Document:

Exhibit 10.13

                               SECOND AMENDMENT TO
                                 LOAN AGREEMENT

      THIS SECOND AMENDMENT TO LOAN AGREEMENT ("Second Amendment") is made as of
this 12th day of September, 2003, by and among FLEET CAPITAL CORPORATION
("Fleet"), a Rhode Island corporation with an office at One South Wacker Drive,
Suite 1400, Chicago, Illinois 60606, individually as a Lender and as Agent
("Agent") for itself and any other financial institution which is or becomes a
party hereto (each such financial institution, including Fleet, is referred to
hereinafter individually as a "Lender" and collectively as the "Lenders"), the
CANADIAN PARTICIPANTS party hereto, the U.K. PARTICIPANTS party hereto, an
Affiliate of Fleet National Bank to be incorporated under the laws of Canada or
a province thereof and to be selected by Agent, individually as a Lender and as
Canadian Agent ("Canadian Agent"), FLEET NATIONAL BANK, London U.K. branch,
trading as FleetBoston Financial, individually as a Lender and as U.K. Agent
("U.K. Agent"), WELLS FARGO FOOTHILL, INC. (f/k/a Foothill Capital Corporation),
as Syndication Agent ("Syndication Agent"), the LENDERS, KATY INDUSTRIES, INC.,
a Delaware corporation, with its chief executive office and principal place of
business at 765 Straits Turnpike, Suite 2000, Middlebury, Connecticut 06762
("Katy" or "U.S. Borrower"), WOODS INDUSTRIES (CANADA) INC., a Canadian
corporation with its chief executive office and principal place of business at
375 Kennedy Road, Scarborough, Ont. MlK 2A3 ("Woods Canada" or "Canadian
Borrower") and CONTICO MANUFACTURING LIMITED ("CML" or U.K. Borrower"), a
private limited company incorporated under the laws of England and Wales and
registered with Company No. 1338772 whose registered office is Cardrew Way,
Redruth Cornwall, TR15 1ST, England. Katy, Woods Canada and CML are sometimes
hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers."

                              W I T N E S S E T H :

      WHEREAS, Agent, Lenders, Canadian Participants, U.K. Participants, U.K.
Agent, Syndication Agent and Borrowers entered into a certain Loan Agreement
dated as of January 31, 2003 as amended by a certain First Amendment to Loan
Agreement dated as of April 30,2003 (said Loan Agreement, as so amended, is
hereinafter referred to as the "Loan Agreement"); and

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

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

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

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

<PAGE>

2.    Disposition of Assets. Section 7.2.9 of the Loan Agreement is hereby
      deleted and the following is inserted in its stead:

            "7.2.9 Disposition of Assets. Sell, lease or otherwise dispose of
      any of, or permit any Subsidiary of any Borrower to sell, lease or
      otherwise dispose of any of, its Properties, including any disposition of
      Property as part of a sale and leaseback transaction, to or in favor of
      any Person, except for:

            (i) sales of Inventory in the ordinary course of business;

            (ii) transfers of Property to a Borrower by a Subsidiary of Borrower
      or transfers of Property by a Loan Party to another Loan Party;

            (iii) dispositions of Property that is substantially worn, damaged,
      uneconomic, redundant or obsolete; provided that the sales proceeds from
      such dispositions are (A) reinvested in Equipment or other real Property
      in which Agent has a Lien (subject only to Permitted Liens that are not
      Purchase Money Liens) within 90 days after the date of such disposition as
      provided in subsection 3.3.1 of the Agreement or (B) applied to the Loans
      pursuant to subsection 3.3.1 of the Loan Agreement.

            (iv) dispositions of investments described in clauses (iv), (v),
      (vi) and (vii) of the definition of the term "Restricted Investments";

            (v) other dispositions expressly authorized by this Agreement;

            (vi) sales of Equipment and real Property in connection with the
      closing of Woods' wire fabrication facility in Mooresville, Indiana;
      provided that the aggregate sales proceeds from such dispositions equal or
      exceed $1,800,000 and that such sales proceeds net of amounts required to
      remove Permitted Liens prior to the Liens of Agents as applied first, to
      installments of principal due under the Term Notes ratably, to be applied
      to future installments in inverse order of maturity in an amount equal to
      eighty percent (80%) of the Appraised Value of the Equipment so sold,
      until paid in full and second, to repay outstanding principal of U.S.
      Revolving Credit Loans on a ratable basis.

            (vii) sales of real Property in connection with the closing of the
      Microtron facility in Pineville, North Carolina; provided that the
      aggregate sales proceeds from such dispositions equal or exceed seventy
      percent (70%) of the Appraised Value of the real Property so sold and that
      such sales proceeds are applied to first, to installments of principal due
      under the Term Notes ratably, to be applied to future installments in
      inverse order of maturity, until paid in full and second, to repay
      outstanding principal of U.S. Revolving Credit Loans ratably;

            (viii) leases or subleases of unused real Property or Equipment;
      provided that such leases or subleases are pursuant to arms-length
      agreements with third parties at fair market rates;

            (ix) the sale of all or substantially all of the Securities or
      assets and business of GC/Waldom Electronics, Inc.; provided that the
      aggregate sales proceeds from any such

                                       2
<PAGE>

      disposition equal or exceed $8,000,000 and that such sales proceeds are
      applied to the Loans pursuant to subsection 3.3.1 of the Agreement;

            (x) Asset Sales of assets having a fair market value not in excess
      of $10,000,000 in any single transaction (or a series of related
      transactions) or in excess of $30,000,000 in the aggregate over the Term;
      provided that in any such Asset Sale, (x) the consideration received for
      such assets shall be in an amount at least equal to the greater of (i) the
      fair market value thereof, and (ii) (A) in the case of Accounts and
      Inventory, the aggregate value attributable to such Accounts and Inventory
      in determining the Canadian, U.K. or U.S. Borrowing Base, as applicable
      (but without giving effect to any reduction due to advance rates or any
      reserves), and (B), as long as the Term Loan is outstanding, in the case
      of Equipment and real Property Assets, seventy percent (70%), with respect
      to real Property, or eighty percent (80%), with respect to Equipment, of
      the Appraised Value of such asset; it being understood that in the case of
      Asset Sales of capital stock or other equity interests (or any options or
      warrants to purchase stock or other Securities exchangeable for or
      convertible into stock or other equity interests) of any Person, the
      consideration received therefore shall be in an amount equal to the
      greater of (i) the fair market value thereof and (ii) the aggregate value
      attributable to such Person's Accounts and Inventory in determining the
      Canadian, U.K. or U.S. Borrowing Base, as applicable (but without giving
      effect to any reduction due to advance rates or any reserves) plus seventy
      percent (70%), with respect to real Property, or eighty percent (80%) with
      respect to Equipment, of the Appraised Value of such Person's Equipment or
      real Property; (y) the sole consideration received shall be cash or, if
      the disposition in question is of a business line, entire facility or
      division, assumption of Indebtedness; and (z) the proceeds of such Asset
      Sales shall be applied as required by subsection 3.3.1 of the Agreement
      or, with respect to sales proceeds of Equipment or real Property, are
      reinvested in Equipment or other real Property in which Agent has a Lien
      (subject only to Permitted Liens that are not Purchase Money Liens) within
      90 days after the date of disposition as provided in subsection 3.3.1 of
      the Agreement; and provided, further, that in any such Asset Sale in which
      the consideration received exceeds $20,000, Agent shall have received a
      certificate of an officer of Borrower Representative evidencing that the
      conditions in clauses (x) and (y) above will be satisfied and certifying
      that Borrowers and their Subsidiaries will comply with clause (z) above
      and setting forth in reasonable detail the calculations relating thereto
      and otherwise in form and substance satisfactory to Agent at least 5
      Business Days prior to the consummation of the proposed Asset Sale;

            (xi) sale of all or substantially all of the assets and business of
      Duckback Products, Inc. (the "Duckback Asset Sale") if (x) the net sales
      proceeds realized by Duckback Products, Inc. from such sale equals or
      exceeds $15,000,000, (y) after giving effect to such sale, there is no
      existing and continuing Event of Default, (z) Duckback Products, Inc. or
      Katy shall pay to Agent for application to the U.S. Obligations the amount
      of such net sales proceeds in accordance with subsection 3.3.1 of the
      Agreement, which net sales proceeds shall be applied to outstanding U.S.
      Obligations as provided in said subsection 3.3.1, and (aa) the terms and
      conditions of such sale, including, without limitation, any asset purchase
      agreement entered into in connection with such sale, are reasonably
      acceptable to Agent; and

                                       3
<PAGE>

            (xii) sales or liquidations of Inactive Subsidiaries."

3.    Financial Covenants. As of the "Second Amendment Effective Date" (as
      defined in Section 4 of the Second Amendment), Exhibit 7.3 of the Loan
      Agreement is hereby deleted and Exhibit 7.3 attached to this Second
      Amendment is inserted in its stead.

4.    Second Amendment Effective Date. This Second Amendment shall become
      effective upon satisfaction of each of the following conditions:

                  (i) Borrowers, Agent and Majority Lenders shall have executed
                  and delivered to each other this Second Amendment; and

                  (ii) The Duckback Asset Sale shall have been consummated in
                  accordance with the provisions of subsection 7.2.9 of the Loan
                  Agreement as amended by this Second Amendment on before
                  September 30,2003.

                  The date on which each of the foregoing conditions precedent
      is satisfied shall be referred to as the "Second Amendment Effective
      Date."

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

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

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

                            (Signature Page Follows)

                                       4
<PAGE>

             (Signature Page to Second Amendment to Loan Agreement)

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

                                        KATY INDUSTRIES, INC.

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

                                        CONTICO MANUFACTURING LIMITED

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

<PAGE>

                                        WOODS INDUSTRIES (CANADA) INC.

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

<PAGE>

                                        FLEET CAPITAL CORPORATION,
                                         as Agent and as a Lender

                                        By: /s/ David Lehner
                                           -------------------------------------
                                            Name: David Lehner
                                                 -------------------------------
                                            Title: Vice President
                                                  ------------------------------

<PAGE>

                                        WELLS FARGO FOOTHlLL, INC. (f/k/a
                                        Foothill Capital Corporation),
                                        as a Lender

                                        By: /s/ Lan Wong
                                           -------------------------------------
                                            Name: Lan Wong
                                                 -------------------------------
                                            Title: Assistant Vice-President
                                                  ------------------------------

<PAGE>

                                        GMAC COMMERCIAL FINANCE, as a Lender

                                        By: /s/ Kathryn Williams
                                           -------------------------------------
                                            Name: Kathryn Williams
                                                 -------------------------------
                                            Title: Senior Vice President
                                                  ------------------------------

<PAGE>

                                        LASALLE BANK NATIONAL ASSOCIATION,
                                        as a lender

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

<PAGE>

                                        U.S. BANK NATIONAL ASSOCIATION,
                                         as a Lender

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

<PAGE>

                                        UPS CAPITAL CORPORATION, as a Lender

                                        By: /s/ Charles Johnson
                                           -------------------------------------
                                            Name: Charles Johnson
                                                 -------------------------------
                                            Title: SVP
                                                  ------------------------------

<PAGE>

Accepted and Agreed to this 12th of September, 2003.

                          GUARANTORS:

                          KKTY HOLDING C0MPANY, L.L.C.

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

                          AMERICAN GAGE & MACHINE CO.

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

                          CONTICO COMMERCIAL PRODUCTS, L.L.C.

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

                          DUCKBACK PRODUCTS, INC.

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

                          GCW, INC.

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

                          PTR MACHINE CORP.

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

                          SAVANNAH ENERGY SYSTEMS COMPANY

                          By:
                             ---------------------------------------
                                   Name: Amir Rosenthal

<PAGE>

Accepted and Agreed to this 12th of September, 2003.

                          GUARANTORS:

                          KKTY HOLDING C0MPANY, L.L.C.

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

                          AMERICAN GAGE & MACHINE CO.

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

                          CONTICO COMMERCIAL PRODUCTS, L.L.C.

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

                          DUCKBACK PRODUCTS, INC.

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

                          GCW, INC.

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

                          PTR MACHINE CORP.

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

                          SAVANNAH ENERGY SYSTEMS COMPANY

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

<PAGE>

                                   Title: Secretary
                                         ---------------------------

                          WJ SMITH WOOD PRESERVING COMPANY

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

                          WOODS INDUSTRIES, INC.

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

<PAGE>

                                   EXHIBIT 7.3

                               FINANCIAL COVENANTS

DEFINITIONS

            Consolidated EBITDA - for any period, the sum, without duplication,
of the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) provisions for taxes based on income, (iv) total
depreciation expense, (v) total amortization expense, (vi) all unusual expenses
and all other non-capitalized restructuring expenses (including costs and
expenses attributable to employee severance obligations and facility
consolidation costs) for such period to the extent not disallowed by Agent in
its sole discretion, (vii) any payment of or accrual for the Management Fee
under the Management Agreement, (viii) all other payments made to K&C and its
Affiliates during such period for expenses incurred on behalf of Parent, Katy or
any of their respective Subsidiaries pursuant to Kohlberg Agreements, (ix) any
non-cash expense incurred with respect to Katy's stock appreciation rights plan
("SAR"); and (x) other non-cash items (other than any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenditures in any
future period), but only, in the case of clauses (ii)-(ix), to the extent
deducted in the calculation of Consolidated Net Income less other non-cash items
added in the calculation of Consolidated Net Income (other than any such
non-cash item to the extent that it will result in the receipt of cash payments
in any future period), all of the foregoing as determined on a consolidated
basis for Katy and its Subsidiaries in conformity with GAAP; provided that there
shall be subtracted from the sum of items (i) through (xi) above the amount of
any cash expenditure made within the applicable period pursuant to the SAR, to
the extent that the amount of such cash expenditure was expensed or will be
expensed against a prior or future period's Consolidated Net Income; provided,
further, that (a) in the event any Loan Party makes an acquisition of any Person
or any division or any business unit permitted hereunder or consented to by
Majority Lenders during such period, if Katy provides Agent and Lenders
financial statements with respect to the business so acquired (which financial
statements shall have been audited by one of the "Big 4" accounting firms or
another nationally recognized accounting firm reasonably satisfactory to Agent
or financial statements otherwise satisfactory to Agent) reasonably satisfactory
to Majority Lenders, Consolidated EBITDA for such period shall be calculated on
a pro forma basis, taking into account the elimination of non-recurring
expenses, based on the results of such acquired Person or acquired assets as if
such acquisition had occurred on the first day of such period, and (b) in the
event any Loan Party makes a Permitted Disposition (or any other disposition of
any Person or any division or any business unit permitted hereunder or consented
to by the Majority Lenders) during such period, Consolidated EBITDA for such
period shall be calculated on a pro forma basis, based on the results of such
disposed Person or disposed assets as if such Permitted Disposition (or such
other disposition) had occurred on the first day of such period. The foregoing
notwithstanding, Consolidated EBITDA for: (i) the fiscal quarter ended June
30,2002 shall be deemed to equal $6,800,000; (ii) for the fiscal quarter ended
September 30,2002 shall be deemed to equal $12,000,000; and (iii) for the fiscal
quarter ended December 31, 2002 shall be deemed to equal $10,800,000.

<PAGE>

            Consolidated Interest Expense -for any period, total interest
expense of Katy and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Katy and its Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Agreements, but excluding, however, (i) any amounts referred
to in the Fee Letter.

            Consolidated Leverage Ratio, as at any date, the ratio of (a)
Consolidated Total Debt as at such date to (b) Consolidated EBITDA for the
consecutive four fiscal quarters ending on the last day of the most recently
ended fiscal quarter.

            Consolidated Net Income, for any period, the net income (or loss) of
Katy on a Consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any Person (other than a Subsidiary of Katy) in which
any other Person (other than Katy or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to Katy or any of its Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of Katy or is merged into or consolidated with Katy or any
of its Subsidiaries or that Person's assets are acquired by Katy or any of its
Subsidiaries, (iii) the income of any Subsidiary of Katy to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax gains
or losses attributable to Asset Sales or returned surplus assets of any Pension
Plan, (v) any LIFO reserves of Contico to the extent such LIFO reserves decrease
or increase net income of Contico, and (vii) (to the extent not included in
clauses (i) through (v) above) any net extraordinary gains or net extraordinary
losses.

            Consolidated Total Debt means, as at any date of determination, the
aggregate stated balance sheet amount (which shall not include the face amount
of undrawn Letters of Credit) of all Money Borrowed of Katy and its Subsidiaries
on the last day of the most recently ended fiscal quarter, determined on a
Consolidated basis in accordance with GAAP.

            Minimum Consolidated EBITDA. Katy shall not permit Consolidated
EBITDA for any period set forth below to be less than the amount set forth below
opposite such period:

                 Period                                        Amount
                 ------                                        ------

Four Fiscal Quarters Ending March 31,2003 and               $30,000,000
June 30,2003

Four Fiscal Quarters Ending September 30,2003 and           $26,000,000
each December 31, March 31, June 30 and
September 30 thereafter

<PAGE>

            Consolidated Leverage Ratio. Katy shall not permit the Consolidated
Leverage Ratio as of any date set forth below to be more than the amount set
forth below opposite such date:

              Period                                          Ratio
              ------                                          -----

March 31 and June 30,2003                                   3.25 to 1

September 30,2003 and each December 31, March 31,           3.00 to 1
June 30 and September 30 thereafterExhibit 10.14

                        THIRD AMENDMENT TO LOAN AGREEMENT

      THIS THIRD AMENDMENT TO LOAN AGREEMENT ("Third Amendment") is made as of
this 15th day of October, 2003, by and among FLEET CAPITAL CORPORATION
("Fleet"), a Rhode Island corporation with an office at One South Wacker Drive,
Suite 1400, Chicago, Illinois 60606, individually as a Lender and as Agent
("Agent") for itself and any other financial institution which is or becomes a
party hereto (each such financial institution, including Fleet, is referred to
hereinafter individually as a "Lender" and collectively as the "Lenders"), the
CANADIAN PARTICIPANTS party hereto, the U.K. PARTICIPANTS party hereto, an
Affiliate of Fleet National Bank to be incorporated under the laws of Canada or
a province thereof and to be selected by Agent, individually as a Lender and as
Canadian Agent ("Canadian Agent"), FLEET NATIONAL BANK, London U.K. branch,
trading as FleetBoston Financial, individually as a Lender and as U.K. Agent
("U.K. Agent"), WELLS FARGO FOOTHILL, INC. (f/k/a Foothill Capital Corporation),
as Syndication Agent ("Syndication Agent"), the LENDERS, KATY INDUSTRIES, INC.,
a Delaware corporation, with its chief executive office and principal place of
business at 765 Straits Turnpike, Suite 2000, Middlebury, Connecticut 06762
("Katy" or "U.S. Borrower"), Woods Industries (Canada) Inc., a Canadian
corporation with its chief executive office and principal place of business at
375 Kennedy Road, Scarborough, Ont. M1K 2A3 ("Woods Canada" or "Canadian
Borrower") and Contico Manufacturing Limited ("CML" or U.K. Borrower"), a
private limited company incorporated under the laws of England and Wales and
registered with Company No. 1338772 whose registered office is Cardrew Way,
Redruth Cornwall, TR15 1ST, England. Katy, Woods Canada and CML are sometimes
hereinafter referred to individually as a "Borrower" and collectively as
"Borrowers."

                              W I T N E S S E T H:
                              - - - - - - - - - -

      WHEREAS, Agent, Lenders, Canadian Participants, U.K. Participants, U.K.
Agent, Syndication Agent and Borrowers entered into a certain Loan Agreement
dated as of January 31, 2003 as amended by a certain First Amendment to Loan
Agreement dated as of April 30, 2003 and by a certain Second Amendment to Loan
Agreement dated as of September 12, 2003 (said Loan Agreement, as so amended, is
hereinafter referred to as the "Loan Agreement"); and

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

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

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

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

                                       95
<PAGE>

2.    Disposition of Assets. Subsection 7.2.9 of the Loan Agreement is hereby
      deleted and the following is inserted in its stead:

            "7.2.9 Disposition of Assets. Sell, lease or otherwise dispose of
      any of, or permit any Subsidiary of any Borrower to sell, lease or
      otherwise dispose of any of, its Properties, including any disposition of
      Property as part of a sale and leaseback transaction, to or in favor of
      any Person, except for:

            (i) sales of Inventory in the ordinary course of business;

            (ii) transfers of Property to a Borrower by a Subsidiary of Borrower
      or transfers of Property by a Loan Party to another Loan Party;

            (iii) dispositions of Property that is substantially worn, damaged,
      uneconomic, redundant or obsolete; provided that the sales proceeds from
      such dispositions are (A) reinvested in Equipment or other real Property
      in which Agent has a Lien (subject only to Permitted Liens that are not
      Purchase Money Liens) within 90 days after the date of such disposition as
      provided in subsection 3.3.1 of the Agreement or (B) applied to the Loans
      pursuant to subsection 3.3.1 of the Loan Agreement.

            (iv) dispositions of investments described in clauses (iv), (v),
      (vi) and (vii) of the definition of the term "Restricted Investments";

            (v) other dispositions expressly authorized by this Agreement;

            (vi) sales of Equipment and real Property in connection with the
      closing of Woods' wire fabrication facility in Mooresville, Indiana;
      provided that the aggregate sales proceeds from such dispositions equal or
      exceed $1,800,000 and that such sales proceeds net of amounts required to
      remove Permitted Liens prior to the Liens of Agents as applied first, to
      installments of principal due under the Term Notes ratably, to be applied
      to future installments in inverse order of maturity in an amount equal to
      eighty percent (80%) of the Appraised Value of the Equipment so sold,
      until paid in full and second, to repay outstanding principal of U.S.
      Revolving Credit Loans on a ratable basis.

            (vii) sales of real Property in connection with the closing of the
      Microtron facility in Pineville, North Carolina ("Microtron Sales");
      provided that the aggregate sales proceeds net of sale costs and expenses
      from such dispositions equal or exceed $370,000 and that such sales
      proceeds are applied first, to installments of principal due under the
      Term Notes ratably, to be applied to future installments in inverse order
      of maturity, until paid in full and second, to repay outstanding principal
      of U.S. Revolving Credit Loans ratably;

            (viii) leases or subleases of unused real Property or Equipment;
      provided that such leases or subleases are pursuant to arms-length
      agreements with third parties at fair market rates;

            (ix) the sale of all or substantially all of the Securities or
      assets and business of GC/Waldom Electronics, Inc.; provided that the
      aggregate sales proceeds from any such

<PAGE>

      disposition equal or exceed $8,000,000 and that such sales proceeds are
      applied to the Loans pursuant to subsection 3.3.1 of the Agreement;

            (x) Asset Sales of assets having a fair market value not in excess
      of $10,000,000 in any single transaction (or a series of related
      transactions) or in excess of $30,000,000 in the aggregate over the Term;
      provided that in any such Asset Sale, (x) the consideration received for
      such assets shall be in an amount at least equal to the greater of (i) the
      fair market value thereof, and (ii) (A) in the case of Accounts and
      Inventory, the aggregate value attributable to such Accounts and Inventory
      in determining the Canadian, U.K. or U.S. Borrowing Base, as applicable
      (but without giving effect to any reduction due to advance rates or any
      reserves), and (B), as long as the Term Loan is outstanding, in the case
      of Equipment and real Property Assets, seventy percent (70%), with respect
      to real Property, or eighty percent (80%), with respect to Equipment, of
      the Appraised Value of such asset; it being understood that in the case of
      Asset Sales of capital stock or other equity interests (or any options or
      warrants to purchase stock or other Securities exchangeable for or
      convertible into stock or other equity interests) of any Person, the
      consideration received therefor shall be in an amount equal to the greater
      of (i) the fair market value thereof and (ii) the aggregate value
      attributable to such Person's Accounts and Inventory in determining the
      Canadian, U.K. or U.S. Borrowing Base, as applicable (but without giving
      effect to any reduction due to advance rates or any reserves) plus seventy
      percent (70%), with respect to real Property, or eighty percent (80%) with
      respect to Equipment, of the Appraised Value of such Person's Equipment or
      real Property; (y) the sole consideration received shall be cash or, if
      the disposition in question is of a business line, entire facility or
      division, assumption of Indebtedness; and (z) the proceeds of such Asset
      Sales shall be applied as required by subsection 3.3.1 of the Agreement
      or, with respect to sales proceeds of Equipment or real Property, are
      reinvested in Equipment or other real Property in which Agent has a Lien
      (subject only to Permitted Liens that are not Purchase Money Liens) within
      90 days after the date of disposition as provided in subsection 3.3.1 of
      the Agreement; and provided, further, that in any such Asset Sale in which
      the consideration received exceeds $20,000, Agent shall have received a
      certificate of an officer of Borrower Representative evidencing that the
      conditions in clauses (x) and (y) above will be satisfied and certifying
      that Borrowers and their Subsidiaries will comply with clause (z) above
      and setting forth in reasonable detail the calculations relating thereto
      and otherwise in form and substance satisfactory to Agent at least 5
      Business Days prior to the consummation of the proposed Asset Sale;

            (xi) sale of all or substantially all of the assets and business of
      Duckback Products, Inc. (the "Duckback Asset Sale") if (x) the net sales
      proceeds realized by Duckback Products, Inc. from such sale equals or
      exceeds $15,000,000, (y) after giving effect to such sale, there is no
      existing and continuing Event of Default, (z) Duckback Products, Inc. or
      Katy shall pay to Agent for application to the U.S. Obligations the amount
      of such net sales proceeds in accordance with subsection 3.3.1 of the
      Agreement, which net sales proceeds shall be applied to outstanding U.S.
      Obligations as provided in said subsection 3.3.1, and (aa) the terms and
      conditions of such sale, including, without limitation, any asset purchase
      agreement entered into in connection with such sale, are reasonably
      acceptable to Agent; and

<PAGE>

            (xii) sales or liquidations of Inactive Subsidiaries."

3.    Third Amendment Effective Date. This Third Amendment shall become
      effective upon satisfaction of each of the following conditions:

                  (i) Borrowers, Agent and Majority Lenders shall have executed
                  and delivered to each other this Third Amendment; and

                  (ii) The Microtron Sales shall have been consummated in
                  accordance with the provisions of subsection 7.2.9 of the Loan
                  Agreement as amended by this Third Amendment on or before
                  January 31, 2004.

                  The date on which each of the foregoing conditions precedent
      is satisfied shall be referred to as the "Third Amendment Effective Date."

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

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

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

                            (Signature Page Follows)

<PAGE>

              (Signature Page to Third Amendment to Loan Agreement)

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

                                  KATY INDUSTRIES, INC.

                                  By:___________________________________________
                                         Name:  Amir Rosenthal
                                         Title: Vice President

<PAGE>

                                  CONTICO MANUFACTURING LIMITED

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  WOODS INDUSTRIES (CANADA) INC.

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  FLEET CAPITAL CORPORATION,
                                    as Agent and as a Lender

                                  By:___________________________________________
                                         Name:  David Lehner
                                         Title: Vice President

<PAGE>

                                  WELLS FARGO FOOTHILL, INC. (f/k/a Foothill
                                  Capital Corporation), as a Lender

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  GMAC COMMERCIAL FINANCE, as a Lender

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  LASALLE BANK NATIONAL ASSOCIATION,
                                  as a Lender

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  U.S. BANK NATIONAL ASSOCIATION, as a Lender

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

                                  UPS CAPITAL CORPORATION, as a Lender

                                  By:___________________________________________
                                         Name:__________________________________
                                         Title:_________________________________

<PAGE>

      Accepted and Agreed to this ___ day of October, 2003.

                                  GUARANTORS:

                                  KKTY HOLDING COMPANY, L.L.C.

                                  By:_________________________________
                                           Name:  Christopher Anderson
                                           Title:  Authorized Manager

                                  AMERICAN GAGE & MACHINE CO.

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

                                  CONTINENTAL COMMERCIAL PRODUCTS, LLC

                                  By:_________________________________
                                           Name:  Amir Rosenthal
                                           Title:  Authorized Manager

                                  DBPI, INC.

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

                                  GCW, INC.

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

                                  PTR MACHINE CORP.

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

<PAGE>

                                  SAVANNAH ENERGY SYSTEMS COMPANY

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

                                  WJ SMITH WOOD PRESERVING COMPANY

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

                                  WOODS INDUSTRIES, INC.

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

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