LILLY INDUSTRIES, INC.

                           CHANGE IN CONTROL AGREEMENT

                                 ALAIN DEBLANDRE

         This  CHANGE  IN  CONTROL  AGREEMENT,  dated as of  February  3,  2000,
evidences  an  agreement  by and  between  LILLY  INDUSTRIES,  INC.,  a Canadian
corporation  organized  under the laws of the  Province of  Ontario,  having its
principal executive offices at 65 Duke Street, London, Ontario ("Lilly Canada"),
a  subsidiary  of Lilly  Industries,  Inc.,  an Indiana  corporation  having its
principal  executive  offices at 200 West 103rd  Street,  Indianapolis,  Indiana
46290 (the "Company") and ALAIN DEBLANDRE, an individual residing at 1216 Gordon
Street, Guelph, Ontario, Canada N1H 6H9 ("Executive").

                                   Background

         A. The Board of Directors of the Company has  determined  that it is in
the best  interests  of the  Company  and its  shareholders  to assure  that the
Company and Lilly  Canada will have the  continued  undivided  time,  attention,
loyalty, and dedication of Executive, notwithstanding the possibility, threat or
occurrence of a Change in Control (as defined in subsection  3(c) hereof) of the
Company.

         B. The Board  believes  it is  imperative  to diminish  the  inevitable
distraction  of  Executive  by virtue of the  personal  uncertainties  and risks
created by pending or threatened Change in Control and to encourage  Executive's
full undivided time, attention, loyalty, and dedication to the Company and Lilly
Canada  currently  and in the  event of any  threatened  or  pending  Change  in
Control.

         C. By this  Agreement,  the Board  intends  upon a Change in Control to
assure Executive with  compensation and benefits  arrangements if his employment
terminates as a result of a Change in Control which are  competitive  with those
of other corporations similarly situated to the Company.  Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into this
Agreement.

         D. In reliance on this Agreement,  Executive is willing to continue his
employment  with  Lilly  Canada on the terms  agreed to by  Executive  and Lilly
Canada from time to time.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1.  Undertaking.  Subject to Section 4, Lilly  Canada  agrees to pay or
provide to Executive the termination  benefits specified in Section 2 hereof if:
(a) within three (3) years after,  a Change in Control (as defined in subsection
3(c) hereof):  either (i) the Company or Lilly Canada  terminates the employment
of Executive before age sixty-five (65) for any reason other than Good Cause (as
defined in subsection 3(h) hereof),  death, Disability (as defined in subsection
3(g) hereof), or (ii) Executive  voluntarily  terminates his employment for Good
Reason  (as  defined  in  subsection  3(i)  hereof),  or (b) the  employment  of
Executive  is  terminated  before  such a Change in Control,  or an  anticipated
Change in Control, and Executive reasonably demonstrates that such termination

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occurred in  connection  with,  or in  anticipation  of such a Change in Control
(whether or not such Change in Control actually occurs).

         2. Termination Benefits. Subject to Section 4, if Executive is entitled
to termination  benefits pursuant to Section 1 hereof, Lilly Canada shall pay or
provide the following:

                  (a) Severance Pay.  Lilly Canada shall pay to Executive,  in a
         cash lump sum, an amount equal to the sum of:

                           (1) two (2) times the sum of (i) plus (ii) below:

                                    (i)     Executive's  annual  base  salary at
                                            the rate in effect as of the date of
                                            termination  of  employment  (or, at
                                            Executive's election, at the rate in
                                            effect on any date during the period
                                            beginning  on the  first  day of the
                                            month   immediately   prior  to  the
                                            occurrence  of  events  constituting
                                            "Good   Reason"   or  a  Change   in
                                            Control), plus

                                    (ii)     an  amount  equal  to the  targeted
                                             variable  compensation of Executive
                                             for   the   year  in   which   such
                                             termination    occurs    (or,    if
                                             Executive  is advised of the amount
                                             of  such   targeted   amount  after
                                             events   specified   herein   which
                                             constitute  "Good  Reason,"  or the
                                             targeted amount  constitutes  "Good
                                             Reason," at  Executive's  election,
                                             the variable  compensation paid for
                                             any fiscal year for which Executive
                                             has  actually  received  a variable
                                             compensation  payment either in the
                                             twelve (12) months  before a Change
                                             in Control or any fiscal year after
                                             a Change in Control), plus ----

                           (2)      two  (2)  times  an  amount   equal  to  any
                                    contributions  the  Company or Lilly  Canada
                                    would  have  otherwise  made on  Executive's
                                    behalf  to  the  Company's   Employee  Stock
                                    Purchase  Plan during the twelve (12) months
                                    following  Executive's  date of termination,
                                    had Executive's  employment  and/or the plan
                                    or  amounts   contributed   thereto  by  the
                                    Company  or  Lilly  Canada  on   Executive's
                                    behalf not been reduced or  terminated  (or,
                                    at  Executive's  election,  two (2) times an
                                    amount  equal  to  any   contributions   the
                                    Company or Lilly Canada made on  Executive's
                                    behalf to such plan for any plan year ending
                                    either in the twelve  (12)  months  before a
                                    Change in Control or any fiscal year after a
                                    Change in Control).

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         Lilly   Canada   shall   make   such  lump  sum   payments   within  an
         administratively  reasonable period (but not to exceed sixty (60) days)
         after the Release  Effective  Date (as defined in Section 4(a) hereof).
         Such  payments  shall  be in  addition  to any  salary,  vacation  pay,
         variable  compensation  or benefits  earned or accrued by Executive for
         services rendered prior to his termination.

                  (b)  Health,  Accident,  and  Life  Insurance  and  Disability
         Benefits. The Executive shall be entitled to continue for two (2) years
         following the date of  termination,  at the Company's or Lilly Canada's
         cost,  Executive's coverage under the Company's or Lilly Canada's group
         insurance,  health and accident,  life, and disability benefit plans in
         which  Executive was entitled to participate  immediately  prior to the
         Change in Control  provided that  continued  participation  is possible
         under the general  terms and  provisions of such plans,  programs,  and
         arrangements;  provided,  however, such continuation coverage shall run
         concurrently  with any  continuation  coverage  otherwise  available to
         Executive  under the  terms of such  plans.  In the  event  Executive's
         participation in any such plan,  program,  or arrangement is barred, or
         any such plan,  program, or arrangement is discontinued or the benefits
         thereunder are materially reduced, the Company shall arrange to provide
         Executive with benefits  substantially similar to those which Executive
         would  have  otherwise  been  entitled  to receive  under  such  plans,
         programs, and arrangements prior thereto at the Company's cost.

                  (c)   Acceleration   of  Stock  Options.   The  Company  shall
         accelerate and make immediately exercisable any and all unmatured stock
         options  (whether or not such stock options are otherwise  exercisable)
         which  Executive  then holds to acquire  securities  from the  Company;
         provided,  however,  that  Executive  shall have ninety (90) days after
         such  termination  of  employment  to exercise  any  outstanding  stock
         options  and after such ninety  (90) days any and all  unexpired  stock
         options shall lapse; and, provided,  further,  however, any tax benefit
         provisions with respect to any stock options shall apply to any and all
         unmatured  stock  options  (whether  or  not  such  stock  options  are
         otherwise exercisable).

         3.  Definitions.  When  the  initial  letter  of a word  or  phrase  is
capitalized  herein,  such word or phrase shall have the meaning hereinafter set
forth:

                  (a)      "Affiliated Employer" means:

                           (1)      a   member   of  a   controlled   group   of
                                    corporations  (as  defined  in Code  Section
                                    414(b)) of which the Company is a member; or

                           (2)      an unincorporated trade or business which is
                                    under  common  control  (as  defined in Code
                                    Section 414(c)) with the Company.

                  (b) "Board" means the board of directors of Lilly  Industries,
         Inc, an Indiana corporation.


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                  (c) "Change in Control" shall be deemed to have occurred if:

                           (1)      the  Company  shall  become  a  party  to an
                                    agreement of merger, consolidation, or other
                                    reorganization pursuant to which the Company
                                    will be a  constituent  corporation  and the
                                    Company   will  not  be  the   surviving  or
                                    resulting corporation,  or which will result
                                    in less than 50% of the  outstanding  voting
                                    securities  of the  surviving  or  resulting
                                    entity    being    owned   by   the   former
                                    shareholders of the Company;

                           (2)      the  Company  shall  become  a  party  to an
                                    agreement  providing  for the  sale or other
                                    disposition   by  the   Company  of  all  or
                                    substantially  all  of  the  assets  of  the
                                    Company  to  any  individual,   partnership,
                                    joint    venture,    association,     trust,
                                    corporation, or other entity which is not an
                                    Affiliated Employer; or

                           (3)      the acquisition by any  individual,  entity,
                                    or group  (within  the  meaning  of  Section
                                    13(d)(3)  or  14(d)(2)  of  the   Securities
                                    Exchange  Act of 1934,  as amended from time
                                    to time) of an aggregate of more than 20% of
                                    the  combined   voting  power  of  the  then
                                    outstanding Class A Stock of the Company.

                  (d) "Committee" means the Compensation  Committee of the Board
         to which the Board has delegated  authority to administer and interpret
         this Agreement.

                  (e) "Company" means Lilly Industries,  Inc. and any successors
         to Lilly Industries, Inc., an Indiana corporation.

                  (f)  "Confidential  Information"  means any information not in
         the public  domain and not  previously  disclosed  to the public by the
         Board or  management  of the  Company or an  Affiliated  Employer  with
         respect to the products,  facilities,  methods, trade secrets and other
         intellectual  property,  systems,  procedures,   manuals,  confidential
         reports,  product price lists, customer lists,  financial  information,
         business  plans,  prospects,  or  opportunities  of the  Company  or an
         Affiliated  Employer,  or  any  information  which  the  Company  or an
         Affiliated Employer has designated as Confidential Information.

                  (g) "Disability" means a disability as determined for purposes
         of any group disability  insurance policy of Lilly Canada in effect for
         Executive which qualifies Executive for permanent  disability insurance
         payments in  accordance  with such policy.  The  Committee  may require
         subsequent  proof of  continued  Disability,  prior to the  sixty-fifth
         (65th)  birthday of  Executive,  at  intervals of not less than six (6)
         months.

                  (h)  "Good  Cause"  means:  (1)  conviction  for a  felony  or
         conviction for any crime or offense lesser than a felony  involving the
         property  of  the  Company  or an  Affiliated  Employer,  whether  such
         conviction occurs before or after termination of employment; (2)

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         engaging in conduct that has caused demonstrable and material injury to
         the Company or an Affiliated Employer, monetary or otherwise; (3) gross
         dereliction of duties or other gross misconduct and the failure to cure
         such situation  within thirty (30) days after receipt of notice thereof
         from  the  Committee;  or (4)  the  disclosure  or use of  Confidential
         Information  to a  party  unrelated  to the  Company  or an  Affiliated
         Employer  other than in the normal and ordinary  performance of service
         for the Company or an  Affiliated  Employer.  The  determination  as to
         whether Good Cause exists shall be made by the Committee in good faith.
         Notwithstanding  anything herein to the contrary,  no act or failure to
         act of  Executive  shall be  considered  to be "Good  Cause" under this
         Agreement  unless it shall be done, or omitted to be done, by Executive
         not in good  faith and  without  reasonable  belief  that his action or
         omission  was in the best  interest  of the  Company  or an  Affiliated
         Employer.

                  (i) "Good Reason" means, without Executive's written consent:

                           (1)      a substantial change in Executive's  status,
                                    position or responsibilities  which does not
                                    represent  a  promotion   from   Executive's
                                    status,  position or  responsibilities as in
                                    effect  immediately  prior to the  Change in
                                    Control;  the assignment to Executive of any
                                    material  duties or  responsibilities  which
                                    are clearly  inconsistent  with  Executive's
                                    status, position or responsibilities; or any
                                    removal  of  Executive  from,  or failure to
                                    reappoint  or reelect  Executive  to, any of
                                    such  positions,  except in connection  with
                                    the  termination of  Executive's  employment
                                    for  Disability,  death,  Good Cause,  or by
                                    Executive other than for Good Reason;

                           (2)      a reduction by Lilly  Canada in  Executive's
                                    annual  base salary as in effect on the date
                                    hereof, or as the same may be increased from
                                    time  to  time   during  the  term  of  this
                                    Agreement,  or  Lilly  Canada's  failure  to
                                    increase   (within  twelve  (12)  months  of
                                    Executive's  last  increase  in annual  base
                                    salary) Executive's annual base salary after
                                    a Change in  Control  in an amount  which at
                                    least equals, on a percentage basis,  eighty
                                    percent  (80%)  of  the  average  percentage
                                    increase  in  annual  base  salary  for  all
                                    corporate  officers  of the Company or Lilly
                                    Canada effected in the preceding twelve (12)
                                    months;

                           (3)      a change by Lilly Canada in the  methodology
                                    of  computing  Executive's  bonus  under the
                                    Variable    Compensation    Plan    or   the
                                    termination of such plan or its  replacement
                                    with  a  plan  using  a   methodology   less
                                    favorable  to  Executive  than that used for
                                    any  fiscal  year for  which  Executive  has
                                    actually  received a  variable  compensation
                                    payment  either  in  the  last  fiscal  year
                                    before a Change  in  Control  or any  fiscal
                                    year after a Change in Control;

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                           (4)      if Executive  performed his principal duties
                                    at  the  Company's   executive   offices  in
                                    Indianapolis, Indiana immediately before the
                                    Change in  Control,  the  relocation  of the
                                    Company's  principal  executive offices to a
                                    location   outside   of  the   Indianapolis,
                                    Indiana metropolitan area (which consists of
                                    all counties  which are contiguous to Marion
                                    County,  Indiana), or if Executive performed
                                    his  principal  duties at a  location  other
                                    than  the  Company's  executive  offices  in
                                    Indianapolis, Indiana immediately before the
                                    Change in Control,  the Company's  requiring
                                    Executive to be based at any place more than
                                    forty (40) miles  distance from the location
                                    which  Executive   performed  his  principal
                                    duties prior to a Change in Control,  except
                                    for   required   travel  on  the   Company's
                                    business   to   an   extent    substantially
                                    consistent with Executive's  business travel
                                    obligations  at  the  time  of a  Change  in
                                    Control;

                           (5)      the  failure by Lilly  Canada to continue to
                                    provide  Executive with benefits  (including
                                    any    variable     compensation    program)
                                    substantially     similar    to,    or    of
                                    substantially  the same  aggregate  value to
                                    Executive,  as those  enjoyed  by all  other
                                    corporate  officers  of the  Company  or any
                                    Affiliated Employer from time to time either
                                    before or after a Change in Control;

                           (6)      the failure of the  Company or Lilly  Canada
                                    to  obtain  an  agreement   satisfactory  to
                                    Executive  (which  satisfaction  may  not be
                                    unreasonably withheld) from any successor or
                                    assign of the Company to assume and agree to
                                    perform this Agreement;

                           (7)      any  purported  termination  of  Executive's
                                    employment which is not effected pursuant to
                                    a  Notice  of  Termination   satisfying  the
                                    requirements of subsection (k) hereof; or

                           (8)      any request by Lilly  Canada that  Executive
                                    participate  in an unlawful  act or take any
                                    action  constituting a breach of Executive's
                                    professional standard of conduct.

         Notwithstanding   anything  in  this   subsection   to  the   contrary,
         Executive's  right to terminate his employment for Good Reason pursuant
         to this subsection shall not be affected by Executive's  incapacity due
         to physical or mental illness.

                  (j) "Lilly  Canada" means Lilly  Industries,  Inc., a Canadian
         corporation organized under the laws of the Province of Ontario.

                  (k)  "Notice  of  Termination"  means  a  notice  which  shall
         indicate the date on which  Executive's  employment shall terminate and
         the specific termination provision in this

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         Agreement  relied  upon and shall set forth in  reasonable  detail  the
         facts and  circumstances  claimed to provide a basis for termination of
         Executive's employment under the provision so indicated.

         4. Conditions to Payments and Benefits.

                  (a) Release of Claims.  As a condition of Executive  receiving
         from Lilly Canada or the Company the payments and benefits provided for
         in  this  Agreement,  which  payments  and  benefits  Executive  is not
         otherwise entitled to receive, Executive understands and agrees that he
         will be required to execute a release of all claims against the Company
         or Lilly Canada  (arising out of matters  occurring on or prior to such
         termination) in the form attached hereto as Exhibit 1 (the  "Release").
         Executive  acknowledges  that he has been advised in writing to consult
         with an attorney prior to executing the Release,  and Executive  agrees
         that he will consult with his attorney  prior to executing the Release.
         The Executive and the Company and Lilly Canada agree that Executive has
         a period of twenty-one (21) days within which to consider this Release,
         and has a period  of seven  (7) days  following  the  execution  of the
         Release   within  which  to  revoke  the  Release.   The  parties  also
         acknowledge  and  agree  that the  Release  shall not be  effective  or
         enforceable until the seven (7) day revocation period expires. The date
         on which this seven (7) day period  expires shall be the effective date
         of the Release (the "Release Effective Date").

                  THE  EXECUTIVE  AGREES  THAT  EXECUTION  AND  DELIVERY  TO THE
         COMPANY AND LILLY CANADA OF THE RELEASE REQUESTED BY THE COMPANY AND/OR
         LILLY  CANADA,  AND THE  PASSAGE OF ALL  NECESSARY  WAITING  PERIODS IN
         CONNECTION  THEREWITH,  SHALL  BE A  CONDITION  TO THE  RECEIPT  OF ANY
         PAYMENT OR BENEFITS  TO BE  PROVIDED  BY THE  COMPANY AND LILLY  CANADA
         UNDER THIS  AGREEMENT.  IF THE  EXECUTIVE  ELECTS  NOT TO  EXECUTE  AND
         DELIVER TO THE COMPANY AND LILLY  CANADA THE RELEASE  REQUESTED  BY THE
         COMPANY AND/OR LILLY CANADA, THE EXECUTIVE SHALL NOT BE ENTITLED TO ANY
         PAYMENTS OR BENEFITS  UNDER THIS  AGREEMENT  AND ALL SUCH  PAYMENTS AND
         BENEFITS SHALL BE FORFEITED.

         5. Additional Provisions.

                  (a) Enforcement of Agreement. The Company and Lilly Canada are
         aware that upon the  occurrence of a Change in Control,  the Board or a
         shareholder  of the Company and Lilly  Canada may then cause or attempt
         to cause the  Company  or Lilly  Canada  to  refuse to comply  with its
         obligations under this Agreement,  or may cause or attempt to cause the
         Company or Lilly  Canada to  institute,  or may  institute,  litigation
         seeking to have this Agreement declared  unenforceable,  or may take or
         attempt to take other action to deny  Executive  the benefits  intended
         under  this  Agreement.  In these  circumstances,  the  purpose of this
         Agreement  could be  frustrated.  It is the intent of the  Company  and
         Lilly  Canada that  Executive  not be  required  to incur the  expenses
         associated with the enforcement of

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         Executive's  rights under this  Agreement by  litigation or other legal
         action,  nor that  Executive be bound to negotiate  any  settlement  of
         Executive's  rights  hereunder,  because  the cost and  expense of such
         legal  action  or  settlement  would  substantially  detract  from  the
         benefits intended to be extended to Executive  hereunder.  Accordingly,
         if following a Change in Control it should appear to Executive that the
         Company  or  Lilly  Canada  has  failed  to  comply  with  any  of  its
         obligations  under this  Agreement  or in the event that the Company or
         Lilly  Canada or any  other  person  (including  the  Internal  Revenue
         Service)   takes  any  action  to  declare  this   Agreement   void  or
         unenforceable,  or  institutes  any  litigation  or other legal  action
         designed to deny,  diminish or to recover from  Executive  the benefits
         entitled to be provided  to  Executive  hereunder,  and  Executive  has
         complied with all of his obligations under this Agreement,  the Company
         and Lilly Canada irrevocably  authorizes Executive from time to time to
         retain counsel of Executive's  choice, at the expense of the Company as
         provided in this subsection,  to represent Executive in connection with
         the  initiation  or defense of any  litigation  or other legal  action,
         whether such action is by or against the Company or Lilly Canada or any
         director,  officer,  shareholder,  or other person  affiliated with the
         Company  or Lilly  Canada,  in any  jurisdiction.  Notwithstanding  any
         existing or prior attorney-client  relationship between the Company and
         such  counsel,  the Company and Lilly  Canada  irrevocably  consents to
         Executive  entering  into an  attorney-client  relationship  with  such
         counsel,  and in that  connection  the  Company  and Lilly  Canada  and
         Executive  agree that a confidential  relationship  shall exist between
         Executive and such counsel. The reasonable fees and expenses of counsel
         selected from time to time by Executive as herein above  provided shall
         be paid or  reimbursed to Executive by the Company or Lilly Canada on a
         regular,  periodic basis upon  presentation by Executive of a statement
         or statements prepared by such counsel in accordance with its customary
         practices.  Any legal expenses  incurred by the Company or Lilly Canada
         by reason of any dispute between the parties as to enforceability of or
         the terms contained in this Agreement,  notwithstanding  the outcome of
         any such dispute,  shall be the sole  responsibility of the Company and
         Lilly  Canada,  and the  Company  and Lilly  Canada  shall not take any
         action to seek reimbursement from Executive for such expenses.

                  (b) Severance Pay; No Duty to Mitigate. The amounts payable to
         Executive  under this Agreement  shall not be treated as damages but as
         severance  compensation  to which  Executive  is  entitled by reason of
         termination of Executive's employment in the circumstances contemplated
         by this  Agreement,  and is inclusive  of  Executive's  entitlement  to
         termination  pay and severance pay under the Employment  Standards Act,
         R.S.O.  1990, E.14, as amended.  The Company and Lilly Canada shall not
         be entitled to set off against  the amounts  payable to  Executive  any
         amounts earned by Executive in other  employment  after  termination of
         Executive's  employment  with Lilly Canada,  or any amounts which might
         have been earned by Executive in other employment, had Executive sought
         such  other  employment,  or  any  set-off,  counterclaim,  recoupment,
         defense,  or any other  claim,  right,  or action  which the Company or
         Lilly Canada may have against Executive or others.

                  (c)  Notice  of  Termination.  Any  purported  termination  of
         employment  by Lilly Canada or by Executive  shall be  communicated  by
         written Notice of Termination to the other

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         party  hereto in  accordance  with  subsection  3(k)  hereof  and shall
         provide at least ten (10)  business  days  notice  prior to the date of
         termination.  Solely for purposes of this Agreement,  no such purported
         termination shall be effective without such Notice of Termination.

                  (d)  Assignment.  This  Agreement is personal to Executive and
         without the prior written consent of the Company and Lilly Canada shall
         not be  assignable  by  Executive  other  than by  will or the  laws of
         descent and distribution.  This Agreement shall inure to the benefit of
         and be enforceable by Executive's legal representatives. This Agreement
         shall inure to the benefit of and be binding upon the Company and Lilly
         Canada and their  successors and assigns.  The Company and Lilly Canada
         shall assign this Agreement to any corporation or other business entity
         succeeding  to  substantially  all of the  business  and  assets of the
         Company by merger,  consolidation,  sale of assets,  or  otherwise  and
         shall obtain the assumption of this Agreement by such successor.

                  (e)  Termination.  The Board shall have the right to terminate
         this Agreement, for any reason, upon twelve (12) months' written notice
         to Executive prior to a Change in Control.

                  (f)  Amendment.  The Board  shall have the right to amend this
         Agreement,  for any reason,  upon twelve (12) months' written notice to
         Executive prior to a Change in Control.

                  (g)  Governing  Law. This  Agreement  shall be governed by and
         subject to the laws of the State of Indiana, U.S.A.

                  (h) Severability.  The invalidity or  unenforceability  of any
         particular  provision  of this  Agreement  shall not  affect  the other
         provisions, and this Agreement shall be construed in all respects as if
         such invalid or unenforceable provision had not been contained herein.

                  (i)  Captions.   The  captions  in  this   Agreement  are  for
         convenience and identification  purposes only, are not an integral part
         of this Agreement,  and are not to be considered in the  interpretation
         of any part hereof.

                  (j)  Source  of  Payment.  For  purposes  of  this  Agreement,
         employment and compensation  paid by any direct or indirect  subsidiary
         of the Company will be deemed to be employment and compensation paid by
         the Company.

                  (k)  Notices.   Except  as  specifically  set  forth  in  this
         Agreement,  all notices and other communications  hereunder shall be in
         writing  and shall be deemed to have been duly  given if  delivered  in
         person  or sent by  registered  or  certified  mail,  postage  prepaid,
         addressed  as set forth  above,  or to such  other  address as shall be
         furnished in writing by any party to the other.

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                  (l)  Waivers.  The  Executive's  or  the  Company's  or  Lilly
         Canada's failure to insist upon strict compliance with any provision of
         this  Agreement  or the  failure to assert any right  Executive  or the
         Company  or  Lilly  Canada  may  have  hereunder,   including,  without
         limitation,  the right of Executive to terminate Executive's employment
         for Good Reason,  shall not be deemed to be a waiver of such  provision
         or right, or of any other provision or right of this Agreement.

                  (m) Non-exclusivity of Right.  Nothing in this Agreement shall
         prevent or limit Executive's  continuing or future participation in any
         plan, program, policy or practice provided by the Company or any of its
         Affiliated  Employers and for which  Executive  may qualify,  nor shall
         anything herein limit or otherwise  affect such rights as Executive may
         have under any contract or agreement with the Company or any Affiliated
         Employer.  Amounts  which are vested  benefits  or which  Executive  is
         otherwise  entitled  to receive  under any plan,  policy,  practice  or
         program  of, or any  contract  or  agreement  with,  the Company or any
         Affiliated  Employer at or subsequent to the date of termination  shall
         be payable in accordance  with such plan,  policy,  practice,  program,
         contract or agreement except as explicitly  modified by this Agreement;
         provided,  however,  this Agreement shall be the sole source of any and
         all  severance  benefits  that  Executive  is entitled to receive,  and
         Executive will not be entitled to participate  in, or receive  benefits
         from, any other  severance  plan or severance  policy or program of the
         Company,  and Executive shall not be entitled to any severance benefits
         other than as identified in this Agreement and Executive  hereby waives
         any and all rights to any such other severance benefits.

                  (n) Integration and  Counterparts.  This Agreement  supercedes
         all prior  agreements  between the parties  with respect to the matters
         covered  herein.  This  Agreement  may  be  signed  in  any  number  of
         counterparts, each of which shall be deemed to be the original.

                  6.  Guarantee.  The Company  guarantees  the  obligations  and
         performance of Lilly Canada under this Agreement.

         IN  WITNESS  WHEREOF,  Executive  has  executed  and,  pursuant  to the
authorization  from its Board,  the  Company  has caused  this  Agreement  to be
executed in its name and on its  behalf,  all as of the day and year first above
written.

"EXECUTIVE"

-----------------------------------------------------

Alain DeBlandre

"LILLY INDUSTRIES, INC., a Canadian
Corporation"


-----------------------------------------------------

President

"LILLY INDUSTRIES, INC., an Indiana
Corporation"


-----------------------------------------------------

Chairman of the Board

-----------------------------------------------------

Chairman of the Compensation Committee
574258.3-2/21/00 574258.3-2/21/00

                                     - 10 -

<PAGE>



                              RELEASE OF ALL CLAIMS

         In consideration of receiving from LILLY  INDUSTRIES,  INC., a Canadian
corporation  organized  under the laws of the  Province of  Ontario,  having its
principal executive offices at 65 Duke Street, London, Ontario ("Lilly Canada"),
a  subsidiary  of Lilly  Industries,  Inc.,  an Indiana  corporation  having its
principal  executive  offices at 200 West 103rd  Street,  Indianapolis,  Indiana
46290 (the "Company"),  the payments and benefits  provided for in the Change in
Control  Agreement,  dated as of  February  3,  2000,  (the  "Change  in Control
Agreement")  between  the  Company  and  the  undersigned  ("Executive"),  which
payments and benefits Executive was not otherwise entitled to receive, Executive
unconditionally  releases  and  discharges  the Company from any and all claims,
causes of  action,  demands,  lawsuits  or other  charges  whatsoever,  known or
unknown,  directly or  indirectly  related to  Executive's  employment  with the
Company,  except for a breach of the Company's  obligations  under the Change in
Control  Agreement.  The claims or actions released herein include,  but are not
limited  to,  those  based on  allegations  of  wrongful  discharge,  breach  of
contract, promissory estoppel, defamation, infliction of emotional distress, and
those  alleging  discrimination  on the  basis of race,  color,  sex,  religion,
national origin, age, disability, or any other basis, including, but not limited
to, any claim or action  under  Title VII of the Civil  Rights Act of 1964,  the
Employment  Standards Act,  R.S.O.  1990,  E.14, as amended,  the National Labor
Relations Act, the Family and Medical Leave Act, the Fair Labor Standards Act or
the  Worker   Adjustment  and  Retraining   Notification   Act,  those  alleging
discrimination on the basis of race, color, sex, religion, national origin, age,
disability,  or handicap or any other prohibited ground of discrimination  under
the Human Rights Code, R.S.O. 1990, H.19, as amended,  the Age Discrimination in
Employment  Act of 1967,  the  Rehabilitation  Act of 1973,  the Americans  with
Disabilities  Act of 1990,  the Equal Pay Act of 1963,  the Civil  Rights Act of
1991, the Employee Retirement Income Security Act of 1974, or any other federal,
state,  or local law,  rule,  ordinance,  or regulation as presently  enacted or
adopted and as each may hereafter be amended; PROVIDED,  HOWEVER, THAT EXECUTIVE
DOES NOT WAIVE  RIGHTS OR CLAIMS THAT MAY ARISE AFTER THE DATE OF THIS  RELEASE,
OR THAT ARISE EITHER BEFORE OR AFTER THE DATE OF THIS RELEASE, OUT OF CLAIMS FOR
BENEFITS UNDER ANY EMPLOYEE PENSION,  WELFARE, OR BENEFIT PLAN OR PROGRAM OF THE
COMPANY  OR AS A  RESULT  OF THE  COMPANY'S  BREACH  OF THE  CHANGE  IN  CONTROL
AGREEMENT.

         With  respect  to any claim  that  Executive  might  have under the Age
Discrimination in Employment Act of 1967, as amended:

         (i) The  Executive's  waiver of said  rights  or  claims  under the Age
Discrimination  in Employment  Act of 1967 is in exchange for the  consideration
reflected in this Release;

         (ii) The Executive  acknowledges that he has been advised in writing to
consult  with an  attorney  prior  to  executing  this  Release  and that he has
consulted with his attorney prior to executing this Release;

                                    Exhibit 1


<PAGE>



         (iii) The Executive  acknowledges that he has been given a period of at
least twenty-one (21) days within which to consider this Release; and

         (iv) The Executive and the Company agree that Executive has a period of
seven (7) days  following the  execution of this Release  within which to revoke
the Release.

The parties also  acknowledge and agree that this Release shall not be effective
or enforceable  until the seven (7) day revocation  period expires.  The date on
which this  seven (7) day period  expires  shall be the  effective  date of this
Release.

         The  Executive  further  agrees,  in  consideration  of  receiving  the
payments and benefits  provided for in the Change in Control  Agreement,  not to
initiate  or  instigate  any  claims,  causes of action or demands  against  the
Company in any way directly or indirectly related to Executive's employment with
the  Company or the  termination  of his  employment  except for a breach of the
Company's  obligations  under the Change in  Control  Agreement,  and  Executive
agrees to  reimburse,  defend,  and hold  harmless the Company  against any such
claims, causes of action or demands.

         The  Executive  agrees  that he will  not  seek,  nor be  entitled  to,
employment with the Company, and hereby waives any future right to consideration
for  employment by the Company.  The Executive  further  agrees that if he seeks
employment  with the Company in violation of this  Agreement  and is hired,  the
Company shall have the right to immediately  and  unconditionally  terminate his
employment without any reason and without recourse by Executive.

         The Executive  understands that as used in this Release,  the "Company"
includes  its  past,   present  and  future   officers,   directors,   trustees,
shareholders, parent corporations, employees, agents, subsidiaries,  affiliates,
distributors,  successors,  and assigns, any and all employee benefit plans (and
any  fiduciary of such plans)  sponsored by the Company,  and any other  persons
related to the Company.

Alain DeBlandre

Date

WITNESS: