
Effective Date"):

          A.   On or before the First 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 First Amendment Effective Date:
<PAGE>

          (i)   Officer's Certificates of Company, dated a recent date prior to
     the First 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 adopted by the Board of
     Directors of Company approving and authorizing the execution, delivery, and
     performance of this Amendment are in full force and effect without
     modification or amendment;

          (ii)  Signature and incumbency certificates of the officers of Company
     executing this Amendment; and

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

          B.    On or before the First Amendment Effective Date, Requisite
Lenders shall deliver to Agent copies of this Amendment executed by Requisite
Lenders.

         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
to carry out the transactions contemplated by, and perform its obligations
under, the Credit Agreement as amended by this Amendment (the "Amended
Agreement").

         B.     Authorization of Agreements.  The execution and delivery of this
Amendment and the performance of the Amended Agreement 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 the performance by such Loan Party of the
Amended Agreement 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), 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 First 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 the performance by Loan Parties of the
Amended Agreement do not and will not require any Governmental Authorization.
<PAGE>

          E.   Binding Obligation.  This Amendment has been duly executed and
delivered by the Loan Parties and this Amendment and the Amended Agreement are
the legally valid and binding obligations of the Loan Parties, 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 First 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.

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

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.

          Section 5.  MISCELLANEOUS

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

          (i)   On and after the First 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
<PAGE>

STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD
REQUIRE APPLICATION OF ANOTHER LAW.

          E.   Funding and Payment Office Change and Notice Address under each
of the Loan Documents.  Agent hereby notifies Company and each Lender that (i)
the Funding and Payment Office shall be, until further notice, the office of
Agent located at 40 Kingsbridge Road, Piscataway, New Jersey  08854 and (ii) its
notice address under each of the Loan Documents shall be Bankers Trust Company,
40 Kingsbridge Road, Piscataway, New Jersey 08854, Attention: Sam Cardone.

          F.   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 and Requisite Lenders and each of the Credit Support Parties
and receipt by Company and Agent of written or telephonic notification of such
execution and authorization of delivery thereof.

                 [Remainder of page intentionally left blank]<PAGE>

                                                                    Exhibit 10.2

                             KATY INDUSTRIES, INC.

August 5, 2001

Mr. Amir Rosenthal
530 Bagley Road
Southbury, Connecticut 06488

Dear Amir:

On behalf of Katy Industries, Inc. ("Katy"), I am pleased to extend this offer
of employment on the following terms and conditions:

1.  Subject to the approval of the Board of Directors, your position will be
    Vice President and Chief Financial Officer, General Counsel and Corporate
    Secretary of Katy. Your responsibilities will include general accounting,
    audit, credit and collection, accounts payable, payroll, treasury and cash
    management, tax, legal, risk management, SEC reporting, investor relations,
    board reports, bank relations, credit agreements, covenant reporting,
    operations analysis, monthly financial reporting and assisting in M & A
    activities. Your office will be in Connecticut.

2.  Your initial Annual Base Salary will be $250,000. Your first annual review
    will be on January 1, 2003.

3.  You will be paid a sign-up bonus of $75,000 upon employment.

4.  Beginning in the year 2002, you will be eligible to participate in Katy's
    executive bonus program on terms commensurate with those afforded to similar
    executive employees of Katy and its subsidiaries. Your bonus will depend
    upon meeting a certain EBITDA goal for the company established with the
    board of directors each year. Your target bonus will be 30% of your Annual
    Base Salary. Your actual bonus may be more if the EBITDA goal is exceeded.
    The bonus plan is being drafted at this time so I cannot provide additional
    details.

5.  You will be issued incentive stock options to purchase 200,000 shares of
    Katy stock at the closing price on the day before the issuance of the
    options. Options will vest ratably over three calendar years, subject to the
    achievement of annual EBITDA targets. The first vesting will occur on
    January 1, 2003, if the Year 2002 EBITDA target is achieved. Options will
    have a maximum exercise period of ten years from the date of the initial
    grant, and will be subject to accelerated vesting in the event of a Change
    of Control event. A "Change of Control" will be defined as (i) a sale of
    100% of the Company's outstanding capital stock; (ii) a sale of all or
    substantially all of the Company's operating subsidiaries or assets; or
    (iii) a transaction or transactions in which any third party acquires a
    stock ownership greater than that held by KKTY Holding Company, L.L.C., a
    holding company organized by Kohlberg & Co., L.L.C. ("Kohlberg") to
    recapitalize Katy Industries, Inc., and in which Kohlberg relinquishes
    control of the Board.

6.  You will be eligible for participation in any and all employee benefit
    programs on terms commensurate with that afforded to comparable executive
    employees of Katy and its subsidiaries. In addition, Katy will pay your out-
    of-pocket cost of continuing your present medical insurance coverage under
    COBRA until such time as you are eligible to participate in Katy's medical
    insurance plan.

7.  You will receive three weeks vacation annually.

<PAGE>

8.  You will receive an automobile allowance of $800 per month gross paid in
    advance, with 50% of the annual allowance paid in January and 50% paid in
    July. A pro rata adjustment will be made based on your date of employment.
    These payments are subject to normal withholding.

9.  In the event that on or prior to December 31, 2004, (a) your employment by
    Katy is terminated other than for "cause", or (b) there is a Change of
    Control event after which (i) you are terminated other than for cause, (ii)
    you are required to relocate of (iii) there is a substantial change in your
    job responsibilities, Katy will continue to pay your regular base salary for
    a period of one year. For the purposes of the foregoing, "cause" shall mean
    (i) willful failure or neglect to perform your duties, provided you have
    been given notice of such failure or neglect and have been given 30 days to
    cure, (ii) the conviction of a felony, embezzlement or improper use of
    corporate funds by you, or (iii) self dealing detrimental to the Company or
    any attempt to obtain a personal profit from any transaction in which the
    Company has an interest.

If you are in agreement with the above terms and conditions please countersign
this letter below and return it to me.

Sincerely yours,

C. Michael Jacobi

Agreed and accepted:

------------------------------                 -------------------------------
Amir Rosenthal                                 Date

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]