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                       THIRD AMENDMENT TO CREDIT AGREEMENT

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                                      among

                             LILLY INDUSTRIES, INC.

                             an Indiana corporation

                          the Lenders Signatory Hereto

                                       and

                        BANK ONE, INDIANA, N.A., as Agent



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                            Dated as of May 31, 2000

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                                TABLE OF CONTENTS


PART I.      AMENDATORY PROVISIONS............................................1

             SECTION 5         Covenants......................................1

                     5.1      Affirmative Covenants...........................1

PART II.     SCHEDULES........................................................1

PART III.    CONTINUING EFFECT................................................1

PART IV.     INDEPENDENT CREDIT DECISION......................................2

PART V.      CONDITIONS PRECEDENT.............................................2


                                                         i


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                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT made as of the 31st day of May, 2000, by and among
LILLY INDUSTRIES,  INC., an Indiana  corporation (the  "Borrower"),  the LENDERS
party hereto, and BANK ONE, INDIANA,  N.A., a national banking  association,  as
agent for the Lenders hereunder (in such capacity, the "Agent");

                              W I T N E S S E T H:

         WHEREAS,  as of October 24,  1997,  the parties  hereto  entered into a
certain  Credit  Agreement,  as amended  April 14,  1998 and August 31, 1999 (as
amended the "Agreement"); and

         WHEREAS,  the Borrower has given written  notice to the  Administrative
Agent and the Lenders to  permanently  reduce the Revolving  Loan  Commitment by
Twenty-Five Million Dollars ($25,000,000) effective as of May 31, 2000;

         WHEREAS,  the Borrower  has  requested a  modification  in the Leverage
Ratio covenant;

         NOW,  THEREFORE,  in  consideration  of the  premises,  and the  mutual
promises herein contained, the parties agree that the Agreement shall be, and it
hereby is, amended as provided herein and the parties further agree as follows:

                          PART I. AMENDATORY PROVISIONS

                                    SECTION 5

                                    Covenants

5.1      Affirmative Covenants.

                  5.1.17  Leverage  Ratio.  Section  5.1.17 of the  Agreement is
         hereby amended by substituting the following  Section 5.1.17 in lieu of
         the existing provision:

                           5.1.17 Leverage Ratio. Maintain its Leverage Ratio at
                  not greater than 2.75 to 1.0 at all times.

                               PART II. SCHEDULES

         The  Agreement  is hereby  amended by  substituting  Schedule 1 to this
Third Amendment in lieu of Schedule 1 to the Agreement.

                                       1
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                           PART III. CONTINUING EFFECT

         Except as expressly modified herein:

                  (a) All terms,  conditions,  representations,  warranties  and
         covenants  contained in the  Agreement  shall remain the same and shall
         continue in full force and effect, interpreted, whatever possible, in a
         manner consistent with this Third Amendment;  provided, however, in the
         event of any irreconcilable  inconsistency,  this Third Amendment shall
         control;

                  (b)  The  representations  and  warranties  contained  in  the
         Agreement  shall survive this Third Amendment in their original form as
         continuing representations and warranties of the Borrower; and

                  (c) Capitalized  terms used in this Third  Amendment,  and not
         specifically  herein defined,  shall have the meanings ascribed to them
         in the Agreement.

In consideration hereof, the Borrower represents, warrants, covenants and agrees
that:

                  (aa)  Each  representation  and  warranty  set  forth  in  the
         Agreement,  as hereby amended,  remains true and correct as of the date
         hereof  in all  material  respects,  except  to the  extent  that  such
         representation and warranty is expressly intended to apply solely to an
         earlier date and except changes  reflecting  transactions  permitted by
         the Agreement;

                  (bb)  There  currently  exists no  offsets,  counterclaims  or
         defenses  to  the  performance  of  the   Obligations   (such  offsets,
         counterclaims or defenses, if any, being hereby expressly waived);

                  (cc) There has not occurred any Default or Unmatured  Default;
         and

                  (dd)  After  giving  effect to this  Third  Amendment  and any
         transactions contemplated hereby, no Default or Unmatured Default is or
         will be occasioned hereby or thereby.



                                       2
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                      PART IV. INDEPENDENT CREDIT DECISION

         Each  Lender  acknowledges  that  it  has,  independently  and  without
reliance  upon the  Agent or any  other  Lender,  based  on such  documents  and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this Third Amendment.

                          PART V. CONDITIONS PRECEDENT

         Notwithstanding  anything  contained  in this  Third  Amendment  to the
contrary,  the Lenders shall have no obligation under this Third Amendment until
each  of  the  following   conditions  precedent  have  been  fulfilled  to  the
satisfaction of the Agent:

                  (a) Each of the  conditions  set forth in  Section  6.2 of the
         Agreement shall have been satisfied;

                  (b) The Agent shall have received  counterparts  of this Third
         Amendment  duly  executed  by the  Agent,  Borrower  and  the  Required
         Lenders;

                  (c) All legal matters  incident to this Third  Amendment shall
         be reasonably satisfactory to the Agent and its counsel.

         IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have caused
this Third Amendment to be executed by their respective officers duly authorized
as of the date first above written.

                      [This space intentionally left blank]





                                                         3


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                              Schedule 1 - Lenders

Lenders                                               Revolving Loan
and Addresses                                           Commitment

Bank One, Indiana, N.A.                              $ 51,428,571.43
111 Monument Circle
4th Floor
Indianapolis, IN 46277
Attn: Dennis Bassett
Fax: (317) 266-6042

First Union National Bank                            $ 21,428,571.43
One First Union Center, TW-5
301 S. College Street
Charlotte, NC 28288
Attn: Peter Stephen
Fax: (704) 374-2802

Harris Trust and Savings Bank                        $ 21,428,571.43
111 West Monroe, 10-West
Chicago, IL 60603
Attn: Thad Rasche
Fax: (312) 461-5225


KeyBank National Association                         $ 21,428,571.43
127 Public Square
Mail Station OH-01-27-0606
Cleveland, OH 44114
Attn: Frank Jancar
Fax: (216) 689-4981

National City Bank of Indiana                        $ 21,428,571.43
101 W. Washington St., Ste. 200E
Indianapolis, IN 46255
Attn: Michael Stewart
Fax: (317) 267-8899

Bank of America N.A.                                 $ 12,857,142.85
335 Madison Avenue
5th Floor
New York, NY 10017
Attn: David Noda
Fax: (212) 503-7878                                  ---------------
                                                     $150,000,000.00


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                                SIGNATURE PAGE OF
                             LILLY INDUSTRIES, INC.
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                               LILLY INDUSTRIES, INC.


                                               By:/s/ John C. Elbin
                                                  ------------------------------
                                                  John C. Elbin, Vice President,
                                                  Chief Financial Officer
                                                  and Secretary


Address:

200 West 103rd Street
Indianapolis, IN 46290
Attention: John C. Elbin
Facsimile: 317-814-8780


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                                SIGNATURE PAGE OF
                           BANK ONE, INDIANA, N.A. TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                               BANK ONE INDIANA, N.A.
                                               individually and as Agent


                                               By: /s/ Dennis L. Bassets
                                               Its: Senior Vice President


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                                SIGNATURE PAGE OF
                            FIRST UNION NATIONAL BANK
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                                 FIRST UNION NATIONAL BANK


                                                 By: /s/ Jorge A. Gonzalez
                                                     --------------------------
                                                     Jorge A. Gonzalez
                                                 Its: Senior Vice President


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                                SIGNATURE PAGE OF
                          HARRIS TRUST AND SAVINGS BANK
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                                 HARRIS TRUST AND SAVINGS BANK


                                                 By: /s/ Thad D. Rasche
                                                     --------------------------
                                                     Thad D. Rasche
                                                 Its: Vice President




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                                SIGNATURE PAGE OF
                          KEYBANK NATIONAL ASSOCIATION
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                                KEYBANK NATIONAL ASSOCIATION


                                                By: /s/ Frank J. Jancar
                                                    ---------------------------
                                                    Frank J. Jancar
                                                Its: Vice President



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                                SIGNATURE PAGE OF
                          NATIONAL CITY BANK OF INDIANA
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                                  NATIONAL CITY BANK OF INDIANA


                                                  By: /s/ Thomas R. Grim
                                                      -------------------------

                                                  Its: Corporate Banking Officer



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                                SIGNATURE PAGE OF
                              BANK OF AMERICA N.A.
                                       TO
                               THIRD AMENDMENT TO
                                CREDIT AGREEMENT


                                                  BANK OF AMERICA N.A.


                                                  By: /s/ Donald J. Chin
                                                      -------------------------
                                                      Donald J. Chin
                                                  Its: Managing Director